EXHIBIT 10.12
CHARMING SHOPPES, INC.
2003 Non-Employee Directors Compensation Plan
Amended and Restated Effective May 7, 2008
1.
Purpose and Scope
of the Plan .
(a)
Purpose.
The purpose of this 2003 Non-Employee Directors
Compensation Plan (the "Plan") of Charming Shoppes, Inc. (the
"Company") is to advance the interests of the Company and its
shareholders by providing for fair and adequate equity
compensation of non-employee directors and an opportunity for
deferral of compensation in order to attract and retain high
quality persons to serve as directors and to enable such
persons to increase their proprietary interest in the
Company. In furtherance of this purpose, the Plan
provides for grants of Options, Stock Appreciation Rights,
Restricted Stock Units, and/or Restricted Stock, and the
opportunity for a director to elect deferred and
alternative forms of compensation in lieu of
cash fees for service as a director, including Deferred Shares
and deferred cash.
(b)
Effect of
Amendment and Restatement of the Plan . The
Company hereby amends and restates the Plan, effective May 8,
2008 (the "Effective Date"). The Plan was initially adopted
on August 21, 1996 and was subsequently amended and restated
on several occasions. Non-employee director
compensation before the Effective Date was governed by the
Plan and other policies of the Company then in effect, except
that Section 4 hereof applies to any outstanding Deferred
Shares, Section 6(a) applies to any outstanding Restricted
Stock and Section 6(b) applies to RSUs granted in 2007 and
thereafter.
(c)
Grandfathered
Accounts. The amendment and restatement of
January 1, 2005 and subsequent amendments to the Plan shall
not affect Grandfathered Accounts (as defined below), which
shall continue to be subject to, and governed by, the terms
and conditions of the Plan as in effect on December 31,
2004.
(d)
Relation of
Plan to Other Director Compensation. The amount,
timing, and other terms of cash compensation that may be paid
by the Company to non-employee directors are not governed by
this Plan, except for cash-settled equity awards hereunder
and except to the extent that opportunities for deferral of
cash compensation otherwise payable to a director, or receipt
of such cash compensation in alternative forms, may be made
available to a director under this Plan. In
addition, adoption of the Plan does not limit the authority
of the Board of Directors in adopting other compensation
programs in which directors may participate.
2.
Definitions.
In addition to the terms defined in Section 1, the
following terms shall be defined as set forth below:
(a) "Account"
means the account established and maintained by the Company
for RSUs granted under Section 6 and Deferred Shares and
deferred cash credited under Section 8. A
subaccount for RSUs and a subaccount for such Deferred Shares
and deferred cash may be designated within the
Account. The Account and RSUs, Deferred Shares and
deferred cash credited to the Account will be maintained
solely as bookkeeping entries by the Company to evidence
unfunded obligations of the Company.
(b) "Administrator"
means the individual or committee specified in Section 3(b) to
whom the Board has delegated authority to administer the
Plan.
(c) "Beneficiary"
means the person(s) or trust(s) which have been designated by
a Participant in his or her most recent written beneficiary
designation filed with the Administrator to receive the
benefits specified under the Plan upon such Participant's
death. If, upon a Participant's death, there is no
designated Beneficiary or surviving designated Beneficiary,
then the term Beneficiary means the person(s) or trust(s)
entitled by will or the laws of descent and distribution to
receive such benefits.
(d) "Board"
means the Board of Directors of the Company. The
Board may delegate its functions to a committee of the Board
as specified under Section 3(a), in which case references to
the Board shall be deemed to include such
committee.
(e) "Change
in Control" and related terms are defined in Section
12.
(f) "Code"
means the Internal Revenue Code of 1986, as amended, including
regulations thereunder and successor provisions and
regulations thereto.
(g) "Deferred
Shares" means a Share Unit credited to a Participant's Account
under Section 8 as a result of deferral of cash fees or other
deferral permitted hereunder.
(h) "Director
Compensation" means annual retainer fees payable to a director
in his or her capacity as such for service on the Board and
service as chairman of any Board committee, and any other fees
payable to a director in his or her capacity as such for
attending meetings and other service on the Board and Board
committees; provided, however, that the Administrator may
determine that specific fees will not be deemed Director
Compensation (such determination to be made in advance of the
applicable deadline for deferral of fees) and may determine
that cash paid in settlement of Cash-Settled RSUs will be
deemed to be Director Compensation. Reimbursement
of expenses does not constitute Director
Compensation.
(i) "Disability"
means a Participant's termination of service as a director of
the Company due to a physical or mental incapacity of long
duration which renders the Participant unable to perform the
duties of a director of the Company.
