Document:

exhibit109april12008.htm

    
      
         

      

      
         

        
          

        

      

      
         

        
          EXHIBIT
10.9

          Performance Vesting SARs
(EBITDA) 

          Other Executives

          

        

      

    

    CHARMING
SHOPPES, INC.

    2004
STOCK AWARD AND INCENTIVE PLAN

    STOCK
APPRECIATION RIGHTS AGREEMENT

     

    Agreement
dated as of April 1, 2008 (the “Grant Date”) between CHARMING SHOPPES, INC. (the
“Company”) and _____________________ (the “Employee”).

     

    1. Grant of SARs;
Consideration; Employee Acknowledgments.

     

    The
Company hereby confirms the grant, under the Company’s 2004 Stock Award and
Incentive Plan (the “Plan”), to the Employee on the Grant Date of a stock
appreciation right (the “SAR”) with respect to _________ shares of the Company’s
common stock, par value $.10 per share (the “Shares”), subject to vesting based
on the Company’s achievement of performance goals, continued employment and
other restrictions as set forth herein and in the Plan.  The number of
Shares for which the SAR shall vest depends on the Company’s achievement of the
performance goals described in Section 3 below and the satisfaction of other
conditions described in Section 6 of this Agreement.  The target
number of Shares (“Target Shares”) with respect to which the SAR may vest is
_________ shares.  The maximum number of Shares (“Maximum Shares”)
with respect to which the SAR may vest is the number set forth in the first
sentence of this Section 1.

     

    The SAR
represents the right to receive, at exercise, a number of Shares with a then
Fair Market Value equal to the appreciation in value of the Shares over the Base
Amount.  The Base Amount is $_________ per share, which is the fair
market value of a Share on the Grant Date.

     

    The
Employee shall be required to pay no consideration for the grant of the SAR
except for his or her agreement to provide services to the Company prior to
exercise and his or her agreement to abide by the terms set forth in the Plan,
this Stock Appreciation Rights Agreement (the “Agreement”), and any Rules and
Regulations under the Plan.  The Employee acknowledges and agrees that
(i) the SAR is nontransferable, except as provided in Section 8 hereof and in
the Plan, (ii) the SAR is subject to forfeiture in the event of the Employee’s
termination of employment in certain circumstances, as specified in Section 6
hereof, or to the extent that the performance goals specified in Section 3
hereof are not met, and (iii) sales of Shares will be subject to the Company’s
policies regulating trading by employees, including any applicable “blackout” or
other designated periods in which sales of Shares are not
permitted.

     

    2. Incorporation of Plan by
Reference.

     

    The SAR
has been granted to the Employee under the Plan.  All of the terms,
conditions and other provisions of the Plan are hereby incorporated by reference
into this Agreement.  Capitalized terms used in this Agreement but not
defined herein shall have the same meanings as in the Plan.  If there
is any conflict between the provisions of this Agreement and the provisions of
the Plan, the provisions of the Plan shall govern.  The Employee
hereby accepts the grant of

     

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

    the SAR,
acknowledges receipt of the Plan, and agrees to be bound by all the terms and
provisions hereof and thereof (as presently in effect or hereafter amended), and
by all decisions and determinations of the Board or Committee under the
Plan.

     

    3. Performance Goals and
Vesting.

     

    (a) Performance
Goals.  Except as otherwise provided in Section 6, the number
of Shares for which the SAR shall vest pursuant to this Agreement shall depend
on the Company’s achievement of EBITDA performance goals over the Performance
Period and continued employment through the Vesting Date described in Section
3(c).  The Performance Period is the period beginning February 3, 2008
and ending January 30, 2010.  The number of  Shares for
which the SAR may vest shall be determined based on the Company’s EBITDA
performance goals for the Performance Period, as set forth on the attached Exhibit
A.

     

    (b) Calculation of Achievement
of Performance Goals.  At the end of the Performance Period,
the Committee shall determine whether and to what extent the performance goals
set forth on the attached Exhibit A have been
met and all other material conditions have been satisfied, and the Committee
shall determine the number of Shares that are earned (if any) based on
achievement of the performance goals (the “Earned Shares”).  The
number of Earned Shares shall not exceed the Maximum Shares.  If the
number of Earned Shares is less than 100% of the Maximum Shares, the SAR with
respect to the excess of the Maximum Shares over the Earned Shares shall
terminate as of the end of the Performance Period.  The SAR shall vest
with respect to Earned Shares as described in Section 3(c) below.

     

    (c) Vesting.  The
SAR may be exercised only if and to the extent that it has become vested as
specified in this Agreement.  Subject to acceleration as provided in
Section 6 and all other terms and conditions of this Agreement and the Plan,
this SAR shall become vested and exercisable with respect to the Earned Shares
as follows:

     

    
      	
              Vesting
      Date

            	
              Percentage
      of Earned Shares

              for Which the SAR is
      Exercisable

            
	 
      	 
      
	
              January
      30, 2010

            	
              50%

            
	
              January
      29, 2011

            	
              50%

            

    

     

    Except as
otherwise provided in Section 6, the Employee must be employed by the Company on
the applicable vesting date in order for the SAR to vest.  The number
of Earned Shares with respect to which the SAR vests shall be cumulative but
shall not exceed 100% of the Earned Shares.  If the foregoing schedule
would produce fractional Shares, the number of Shares for which the SAR vests
shall be rounded to the nearest whole Share.  The SAR shall expire at
5:00 p.m. on the day before the seventh anniversary of the Grant Date, unless
the SAR terminates on an earlier date as provided herein.

     

    4. Method of
Exercise.

     

    (a) The SAR
may be exercised, to the extent the SAR is then vested and exercisable, by
delivery to and receipt by the Secretary of the Company at 3750 State Road,
Bensalem, Pennsylvania 19020, of a written notice, signed by the Employee,
specifying the portion of the

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    vested
SAR that the Employee wishes to exercise.  As soon as practicable
after the receipt of such notice, the Company shall deliver to the Employee a
number of whole Shares that will be determined by dividing the Stock
Appreciation by the Fair Market Value of a Share on the date of exercise, less
applicable tax withholding.  “Stock Appreciation” shall mean the
amount that results from multiplying (i) the number of Shares as to which the
vested SAR is exercised by (ii) the amount by which the Fair Market Value of a
Share on the date of exercise exceeds the Base Amount.  Only whole
Shares will be delivered pursuant to the exercise of the SAR.

