-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Gz8j2XRpYPadQRhrhIJ/AHxuzLxsW4jhfBlwt0pbUPuJy9fcRX4AJ364laDG7rS0 bUgvIyUiwpwb2TtikqeaWw== 0000019353-05-000047.txt : 20050211 0000019353-05-000047.hdr.sgml : 20050211 20050211121726 ACCESSION NUMBER: 0000019353-05-000047 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20050207 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050211 DATE AS OF CHANGE: 20050211 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CHARMING SHOPPES INC CENTRAL INDEX KEY: 0000019353 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-WOMEN'S CLOTHING STORES [5621] IRS NUMBER: 231721355 STATE OF INCORPORATION: PA FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-07258 FILM NUMBER: 05596371 BUSINESS ADDRESS: STREET 1: 450 WINKS LANE CITY: BENSALEM STATE: PA ZIP: 19020 BUSINESS PHONE: 2152459100 MAIL ADDRESS: STREET 1: 450 WINKS LANE CITY: BENSALEM STATE: PA ZIP: 19020 8-K 1 feb118k.txt FORM 8-K FEBRUARY 7, 2005 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) February 7, 2005 CHARMING SHOPPES, INC. (Exact name of registrant as specified in its charter) PENNSYLVANIA 000-07258 23-1721355 (State or other jurisdiction (Commission File Number) (IRS Employer of incorporation) Identification No.) 450 WINKS LANE, BENSALEM, PA 19020 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (215) 245-9100 NOT APPLICABLE (Former name or former address, if changed since last report.) Check the appropriate box below if the Form 8-K filing is intended to simul- taneously satisfy the filing obligation of the registrant under any of the following provisions: [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 1.01. Entry into a Material Definitive Agreement. On February 7, 2005, Charming Shoppes, Inc. (the "Company") granted restricted stock and performance share awards to Dorrit J. Bern, the Company's Chief Executive Officer, and to Joseph M. Baron, Anthony A. DeSabato, Eric M. Specter, and Colin D. Stern, the other executive officers who were named in the Company's 2004 Proxy Statement and/or who are expected to be named in the Company's 2005 Proxy Statement (the "Executive Officers"). These grants were made pursuant to the Charming Shoppes, Inc. 2004 Stock Award and Incentive Plan (the "2004 Plan"), which was approved by the Company's Board of Directors on April 30, 2004 and by the Company's shareholders on June 24, 2004. In addition to approving the plan, shareholders also approved, among other things, the material terms of certain awards that may be granted under the 2004 Plan to the named Executive Officers in order to meet the requirement for such awards to qualify as "performance-based" under Section 162(m) of the Internal Revenue Code. The 2004 Plan was filed with the Securities and Exchange Commission on May 19, 2004 as Appendix "B" to the Company's 2004 Proxy Statement Pursuant to Section 14 of the Securities Exchange Act of 1934. Following is a brief description of the general terms of the restricted stock and performance share awards, which is qualified in its entirety by reference to the full text of the 2004 Plan filed as "Appendix B" to the Company's 2004 Proxy Statement and by reference to the full text of the Forms of Restricted Stock Agreement and Performance Share Agreement filed as Exhibits under Section 9.01 of this Report on Form 8-K. Restricted Stock Agreement The Company granted to Ms. Bern restricted shares of its common stock under the Form of Restricted Stock Agreement filed as Exhibit 99.1 to this Report on Form 8-K. The restricted shares are subject to a two-year restricted period commencing on the date of grant. In general, the shares of restricted stock are subject to forfeiture during the restricted period upon termination of employment for any reason other than death, disability, retirement, termination by the employee for good reason, or termination by the Company for reasons other than cause. The terms "disability," "good reason," and "cause" have the meanings ascribed to such terms in the Employment Agreement by and between the Company and Dorrit J. Bern dated as of January 1, 2005 (the "Employment Agreement"), filed as Exhibit 99.1 to the Company's Report on Form 8-K dated January 3, 2005 and filed on January 4, 2005. In addition, the lapse of restrictions on shares issued under the Restricted Stock Agreement will be accelerated if Ms. Bern resigns for good reason, is terminated without cause, dies, or becomes disabled, or in the event of a change in control of the Company (as defined in the Employment Agreement), and the restricted shares will vest immediately. A non-renewal of the Employment Agreement by the Company will be treated as a termination for good reason. If the employee elects to defer any of the restricted shares pursuant to the Company's Variable Deferred Compensation Plan for Executives or a successor plan (the "Deferred Compensation Plan"), the terms of the Deferred Compensation Plan will govern the timing of payment of vested restricted shares. The Company granted to the remaining Executive Officers, restricted shares of its common stock under the Form of Restricted Stock Agreement filed as Exhibit 99.2 to this Report on Form 8-K. Restrictions on the shares lapse as to 33% of the total number of shares granted on each of the third and fourth anniversaries of the date of grant, and as to 34% of the total number of shares granted on the fifth anniversary of the date of grant. In general, the shares of restricted stock are subject to forfeiture during the restricted period upon termination of employment for any reason other than death, permanent disability, retirement, or involuntary termination by the Company for reasons other than cause (as defined in the Restricted Stock Agreement). In addition, the lapse of restrictions on shares issued under the Restricted Stock Agreement will be accelerated in the event of a change in control of the Company (as defined in the Restricted Stock Agreement), and the restricted shares will vest immediately. If the employee elects to defer any of the restricted shares pursuant to the Deferred Compensation Plan, the terms of the Deferred Compensation Plan will govern the timing of payment of vested restricted shares. 1 Performance Share Agreement The Company granted to Ms. Bern, restricted stock units with respect to shares of its common stock under the Form of Performance Share Agreement filed as Exhibit 99.3 to this Report on Form 8-K. The actual number of shares that will vest and be distributed pursuant to the Performance Share Agreement will depend on the Company's achievement of certain performance goals over a three-year performance period or the satisfaction of other conditions described in the Performance Share Agreement. The performance goal relates to the Company's achievement of a specified level of cumulative free cash flow (as defined in the Performance Share Agreement), and provides for 100% vesting upon achievement of the target amount, 50% vesting upon achievement of a minimum amount, and 200% vesting upon achievement of a maximum amount, with interpolation between these measuring points. The restricted stock units generally vest on February 2, 2008, subject to continued employment with the Company and to the Company's achievement of the performance goals specified in the Performance Share Agreement. In general, the restricted stock units are subject to forfeiture during the restricted period upon termination of employment for any reason other than death, disability, retirement, termination by the employee for good reason, or termination by the Company for reasons other than cause. The terms "disability," "good reason," and "cause" have the meanings ascribed to such terms in the Employment Agreement by and between the Company and Dorrit J. Bern dated as of January 1, 2005 (the "Employment Agreement"), filed as Exhibit 99.1 to the Company's Report on Form 8-K dated January 3, 2005 and filed on January 4, 2005. In addition, the lapse of restrictions on restricted stock units under the Performance Share Agreement will be accelerated if Ms. Bern resigns for good reason, is terminated without cause, dies or becomes disabled, or in the event of a change in control of the Company (as defined in the Employment Agreement), and shares of common stock equal to the Target Shares (as defined in the Performance Share Agreement) will vest immediately. A non-renewal of the Employment Agreement by the Company will be treated as a termination for good reason. If the employee elects to defer any of the performance shares pursuant to the Company's Variable Deferred Compensation Plan for Executives or a successor plan (the "Deferred Compensation Plan"), the terms of the Deferred Compensation Plan will govern the timing of payment of vested shares. The Company granted to the remaining Executive Officers, restricted stock units with respect to shares of its common stock under the Form of Performance Share Agreement filed as Exhibit 99.4 to this Report on Form 8-K. The actual number of shares that will vest and be distributed pursuant to the Performance Share Agreement will depend on the Company's achievement of certain performance goals or the satisfaction of other conditions described in the Performance Share Agreement. The performance goal relates to the Company's achievement of a specified level of cumulative free cash flow (as defined in the Performance Share Agreement), and provides for 100% vesting upon achievement of the target amount, 50% vesting upon achievement of a minimum amount, and 200% vesting upon achievement of a maximum amount, with interpolation between these measuring points. The restricted stock units generally vest on February 2, 2008, subject to continued employment with the Company and to the Company's achievement of the performance goals specified in the Performance Share Agreement. In general, the restricted stock units are subject to forfeiture during the restricted period upon termination of employment for any reason other than death, permanent disability, retirement, or involuntary termination by the Company for reasons other than cause (as defined in the Performance Share Agreement). In addition, the lapse of restrictions on restricted stock units under the Performance Share Agreement will be accelerated in the event of a change in control of the Company (as defined in the Performance Share Agreement), and shares of common stock equal to the Target Shares (as defined in the Performance Share Agreement) will vest immediately. If the employee elects to defer any of the performance shares pursuant to the Deferred Compensation Plan, the terms of the Deferred Compensation Plan will govern the timing of payment of vested shares. 