CHARMING SHOPPES, INC. PERFORMANCE SHARE AGREEMENT
EXHIBIT
99.3
CHARMING
SHOPPES, INC.
2004
STOCK AWARD AND INCENTIVE PLAN
Agreement
dated as of February 2, 2006, 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
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: February 2, 2006
2. Incorporation
of Plan by Reference.
The
Performance Shares have been granted to Employee under the Plan, a copy of
which
previously has been provided to Employee. 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. In addition, the terms of the deferral of settlement of the Performance
Shares are governed by the Charming Shoppes Variable Deferred Compensation
Plan
for Executives, or a successor plan (the “Deferred Compensation Plan”), a copy
of which previously has been provided to Employee, which terms are also
incorporated herein by reference. Employee hereby accepts the grant of
Performance Shares, acknowledges receipt of a 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 and the Deferred Compensation 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,
as amended (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.
2
(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 (subject to the six-month
delay
on distribution, if applicable, under Section 7(c)). 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 (subject to the six-month
delay
on distribution, if applicable, under Section 7(c)).
(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 January 31, 2009 (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 29, 2006 and ending January 31, 2009. 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
Performance Period
|
Percentage
of
Target
Shares That Vest
|
|
Minimum:At
least $
|
__%
|
|
Target:
$
|
__
%
|
|
Maximum:
$ or more
|
__
%
|
The
percentage of Target Shares that shall vest will be interpolated between
each of
the measuring points, and the number of vested Performance 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 Performance 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 a distribution 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 Performance
Shares
that vest under this Section 3(c), 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, except as otherwise provided under Section
6.
3
(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.
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),
Performance 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, except that, if the Change in Control
does not constitute or involve a transaction that constitutes “a change in the
ownership or effective control of the corporation, or in the ownership of
a
substantial portion of the assets of the corporation” under Section
409A(a)(2)(A)(v) of the Internal Revenue Code (the “Code”), the distribution
shall occur at the earliest date thereafter that a distribution would have
occurred hereunder in the absence of a Change in Control. For purposes of
this
Agreement, “Change in Control” shall have the meaning ascribed to such term in
the Employment Agreement.
4. Dividend
and Distribution Equivalents; Adjustments.
(a) 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 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.
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(b) Adjustments
The
number of Performance Shares shall be adjusted by the Committee, in accordance
with Section 10(c) of the Plan, in order to preserve without enlarging
Employee’s rights with respect to such Award. Any such adjustment shall be made
taking into account any crediting of Performance Shares or cash to the Employee
under Section 4(a) in connection with such transaction or event.
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 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 Deferred Compensation Plan, the terms of the Deferred
Compensation Plan shall govern the timing of payment of vested Shares and
dividend and distribution amounts
7. Settlement.
(a) Distribution.
The
Company shall make a distribution in settlement of the Performance Shares
by
making delivery within 60 days after the distribution date (as specified
herein,
subject to Section 6) in the same manner as may be specified under the Deferred
Compensation Plan; provided, however, that if permitted under the Deferred
Compensation Plan, the Company may make delivery of Shares hereunder in
settlement of Performance Shares by either delivering one or more certificates
representing such Shares to the Employee, registered in the name of the Employee
(and any joint name, if so directed by the Employee), or by depositing such
Shares into an account maintained for the Employee (or of which the Employee
is
a joint owner, with the consent of the Employee) established in connection
with
the Company's Employee Stock Purchase Program or another plan or arrangement
providing for investment in Shares and under which the Employee's rights
are
similar in nature to those under a stock brokerage account. If the Company
determines to settle Performance Shares by making a deposit
of Shares into such an account, the Company may settle any fractional
Performance Share by means of such deposit. In other circumstan-ces or if
so
determined by the Company, the Company shall instead pay cash in lieu of
fractional Shares, on such basis as the Plan Administrator may determine.
In no
event will the Company in fact issue fractional Shares.
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(b) Effect
of Settlement.
Upon
settlement of the Performance Shares, all obligations of the Company in respect
of such Performance Shares shall be terminated.
(c) Avoidance
of Constructive Receipt.
Other
provisions of this Agreement notwithstanding, if under Section 409A of the
Code
or any other U.S. federal income tax law as presently in effect or hereafter
amended (i) the timing of any settlement hereunder would result in a
distribution of Shares to Employee at a time that Employee is a “Specified
Employee” under Code Section 409A(a)(2)(B)(i) (i.e., a “key” employee), such
settlement shall be delayed in accordance with the terms of Section 7.2(c)
of
the Deferred Compensation Plan (but without any effect on the timing of any
settlement that otherwise would occur six months or more after Employee’s
separation from service within the meaning of Code Section 409A); (ii) any
distribution in settlement of the Performance Shares that is triggered by
a
termination of employment hereunder will occur only at such time as Employee
has
had a “separation from service” as defined in Proposed Treasury Regulation §
1.409A-1(h) (and any successor regulation) regardless of whether any other
event
might be viewed as a termination of employment by the Company for any other
purpose; (iii) the Company shall have no power or authority to accelerate
the
distribution and settlement of the Performance Shares except to the extent
such
acceleration is permitted under Code Section 409A; and (iv) other restrictions
and limitations under the Deferred Compensation Plan with respect to
distributions apply to the Performance Shares whether or not the Performance
Shares have yet become vested or been deferred under the Deferred Compensation
Plan.
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 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)
|
▇▇▇▇▇▇
▇. ▇▇▇▇
|
Attachment: Exhibit
A: Cumulative Free Cash Flow
6