<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended January 29, 1994
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OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the transition period from to
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Commission file number 0-7258
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CHARMING SHOPPES, INC.
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(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
PENNSYLVANIA 23-1721355
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
450 Winks Lane, Bensalem, Pennsylvania 19020
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(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code (215) 245-9100
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Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common stock (par value $.10 per share)
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(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. (X) YES ( ) NO
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (Section 229.405 of this chapter) is not contained herein,
and will not be contained, to the best of the registrant's knowledge, in
definitive proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K. (X)
As of February 28, 1994, 102,713,582 common shares were outstanding. The
aggregate market value of the common shares (based upon the closing price on
February 28, 1994) held by non-affiliates was approximately $1.237
billion.
DOCUMENTS INCORPORATED BY REFERENCE: As stated in Part III of this annual
report, portions of the following document are incorporated herein by
reference:
Definitive proxy statement for annual shareholders meeting to be filed within
120 days after the end of the fiscal year covered by this annual report.
<PAGE> 2
CHARMING SHOPPES, INC.
1993 FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART I
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<S> <C> <C>
Item 1 Business
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Merchandising and Marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Purchasing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Stores . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Store Management and Employees . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Trademarks and Servicemarks . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Item 2 Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Item 3 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Item 4 Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . . . . . . 8
Item 4a Executive Officers of the Registrant . . . . . . . . . . . . . . . . . . . . . . . . . 8
</TABLE>
<TABLE>
<CAPTION>
PART II
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<S> <C> <C>
Item 5 Market for Registrant's Common Equity and Related Stockholder Matters . . . . . . . . . 9
Item 6 Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Item 7 Management's Discussion and Analysis of Financial Condition and
Results of Operations 11
Item 8 Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . 15
Item 9 Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure 31
</TABLE>
<TABLE>
<CAPTION>
PART III
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<S> <C> <C>
Item 10 Directors and Executive Officers of the Registrant . . . . . . . . . . . . . . . . . . 31
Item 11 Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Item 12 Security Ownership of Certain Beneficial Owners and Management . . . . . . . . . . . . 31
Item 13 Certain Relationships and Related Transactions . . . . . . . . . . . . . . . . . . . . 31
</TABLE>
<TABLE>
<CAPTION>
PART IV
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<S> <C> <C>
Item 14 Exhibits, Financial Statement Schedules and Reports on Form 8-K . . . . . . . . . . . 32
</TABLE>
1
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PART I
ITEM 1 BUSINESS
GENERAL
Charming Shoppes, Inc., a Pennsylvania corporation formed in 1969, operates,
through its subsidiary corporations, 1,333 women's specialty apparel stores in
45 states. Unless the context indicates otherwise, the term "Company" refers
to Charming Shoppes, Inc. and, where appropriate, one or more of its wholly
owned subsidiaries. The Company's "Fashion Bug" stores specialize in selling,
at moderate and popular prices, a wide variety of junior, misses, womens, girls
and large size sportswear, dresses, coats, suits, lingerie, accessories, and
casual footwear to women principally in the 15 to 45 year old age group. The
Company's "Fashion Bug Plus" stores sell similar merchandise primarily for the
large size woman. The Company also sells men's sportswear, accessories and
coats in the majority of its Fashion Bug stores.
The Company's stores sell both brand name merchandise and specially
manufactured garments under one of the Company's private labels. The Company's
policies of advertising, promotion and the offering of its chain-wide charge
card permit the Company to operate successfully in smaller malls and strip
shopping centers, as well as in regional malls.
MERCHANDISING AND MARKETING
The Company's policy is to stock each store with a broad selection and full
range of sizes of current fashions at moderate and popular prices. Rather than
a narrow assortment of high-fashion merchandise targeted at a single age group,
the stores offer a broad selection of contemporary and classic clothing which
appeals to a wide range of lower middle to middle income customers. Through
its merchandise information system, the Company constantly monitors the demands
of its customers for style and price in order to restock inventories with a
selection desirable to each particular stores' customers. The Company has also
responded to demographic changes and consumer preferences by providing greater
fashion selection in misses and large sizes and better quality at attractive
prices.
Merchandise sold by the Company is produced by a large number of manufacturers
in the United States and abroad, and the Company constantly evaluates
merchandise that is offered in the world markets. Approximately 77% of the
merchandise sold is private label, primarily under the "Stefano" and "Maggie
Lawrence" labels. The Company anticipates that the percent of private label
merchandise will continue to increase. The private label program was developed
as a result of customer demand for better quality merchandise, comparable to
certain national brands, at lower prices. Our product developers use a
state-of-the-art computer system to design and continually update a wide
variety of merchandise. The Company then contracts directly with domestic and
foreign manufacturers to have goods manufactured to our specifications
(construction, fabric, fit and style), which are sold at attractive prices
while providing higher than average mark-up for the Company. Use of the
private label program requires the Company to contract for merchandise in
advance of its intended selling season, thus exposing the Company to markdowns
of merchandise caused by changes in customer preferences. (See "Purchasing")
2
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The Company is promotionally oriented, utilizing an advertising program on
radio and in newspapers in the locale of the stores, and making extensive use
of direct mail. Additionally the Company advertises at the conclusion of a
number of nationally syndicated television programs in an effort to gain
exposure to a larger base of potential customers. Pricing policies, displays,
store promotions, convenient locations and store hours are also used to attract
customers. With the assistance and planning of specialized home office
personnel, each store provides such displays and advertising as may be
necessary to feature certain merchandise or certain promotional selling prices
from time to time.
The retail sale of women's apparel is a highly competitive business with
numerous competitors, including individual and chain fashion specialty stores
and department stores. The Company cannot estimate the number of competitors
or its relative competitive position, due to the large number of companies
selling women's apparel. The primary elements of competition are merchandise
style, size, selection, quality, display and price, as well as store location,
design, advertising and promotion and personalized service to the customers.
The Company believes that its strategy in specializing in fashionable
merchandise, both for the large size women and for the junior and girls'
customers, and its ability to effect volume purchases to pass cost savings to
its customers are important elements in its operations.
The Company encourages credit sales on its private label charge card. The
private label charge program has approximately 3,400,000 active accounts which
account for 37% of retail sales. The Company believes that the charge card is
a promotional vehicle in itself, engendering customer loyalty, creating a
substantial base for direct mail promotion and encouraging incremental sales.
Since 1989 the Company has been repurchasing portions of its credit card
receivables from various financial institutions. During October, 1993, the
Company completed this repurchase and now controls its entire private label
credit card file. The Company has entered into agreements whereby it can
sell, on a revolving basis, its accounts receivable and currently all
receivables have been sold under these programs. These agreements provide for
the Company to continue to service the receivables and control credit policies.
This will allow the Company to continue to fund receivable growth, provide
customer service and collect past due accounts. Accordingly, its relationship
with its credit card customers is not affected by the securitization
agreements. The Company's charge card portfolio is administered by Spirit of
America National Bank, a national association and wholly-owned subsidiary of
the Company. Spirit of America National Bank approves credit applications
and a third party performs all billing and collection activities. An increase
in short-term interest rates could have an adverse effect on credit costs.
The Company uses interest rate caps and swaps in an attempt to mitigate the
effect of rising interest rates.
The Company's stores feature wall and selling-floor displays which coordinate
merchandise in order to promote multiple sales. The stores, which the Company
believes must constantly present a fresh, contemporary shopping environment,
are redecorated or fully remodeled as necessary to augment sales. The Company
is constantly testing and implementing new store designs and fixture packages
aimed at providing an effective merchandise presentation.
The Company emphasizes customer service, including the presence of sales people
in the stores, rather than self-service; lay-away plans; and acceptance of
merchandise returns for cash or credit within a reasonable time period.