2 Awards Granted Under the Restricted Stock and Performance Share Agreements The number of restricted shares granted under the Restricted Stock Agreement, and the number of restricted stock units representing the Target Shares to be awarded under the Performance Share Agreement, for each of the executive officers who were named in the Company's 2004 Proxy Statement and/or who are expected to be named in the Company's 2005 Proxy Statement is as follows: Target Restricted Performance Name Shares Shares ---- ------ ------ Dorrit J. Bern............... 150,966 150,966 Joseph M. Baron.............. 45,000 30,000 Anthony A. DeSabato.......... 23,400 15,600 Eric M. Specter.............. 39,000 26,000 Colin D. Stern............... 28,800 19,200 Item 9.01 Financial Statements and Exhibits. (c) Exhibits. Exhibit No. Description 99.1 Form of Charming Shoppes, Inc. 2004 Stock Award and Incentive Plan Restricted Stock Agreement between the Company and Dorrit J. Bern. 99.2 Form of Charming Shoppes, Inc. 2004 Stock Award and Incentive Plan Restricted Stock Agreement - Section 16 Officers. 99.3 Form of Charming Shoppes, Inc. 2004 Stock Award and Incentive Plan Performance Share Agreement between the Company and Dorrit J. Bern. 99.4 Form of Charming Shoppes, Inc. 2004 Stock Award and Incentive Plan Performance Share Agreement. 3 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. CHARMING SHOPPES, INC. ---------------------- (Registrant) Date: February 11, 2005 /S/ ERIC M. SPECTER --------------------- Eric M. Specter Executive Vice President Chief Financial Officer 4 EXHIBIT INDEX Exhibit No. Description 99.1 Form of Charming Shoppes, Inc. 2004 Stock Award and Incentive Plan Restricted Stock Agreement between the Company and Dorrit J. Bern. 99.2 Form of Charming Shoppes, Inc. 2004 Stock Award and Incentive Plan Restricted Stock Agreement - Section 16 Officers. 99.3 Form of Charming Shoppes, Inc. 2004 Stock Award and Incentive Plan Performance Share Agreement between the Company and Dorrit J. Bern. 99.4 Form of Charming Shoppes, Inc. 2004 Stock Award and Incentive Plan Performance Share Agreement. EX-99 2 feb11991.txt EXHIBIT 99.1 EXHIBIT 99.1 CHARMING SHOPPES, INC. 2004 STOCK AWARD AND INCENTIVE PLAN RESTRICTED STOCK AGREEMENT Agreement dated as of February __, 2005, between CHARMING SHOPPES, INC. (the "Company") and DORRIT J. BERN (the "Employee"). It is agreed as follows: 1. Grant of Restricted Stock; Consideration; Employee Acknowledgments. The Company hereby confirms the grant, under the Company's 2004 Stock Award and Incentive Plan (the "Plan"), to Employee on the date of this Restricted Stock Agreement (the "Date of Grant") of _________ shares of the Company's common stock, par value $0.10 per share ("Shares"), pursuant to Section 6(d) of the Plan, and subject to restrictions as set forth herein and in the Plan ("Restricted Stock"). Employee shall be required to pay no cash consideration for the grant of the Restricted Stock, but Employee's prior services to the Company and performance of services to the Company from the date of grant to the date of issuance of the Shares, and her agreement to abide by the terms set forth in the Plan, this Restricted Stock Agreement (the "Agreement"), and any Rules and Regulations under the Plan, shall be deemed to be consideration for this grant of Restricted Stock. Employee acknowledges and agrees that (i) the Restricted Stock is nontransferable as provided in Section 3(a) hereof and Sections 6(d) and 10(b) of the Plan, (ii) the Restricted Stock is subject to forfeiture in the event of Employee's termination of employment in certain circumstances, as specified in Section 3(b) hereof, and (iii) sales of Shares following the lapse of restrictions 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 Restricted Stock has been granted to Employee under the Plan, a copy of which is attached hereto. All of the terms, conditions and other provisions of the Plan are hereby incorporated by reference into this Agreement. Employee hereby accepts the grant of Restricted Stock, acknowledges receipt of the attached copy 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. - ------------------------------------------------------------------------------ THE DATE OF GRANT OF THIS RESTRICTED STOCK IS: ________________ GRANT NUMBER: _________ 3. Restrictions on Restricted Stock. (a) Restrictions Generally. Until they lapse in accordance with Section 3(b), 3(c), or 3(d), the following restrictions (the "Restrictions") shall apply to the Restricted Stock: (1) Employee shall have no right to sell, transfer, assign, pledge, or otherwise encumber or dispose of the Restricted Stock (except for transfers and forfeitures to the Company); and (2) the Restricted Stock shall be subject to the risk of forfeiture as set forth in Section 3(b). Employee shall be entitled to receive dividends and distributions on the Restricted Stock in accordance with Section 4. If certificates are issued to Employee, Employee shall be entitled to vote Restricted Stock on any matter submitted to a vote of holders of Common Stock, to the extent permitted by law; and Employee shall have all other rights of a shareholder of the Company except as otherwise expressly limited or provided under this Agreement. (b) Termination of Employment. (i) Forfeiture. Unless otherwise determined by the Committee or as provided by the Employment Agreement described below, if Employee's employment terminates and she thereafter is not an employee of the Company or any of its subsidiaries (a "Termination"), and such Termination is for any reason other than due to death, Disability, termination by Employee for Good Reason, or termination by the Company for reasons other than Cause, the Restricted Stock as to which Restrictions have not lapsed at or before such Termination shall be forfeited at the time of such Termination. For purposes of this Agreement, "Cause," "Good Reason" and "Disability" shall have the meanings ascribed to such terms in the Employment Agreement by and between the Company and Employee dated as of January 1, 2005 (the "Employment Agreement"). Accordingly, unless otherwise determined by the Committee or as provided by the Employment Agreement, Employee's voluntary Termination (other than due to Disability or for Good Reason) or Termination by the Company for Cause will result in all shares of Restricted Stock which remain subject to Restrictions being immediately forfeited. (ii) Vesting. In the event of a Termination due to death, Disability, termination by Employee for Good Reason, or termination by the Company for reasons other than Cause, the Restrictions on all Restricted Stock shall lapse at the time of such Termination. Notwithstanding anything in this Agreement to the contrary, the Restrictions on the Restricted Stock shall lapse under all events as may be specified for full vesting of stock awards under the Employment Agreement. 2 (c) Expiration of Restrictions. Unless the Restrictions on Restricted Stock lapse earlier under Section 3(b) or 3(d), the Restrictions shall lapse according to the following schedule, in each instance subject to Employee's continued employment with the Company through the relevant vesting date: Vesting Date Shares ------------ ------ January 31, 2007 100% Upon expiration of the Restrictions on any Restricted Stock, the Company shall promptly deliver to Employee one or more certificates representing such Shares (which shall no longer be deemed to be Restricted Stock), with any legend referring to the Restrictions removed from such certificate(s), or shall cause such Shares to be delivered to a broker or bank which maintains an account for Employee or Employee's designee, for deposit to such account, or shall make delivery of such Shares by other reasonable means determined by the Committee. (d) Acceleration of Expiration of Restrictions. In the event of a Change in Control at a time that Employee is employed by the Company or any of its subsidiaries (or simultaneously with Employee's Termination), the Restrictions on the Restricted Stock shall lapse immediately prior to the Change in Control. For purposes of this Agreement, "Change in Control" shall have the meaning ascribed to such term in the Employment Agreement. (e) Certificates Representing Restricted Stock. Restricted Stock shall be evidenced by issuance of one or more certificates in the name of Employee, bearing an appropriate legend referring to the terms, conditions, and Restrictions applicable hereunder. Unless otherwise determined by the Committee, such certificates shall remain in the physical custody of the General Counsel of the Company or his designee until such time as the Restrictions on such shares have lapsed. In addition, Restricted Stock shall be subject to such stop-transfer orders and other restrictive measures as the General Counsel of the Company shall deem advisable under federal or state securities laws, rules and regulations thereunder, and the rules of the Nasdaq National Market System or any national securities exchange on which Common Stock is then quoted or listed, or to implement the Restrictions, and the General Counsel may cause a legend or legends to be placed on any such certificates to make appropriate reference to the Restrictions. (f) Stock Powers. Employee agrees to execute and deliver to the Company one or more stock powers, in such form as may be specified by the General Counsel, authorizing the transfer of the Restricted Stock to the Company, at the Date of Grant of the Restricted Stock or upon request at any time thereafter. 