     

    (b) Upon
exercise of the SAR, the Company will deliver a stock certificate for the Shares
to be delivered, with any requisite legend affixed.  Such exercise may
include instructions to the Company to deliver Shares due upon exercise of the
SAR to any registered broker or dealer designated by the Committee in lieu of
delivery to the Employee.  Such instructions must designate the
account into which the Shares are to be deposited.  The method of
exercise and related matters governed by this Section 4 shall be subject to
Rules and Regulations adopted by the Committee and in effect at the time the
Employee’s notice of exercise is received by the Company; such Rules and
Regulations may vary from or limit the procedures specified in this Section 4,
and may specify other methods of exercise.  Upon exercise of any
portion of the SAR, the exercised portion of the SAR shall terminate and cease
to be outstanding.

     

    (c) If, on
the date on which the vested SAR will terminate according to its terms, the
Employee has not given the Company written notice of exercise, and if the Stock
Appreciation amount is a positive number, then the outstanding vested portion of
the SAR shall be automatically exercised and taxes shall be withheld as
described in Section 5 below.

     

    5. Tax
Withholding.

     

    The Company will withhold from the
Shares to be delivered upon the exercise of the SAR a sufficient number of such
Shares to satisfy the minimum federal, state and local tax withholding
obligations relating to the SAR exercise.  The Shares withheld will be
valued at the Fair Market Value, determined in such manner as may be specified
under the Plan.

     

    6. Termination
of Employment.

     

    (a) Exercisability after
Termination of Employment.  The SAR shall terminate and no
longer be exercisable at the earlier of (i) the scheduled expiration date of the
SAR, as set forth in Section 3(c) above, or (ii) the earliest time specified
below at or following the Employee’s termination of employment with the Company
and its subsidiaries (“Termination”).  In the event of Termination of
employment before a Change in Control, the SAR shall be exercisable as
follows:

     

    (i) Termination within one year after
the Grant Date.  In the event of the Employee’s Termination for
any reason prior to the expiration of one year after the Grant Date, other than
by reason of the Employee’s death, permanent disability or Retirement, the SAR
shall immediately terminate.

     

    (ii) Death or
Disability.  In the event of the Employee’s Termination upon
death or permanent disability, the SAR will vest and be exercisable as
follows:

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    (1) If the
Employee’s Termination upon death or permanent disability occurs on or before
the end of the Performance Period, the SAR shall vest in full with respect to
all of the Target Shares.  The SAR shall immediately terminate with
respect to Shares in excess of the Target Shares.  The vested SAR
shall remain exercisable for one year after the Termination date.

     

    (2) If  the
Employee’s Termination upon death or permanent disability occurs after the end
of the Performance Period, the SAR shall vest in full with respect to all of the
Earned Shares.  The vested SAR shall remain exercisable for one year
after the Termination date.

     

    For
purposes of this Agreement, the existence of a “permanent disability” shall be
determined by, and in accordance with criteria and standards adopted by, the
Committee.

     

    (iii) Voluntary
Termination.  In the event of the Employee’s voluntary
Termination at or after the expiration of one year after the Grant Date, any
outstanding vested portion of the SAR may be exercised for three months after
the Termination date.  Any unvested portion of the SAR shall
immediately terminate.

     

    (iv) Termination for
Cause.  In the event of the Employee’s Termination for Cause at
or after the expiration of one year after the Grant Date, any outstanding vested
portion of the SAR may be exercised for three months after the Termination
date.  Any unvested portion of the SAR shall immediately
terminate.

     

    (v) Involuntary Termination without
Cause.  In the event of the Employee’s involuntary Termination
by the Company for reasons other than Cause, permanent disability or Retirement,
at or after the expiration of one year after the Grant Date, the SAR will vest
and be exercisable as follows:

     

    (1) If the
Termination occurs on or before the end of the Performance Period, the SAR will
remain outstanding through the end of the Performance Period and the number of
Earned Shares (if any) shall be determined as if the Employee were still
employed by the Company.  At the end of the Performance Period, the
SAR shall vest with respect to a portion of the Earned Shares, which shall be
determined by multiplying the Earned Shares by a fraction, the numerator of
which is the number of full or partial months in the Performance Period before
the Termination date and the denominator is 24.  The remainder of the
SAR will be forfeited as of the end of the Performance
Period.   The vested SAR shall remain exercisable for one year
after the end of the Performance Period.

     

    (2) If the
Termination occurs after the end of the Performance Period, the SAR with respect
to the Earned Shares shall become fully vested on the Termination date, and the
vested SAR shall remain exercisable for one year after the Termination
date.

     

    (vi) Retirement.  In the
event of the Employee’s Termination upon Retirement, the SAR will vest and be
exercisable as follows:

     

    (1) If the
Termination occurs on or before the end of the Performance Period, the SAR shall
remain outstanding through the end of the Performance Period and
the

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    number of
Earned Shares (if any) shall be determined as if the Employee were still
employed by the Company.  The SAR with respect to the Earned Shares
will remain in effect until the expiration date of the SAR as set forth in
Section 3(c) and will continue to vest according to Section 3(c) as if the
Employee were still employed by the Company.

     

    (2) If the
Termination occurs after the end of the Performance Period, the SAR with respect
to Earned Shares will remain in effect until the expiration date of the SAR as
set forth in Section 3(c) and will continue to vest according to Section 3(c) as
if the Employee were still employed by the Company.