3
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PURCHASING
Purchasing is conducted on a departmental basis for each of the "Fashion Bug"
and "Fashion Bug Plus" merchandise groups by a staff of buyers supervised by
one or more merchandise managers. The Company believes that specialization of
buyers within their departments enhances their expertise in obtaining quality
merchandise at a cost which will permit attractive selling prices, while
obtaining the desired mark-up for the Company.
The merchandising staff obtains store and chain-wide inventory information
generated by a merchandise information system utilizing point of sale
terminals, through which merchandise can be followed from the placement of the
order to the actual sale. Based upon this data, the merchandise managers
compare budgeted to actual sales and make merchandising decisions, as
indicated, including re-order, markdowns and changes in the buying plans for
upcoming seasons.
The Company does not own or operate any significant manufacturing facilities.
During the fiscal year ended January 29, 1994, the Company purchased
merchandise from approximately 700 suppliers, none of which accounted for more
than 3% of its purchases. The Company's wholly-owned contracting and buying
subsidiaries are headquartered in Hong Kong. Through this office the Company
conducts its sourcing operations in 24 countries with offices in 15 of these
countries. Any event that causes a sudden disruption in the flow of or
significantly increases the cost of imported merchandise could have a
materially adverse effect on the Company's operations.
DISTRIBUTION
The Company operates two distribution centers. One is located in Bensalem,
Pennsylvania, adjacent to the Company's corporate headquarters. This automated
facility, which also contains executive, administrative and buying offices,
occupies approximately 515,000 square feet. The second distribution facility
is located in Greencastle, Indiana. The 150 acre tract of land contains a
building of approximately 350,000 square feet. During fiscal 1995 the Company
will expand this facility by 175,000 square feet. Upon completion of this
expansion, the Company estimates that it will have the ability to service over
2,000 stores from these two distribution centers.
The great majority of merchandise purchased by the Company is received at these
centers, where it is prepared for distribution to the stores. The functions
performed at these central facilities include quality control inspection,
ticketing, packing and shipping. During 1993, the Company implemented an
automated sortation system in its Bensalem, Pennsylvania distribution center
which will continue to enhance the flow of merchandise from receipt to shipment.
This system will be implemented in the Greencastle, Indiana facility during
Fiscal 1995. Shipments to each store are made by trucks operated principally
by common carriers. The Company utilizes a computerized automated distribution
model which has enhanced the efficiency of the distribution department and
enables that department to build various attributes into each store's plan to
determine not only the number of units, but the type of unit to be distributed
to each store.
The Company operates a program of shipping direct from the supplier certain
merchandise as a complement to its centralized distribution capability. Direct
shipping of certain merchandise increases the Company's flexibility and saves
time in the distribution of goods.
4
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STORES
Substantially all of the Company's 1,333 stores are located in enclosed
shopping malls and strip shopping centers which are situated primarily in
suburban metropolitan areas and smaller towns. The Company's extensive
promotional policies enable it to operate stores successfully in a variety of
shopping environments, whereas many of its competitors rely principally on
regional mall traffic (See "Merchandising and Marketing" above). Typically,
stores are open seven days per week, eleven hours per day Monday through
Saturday and seven hours on Sunday.
The Company experiences a normal seasonal sales pattern for the retail apparel
industry, with its peak sales occurring during the Christmas, Easter and
back-to-school seasons and the period preceding Mother's Day. The Company
generally builds inventory levels prior to these peak selling periods. To keep
inventory current and fashionable, the Company reduces the price of slow moving
merchandise throughout the year. End of season sales are conducted with the
objective of carrying a minimal amount of seasonable merchandise over from one
season to another. Sales for the four quarters of the fiscal year ended
January 29, 1994, as a percent of total sales, were 21.9, 24.6 , 25.0 and 28.5,
respectively.
The "Fashion Bug" stores range in size, generally, from 6,000 square feet to
16,000 square feet, averaging approximately 8,900 square feet. The "Fashion
Bug Plus" stores range in size, generally, from 3,000 square feet to 5,000
square feet, averaging approximately 3,900 square feet. Total square feet of
leased space as of the fiscal year ended January 29, 1994, increased to
11,468,000 from 9,695,000 as of the fiscal year ended January 30, 1993, a 18.3%
increase.
The Company has pursued an aggressive store expansion policy over the past five
fiscal years, as set forth in the following tables:
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
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NUMBER OF FEB 3 FEB 2 FEB 1 JAN 30 JAN 29
STORES 1990 1991 1992 1993 1994
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<S> <C> <C> <C> <C> <C>
Open at beginning of period 926 1013 1058 1137 1220
Opened during period 109 116 111 129 157
Closed or combined during period (22) (71) (32) (46) (44)
---- ---- ---- ---- ----
1013 1058 1137 1220 1333
---- ---- ---- ---- ----
</TABLE>
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
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FEB 3 FEB 2 FEB 1 JAN 30 JAN 29
STORE TYPE 1990 1991 1992 1993 1994
- ----------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Fashion Bug 864 909 1011 1116 1248
Fashion Bug Plus 149 149 126 104 85
--- --- --- --- --
1013 1058 1137 1220 1333
---- ---- ---- ---- ----
</TABLE>
5
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The Company anticipates a net increase of approximately 125 stores during the
1995 fiscal year. The Company also plans to expand or remodel 80 existing
stores. The new and expanded stores will average approximately 12,000 square
feet in size and will result in a 17% increase in square feet of leased space
during fiscal 1995. The factors considered in locating new stores and closing
existing stores include the demographics of the surrounding area, the
availability of suitable locations, competition in the immediate area,
negotiation of satisfactory lease terms, the principal specialty and "anchor"
stores, expected customer traffic and the location of the Company's store
within the shopping center.
STORE MANAGEMENT AND EMPLOYEES
All stores are operated under the direct management of the Company. Each store
has a manager and an assistant manager who are in daily operational control.
The Company's 184 supervisors travel to all stores on a frequent basis, to
supervise store operations. Generally, store managers are appointed from the
group of assistant managers, and supervisors are appointed from the group of
existing store managers. It is a policy of the Company to motivate its store
personnel through promotion from within, with competitive wages and various
incentive, medical and retirement plans. Store operational and purchasing
policies are developed centrally, leaving individual store management with the
principal duties of display, selling and reporting through point of sale
terminals. As of January 29, 1994, the Company employed approximately 15,900
people, approximately 7,800 of whom were employed on a part-time basis. In
addition, a number of temporary employees are hired during the Christmas
season.
TRADEMARK AND SERVICEMARKS
"Fashion Bug" (R), "Fashion Bug Plus" (R), "Glitter" (R), "Intimate Moments"
(R), "Sopre" (R),"Maggie Lawrence Collection" (R), "Stefano" (R), "Stefano Man"
(R), "Styles to Fit Every You" (R), "L.A. Blues" (R), "Fashion Bug Fits Your
Life" (R), "Details" (R) and several other trademarks and servicemarks of
lesser importance to the Company have been registered with the United States
Patent and Trademark Office and in other countries.
6
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ITEM 2 PROPERTIES
The Company primarily leases all store premises. During Fiscal 1994, four
stores opened on premises which are owned by the Company. Typically, store
leases have initial terms of 5 to 20 years and contain provisions for renewal
options, additional rentals based on a percentage of sales and payment of real
estate taxes and common area charges. With respect to stores open as of
January 29, 1994, the following table shows the number of store leases expiring
during the periods indicated, assuming the exercise of the Company's renewal
options:
<TABLE>
<CAPTION>
Number
of Leases
Period Expiring
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<S> <C>
1994 7
1995 - 1999 38
2000 - 2004 121
2005 - 2009 261
2010 - 2014 281
2015 - 2041 621
</TABLE>
The Company owns a 515,000 square foot distribution center in Bensalem,
Pennsylvania and a 350,000 square foot distribution center in Greencastle,
Indiana (see Item 1 "Business - Distribution").
