UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
________________
FORM
8-K
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15 (D)
OF
THE
SECURITIES EXCHANGE ACT OF 1934
|
Date
of Report (date of earliest event reported)
|
June
23, 2005
|
THE
CHILDREN’S PLACE RETAIL STORES, INC.
(Exact
Name of Registrant as Specified in its Charter)
|
Delaware
|
0-23071
|
31-1241495
|
||
|
(State
or other jurisdiction
|
(Commission
|
(IRS
Employer ID
|
||
|
of
incorporation)
|
File
Number)
|
Number)
|
|
915
Secaucus Road, Secaucus, New Jersey
|
07094
|
|
(Address
of principal executive offices)
|
(Zip
Code)
|
|
Registrant’s
Telephone Number, including area code:
|
(201)558-2400
|
|
Not
Applicable
|
|
|
(Former
name or former address, if changed since last
report)
|
|
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
|
o
|
Written
communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
|
|
o
|
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|
|
o
|
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR
240.14d-2(b))
|
|
o
|
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR
240.13e-4(c)
|
|
|
|
Item
1.01 Entry into a Material Definitive Agreement
2005
Equity Incentive Plan
On
June
23, 2005, at the Annual Meeting of Stockholders of The Children’s Place Retail
Stores, Inc. (the “Company”), the Company’s stockholders approved the adoption
of the 2005 Equity Incentive Plan (the “2005 Plan”). After the Annual Meeting of
Stockholders on June 23, 2005, the Compensation Committee of the Company’s Board
of Directors (the “Compensation Committee”) approved the following amendments to
the 2005 Plan: (i) awards granted under the 2005 Plan that are based solely
on
continued employment or service shall have a minimum vesting period of three
years from the date of grant; (ii) awards granted under the 2005 Plan that
are
based on achievement of pre-established corporate or individual performance
objectives shall have a minimum vesting period of one year from the date of
grant; and (iii) each non-employee director shall receive a grant of options
to
purchase 15,000 shares (rather than stock appreciation rights) on the date
of
his or her initial election to the Board of Directors and options to purchase
6,000 shares (rather than stock appreciation rights) on the last day of each
fiscal year. A description of the 2005 Plan (other than the amendments described
above) is incorporated herein by reference to the Company’s Proxy Statement,
which was filed with the Securities and Exchange Commission on May 13, 2005
(a
copy of which is filed herewith as Exhibit 10.1). A complete copy of an Amended
and Restated 2005 Equity Incentive Plan reflecting the amendments approved
by
the Compensation Committee and described above is filed herewith as Exhibit
10.2.
Base
Salary
On
June
23, 2005, the Compensation Committee approved an increase in the annual base
salary of Ezra Dabah, the Company’s Chairman and Chief Executive Officer, to
$950,000.
Item
9.01 Financial Statements and Exhibits
| (c) |
Exhibits:
|
|
10.1
|
Description
of 2005 Equity Incentive Plan from Proxy Statement filed on May 13,
2005
|
|
10.2
|
Amended
and Restated 2005 Equity Incentive Plan of The Children's Place Retail
Stores, Inc.
|
SIGNATURES
Pursuant
to the Securities Exchange Act of 1934, the Company has duly caused this report
to be signed on its behalf by the undersigned hereunto duly
authorized.
| THE CHILDREN’S PLACE RETAIL STORES, INC. | ||
| |
|
|
| By: | /s/ Steven Balasiano | |
|
Name: Steven Balasiano |
||
| Title: Senior Vice President, General Counsel and Chief Administrative Officer | ||
| Dated: June 29, 2005 | ||
Exhibit
10.1
(excerpted
from May 13, 2005 Proxy Statement)
Description
of the 2005 Equity Incentive Plan
The
2005
Equity Incentive Plan would govern grants of stock-based awards to employee
and
director participants awarded after May 2, 2005. Whether or not the
2005
Equity Incentive Plan is approved, the 1996 and 1997 Stock Option Plans will
remain in effect. If the 2005 Equity Incentive Plan is approved, a maximum
of
2.0 million shares of Common Stock will be reserved for issuance under
the
2005 Equity Incentive Plan. As of April 29, 2005, options for 560,573
shares remain available for grant under the 1996 and 1997 Stock Option Plans,
as
amended by stockholders in 2004. If the 2005 Equity Incentive Plan is approved,
the Compensation Committee will not grant any additional options under the
1996
and 1997 Stock Option Plans and the number of shares reserved under the 1996
and
1997 Stock Option Plans will be reduced to approximately 3,987,119 shares
to cover the number of options outstanding under such plans as of April 29,
2005.
Based
on
the recommendation of the Compensation Committee, the Board of Directors has
unanimously approved the 2005 Equity Incentive Plan. The 2005 Equity Incentive
Plan is designed to support the Company's long-term business objectives in
a
manner consistent with our executive compensation philosophy. The Board of
Directors believes that by allowing the Company to continue to offer its key
employees and directors long-term, performance-based compensation through the
2005 Equity Incentive Plan, the Company will promote the following key
objectives:
•
aligning the interest of employees with those of the stockholders through
increased employee ownership of the Company; and
•
attracting, motivating and retaining experienced and highly qualified employees
who will contribute to the Company's financial success.
The
2005
Equity Incentive Plan provides for a variety of equity award vehicles to
maintain flexibility. The 2005 Equity Incentive Plan will permit the grant
of
stock options, stock appreciation rights, restricted stock awards, deferred
stock awards and performance awards (collectively referred to as "incentive
awards"). Stock options are the only equity awards currently available to
employees and directors under the 1996 and 1997 Stock Option Plans.
Key
employees and directors of the Company and its subsidiaries are eligible to
receive incentive awards under the 2005 Equity Incentive Plan. The relative
mix
of equity compensation to total compensation increases in relation to a
participant's role in influencing stockholder value.
The
2005
Equity Incentive Plan is designed to meet the requirements for deductibility
of
executive compensation under Section 162(m) of the Internal Revenue
Code of
1986, as amended (the "Code") with respect to stock options and stock
appreciation rights under the 2005 Equity Incentive Plan that are intended
to
qualify as "performance-based compensation" under Code Section 162(m).
Also, in order to meet Code Section 162(m) requirements, the 2005 Equity
Incentive Plan provides limits on the number and type of shares that any one
participant may receive during any calendar year, as described below.
The
following is a summary of the 2005 Equity Incentive Plan. The full text of
the
2005 Equity Incentive Plan is attached to this Proxy Statement as
Exhibit A, and the following summary is qualified in its entirety by
reference to this Exhibit.
Plan
Administration
The
selection of potential participants in the 2005 Equity Incentive Plan, the
level
of participation of each participant and the terms and conditions of all
incentive awards shall be determined by the Compensation Committee. It is
intended that each member of the Compensation Committee will be an "independent
director" for purposes of the Company's Corporate Governance Guidelines, the
Compensation Committee's Charter and the NASD listing requirements. The
Compensation Committee shall consist of two or more directors of the Company,
each of whom shall be a "Non-Employee Director" within the meaning of
Rule 16b-3 under the Securities Exchange Act of 1934, as amended, and
an
"outside director" within the meaning of Section 162(m) of the Code.
Currently, the Compensation Committee is comprised of three Directors, each
meeting the independence criteria.
The
Compensation Committee shall have full power and authority to administer and
interpret the 2005 Equity Incentive Plan. Determinations of the Compensation
Committee as to any question which may arise with respect to the interpretation
of the provisions of the 2005 Equity Incentive Plan and incentive awards granted
thereunder shall be final. The Committee may take any action with regard to
the
2005 Equity Incentive Plan as it shall deem desirable to effectuate the plan's
purpose, so long as said actions are not inconsistent with the provisions of
the
2005 Equity Incentive Plan. The Compensation Committee may authorize and
establish such rules, regulations and revisions as it may deem advisable to
make
the 2005 Equity Incentive Plan and incentive awards granted thereunder effective
or provide for their administration.