     

    (3) Notwithstanding
the foregoing, after the date of the Employee’s Termination on account of
Retirement, while any portion of the SAR remains in effect and unvested, all of
the SAR shall be immediately forfeited if the Employee: (A) directly or
indirectly owns any equity or proprietary interest in any Competitor (as defined
below) of the Company (except for ownership of shares in a publicly traded
company not exceeding five percent of any class of outstanding securities), or
is an employee, agent, director, advisor, or consultant to or for any Competitor
of the Company in the United States, whether on his or her own behalf or on
behalf of any person, and is involved in the procuring, sale, marketing,
promotion, or distribution of any product or product lines competitive with any
product or product lines of the Company at the time of Employee’s Retirement, or
if Employee assists in, manages, or supervises any of the foregoing activities,
or (B) undertakes any action to induce or cause any supplier to discontinue any
part of its business with the Company, or (C) attempts to induce any merchant,
buyer, or manager or higher level employee of the Company to terminate his or
her employment with the Company, or (D) discloses confidential or proprietary
information of the Company to any person, firm, corporation, association, or
other entity for any reason or purpose whatsoever, or makes use of any such
information for his or her own purposes, so long as such information has not
otherwise been disclosed to the public or is not otherwise in the public domain
except as required by law or pursuant to administrative or legal
process.

     

    (vii) Definitions.

     

    (1) For
purposes of this Agreement, “Cause” shall mean:  (a) the Employee’s
willful and continued failure to substantially perform his or her duties with
the Company (other than any such failure resulting from disability or occurring
after issuance by the Employee of a notice of termination), after a written
demand for substantial performance is delivered to the Employee that
specifically identifies the manner in which the Company believes that the
Employee has willfully failed to substantially perform his or her duties, and
after the Employee has failed to resume substantial performance of his or her
duties on a continuous basis within 30 calendar days of receiving such demand;
(b) the Employee’s willfully engaging in conduct (other than conduct covered
under (a) above) which is demonstrably and materially injurious to the Company,
monetarily or otherwise; or (c) the Employee’s having been convicted of a
felony.  For purposes of this subparagraph, no act, or failure to act,
on the Employee’s part shall be deemed “willful” unless done, or omitted to be
done, by the Employee not in good faith and without reasonable belief that the
action or omission was in the best interests of the Company.

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    (2) For
purposes of this Agreement, “Retirement” shall mean a retirement at or after the
Employee has attained age 62.

     

    (3) For
purposes of this Agreement, “Competitor” shall mean any individual or
organization that procures, sources, markets, promotes, sells or distributes any
products or product lines that are, or are actually planned or under
consideration to be, procured, sourced, marketed, promoted, sold or distributed
by the Company during the Employee’s employment by the Company.

     

    (b) Termination of
SAR.  Any portion of the SAR that is not exercisable at the
Termination date and that will not become exercisable thereafter pursuant to
this Section 6 shall terminate as of the Employee’s Termination
date.  Notwithstanding anything in this Section 6 to the contrary, the
SAR may not be exercised after the expiration time set forth in Section
3(c).

     

    (c) Change in
Control.

     

    (i) Acceleration of
Vesting.  If a Change in Control occurs at a time when the
Employee is employed by the Company or any of its subsidiaries (or following a
Termination in which SARs are not forfeited under Section 6(a)), the SAR, to the
extent then outstanding, shall vest immediately prior to the Change in Control
as follows:

     

    (1) If a
Change in Control occurs on or before the end of the Performance Period and the
Employee is employed by the Company or any of its subsidiaries on the date of
the Change in Control, the SAR shall vest in full with respect to all of the
Target Shares.

     

    (2) If a
Change in Control occurs on or before the end of the Performance Period and
following a Termination by the Employee on account of Retirement under Section
6(a)(vi), the SAR shall vest in full with respect to all of the Target
Shares,

     

    (3) If a
Change in Control occurs on or before the end of the Performance Period and
following an involuntary Termination of the Employee without Cause under Section
6(a)(v), the SAR shall vest with respect to a pro-rata portion of the Target
Shares, which shall be determined by multiplying the fraction described in
Section 6(a)(v) by the number of  Target Shares.

     

    (4) If a
Change in Control occurs after the end of the Performance Period, the SAR shall
vest in full with respect to all of the Earned Shares.

     

    (5) The SAR
shall immediately terminate with respect to any Shares that do not vest upon the
Change of Control as described in this Section 6(c).

     

    (ii) Exercise after a Change in Control;
Adjustments.  In the event of the Employee’s Termination after
a Change in Control, the vested SAR, to the extent then outstanding, shall be
exercisable for the applicable time period described in Section 6(a)(ii), (iii),
(iv), (v) (one year after the Termination Date) or (vi), based on the reason for
the Employee’s Termination and determined without regard to any requirement that
the Termination occur one year after the Grant Date.   In the
event of a Change in Control, the Committee may make such

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    adjustments
and take such other actions with respect to outstanding SARs as the Committee
deems appropriate pursuant to Section 10(c) of the Plan.

     

    (iii)           Definitions of Certain
Terms.  For purposes of this Agreement, the following
definitions shall apply:

     

    (1) “Beneficial
Owner,” “Beneficially Owns,” and “Beneficial Ownership” shall have the meanings
ascribed to such terms for purposes of Section 15(c) of the Exchange Act and the
rules thereunder, except that, for purposes of this Agreement, “Beneficial
Ownership” (and the related terms) shall include Voting Securities that a Person
has the right to acquire pursuant to any agreement, or upon exercise of
conversion rights, warrants, options, or otherwise, regardless of whether any
such right is exercisable within 60 days of the date as of which Beneficial
Ownership is to be determined.