The Company owns approximately 22 acres in two parcels across the street from
the Company's existing offices and distribution center in Bensalem,
Pennsylvania. This 22 acre tract contains a 110,000 square foot office
building which houses the Company's data processing facility and additional
administrative offices. Spirit of America National Bank, the Company's
private label credit card operation, occupies 13,000 square feet of leased
office space in Milford, Ohio. The Company owns a total of 60,000 square feet
of office and warehouse space in Hong Kong.
ITEM 3 LEGAL PROCEEDINGS
On December 10, 1993, the Company and a wholly owned subsidiary received
federal grand jury subpoenas seeking the production of certain leases to which
store operating subsidiaries of the Company ("Store Subsidiaries") are parties
and other related documents. The subpoenas were issued in conjunction with an
investigation by the United States Attorney in Philadelphia, Pennsylvania
concerning the Store Subsidiaries' claims for payment of "construction
allowances" from certain of their landlords. The allowances, which were
negotiated between the Store Subsidiaries and the landlords of certain of their
retail stores, relate to expenses incurred in altering and furnishing the
landlords' premises to make such space suitable for conducting the Store
Subsidiaries' retail operations. The Company has been providing information in
response to the subpoenas and continues to cooperate with the office of the
United States Attorney. In view of the fact that the investigation is in a
preliminary stage, the Company lacks sufficient information to determine the
outcome of the investigation at this time.
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ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year.
ITEM 4A EXECUTIVE OFFICERS OF THE REGISTRANT
The following list contains certain information relative to Executive Officers
of the Company. There are no family relationships among any Executive
Officers, except that David V. Wachs is the father of Philip and Michael Wachs.
The term of each Executive Officer expires at the next annual meeting of the
Board of Directors following the Annual Meeting of Shareholders scheduled to be
held during June, 1994, or until their successors are duly elected and
qualified.
David V. Wachs, 68, has been Chairman of the Board since 1971 and Chief
Executive Officer since February, 1988. He also served as President of the
Company from January, 1989 until March, 1990 when he was succeeded as President
by Philip Wachs. Mr. Wachs' term as a Director expires in 1996.
Philip Wachs, 38, has been President and Chief Operating Officer since March,
1990 and Vice Chairman of the Board since June, 1989. Prior to his appointment
as President, he served as Executive Vice President - Real Estate for over five
years. Mr. Wachs' term as a Director expires in 1995.
Samuel Sidewater, 56, has served as a Director since September, 1988. He has
served as Executive Vice President - New Business Development since August,
1990, and prior to that time he served as Executive Vice President -
Merchandising for more than five years. Mr. Sidewater's term as a Director
expires in 1996.
Mordechay Kafry, 41, has served as a Director since January, 1990, and as
Executive Vice President - Merchandise Procurement for more than five years.
Mr. Kafry's term as a Director expires in 1994.
Ivan M. Szeftel, 40, has served as Executive Vice President - Finance for more
than five years.
Anthony A. DeSabato, 45, has served as Executive Vice President and Corporate
Director of Human Resources since March, 1990. He served as Vice President -
Human Resources from January, 1988 through March, 1990.
Colin D. Stern, 45, has served as Executive Vice President and General Counsel
since March, 1990. Prior to that time, he served as Vice President and General
Counsel from November, 1989. Prior to November, 1989, Mr. Stern was a partner
in the law firm of Cohen, Shapiro, Polisher, Shiekman and Cohen, Philadelphia,
Pennsylvania, during the period from January, 1984 through October, 1989. Mr.
Stern was a member of the corporate law department of that firm.
Michael Wachs, 34, has served as Executive Vice President - Real Estate since
April 1, 1993. Prior to that time, he served as Vice President - Real Estate.
Bernard Brodsky, 54, has served as Vice President, Treasurer and Secretary for
more than five years.
Ben Mento, 44, has served as Vice President - Director of Store Operations for
more than five years.
Eric Specter, 36, has served as Vice President - Corporate Controller for more
than five years.
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PART II
ITEM 5 MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDERS' MATTERS
(a) PRINCIPAL MARKET: The Company's Common Stock is traded on the
over-the-counter market and quoted on the NASDAQ National Market System
under the symbol CHRS.
(b) The following table sets forth the high and low closing sale prices for
the Company's Common Stock during the indicated periods, as reported by
NASDAQ, and the amount of cash dividend declared by the Company on its
Common Stock during the indicated periods.
<TABLE>
<CAPTION>
FISCAL 1994 FISCAL 1993 DIVIDENDS PER SHARE
HIGH LOW HIGH LOW 1993 1992
---- --- ---- --- ---- ----
<S> <C> <C> <C> <C> <C> <C>
1st Quarter $ 19 1/8 $ 13 3/4 $ 16 7/16 $ 12 11/16 $ .0225 $ .02
2nd Quarter 18 1/4 12 1/4 16 3/8 13 5/16 .0225 .02
3rd Quarter 14 7/8 11 1/2 18 1/2 14 1/16 .0225 .02
4th Quarter 14 1/4 10 3/4 19 16 5/8 .0225 .02
</TABLE>
On March 9, 1994, (first quarter of fiscal 1995), the Company declared a
quarterly dividend of $.0225 per share to shareholders of record on March 25,
1994.
(c) Approximate Number of Holders of Common Stock:
The approximate number of holders of record of the Company's Common Stock
as of February 28, 1994, was 4,499.
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ITEM 6 SELECTED FINANCIAL DATA
The following table presents selected financial data for the Company for each
of the five fiscal years ended, as of February 3, 1990 through January 29,
1994. All of the selected financial data are extracted from the Company's
audited financial statements and should be read in conjunction with the
financial statements and the notes thereto included under Item 8 of this Form
10-K.
CHARMING SHOPPES, INC. AND SUBSIDIARIES
(in thousands except per share amounts)
FIVE YEAR COMPARATIVE SUMMARY
<TABLE>
<CAPTION>
Year Ended
----------------------------------------------------------------------------
January 29 January 30 February 1 February 2 February 3
1994 1993 1992 1991 1990*
---- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C>
Net sales $1,254,122 $1,178,714 $1,020,656 $886,265 $808,637
Income from continuing
operations 75,765 81,127 58,302 40,346 36,410
Income per share from
continuing operations .70 .75 .55 .40 .36
Cash dividends per
common share .09 .08 .06 .06 .06
AT YEAR END:
Total assets 829,233 737,251 637,015 525,334 466,379
Long-term obligations 22,298 26,246 31,199 35,876 32,112
Working capital 181,906 200,083 182,289 137,058 134,005
Stockholders' equity 522,100 445,309 362,208 299,199 262,455
* Consists of 53 weeks
</TABLE>
10
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ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
FINANCIAL SUMMARY
The following table sets forth certain financial data expressed as a percentage
of net sales and on a comparative basis:
<TABLE>
<CAPTION>
PERCENTAGE OF NET SALES PERCENTAGE INCREASE (DECREASE)
FROM PRIOR YEAR
1994 1993 1992 1993-1994 1992-1993
---- ---- ---- --------- ---------
<S> <C> <C> <C> <C> <C>
Net Sales 100.0% 100.0% 100.0% 6.4% 15.5%
Cost of goods sold,
buying and occupancy 68.9% 68.3% 69.1% 7.3% 14.2%
Selling, general and
administrative 22.8% 22.1% 22.9% 9.6% 11.8%
Interest .2% .3% .3% (13.6%) (14.8%)
Income Taxes 2.9% 3.2% 2.7% ( 5.4%) 39.9%
Net Income* 6.1% 6.9% 5.7% ( 6.6%) 39.1%
</TABLE>
*Net Income for Fiscal 1994 is before the cumulative effect of an accounting
change of $3,991,000 or $.04 per share.