4. Dividends and Distributions. Unless otherwise determined by the Committee, payment of all dividends and distributions on the Restricted Stock which would otherwise be payable to the Employee when, as, and if declared and paid on Shares, shall be deferred until and payable to the Employee when, as and if the Restrictions on the Restricted Stock lapse under Section 3 in the same proportion that the number of shares of Restricted Stock as to which the Restrictions have lapsed bears to the total number of shares of Restricted Stock. Payment shall be made on the applicable date 3 described in this Agreement. Unless otherwise determined by the Committee, all dividends and distributions referred to in the immediately preceding sentence, other than regular quarterly cash dividends (if any), shall be deemed reinvested in additional Restricted Stock at the Fair Market Value of Shares on the date when such dividends and distributions would be paid on Shares and such additional Restricted Stock shall be subject to the same Restrictions as apply to the original Restricted Stock. No interest will be credited on any cash amount (if any) of such dividends payable at the time of lapse of the Restrictions. Such Restrictions shall lapse as to the shares of additional Restricted Stock in the same proportion that the number of shares of original Restricted Stock as to which the Restrictions have lapsed bears to the total number of shares of original Restricted Stock. 5. Tax Withholding. Employee agrees to remit to the Company and any subsidiary, and authorizes the Company and any subsidiary to deduct from any payment to be made to Employee hereunder if such remittance has not been made, any amount that federal, state, local, or foreign tax law requires to be withheld with respect to the Restricted Stock or lapse of restrictions thereon. Unless otherwise determined by the Board or Committee, unless the Employee has made other arrangements satisfactory to the Company to provide for payment of mandatory withholding taxes in advance of the applicable date on which the risk of forfeiture is to lapse (by such deadline as the Company may specify), the Company will withhold from the number of Shares as to which the risk of forfeiture is then to lapse a number of whole shares up to but not exceeding that number which has a Fair Market Value nearest to but not exceeding the amount of federal, state and local taxes required to be withheld as a result of the lapse of such risks of forfeiture. The Employee may elect such other methods of satisfying such withholding obligation as may be permitted under rules and regulations adopted by the Committee and in effect at the time of the lapse of such risks of forfeiture, which may include the surrender of shares of the Company's common stock owned separately by Employee. In the case of the withholding or surrender of Shares to pay withholding taxes, the Shares withheld or the shares surrendered will be valued at the Fair Market Value determined in accordance with procedures for valuing shares as set forth in rules and regulations adopted by the Committee and otherwise in effect at the time of lapse of such risks of forfeiture. 6. Deferred Compensation Plan. Notwithstanding the foregoing, if Employee elects to defer any of the Restricted Stock pursuant to the Charming Shoppes Variable Deferred Compensation Plan for Executives, or a successor plan (the "Deferred Compensation Plan"), the terms of the Deferred Compensation Plan shall govern the timing of payment of vested Restricted Stock and dividend equivalents. The Company and Employee acknowledge and agree that if any provisions of this Agreement are subject to section 409A of the Internal Revenue Code of 1986, as amended (the "Code"), the Company and Employee may take such actions as they mutually deem appropriate to modify the terms of this Agreement so as to comply with section 409A of the Code. 4 7. 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 Restricted Stock granted hereby, and supersedes any prior agreements or documents with respect to such Restricted Stock. No amendment, alteration, suspension, discontinuation, or termination of this Agreement which may impose any additional obligation upon the Company or materially and adversely affect the rights of Employee with respect to the Restricted Stock 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 (if subject to such an additional obligation) and by Employee (if Employee's rights are materially and adversely affected). CHARMING SHOPPES, INC. BY: - -------------------------------------- (Authorized Officer) EMPLOYEE: - -------------------------------------- Dorrit J. Bern Attachments: 2004 Stock Award and Incentive Plan Form of Stock Power 5 STOCK POWER FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto Charming Shoppes, Inc. _____shares of Common Stock, $0.10 par value per share, of Charming Shoppes, Inc., a Pennsylvania corporation (the "Corporation"), registered in the name of the undersigned on the books and records of the Corporation, and does hereby irrevocably constitute and appoint Colin D. Stern and Anthony A. DeSabato, and each of them, attorneys, to transfer the Common Stock on the books of the Corporation, with full power of substitution in the premises. ------------------------ Dorrit J. Bern Date: ----------------------- 6 EX-99 3 feb11992.txt EXHIBIT 99.2 EXHIBIT 99.2 CHARMING SHOPPES, INC. 2004 STOCK AWARD AND INCENTIVE PLAN RESTRICTED STOCK AGREEMENT - SECTION 16 OFFICERS Agreement dated as of ________, 200__, between CHARMING SHOPPES, INC. (the "Company") and __________________ (the "Employee"). It is agreed as follows: 1. Grant of Restricted Stock; Consideration; Employee Acknowledgments. The Company hereby confirms the grant, under the Company's 2004 Stock Award and Incentive Plan (the "Plan"), to Employee on the date of this Restricted Stock Agreement (the "Date of Grant") of ______ shares of the Company's common stock, par value $0.10 per share ("Shares"), pursuant to Section 6(d) of the Plan, and subject to restrictions as set forth herein and in the Plan ("Restricted Stock"). Employee shall be required to pay no cash consideration for the grant of the Restricted Stock, but Employee's prior services to the Company, performance of services to the Company from the date of grant to the date of issuance of the Shares and performance of further services prior to the expiration of applicable restrictions relating to the Restricted Stock and otherwise during the term of his or her employment, and his or her agreement to abide by the terms set forth in the Plan, this Restricted Stock Agreement (the "Agreement"), and any Rules and Regulations under the Plan, shall be deemed to be consideration for this grant of Restricted Stock. Employee acknowledges and agrees that (i) the Restricted Stock is nontransferable as provided in Section 3(a) hereof and Sections 6(d) and 10(b) of the Plan, (ii) the Restricted Stock is subject to forfeiture in the event of Employee's termination of employment in certain circumstances, as specified in Section 3(b) hereof, and (iii) sales of Shares following the lapse of restrictions 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 Restricted Stock has been granted to Employee under the Plan, a copy of which is attached hereto. 