     

    (2) “Change
in Control” means and shall be deemed to have occurred if

     

    (A) any
Person, other than the Company or a Related Party, acquires directly or
indirectly the Beneficial Ownership of any Voting Security of the Company and
immediately after such acquisition such Person has, directly or indirectly, the
Beneficial Ownership of Voting Securities representing 20 percent or more of the
total voting power of all the then-outstanding Voting Securities;
or

     

    (B) those
individuals who as of the Date of Grant constitute the Board or who thereafter
are elected to the Board and whose election, or nomination for election, to the
Board was approved by a vote of at least two-thirds (2/3) of the directors then
still in office who either were directors as of the Date of Grant or whose
election or nomination for election was previously so approved, cease for any
reason to constitute a majority of the members of the Board; or

     

    (C) there is
consummated a merger, consolidation, recapitalization, or reorganization of the
Company, a reverse stock split of outstanding Voting Securities, or an
acquisition of securities or assets by the Company (a “Transaction”), other than
a Transaction which would result in the holders of Voting Securities having at
least 80 percent of the total voting power represented by the Voting Securities
outstanding immediately prior thereto continuing to hold Voting Securities or
voting securities of the surviving entity having at least 60 percent of the
total voting power represented by the Voting Securities or the voting securities
of such surviving entity outstanding immediately after such Transaction and in
or as a result of which the voting rights of each Voting Security relative to
the voting rights of all other Voting Securities are not
altered;  or

     

    (D) there is
implemented or consummated a plan of complete liquidation of the Company or sale
or disposition by the Company of all or substantially all of the Company’s
assets other than any such transaction which would result in Related Parties
owning or acquiring more than 50 percent of the assets owned by the Company
immediately prior to the transaction.

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    (3) “Person”
shall have the meaning ascribed for purposes of Section 15(c) of the Exchange
Act and the rules thereunder.

     

    (4) “Related
Party” means (i) a majority-owned subsidiary of the Company; or (ii) a trustee
or other fiduciary holding securities under an employee benefit plan of the
Company or any majority-owned subsidiary of the Company; or (iii) a corporation
owned directly or indirectly by the shareholders of the Company in substantially
the same proportion as their ownership of Voting Securities; or (iv) if, prior
to any acquisition of a Voting Security which would result in any Person
Beneficially Owning more than ten percent of any outstanding class of Voting
Security and which would be required to be reported on a Schedule 13D or an
amendment thereto, the Board approved the initial transaction giving rise to an
increase in Beneficial Ownership in excess of ten percent and any subsequent
transaction giving rise to any further increase in Beneficial Ownership;
provided, however, that such Person has not, prior to obtaining Board approval
of any such transaction, publicly announced an intention to take actions which,
if consummated or successful (at a time such Person has not been deemed a
“Related Party”), would constitute a Change of Control.

     

    (5) “Voting
Securities” means any securities of the Company which carry the right to vote
generally in the election of directors.

     

    (d) Except as
provided in Section 7, an Employee shall not be deemed to have terminated his or
her employment for purposes of this Section 6 if his employment terminates with
the Company but thereafter continues with one of the Company’s subsidiaries or
terminates with a subsidiary but thereafter continues with the Company or
another subsidiary.

     

    7. Change in Job
Status.

     

    Should
the Employee’s job classification change, and as a result of such change the
Committee determines, in its sole discretion and prior to any Change of Control,
that the Employee is no longer employed in a position which would enable the
Employee to contribute to the success of the Company on at least as great a
level as that to which the Employee was enabled by his prior job classification,
then the Committee may deem the Employee’s employment with the Company or its
subsidiaries to have been terminated involuntarily (but not for cause) in
respect of all or a portion of this SAR.

     

    8. Limits on Transfer of SARs;
Beneficiaries.

     

    No right
or interest of a participant in this SAR shall be pledged, encumbered or
hypothecated to or in favor of any third party or shall be subject to any lien,
obligation or liability of the Employee to any third party.  This SAR
shall not be transferable to any third party by the Employee otherwise than by
will or the laws of descent and distribution, and this SAR shall be exercisable,
during the lifetime of the Employee, only by the Employee; provided, however,
that the Employee will be entitled to designate a beneficiary or beneficiaries
to exercise his or her rights under this SAR upon the death of Employee, in the
manner and to the extent permitted by the Committee under Rules and Regulations
adopted by the Committee under the Plan, and the Committee may permit transfers
otherwise to the extent permitted under the Plan.

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    9. Investment
Representation.

     

    Unless,
at the time of any exercise of this SAR, the issuance and delivery of Shares
hereunder to the Employee is registered under a then-effective registration
statement under the Securities Act of 1933, as amended (the “Securities Act”),
and complies with all applicable registration requirements under state
securities laws, the Employee shall provide to the Company, as a condition to
the valid exercise of this SAR and the delivery of any certificates representing
Shares, appropriate evidence, satisfactory in form and substance to the Company,
that he or she is acquiring the Shares for investment and not with a view to the
distribution of the Shares or any interest in the Shares, and a representation
to the effect that the Employee shall make no sale or other disposition of the
Shares unless (i) the Company shall have received an opinion of counsel
satisfactory to it in form and substance that such sale or other disposition may
be made without registration under the then-applicable provisions of the
Securities Act, the related rules and regulations of the Securities and Exchange
Commission, and applicable state securities laws and regulations, or (ii) the
sale or other disposition of the Shares shall be registered under a currently
effective registration statement under the Securities Act and complies with all
applicable registration requirements under state securities laws.  The
certificates representing the Shares may bear an appropriate legend giving
notice of the foregoing restriction on transfer of the Shares, and any other
restrictive legend deemed necessary or appropriate by the
Committee.

     

    10. Miscellaneous.

     

    This
Agreement shall be binding upon the heirs, executors, administrators and
successors of the parties.  This Agreement constitutes the entire
agreement between the parties with respect to the SAR, and supersedes any prior
agreements or documents with respect to the SAR.  No amendment,
alteration, suspension, discontinuation or termination of this Agreement which
may impose any additional obligation upon the Company or impair the rights of
the Employee with respect to the SAR shall be valid unless in each instance such
amendment, alteration, suspension, discontinuation or termination is expressed
in a written instrument duly executed in the name and on behalf of the Company
and by the Employee.

     

    
      	
              CHARMING
      SHOPPES, INC.