NET SALES
Net sales for the fiscal year ended January 29, 1994 ("Fiscal 1994"), totaled
$1,254,122,000 as compared to $1,178,714,000 for the fiscal year ended January
30, 1993 ("Fiscal 1993"), a 6.4% increase. The Company had a 1.8% decrease in
sales of existing stores compared to Fiscal 1993. 11.7% of Fiscal 1994 sales
relate to stores opened in that year. Sales of stores closed during Fiscal
1994 accounted for 3.5% of Fiscal 1993 sales. The net sales increase of 15.5%
in Fiscal 1993 was primarily attributable to the net addition of new stores and
a 6.5% increase in comparable stores sales. The number of retail stores
increased from 1,220 on January 30, 1993 to 1,333 on January 29, 1994.
Sales for the fourth quarter of Fiscal 1994 totaled $357,186,000 as compared to
$337,167,000 for the corresponding period of Fiscal 1993, a 5.9% increase. The
Company had a 2.9% decrease in quarterly sales for existing stores as compared
to the prior year. 12.1% of the quarterly sales are attributable to new stores
opened during Fiscal 1994. Sales for stores closed during Fiscal 1994
accounted for 3.3% of Fiscal 1993 fourth quarter sales.
Net sales increased 14.1% for the fourth quarter of Fiscal 1993 as compared to
the corresponding period during the fiscal year ended February 1, 1992 ("Fiscal
1992"). This increase in sales was primarily due to newly opened stores and a
6.0% increase in comparable store sales.
11
<PAGE> 13
COST OF GOODS SOLD, BUYING AND OCCUPANCY
Cost of goods sold, buying and occupancy expenses expressed as a percentage of
sales increased 0.6% in Fiscal 1994 over the prior year and decreased 0.8% in
Fiscal 1993 over Fiscal 1992. The Company's cost of goods sold percentage
decreased during Fiscal 1994 and Fiscal 1993. During Fiscal 1994 the Company's
cost of goods sold percentage decreased as a result of cost reductions achieved
through the direct sourcing of private label merchandise. During Fiscal 1993
the Company was able to increase merchandise margins through improvements in
its overall merchandise assortments which were refined through the use of
enhanced analysis and distribution systems to meet local consumer preferences.
As a percentage of sales, buying and occupancy expenses increased in Fiscal
1994 as a result of the spreading of these relatively fixed costs over
decreased comparable store sales. In Fiscal 1993 buying and occupancy expenses
decreased as a percentage of sales due to the implementation of cost control
measures in the areas of stores rents and utilities and the effect of higher
comparative store sales relative to fixed expenses.
Cost of goods sold, buying and occupancy expenses comprised the same percentage
of sales in the fourth quarter of Fiscal 1994 as compared to the corresponding
period of Fiscal 1993 and increased 0.1% in the fourth quarter of Fiscal 1993
as compared to the corresponding period of Fiscal 1992. During the fourth
quarters of Fiscal 1993 and 1994, the Company's cost of goods sold percentage
decreased. For Fiscal 1994 this improvement was the result of cost savings
achieved through direct sourcing of private label merchandise. In Fiscal 1993
the Company experienced a less promotional selling environment and an improved
merchandise mix. In Fiscal 1994 these improved margins were offset by the
effect of fixed buying and occupancy expenses on lower comparable store sales.
In Fiscal 1993 costs associated with store closings offset the effect of
improved margins.
SELLING, GENERAL AND ADMINISTRATIVE
Selling, general and administrative expenses, expressed as a percentage of
sales increased 0.7% in Fiscal 1994 over Fiscal 1993 and decreased 0.8% in
Fiscal 1993 over Fiscal 1992. The primary reason for the increase in Fiscal
1994 was the effect of lower comparative store sales to these relatively fixed
expenses. The primary reasons for the decrease in Fiscal 1993 were the
favorable effect of the interest rates on the costs of the Company's private
label credit card program and the effect of higher comparative store sales to
relatively fixed expenses.
INTEREST EXPENSE
Interest expense decreased in Fiscal 1994 and Fiscal 1993 primarily due to
lower interest rates and a reduction in long-term debt.
PROVISION FOR INCOME TAXES
The effective tax rates were 32.2%, 31.9%, and 31.8% for Fiscal 1994, 1993 and
1992, respectively. The increase in the effective tax rate for Fiscal 1994 was
primarily the result of an increase in the federal statutory rate from 34% to
35%. The effective tax rate for Fiscal 1993 was comparable to the rate in
Fiscal 1992.
12
<PAGE> 14
PERFORMANCE ANALYSIS
The following ratios measure the Company's overall performance as shown by the
return on average stockholders' equity and return on average total assets.
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Net return on average
stockholders' equity 16.5% 20.1% 17.6%
Net return on average
total assets 10.2% 11.8% 10.0%
</TABLE>
FINANCIAL CONDITION
LIQUIDITY AND CAPITAL RESOURCES
Cash provided from operations and the Company's capital structure provide the
resources needed to support both current operations and future growth. The
following ratios measure the Company's ability to meet its short-term
obligations:
<TABLE>
<CAPTION>
(in thousands) 1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Working Capital $ 181,906 $ 200,083 $ 182,289
Current ratio 1.7 1.9 1.9
</TABLE>
The Company considers, and currently uses for internal management purposes, the
following measures of liquidity and capital resources:
<TABLE>
<CAPTION>
(in thousands) 1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Cash provided by
operating activities $ 90,236 $98,807 $86,156
Capital Resources and
Leverage Ratios:
Debt to equity 5.2% 7.0% 9.9%
Cash provided by operating
activities to capital
investment 114% 152% 185%
</TABLE>
Cash provided by operating activities represents the Company's primary source
of liquidity and capital. Cash provided by operating activities amounted to
$90.2 million in Fiscal 1994 as compared to $98.8 million in Fiscal 1993.
The primary reason for the decrease in operating cash flow was an
increase in the net investment in inventory (increase in inventory less
increase in accounts payable) which was partially offset by an increase in
accrued expenses. This additional inventory was the result of a 7% increase in
average inventory per store and additional inventory in transit due to the
higher level of imported private label merchandise. The increase in accrued
expenses resulted from the acquisition and simultaneous sale of the Company's
private label credit card receivables which resulted in an increase in the
limited recourse liability established for sold receivables.
13
<PAGE> 15
The Company operates a proprietary credit card program for customers of its
stores. The Company had previously sold the receivables generated from these
credit sales ("Receivables") to various financial institutions. To increase
its control over this credit card program, the Company has been repurchasing
these Receivables. During Fiscal 1994, the Company repurchased $186.9 million
of Receivables which completed the acquisition of its entire private label
credit card file.
In conjunction with these repurchases the Company has entered into various
securitization agreements whereby it can sell, on a revolving basis, for a
specified term, up to $400 million of Receivables. When the revolving period
terminates, an amortization period begins whereby the principal payments are
paid to the party with whom the Company has entered into the securitization
agreement. Through the end of Fiscal 1994 the Company had sold $380.7 million
of Receivables of which $186.9 million were sold during Fiscal 1994.
Receivables are sold under these agreements at face value.
These securitization agreements improve overall liquidity and lessen the effect
of interest rate volatility by replacing short term sources of funding. Under
certain agreements the Company is subject to limited recourse if credit losses
exceed designated limits. The Company has established an accrual of $29.2
million which management believes is an adequate reserve against any such
uncollected receivables.
