Document:

exhibit103april12008.htm

    
      
         

      

      
         

        
          

        

      

      
         

        
          EXHIBIT
10.3

          Time Based RSUs

          Other Executives

          

        

      

    

    CHARMING
SHOPPES, INC.

    2004
STOCK AWARD AND INCENTIVE PLAN

     

    RESTRICTED
STOCK UNITS AGREEMENT

     

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

     

    
      	
              1.  

            	
              Grant of Restricted
      Stock Units; Consideration; Employee
    Acknowledgments.

            

    

     

    The
Company hereby confirms the grant, under the Company’s 2004 Stock Award and
Incentive Plan (the “Plan”),  of __________ Restricted Stock Units
pursuant to the Plan.  The Restricted Stock Units are subject to the
terms and conditions of the Plan and this Agreement (and, in the case of any
elective deferral, the Company’s Variable Deferred Compensation Plan for
Executives (the “Deferred Compensation Plan”)).  Employee 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 his or her
employment, and his or her agreement to abide by the terms set forth in the
Plan, this Restricted Stock Units Agreement (the “Agreement”), and any Rules and
Regulations under the Plan, shall be deemed to be consideration for this grant
of Restricted Stock Units.  Employee acknowledges and agrees that (i)
the Restricted Stock Units are nontransferable as provided in Section 3(d)
hereof and the Plan, (ii) the Restricted Stock Units are subject to forfeiture
in the event of Employee’s termination of employment in certain circumstances,
as specified in 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.

     

    
      	
              2.  

            	
              Incorporation of Plan
      and Deferred Compensation Plan by
  Reference.

            

    

     

    The
Restricted Stock Units have been granted to Employee under the
Plan.  All of the terms, conditions, and other provisions of the Plan
are hereby incorporated by reference into this Agreement.  Capitalized
terms used in this Agreement but not defined herein shall have the same meanings
as in the Plan.  If there is any conflict between the provisions of
this Agreement and the provisions of the Plan, the provisions of the Plan shall
govern.  In addition, the terms of any deferral of settlement of the
Restricted Stock Units are governed by 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 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

     

    
      
        
           

        

         

      

      
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    the
Deferred Compensation Plan, or any person or committee designated by the
Committee to administer the Plan (the “Administrator”).

     

    
      	
              3.  

            	
              Restrictions on
      Restricted Stock Units.

            

    

     

    (a) Nature of Restricted Stock
Units; Restricted Period and Deferral of Settlement.  Each
Restricted Stock Unit represents the right to receive one Share, which will be
issued and delivered, after the lapse of the “Restricted Period” specified below
to the extent the Restricted Stock Units have not been forfeited, at the
settlement date applicable under Section 6.  Restricted Stock Units
are subject to a risk of forfeiture during such Restricted Period and are
subject to restrictions on transfer and other conditions during the Restricted
Period and the additional deferral period, if any.  This Award differs
from awards of “restricted stock” in that such restricted stock 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, Employee
has no voting rights or rights to actual dividends prior to the end of the
Restricted Period, but Employee is entitled to dividend equivalents in
accordance with Section 4.

     

    (b) Lapse of Restricted
Period.  Unless the Restricted Period on Restricted Stock Units
has lapsed earlier under Section 3(c) or 5(a), the Restricted Period will lapse
according to the following schedule, subject to Employee’s continued employment
with the Company or a subsidiary through the relevant vesting date:

     

    
      	
              Vesting
      Date

            	
              Restricted
      Stock Units for Which

              the Restricted Period
      Lapses

            
	 
      	 
      
	
              April
      1, 2011

            	
              1/3

            
	
              April
      1, 2012

            	
              1/3

            
	
              April
      1, 2013

            	
              1/3

            

    

    

    The lapse
of the Restricted Period for the Restricted Stock Units is cumulative, but shall
not exceed 100%.