            
	
               

               

              BY:________________________________

            
	
               

               
      

            
	
              EMPLOYEE:

            
	
               

               

              ___________________________________

            

    

     

     

     

     

     

    
 

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    EXHIBIT
A

     

    EBITDA
PERFORMANCE GOALS

     

    
      	
               

               

              EBITDA
      GOAL

            	
               

               

              TWO
      YEAR CUMULATIVE EBITDA

            	
              EARNED
      SHARES AS A

              PERCENTAGE
      OF

              TARGET
      SHARES

            
	
               

              Below
      Minimum

               

            	
               

              Below $___
    million

            	
               

              0%

            
	
               

              Minimum

               

            	
               

              At
      least $___ million

            	
               

              50%

            
	
               

              Target

               

            	
               

              $___
      million

            	
               

              100%

            
	
               

              Maximum

               

            	
               

              $___
      million or more

            	
               

              200%

            

    

    

    The
Committee shall determine EBITDA and the number of Earned Shares at the end of
the Performance Period. The percentage of Target
Shares that shall be considered Earned Shares at the end of the Performance
Period shall be interpolated between each of the Minimum and Maximum measuring
points, and the number of Shares shall be rounded to the next whole
Share.  The performance goals and Minimum, Target and Maximum numbers
of Shares shall be subject to adjustment in accordance with the
Plan.

     

    EBITDA
shall mean the Company’s cumulative earnings before interest, taxes,
depreciation and amortization for the two fiscal years during the Performance
Period, based on the Company’s audited financial statements (adjusted for
one-time non-recurring, non-cash charges in accordance with generally accepted
accounting principles, consistently applied).   

     

    

    
      
        A-1exhibit10_1.htm

    Exhibit
10.1

    

                                   EMPLOYMENT
AGREEMENT

                                   --------------------

    

    THIS
EMPLOYMENT AGREEMENT is entered into as of this 1 day of April, 2008 between
FRANKLIN ELECTRIC CO., INC. (“Franklin”), an Indiana corporation, and John J.
Haines (the “Executive”).

    

    WHEREAS,
Franklin desires to employ Executive as its Vice President and Chief Financial
Officer, and Executive is willing to accept such employment upon the terms and
conditions set forth below;

    

    NOW
THEREFORE, in consideration of the premises and mutual covenants and agreements
herein contained, the parties hereto hereby agree as follows:

    

          1.   EMPLOYMENT.  Franklin
agrees to employ Executive as its Vice President and Chief Financial Officer to
perform all such duties as are normally associated with such position in
companies of similar size and nature or are prescribed for such office by the
by-laws or directed by the Board of Directors, and Executive agrees to serve
Franklin in such capacity and devote his full business time and attention to the
business of Franklin, subject to vacations, holidays, normal illnesses and a
reasonable amount of time for civic, community and industry
affairs.  Executive agrees not to accept membership on the Board of
Directors of any other business corporation without the prior approval of the
Management Organization and Compensation Committee of the Board of Directors of
Franklin.

    

         2.   TERM.  The
employment of Executive hereunder (the “Term”) shall be for a three (3) year
period commencing on April 14, 2008 and ending on April 14, 2011, provided that
on April 14, 2011 and each April 14 thereafter the Term shall automatically and
without any action by either party hereto be extended for an additional period
of one year unless at least ninety (90) days prior to any Anniversary Date
either party notifies the other of its election not to extend the then current
Term, in which case the Term shall end at the expiration of the Term as last
extended.  Following any such notice by the Company of its election
not to extend the Term, Executive may terminate his employment at any time prior
to the expiration of the Term by giving written notice to the Company at least
thirty (30) days prior to the effective date of termination, and upon the
earlier of such effective date of termination or the expiration of the Term
Executive shall be entitled to receive the same compensation and benefits as are
provided in subparagraph (b) of paragraph 6 but for a severance period which
shall begin on the effective date of termination or expiration of the Term, as
the case may be, and ending on the earlier of (i) the date on which Executive
would attain his normal retirement age (as defined in the Franklin Electric Co.,
Inc. Basic Retirement Plan, hereinafter referred to as “Normal Retirement Age”),
or (ii) twelve  (12) months.

    

          3.   COMPENSATION.  Franklin
shall pay for or provide to Executive for all services to be performed by
Executive under this Agreement the following:

    

         (a)  A
fixed salary of $250,000 per annum, or such higher amount as the Board of
Directors of Franklin may from time to time authorize (which amount shall not be
reduced below the amount at any time in

    
      
         

      

      
        - 7
-

        
          

        

      

      
         

      

    

    <Page>
8

    

    effect
without Executive’s consent), payable in equal monthly installments (such amount
from time to time in effect being referred to herein as “Executive’s
Salary”);

    

         (b)  Such
bonus as may be allocated to Executive by the Management Organization and
Compensation Committee of Franklin’s Board of Directors pursuant to the Franklin
Executive Officer Bonus Plan; it being understood and agreed to that, for the
fiscal year ending 2008, such bonus, payable in the first quarter of 2009, will
not be less than $160,000;

    

         (c)  Participation
in the Franklin Electric Co., Inc. Stock Plan, and any successor stock plans, as
long as such plans remain in effect, and in any future compensation plans
covering senior executives of Franklin; it being understood and agreed to that,
promptly after the release of First Quarter 2008 earnings and at a time when
Franklin executive officers are otherwise permitted by Franklin’s policies to
effect transactions in Franklin’s securities, under and subject to the terms of
the Franklin Electric Co., Inc. Stock Plan, (i) Executive will receive an option
to purchase 10,000 shares of Franklin’s common stock at an option exercise price
equal to the closing price of Franklin’s common stock on the grant date, with
the option vesting ratably in four equal annual installments, the first
installment vesting on the first anniversary of the grant date and (ii)
Executive will receive an 8,000 share grant of Franklin’s common stock, such
grant to vest 100% on the fourth anniversary of the grant date;

    

         (d)  Participation
in Franklin’s employee benefit plans, policies, practices and arrangements in
which other senior executives of Franklin participate as long as such plans,
policies, practices and arrangements remain in effect, and in any future
employee benefit plans and arrangements covering senior executives, including
without limitation any defined benefit retirement plan, profit sharing plan,
health or dental plan, disability plan, or life insurance plan (collectively,
the “Benefit Plans”);

    

         (e)  Paid
vacations and sick leave in accordance with Franklin’s policies respecting same
as in effect from time to time.  Effective April 14, 2008 three (3)
weeks annual vacation and effective January 1, 2009 4 weeks annual vacation;
and

    

         (f)  All
fringe benefits and perquisites offered by Franklin from time to time to senior
executives.