These agreements provide for the Company to continue to service the receivables
and control credit policies. This will allow the Company to continue to fund
receivable growth, provide customer service and collect past due accounts.
Accordingly, its relationship with its credit card customers is not affected by
the securitization agreements.
The increased investment in other assets is primarily related to investments in
joint ventures relating to the Company's direct sourcing operation and an
increase in fixed assets not placed in service.
The Company believes that its liquidity and capital resources are sufficient to
sustain current operations and provide for accelerated future growth.
CAPITAL REQUIREMENTS
Capital expenditures amounted to $79.0 million, $65.0 million, and $46.7
million in Fiscal 1994, 1993 and 1992, respectively. These expenditures were
primarily for new store construction, the remodeling and expansion of existing
stores and the expansion of the Company's Greencastle, Indiana distribution
center.
During fiscal 1995, the Company anticipates capital expenditures of
approximately $88 million which are principally for the construction of
approximately 170 new stores and the remodeling and expansion of existing
stores. This budget also includes $15 million to complete the expansion of its
distribution center in Greencastle, Indiana. In both fiscal 1995 and 1996, the
Company has scheduled debt maturity payments of $5.0 million. It is
anticipated that the capital required for these expenditures and debt payments
will be financed principally through internally generated funds.
Cash dividends were $9,236,000 during Fiscal 1994 as compared to $8,176,200
during Fiscal 1993.
INFLATION
The Company's financial statements are presented on a historical cost basis.
The Company believes that the impact of inflation during Fiscal 1994 has not
been material to its financial condition and results of operations.
14
<PAGE> 16
ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
REPORT OF INDEPENDENT AUDITORS
To the Stockholders and Board of Directors
Charming Shoppes, Inc.
Bensalem, Pennsylvania
We have audited the accompanying consolidated balance sheets of Charming
Shoppes, Inc. and subsidiaries as of January 29, 1994 and January 30, 1993 and
the related consolidated statements of income, stockholders' equity, and cash
flows for each of the three fiscal years in the period ended January 29, 1994.
Our audits also included the financial statement schedules listed in the Index
as Item 14(a). These financial statements and schedules are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements and schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
schedules are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and schedules. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement and schedule presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Charming Shoppes,
Inc. and subsidiaries at January 29, 1994 and January 30, 1993 and the
consolidated results of their operations and their cash flows for each of the
three fiscal years in the period ended January 29, 1994, in conformity with
generally accepted accounting principles. Also, in our opinion, the related
financial statement schedules, when considered in relation to the basic
financial statements taken as a whole, present fairly in all material respects
the information set forth therein.
As discussed in the Notes to Consolidated Financial Statements, the Company
changed its method of accounting for income taxes in Fiscal 1994.
ERNST & YOUNG
Philadelphia, Pennsylvania
March 8, 1994
15
<PAGE> 17
CONSOLIDATED BALANCE SHEETS
CHARMING SHOPPES, INC. AND SUBSIDIARIES
(in thousands except share and per share amounts)
<TABLE>
<CAPTION>
JANUARY 29 JANUARY 30
ASSETS 1994 1993
---- ----
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 52,390 $ 98,786
Short-term investments-at cost 45,290 50,762
Merchandise inventories 259,527 208,445
Prepayments and other 83,097 75,592
- -----------------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 440,304 433,585
Property, equipment and leasehold improvements - at cost 416,029 343,166
Less: accumulated depreciation and amortization 161,695 129,106
- -----------------------------------------------------------------------------------------------------------
Net property, equipment and leasehold improvements 254,334 214,060
Long-term investments - at cost 83,695 57,658
Other assets 50,900 31,948
- -----------------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 829,233 $ 737,251
- -----------------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 147,638 $147,225
Accrued expenses 97,234 75,877
Income taxes 8,521 5,572
Current portion - long-term debt 5,005 4,828
- -----------------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 258,398 233,502
Deferred taxes 26,437 32,194
Long-term debt 22,298 26,246
STOCKHOLDERS' EQUITY
Common Stock $.10 par value
Authorized 300,000,000 shares. Issued and
outstanding 102,735,437 and 102,448,158 shares 10,274 10,245
Additional Paid-in Capital 54,208 51,708
Deferred Employee Compensation (7,015) (10,757)
Retained Earnings 464,633 394,113
- -----------------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY 522,100 445,309
- -----------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 829,233 $ 737,251
- -----------------------------------------------------------------------------------------------------------
See Notes to Consolidated Financial Statements
</TABLE>
16
<PAGE> 18
CONSOLIDATED STATEMENTS OF INCOME
CHARMING SHOPPES, INC. AND SUBSIDIARIES
(in thousands except shares and per share amounts)
<TABLE>
<CAPTION>
YEAR ENDED
JANUARY 29 JANUARY 30 FEBRUARY 1
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
NET SALES $ 1,254,122 $ 1,178,714 $ 1,020,656
Other Income 9,352 9,146 6,601
- ------------------------------------------------------------------------------------------------------------
TOTAL REVENUE 1,263,474 1,187,860 1,027,257
- ------------------------------------------------------------------------------------------------------------
Cost of goods sold, buying and occupancy expenses 863,381 804,963 705,047
Selling, general and administrative expenses 285,804 260,806 233,265
Interest expense 2,557 2,958 3,473
- ------------------------------------------------------------------------------------------------------------
TOTAL EXPENSES 1,151,742 1,068,727 941,785
- ------------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES AND CUMULATIVE
EFFECT OF AN ACCOUNTING CHANGE 111,732 119,133 85,472
- ------------------------------------------------------------------------------------------------------------
Income Taxes 35,967 38,006 27,170
- ------------------------------------------------------------------------------------------------------------
Income before cumulative effect
of accounting change 75,765 81,127 58,302
- ------------------------------------------------------------------------------------------------------------
Cumulative effect of adoption of SFAS 109 3,991 0 0
- ------------------------------------------------------------------------------------------------------------
NET INCOME $ 79,756 $ 81,127 $ 58,302
- ------------------------------------------------------------------------------------------------------------
PER SHARE DATA
- -----------------
Net Income before cumulative effect of
accounting change $.70 $.75 $.55
Cumulative effect of accounting change .04 .00 .00
-- -- --
Net Income .74 .75 .55
Cash Dividends .09 .08 .06
Weighted average number of common shares
and share equivalents outstanding during
this year 108,390,583 108,681,305 106,267,242
See Notes to Consolidated Financial Statements
</TABLE>
17
<PAGE> 19
CONSOLIDATED STATEMENTS OF CASH FLOWS
CHARMING SHOPPES, INC. AND SUBSIDIARIES
(in thousands)
<TABLE>
<CAPTION>
YEAR ENDED
JANUARY 29 JANUARY 30 FEBRUARY 1
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
OPERATING ACTIVITIES
NET INCOME $79,756 $ 81,127 $ 58,302
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
Provision for losses on accounts receivable 0 0 2,806
Deferred income taxes 2,007 1,344 (71)
Depreciation and amortization 42,487 35,065 31,524
Amortization of deferred compensation expense 3,597 3,512 3,160
Tax benefit from Employee Stock Plans 1,798 3,200 3,065
Cumulative effect of an accounting change (3,991) 0 0
Gain on sale of investments (115) (109) (155)
Loss from abandonment of capital assets 2,333 3,106 2,523
CHANGES IN OPERATING ASSETS AND LIABILITIES:
Accounts receivable 0 (10,830) (12,483)
Merchandise inventories (51,082) (21,695) (31,690)
Accounts payable 413 12,077 25,416
Prepayments & other (11,273) (15,488) (17,825)