Limitations
on Plan Awards
If
the
2005 Equity Incentive Plan is approved, the Board of Directors will reserve
a
maximum of 2.0 million shares for issuance pursuant to stock options,
stock
appreciation rights, restricted stock awards, deferred stock awards and
performance awards under the 2005 Equity Incentive Plan. A participant may
receive multiple incentive awards under the 2005 Equity Incentive Plan. A
maximum of 500,000 shares may be granted under the 2005 Equity Incentive Plan
to
an individual pursuant to stock options and stock appreciation rights awarded
during any calendar year.
Eligibility
and Participation
Key
employees and directors of the Company and its subsidiaries qualify as potential
participants under the 2005 Equity Incentive Plan. The selection of potential
participants, the level of participation of each participant and the terms
and
conditions of all incentive awards shall be determined by the Compensation
Committee in its sole discretion, subject, however, to the terms and conditions
of the 2005 Equity Incentive Plan. Non-employee directors shall only be eligible
to receive stock appreciation rights under the 2005 Equity Incentive Plan.
Types
of Plan Awards
As
described in the Compensation
Committee Report,
the
Company's current equity compensation awards to employees and directors are
only
comprised of stock options. The 2005 Equity Incentive Plan would provide for
a
variety of other equity incentives to preserve flexibility. The incentive awards
that may be issued under the 2005 Equity Incentive Plan are described below.
Stock
Options
The
number of stock options granted to a participant shall be determined by the
Compensation Committee in its sole discretion and shall be reflected in an
option agreement between the participant and the Company. The price per share
of
the shares to be purchased pursuant to the exercise of any option shall be
fixed
by the Compensation Committee at the time of the grant; provided, however,
that
in no event shall the purchase price be less than 100% of the fair market value
of a share on the date of the grant of the option.
Stock
options granted under the 2005 Equity Incentive Plan may be either non-qualified
stock options or incentive stock options qualifying under Section 422
of
the Code. The maximum number of shares of Common Stock that may be subject
to
incentive stock options granted to an individual in a given year is 500,000.
No
option which is intended to qualify as an incentive stock option shall be
granted under the 2005 Equity Incentive Plan to any person who, at the time
of
such grant, is not an employee of the Company or a subsidiary thereof.
No
option
which is intended to qualify as an incentive stock option may be granted under
the 2005 Equity Incentive Plan to any employee who, at the time the option
is
granted, owns shares possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company, unless the
exercise price under such option is at least 110% of the Fair Market Value
of a
share on the date such option is granted and the duration of such option is
not
more than five (5) years.
The
duration of any option granted under the 2005 Equity Incentive Plan shall be
fixed by the Compensation Committee at the time of grant; provided, however,
that no option shall remain in effect for a period of more than ten
(10) years from the date upon which it is granted. The vesting schedule
of
any option shall be fixed by the Compensation Committee at the time of grant.
Notwithstanding the foregoing, all or any part of any remaining unexercised
options granted to a participant under the 2005 Equity Incentive Plan may
generally be exercised under the following occasions: (a) upon the holder's
retirement from the Company on or after his or her 65th birthday; (b) upon
the disability or death of the holder; (c) upon a change in control
of the
Company as defined in the 2005 Equity Incentive Plan; or (d) upon special
circumstances or events which, in the opinion of the Compensation Committee,
merit special consideration.
Stock
Appreciation Rights
A
stock
appreciation right entitles the participant, upon settlement, to receive a
number of shares of Common Stock equal to (a) the product obtained by
multiplying (1) the excess of the fair market value of a share of our
Common Stock on the date of settlement over the base price of the right, by
(2) the applicable number of shares of Common Stock subject to the right
that has been exercised, divided by (b) the fair market value of a share
of
our Common Stock on the date of settlement. Stock appreciation rights may be
granted on a stand-alone basis or in tandem with a related stock option. The
base price may not be less than the fair market value of a share of Common
Stock
on the date of grant. Under the 2005 Equity Incentive Plan, stock appreciation
rights are generally subject to the same vesting, exercise and duration
conditions set forth above for stock options.
The
Compensation Committee, in its sole discretion, may limit the amount payable
upon the exercise of a stock appreciation right. Any such limitation shall
be
determined as of the date of grant and shall be reflected in an agreement
between the participant and the Company.
Restricted
Stock Awards
A
restricted stock award represents shares of Common Stock that are issued subject
to restrictions on transfer and vesting requirements as determined by the
Compensation Committee. Vesting requirements may be based on the continued
service of the participant for a specified time period or on the attainment
of
specified business performance goals established by the Committee or both.
Subject to the transfer restrictions and vesting requirements of the award,
the
participant will have the same rights as one of the Company's stockholders,
including all voting and dividend rights, during the restriction period, unless
the Committee determines otherwise at the time of the grant. All restricted
stock awards shall be evidenced by an agreement between the participant and
the
Company.
As
set
forth in the 2005 Equity Incentive Plan, all restrictions to which a restricted
stock award is subject shall lapse (a) upon the holder's retirement
from
the Company on or after his or her 65th birthday; (b) upon the disability
or death of the holder; (c) upon a change in control of the Company
as
defined in the 2005 Equity Incentive Plan; or (d) upon special
circumstances or events which, in the opinion of the Compensation Committee,
merit special consideration.
Deferred
Stock Awards
A
deferred stock award entitles the participant to receive Common Stock at the
end
of a specified deferral period. The Compensation Committee shall have the sole
discretion to establish restrictions on a deferred stock award at the time
of
the grant, including the applicable deferral period. Other restrictions may
include continued service requirements, performance requirements, or both.
A
deferred stock award shall be evidenced by an agreement executed on behalf
of
the Company and the participant. All restrictions to which a deferred stock
award is subject shall lapse under the same circumstances set forth above under
Restricted
Stock Awards.
Performance
Awards
The
Compensation Committee shall have the authority to grant a participant a
performance award. The value of the performance award may be linked to the
market value, book value, net profits or other measure of the value of a share
of Common Stock, or other specific performance criteria determined by the
Compensation Committee. The terms and conditions of a performance award shall
be
determined by the Compensation Committee in its sole discretion at the time
of
the grant and as set forth in the applicable performance award agreement.
Grants
of Stock Appreciation Rights to Eligible Directors
Each
eligible non-employee director of the Company who is initially elected to the
Board of Directors of the Company shall be granted 15,000 stock appreciation
rights on the date of his or her initial election to the Board of Directors.
On
the last day of each fiscal year of the Company, each eligible non-employee
director shall be granted an additional 6,000 stock appreciation rights. The
stock appreciation rights granted on the last day of the fiscal year shall
be
prorated for directors who are initially elected during the given fiscal year.
Termination
of Employment or Service
Unless
otherwise provided in a participant's employment and/or other agreement,
unexercised options and/or rights granted under the 2005 Equity Incentive Plan
will terminate immediately upon the cessation or termination of the
participant's employment or service with the Company. However, upon a cessation
or termination of employment of service without cause, the participant shall
have ninety (90) days within which to exercise any unexercised options
and/or rights that the participant could have exercised on the day on which
such
employment or service was terminated, provided that such exercise be
accomplished prior to the expiration of the term of the unexercised option
and/or right. Notwithstanding the foregoing, if the cessation of employment
or
service is due to disability or death, the holder or the representative of
the
participant's estate shall have, for at least a period of one (1) year,
the
privilege of exercising options and/or rights which are vested but unexercised
at the time of disability or death.
Unless
otherwise provided in a participant's employment agreement, the Compensation
Committee shall determine in its sole discretion at the time of grant of a
restricted stock award, deferred stock award and/or performance award, the
affect, if any, that a termination of a participant's employment or service
with
the Company shall have on the award. Any and all terms and conditions regarding
termination, if any, shall be set forth in the applicable award agreement.
Notwithstanding the foregoing, a participant's interest in a restricted stock
award, deferred stock award and/or performance award shall terminate immediately
upon termination for cause.
Limited
Transferability
All
stock
options, stock appreciation rights, restricted stock awards, deferred stock
awards, performance awards and all other rights under the 2005 Equity Incentive
Plan are non-transferable and non-assignable by the holder thereof except to
the
extent that the estate of a deceased holder of an award or right may be
permitted to exercise them. Options and rights may be exercised or surrendered
during the participant's lifetime only by the participant.