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. Employee hereby accepts the grant of Restricted Stock, acknowledges receipt of the attached copy 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. - -------------------------------------------------------------------------------- THE DATE OF GRANT OF THIS RESTRICTED STOCK IS: _____________ GRANT NUMBER: __________ 3. Restrictions on Restricted Stock. (a) Restrictions Generally. Until they lapse in accordance with Section 3(b), 3(c), or 5(a), the following restrictions (the "Restrictions") shall apply to the Restricted Stock: (1) Employee shall have no right to sell, transfer, assign, pledge, or otherwise encumber or dispose of the Restricted Stock (except for transfers and forfeitures to the Company); and (2) the Restricted Stock shall be subject to the risk of forfeiture as set forth in Section 3(b). Employee shall be entitled to receive dividends and distributions on the Restricted Stock in accordance with Section 4. Employee shall be entitled to vote Restricted Stock on any matter submitted to a vote of holders of Common Stock, to the extent permitted by law; and Employee shall have all other rights of a shareholder of the Company except as otherwise expressly limited or provided under this Agreement. (b) Forfeiture. Unless otherwise determined by the Committee, if Employee's employment terminates and he or she thereafter is not an employee of the Company or any of its subsidiaries (a "Termination"), and such Termination is for any reason other than due to death, permanent disability, Retirement or involuntary termination by the Company for reasons other than "Cause," the Restricted Stock as to which Restrictions have not lapsed at or before such Termination shall be forfeited at the time of such Termination. Accordingly, unless otherwise determined by the Committee, Employee's voluntary Termination (other than due to Retirement) or Termination by the Company for Cause will result in all shares of Restricted Stock which remain subject to Restrictions being immediately forfeited. Vesting and forfeiture terms applicable to other terminations are as follows: (i) Death or Disability. In the event of Employee's Termination due to death or permanent disability, all Restrictions on the Restricted Stock shall lapse at the time of such Termination (i.e., none of the Restricted Stock will be forfeited). For purposes of this Agreement, the existence of a "permanent disability" shall be determined by, or in accordance with criteria and standards adopted by, the Committee. (ii) Termination Not for Cause. In the event of Employee's Termination due to involuntary termination by the Company for reasons other than "Cause," the Restrictions on those shares of Restricted Stock as to which Restrictions would have lapsed at the next anniversary of the Date of Grant in the absence of a Termination (but disregarding any other event occurring prior to that next anniversary date) will lapse on an accelerated basis at the time of such Termination (i.e., if Termination is more than two (2) years after the Date of Grant, one additional tranche of the Restricted Stock will become non-forfeitable), so those shares of Restricted Stock will not be forfeited, and the other shares of Restricted Stock as to which Restrictions have not lapsed at or before such Termination (i.e., any tranche as to which Restrictions would have lapsed at an anniversary of the Date of Grant after the next anniversary date) shall be forfeited at the time of such Termination. (iii) Definition of "Cause." For purposes of this Agreement, "Cause" shall mean Employee's chronic neglect, refusal or failure to fulfill his or her employment duties and responsibilities, other than for reasons of sickness, accident or other similar causes beyond Employee's control. Such neglect, refusal or failure shall be determined in the sole and reasonable judgment of the Committee. (iv) Retirement. In the event of Employee's Termination due to Retirement, Employee's Restricted Stock will not be forfeited upon such Retirement, but instead the Restrictions on Employee's Restricted Stock shall remain in effect until the earlier of the time such Restrictions lapse under Section 3(c) or 5(a) or Employee's death. During such post-Retirement period in which the Restrictions remain in effect, the Restricted Stock shall be immediately forfeited if Employee: (A) directly or indirectly owns any equity or proprietary interest in (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 (as defined below) of the Company in the United States, whether on his or her own behalf or on behalf of any person, 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 2 proprietary information of the Company to any person, firm, corporation, association, or other entity for any reason or purpose whatsoever, or make 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. For purposes of this Agreement, "Retirement" shall mean a retirement at or after Employee has attained age 62, and "Competitor" shall mean (a) at any time only a chain of retail stores with 50 or more store locations; provided, however, that the average square footage of the chain's stores is less than 15,000 square feet, or (b) a chain of retail stores with 100 or more store locations (without regard to square footage) whose gross revenues in plus size women's apparel (sizes 14 - 34) exceed 5% of its total gross revenues. (c) Expiration of Restrictions. Unless the Restrictions on Restricted Stock lapse earlier under Section 3(b) or 5(a), the Restrictions shall lapse as to thirty-three (33%) percent of the total number of shares of Restricted Stock on the third anniversary of the Date of Grant, an additional thirty-three (33%) percent of the total number of shares of Restricted Stock on the fourth anniversary of the Date of Grant and the remaining thirty-four (34%) percent of the total number of shares of Restricted Stock on the fifth anniversary of the Date of Grant. Upon expiration of the Restrictions on any Restricted Stock, the Company shall promptly deliver to Employee one or more certificates representing such Shares (which shall no longer be deemed to be Restricted Stock), with any legend referring to the Restrictions removed from such certificate(s), or shall cause such Shares to be delivered to a broker or bank which maintains an account for Employee or Employee's designee, for deposit to such account, or shall make delivery of such Shares by other reasonable means determined by the Committee. (d) Certificates Representing Restricted Stock. Restricted Stock shall be evidenced by issuance of one or more certificates in the name of Employee, bearing an appropriate legend referring to the terms, conditions, and Restrictions applicable hereunder. Unless otherwise determined by the Committee, such certificates shall remain in the physical custody of the General Counsel of the Company or his designee until such time as the Restrictions on such shares have lapsed. In addition, Restricted Stock shall be subject to such stop-transfer orders and other restrictive measures as the General Counsel of the Company shall deem advisable under federal or state securities laws, rules and regulations thereunder, and the rules of the Nasdaq National Market System or any national securities exchange on which Common Stock is then quoted or listed, or to implement the Restrictions, and the General Counsel may cause a legend or legends to be placed on any such certificates to make appropriate reference to the Restrictions. (e) Stock Powers. Employee agrees to execute and deliver to the Company one or more stock powers, in such form as may be specified by the General Counsel, authorizing the transfer of the Restricted Stock to the Company, at the Date of Grant of the Restricted Stock or upon request at any time thereafter. 4. Dividends and Distributions. Unless otherwise determined by the Committee, payment of all dividends and distributions on the Restricted Stock which would otherwise be payable to the Employee when, as, and if declared and paid on Shares, shall be deferred until and payable to the Employee when, as and if the Restrictions on the Restricted Stock lapse under Sections 3(a), 3(b), 3(c) or 5(a) in the same proportion that the number of shares of Restricted Stock as to which the Restrictions have lapsed bears to the total number of shares of Restricted Stock. Unless otherwise determined by the Committee, all dividends and distributions referred to in the immediately preceding sentence, other than regular quarterly cash dividends (if any), shall be deemed reinvested in additional Restricted Stock at the Fair Market Value of Shares on the date when such dividends and distributions would be paid on Shares and such additional Restricted Stock shall be subject to the same Restrictions as apply to the original Restricted Stock. No interest will be credited on any cash amount (if any) of such dividends payable at the time of lapse of the Restrictions. Such Restrictions shall lapse as to the shares of additional Restricted Stock in the same proportion that the number of shares of original Restricted Stock as to which the Restrictions have lapsed bears to the total number of shares of original Restricted Stock. 3 5. Change of Control Provisions. (a) Acceleration of Expiration of Restrictions. In the event of a Change of Control at a time that Employee is employed by the Company or any of its subsidiaries (or simultaneously with Employee's Termination) and after the date of grant of the Restricted Stock, the Restrictions on the Restricted Stock shall lapse immediately prior to the Change of Control. (b) 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 13(d) of the Exchange Act and the rules thereunder, except that, for purposes of this Section 5, "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 of Control" means and shall be deemed to have occurred if (i) 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 (ii) 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 (iii) 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 (iv) 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. (3) "Person" shall have the meaning ascribed for purposes of Section 13(d) 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; 4 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. 