Income taxes payable 2,949 ( 1,692) 2,774
Accrued expenses 21,357 9,190 18,810
------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 90,236 98,807 86,156
- -----------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Investment in capital assets 79,023 64,988 46,678
Gross purchases of short-term investments 35,605 103,710 0
Proceeds from sales of short-term investments (41,078) (52,948) 0
Gross purchases of long-term investments 71,952 31,865 24,788
Proceeds from sales of long-term investments (46,029) (6,996) (1,126)
Increase (decrease) in other assets 25,022 11,063 (3,949)
Purchase of accounts receivable 186,857 0 79,201
Sale of accounts receivable (186,857) (54,826) (73,035)
- -----------------------------------------------------------------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES 124,495 96,856 72,557
- -----------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Proceeds from long-term borrowings 1,200 0 155
Reduction of long-term borrowings (4,971) (4,945) (530)
Proceeds from exercise of stock options 870 2,976 4,519
Payments on notes receivable 0 69 0
Sale and leaseback of equipment 0 0 20,958
Dividends paid (9,236) (8,176) (6,037)
- -----------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (12,137) (10,076) 19,065
- -----------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (46,396) (8,125) 32,664
Cash and Cash Equivalents, Beginning of Year 98,786 106,911 74,247
- -----------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 52,390 $ 98,786 $ 106,911
- -----------------------------------------------------------------------------------------------------------
See Notes to Consolidated Financial Statements
</TABLE>
18
<PAGE> 20
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
CHARMING SHOPPES, INC. AND SUBSIDIARIES
(in thousands except shares)
<TABLE>
<CAPTION>
ADDITIONAL DEFERRED
COMMON STOCK PAID-IN EMPLOYEE
SHARES AMOUNT CAPITAL COMPENSATION
------ ------ ------- ------------
<S> <C> <C> <C> <C>
BALANCE, FEBRUARY 2, 1991 50,069,679 $5,007 $26,485 $(5,843)
Issued to employees, net 54,088 6 8,948 (9,291)
Exercise of stock options 681,659 68 4,788
Amortization 3,160
Tax benefit - Employee
Stock Programs 3,065
- ---------------------------------------------------------------------------------------------------------------
BALANCE, FEBRUARY 1, 1992 50,805,426 5,081 43,286 (11,974)
Issued to employees, net (440,163) (44) 2,190 (2,295)
Exercise of stock options 941,118 94 3,032
Amortization 3,512
Tax benefit - Employee
Stock Programs 3,200
Two-for-one stock split 51,141,777 5,114
- ---------------------------------------------------------------------------------------------------------------
BALANCE, JANUARY 30, 1993 102,448,158 10,245 51,708 (10,757)
Issued to employees, net (69,193) (7) (822) 145
Exercise of stock options 356,472 36 1,524
Amortization 3,597
Tax benefit - Employee
Stock Programs 1,798
- ---------------------------------------------------------------------------------------------------------------
BALANCE, JANUARY 29, 1994 102,735,437 $10,274 $54,208 $(7,015)
</TABLE>
<TABLE>
<CAPTION>
NOTES RETAINED
RECEIVABLE EARNINGS
---------- --------
<S> <C> <C>
BALANCE, FEBRUARY 2, 1991 $ (461) $ 274,011
Cash dividends (6,037)
Net income 58,302
- ---------------------------------------------------------------------------------------------------------------
BALANCE, FEBRUARY 1, 1992 (461) 326,276
Two-for-one stock split (5,114)
Payment 69
Transfer 392
Cash dividends (8,176)
Net income 81,127
- ---------------------------------------------------------------------------------------------------------------
BALANCE, JANUARY 30, 1993 0 394,113
Cash Dividends (9,236)
Net income 79,756
- ---------------------------------------------------------------------------------------------------------------
BALANCE, JANUARY 29, 1994 $ 0 $464,633
</TABLE>
See Notes to Consolidated Financial Statements
19
<PAGE> 21
CHARMING SHOPPES, INC. AND SUBSIDIARIES
Year Ended January 29, 1994
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BUSINESS
The Company operates a chain of specialty stores merchandising moderately
priced junior, misses, plus and children's size sportswear, dresses, coats,
lingerie accessories and casual footwear. A limited assortment of men's
sportswear is also available in most stores.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company and
its subsidiaries, all of which are wholly owned. All significant intercompany
accounts and transactions are eliminated. The parent and its subsidiaries have
a 52-53 week fiscal year ending the Saturday nearest January 31.
FOREIGN OPERATIONS
The Company follows the practice of using a December 31 fiscal year for all
foreign subsidiaries in order to expedite the year-end closing.
CASH EQUIVALENTS
The Company considers all highly liquid investments with a maturity of three
months or less when purchased to be cash equivalents. These amounts are stated
at cost which approximates market value.
SHORT-TERM INVESTMENTS
Short-term investments include investments with an original maturity of greater
than three months and a remaining maturity of less than one year. Short-term
investments are stated at cost which approximates market value.
INVENTORIES
Merchandise inventories are valued at the lower of cost or market as determined
by the retail method (average cost basis).
PROPERTY AND DEPRECIATION
Depreciation and amortization for financial reporting purposes are principally
computed by the straight-line method over the estimated useful lives of the
assets, or in the case of leasehold improvements, over the lives of the
respective leases. Accelerated depreciation methods are used for income tax
reporting purposes. Depreciation expense was $36,417,000, $29,575,000, and
$26,617,000 in fiscal 1994, 1993, and 1992, respectively.
COMMON STOCK PLANS
Deferred compensation expense relating to Employee Stock Option and Stock
Incentive Plans is amortized over the required employment period.
20
<PAGE> 22
CHARMING SHOPPES, INC. AND SUBSIDIARIES
Year Ended January 29, 1994
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INCOME TAXES
Effective January 31, 1993, the Company adopted Statement of Financial
Accounting Standards No. 109 ("SFAS 109"), "Accounting for Income Taxes" and
has separately reported the cumulative effect of that change in the
Consolidated Statement of Income for the fifty-two weeks ended January 29,
1994. SFAS 109 requires a change from the deferred method of accounting for
income taxes under APB Opinion 11 to the liability method of accounting for
income taxes. Under the liability method, deferred tax assets and liabilities
are adjusted to reflect the effect of changes in enacted tax rates on expected
reversals of financial statement and income tax carrying value differences. As
permitted by SFAS 109, the Company has elected not to restate the financial
statements for any prior years. The effect of the change on pretax income from
continuing operations for the twelve months ended January 29, 1994 was not
material; however, the cumulative effect of the change increased net income by
$3,991,000 or $0.04 per share.
U.S. Income Taxes have not been provided on undistributed earnings of foreign
subsidiaries accumulated prior to January 29, 1994, because the Company intends
to reinvest such undistributed earnings in the operations. Presently, income
taxes would not be significantly increased if such earnings were remitted
because of available foreign tax credits.
NET INCOME PER SHARE
Net income per common share is based on the weighted average number of shares
and share equivalents outstanding during each fiscal year. Common stock
equivalents include the effect of dilutive stock options.
21
<PAGE> 23
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CHARMING SHOPPES, INC. AND SUBSIDIARIES
Year Ended January 29, 1994
FINANCIAL INSTRUMENTS
The Company has entered into various agreements whereby it can sell, on a
revolving basis, up to $400,000,000 of the Company's private label credit card
accounts receivable. Through the end of fiscal 1994, the Company has sold a
total of $380,678,000 of which $186,857,000, $54,826,000 and $92,754,000 were
sold during the fiscal years ended January 29, 1994, January 30, 1993 and
February 1, 1992, respectively. As of January 29, 1994 and January 30, 1993,
$380,678,000 and $197,373,000 remained to be collected, respectively. The
Company remained contingently liable for approximately $29,316,000 of the sold
receivables. The Company has established an accrual of $29,225,000 which
management believes is an adequate reserve against any such uncollected
receivables. Net accounts receivable finance income is included in selling,
general and administrative expenses.
