EXHIBIT 10.4
CHARMING SHOPPES, INC.
PERFORMANCE SHARE AGREEMENT
Agreement dated
as of June 2, 2005, between CHARMING SHOPPES, INC. (the
"Company") and Steven A. Lightman (the
"Employee").
It is agreed as follows:
1. Grant of Performance Shares;
Consideration; Employee Acknowledgments.
(a) The Company
hereby confirms the grant to Employee of restricted stock
units ("Performance Shares") with respect
to 30,000 shares of the Company's
common stock, par value $0.10 per share
("Shares"), subject to restrictions as
set forth herein. The Performance Shares
are granted as of the date of this
Performance Share Agreement (the "Date of
Grant"). The number of Performance
Shares set forth in this Section 1(a) is
the target award of Performance Shares
(the "Target Shares"). The actual number of
Shares that will vest and be
distributed pursuant to this Performance
Share Agreement (the "Agreement") shall
depend on the Company's achievement of the
performance goals described in
Section 3(c) below or the satisfaction of
other conditions described in Section
3(b) or 3(d) of this Agreement.
(b) Employee
shall be required to pay no cash consideration for the grant
of the Performance Shares, but Employee's
performance of services to the Company
from the Date of Grant to the date of
issuance of the Shares, and his agreement
to abide by the terms set forth in this
Agreement, and any Rules and Regulations
promulgated by the Committee for
administration of this Agreement, shall be
deemed to be consideration for this grant
of Performance Shares. Employee
acknowledges and agrees that (i) the
Performance Shares are nontransferable as
provided in Section 3(a) hereof, (ii) the
Performance Shares are subject to
forfeiture in the event of Employee's
termination of employment in certain
circumstances, as specified in Section 3(b)
hereof or to the extent that the
performance goals specified in Section 3(c)
below are not met, and (iii) sales
of Shares following vesting (and, if
deferred, any later settlement) of the
Performance Shares will be subject to the
Company's policies regulating trading
by employees, including any applicable
"blackout" or other designated periods in
which sales of Shares are not
permitted.
--------------------------------------------------------------------------------
THE DATE OF GRANT OF THESE PERFORMANCE SHARES IS: June 2, 2005
GRANT NUMBER: _________
<PAGE>
2. Acceptance of Award; Administrator.
Employee hereby
accepts the grant of Performance Shares, acknowledges
receipt of this Agreement, and agrees to be
bound by all the terms and
provisions hereof (as presently in effect
or hereafter amended), and by all
decisions and determinations of the Board
or the Compensation and Stock Option
Committee of the Board (the "Committee").
The number and type of Performance
Shares (including the number and type of
Target Shares) are subject to
adjustment by the Committee to reflect any
large, special and non-recurring
dividend or other distribution,
recapitalization, forward or reverse split,
stock dividend, reorganization, merger,
consolidation, spin-off, combination,
repurchase, share exchange, liquidation,
dissolution or similar corporate
transaction or event that affects the
stock, in an appropriate manner.
3. Restrictions on Performance Shares.
(a) Restrictions
Generally. Until the Shares vest in accordance with
Section 3(b), 3(c), or 3(d), the following
restrictions (the "Restrictions")
shall apply to the Performance Shares: (1)
Employee shall have no right to sell,
transfer, assign, pledge, or otherwise
encumber or dispose of the Performance
Shares (except for transfers and
forfeitures to the Company); and (2) the
Performance Shares shall be subject to the
risk of forfeiture as set forth in
Section 3(b) and 3(c). Employee shall be
entitled to receive dividend and
distribution equivalents with respect to
the Performance Shares in accordance
with Section 4. Employee shall not have any
rights of a shareholder of the
Company, including the right to vote, with
respect to Performance Shares, until
actual Shares are issued to Employee upon
vesting of the Shares.
(b) Termination
of Employment; Forfeiture. Unless otherwise determined by
the Committee, if Employee's employment
terminates and immediately thereafter he
or she is not an employee of the Company or
any of its subsidiaries (a
"Termination"), and such Termination is for
any reason other than due to death,
"Disability," Termination by Employee for
"Good Reason," or involuntary
termination by the Company for reasons
other than "Cause," the Performance
Shares as to which Restrictions have not
lapsed at or before such Termination
shall be forfeited at the time of such
Termination. Accordingly, Employee's
voluntary Termination (other than for Good
Reason) or Termination by the Company
for Cause will result in all Performance
Shares which remain subject to
Restrictions being immediately forfeited.
Vesting and forfeiture terms
applicable to other Terminations are as
follows:
(i) Death or Disability. In the event of Employee's Termination due
to
death or
Disability, all Restrictions on the Target Shares shall lapse
at
the time of such Termination
(i.e., none of the Target Shares will be
forfeited).
(ii) Termination Not for Cause or for Good Reason. In the event
of
Employee's
Termination due to involuntary termination by the Company for
reasons other
than "Cause" or by Employee for "Good Reason," all
Restrictions on
the Target Shares shall lapse at the time of such
Termination
(i.e., none of the Target Shares will be forfeited).
-2-
<PAGE>
(iii) Definition of "Cause," "Good Reason" and "Disability."
For
purposes of this
Agreement, "Cause," "Good Reason" and "Disability" shall
have the
meanings ascribed to such terms in the Employment Agreement by
and
between the
Company and Employee dated as of May 18, 2005 (the "Employment
Agreement").
(c) Vesting
Based on Performance Goals.
(i) Vesting Date. Unless the Performance Shares vest earlier
under
Section 3(b) or
3(d), the Performance Shares shall vest on February 2, 2008
(the "Vesting
Date"), subject to Employee's continued employment with the
Company or a
subsidiary through the Vesting Date and subject to the
Company's
achievement of the performance goals described in subsection
(ii)
below.
(ii) Performance Goals. Except as provided in Section 3(b) or
3(d),
the number of
Shares that shall be vested pursuant to this Agreement shall
depend on the
Company's achievement of the following performance goals over
the Performance
Period. The Performance Period is the period beginning
January 31, 2005
and ending February 2, 2008. The number of Shares that
vest at the end
of the Performance Period shall be determined based on the
Company's
Cumulative Free Cash Flow for the Performance Period, as
follows:
-----------------------------------------
-------------------------------------
Cumulative Free Cash Flow for
Percentage of
Performance Period
Target Shares That
Vest
-----------------------------------------
-------------------------------------
Minimum: At least
$107,000,000
50%
-----------------------------------------
-------------------------------------
Target:
$134,000,000
100%
-----------------------------------------
-------------------------------------
Maximum: $161,000,000 or more
200%
-----------------------------------------
-------------------------------------
The
percentage