    

         4.   EXPENSES.  Franklin
shall promptly pay or reimburse Executive for all reasonable expenses incurred
by Executive in the performance of duties hereunder in accordance with expense
policies from time to time in effect for senior executives of
Franklin.

    

          5.   CONDITIONS
OF EMPLOYMENT.  During the Term, Executive shall be furnished office
space, assistance and accommodations suitable to the character of his position
with Franklin and adequate for the performance of his
duties.  Executive’s services shall be performed at Franklin’s
principal executive office in Bluffton, Indiana, except when the nature of
Executive’s duties hereunder requires reasonable domestic and foreign
travel.

    
      
         

      

      
        - 8
-

        
          

        

      

      
         

      

    

    <Page>
9

    

          6.   TERMINATION
OF EMPLOYMENT.  Either Executive or Franklin may terminate Executive’s
employment hereunder at any time upon giving the other at least ninety (90) days
advance written notice of such termination, provided that Franklin may specify
an earlier date of termination (not earlier than the date of such notice) if
termination is for Good Cause (as defined below), and Executive may specify an
earlier date of termination (not earlier than the date of such notice) if
termination is for Good Reason (as defined below), and provided further that if
termination is due to the death of Executive, termination shall be effective
immediately upon such death and without any requirement for written
notice.  In the event of any termination hereunder Executive shall be
entitled to receive compensation and benefits only as hereinafter set forth or
as provided in paragraph 2:

    

         (a)  If
Executive’s employment is terminated by Executive without Good Reason or by
Franklin with Good Cause (i) Executive’s compensation under (a) and (b) of
Paragraph 3 shall be limited to a pro-rata portion of Executive’s Salary (and
not any bonus) for the year of termination, and (ii) Executive shall continue to
be provided with the benefits under (c), (d), (e) and (f) of Paragraph 3,
(subject however to all terms, if any, of the Benefit Plans that may be
applicable to termination of employment) until the effective date of the
termination;

    

         (b)  If
at any time other than as specified in subparagraph (c) of this paragraph 6,
Franklin shall terminate Executive’s employment without Good Cause, or Executive
shall voluntarily terminate such employment with Good Reason, (i) Executive’s
compensation under (a) and (b) of Paragraph 3 for the portion of the year of
termination prior to the effective date of termination shall be a pro-rata
portion of Executive’s Salary for such year, together with a bonus equal to not
less than a pro-rata portion of his bonus paid or payable for the year prior to
the year of termination, (ii) Executive shall receive as compensation for the
severance period described below an additional amount, payable in a lump sum
within thirty (30) days after the effective date of his termination of
employment, computed by annualizing the compensation which he is to receive
pursuant to clause (i) above, (iii) Executive shall continue to be provided with
the benefits under (c) and (d) of Paragraph 3 for such severance period, and
(iv) any stock options granted to Executive by Franklin shall be accelerated and
become immediately exercisable in full on the effective date of termination,
subject to any limitations on the order of exercise which may be applicable to
incentive stock options (as defined in Section 422 of the Internal Revenue Code
of 1986, as amended), if any, that may hereafter be granted, and shall remain
exercisable for such period after the effective date of termination as is
provided under the terms of the options and the plans pursuant to which they
were issued.  The severance period for this subparagraph (b) of
paragraph 6 shall be the period beginning on the date of termination and ending
on the earlier of (A) the date on which Executive would attain his Normal
Retirement Age, or (B) twelve (12) months.

    

         (c)  If
within two (2) years after a Change in Control, (i) Franklin shall terminate
Executive’s employment with Franklin without Good Cause, (ii) Executive shall
voluntarily terminate such employment with Good Reason, or (iii) Executive shall
voluntarily terminate such employment for any reason whatsoever during the
period beginning on the

    
      
         

      

      
        - 9
-

        
          

        

      

      
         

      

    

    <Page>
10

    

    first
anniversary of the Change in Control and ending thirty (30) days thereafter,
Franklin shall, within thirty (30) days after any such termination, pay to
Executive (A) a lump sum cash amount as compensation under (a) and (b) of
Paragraph 3 for the portion of the year of termination prior to the effective
date of termination equal to a pro-rata portion of Executive’s Salary for such
year, together with a bonus equal to not less than a pro-rata portion of his
bonus paid or payable for the year prior to the year of termination, (B) a lump
sum cash amount, as compensation for the severance period described below,
computed by annualizing the compensation which he is to receive pursuant to
clause (A) above, and (C) in settlement of any stock options then outstanding
(whether or not then exercisable), a lump sum cash payment equal to the
difference between the aggregate fair market value of the shares subject to such
options as of the date of such termination and the aggregate exercise price
thereof.  In addition, Executive shall, following his termination of
employment under this subparagraph (c) of paragraph 6, for the severance period
described below continue to be provided with the benefits under (c) and (d) of
Paragraph 3.  The severance period for this subparagraph (c) of
paragraph 6 shall be the period beginning on the date of termination and ending
on the earlier of (A) the date on which Executive would attain his Normal
Retirement Age, or (B) twenty-four (24) months.

    

         (d)  Franklin
agrees that with respect to any compensation or benefits payable hereunder to
Executive with respect to termination of his employment with Franklin for any
reason whatsoever, Executive shall not be required to mitigate his damages by
seeking other employment or otherwise, and Franklin’s obligations hereunder
shall not be reduced in any way by reason of any compensation received by
Executive from sources other than Franklin after the termination of Executive’s
employment with Franklin for any reason whatsoever.