Adjustments
for Corporate Changes
In
the
event of recapitalizations, reclassifications or other specified events
affecting the Company or shares of Common Stock, appropriate and equitable
adjustments may be made to the number and kind of shares of Common Stock
available for grant, the maximum limitations under the 2005 Equity Incentive
Plan and the number and kind of shares of Common Stock or other rights and
prices under outstanding incentive awards.
Term,
Modifications and Amendments
The
2005
Equity Incentive Plan will have a term of ten years expiring on April 18,
2015, unless terminated earlier by the Board of Directors. The Board of
Directors may at any time and from time to time and in any respect amend or
modify the Plan. The Board of Directors may seek the approval of any amendment
or modification by the Company's stockholders to the extent necessary or
advisable in its sole discretion for purposes of compliance with
Section 162(m) or Section 422 of the Code, the listing requirements
of
the NASDAQ National Market or another exchange or securities market or for
any
other purpose. No amendment or modification of the 2005 Equity Incentive Plan
may adversely affect any outstanding incentive award without the consent of
the
participant or the permitted transferee of the award. Any material amendment
by
the Board of Directors or Compensation Committee, including an amendment which
would increase the number of shares issuable under the 2005 Equity Incentive
Plan or to any individual or change the class of participants, will require
the
approval of the stockholders of the Company within one (1) year of such
amendment.
Issuance
of Shares
The
Company may postpone the issuance and delivery of shares granted under the
2005
Equity Incentive Plan until (a) the admission of such shares to listing
on
the applicable principle securities exchange or securities trading market,
and
(b) the completion of registration or other qualification of the shares
under any State or Federal law, rule or regulation as the Company may deem
advisable. Holders of incentive awards granted under the 2005 Equity Incentive
Plan shall make representations and furnish information, which in the opinion
of
the Company's counsel, is appropriate to permit the Company to issue shares
in
compliance with the provisions of the Securities Act of 1933, and the rules
and
regulations promulgated thereunder, or any comparable act.
Income
Tax Withholding
If
the
Company is required to withhold any amounts by reason of Federal, State, local
or foreign tax rules or regulations with respect to an incentive award granted
under the 2005 Equity Incentive Plan, the Company shall be entitled to take
appropriate action in order to ensure compliance with such withholding
requirements. In order to facilitate payment by the holder of an incentive
award
of his or her withholding obligations, the Company may, at its election,
(a) deduct the appropriate withholding amount from any cash payment
due to
the holder, (b) require the holder to pay to the Company the appropriate
withholding amount in cash, (c) permit the holder to elect to have the
Company withhold a portion of the shares otherwise to be delivered with respect
to the incentive award, the fair market value of which is equal to the minimum
statutory withholding amount, or (d) permit the holder to elect to deliver
to the Company shares already owned by the holder for at least six
(6) months, the fair market value of which is equal to the appropriate
withholding amount.
Exhibit
10.2
AMENDED
AND RESTATED
2005
EQUITY INCENTIVE PLAN
OF
THE
CHILDREN’S PLACE RETAIL STORES, INC.
1. Purpose.
The
purpose of this Equity Incentive Plan is to advance the interests of the
Corporation by encouraging and enabling the acquisition of a larger personal
proprietary interest in the Corporation by key employees and directors of the
Corporation and its Subsidiaries upon whose judgment and keen interest the
Corporation is largely dependent for the successful conduct of its operations
and by providing such key employees and directors with incentives to put forth
maximum efforts for the success of the Corporation’s business. It is anticipated
that the acquisition of such proprietary interests in the Corporation and such
incentives will stimulate the efforts of such key employees and directors on
behalf of the Corporation and its Subsidiaries and strengthen their desire
to
remain with the Corporation and its Subsidiaries. It is also expected that
such
incentives and the opportunity to acquire such a proprietary interest will
enable the Corporation and its Subsidiaries to attract desirable employees
and
directors.
2. Definitions.
When
used in this Plan, unless the context otherwise requires:
(a) “Alternative
Rights” shall have the meaning as set forth in Section 9 hereof.
(b) “Board
of
Directors” shall mean the Board of Directors of the Corporation, as constituted
at any time.
(c) Except
as
otherwise provided in the holder’s employment agreement (if any) with the
Corporation or a Subsidiary, “Cause” shall mean, with respect to the holder of
an Incentive Award, (i) a breach by the holder of any of the material provisions
of any employment agreement between the holder and the Corporation or a
Subsidiary that the holder fails to remedy or cease within ten (10) days after
notice thereof to the holder; (ii) any conduct, action or behavior by the holder
that has or may reasonably be expected to have a material adverse effect on
the
reputation of the Corporation or its Subsidiaries or on the holder’s reputation
or that is not befitting of an executive officer, employee or director of the
Corporation or a Subsidiary; (iii) the commission by the holder of an act
involving moral turpitude or dishonesty, whether or not in connection with
the
holder’s employment by, or service as a director of, the Corporation or a
Subsidiary; (iv) the holder shall have committed any act of fraud or
embezzlement against the Corporation or a Subsidiary or engaged in any other
willful misconduct in connection with his duties; or (v) the holder shall have
been convicted of a felony (other than a felony relating to motor vehicle laws).
Notwithstanding the foregoing, no Cause shall be deemed to exist with respect
to
the holder’s acts described in (ii) above unless the Corporation shall have
given prior written notice to the holder specifying the Cause with reasonable
particularity and, within 30 days after such notice, the holder shall not have
cured or eliminated the problem or thing giving rise to such Cause.
(d) “Chairman
of the Board” shall mean the person who at the time shall be Chairman of the
Board of Directors.
(e) “Change
in Control” shall mean any of the following events: (i) the sale to any
purchaser of (A) all or substantially all of the assets of the Corporation
or
(B) capital stock representing more than 50% of the stock of the
Corporation entitled to vote generally in the election of directors of the
Corporation; (ii) the merger or consolidation of the Corporation with another
corporation if, immediately after such merger or consolidation, less than a
majority of the combined voting power of the then outstanding securities
entitled to vote generally in the election of directors of the surviving or
resulting corporation in such merger or consolidation is held, directly or
indirectly, in the aggregate by the holders immediately prior to such
transaction of the outstanding securities of the Corporation; (iii) the filing
of a report on Schedule 13D or Schedule 14D-1 (or any successor schedule, form,
or report or item therein), each promulgated pursuant to the Exchange Act,
disclosing that any person (as the term “person” is used in Section 13(d)(3) or
Section 14(d)(2) of the Exchange Act) has become the beneficial owner (as the
term “beneficial owner” is defined under Rule 13d-3 or any successor rule or
regulation promulgated under the Exchange Act) of securities representing 50%
or
more of the combined voting power of the voting stock of the Corporation; or
(iv) the filing by the Corporation of a report or proxy statement with the
Securities and Exchange Commission pursuant to the Exchange Act disclosing
in
response to Form 8-K or Schedule 14A (or any successor schedule, form, or report
or item therein) that a change in control of the Corporation has occurred or
will occur in the future pursuant to any then existing contract or transaction.
Notwithstanding the foregoing, a “Change in Control” shall not be deemed to
occur as a result of an event described above if a majority of the individuals
who are members of the Board of Directors prior to such event specifically
determines that a Change in Control should not be deemed to have
occurred.
(f) “Code”
shall mean the Internal Revenue Code of 1986, as amended.
(g) “Committee”
shall mean the Committee hereinafter described in Section 3 hereof.
(h) “Corporation”
shall mean The Children’s Place Retail Stores, Inc., a Delaware
corporation.
(i) “Deferred
Stock Award” shall mean an Incentive Award granted in accordance with Section 15
hereof.
(j) “Disability”
shall mean: (i) with respect to the holder of an Option that is not an incentive
stock option, the holder’s inability, as a result of physical or mental
incapacity or infirmity, to perform the duties of his employment for (a) a
continuous period of at least 120 days, or (b) periods aggregating at least
180
days during any period of 12 consecutive months; or (ii) with respect to the
holder of an Option that is an incentive stock option, and when used in
connection with such incentive stock option following such holder’s termination
of employment, a “disability” within the meaning of Section 22(e)(3) of the
Code.