6. Tax Withholding. Employee agrees to remit to the Company and any subsidiary, and authorizes the Company and any subsidiary to deduct from any payment to be made to Employee hereunder if such remittance has not been made, any amount that federal, state, local, or foreign tax law requires to be withheld with respect to the Restricted Stock or lapse of restrictions thereon. Unless otherwise determined by the Board or Committee, unless the Employee has made other arrangements satisfactory to the Company to provide for payment of mandatory withholding taxes in advance of the applicable date on which the risk of forfeiture is to lapse (by such deadline as the Company may specify), the Company will withhold from the number of Shares as to which the risk of forfeiture is then to lapse a number of whole shares up to but not exceeding that number which has a Fair Market Value nearest to but not exceeding the amount of federal, state and local taxes required to be withheld as a result of the lapse of such risks of forfeiture. The Employee may elect such other methods of satisfying such withholding obligation as may be permitted under rules and regulations adopted by the Committee and in effect at the time of the lapse of such risks of forfeiture, which may include the surrender of shares of the Company's common stock owned separately by Employee. In the case of the withholding or surrender of Shares to pay withholding taxes, the Shares withheld or the shares surrendered will be valued at the Fair Market Value determined in accordance with procedures for valuing shares as set forth in rules and regulations adopted by the Committee and otherwise in effect at the time of lapse of such risks of forfeiture. 7. Deferred Compensation Plan. Notwithstanding the foregoing, if Employee elects to defer any of the Restricted Stock pursuant to the Charming Shoppes Variable Deferred Compensation Plan for Executives, or a successor plan (the "Deferred Compensation Plan"), the terms of the Deferred Compensation Plan shall govern the timing of payment of vested Restricted Stock and dividend equivalents. The Company and Employee acknowledge and agree that if any provisions of this Agreement are subject to section 409A of the Internal Revenue Code of 1986, as amended (the "Code"), the Company and Employee may take such actions as they mutually deem appropriate to modify the terms of this Agreement so as to comply with section 409A of the Code. 5 8. 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 Restricted Stock granted hereby, and supersedes any prior agreements or documents with respect to such Restricted Stock. No amendment, alteration, suspension, discontinuation, or termination of this Agreement which may impose any additional obligation upon the Company or materially and adversely affect the rights of Employee with respect to the Restricted Stock 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 (if subject to such an additional obligation) and by Employee (if Employee's rights are materially and adversely affected). CHARMING SHOPPES, INC. BY:__________________________ (Authorized Officer) EMPLOYEE: __________________________ Attachments: 2004 Stock Award and Incentive Plan Form of Stock Power 6 STOCK POWER FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto Charming Shoppes, Inc. __________ shares of Common Stock, $0.10 par value per share, of Charming Shoppes, Inc., a Pennsylvania corporation (the "Corporation"), registered in the name of the undersigned on the books and records of the Corporation, and does hereby irrevocably constitute and appoint Colin D. Stern and Anthony A. DeSabato, and each of them, attorneys, to transfer the Common Stock on the books of the Corporation, with full power of substitution in the premises. __________________________________ Date:_____________________________ 7 EX-99 4 feb11993.txt EXHIBIT 99.3 EXHIBIT 99.3 CHARMING SHOPPES, INC. 2004 STOCK AWARD AND INCENTIVE PLAN PERFORMANCE SHARE AGREEMENT Agreement dated as of February ___, 2005, between CHARMING SHOPPES, INC. (the "Company") and DORRIT J. BERN (the "Employee"). It is agreed as follows: 1. Grant of Performance Shares; Consideration; Employee Acknowledgments. (a) The Company hereby confirms the grant to Employee, under the Company's 2004 Stock Award and Incentive Plan (the "Plan"), of restricted stock units ("Performance Shares") with respect to ______________ shares of the Company's common stock, par value $0.10 per share ("Shares"), subject to restrictions as set forth herein and in the Plan. The Performance Shares are granted as of the date of this Performance Share Agreement (the "Date of Grant"). The number of Performance Shares set forth in this Section 1(a) is the target award of Performance Shares (the "Target Shares"). The actual number of Shares that will vest and be distributed pursuant to this Performance Share Agreement (the "Agreement") shall depend on the Company's achievement of the performance goals described in Section 3(c) below or the satisfaction of other conditions described in Section 3(b) or 3(d) of this Agreement. The Performance Shares are granted pursuant to Section 6(e) of the Plan. (b) Employee shall be required to pay no cash consideration for the grant of the Performance Shares, but Employee's prior services to the Company and performance of services to the Company from the date of grant to the date of issuance of the Shares, and her agreement to abide by the terms set forth in the Plan, this Agreement, and any Rules and Regulations under the Plan, shall be deemed to be consideration for this grant of Performance Shares. Employee acknowledges and agrees that (i) the Performance Shares are nontransferable as provided in Section 3(a) hereof and Section 10(b) of the Plan, (ii) the Performance Shares are subject to forfeiture in the event of Employee's termination of employment in certain circumstances, as specified in Section 3(b) hereof or to the extent that the performance goals specified in Section 3(c) below are not met, and (iii) sales of Shares following vesting of the 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. - ------------------------------------------------------------------------------ THE DATE OF GRANT OF THESE PERFORMANCE SHARES IS: ________________ GRANT NUMBER: _________ 2. Incorporation of Plan by Reference. The Performance Shares have been granted to Employee under the Plan, a copy of which is attached hereto. All of the terms, conditions and other provisions of the Plan are hereby incorporated by reference into this Agreement. Employee hereby accepts the grant of Performance Shares, acknowledges receipt of the attached copy 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. The number and type of Performance Shares (including the number and type of Target Shares) are subject to adjustment pursuant to Section 10(c) of the Plan. 3. Restrictions on Performance Shares. (a) Restrictions Generally. Until the Shares vest in accordance with Section 3(b), 3(c), or 3(d), the following restrictions (the "Restrictions") shall apply to the Performance Shares: (1) Employee shall have no right to sell, transfer, assign, pledge, or otherwise encumber or dispose of the Performance Shares (except for transfers and forfeitures to the Company); and (2) the Performance Shares shall be subject to the risk of forfeiture as set forth in Section 3(b) and 3(c). Employee shall be entitled to receive dividend and distribution equivalents with respect to the Performance Shares in accordance with Section 4. Employee shall not have any rights of a shareholder of the Company, including the right to vote, with respect to Performance Shares, until actual Shares are issued to Employee upon vesting of the Shares. (b) Termination of Employment. (i) Forfeiture. Unless otherwise determined by the Committee or as provided by the Employment Agreement described below, if Employee's employment terminates and she thereafter is not an employee of the Company or any of its subsidiaries (a "Termination"), and such Termination is for any reason other than due to death, Disability, termination by Employee for Good Reason, or termination by the Company for reasons other than Cause, the Performance Shares that have not vested at or before such Termination shall be forfeited at the date of such Termination. For purposes of this Agreement, "Cause," "Good Reason" and "Disability" shall have the meanings ascribed to such terms in the Employment Agreement by and between the Company and Employee dated as of January 1, 2005 (the "Employment Agreement"). Accordingly, unless otherwise determined by the Committee or as provided by the Employment Agreement, Employee's voluntary Termination (other than due to Disability or for Good Reason) or Termination by the Company for Cause will result in forfeiture of all Performance Shares that have not vested. (ii) Vesting. In the event of a Termination due to death, Disability, termination by Employee for Good Reason, or termination by the Company for reasons other than Cause, Shares equal to the Target Shares shall vest and be distributed to Employee free of the Restrictions as of the date of such Termination. Notwithstanding anything in the Agreement to the contrary, Shares equal to the Target Shares shall vest and be distributed to Employee under all events as may be specified for full vesting of stock awards under the Employment Agreement. 