EXHIBIT
10.2.1
CHARMING SHOPPES,
INC.
1988 KEY EMPLOYEE STOCK
OPTION PLAN
As Amended and Restated January 25,
2006
The purpose of
this Stock Option Plan (the "Plan") is to assist Charming Shoppes,
Inc. (the "Company") and any subsidiaries thereof in retaining and
attracting key employees by enabling them to acquire common stock
of the Company at a price below the current market price for such
shares. The Plan will enable them to acquire an equity interest in
the Company and will provide an incentive for them to expend
maximum effort for the success of the business of the Company and
its subsidiaries.
1.
AMOUNT AND SOURCE OF
STOCK
The aggregate
number and class of shares which may be the subject of Options
granted pursuant to the Plan is 1,500,000 shares of common stock of
the Company, par value of $.10 per share (the "Common Stock"),
subject to adjustment as provided in Section 9. Such shares may be
authorized but unissued shares of Common Stock of the Company or
may be shares held in or acquired for the treasury of the Company.
If any Option shall terminate for any reason without having been
exercised in full, the unpurchased shares subject thereto shall be
available for issuance or transfer under another Option granted
under the Plan.
2.
ADMINISTRATION OF THE
PLAN
(a)
The Plan shall be administered by a
Committee (the "Committee") of three or more persons designated by,
and who shall serve at the pleasure of, the Board of Directors of
the Company (the "Board of Directors"). From time to time, the
Committee or the Board of Directors may grant Options, subject to
the terms of the Plan, to such eligible employees, and with respect
to such number of shares of Common Stock as the Committee or the
Board of Directors, each acting in its sole discretion, may
determine. Each Option granted under the Plan shall be evidenced by
a stock option agreement (the "Stock Option Agreement"), which
shall be executed by the Company and by the person to whom the
option is granted and which shall be in such form and contain such
provisions, not inconsistent with the Plan, as the Committee or the
Board of Directors shall determine. The Committee or the Board of
Directors may impose any restrictions or conditions on the grant or
exercise of Options, which are not inconsistent with the terms
hereof.
(b)
Subject to the provisions of the
Plan, the Committee shall be authorized to interpret the Plan and
the grants made under the Plan, to establish, amend and rescind any
rules and regulations relating to the Plan, and to make all
determinations necessary or advisable for the administration of the
Plan. The Committee may correct any defect, supply any omission and
reconcile any inconsistency in the Plan or in any Option or grant
in the manner and to the extent it shall deem appropriate. The
determinations of the Committee in the administration of the Plan,
as described herein, shall be final and conclusive. The Committee
may adopt such rules and regulations as it deems necessary or
appropriate for governing its affairs.
(c)
Each member of the Committee shall
be a director of the Company. Other provisions of the Plan
notwithstanding, the Board may perform any function of the
Committee under the Plan, in order to ensure that transactions
under the Plan are exempt under Rule 16b-3 or for any other reason;
provided, however , that authority specifically reserved to
the Board under the terms of the Plan, the Company's Articles of
Incorporation or By-laws, or applicable law shall be exercised by
the Board and not by the Committee. The Board and Committee are
authorized to delegate authority to one or more officers of the
Company to act on behalf of the Board or Committee, to the fullest
extent permitted under the Business Corporation Law of the
Commonwealth of Pennsylvania.
(d)
Any Plan provision to the contrary
notwithstanding, any power of the Board of Directors under this
Plan or any outstanding option agreement hereunder (including an
Option granted by the Board of Directors under the Plan) may
likewise be exercised by the Committee.; provided, however, that
the Board shall retain exclusive power to terminate, modify, or
amend the Plan under Section 10 hereof (with other powers under
Section 10 exercisable by the Committee in accordance with the
terms of the delegation of authority set forth in this Section
2(c)).
3.
EFFECTIVE DATE AND TERM
OF PLAN
The Plan became
effective September 9, 1988, and was approved by the Company's
shareholders at the Annual Meeting of Shareholders on June 7,
1989.
4.
ELIGIBLE
PARTICIPANTS
Only the key
employees of the Company and any subsidiaries of the Company shall
be eligible to receive New Options under the Plan. A director of
the Company or one of its subsidiaries who is also a key employee
shall be eligible to participate under the Plan.
5.
TERMS OF
OPTIONS
Except as
hereinafter provided, all Options shall be subject to the following
terms and conditions:
(a)
Purchase Price
The purchase
price for the shares of Common Stock to be purchased upon exercise
of the Options granted pursuant to the Plan shall be one dollar
($1.00) per share.
