CHARMING SHOPPES, INC. RESTRICTED STOCK UNITS AGREEMENT
EXHIBIT
10.5
Performance Based
RSUs
Xxxxxx X. Xxxx
CHARMING
SHOPPES, INC.
RESTRICTED
STOCK UNITS AGREEMENT
Agreement
(the “Agreement”), dated as of April 1, 2008 (the “Grant Date”), between
CHARMING SHOPPES, INC. (the “Company”) and XXXXXX X. XXXX (the
“Executive”).
WHEREAS,
the Executive is presently employed by the Company in the capacity of President
and Chief Executive Officer, and is a member of the Board of Directors of the
Company where she currently serves as Chairman of the Board;
WHEREAS,
the Company recognizes that the Executive’s contribution has been substantial
and meritorious and, as such, the Executive has demonstrated unique
qualifications to act in an executive capacity for the Company; and
WHEREAS,
the Company and the Executive are parties to an Employment Agreement dated as of
December 31, 2007, as amended (the “Employment Agreement”), which provides for
the grant of restricted stock units to reward the Executive for her
contributions to the Company.
NOW
THEREFORE, it is agreed as follows:
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1.
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Grant of Restricted
Stock Units; Consideration; Executive
Acknowledgments.
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The
Company hereby confirms the grant, under the Company’s 2004 Stock Award and
Incentive Plan (the “Plan”), of _______ Restricted Stock Units on the Grant
Date. The Restricted Stock Units are subject to the terms and
conditions of the Plan, the Charming Shoppes Variable Deferred Compensation Plan
(the “Deferred Compensation Plan”) and this Agreement. Executive is
required to pay no cash consideration for the grant of the Restricted Stock
Units, but performance of services prior to the expiration of the risk of
forfeiture relating to the Restricted Stock Units and otherwise during her
employment, 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 Restricted Stock Units. Executive
acknowledges and agrees that (i) the Restricted Stock Units are nontransferable
as provided in Section 3(e) hereof and in the Plan, (ii) the Restricted Stock
Units are subject to forfeiture in the event of Executive’s termination of
employment in certain circumstances, as specified in and under Section 3 hereof,
and (iii) sales of shares of the Company’s common stock, par value $0.10 per
share (“Shares”), following the lapse of restrictions and settlement of the
Restricted Stock Units, 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.
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2.
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Incorporation of Plan
and Deferred Compensation Plan by
Reference.
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The
Restricted Stock Units have been granted to Executive under the
Plan. All of the terms, conditions, and other provisions of the Plan
are hereby incorporated by reference into this Agreement. Capitalized
terms used in this Agreement but not defined herein or noted to be defined in
the Employment Agreement 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
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provisions
of the Plan shall govern. In addition, the terms of the deferral of
settlement of the Restricted Stock Units are governed by the Deferred
Compensation Plan, a copy of which previously has been provided to Executive,
which terms are also incorporated herein by reference. Executive
hereby accepts the grant of Restricted Stock Units, acknowledges receipt of a
copy of the Plan and the Deferred Compensation 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.
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3.
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Restrictions on
Restricted Stock Units.
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(a) Nature of Restricted Stock
Units; Vesting and Deferral of Settlement. Each
Restricted Stock Unit represents the right to receive one Share, which will be
issued and delivered upon vesting in accordance with the vesting provisions
specified in this Section 3, to the extent the Restricted Stock Units have not
been forfeited, at the settlement date applicable under Section
5. Restricted Stock Units are subject to a risk of forfeiture before
they vest. This Award differs from awards of “restricted stock,” in
that such awards involve issuance of Shares at or shortly after grant, with such
shares subject to forfeiture (i.e., such shares must be returned to the Company
if forfeited) during any restricted period. With respect to
Restricted Stock Units, Executive has no voting rights or rights to actual
dividends prior to the vesting of the Restricted Stock Units, but Executive is
entitled to dividend equivalents in accordance with Section 4.
(b) Termination of
Employment.