(k) “Eligible
Director” shall mean a director of the Corporation who is not also an employee
of the Corporation or a Subsidiary.
(l) “Eligible
Persons” shall mean those persons described in Section 4 who are potential
recipients of Incentive Awards.
(m) “Exchange
Act” shall mean the Securities Exchange Act of 1934, as amended.
(n) “Fair
Market Value” on a specified date shall mean the average of the highest and
lowest selling price at which a Share is traded on the stock exchange, if any,
on which Shares are primarily traded or, if the Shares are not then traded
on a
stock exchange, the average of the closing representative bid and asked price
of
a Share as reported by the principal securities exchange or securities trading
market on which the Shares are listed or approved for trading, but if no Shares
were traded on such date, then on the last previous date on which a Share was
so
traded, or, if none of the above are applicable, the value of a Share as
established by the Board of Directors or the Committee for such date using
any
reasonable method of valuation.
(o) “Incentive
Award” shall mean an Option, Right, Restricted Stock Award, Deferred Stock Award
or Performance Award granted pursuant to this Plan.
(p) “Options”
shall mean the stock options granted pursuant to this Plan.
(q) “Performance
Award” shall mean an Incentive Award granted in accordance with Section 16
hereof.
(r) “Plan”
shall mean this 2005 Equity Incentive Plan of The Children’s Place Retail
Stores, Inc., as adopted by the Board of Directors on April 18, 2005, as amended
and restated on June 23, 2005, as such Plan from time to time may be further
amended.
(s) “President”
shall mean the person who at the time shall be the President of the
Corporation.
(t) “Restricted
Shares” shall mean the Shares issued as a result of a Restricted Stock
Award.
(u) “Restricted
Stock Award” shall mean a grant of Restricted Shares or of the right to purchase
Restricted Shares pursuant to Section 13 hereof.
(v) “Rights”
shall mean Alternative Rights and/or Stock Appreciation Rights granted pursuant
to the Plan.
(w) “Share”
shall mean a share of common stock, par value $.10 per share, of the
Corporation.
(x) “Spread”
shall mean the excess of the Fair Market Value of a Share on the date of
exercise of a Right over the exercise price per Share of such Right.
(y) “Stock
Appreciation Rights” shall have the meaning as set forth in Section 9
hereof.
(z) “Subsidiary”
shall mean any corporation, limited liability corporation, partnership or
limited partnership, 50% or more of whose stock having general voting power,
membership interests, or capital or profits interests, as the case may be,
is
owned by the Corporation, or by another Subsidiary as herein defined, of the
Corporation; provided, however, that for purposes of an Option that is an
incentive stock option to be granted to an employee of a Subsidiary, the term
“Subsidiary” shall mean a subsidiary corporation as defined in Section 424(f) of
the Code.
3. Administration.
The
Plan shall be administered by the Compensation Committee of the Board of
Directors (the “Committee”), which shall consist of two or more directors of the
Corporation, each of whom shall be a “Non-Employee Director” within the meaning
of Rule 16b-3 under the Exchange Act and an “outside director” within the
meaning of Section 162(m) of the Code. Any member of the Committee may resign
by
giving written notice thereof to the Board of Directors, and any member of
the
Committee may be removed at any time, with or without Cause, by the Board of
Directors. If, for any reason, a member of the Committee shall cease to serve,
the vacancy shall be filled by the Board of Directors.
The
Committee shall have full power and authority to administer and interpret the
Plan. Determinations of the Committee as to any question which may arise with
respect to the interpretation of the provisions of the Plan and Incentive Awards
shall be final. The Committee may authorize and establish such rules,
regulations and revisions thereof not inconsistent with the provisions of the
Plan, as it may deem advisable to make the Plan and Incentive Awards effective
or provide for their administration, and may take such other action with regard
to the Plan and Incentive Awards as it shall deem desirable to effectuate their
purpose.
4. Participants.
The
class of persons who are potential recipients of Incentive Awards granted under
this Plan shall consist of key employees and directors of the Corporation or
a
Subsidiary, as determined by the Committee in its sole discretion. The parties
to whom Incentive Awards are granted under this Plan, and the number of Shares
subject to each such Incentive Award, shall be determined by the Committee
in
its sole discretion, subject, however, to the terms and conditions of this
Plan.
Each Eligible Director shall only be eligible to receive Options in accordance
with Section 7 hereof.
5. Shares.
Subject
to the provisions of Section 20 hereof, the Committee may grant Incentive Awards
with respect to an aggregate of up to 2 million Shares, all of which Shares
may
be either Shares held in treasury or authorized but unissued Shares, provided,
however, that the foregoing limitation shall not apply to Alternative Rights
but
shall apply to any Option with respect to which the Alternative Rights are
granted. The maximum number of Shares which may be the subject of Options and
Rights granted during any calendar year to any individual shall not exceed
500,000 Shares. If the Shares that would be issued or transferred pursuant
to
any Incentive Awards are not issued or transferred and cease to be issuable
or
transferable for any reason, or if Restricted Shares which are subject to a
Restricted Stock Award are forfeited, the number of Shares subject to such
Incentive Award will no longer be charged against the limitation provided for
herein and may again be made subject to Incentive Awards; provided, however,
that Shares as to which an Option has been surrendered in connection with the
exercise of an Alternative Right shall not again be available for the grant
of
any further Incentive Awards. If any portion of a Stock Appreciation Right
expires or is forfeited for any reason prior to being exercised, the number
of
Shares subject to the unexercised portion of such Stock Appreciation Right
will
no longer be charged against the limitation provided for herein and may again
be
made subject to Incentive Awards. Notwithstanding the preceding, with respect
to
any Option and/or Rights granted to any individual who is a “covered employee”
within the meaning of Section 162(m) of the Code that is canceled, the number
of
shares subject to such Option and/or Rights shall continue to count against
the
maximum number of shares which may be the subject of Options and Rights granted
to such individual during the applicable calendar year. For purposes of the
preceding sentence, if, after grant, the exercise price of an Option and/or
the
base amount of any Rights is reduced, such reduction shall be treated as a
cancellation of such Option and/or Rights and the grant of a new Option and/or
Rights (if any), and both the cancellation of the Option and/or Rights and
the
new Option and/or Rights shall reduce the maximum number of Shares for which
Options and Rights may be granted to the holder of such Option and/or Rights
during the applicable calendar year. In the event Shares are withheld by the
Corporation to satisfy income or other tax withholding obligations with respect
to any Incentive Award, the Shares withheld for this purpose shall reduce the
maximum number of Shares for which Options and/or Rights may be granted to
the
holder of such Option and/or Rights and shall be charged against the limitations
in this Section 5.
6. Grant
of Options.
The
number of Options to be granted to any Eligible Person shall be determined
by
the Committee in its sole discretion.
At
the
time an Option is granted, the Committee may, in its sole discretion, designate
whether such Option (a) is to be considered as an incentive stock option within
the meaning of Section 422 of the Code, or (b) is not to be treated as an
incentive stock option for purposes of this Plan and the Code. Options with
respect to which no designation is made by the Committee shall be deemed to
be
incentive stock options to the extent that the $100,000 limitation described
in
the succeeding paragraph is satisfied. No Option which is intended to qualify
as
an incentive stock option shall be granted under this Plan to any person who,
at
the time of such grant, is not an employee of the Corporation or a
Subsidiary.
Notwithstanding
any other provision of this Plan to the contrary, to the extent that the
aggregate Fair Market Value (determined as of the date an Option is granted)
of
the Shares with respect to which Options which are designated as incentive
stock
options, and any other incentive stock options, granted to an employee (under
this Plan, or any other incentive stock option plan maintained by the
Corporation or any Subsidiary that meets the requirements of Section 422 of
the
Code) first become exercisable in any calendar year exceeds $100,000, such
Options shall be treated as Options which are not incentive stock options.