    

         (e)  In
the event that Executive is subject to an excise tax under Section 4999 of the
Internal Revenue Code of 1986 with respect to any cash, benefits or other
property received, or any acceleration of vesting of any benefit or award, in
the event of a Change of Control, Franklin shall pay Executive an amount (a
“Gross-Up Payment”) such that after payment by Employee of (i) all taxes imposed
upon the Gross-Up Payment, and (ii) any interest, penalties and additions which
are imposed on Executive with respect to such taxes, the Executive retains an
amount of the Gross-Up Payment equal to the sum of (i) the Excise Tax imposed
and (ii) the product of any deductions disallowed because of the inclusion of
the Gross-Up Payment in the Employee’s adjusted gross income and the highest
applicable marginal rate of federal income taxation for the calendar year in
which the Gross-Up Payment is to be made.  For purposes of determining
the amount of the Gross-Up Payment, the Employee shall be deemed to (i) pay
federal income taxes at the highest marginal rates of federal income taxation
for the calendar year in which the Gross-Up Payment is to be made, and (ii) pay
applicable state and local income taxes at the highest marginal rate of taxation
for the calendar year in which the Gross-Up Payment is to be made, net of the
maximum reduction in federal income taxes which could be obtained from deduction
of such state and local taxes.

    

         (f)  For
purposes of this paragraph 6:

    
      
         

      

      
        - 10
-

        
          

        

      

      
         

      

    

    <Page>
11

    

         (1)  “Good
Cause” shall mean (A) Executive’s death or disability, (B) Executive’s fraud,
(C) Executive’s misappropriation of, or intentional material damage to, the
property or business of Franklin, (D) Executive’s commission of a felony which
is likely to result in material harm or injury (whether financial or otherwise)
to Franklin, provided that if Executive is ultimately not convicted of the
alleged felony, Franklin’s termination of his employment based on this provision
shall be deemed to have been without Good Cause, or (E) with respect to any
termination not subject to subparagraph (c) of this paragraph 6, Executive’s
willful and continued material failure to perform his obligations under this
Agreement, provided that Franklin shall have given written notice to Executive
describing such failure(s) and, as long as it is capable of being cured and does
not involve acts of material dishonesty directed against Franklin, the same
shall not have been substantially cured or corrected within thirty (30) days
thereafter, or if the same could not reasonably be cured within such period,
cure was not commenced within such period and diligently pursued and fully cured
within sixty (60) days of Franklin’s original notice to Executive.

    

         (2)  “Good
Reason” shall exist if (A) there is a change in the Executive’s title of Chief
Financial Officer or a significant change in the nature or the scope of
Executive’s authority, (B) there is a reduction in Executive’s Salary or
retirement benefits described in paragraph 3(d) or a material reduction in
Executive’s compensation and benefits in the aggregate, excluding (in the case
of incentive benefits that are based upon the performance of Executive or
Franklin) reductions in benefits resulting from diminished performance by
Executive or Franklin, (C) Franklin changes the principal location in which
Executive is required to perform services to a location more than fifty (50)
miles from Franklin’s corporate headquarters as of the date of this Agreement,
(D) there is a reasonable determination by Executive that, as a result of a
change in circumstances significantly affecting his position, he is unable to
exercise the authority, powers, function or duties attached to his positions, or
(E) any purchaser (or affiliate thereof) who purchases substantially all of the
assets of Franklin shall decline to assume all of Franklin’s obligations under
this Agreement.

    

         (3)  “Change
in control” shall be deemed to have taken place if (A) a third person, including
a “group” as defined in Section 13(d)(3) of the Securities Exchange Act of 1934,
and excluding any person who, as of the date of this Agreement, is the
beneficial owner of shares of Franklin stock representing 20% or more of the
total number of votes that may be cast for the election of Directors, becomes
the beneficial owner of shares of Franklin stock representing 20% or more of the
total number of votes that may be cast for the election of Directors, or (B) as
the result of, or in connection with, any cash tender or exchange offer, merger
or other business combination, sale of assets or contested election, or any
combination of the foregoing

    
      
         

      

      
        - 11
-

        
          

        

      

      
         

      

    

    <Page>
12

    

    transactions,
the persons who immediately prior thereto were directors of Franklin cease to
constitute a majority of the Board of Directors of
Franklin.  Notwithstanding the foregoing sentence, a Change of Control
shall not be deemed to occur by virtue of any transaction in which Executive is
a participant in a group effecting an acquisition of Franklin if Executive holds
an equity interest in the entity acquiring Franklin at the time of such
acquisition.

    

          7.   INDEMNIFICATION.  Franklin
shall indemnify, protect, defend and hold harmless Executive from and against
all liabilities, costs and expenses (including but not limited to attorneys’
fees) incurred as a result of Executive’s employment with Franklin to the
fullest extent permitted by the Indiana Business Corporation Law.

    

          8.   LITIGATION
EXPENSES. Franklin shall pay to Executive all out-of-pocket expenses, including
attorneys’ fees, incurred by Executive in connection with any claim or legal
action or proceeding involving this Agreement, whether brought by Executive or
by or on behalf of Franklin or by another party; provided, however, Franklin
shall not be obligated to pay to Executive out-of-pocket expenses, including
attorneys’ fees, incurred by Executive in any claim or legal action or
proceeding in which Franklin is a party adverse to Executive if Franklin
prevails in such litigation.  Franklin shall pay prejudgment interest
on any money judgment obtained by Executive, calculated at the published prime
interest rate charged by Franklin’s principal banking connection, as in effect
from time to time, from the date that payment(s) to him should have been made
under this Agreement.