(j) "Exchange
Act" means the Securities Exchange Act of 1934, as amended,
including rules thereunder and successor provisions and rules
thereto.
(k) "Grandfathered
Account" means that portion of a Participant's Account that
was earned and vested as of December 31, 2004, and shall
include earnings (including dividends paid in accordance with
Section 13(b) and dividends and dividend equivalents paid in
accordance with Section 9(a)) credited to such amount under
the terms of the Plan. All Grandfathered Accounts
shall be calculated in accordance with Section 409A of the
Code. The Company shall maintain a separate record
of Grandfathered Accounts.
(l) "Fair
Market Value" means, with respect to Shares, the fair market
value of such Shares determined by such methods or procedures
as shall be established from time to time by the
Board. Unless otherwise determined by the Board,
the Fair Market Value of a Share as of any given date means
the closing sale price of a Share reported on the Nasdaq
Global Select Market (or, if Shares are then principally
traded on a national securities exchange, in the reported
"composite transactions" for such exchange) for such date, or,
if no Shares were traded on that date, on the next preceding
day on which there was such a trade.
(m) “Mandatory
Retirement” means the termination of a director's
service in accordance with any mandatory retirement policy
adopted by the Board of Directors and then in
effect.
(n) "Option"
means the right, granted to a Participant under Section 7, to
purchase a specified number of Shares at the specified
exercise price for a specified period of time under the
Plan. All Options will be non-qualified stock
options.
(o) "Participant"
means any person who has been granted an Option which remains
outstanding, has RSUs, Deferred Shares or deferred cash
credited to his or her Account, or has elected to defer
receipt of Director Compensation in the form of Deferred
Shares or deferred cash under the Plan.
(p) "Plan
Year" means, with respect to a Participant, the period
commencing at the time of election of the director at an
annual meeting of shareholders (or the election of a class of
directors if the Company then has a classified Board of
Directors), or the director's initial appointment to the Board
if not at an annual meeting of shareholders, and continuing
until the close of business of the day preceding the next
annual meeting of shareholders.
(q) "Restricted
Stock" means Shares granted under Section 6, subject to a risk
of forfeiture and restrictions on transfer for a specified
period.
(r) "RSU"
or "Restricted Share Unit" means a Share Unit credited to a
Participant's Account as a grant under Section 6, which is
subject to a risk of forfeiture for a specified
period.
(s) "Shares"
means shares of common stock of the Company and such other
securities as may be substituted or resubstituted for Shares
pursuant to Section 13(b).
(t) "Share
Unit" means a right to receive, at a specified settlement
date, delivery of one Share or the cash Fair Market Value of a
Share at that date, subject to the terms and conditions of the
Plan. Share Units in the form of RSUs shall be
subject to a risk of forfeiture, but Share Units in the form
of Deferred Shares will be at all times
non-forfeitable. Share Units and related awards
settleable in cash shall be referred to as "Cash-Settled" and
those settleable in Shares shall be referred to as
"Share-Settled." A given award will be deemed to be
a Share-Settled award unless it has been specifically
designated as a Cash-Settled award in this Plan or otherwise
by the Committee in writing.
(u) "Stock
Appreciation Right" or "SAR" means the right, granted to the
Participant under Section 7, to receive, upon exercise
thereof, the excess of (i) the Fair Market Value of one Share
on the date of exercise over (ii) the grant price of the SAR
as determined by the Board at the time of grant.
(v) "Valuation
Date" shall mean the close of business on the last business
day of each calendar quarter and, in the case of any final
distribution of deferred cash from a Participant's Account,
the day as of which such distribution is made; provided,
however, that the Administrator may specify a different
Valuation Date in order to coordinate the Participant's
deferred cash balance with any actual investment by which the
deferred cash balance is to be measured.
3.
Administration.
(a)
Authority
. Both the Board and the Administrator (subject to
the ability of the Board to restrict the Administrator) shall
administer the Plan in accordance with its terms, and shall
have all powers necessary to accomplish such purpose,
including the power and authority to construe and interpret
the Plan, to define the terms used herein, to prescribe, amend
and rescind rules and regulations, agreements, forms, and
notices relating to the administration of the Plan, and to
make all other determinations necessary or advisable for the
administration of the Plan. The Board may delegate
any or all of its functions to a committee of the Board,
provided that the Board shall approve the form and amount of
compensation to directors under any provision of the
Plan. The Administrator may perform any function of
the Board under the Plan, except for establishing the form and
amount of compensation under any provision, adopting material
amendments to the Plan under Section 13(e), and any other
function from time to time specifically reserved by the Board
to itself. Any actions of the Board or the
Administrator with respect to the Plan shall be final,
conclusive, and binding upon all persons interested in the
Plan, except that any action of the Administrator will not be
binding on the Board. The Board and Administrator
may each appoint agents and delegate thereto powers and duties
under the Plan, except as otherwise limited by the
Plan.