     

    (c) Forfeiture and Termination
of Employment.  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 Units as to which the Restricted Period has 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 Restricted Stock Units
as to which the Restricted Period has not lapsed being immediately
forfeited.  Vesting and forfeiture terms applicable to other
terminations are as follows:

     

    
      
        
           

        

         

      

      
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    (i) Death or
Disability.  In the event of Employee’s Termination due to
death or permanent disability, the Restricted Period on the Restricted Stock
Units shall lapse at the time of such Termination (i.e., none of the
Restricted Stock Units 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
Restricted Period on those Restricted Stock Units (if any) as to which the
Restricted Period would have lapsed on the next anniversary of the Grant Date
pursuant to Section 3(b) in the absence of a Termination (but disregarding any
other event occurring prior to that next date) will lapse on an accelerated
basis at the time of such Termination (for example, if Termination occurs 1.5
years after the Grant Date, one additional tranche of the Restricted Stock Units
will become non-forfeitable), so those Restricted Stock Units will not be
forfeited.  The other Restricted Stock Units as to which the
Restricted Period has not lapsed at or before such Termination (i.e., any tranche as
to which the Restricted Period would not have lapsed as scheduled pursuant to
Section 3(b) assuming continued employment through the next anniversary of the
Grant Date) shall be forfeited at the time of such Termination.

     

    (iii) Retirement.  In the
event of Employee’s Termination due to Retirement, Employee’s Restricted Stock
Units will not be forfeited upon such Retirement, but instead the Restricted
Period on Employee’s Restricted Stock Units shall remain in effect until the
earlier of the time such Restricted Period shall lapse under Section 3(c) or
5(a) or Employee’s death.  During such post-Retirement period during
which the Restricted Period remains in effect, the Restricted Stock Units shall
be immediately forfeited if Employee: (A) directly or indirectly owns any equity
or proprietary interest in any Competitor (as defined below) of the Company
(except for ownership of shares in a publicly traded company not exceeding five
percent of any class of outstanding securities), or is an employee, agent,
director, advisor, or consultant to or for, any Competitor of the Company in the
United States, whether on his or her own behalf or on behalf of any person, and
is involved in the procuring, sale, marketing, promotion, or distribution of any
product or product lines competitive with any product or product lines of the
Company at the time of Employee’s Retirement, or if Employee assists in,
manages, or supervises any of the foregoing activities, or (B) undertakes any
action to induce or cause any supplier to discontinue any part of its business
with the Company, or (C) attempts to induce any merchant, buyer, or manager or
higher level employee of the Company to terminate his or her employment with the
Company, or (D) discloses confidential or proprietary information of the Company
to any person, firm, corporation, association, or other entity for any reason or
purpose whatsoever, or makes use of any such information for his or her own
purposes, so long as such information has not otherwise been disclosed to the
public or is not otherwise in the public domain except as required by law or
pursuant to administrative or legal process.

     

    (iv) Definitions.

     

    (A) For
purposes of this Agreement, “Cause” shall mean: (a) the Employee’s willful and
continued failure to substantially perform his or her duties with the Company
(other than any such failure resulting from disability or occurring after
issuance by the 

     

     

    
      
         

      

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

     

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

     

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

     

    (d) Nontransferability.  Restricted
Stock Units and all related rights hereunder shall not be transferable or
assignable by Employee other than by will or the laws of descent and
distribution, and shall not be pledged, hypothecated, or otherwise encumbered in
any way or subject to execution, attachment, lien, or similar
process.

     

    
      	
              4.  

            	
              Employee’s Account,
      Dividend Equivalents and
Adjustments.

            

    

     

    (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 Employee (the “Account”) reflecting the number of Restricted Stock
Units then credited to Employee hereunder as a result of this grant of
Restricted Stock Units and any crediting of additional Restricted Stock Units to
Employee pursuant to payments equivalent to dividends paid on Shares under
Section 4(b) (“Dividend Equivalents”).