The Company uses interest rate swaps and caps to manage its exposure to
interest rate fluctuations. The Company has entered into three interest rate
swap agreements with notional principal amounts totaling $100 million. These
agreements, which expire in July, 1996, effectively converted the variable
interest rate utilized in a portion of the sale settlement transactions
described above to a fixed rate. The Company has also entered into three
interest rate cap agreements with notional principal amounts totaling $300
million. These agreements expire between October 1994 and February 1996. Net
receipts or payments under these agreements are recognized as an adjustment to
selling, general and administrative expenses.
At January 29, 1994 these swap agreements had a fair value of ($657,500) and
the caps had a fair value of $0. The fair value is an estimated amount that
the Company would receive or pay to terminate the agreement at the reporting
date, taking into account current interest rates and the credit worthiness of
the counterparties.
PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS
<TABLE>
<CAPTION>
Lives
(in thousands) (Years) 1994 1993
------- ---- ----
<S> <C> <C> <C>
Land $ 3,385 $ 2,810
Building and improvements 10 to 33 61,759 49,300
Store fixtures 5 to 10 92,794 80,324
Equipment 3 to 10 96,622 74,706
Leasehold improvements 10 to 20 161,469 136,026
- -------------------------------------------------------------------------
Total at cost 416,029 343,166
Less accumulated depreciation
and amortization 161,695 129,106
- -------------------------------------------------------------------------
$254,334 $214,060
- -------------------------------------------------------------------------
</TABLE>
LONG-TERM INVESTMENTS
The carrying amounts and fair values of long-term investments based on quoted
market prices are as follows:
<TABLE>
<CAPTION>
FISCAL 1994 FISCAL 1993
(IN THOUSANDS) FAIR VALUE BOOK VALUE FAIR VALUE BOOK VALUE
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Equity Securities $ 6,686 $ 6,362 $ 8,039 $ 7,668
Debt Securities 79,101 77,333 51,204 49,990
- ----------------------------------------------------------------------------------------------
Total $85,787 $83,695 $ 59,243 $ 57,658
- -----------------------------------------------------------------------------------------------
</TABLE>
22
<PAGE> 24
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CHARMING SHOPPES, INC. AND SUBSIDIARIES
Year Ended January 29, 1994
INCOME TAXES
The Company adopted SFAS 109 as of January 31, 1993. The cumulative effect of
this change in accounting for income taxes of $3,991,000 is determined as of
January 31, 1993 and is reported separately in the consolidated statement of
income for the year ended January 29, 1994.
Income tax expense attributable to income from continuing operations consists
of:
<TABLE>
<CAPTION>
(in thousands) 1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
CURRENT:
Federal $29,971 $33,479 $24,189
State 2,393 1,735 1,605
Foreign 1,596 1,448 1,447
- ----------------------------------------------------------------------------------
$33,960 $36,662 $27,241
- ----------------------------------------------------------------------------------
DEFERRED:
Federal 2,250 1,236 (26)
State (243) 108 (45)
- ----------------------------------------------------------------------------------
2,007 1,344 (71)
- ----------------------------------------------------------------------------------
Income Tax Expense $35,967 $38,006 $27,170
- ----------------------------------------------------------------------------------
</TABLE>
The components of deferred income tax expense of $2,007, for the year ended
January 29, 1994 are all attributable to income from continuing operations.
The components of deferred income tax expense for the years ended January 30,
1993 and February 1, 1992 are as follows:
<TABLE>
<CAPTION>
(in thousands) 1993 1992
---- ----
<S> <C> <C>
Depreciation $2,522 $2,169
Employee benefits 1,222 (302)
Inventory (352) (221)
Accounts Receivable (1,090) (675)
Other (958) (1,042)
- -----------------------------------------------------------------
Deferred Income Tax Expense $1,344 $ (71)
- -----------------------------------------------------------------
</TABLE>
23
<PAGE> 25
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CHARMING SHOPPES, INC. AND SUBSIDIARIES
Year Ended January 29, 1994
Prepayments and other assets include deferred income taxes of $9,418,000 at
January 30, 1993. The Company made income tax payments of $33,674,000,
$30,778,000 and $19,604,000 for the years ended January 29, 1994, January 30,
1993 and February 1, 1992, respectively.
The components of deferred tax assets and liabilities at January 29, 1994 are
as follows:
<TABLE>
<CAPTION>
NET CURRENT NET LONG-TERM
ASSETS ASSETS
(LIABILITIES) (LIABILITIES)
------------- -------------
<S> <C> <C>
Property, equipment and leasehold
improvements $(22,774)
Inventory $ 2,600
Deferred employee compensation 4,113
Prepaid employee benefits (1,880)
Accounts Receivable 4,768
Deferred Rent 3,668
Other (7,776)
- -------------------------------------------------------------------------
$ 9,156 $ (26,437)
- -------------------------------------------------------------------------
</TABLE>
Net current deferred taxes are included in prepayments and other current
assets.
24
<PAGE> 26
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CHARMING SHOPPES INC. AND SUBSIDIARIES
Year Ended January 29, 1994
A reconciliation of the effective tax rate with the statutory federal income
tax rate follows:
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Statutory federal income tax rate 35.0% 34.0% 34.0%
State income tax, net of federal income tax benefit 1.3 1.0 1.2
Foreign income (0.1) 0.4 (0.4)
Investment income (1.1) (1.0) (1.2)
Employee benefits (1.6) (1.3) (1.4)
Other, net (1.3) (1.2) (0.4)
- ---------------------------------------------------------------------------------------------
32.2% 31.9% 31.8%
- ---------------------------------------------------------------------------------------------
</TABLE>
The components of income before income taxes and the cumulative effect of an
accounting change consist of the following:
<TABLE>
<CAPTION>
(in thousands) 1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Domestic $106,755 $116,338 $80,133
Foreign 4,977 2,795 5,339
- ----------------------------------------------------------------------------------------------
$111,732 $119,133 $85,472
- ----------------------------------------------------------------------------------------------
</TABLE>
DEBT
Long-term debt at year end consisted of the following:
<TABLE>
<CAPTION>
(in thousands) 1994 1993
---- ----
<S> <C> <C>
9.3% note payable, annually through 1998 $21,428 $25,714
Variable rate mortgage due 1996
(2.4% at 1/29/94) 1,000 1,000
Variable rate mortgage note, interest rate
1.25% above Hong Kong Prime Rate,
payable monthly through 2001
(7.75% at 1/29/94) 496 563
Variable rate mortgage note, interest rate
1% above HIBOR, payable monthly
through 2000 (4.625% at 1/29/94) 3,167 3,642
Variable rate mortgage note, interest rate
1% above SIBOR, payable monthly through
2000 (4.19% at 1/29/94) 1,057 0
Other 155 155
- -----------------------------------------------------------------------------
Total long-term debt 27,303 31,074
Less current portion 5,005 4,828
- -----------------------------------------------------------------------------
$22,298 $26,246
- -----------------------------------------------------------------------------
</TABLE>
25
<PAGE> 27
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CHARMING SHOPPES INC. AND SUBSIDIARIES
Year Ended January 29, 1994
The mortgages are collateralized by buildings with a net book value of
$8,893,000.
During the fiscal years ended January 29, 1994, January 30, 1993, and February
1, 1992 the Company made interest payments of $2,687,500, $3,094,900, and
$3,319,300, respectively.