This
paragraph shall be applied by taking Options into account in the order in which
they are granted.
Nothing
herein contained shall be construed to prohibit the issuance of Options at
different times to the same person.
An
Option
agreement signed by the Chairman of the Board or the President or a Vice
President of the Corporation, attested by the Treasurer or an Assistant
Treasurer, or Secretary or an Assistant Secretary of the Corporation and bearing
the seal of the Corporation affixed thereto, shall be issued to each person
to
whom an Option is granted. The Option agreement shall be in the form as may
be
determined by the Committee from time to time, and need not be identical with
respect to each grantee.
7. Grants
of Options to Eligible Directors.
Notwithstanding any other provision of this Plan to the contrary, Options which
are not incentive stock options shall be granted to each Eligible Director
in
accordance with this Section 7. Each Eligible Director who is initially elected
to the Board of Directors by the Corporation shall be granted an Option on
the
date of his initial election to the Board of Directors to purchase 15,000 Shares
at a purchase price per Share equal to the Fair Market Value of a Share on
the
date of grant of such Option. On the last day of each fiscal year of the
Corporation, each member of the Board of Directors who is an Eligible Director
on such date shall be granted an additional Option to purchase 6,000 Shares
at a
purchase price per Share equal to the Fair Market Value of a Share on the date
of grant of such Option; provided, however, that with respect to any such
Eligible Director who is initially elected to the Board of Directors during
such
a fiscal year, the Option granted to such Eligible Director on the last day
of
the fiscal year during which he was initially elected to the Board of Directors
shall be for a number of Shares equal to 6,000 multiplied by a fraction, the
numerator of which shall be the number of days during the fiscal year during
which such Eligible Director was a member of the Board of Directors and the
denominator of which shall be 365, which number of Shares shall be rounded
up to
the next whole number of Shares.
8. Option
Purchase Price.
The
price per Share of the Shares to be purchased pursuant to the exercise of any
Option shall be fixed by the Committee at the time of grant; provided, however,
that in no event shall such purchase price be less than 100% of the Fair Market
Value of a Share on the date of grant of the Option.
9. Grant
of Rights.
The
Committee, in its sole discretion, shall have the authority to grant Rights
to
any Eligible Person, which may be granted separately, or in connection with
an
Option at the time of the grant of an Option. Any Rights granted in connection
with an Option (“Alternative Rights”) shall be granted with respect to the same
number of Shares as are covered by the Option, subject to adjustment pursuant
to
the provisions of Section 20 hereof, and may be exercised as an alternative
to the exercise of the related Option.
Alternative
Rights granted in connection with an Option shall entitle the holder thereof
to
receive Shares from the Corporation, determined as hereinafter provided, only
if
and to the extent that the related Option is exercisable, by surrendering the
Option with respect to the number of Shares as to which such Rights are then
exercised. Such Option, to the extent surrendered, shall be deemed exercised
for
purposes of the limitations under Section 5. Upon any exercise of Alternative
Rights, the holder thereof shall be entitled to receive a number of Shares
(rounded down to the next whole number of Shares) equal to (i) the product
obtained by multiplying (A) the Spread by (B) the number of Shares in respect
of
which the Rights shall have then been so exercised, divided by (ii) the Fair
Market Value of a Share on the date of exercise.
Upon
the
exercise of Rights granted without relationship to an Option (“Stock
Appreciation Rights”), the holder thereof shall be entitled to receive a number
of Shares (rounded down to the next whole number of Shares) equal to (i) the
product obtained by multiplying (A) the Spread by (B) the number of Shares
in
respect of which the Stock Appreciation Rights shall have then been so
exercised, divided by (ii) the Fair Market Value of a Share on the date of
exercise.
Notwithstanding
anything contained herein, the Committee, in its sole discretion, may limit
the
amount payable upon the exercise of Rights. Any such limitation shall be
determined as of the date of grant and noted in the Rights agreement evidencing
the grant of the Rights.
Rights
shall be evidenced by an agreement executed on behalf of the Corporation and
by
the Eligible Person to whom the Rights are granted. Each Rights agreement shall
set forth the number of Shares subject to the Rights being granted, the exercise
price per Share thereof, and such other terms and conditions as determined
by
the Committee at the time of grant; provided, however, that (i) the exercise
price per Share of Alternative Rights shall be equal to the purchase price
per
Share of the Option related thereto, and (ii) in no event shall the exercise
price per Share of any Rights be less than 100% of the Fair Market Value of
a
Share on the date of grant of such Rights. The form of agreement shall be as
determined from time to time by the Committee, and need not be identical with
respect to each grantee.
10. Duration
of Options and Rights.
The
duration of any Option or Right granted under this Plan shall be fixed by the
Committee at the time of grant; provided, however, that no Option or Right
shall
remain in effect for a period of more than ten (10) years from the date upon
which it is granted.
The
duration of any Alternative Rights granted in connection with any Option shall
be coterminous with the duration of the related Option.
11. Ten
Percent Shareholders.
Notwithstanding any other provision of this Plan to the contrary, no Option
which is intended to qualify as an incentive stock option may be granted under
this Plan to any employee who, at the time the Option is granted, owns shares
possessing more than ten percent (10%) of the total combined voting power of
all
classes of stock of the Corporation, unless the exercise price under such Option
is at least 110% of the Fair Market Value of a Share on the date such Option
is
granted and the duration of such Option is no more than five (5)
years.
12. Exercise
of Options and Rights.
Except
as otherwise provided herein or in the holder’s employment agreement (if any)
with the Corporation or a Subsidiary, Options and Rights shall become vested
and
exercisable by the holder as determined by the Committee in its sole discretion
at the time of grant and as set forth in the applicable Option and/or Rights
agreement (such vesting may be based on continued employment or service, or
upon
the achievement of pre-established corporate or individual performance
objectives, or otherwise, including any combination thereof but in no event
shall the vesting period be less than three (3) years commencing on the date
of
the grant if based on continued employment or service or less than one (1)
year
commencing on the date of the grant if based on achievement of pre-established
corporate or individual performance objectives, or otherwise, including any
combination thereof ).
Notwithstanding
the foregoing, all or any part of any remaining unexercised Options and/or
Rights granted to any Eligible Person may be exercised, subject to Section
19
hereof, in the following circumstances (but in no event, other than the holder’s
death, during the six (6) month period commencing on the date of grant, and
in
no event prior to approval of the Plan by shareholders of the Corporation as
provided in Section 26 hereof or after the term of the Option or Rights has
expired): (a) upon the holder’s retirement from the Corporation and all
Subsidiaries on or after his 65th birthday; (b) upon the Disability or death
of
the holder; (c) upon a Change of Control while the holder is in the employ
or
service of the Corporation; or (d) upon the occurrence of such special
circumstance or event as in the opinion of the Committee merits special
consideration.
An
Option
shall be exercised by the delivery of a written notice duly signed by the holder
thereof to such effect, together with the Option agreement (and, in the case
of
the exercise of an Option with respect to which Alternative Rights were granted
in relation thereto, the related Rights agreement) and the full purchase price
of the Shares purchased pursuant to the exercise of the Option, to the Chairman
of the Board of Directors or an officer of the Corporation appointed by the
Chairman of the Board of Directors for the purpose of receiving the same.
Payment of the full purchase price shall be made as follows: in cash or by
check
payable to the order of the Corporation; by delivery to the Corporation of
Shares which shall be valued at their Fair Market Value on the date of exercise
of the Option (provided, that a holder may not use any Shares to pay the
purchase price unless the holder has beneficially owned such Shares for at
least
six (6) months); or by such other methods as the Committee may permit from
time
to time.
Within
a
reasonable time after the exercise of an Option, the Corporation shall cause
to
be delivered to the person entitled thereto, a certificate for the Shares
purchased pursuant to the exercise of the Option. If the Option shall have
been
exercised with respect to less than all of the Shares subject to the Option,
the
Corporation shall also cause to be delivered to the person entitled thereto
a
new Option agreement in replacement of the agreement surrendered at the time
of
the exercise of the Option, indicating the number of Shares with respect to
which the Option remains available for exercise, or the original Option
agreement shall be endorsed to give effect to the partial exercise thereof.