     

    (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 Employee equivalent to dividends on Shares
without undue administrative burdens on the Company.  Accordingly, no
interest will be credited on any cash amount (if any) of such dividend
equivalents from the dividend date to the time of settlement of the Restricted
Stock Units.  All Dividend Equivalents shall be deemed reinvested in
additional Restricted Stock Units and shall be subject to the same risk of
forfeiture, Restricted Period, and other restrictions and payment terms as apply
to the original Restricted Stock Units.

     

    
      
        
           

        

         

      

      
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    Employee
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 Employee’s Account 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
Restricted Stock Units.  Any such adjustment shall be made taking into
account any crediting of Restricted Stock Units or cash to the Employee under
Section 4(b) in connection with such transaction or event.

     

    
      	
              5.  

            	
              Change of
      Control.

            

    

     

    (a) Accelerated Expiration of
Restricted Period.  In the event of a Change of Control at a
time when Employee is employed by the Company or any of its subsidiaries (or
simultaneously with Employee’s Termination) and after the Grant Date of the
Restricted Stock Units, the Restricted Period on the Restricted Stock Units
shall lapse immediately prior to the Change of Control.

     

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

     

    (i) “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.

     

    (ii) “Change
of Control” means and shall be deemed to have occurred if

     

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

     

    (B) those
individuals who as of the Grant Date 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 Grant Date or whose election
or nomination for election was previously so approved, cease for any reason to
constitute a majority of the members of the Board; or

     

    (C) there is
consummated a merger, consolidation, recapitalization, or reorganization of the
Company, a reverse stock split of outstanding Voting Securities, or an
acquisition of securities or assets by the Company (a “Transaction”), other than
a Transaction which would result in the holders of Voting Securities having at
least 80 percent of the total

     

     

    
      
         

      

      
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    voting
power represented by the Voting Securities outstanding immediately prior thereto
continuing to hold Voting Securities or voting securities of the surviving
entity having at least 60 percent of the total voting power represented by the
Voting Securities or the voting securities of such surviving entity outstanding
immediately after such Transaction and in or as a result of which the voting
rights of each Voting Security relative to the voting rights of all other Voting
Securities are not altered;  or

     

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

     

    (iii) “Person”
shall have the meaning ascribed for purposes of Section 13(d) of the Exchange
Act and the rules thereunder.

     

    (iv) “Related
Party” means (a) a majority-owned subsidiary of the Company; or (b) a trustee or
other fiduciary holding securities under an employee benefit plan of the Company
or any majority-owned subsidiary of the Company; or (c) a corporation owned
directly or indirectly by the shareholders of the Company in substantially the
same proportion as their ownership of Voting Securities; or (d) 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.

     

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

     

    
      	
              6.  

            	
              Settlement.

            

    

     

    (a) Time of
Settlement.  Settlement of Restricted Stock Units shall occur
within 60 days following the date on which the Restricted Period lapses;
provided, however, that if Employee made a timely election to defer payment
under the Deferred Compensation Plan, the settlement of the Restricted Stock
Units will be made on the applicable date specified for payment in accordance
with the Restricted Stock Units Election that was filed by Employee under the
Deferred Compensation Plan.  The Company shall settle the Restricted
Stock Units by delivering Shares to Employee equal to the number of Restricted
Stock Units that are payable on the settlement date.  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 Employee,
registered in the name of the Employee (and any joint name, if so directed by
the Employee), or by depositing such Shares into a stock brokerage account
maintained for the

     

     

    
      
         

      

      
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    Employee
(or of which the Employee is a joint owner, with the consent of the
Employee).  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 Restricted Stock Units, all
obligations of the Company in respect of such Restricted Stock Units shall be
terminated.

     

    7. Section
409A.

     

    Notwithstanding
the foregoing, 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 Employee at a time when Employee 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
Employee’s separation from service within the meaning of Code Section 409A);
(ii) any distribution in settlement of the Restricted Stock Units that is
triggered by a termination of employment hereunder will occur only at such time
as Employee 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 Employee 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.

     

    7.           Tax
Withholding.

     

    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.