2 (c) Vesting Based on Performance Goals. (i) Vesting Date. Unless the Target Shares vest earlier under Section 3(b) or 3(d), the Performance Shares shall vest on the February 2, 2008 (the "Vesting Date"), subject to Employee's continued employment with the Company to the Vesting Date and subject to the Company's achievement of the performance goals described in subsection (ii) below. (ii) Performance Goals. Except as provided in Section 3(b) or 3(d), the number of Shares that shall be vested pursuant to this Agreement shall depend on the Company's achievement of the following performance goals over the Performance Period. The Performance Period is the period beginning January 31, 2005 and ending February 2, 2008. The number of Shares that vest at the end of the Performance Period shall be determined based on the Company's Cumulative Free Cash Flow for the Performance Period, as follows: Cumulative Free Cash Flow for Percentage of Performance Period Target Shares That Vest ------------------ ----------------------- Minimum: 50% Target: 100% Maximum: 200% The percentage of Target Shares that shall vest will be interpolated between each of the measuring points, and the number of vested Shares shall be rounded up to the next highest whole Share. Free Cash Flow shall be calculated by the Committee using the definition and methodology set forth on the attached Exhibit A. (iii) Calculation of Vested Shares. At the end of the Performance Period, the Committee shall determine whether and to what extent the performance goals have been met, and the number of Performance Shares that shall be vested for the Performance Period. The Committee shall certify its conclusions in writing. Except as described in Section 3(b) or 3(d), Employee must be employed by the Company on the Vesting Date in order for Employee to receive payment with respect to the Performance Shares. If the Performance Shares vest at less than 100% of the Target Shares, the Performance Shares that do not vest shall be forfeited as of the Vesting Date. If the Performance Shares vest at more than 100% of the Target Shares, the number of Performance Shares shall be increased to the vested amount as of the Vesting Date. The Company shall distribute Shares to Employee equal to the vested Performance Shares, free of the Restrictions, not later than 30 days after receipt by the Company of the audit opinion of its independent auditors with respect to the Company's annual financial statements for the last fiscal year of the Performance Period, and in any event not later than 60 days after the Vesting Date. (iv) Coordination with Sections 3(b) and 3(d). If a Termination as described in Section 3(b) or a Change in Control as described in Section 3(d) occurs before the end of the Performance Period, the vesting of the Performance Shares shall be determined pursuant to Section 3(b) or 3(d), whichever is applicable. If no Termination or Change in Control occurs 3 before the end of the Performance Period, the vesting of the Performance Shares shall be determined pursuant to the achievement of performance goals under this Section 3(c). (d) Change in Control. In the event of a Change in Control at a time that Employee is employed by the Company or any of its subsidiaries (or simultaneously with Employee's Termination), Shares equal to the Target Shares shall vest immediately prior to the Change in Control and shall be distributed free of the Restrictions effective as of the Change of Control. For purposes of this Agreement, "Change in Control" shall have the meaning ascribed to such term in the Employment Agreement. (e) Delivery of Certificates. Upon vesting of Performance Shares under any provision of this Section 3, the Company shall promptly deliver to Employee one or more certificates representing the vested Shares, or shall cause such Shares to be delivered to a broker or bank which maintains an account for Employee or Employee's designee, for deposit to such account, or shall make delivery of such Shares by other reasonable means determined by the Committee. 4. Dividend and Distribution Equivalents. The Company shall credit to a bookkeeping account on its records for Employee an amount equal to all dividends and distributions on the Target Shares which would otherwise be payable to the Employee if the Target Shares represented actual Shares, when, as, and if declared and paid on Shares. The accumulated dividends and distributions shall be deferred and shall be payable to the Employee when, as and if the Target Shares vest under Section 3 in the same proportion that the number of Target Shares that vest bears to the total number of Target Shares. Payment shall be made on the date on which the vested Shares are issued as described in the applicable provision of Section 3. Unless otherwise determined by the Committee, all dividends and distributions referred to in the immediately preceding sentence, other than regular quarterly cash dividends (if any), shall be deemed reinvested in additional Performance Shares at the Fair Market Value of Shares on the date when such dividends and distributions would be paid on Shares and such additional Performance Shares shall be subject to the same vesting restrictions as apply to the original Performance Shares. The shares of additional Performance Shares shall vest in the same proportion that the number of original Target Shares that vest bears to the total number of original Target Shares. No interest will be credited on any cash amount (if any) of dividends payable at the time of vesting. 5. Tax Withholding. Employee agrees to remit to the Company and any subsidiary, and authorizes the Company and any subsidiary to deduct from any payment to be made to Employee hereunder if such remittance has not been made, any amount that federal, state, local, or foreign tax law requires to be withheld with respect to distribution of the Shares and the dividend and distribution amounts described in Section 4. Unless otherwise determined by the Board or Committee, unless the Employee has made other arrangements satisfactory to the Company to provide for payment of mandatory withholding taxes in advance of the payment date (by such deadline as the Company may specify), the Company will withhold from the number of vested Shares a number of whole Shares up to but not exceeding that number which has a Fair Market 4 Value nearest to but not exceeding the minimum amount of federal, state and local taxes required to be withheld as a result of the payment. The Employee may elect such other methods of satisfying such withholding obligation as may be permitted under rules and regulations adopted by the Committee and in effect at the time of payment, which may include the surrender of Shares of the Company's common stock owned separately by Employee. In the case of the withholding or surrender of Shares to pay withholding taxes, the Shares withheld or the Shares surrendered will be valued at the Fair Market Value determined in accordance with procedures for valuing Shares as set forth in rules and regulations adopted by the Committee and otherwise in effect at the time of lapse of such risks of forfeiture. 6. Deferred Compensation Plan. Notwithstanding the foregoing, if Employee elects to defer any of the Performance Shares pursuant to the Charming Shoppes Variable Deferred Compensation Plan for Executives, or a successor plan (the "Deferred Compensation Plan"), the terms of the Deferred Compensation Plan shall govern the timing of payment of vested Shares and dividend and distribution amounts. The Company and Employee acknowledge and agree that if any provisions of this Agreement are subject to section 409A of the Internal Revenue Code of 1986, as amended (the "Code"), the Company and Employee may take such actions as they mutually deem appropriate to modify the terms of this Agreement so as to comply with section 409A of the Code. 7. 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 Performance Shares granted hereby, and supersedes any prior agreements or documents with respect to such Performance Shares. No amendment, alteration, suspension, discontinuation, or termination of this Agreement which may impose any additional obligation upon the Company or materially and adversely affect the rights of Employee with respect to the Performance Shares 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 (if subject to such an additional obligation) and by Employee (if Employee's rights are materially and adversely affected). CHARMING SHOPPES, INC. EMPLOYEE: BY:_________________________ BY:________________________________ (Authorized Officer) Dorrit J. Bern Attachment: Exhibit A: Cumulative Free Cash Flow 5 EXHIBIT A CUMULATIVE FREE CASH FLOW Performance Period - Fiscal Years 2006, 2007 and 2008 - -------------------------------------------------------------------------------- Three Year Cumulative Free Cash Flow* at Target - -------------------------------------------------------------------------------- * The Three Year Cumulative Free Cash Flow means the aggregate amount of Free Cash Flow** for each of fiscal years 2006, 2007 and 2008. ** "Free Cash Flow" means Net Cash provided by Operating Activities*** (Adjusted for one-time non-recurring cash charges in accordance with generally accepted accounting principles consistently applied) minus (the sum of Investment in Capital Assets*** (excluding purchases of Assets in connection with an acquisition of a business) plus Purchases of Assets under Capital Leases***). *** As defined and recorded in the Company's Consolidated Statement of Cash Flows for each of the three fiscal years ended in the Performance Period. a-1 EX-99 5 feb11994.txt EXHIBIT 99.4 EXHIBIT 99.4 CHARMING SHOPPES, INC. 2004 STOCK AWARD AND INCENTIVE PLAN PERFORMANCE SHARE AGREEMENT Agreement dated as of February ___, 2005, between CHARMING SHOPPES, INC. (the "Company") and _____________________________ (the "Employee"). It is agreed as follows: 1. Grant of Performance Shares; Consideration; Employee Acknowledgments. (a) The Company hereby confirms the grant to Employee, under the Company's 2004 Stock Award and Incentive Plan (the "Plan"), of restricted stock units ("Performance Shares") with respect to ______________ shares of the Company's common stock, par value $0.10 per share ("Shares"), subject to restrictions as set forth herein and in the Plan. The Performance Shares are granted as of the date of this Performance