(b)
Administrator
. The Administrator shall be the Executive Vice
President, General Counsel and Secretary of the Company, or,
if that officer is unavailable, the Executive Vice President,
Chief Financial Officer, or, if that officer is unavailable,
the Executive Vice President and Director of Human Resources;
provided, however, that the Board may designate a different
individual or committee to serve as
Administrator. In any case in which a director is a
member of the Administrator, such director shall not act on or
decide any matter relating solely to himself or herself or any
of his or her rights or benefits under the Plan. No
bond or other security need be required of the Administrator
or any member thereof in any jurisdiction.
(c)
Limitation
of Liability . Each member of the Board and
the Administrator shall be entitled to, in good faith, rely or
act upon any report or other information furnished to him or
her by any officer or other employee of the Company or any
subsidiary, the Company's independent certified public
accountants, or any executive compensation consultant, legal
counsel, or other professional retained by the Company to
assist in the administration of the Plan. No member
of the Board or the Administrator, nor any person to whom
ministerial duties under the Plan have been delegated, shall
be personally liable for any action, determination, or
interpretation taken or made in good faith with respect to the
Plan, and any such person shall, to the extent permitted by
law, be fully indemnified and protected by the Company with
respect to any such action, determination, or
interpretation.
4.
Shares
Available Under the Plan . Subject to
adjustment as provided in Section 13(b), the total number of
Shares reserved and available for delivery under the Plan for
awards granted on or after June 26, 2003 shall be 600,000;
provided however, that, in no event may more than 50% of such
Shares be delivered in connection with "full-value
Awards." For this purpose, "full-value
Awards" means awards other than Options or SARs for which a
Participant does not pay or surrender rights to payment equal
to at least the Fair Market Value of the award determined at
the date of grant. Shares subject to and to be
delivered in connection with awards granted before June 26,
2003 which remain outstanding at that date shall be drawn
from the shares reserved and available under the Plan at the
time of grant. The Shares delivered under
the Plan may consist, in whole or in part, of authorized and
unissued Shares or treasury Shares. For purposes
of this Section 4, Shares subject to an award under the Plan
(including an award granted before June 26, 2003) that is
canceled, expired, forfeited, settled in cash, or otherwise
terminated without a delivery of Shares to the Participant,
including the number of Shares withheld or surrendered in
payment of any exercise or purchase price of an award and
including the number of Shares subject to an award but not
delivered upon exercise or settlement of the award, will
become available for awards under the Plan. Shares delivered
in settlement of Deferred Shares shall not be deemed to be
Shares drawn from the Shares reserved and available under
this Section 4, to the fullest extent permitted under Nasdaq
Marketplace Rule 4350(i)(1)(A)(ii) and excluding Deferred
Shares resulting from deferrals of Share-Settled
RSUs.
5.
Eligibility.
Each non-employee director of the Company may
participate in the Plan, subject to the terms hereof. No
person other than those specified in this Section 5 will be
eligible to participate in the Plan. The Administrator
will notify each person of his or her eligibility to participate in
an elective feature of the Plan not later than 15 days prior to any
deadline for filing an election form.
6.
Grants of
Restricted Stock or RSUs. Restricted Stock
and/or RSUs shall be granted to non-employee directors in
accordance with policies established from time to time by the Board
specifying the directors or classes of directors to be granted such
awards, the number of shares of Restricted Stock or RSUs to be
granted, and the time or times at which such awards shall be
granted. An award granted under this Section 6 shall
become vested and non-forfeitable at such dates as may be specified
by the Board, and shall have such other terms as may be established
by the Board.
(a)
One-Time
Grant Upon First Election as a Non-Employee Director.
The policy with respect to newly appointed or elected
non-employee directors under this Section 6, effective as of
June 21, 2007 and continuing until modified or revoked by the
Board, shall be as follows:
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(i)
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Award Type and Amount . Effective June 21, 2007,
one-time grants of Restricted Stock to each newly appointed or
elected non-employee director were discontinued.