(b)
Number of Shares
The number of
shares of Common Stock which may be purchased upon exercise of the
Options granted pursuant to the Plan shall be determined by the
Committee or the Board of Directors.
(c)
Duration of Option
Subject to the
provisions of this Section 5, the Board or Committee shall
determine the time at which each Option granted pursuant to the
Plan will terminate, provided that such termination shall be no
later than ten years from the date on which it is
granted.
(d)
Transferability of
Option
Unless
otherwise determined by the Committee, no Option shall be
transferable by the employee in whole or in part other than by will
or the laws of descent and distribution, and each Option shall be
exercisable, during the lifetime of the employee, only by him or
her. Unless otherwise determined by the Committee, upon any attempt
to so transfer any Option or upon the levy of attachment or similar
process upon any Option, the Option shall automatically become null
and void.
(e)
Exercise of Option
Subject to the
provisions of this Section 5, the Committee or the Board of
Directors (depending upon which granted the Option) shall have the
absolute discretion in determining whether any Options shall be
exercisable in whole, at one time, or in part, from time to time
and, if in part from time to time, the rate or times at which such
Options shall be exercisable on a cumulative or non-cumulative
basis. Either the Committee or the Board of Directors may, in its
absolute discretion, provide for the acceleration of any Option
upon a change in control of the Company, or otherwise accelerate
the time at which any Option may be exercised in whole or in part.
Except as provided in Sections 7 and 8, no Option may be exercised
at a time when the optionee is not an employee of the Company or
one of its subsidiaries; provided, however, that either the
Committee or the Board of Directors may, in its absolute
discretion, specify a period following any termination of an
optionee's employment with the Company or any of its subsidiaries
during which an Option shall remain outstanding and be exercisable,
except that no Option, as so specified, shall remain outstanding
and be exercisable later than ten years after the date on which it
was granted and no Option, as so specified, shall be exercisable
later than five years (or such longer period as may be specified
pursuant to Section 7 or 8) after the date of such termination of
the optionee's employment with the Company or any of its
subsidiaries.
(f) Modification of Options Vesting in 2005 and
Later Years .
Other provisions of the Plan notwithstanding,
any Option outstanding hereunder at any time in 2005 which Option
vested in 2005 or would vest after 2005 (an “Affected
Option”) shall be subject to the provisions of this
subsection (f), in order to comply with the requirements of Code
Section 409A which became effective January 1, 2005. As permitted
under IRS Notice 2005-1 and Proposed Treasury Regulation §
1.409A:
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Any Affected
Option that is otherwise exercisable in 2005 may be exercised in
2005, which shall be deemed a termination of the Affected Option in
accordance with Q/A 20 of IRS Notice 2005-1.
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Employees who
hold an Affected Option shall be permitted to choose one of the
following two exercise elections during 2005 (subject to such
deadline as the Company may specify), and thereafter the Affected
Option shall be exercisable only as permitted under that exercise
election (including any related post-termination exercise
provisions):
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Exercise
Election A: The employee may elect to have each part of the
Affected Option (a “tranche”) vesting at a date between
2005 and 2009 be exercisable from that vesting date until March 15
th of the following year, in compliance with the
“short-term deferral” provisions of Proposed Treasury
Regulation § 1.409A-1(b)(iv) and Q/A 4(c) of IRS Notice
2005-1.
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Exercise
Election B: The employee may elect a particular calendar year in
which the Affected Option tranche will become exercisable. Under
this Exercise Election, the Affected Option will become exercisable
on January 1 of the year selected and will remain exercisable until
December 31 of that year. The exercise year selected must be after
the year in which the Affected Option tranche vests, and if the
employee selects the year in which the option expires the exercise
period will extend only from January 1 of that year until the
expiration date. This alternative is in compliance with Proposed
Treasury Regulation § 1.409A-3(a)(4) and §
1.409A-3(g)(1).
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The periods
following termination of employment, death or disability during
which an Affected Option may be exercised will be as
follows:
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If Exercise
Election A has been selected: If the employee’s employment
with the Company or its subsidiaries terminates, the Affected
Option will be exercisable, if and to the extent vested, for the
lesser of the period provided in the applicable Stock Option
Agreement or the period permitted under Proposed Treasury
Regulation § 1.409A-1(b)(4) (in some cases not extending
beyond March 15 of the year following the year of
termination).
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If Exercise
Election B has been selected: If the employee’s employment
with the Company or its subsidiaries terminates before the Affected
Option has become exercisable under Exercise Election B, the
Affected Option will be exercisable, if and to the
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