Exhibit 10.3

 

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,

 

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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

 

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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.

 

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(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.

 

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. 
Notwithstanding anything contained herein to the contrary, an Eligible Director
shall only be eligible to receive Deferred Stock Awards 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 Incentive Awards granted

 

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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 (other than an Eligible Director)
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

 

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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, 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 Deferred Stock Awards to
Eligible Directors.  Notwithstanding any other provision of this Plan to the
contrary, Deferred Stock Awards having terms and conditions set forth in
Section 15 shall be automatically granted to each Eligible Director in
accordance with this Section 7 without any additional action by the Committee
necessary.  On the first 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 a number of Deferred Stock Awards determined by dividing $100,000 by the
Fair Market Value of a Share on such date (which number shall be rounded down to
the next whole number of Shares).  Each Eligible Director who is initially
elected to the Board of Directors by the Corporation during the fiscal year
shall be granted a number of Deferred Stock Awards, which number of Shares shall
be rounded up to the next whole number of Shares, equal to the quotient of
(i) the product of $100,000 multiplied by a fraction, the numerator of which
shall be the number of days remaining during the fiscal year and the denominator
of which shall be 365, which number of Shares shall be rounded up to the next
whole number of Shares, divided by (ii) the Fair Market Value of a Share on such
Eligible Director’s date of election. In addition on June 28, 2008, each
Eligible Director shall be granted a number of Deferred Stock Awards, which
number of Shares shall be rounded up to the next whole number of Shares, equal
to the quotient of (i) the product of $100,000 multiplied by a fraction, the
numerator of which shall be the number of days remaining during the fiscal year
and the denominator of which shall be 365 and divided by (ii) the Fair Market
Value of a Share.

 

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
(other than an Eligible Director), 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

 

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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.

 

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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 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 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.  The Committee may
permit deemed or constructive transfers of Shares in lieu of actual transfer and
physical delivery of certificates.

 

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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.

 

Alternative Rights or Stock Appreciation Rights shall be exercised by the
delivery of a duly signed notice in writing to such effect.  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.

 

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
(other than an Eligible Director) 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;

 

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(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.  The purchase price (if any) 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.  Payment of any purchase price (if any) 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.  If so determined by the Committee, the holder’s
performance of services for the Corporation or a Subsidiary may serve as the

 

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consideration for issuance of the Restricted Stock Award, and no purchase price
need be paid by the holder in such event.

 

15.           Deferred Stock Awards.  The Committee shall have the authority to
grant to any Eligible Person (other than an Eligible Director) a Deferred Stock
Award (an Employee Deferred Stock Award”).  A Deferred Stock Award to an
Eligible Director (a “Director Deferred Stock Award”) shall be granted pursuant
to Section 7.  All Deferred Stock Awards shall be 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
applicable deferral period;

 

(b)           Employee Deferred Stock Awards shall be subject to such vesting
conditions or other restrictions as the Committee may, in its sole discretion,
impose at the time of grant and as set forth in the applicable Deferred Stock
Award agreement (such vesting conditions or other restrictions may be based on
continued employment or service, upon the achievement of pre-established
corporate or individual performance objectives, or such conditions may lapse
upon 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 vesting 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)           A Director Deferred Stock Award shall be evidenced by a Deferred
Stock Award agreement.  Subject to subparagraph (d) below, a Director Deferred
Stock Award shall vest upon the first anniversary of the date of grant under
Section 7 provided that the Eligible Director remains in the service or
employment of the Corporation throughout the one year period commencing on the
date of grant.

 

(d)           Notwithstanding the foregoing, all restrictions to which a
Deferred Stock Award is subject shall lapse, in the following circumstances:
(i) upon the holder’s retirement from the Corporation and all Subsidiaries on or
after his 65th birthday; (ii) upon the Disability or death of the holder;
(iii) upon a Change of Control while the holder is in the employ or service of
the Corporation; or (iv) upon the occurrence of such special circumstance or
event as in the opinion of the Committee merits special consideration; and

 

(e)           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

 

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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 may 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

 

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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 or Sections 13(a)(5) or
15(d) hereof, 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.

 

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(d)           Notwithstanding anything contained herein to the contrary, an
individual who changes his or her status (e.g., from that of an employee to a
director or consultant, or vice versa) shall not be deemed to have ceased being
in the employ or service, as applicable, of the Corporation or any Subsidiary
for purposes of this Section 19, nor shall a transfer of employment among the
Corporation and any Subsidiary be considered a termination of employment;
provided, however, if the recipient of an incentive stock option ceases being an
employee but continues as a consultant or director, such incentive stock options
shall not be deemed to be incentive stock options three months after the date of
such cessation.

 

(d)           Notwithstanding anything contained herein to the contrary, the
Committee shall have discretion to extend the post-termination exercisability
period of any Option or Right longer than is otherwise provided for above;
provided, however, that in no event may an extension of the exercise period
exceed the term of the Option or Right set forth in Section 10.

 

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;

 

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(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

 

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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,

 

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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.

 

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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 this Plan, as amended and
restated in the manner presented, to be executed by its duly authorized officer
as of                           , 2009.

 

 

 

THE CHILDREN’S PLACE RETAIL STORES, INC.

 

 

 

 

 

 

 

By:

/s/ Steven Balasiano

 

Title:

Senior Vice President, General Counsel and Chief Administrative Officer

 

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