     

    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

     

    
      
        
           

        

         

      

      
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    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 Employee 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
Employee.

     

    By
accepting this grant of Restricted Stock Units, Employee 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 Administrator.

     

    
      	
              CHARMING
      SHOPPES, INC.

            
	
              BY:______________________________

            
	
              Colin
      D. Stern

            
	
              Employee
      Vice President

            
	
              EMPLOYEE:

            
	
              __________________________________

            

    

    

     

     

     

     

     

     

     

     

    
 

    
      
        
           

        

         

      

      
        8exhibit104april12008.htm

    
      
         

      

      
         

        
          

        

      

      
         

        
          EXHIBIT
10.4

          Time Based SARs

          Other Executives

        

      

    

    CHARMING
SHOPPES, INC.

    2004
STOCK AWARD AND INCENTIVE PLAN

    STOCK
APPRECIATION RIGHTS AGREEMENT

     

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

     

    1. Grant of SAR; Consideration;
Employee Acknowledgments.

     

    The
Company hereby confirms the grant, under the Company’s 2004 Stock Award and
Incentive Plan (the “Plan”), to the Employee on the Grant Date of a stock
appreciation right (the “SAR”) with respect to ____ shares of the Company’s
common stock, par value $.10 per share (the “Shares”).  The SAR
represents the right to receive, at exercise, a number of Shares with a then
Fair Market Value equal to the appreciation in value of the Shares over the base
amount.  The base amount is $_________ per share, which is the fair
market value of a Share on the Grant Date (the “Base Amount”).

     

    The
Employee shall be required to pay no consideration for the grant of the SAR
except for his or her agreement to provide services to the Company prior to
exercise and his or her agreement to abide by the terms set forth in the Plan,
this Stock Appreciation Rights Agreement (the “Agreement”), and any Rules and
Regulations under the Plan.  The Employee acknowledges and agrees that
(i) the SAR is nontransferable, except as provided in Section 9 hereof and in
the Plan, (ii) the SAR is subject to forfeiture in the event of Employee’s
termination of employment in certain circumstances, as specified in Section 7
hereof, and (iii) sales of Shares will be subject to the Company’s policies
regulating trading by employees, including any applicable “blackout” or other
designated periods in which sales of Shares are not permitted.

     

    2. Incorporation of Plan by
Reference.

     

    The SAR
has been granted to the Employee under the Plan.  All of the terms,
conditions and other provisions of the Plan are hereby incorporated by reference
into this Agreement.  Capitalized terms used in this Agreement but not
defined herein shall have the same meanings as in the Plan.  If there
is any conflict between the provisions of this Agreement and the provisions of
the Plan, the provisions of the Plan shall govern.  Employee hereby
accepts the grant of the SAR, acknowledges receipt of the Plan, and agrees to be
bound by all the terms and provisions hereof and thereof (as presently in effect
or hereafter amended), and by all decisions and determinations of the Board or
Committee under the Plan.

     

    3. Date When
Exercisable.

     

    (a) This SAR
may be exercised only if and to the extent that it has become exercisable as
specified in this Agreement.  Subject to Sections 6 and 7 below, and
all other terms and conditions of this Agreement, this SAR shall become
exercisable as follows:

     

     

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

     

     

    
      	
              Vesting
      Date

            	
              Exercisable
      SAR

            
	 
      	 
      
	
              April
      1, 2011

            	
              1/3

            
	
              April
      1, 2012

            	
              1/3

            
	
              April
      1, 2013

            	
              1/3

            

    

    

    (b) The
number of Shares with respect to which the SAR may be exercised shall be
cumulative but shall not exceed 100% of the Shares subject to the
SAR.  If the foregoing schedule would produce fractional Shares, the
number of Shares for which the SAR becomes exercisable shall be rounded to the
nearest whole Share.  The SAR shall expire at 5:00 p.m. on the day
before the seventh anniversary of the Grant Date, unless the SAR terminates on
an earlier date as provided herein.