(i) Forfeiture. Except
as provided below, if Executive’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 death, Disability, Termination by
Executive for Good Reason, a Termination by the Company for reasons other than
Cause, or a Qualifying Termination, the Restricted Stock Units that have not
vested before such Termination shall be forfeited at the time of such
Termination. For purposes of this Agreement, “Cause,” “Good Reason,”
“Disability” and “Qualifying Termination” shall have the meanings ascribed to
such terms in the Employment Agreement. Accordingly, except as
provided below, Executive’s voluntary Termination (other than due to Disability
or for Good Reason) or Termination by the Company for Cause will result in all
Restricted Stock Units that have not vested at or before such Termination being
immediately forfeited.
(c) Vesting
Schedule. Unless the Restricted Stock Units vests earlier
under Section 3(d) below, the Restricted Stock Units shall vest in accordance
with the following schedule, subject to Executive’s continued employment with
the Company or a subsidiary through the relevant Vesting Date:
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Vesting
Date
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Restricted Stock Units
Vesting
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April
1, 2009
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1/2
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April
1, 2010
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1/2
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The
vesting of the Restricted Stock Units is cumulative, but shall not exceed
100%.
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(d) Vesting
Acceleration. Vesting shall be accelerated as
follows:
(i) In the
event of a Termination due to death, Disability or a Qualifying Termination, the
Restricted Stock Units that have not previously vested shall become immediately
vested on the date of Termination.
(ii) In the
event of a Termination by Executive for Good Reason, or Termination by the
Company for reasons other than Cause, the portion of the Restricted Stock Units
that would have vested if Executive had continued in employment with the Company
for an additional two years following the date of Termination shall become
immediately vested on the date of Termination.
(iii) In the
event of a Change of Control (as defined in the Employment Agreement) at a time
when Executive is employed by the Company or any of its subsidiaries, if the
acquiring company does not convert Executive’s outstanding Restricted Stock
Units to restricted stock units for stock of the acquiring company (or the
parent of the acquiring company, if the acquirer is a subsidiary) that have the
same economic value, vesting provisions and other terms as Executive’s
outstanding Restricted Stock Units, the Restricted Stock Units shall become
fully vested immediately prior to the occurrence of the Change of
Control.
(iv) If, upon
a Change of Control, the acquiring company does convert the Executive’s
outstanding Restricted Stock Units into restricted stock units for stock of the
acquiring company (or the parent of the acquiring company, if the acquirer is a
subsidiary) that have the same economic value, vesting provisions and other
terms as the Executive’s outstanding Restricted Stock Units, the portion of the
Restricted Stock Units that would have vested over the two-year period following
such Change in Control shall become fully vested immediately prior to the
occurrence of the Change in Control.
(v) Notwithstanding
anything in this Agreement to the contrary, the vesting of the Restricted Stock
Units shall not be less favorable to Executive than the vesting specified for
stock awards under the Employment Agreement.
(e) Nontransferability. Restricted
Stock Units and all related rights hereunder shall not be transferable or
assignable by Executive other than by will or the laws of descent and
distribution, and may not be pledged, hypothecated, or otherwise encumbered in
any way or subject to execution, attachment, lien, or similar
process.
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4.
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Executive’s Account,
Dividend Equivalents and
Adjustments.
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(a) Account. Restricted
Stock Units are bookkeeping units, and do not constitute ownership of Shares or
any other equity security. The Company shall maintain a bookkeeping
account for Executive (the “Account”) reflecting the number of Restricted Stock
Units then credited to Executive hereunder as a result of this grant of
Restricted Stock Units and any crediting of additional Restricted Stock Units to
Executive pursuant to payments equivalent to dividends paid on Shares under
Section 4(b) (“Dividend Equivalents”).
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(b) Dividend
Equivalents. Dividend Equivalents shall be credited in
accordance with the provisions of the Deferred Compensation Plan and the
methodology specified by the Company for crediting dividend equivalents on Share
units in effect from time to time thereunder. It is understood that
the intention hereunder is that Dividend Equivalents be credited in a manner
that provides an economic benefit to Executive equivalent to dividends on Shares
without undue administrative burdens on the Company. All Dividend
Equivalents deemed reinvested in additional Restricted Stock Units shall be
subject to the same risk of forfeiture, vesting provisions, and other
restrictions and terms as apply to the original Restricted Stock
Units. Executive shall not be entitled to receive actual dividends in
respect of Restricted Stock Units prior to the issuance of Shares in settlement
thereof.