Share Agreement (the "Date of Grant"). The number of Performance Shares set forth in this Section 1(a) is the target award of Performance Shares (the "Target Shares"). The actual number of Shares that will vest and be distributed pursuant to this Performance Share Agreement (the "Agreement") shall depend on the Company's achievement of the performance goals described in Section 3(c) below or the satisfaction of other conditions described in Section 3(b) or 3(d) of this Agreement. The Performance Shares are granted pursuant to Section 6(e) of the Plan. (b) Employee shall be required to pay no cash consideration for the grant of the Performance Shares, but Employee's prior services to the Company and performance of services to the Company from the date of grant to the date of issuance of the Shares, and his or her agreement to abide by the terms set forth in the Plan, this Agreement, and any Rules and Regulations under the Plan, shall be deemed to be consideration for this grant of Performance Shares. Employee acknowledges and agrees that (i) the Performance Shares are nontransferable as provided in Section 3(a) hereof and Section 10(b) of the Plan, (ii) the Performance Shares are subject to forfeiture in the event of Employee's termination of employment in certain circumstances, as specified in Section 3(b) hereof or to the extent that the performance goals specified in Section 3(c) below are not met, and (iii) sales of Shares following vesting (and, if deferred, any later settlement) of the Performance 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. - -------------------------------------------------------------------------------- THE DATE OF GRANT OF THESE PERFORMANCE SHARES IS: ________________ GRANT NUMBER: _________ 2. Incorporation of Plan by Reference. The Performance Shares have been granted to Employee under the Plan, a copy of which is attached hereto. All of the terms, conditions and other provisions of the Plan are hereby incorporated by reference into this Agreement. Employee hereby accepts the grant of Performance Shares, acknowledges receipt of the attached copy 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. The number and type of Performance Shares (including the number and type of Target Shares) are subject to adjustment pursuant to Section 10(c) of the Plan. 3. Restrictions on Performance Shares. (a) Restrictions Generally. Until the Shares vest in accordance with Section 3(b), 3(c), or 3(d), the following restrictions (the "Restrictions") shall apply to the Performance Shares: (1) Employee shall have no right to sell, transfer, assign, pledge, or otherwise encumber or dispose of the Performance Shares (except for transfers and forfeitures to the Company); and (2) the Performance Shares shall be subject to the risk of forfeiture as set forth in Section 3(b) and 3(c). Employee shall be entitled to receive dividend and distribution equivalents with respect to the Performance Shares in accordance with Section 4. Employee shall not have any rights of a shareholder of the Company, including the right to vote, with respect to Performance Shares, until actual Shares are issued to Employee upon vesting of the Shares. (b) Termination of Employment; Forfeiture. Unless otherwise determined by the Committee, if Employee's employment terminates and immediately thereafter he or she is not an employee of the Company or any of its subsidiaries (a "Termination"), and such Termination is for any reason other than due to death, permanent disability, Retirement or involuntary termination by the Company for reasons other than "Cause," the Performance Shares as to which Restrictions have not lapsed at or before such Termination shall be forfeited at the time of such Termination. Accordingly, Employee's voluntary Termination (other than due to Retirement) or Termination by the Company for Cause will result in all Performance Shares which remain subject to Restrictions being immediately forfeited. Vesting and forfeiture terms applicable to other Terminations are as follows: (i) Death or Disability. In the event of Employee's Termination due to death or permanent disability, all Restrictions on the Target Shares shall lapse at the time of such Termination (i.e., none of the Target Shares will be forfeited); provided, however, that, unless otherwise determined by the Committee, Employee shall not thereafter earn Performance Shares in excess of the Target Shares under Section 3(c). For purposes of this Agreement, the existence of a "permanent disability" shall be determined by, or in accordance with criteria and standards adopted by, the Committee. (ii) Termination Not for Cause. In the event of Employee's Termination due to involuntary termination by the Company for reasons other than "Cause," at or after the expiration of one year after the Date of Grant, the Target Shares shall be adjusted pursuant to the Share Formula for the purpose of determining the number of shares that vest pursuant to Section 3(c) or, after a Change in Control, pursuant to Section 3(d); any 2 Target Shares reduced by operation of the Share Formula will be deemed forfeited, but the opportunity to earn Performance Shares in excess of 100% of the adjusted number of Target Shares under Section 3(c) will remain in effect. In the event of Employee's Termination due to involuntary termination by the Company for reason other than "Cause" before the expiration of one year after the Date of Grant, all Performance Shares as to which Restrictions have not lapsed at or before such Termination will immediately be forfeited. (iii) Definition of "Cause" and "Share Formula". For purposes of this Agreement, (a) "Cause" shall mean Employee's chronic neglect, refusal or failure to fulfill his or her employment duties and responsibilities, other than for reasons of sickness, accident or other similar causes beyond Employee's control; with such neglect, refusal or failure to be determined in the sole and reasonable judgment of the Committee; and (b) "Share Formula" shall be the product of (x) the total number of Target Shares times (y) a fraction, the numerator of which shall be the lesser of three (3) or the number of full and partial years that the Employee has been employed by the Company or any of its subsidiaries between the Date of Grant and the date of Termination and the denominator of which shall be the number three (3). (iv) Retirement. In the event of Employee's Termination due to Retirement, Employee's Performance Shares will not be forfeited upon such Retirement, but instead the Restrictions on Employee's Performance Shares shall remain in effect until the earlier of the time such Restrictions lapse under Section 3(c) or 3(d) or Employee's death. During such post-Retirement period in which the Restrictions remain in effect, all of the Employee's Performance Shares shall be immediately forfeited if Employee: (A) directly or indirectly owns any equity or proprietary interest in (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 (as defined below) of the Company in the United States, whether on his or her own behalf or on behalf of any person, 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 make 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. For purposes of this Agreement, "Retirement" shall mean a retirement at or after Employee has attained age 62, and "Competitor" shall mean (a) at any time only a chain of retail stores with 50 or more store locations; provided, however, that the average square footage of the chain's stores is less than 15,000 square feet, or (b) a chain of retail stores with 100 or more 3 store locations (without regard to square footage) whose gross revenues in plus size women's apparel (sizes 14 - 34) exceed 5% of its total gross revenues. (c) Vesting Based on Performance Goals. (i) Vesting Date. Unless the Performance Shares vest earlier under Section 3(b)(i) or 3(d), the Performance Shares shall vest on February 2, 2008 (the "Vesting Date"), subject to Employee's continued employment with the Company or a subsidiary through the Vesting Date except as otherwise provided in Section 3(b)(ii) and Section 3(b)(iv), and subject to the Company's achievement of the performance goals described in subsection (ii) below. (ii) Performance Goals. Except as provided in Section 3(b) or 3(d), the number of Shares that shall be vested pursuant to this Agreement shall depend on the Company's achievement of the following performance goals over the Performance Period. The Performance Period is the period beginning January 31, 2005 and ending February 2, 2008. The number of Shares that vest at the end of the Performance Period shall be determined based on the Company's Cumulative Free Cash Flow for the Performance Period, as follows: Cumulative Free Cash Flow for Percentage of Performance Period Target Shares That Vest ------------------ ----------------------- Minimum: 50% Target: 100% Maximum: 200% The percentage of Target Shares that shall vest will be interpolated between each of the measuring points, and the number of vested Shares shall be rounded up to the next highest whole Share. Free Cash Flow shall be calculated by the Committee using the definition and methodology set forth on the attached Exhibit A. (iii) Calculation of Vested Shares. At the end of the Performance Period, the Committee shall determine whether and to what extent the performance goals have been met and that all other material conditions have been satisfied, and the resulting number of Performance Shares that shall be vested for the Performance Period. The Committee shall certify its conclusions in writing. Except as described