The
Committee may permit deemed or constructive transfers of Shares in lieu of
actual transfer and physical delivery of certificates.
Upon
the
exercise of an Option with respect to which Alternative Rights were also granted
in relation thereto, the number of Shares subject to exercise under the related
Alternative Rights shall also be reduced by the number of Shares for which
the
related Option was exercised. If the Option shall have been exercised with
respect to less than all of the Shares subject thereto, the Corporation shall
also cause to be delivered to the person entitled thereto a new Option agreement
and a new Rights agreement in replacement of the Option and Rights agreements
surrendered at the time of the partial exercise of the Option, with respect
to
the difference between the number of Shares under the Option agreement (and
the
Rights agreement) immediately before the exercise of the Option and the number
of Shares with respect to which the Option was so exercised, or the original
Option agreement and the original Rights agreement shall be endorsed to give
effect to the partial exercise (and surrender) thereof.
Alternative
Rights or Stock Appreciation Rights shall be exercised by the delivery of a
duly
signed notice in writing to such effect, together with the Rights agreement.
Holders of Alternative Rights shall also surrender the related Option agreement.
Within a reasonable time thereafter, the Corporation shall cause to be delivered
to the person entitled thereto, a certificate for the number of Shares
determined in accordance with Section 9 hereof. Upon the exercise of
Alternative Rights, the number of Shares subject to exercise under the related
Option or portion thereof shall be reduced by the number of Shares represented
by the Option or portion thereof surrendered. If the Rights shall have been
exercised with respect to less than all of the Shares subject thereto, the
Corporation shall also cause to be delivered to the person entitled thereto
a
Rights agreement (and an Option agreement, in the case of Alternative Rights)
with respect to the difference between the number of Shares under the Rights
agreement (and related Option agreement, if any) surrendered at the time of
the
exercise of the Rights and the number of Shares with respect to which the Rights
were so exercised, or the original Rights agreement (and related Option
agreement, if any) shall be endorsed to give effect to the partial exercise
(and
surrender) thereof.
Notwithstanding
any other provision of the Plan or of any Option or Rights agreement, no Option
or Rights granted pursuant to the Plan may be exercised at any time when the
Option or Rights or the granting or exercise thereof violates any law or
governmental order or regulation.
13. Terms
and Conditions of Restricted Stock Awards.
The
Committee shall have the authority to grant to any Eligible Person a Restricted
Stock Award, subject to the following terms and conditions:
(a) All
Restricted Shares granted to or purchased by an Eligible Person pursuant to
the
Plan shall be subject to the following conditions:
(1) except
as
otherwise provided in the holder’s employment agreement (if any) with the
Corporation or a Subsidiary, the Restricted Shares shall be subject to such
transfer restrictions and risk of forfeiture as the Committee shall determine
at
the time the Restricted Stock Award is granted, until such specific conditions
are met (which conditions may be based on continued employment or service,
or
achievement of pre-established corporate or individual performance objectives,
or otherwise, including any combination thereof), and such restrictions shall
lapse, and the Restricted Shares subject to a Restricted Stock Award shall
vest,
as determined by the Committee in its sole discretion at the time of grant
and
as set forth in the applicable Restricted Stock Award agreement but in no event
shall the vesting period be less than three (3) years commencing on the date
of
the grant if based on continued employment or service or less than one (1)
year
commencing on the date of the grant if based on achievement of pre-established
corporate or individual performance objectives, or otherwise, including any
combination thereof;
(2) the
Restricted Shares may not be sold, transferred, or otherwise alienated or
hypothecated until the restrictions are satisfied, removed or
expire;
(3) each
certificate representing Restricted Shares issued pursuant to a Restricted
Stock
Award under this Plan shall bear a legend making appropriate reference to the
restrictions imposed;
(4) the
Committee may impose such other conditions as it may deem advisable on any
Restricted Shares granted to or purchased by an Eligible Person pursuant to
a
Restricted Stock Award under this Plan, including, without limitation,
restrictions under the requirements of any stock exchange upon which such Shares
or shares of the same class are then listed, and under any securities law
applicable to such Shares; and
(5) Notwithstanding
the foregoing, all restrictions to which a Restricted Stock Award is subject
shall lapse, in the following circumstances: (a) upon the holder’s retirement
from the Corporation and all Subsidiaries on or after his 65th birthday; (b)
upon the Disability or death of the holder; (c) upon a Change of Control while
the holder is in the employ or service of the Corporation; or (d) upon the
occurrence of such special circumstance or event as in the opinion of the
Committee merits special consideration.
(b) Prior
to
the satisfaction, expiration or lapse of all of the restrictions and conditions
imposed upon Restricted Shares, a stock certificate or certificates representing
such Restricted Shares shall be registered in the holder’s name but shall be
retained by the Corporation for the holder’s account. The holder shall have the
right to vote such Restricted Shares and shall have all other rights and
privileges of a beneficial and record owner with respect thereto, including,
without limitation, the right to receive dividends, distributions and
adjustments with respect thereto; provided, however, that such dividends,
distributions and adjustments shall be retained by the Corporation for the
holder’s account and for delivery to the holder, together with the stock
certificate or certificates representing such Restricted Shares, as and when
said restrictions and conditions shall have been satisfied, expired or lapsed.
(c) A
Restricted Stock Award shall be evidenced by an agreement executed on behalf
of
the Corporation and by the Eligible Person to whom the Restricted Stock Award
is
granted. The form of Restricted Stock Award agreement shall be determined from
time to time by the Committee, and need not be identical with respect to each
grantee.
14. Restricted
Stock Purchase Price.
Except
as otherwise provided in the holder’s employment agreement (if any) with the
Corporation or a Subsidiary, the purchase price per Share for Restricted Shares
to be purchased pursuant to Restricted Stock Awards shall be fixed by the
Committee at the time of the grant of the Restricted Stock Award and shall
be
set forth in the applicable Restricted Stock Award agreement; provided, however,
that such purchase price shall not be less than the par value of such Shares.
Payment of such purchase price shall be made in cash or by check payable to
the
order of the Corporation, or by such other method as the Committee may
permit.
15. Deferred
Stock Awards.
The
Committee shall have the authority to grant to any Eligible Person a Deferred
Stock Award, subject to the following terms and conditions:
(a) Delivery
of, and the issuance of certificates representing, Shares issuable pursuant
to a
Deferred Stock Award shall occur upon expiration of the deferral period
specified by the Committee;
(b) Deferred
Stock Awards shall be subject to such restrictions as the Committee may impose,
in its sole discretion at the time of grant and as set forth in the applicable
Deferred Stock Award agreement (such restrictions may lapse based on continued
employment or service, upon the achievement of pre-established corporate or
individual performance objectives, at the expiration of a specified deferral
period or at earlier specified times, separately or in combination, in
installments, or otherwise, including any combination thereof but in no event
shall the restriction period be less than three (3) years if based on continued
employment or service or less than one (1) year if based upon the achievement
of
pre-established corporate or individual performance objectives, at the
expiration of a specified deferral period or at earlier times, separately or
in
combination, in installments, or otherwise, including any combination thereof);
(c) Notwithstanding
the foregoing, all restrictions to which a Deferred Stock Award is subject
shall
lapse, in the following circumstances: (a) upon the holder’s retirement from the
Corporation and all Subsidiaries on or after his 65th birthday; (b) upon the
Disability or death of the holder; (c) upon a Change of Control while the holder
is in the employ or service of the Corporation; or (d) upon the occurrence
of
such special circumstance or event as in the opinion of the Committee merits
special consideration; and
(d) A
Deferred Stock Award shall be evidenced by an agreement executed on behalf
of
the Corporation and by the Eligible Person to whom the Deferred Stock Award
is
granted. The form of Deferred Stock Award agreement shall be determined from
time to time by the Committee, and need not be identical with respect to each
grantee.
16. Performance
Awards.