    

          9.   POST-TERMINATION
PAYMENT OBLIGATIONS ABSOLUTE. Franklin’s obligation to pay Executive the
compensation and to make the other arrangements provided herein to be paid and
made after termination of Executive’s employment with Franklin shall be absolute
and unconditional and shall not be affected by any circumstances, including,
without limitation, any set-off, counterclaim, recoupment, defense or other
right that Franklin may have against him or anyone else.  All amounts
so payable by Franklin shall be paid without notice or demand.  Each
and every such payment made by Franklin shall be final and Franklin will not
seek to recover all or any part of such payment from Executive or from
whomsoever may be entitled thereto, for any reason
whatsoever.  Payment by Franklin of the termination benefits provided
in paragraphs 2 or 6 hereof, and the acceptance thereof by Executive, shall
constitute a release by Executive of all claims and actions that Executive may
have against Franklin arising out of Executive’s employment or the termination
thereof except for continuing obligations of Franklin under this
Agreement.

    

         10.   DISCLOSURE
OF CONFIDENTIAL INFORMATION.  Without the consent of Franklin,
Executive shall not at any time divulge, furnish or make accessible to anyone
(other than in the regular course of business of Franklin) any knowledge or
information with respect to confidential or secret processes, inventions,
formulae, machinery, plan, devices or materials of Franklin or with respect to
any confidential or secret engineering development or research work of Franklin
or with respect to any other confidential or secret aspect of the business of
Franklin.  Executive recognizes that irreparable injury will result to
Franklin and its business and properties, in the event of any breach by
Executive of any of the provisions of this paragraph
10.  In

    
      
         

      

      
        - 12
-

        
          

        

      

      
         

      

    

    <Page>
13

    

    the event
of any breach of any of the commitments of Executive pursuant to this paragraph
10, Franklin shall be entitled, in addition to any other remedies and damages
available, to injunctive relief to restrain the violation of such commitments by
Executive or by any person or persons acting for or with Executive in any
capacity whatsoever.

    

         11.   SOLICITATION
OF CUSTOMERS OR EMPLOYEES.  During the term of this Agreement and for
a period of twenty-four (24) months after termination of employment, Executive
shall not, directly of indirectly, or assist any other person to, solicit, or
communicate with, whether by written or personal contact, any customer or
prospect of Franklin on behalf of any organization offering products competitive
with products Franklin sold or developed while Executive was employed by
Franklin, and Executive shall not (i) directly or indirectly, employ or retain
or solicit for employment or arrange to have any other person, firm or other
entity employ or retain or solicit for employment or otherwise participate in
the employment or retention of any person who is an employee of Franklin or (ii)
encourage or solicit any such employee to leave the service of
Franklin.

    

         12.   NOTICES.  Notices
given pursuant to this Agreement shall be in writing and shall be deemed given
when received or, if mailed, two days after mailing by United States registered
or certified mail, return receipt requested, postage prepaid and addressed as
herein provided.  Notice to Franklin shall be addressed to Corporate
Secretary, Franklin Electric Co., Inc. at 400 East Spring Street, Bluffton,
Indiana 46714.  Notices to Executive shall be addressed to the
Executive at his last permanent address as shown on Franklin’s
records.  Notwithstanding the foregoing, if either party shall
designate a different address by notice to the other party given in the
foregoing manner, then notices to such party shall be addressed as designated
until the designation is revoked by further notice given in such
manner.

    

         13.   PAYMENT
OF LEGAL FEES.  Franklin shall pay Executive’s reasonable attorneys’
fees and legal expenses in connection with the negotiation of this
Agreement.

    

         14.   ENTIRE
AGREEMENT.  This Agreement contains the entire understanding between
the parties with respect to the subject matter hereof and cannot be amended,
modified or supplemented in any respect, except by a subsequent written
agreement entered into by both parties hereto.

    

         15.   SEVERABILITY.  If
any provision of this Agreement or the application thereof is held invalid, such
invalidity shall not affect other provisions or applications of this Agreement
that can be given effect without the invalid provision or application and, to
such end, the provisions of this Agreement are declared to be
severable.

    

         16.   SUCCESSORS.  This
Agreement may not be assigned by Franklin except in connection with a merger
involving Franklin or a sale of substantially all of its assets, and the
obligations of Franklin provided for in this Agreement shall be the binding
legal obligations of any successor to Franklin by purchase (if such successor
assumes this Agreement), merger, consolidation, or otherwise.  Without
limiting the foregoing the provisions of this Agreement relating to termination
of employment with Franklin shall be applicable to termination of employment
with any such successor.  This

    
      
         

      

      
        - 13
-

        
          

        

      

      
         

      

    

    <Page>
14

    

    Agreement
may not be assigned by Executive during his life, and upon his death will be
binding upon and inure to the benefit of his heirs, legatees and the legal
representatives of his estate.

    

         17.   WAIVER,
MODIFICATION AND INTERPRETATION.  No provisions of this Agreement may
be modified, waived or discharged unless such waiver, modification or discharge
is agreed to in a writing signed by Executive and an appropriate officer of
Franklin empowered to sign the same by the Board of Directors of
Franklin.  No waiver by either party at any time of any breach by the
other party of, or compliance with, any condition or provision of this Agreement
to be performed by the other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same time or at any prior or
subsequent time.  The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Indiana.  The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.

    

         18.   WITHHOLDING.  Franklin
may withhold from any payment that it is required to make under this Agreement
amounts sufficient to satisfy applicable withholding requirements under any
federal, state, or local law.

    

    
      	
              19.  

            	
              HEADINGS.  The
      headings contained herein are for reference purposes only and shall not in
      any way affect the meaning or interpretation of any provision of this
      Agreement.

            

    

    

    

    

    

    

    

    IN
WITNESS WHEREOF, the
parties hereto have executed this Agreement on the day and year first written
above.

    

    

    

    
      	
              FRANKLIN
      ELECTRIC CO., INC.

            
	 
      
	
                By:
      ________________________

            
	 
      
	
                    R.
      Scott Trumbull

            
	
                    Its:
      Chairman and Chief Executive Officer

            
	 
      
	 
      
	
                EXECUTIVE

            
	 
      
	
                  _________________________

            
	
                  John
      J. Haines

            

    

    

    
      
         

      

      
        - 14
-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00140-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00140-of-00352.parquet"}]]