     

    4. Method of
Exercise.

     

    (a) The SAR
may be exercised, to the extent the SAR is then vested and exercisable, by
delivery to and receipt by the Secretary of the Company at 3750 State Road,
Bensalem, Pennsylvania 19020, of a written notice, signed by the Employee,
specifying the portion of the vested SAR that the Employee wishes to
exercise.  Simultaneous with or as soon as practicable after the
receipt of such notice, the Company shall deliver to the Employee a number of
whole Shares that will be determined by dividing the Stock Appreciation by the
Fair Market Value of a Share on the date of exercise, less applicable tax
withholding.  “Stock Appreciation” shall mean the amount that results
from multiplying (i) the number of Shares as to which the SAR is exercised by
(ii) the amount by which the Fair Market Value of a Share on the date of
exercise exceeds the Base Amount.  Only whole Shares will be delivered
pursuant to the exercise of the SAR.

     

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

     

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

     

    
      
         

      

      
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    5. Tax
Withholding.

     

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

     

    6. Change of Control
Provisions.

     

    (a) Acceleration of
Exercisability.  In the event of a Change of Control at a time
when the Employee is employed by the Company or any of its subsidiaries, this
SAR shall become immediately and fully exercisable immediately prior to the
occurrence of such Change of Control.

     

    (b) Exercise after a Change in
Control; Adjustments.  In the event of the Employee’s
Termination after a Change in Control, the vested SAR, to the extent then
outstanding, shall be exercisable for the applicable time period described in
Section 7(a)(ii), (iii), (iv), (v) or (vi) (determined without regard to any
requirement that the Termination occur one year after the Grant Date). In the
event of a Change in Control, the Committee may make such adjustments and take
such other actions with respect to outstanding SARs as the Committee deems
appropriate pursuant to Section 10(c) of the Plan.

     

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

     

    (i) “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 6, “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.

     

    (ii) “Change of Control” means and
shall be deemed to have occurred if

     

    (1) 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

     

    (2) those
individuals who as of Grant Date 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 Grant Date 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

     

    
      
         

      

      
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    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

     

    (3) 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.

     

    (iii) “Person” shall have the
meaning ascribed for purposes of Section 13(d) of the Exchange Act and the rules
thereunder.

     

    (iv) “Related Party” means (A) a
majority-owned subsidiary of the Company; or (B) a trustee or other fiduciary
holding securities under an employee benefit plan of the Company or any
majority-owned subsidiary of the Company; or (C) a corporation owned directly or
indirectly by the shareholders of the Company in substantially the same
proportion as their ownership of Voting Securities; or (D) 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.

     

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

     

    7. Termination of
Employment.

     

    (a) This SAR
shall terminate and no longer be exercisable at the earlier of (i) the scheduled
expiration time of the SAR, as set forth in Section 3(b) above, or (ii) the
earliest time specified below at or following a termination of employment of the
Employee.  In the event of termination of employment before a Change
in Control, the SAR shall be exercisable as follows:

     

    (i) The SAR
shall terminate at the time of voluntary or involuntary termination of the
Employee’s employment with the Company and its subsidiaries for any
reason

     

    
      
         

      

      
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    at any
time prior to the expiration of one year after the Grant Date of this SAR, other
than by reason of the Employee’s death, permanent disability or
Retirement.

     

    (ii) The SAR
shall continue in effect until the expiration of three months after the
voluntary or, if for Cause, the involuntary termination of the Employee’s
employment with the Company and its subsidiaries, in either case at any time
after the expiration of one year after the Grant Date of this SAR, during which
three-month period this SAR shall be exercisable only to the extent that it was
exercisable at the date of the Employee’s termination of
employment.