in Section 3(b) or 3(d), Employee must be employed by the Company on the Vesting Date in order for Employee to receive payment with respect to the Performance Shares. If the Performance Shares vest at less than 100% of the Target Shares, the Performance Shares that do not vest shall be forfeited as of the Vesting Date. If the Performance Shares vest at more than 100% of the Target Shares, the number of Performance Shares shall be increased to the vested amount as of the Vesting Date, but Performance Shares in excess of the vested amount will no longer be earnable hereunder. The Company shall distribute Shares to Employee equal to the vested Performance Shares, free of the Restrictions, not later than 30 days after receipt by the Company of the audit opinion of its 4 independent auditors with respect to the Company's annual financial statements for the last fiscal year of the Performance Period, and in any event not later than 60 days after the Vesting Date. (iv) Coordination with Sections 3(b) and 3(d). If a Termination as described in Section 3(b) or a Change in Control as described in Section 3(d) occurs before the end of the Performance Period, the vesting of the Performance Shares shall be determined pursuant to Section 3(b) or 3(d), whichever is applicable. If no Termination or Change in Control occurs before the end of the Performance Period, the vesting of the Performance Shares shall be determined pursuant to the achievement of performance goals under this Section 3(c). (d) Change in Control. (i) Acceleration of Vesting. In the event of a Change in Control at a time that Employee is employed by the Company or any of its subsidiaries or simultaneously with Employee's Termination (or following a Termination in which Performance Shares are not forfeited under Section 3(b)(ii) or 3(b)(iv), Shares equal to the Target Shares shall vest immediately prior to the Change in Control and shall be distributed free of the Restrictions effective as of the Change of Control. (ii) 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 13(d) of the Exchange Act and the rules thereunder, except that, for purposes of this Section 3(d), "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 (i) 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 (ii) 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 5 (iii) 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 (iv) 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. (3) "Person" shall have the meaning ascribed for purposes of Section 13(d) 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. (e) Delivery of Certificates. Upon vesting of Performance Shares under any provision of this Section 3, the Company shall promptly deliver to Employee one or more certificates representing the vested Shares, or shall cause such Shares to be delivered to a broker or bank which maintains an account for Employee or Employee's designee, for deposit to such 6 account, or shall make delivery of such Shares by other reasonable means determined by the Committee. 4. Dividend and Distribution Equivalents. The Company shall credit to a bookkeeping account on its records for Employee an amount equal to all dividends and distributions on the Target Shares which would otherwise be payable to the Employee if the Target Shares represented actual Shares, when, as, and if declared and paid on Shares. The accumulated amounts equivalent to dividends and distributions shall be deferred and shall be payable to the Employee when, as and if the Performance Shares vest under Section 3 in the same proportion that the number of Performance Shares that vest bears to the number of Target Shares. Payment shall be made on the date on which the vested Shares are issued as described in the applicable provision of Section 3. Unless otherwise determined by the Committee, all amounts equivalent to dividends and distributions referred to in the immediately preceding sentence, other than equivalents to regular quarterly cash dividends (if any), shall be deemed reinvested in additional Performance Shares at the Fair Market Value of Shares on the date when such dividends and distributions would be paid on Shares and such additional Performance Shares shall be subject to the same Restrictions as apply to the original Performance Shares. As provided above, these additional Performance Shares shall vest in the same proportion that the number Performance Shares that vest bears to the total number of Target Shares. No interest will be credited on any cash amount (if any) of dividends payable at the time of vesting. 5. Tax Withholding. Employee agrees to remit to the Company and any subsidiary, and authorizes the Company and any subsidiary to deduct from any payment to be made to Employee hereunder or otherwise to be paid by the Company if such remittance has not been made, any amount that federal, state, local, or foreign tax law requires to be withheld with respect to distribution of the Shares and the dividend and distribution amounts described in Section 4. Unless otherwise determined by the Board or Committee, unless the Employee has made other arrangements satisfactory to the Company to provide for payment of mandatory withholding taxes in advance of the payment date (by such deadline as the Company may specify), the Company will withhold, at the applicable income tax withholding rate, from the number of vested Shares a number of whole Shares up to but not exceeding that number which has a Fair Market Value nearest to but not exceeding the minimum amount of federal, state and local taxes required to be withheld as a result of the payment. The Employee may elect such other methods of satisfying such withholding obligation as may be permitted under rules and regulations adopted by the Committee and in effect at the time of payment, which may include the surrender of Shares of the Company's common stock owned separately by Employee. In the case of the withholding or surrender of Shares to pay withholding taxes, the Shares withheld or the Shares surrendered will be valued at the Fair Market Value determined in accordance with procedures for valuing Shares as set forth in rules and regulations adopted by the Committee and otherwise in effect at the time of lapse of such risks of forfeiture. 7 6. Deferred Compensation Plan. Notwithstanding the foregoing, if Employee elects to defer any of the Performance Shares pursuant to the Charming Shoppes Variable Deferred Compensation Plan for Executives, or a successor plan (the "Deferred Compensation Plan"), the terms of the Deferred Compensation Plan shall govern the timing of payment of vested Shares and dividend and distribution amounts. The Company and Employee acknowledge and agree that if any provisions of this Agreement are subject to section 409A of the Internal Revenue Code of 1986, as amended (the "Code"), the Company and Employee may take such actions as they mutually deem appropriate to modify the terms of this Agreement so as to comply with section 409A of the Code. In addition, other provisions of this Agreement notwithstanding, (i) if the timing of any distribution hereunder would result in Employee's constructive receipt of income relating to the Performance Shares prior to such distribution, the date of distribution will be the earliest date after the specified date of distribution that distribution can be effected without resulting in such constructive receipt; and (ii) any rights of Employee or retained authority of the Company with respect to Performance Shares hereunder shall be automatically modified and limited to the extent necessary so that Employee will not be deemed to be in constructive receipt of income relating to the Performance Shares prior to the distribution and so that Employee shall not be subject to any penalty under Code section 409A. 7. 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 Performance Shares granted hereby, and supersedes any prior agreements or documents with respect to such Performance Shares. No amendment, alteration, suspension, discontinuation, or termination of this Agreement which may impose any additional obligation upon the Company or materially and adversely affect the rights of Employee with respect to the Performance Shares 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 (if subject to such an additional obligation) and by Employee (if Employee's rights are materially and adversely affected). CHARMING SHOPPES, INC. BY:______________________________________ (Authorized Officer) EMPLOYEE: _________________________________________ Attachment: Exhibit A: Cumulative Free Cash Flow 8 EXHIBIT A CUMULATIVE FREE CASH FLOW Performance Period - Fiscal Years 2006, 2007 and 2008 - -------------------------------------------------------------------------------- Three Year Cumulative Free Cash Flow* at Target - -------------------------------------------------------------------------------- * The Three Year Cumulative Free Cash Flow means the aggregate amount of Free Cash Flow** for each of fiscal years 2006, 2007 and 2008. ** "Free Cash Flow" means Net Cash provided by Operating Activities*** (Adjusted for one-time non-recurring cash charges in accordance with generally accepted accounting principles consistently applied) minus (the sum of Investment in Capital Assets*** (excluding purchases of Assets in connection with an acquisition of a business) plus Purchases of Assets under Capital Leases***). *** As defined and recorded in the Company's Consolidated Statement of Cash Flows for each of the three fiscal years ended in the Performance Period. 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