(c) Adjustments. The
number of Restricted Stock Units credited to Executive’s Account shall be
adjusted by the Committee, in accordance with Section 10(c) of the Plan, in
order to preserve, without enlarging Executive’s rights with respect to, such
Restricted Stock Units. Any such adjustment shall take into account
any crediting of Restricted Stock Units or cash to the Executive under Section
4(b) in connection with such transaction or event.
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5.
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Settlement.
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(a) Time of
Settlement. Settlement of Restricted Stock Units shall occur
at the later of the applicable Vesting Date or the applicable date specified for
payment in accordance with the Restricted Stock Units Election that was filed by
Executive under the Deferred Compensation Plan on or before December 31 of the
year prior to the Grant Date. The Company shall settle the Restricted
Stock Units by making delivery of Shares in such 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 in
settlement of Restricted Stock Units by either delivering one or more
certificates representing such Shares to the Executive, registered in the name
of the Executive (and any joint name, if so directed by the Executive), or by
depositing such Shares into a stock brokerage account maintained for the
Executive (or of which the Executive is a joint owner, with the consent of the
Executive). If the Company determines to settle Restricted Stock
Units by making a deposit of Shares into such an account, the Company may settle
any fractional Restricted Stock Unit by means of such deposit. In
other circumstances or if so determined by the Company, the Company shall
instead pay cash in lieu of fractional Shares, on such basis as the Committee or
the Board may determine. In no event will the Company issue
fractional Shares.
(b) Effect of
Settlement. Upon settlement of the Restricted Stock Units, all
obligations of the Company in respect of such Restricted Stock Units shall be
terminated.
(c) Section
409A. Other provisions of this Agreement notwithstanding, in
order to comply with Section 409A of the Internal Revenue Code (the “Code”), (i)
if the timing of any settlement hereunder would result in a distribution of
Shares to Executive at a time when Executive is a “Specified Employee” under
Code Section 409A and precluded under Code Section 409A from then receiving the
distribution, such settlement shall be delayed in accordance with 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 Executive’s
separation from service within the meaning of Code Section 409A); (ii) any
distribution in
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settlement
of the Restricted Stock Units that is triggered by a termination of employment
hereunder will occur only at such time as Executive has had a “separation from
service” for purposes of Code Section 409A, 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 Restricted Stock Units except to the
extent such acceleration is permitted under Code Section 409A; (iv) all other
requirements of Code Section 409A and regulations thereunder shall apply to the
extent necessary so that the Executive is not subject to constructive receipt of
income under Code Section 409A prior to the actual distribution of Restricted
Stock Units hereunder or to tax penalties under Code Section 409A; and (v) other
restrictions and limitations under the Deferred Compensation Plan with respect
to distributions apply to the Restricted Stock Units subject to Code Section
409A.
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6.
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Tax
Withholding.
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The
Company will withhold from the number of Shares to be delivered upon settlement
a number of whole Shares which has a Fair Market Value equal to the minimum
federal, state and local tax withholding obligation relating to such
settlement. The Shares withheld will be valued at the Fair Market
Value determined in accordance with procedures for valuing Shares as determined
by the Committee and otherwise in effect at the time of settlement, including
under the Deferred Compensation Plan.
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7.
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Miscellaneous.
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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 Units granted
hereby, and supersedes any prior agreements or documents with respect to such
Restricted Stock Units. 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 Executive with respect to the Restricted Stock Units shall be valid
unless in each instance such amendment, alteration, suspension, discontinuation,
or termination is expressed in a written instrument duly executed in the name
and on behalf of the Company and by Executive.
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By
accepting this grant of Restricted Stock Units, Executive agrees to the terms of
this Agreement and agrees to be bound by all the terms and provisions of the
Agreement, the Plan (as presently in effect or hereafter amended) and the
Deferred Compensation Plan, and by all decisions and determinations of the
Committee and the Board.
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CHARMING
SHOPPES, INC.
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BY:
_________________________________
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(Authorized
Officer)
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EXECUTIVE:
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BY:
_________________________________
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Xxxxxx
X. Xxxx
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