     

    (iii) The SAR
shall continue in effect until the expiration of one year after the involuntary
termination of the Employee’s employment, other than for reasons of Cause,
permanent disability or Retirement, with the Company and its subsidiaries at any
time after the expiration of one year after the Grant Date of this SAR, during
which one-year period this SAR shall be exercisable to purchase the number of
Shares as to which the SAR was exercisable at the date of the Employee’s
termination of employment, plus the number of additional Shares (if any) as to
which the SAR would have become exercisable on the next anniversary of the Grant
Date pursuant to Section 3(a) in the absence of a termination (but disregarding
any other event occurring prior to that date).

     

    (iv) The SAR
shall continue in effect until the expiration date of the SAR as set forth in
Section 3(b), if the Employee’s termination results from the Employee’s
retirement at age 62 or thereafter (“Retirement”), provided that (i) during the
period between Retirement and the expiration date of the SAR (the
“Exercisability Period”), the SAR shall continue to be exercisable by the
Employee at such times and to the same extent that it would have been
exercisable had the Employee continued his employment throughout the
Exercisability Period, and (ii) the SAR (whether or not then exercisable) will
immediately terminate if, during the Exercisability Period, Employee (A)
directly or indirectly owns any equity or proprietary interest in any Competitor
(as defined below) of the Company (except for ownership of shares in a publicly
traded company not exceeding five percent of any class of outstanding
securities), or is an employee, agent, director, advisor, or consultant to or
for, any Competitor of the Company in the United States, whether on his or her
own behalf or on behalf of any person, and is involved in the procuring, sale,
marketing, promotion, or distribution of any product or product lines
competitive with any product or product lines of the Company at the time of
Employee’s Retirement, or if Employee assists in, manages, or supervises any of
the foregoing activities, or (B) undertakes any action to induce or cause any
supplier to discontinue any part of its business with the Company, or (C)
attempts to induce any merchant, buyer, or manager or higher level employee of
the Company to terminate his or her employment with the Company, or (D)
discloses confidential or proprietary information of the Company to any person,
firm, corporation, association, or other entity for any reason or purpose
whatsoever, or makes use of any such information for his or her own purposes, so
long as such information has not otherwise been disclosed to the public or is
not otherwise in the public domain except as required by law or pursuant to
administrative or legal process.  As a condition to the continuation
of the SAR in the Exercisability Period, Employee shall be required to enter
into an agreement not to engage in the activities described above and containing
other customary terms and conditions.

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    (v) The SAR
shall continue in effect until the expiration of one year after the Employee’s
death if the Employee dies while employed by the Company or any of its
subsidiaries, during which one-year period this SAR shall be exercisable in
full.

     

    (vi) The SAR
shall continue in effect until the expiration of one year after the termination
of the Employee’s employment with the Company and its subsidiaries by reason of
the Employee’s permanent disability, during which one-year period this SAR shall
be exercisable in full.

     

    (b) Any
portion of the SAR that is not exercisable at the date of termination of
employment and that will not become exercisable thereafter pursuant to Section
7(a) shall terminate as of the Employee’s termination
date.  Notwithstanding anything in this Section 7 to the contrary, in
no event may the SAR be exercised after the expiration date of the SAR as set
forth in Section 3(b).

     

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

     

    (d) For
purposes hereof, the existence of a “permanent disability” shall be determined
by, or in accordance with criteria and standards adopted by, the
Committee.

     

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

     

    (f) Except as
provided in Section 8, an Employee shall not be deemed to have terminated his
employment for purposes of this Section 7 if his or her employment terminates
with the Company but thereafter continues with one of the Company’s subsidiaries
or terminates with a subsidiary but thereafter continues with the Company or
another subsidiary.

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    8. Change in Job
Status.

     

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

     

    9. Limits on Transfer of SARs;
Beneficiaries.

     

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

     

    10. Investment
Representation.

     

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

     

    
      
         

      

      
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    11. Miscellaneous.

     

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

     

    
      	
              CHARMING
      SHOPPES, INC.

            
	
              BY:
  __________________________

            
	
              (Authorized
      Officer)

            
	
              EMPLOYEE:

            
	
              _____________________________

            

    

    

     

     

     

     

     

     

     

     

     

     

    
      
         

      

      
        8

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