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(ii)
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Vesting and Forfeiture Terms . With respect
to Restricted Stock granted before June 21, 2007 under this Section
6(a), one-third of the number of Shares of Restricted Stock shall
vest and become non-forfeitable at the close of business on June 1
of each of the three calendar years following the date of grant of
such award, rounded to the nearest number of whole Shares, subject
to the following:
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(A)
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In
the event of a Change in Control or termination of the
Participant's service as a director due to death or Disability, the
award, if not previously vested or forfeited, shall immediately
vest and become non-forfeitable in full.
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(B)
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In
the event of termination of the Participant's service as a director
due to Mandatory Retirement by the Participant, the award, if not
previously vested or forfeited, shall immediately vest and become
non-forfeitable as to that number of Shares of Restricted Stock as
would have vested and become non-forfeitable if the Participant had
continued to serve as a director through the anticipated date of
the next annual meeting of shareholders.
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Unless
otherwise determined by the Board, an award of Restricted Stock
that has not vested at or before the time of termination of the
Participant's service as a director (this would include
all unvested Restricted Stock in the event of a director's removal
from service) will cease to vest and will be forfeited upon such
termination; provided, however, that, if a director's service would
be terminated as a result of the failure of such director to be
reelected at an annual meeting of shareholders after agreeing to be
nominated for reelection, such service will be deemed to terminate
at the end of a 60-day period following such annual meeting if the
director has not otherwise been appointed or elected to a seat on
the Board and accepted such appointment or election.
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(b)
Annual
Grant to a Non-Employee Director. The
policy with respect to annual grants of RSUs under this
Section 6, effective as of June 21, 2007 and continuing until
modified or revoked by the Board, shall be as
follows:
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(i)
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Award Type and Amount . At the date of the 2007
Annual Meeting of Shareholders and each subsequent annual meeting
of shareholders (subject to delayed grant as specified below) at
which a director is elected or reelected as a member of the Board
(or at which members of another class of directors are elected or
reelected, if the Company then has a classified Board), RSUs shall
be automatically granted to each non-employee director eligible to
participate in the Plan at the close of business on that
date. If an election of directors at an annual meeting
is contested, the date of grant for all eligible directors shall be
the date following the annual meeting that the independent Judge of
Elections reports the results of the election to the Company,
unless otherwise determined by the Board. The number of
such RSUs to be granted shall equal $135,000 divided by the Fair
Market Value of a Share on the date of grant. If a
non-employee director is initially elected or appointed at a date
that does not coincide with the date of an annual meeting and does
not fall within 30 days preceding an announced annual meeting, if
he or she is eligible to participate in the Plan at that date, he
or she will be automatically granted the number of RSUs equal to
(A) $135,000 multiplied by a fraction the numerator of which is the
number of days from the date of grant to the anniversary of the
most recent annual meeting and the denominator of which is 365,
divided by (B) the Fair Market Value of a Share on the date of
grant, with the resulting number of RSUs rounded to the nearest
whole RSU; provided, however, that a director elected or appointed
within 60 days after an annual meeting at which the director was
not reelected will receive the same number of RSUs as were granted
at or following the annual meeting to each other non-employee
director. If at the time of grant of RSUs under this
Section 6(b) on or after May 8, 2008 there remains insufficient
Shares available for the number of Share-Settled RSUs anticipated
to be granted during that fiscal year (taking into account
previously granted and outstanding Share-Settled awards), (i) in
fiscal 2009 the maximum number of Share-Settled RSUs granted to
each non-employee director will be 3,000, and any RSUs to be
granted in excess of that number will be Cash-Settled RSUs, and
(ii) after fiscal 2009 (or earlier at any time that fewer than
3,000 Shares remain available per director for new awards to be
granted at a given date) all RSUs to be granted to a non-employee
director will be Cash-Settled RSUs.
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(ii)
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Vesting and Forfeiture Terms . Such award
shall become vested and non-forfeitable as to all RSUs at the close
of business on June 1 of the year following the date of grant,
subject to the following:
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(A)
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In
the event of a Change in Control or termination of the
Participant's service as a director due to death or Disability, the
award, if not previously vested or forfeited, shall immediately
vest and become non-forfeitable in full.
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(B)
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In
the event of termination of the Participant's service as a director
due to a voluntary termination of service or Mandatory Retirement
by the Participant, the award, if not previously vested
or forfeited, shall immediately vest and become non-forfeitable as
to that number of RSUs equal to the total number of RSUs multiplied
by a fraction the numerator of which is the number of days from the
date of grant to the date of termination of service and the
denominator of which is the number of days from the date of grant
until June 1 of the year following the date of grant of such award
(such fraction in no event will exceed one). This
provision will also apply in the case of a director who fails to be
reelected as a director at an annual meeting of shareholders after
agreeing to be nominated for reelection, provided, however, that,
in such a case the director's service will be deemed to terminate
only if, at the end of a 60-day period following such annual
meeting (but not later than December 31 if that date falls within
the 60-day period), the director has not otherwise been appointed
or elected to a seat on the Board and accepted such appointment or
election.