The
Committee shall have the authority to grant to any Eligible Person a Performance
Award, subject to such terms and conditions as shall be determined by the
Committee in its sole discretion at the time of grant and as set forth in the
applicable Performance Award agreement. The value of a Performance Award may
be
linked to the market value, book value, net profits or other measure of the
value of a Share, or other specific performance criteria determined appropriate
by the Committee, in each case on a specified date or dates or over any period
or periods determined by the Committee, or may be based upon the appreciation
in
the market value, book value, net profits or other measure of the value of
a
specified number of Shares over a fixed period or periods determined by the
Committee; provided, however, that the dates or periods described herein shall
not be prior to or less than one (1) year following the date of the grant.
In
making such determinations, the Committee shall consider (among such other
factors as it deems relevant in light of the specific type of award) the
contributions, responsibilities and other compensation of the particular
Eligible Person. A Performance Award shall be evidenced by an agreement executed
on behalf of the Corporation and by the Eligible Person to whom the Performance
Award is granted. The form of Performance Award agreement shall be determined
from time to time by the Committee, and need not be identical with respect
to
each grantee.
17. Consideration
for Incentive Awards.
The
Corporation shall obtain such consideration for the grant of an Incentive Award
as the Committee in its discretion may determine.
18. Restrictions
on Transferability of Incentive Awards.
Incentive Awards and all other rights thereunder shall be non-transferable
and
non-assignable by the holder thereof except to the extent that the estate of
a
deceased holder of an Incentive Award may be permitted to exercise them. Options
and Rights may be exercised or surrendered during the holder’s lifetime only by
the holder thereof.
19. Termination
of Employment or Service.
(a) Except
as
otherwise provided
herein, in the holder’s employment agreement (if any) with the Corporation or a
Subsidiary, or in the applicable Option and/or Rights agreement,
all or
any part of any Option and/or Rights, to the extent unexercised, shall terminate
immediately upon the cessation or termination for any reason of the holder’s
employment by, or service as a director of, the Corporation or any Subsidiary,
provided that (except as otherwise provided herein, in the holder’s employment
agreement (if any) with the Corporation or a Subsidiary, or in the applicable
Option and/or Rights agreement) the holder shall have ninety (90) days following
the cessation of the holder’s employment or service with the Corporation or its
Subsidiaries, and no longer, within which to exercise any unexercised Option
and/or Rights that such holder could have exercised on the day on which such
employment or service terminated; and provided, further, that such exercise
must
be accomplished prior to the expiration of the term of such Option and/or
Rights. Notwithstanding the foregoing, if the cessation of employment or service
is due to Disability or to death, the holder or the representative of the Estate
or the heirs of a deceased holder shall have the privilege of exercising the
Options and/or Rights which are vested but unexercised at the time of such
Disability or death for a period of time that is no less than one (1) year
from
the date of the holder’s Disability or death. Notwithstanding the foregoing, and
except as otherwise provided in the holder’s employment agreement (if any) with
the Corporation or a Subsidiary, if the employment or service of any holder
of
an Option and/or Rights with the Corporation or a Subsidiary shall be terminated
for Cause, all unexercised Options and/or Rights of such holder shall terminate
immediately upon such termination of the holder’s employment or service with the
Corporation and all Subsidiaries, and a holder of Options and/or Rights whose
employment or service with the Corporation and all Subsidiaries is so
terminated, shall have no right after such termination to exercise any
unexercised Option and/or Rights he might have exercised prior to the
termination of his employment or service with the Corporation and all
Subsidiaries.
(b) Except
as
otherwise provided in the holder’s employment agreement (if any) with the
Corporation or a Subsidiary, the Committee shall determine in its sole
discretion at the time of grant of a Restricted Stock Award or a Deferred Stock
Award, the affect, if any, that a termination of the holder’s employment or
service with the Corporation or any Subsidiary shall have on such Incentive
Award, and such terms shall be set forth in the applicable Incentive Award
agreement. Notwithstanding the foregoing, and except as otherwise provided
in
the holder’s employment agreement (if any) with the Corporation or a Subsidiary,
if the employment or service of any holder of a Restricted Stock Award or a
Deferred Stock Award with the Corporation or a Subsidiary shall be terminated
for Cause, then (i) all Restricted Shares subject to restrictions at the time
his employment terminates (and any dividends, distributions and adjustments
retained by the Corporation with respect thereto), and (ii) any Shares
subject to a Deferred Stock Award with respect to which the deferral period
has
not expired, shall be forfeited and any consideration received therefor from
the
holder shall be returned to the holder.
(c) Except
as
otherwise provided in the holder’s employment agreement (if any) with the
Corporation or a Subsidiary, the Committee shall determine in its sole
discretion at the time of grant of a Performance Award, the affect, if any,
that
a termination of the holder’s employment or service with the Corporation or any
Subsidiary shall have on such Performance Award, and such terms shall be set
forth in the applicable Performance Award agreement. Notwithstanding the
foregoing, and except as otherwise provided in the holder’s employment agreement
(if any) with the Corporation or a Subsidiary, if the employment or service
of
any holder of a Performance Award with the Corporation or a Subsidiary shall
be
terminated for Cause, then such holder’s Performance Award shall terminate
immediately upon such termination of the holder’s employment or service with the
Corporation and all Subsidiaries.
20. Adjustment
Provision.
If,
prior to the complete exercise of any Option and/or Rights, or prior to the
satisfaction, expiration or lapse of all of the restrictions and conditions
imposed pursuant to a Restricted Stock Award or Deferred Stock Award, there
shall be declared and paid a stock dividend upon the Shares or if the Shares
shall be split up, converted, exchanged, reclassified, or in any way substituted
for:
(a) in
the
case of an Option, then the Option, to the extent that it has not been
exercised, shall entitle the holder thereof upon the future exercise of the
Option to such number and kind of securities or cash or other property subject
to the terms of the Option to which he would have been entitled had he actually
owned the Shares subject to the unexercised portion of the Option at the time
of
the occurrence of such stock dividend, split-up, conversion, exchange,
reclassification or substitution, and the aggregate purchase price upon the
future exercise of the Option shall be the same as if the originally optioned
Shares were being purchased thereunder; provided, however, that with respect
to
an Option that is an incentive stock option, such adjustment shall be made
in
accordance with Section 424 of the Code;
(b) in
the
case of an Alternative Right, then the number of Shares subject to the
Alternative Right, to the extent that it has not been exercised, shall be
adjusted to equal the number of Shares to which the holder would have been
entitled had he actually owned the Shares subject to the unexercised portion
of
the Alternative Right at the time of the occurrence of such stock dividend,
split-up, conversion, exchange, reclassification or substitution, and the
aggregate exercise price shall proportionately be adjusted so that the aggregate
exercise price of such Alternative Right immediately prior to such an event
shall be equal to the aggregate exercise price of the adjusted Alternative
Right
immediately following the occurrence of such event;
(c) in
the
case of a Stock Appreciation Right, then the number of Shares subject to the
Stock Appreciation Right, to the extent that it has not been exercised, shall
be
adjusted to equal the number of Shares to which the holder would have been
entitled had he actually owned the Shares subject to the unexercised portion
of
the Stock Appreciation Right at the time of the occurrence of such stock
dividend, split-up, conversion, exchange, reclassification or substitution,
and
the aggregate exercise price shall proportionately be adjusted so that the
aggregate exercise price of such Stock Appreciation Right immediately prior
to
such an event shall be equal to the aggregate exercise price of the adjusted
Stock Appreciation Right immediately following the occurrence of such event;
(d) in
the
case of a Restricted Share issued pursuant to a Restricted Stock Award, the
holder of such Restricted Stock Award shall receive, subject to the same
restrictions and other conditions of such Restricted Stock Award as determined
pursuant to the provisions of Section 13, the same securities or other property
as are received by the holders of the Corporation’s Shares pursuant to such
stock dividend, split-up, conversion, exchange, reclassification or
substitution; and
(e) in
the
case of a Deferred Stock Award, the holder shall receive, at such time as would
otherwise apply under such Deferred Stock Award, such number and kind of
securities or cash or other property to which he would have been entitled had
he
actually owned the Shares subject to the Deferred Stock Award at the time of
the
occurrence of such stock dividend, split-up, conversion, exchange,
reclassification or substitution.