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Unless
otherwise determined by the Board, an award of RSUs that has
not vested at or before the time of termination of the
Participant's service as a director (this would include all
unvested RSUs in the event of a director's removal from
service) as provided herein will cease to vest and will be
forfeited upon such termination.
(c)
Dividends
and Dividend Equivalents . Unless otherwise
determined by the Board, cash dividends on Restricted Stock
which are not large, special and non-recurring and which are
paid prior to the lapse of the risk of forfeiture on such
Restricted Stock shall be paid to the Participant when paid to
the Company's shareholders. Other dividends will be
payable or not payable and subject to adjustment to the
Restricted Stock in accordance with Section
13(b). Dividend Equivalents will be credited on
RSUs in accordance with Section 9(a), with the resulting
additional RSUs subject to the same terms, including risk of
forfeiture, as the RSUs on which the dividend equivalent was
paid; provided, however, that such dividend equivalents may
instead be paid in cash, subject to such terms as the
Administrator may determine, if reinvestment of dividends is
determined by the Administrator to be administratively
burdensome.
(d)
Other
Restricted Stock Terms . Restricted Stock
shall be nontransferable by the Participant at any time that
the award remains subject to a risk of
forfeiture. Restricted Stock granted under the Plan
may be evidenced in such manner as the Administrator shall
determine. Unless otherwise determined by the
Administrator, if certificates representing Restricted Stock
are registered in the name of the Participant, such
certificates shall bear an appropriate legend referring to the
terms, conditions, and restrictions applicable to such
Restricted Stock, the Company shall retain physical possession
of the certificate, and the Participant shall have delivered a
stock power to the Company, endorsed in blank, relating to the
Restricted Stock. Upon the lapse of restrictions on
Restricted Stock, the Share certificate shall be released by
the Company to the Participant with any legend relating to
such restrictions removed.
(e)
Settlement
of RSUs.
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(i)
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General Rule . Except as provided in (ii) – (v) below,
RSUs shall be settled promptly at the time the RSUs become vested
(and in any case within 90 days thereafter); provided, however,
that settlement of RSUs shall be subject to delayed settlement if
and to the extent specified in Section 10(d), (e) or (f)
below.
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(ii)
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Deferral Election . A director may elect to defer
settlement of RSUs by timely filing an election with the Company as
provided below:
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A.
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Timing of Elections . A deferral election must generally be
made by the end of the calendar year prior to the Plan Year in
which the RSU is granted. However, a newly eligible
Participant (within the meaning of Treas. Reg. §
1.409A-2(a)(7)) may make a deferral election with respect to an
initial grant of RSUs under Section 6(b) within 30 days of election
or appointment to the Board (which will apply only to the portion
of the RSUs attributable to service by the director after the
election has been filed), or at such other time as is permitted
under Section 409A of the Code.
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B.
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Effect and Irrevocability of Elections
. Elections relating to RSUs filed before the calendar
year in which the Plan Year to which they relate begins, other than
those subject to Section 9(c), shall become irrevocable immediately
before the beginning of such calendar year unless the Administrator
specifies an earlier time. Elections subject to Section
9(c) shall become irrevocable in accordance with Section
9(c). Other elections shall become irrevocable upon
filing or at such other time as may be specified by the
Administrator. The latest election filed with the
Administrator shall be deemed to supersede all prior inconsistent
elections that remain revocable at the time of filing of the latest
election.
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(iii)
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Matters To Be Elected . The Administrator will
provide a form or forms of election which will permit a director to
make appropriate elections with respect to all relevant matters
under this Section 6. This election form may be included
in the document evidencing the grant of RSUs.
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(iv)
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Permitted Elections as to Settlement . Elections
as to the time of settlement of deferred RSUs shall conform to the
terms of Section 9(c).
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(v)
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Forfeiture Risk. A validly deferred RSU will
remain forfeitable as provided herein until the RSU has become
vested. Thereafter, although it will still be referred
to as an RSU for purposes of the Plan, it will be
non-forfeitable.
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(vi)
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Form
of Settlement. RSUs that are validly deferred will, upon
such deferral, be treated as Deferred Shares and, to the fullest
extent permitted
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