With
respect to any Incentive Awards other than Rights, any fractional shares or
securities issuable as a result of such adjustment shall be payable in cash
based upon the Fair Market Value of such shares or securities at the time such
shares or securities would have otherwise been issued. With respect to any
Rights, any fractional shares or securities issuable as a result of such
adjustment shall be rounded down to the nearest whole number of Shares. If
any
such event should occur, the number of Shares with respect to which Incentive
Awards remain to be issued, or with respect to which Incentive Awards may be
reissued, shall be adjusted in a similar manner.
In
addition to the adjustments provided for in the preceding paragraph, upon the
occurrence of any of the events referred to in said paragraph prior to the
complete payments pursuant to a Performance Award, the Committee, in its sole
discretion, shall determine the amount of cash and/or the number of Shares
which
shall be paid to the holder of a Performance Award at such time as payment
would
otherwise be made, so that there shall be no increase or dilution in the cash
and/or value of the Shares or other property to which the holder shall be
entitled by reason of such events.
Notwithstanding
any other provision of the Plan, in the event of a recapitalization, merger,
consolidation, rights offering, separation, reorganization or liquidation,
or
any other change in the corporate structure or outstanding shares, the
Committee, in its sole discretion, may make such adjustments to the number
of
Shares and the class of shares available hereunder or to any outstanding
Incentive Awards as shall be necessary to prevent dilution or enlargement of
rights, and/or make provision for the payment of cash (or other property if
received as consideration) in cancellation of any outstanding Incentive
Award.
21. Issuance
of Shares and Compliance with Securities Act.
The
Corporation may postpone the issuance and delivery of Shares pursuant to the
grant or exercise of any Incentive Award until (a) the admission of
such
Shares to listing on the principal securities exchange or securities trading
market on which Shares of the Corporation of the same class are then listed
or
approved for trading, and (b) the completion of such registration or
other
qualification of such Shares under any State or Federal law, rule or regulation
as the Corporation shall determine to be necessary or advisable. Any holder
of
an Incentive Award shall make such representations and furnish such information
as may, in the opinion of counsel for the Corporation, be appropriate to permit
the Corporation, in the light of the then existence or non-existence with
respect to such Shares of an effective Registration Statement under the
Securities Act of 1933, as from time to time amended (the “Securities Act”), to
issue the Shares in compliance with the provisions of the Securities Act or
any
comparable act. The Corporation shall have the right, in its sole discretion,
to
legend any Shares which may be issued pursuant to the grant or exercise of
any
Incentive Award, or may issue stop transfer orders in respect
thereof.
22. Code
Section 162(m).
Notwithstanding any other provision of the Plan, if the Committee determines
at
the time an Incentive Award is granted to an Eligible Person who is, or is
likely to be, as of the end of the tax year in which the Corporation would
claim
a tax deduction in connection with such Incentive Award, a “covered employee”
(as defined under Section 162(m) of the Code), then the Committee may provide
that this Section 22 is applicable to such Incentive Award. If
the
Committee determines that an Incentive Award is subject to this Section 22,
the
lapsing of restrictions thereon and the distribution of cash, Shares or other
property pursuant thereto, as applicable, shall be subject to the achievement
of
one or more objective performance goals established by the Committee, which
shall be based on the attainment of specified levels of one or any combination
of the following: revenue growth; booking of orders; earnings, or some
derivative thereof (including earnings before interest and taxes, earnings
before interest, taxes, depreciation and amortization, or earnings per share);
operating income; pre- or after-tax income; cash flow; net earnings; return
on
equity; return on capital (including return on total capital or return on
invested capital); return on assets or net assets; economic value added (or
an
equivalent metric); share price performance; total shareholder return;
improvement in or attainment of expense levels; and improvement in or attainment
of working capital levels of the Corporation or any Subsidiary, division,
business unit or product line of the Corporation for or within which the
Eligible Person is primarily employed. Such performance goals also may be based
solely by reference to the Corporation’s performance or the performance of a
Subsidiary, division, business unit or product line of the Corporation, or
based
upon the relative performance of other companies or upon comparisons of any
of
the indicators of performance relative to other companies. The Committee may
also exclude the impact of an event or occurrence which the Committee determines
should appropriately be excluded, including (i) restructurings, discontinued
operations, extraordinary items, and other unusual or non-recurring charges,
(ii) an event either not directly related to the operations of the Corporation
or not within the reasonable control of the Corporation’s management, or (iii)
the cumulative effects of tax or accounting changes in accounting standards
required by generally accepted accounting principles. Such performance goals
shall be set by the Committee within the time period prescribed by, and shall
otherwise comply with the requirements of, Section 162(m) of the Code, and
the
regulations thereunder.
23. Income
Tax Withholding.
If the
Corporation or a Subsidiary shall be required to withhold any amounts by reason
of any Federal, State, local or foreign tax rules or regulations in respect
of
any Incentive Award, the Corporation or the Subsidiary shall be entitled to
take
such action as it deems appropriate in order to ensure compliance with such
withholding requirements. In order to facilitate payment by the holder of an
Incentive Award of his withholding obligations with respect to the Incentive
Award, the Corporation or Subsidiary may, at its election, (a) deduct from
any
cash payment otherwise due to the holder, the appropriate withholding amount,
(b) require the holder to pay to the Corporation or Subsidiary in cash the
appropriate withholding amount, (c) permit the holder to elect to have the
Corporation withhold a portion of the Shares otherwise to be delivered with
respect to such Incentive Award, the Fair Market Value of which is equal to
the
minimum statutory withholding amount, or (d) permit the holder to elect to
deliver to the Corporation Shares already owned by the holder for at least
six
(6) months, the Fair Market Value of which is equal to the appropriate
withholding amount; provided, however, that if Shares are to be withheld by
the
Corporation for purposes of satisfying such withholding obligations, the number
of Shares withheld shall be calculated using the minimum statutory withholding
rates.
24. Amendment
of the Plan.
Except
as hereinafter provided, the Board of Directors or the Committee may at any
time
withdraw or from time to time amend the Plan as it relates to, and the terms
and
conditions of, any Incentive Awards not theretofore granted, and the Board
of
Directors or the Committee may at any time withdraw or from time to time amend
the Plan as it relates to, and the terms and conditions of, any outstanding
Incentive Award, provided that any amendment of an outstanding Incentive Award
that would adversely affect the rights of the holder thereof shall not be
effected without the holder’s consent. Notwithstanding the foregoing, any
material amendment of the Plan by the Board of Directors or the Committee,
including an amendment which would increase the number of Shares issuable under
the Plan or to any individual or change the class of Eligible Persons, shall
be
subject to the approval of the shareholders of the Corporation within one (1)
year of such amendment.
25. No
Right of Employment or Service.
Nothing
contained herein or in an Incentive Award agreement shall be construed to confer
on any employee or director any right to be continued in the employ of the
Corporation or any Subsidiary or as a director of the Corporation, or derogate
from any right of the Corporation and any Subsidiary to retire, request the
resignation of, or discharge such employee or director (without or with pay),
at
any time, with or without Cause.
26. Effective
Date of the Plan.
This
Plan is conditioned upon its approval by the shareholders of the Corporation
on
or before April 18, 2006; except that this Plan is adopted and approved by
the
Board of Directors effective April 18, 2005 to permit the grant of Incentive
Awards prior to the approval of the Plan by the shareholders of the Corporation
as aforesaid. In the event that this Plan is not approved by the shareholders
of
the Corporation as aforesaid, this Plan and any Incentive Awards granted
hereunder shall be void and of no force or effect.
27. Final
Grant Date.
No
Incentive Award shall be granted under the Plan after April 18,
2015.
IN
WITNESS WHEREOF, the Corporation has caused these presents to be executed by
its
duly authorized officer as of June 23, 2005.
| THE CHILDREN’S PLACE RETAIL STORES, INC. | ||
| |
|
|
| By: | /s/ Steven Balasiano | |
|
Title: Senior Vice President, General Counsel |
||
| and Chief Administrative Officer | ||