The carrying amount of the Company's variable rate debt approximates their fair
value.
The fair value of the Company's $21,428,000 9.3% Note payable is estimated to
be $23,285,000 using discounted cash flow analysis based on an estimate of the
Company's current rate for similar borrowing arrangements.
Aggregate maturities of long-term debt during the next five fiscal years are:
<TABLE>
<CAPTION>
(in thousands)
<S> <C>
1995 $5,005
1996 5,015
1997 6,033
1998 5,039
1999 5,047
</TABLE>
STOCKHOLDERS' EQUITY
The Company's authorized capital consists of 1,000,000 shares of Series
Participating Preferred Stock, $1.00 par value, of which 300,000 shares of
Participating Series A Junior Preferred Stock, $1.00 par value have been
authorized; and 300,000,000 shares of Common Stock, $.10 par value.
STOCK OPTION AND STOCK INCENTIVE PLANS
Effective April 1, 1993, and approved by shareholders at the 1993 annual
meeting, the 1993 Employee's Stock Incentive Plan was adopted. The number of
shares of common stock available for issuance under the Plan are 9,000,000 plus
9% of shares issued by the Company after the effective date of the plan and any
shares available but unissued under the 1990 Plan described below. The form of
the grants and exercise price where applicable, are at the discretion of the
Stock Option Committee of the Board of Directors.
The Company's 1990 Employees' Stock Incentive Plan provides for the grant of
options to purchase common stock to key employees of the Company. The exercise
price of such options may not be less than the fair market value at the date
of the grant. As a result of the adoption of the 1993 Employees' Stock
Incentive Plan, the Company no longer intends to issue shares under this Plan.
As of January 29, 1994, 3,468,682 options were exercisable.
26
<PAGE> 28
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CHARMING SHOPPES, INC. AND SUBSIDIARIES
Year Ended January 29, 1994
The Company's 1989 Non-Employee Director Stock Option Plan provides for the
grant of options to purchase up to 30,000 shares of common stock to each member
of the Board of Directors who are non-employees of the Company. The exercise
price of such options shall be equal to the fair market value of the stock on
the date that the option is granted. As of January 29, 1994, 60,000 options
were exercisable.
The Company's 1988 Key Employee Stock Option Plan provides for the grant of
options to purchase up to 3,000,000 shares of common stock to key employees
of the Company. The exercise price of options granted under this plan is $1.00
per share. As of January 29, 1994, 534,102 options were exercisable.
The table below summarizes the activity in all Stock Option Plans:
<TABLE>
<CAPTION>
Average Option
Option Option Prices
Shares Price Per Share
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Outstanding at February 2, 1991 9,152,910 $ 3.928 $.222 - 5.813
Granted 1,672,400 3.164 .500 - 12.250
Cancelled (478,486) 3.562 .500 - 8.250
Exercised (1,363,318) 4.246 .222 - 5.813
- ------------------------------------------------------------------------------------------------
Outstanding at February 1, 1992 8,983,506 3.824 .500 - 12.250
Granted 1,214,250 11.760 .500 - 18.563
Cancelled (158,432) 3.321 .500 - 13.500
Exercised (941,118) 4.317 .222 - 12.250
- -------------------------------------------------------------------------------------------------
Outstanding at January 30, 1993 9,098,206 4.927 .222 - 18.563
Granted 1,270,000 14.253 1.000 - 18.875
Cancelled (327,224) 4.376 .500 - 18.875
Exercised (356,472) 8.621 .222 - 13.500
- ------------------------------------------------------------------------------------------------
Outstanding at January 29, 1994 9,684,510 $ 6.045 $.222 - 18.563
- ------------------------------------------------------------------------------------------------
</TABLE>
At January 29, 1994, 8,072,457 shares were available for future grant under the
1988 Key Employee Stock Option, and the 1993 Employees' Stock Incentive plans.
The Company's Non-Employee Directors Restricted Stock Plan provides for a one
time grant of 5,000 shares of restricted stock to each member of the Board of
Directors who are non-employees of the Company at the time of the inception of
this plan and a pro-rata grant to each non- employee Director who is elected
thereafter. Directors will pay no cash consideration for the restricted stock
granted to them. 40,000 shares of the Company's common stock have been
reserved for issuance under this plan of which 3,250, 4,084 and 15,000 shares
were issued during the fiscal years ended January 29, 1994, January 30, 1993
and February 1, 1992 respectively.
The Company's Managers' Stock Incentive Program provides for the grant to
purchase Common Stock for $.10 per share to store managers. During the fiscal
years ended February 1, 1992, the Company issued 122,358 to store managers
under the program. The Company no longer intends to issue shares under this
program.
The shares issued and options granted under the above plans are subject to
forfeiture if the employees do not remain in the employ of the Company for a
specified period of time, or, in the case of the 1989 Non-Employee Director
Stock Option Plan, if the individual ceased to remain a Director of the
Company.
27
<PAGE> 29
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CHARMING SHOPPES, INC. AND SUBSIDIARIES
Year Ended January 29, 1994
SHAREHOLDER RIGHTS PLAN
In April 1989, the Board of Directors adopted a Shareholder Rights Plan and
declared a dividend of one Right for each outstanding share of Common Stock.
In connection with the Company's two-for-one stock split which was effected on
December 7, 1992, the number of Rights associated with each outstanding share
of Common Stock was adjusted from one Right per share of Common Stock to
one-half of a Right per share of Common Stock. Such Rights only become
exercisable or transferable apart from the Common Stock, ten days after a
person or group (Acquiring Person) acquires beneficial ownership of, or
commences a tender or exchange offer for twenty percent (20%) or more of the
Company's outstanding common shares. Each Right then may be exercised to
acquire one three-hundredth of a share of newly created Series A Junior
Participating Preferred Stock or a combination of securities and assets of
equivalent value at a price of $70, subject to adjustment.
Upon the occurrence of certain events (for example, if the Company is a
surviving corporation in a merger with an Acquiring Person), the Rights entitle
holders other than the Acquiring Person to acquire Common Stock having a value
of twice the exercised price of the Rights, or, upon the occurrence of certain
other events (for example, if the Company is acquired in a merger or other
business combination transaction in which the Company is not the surviving
corporation), to acquire Common Stock of the Acquiring Person having a value
twice the exercise price of the Rights. The Rights may be redeemed by the
Company at $.01 per Right at any time until the tenth day following public
announcement that a twenty percent (20%) position has been acquired. The
Rights will expire on April 26, 1999.
EMPLOYEE RETIREMENT BENEFIT PLAN
The Company provides a comprehensive retirement benefit program for its
employees.
The Plan provides for a noncontributory profit sharing contribution which
covers substantially all full-time employees who meet age and service
requirements. The contribution is completely discretionary and is determined
by the Board of Directors on an annual basis.
The Plan also provides an employee savings provision (401(k) plan) whereby
eligible participating employees may elect to contribute up to 15% of their
compensation to an investment trust. The Company contributes an amount equal
to 30% of the participant's elective contribution, up to 6% of the
participant's compensation.
The total expense for the above plan amounted to $3,323,000, $3,039,000, and
$2,739,000 for the years ended January 29, 1994, January 30, 1993, and February
1, 1992, respectively.
LEASES
The Company leases all of its stores under noncancelable lease agreements.
Generally, these leases have initial periods of 5 to 20 years and contain
provisions for renewal options, additional rentals based on a percentage of
sales and payment of certain real estate taxes.
In November 1991, the Company completed a sale and leaseback agreement for
$21.0 million of point-of-sale equipment. Under the terms of this agreement,
the Company has agreed to leaseback this equipment under a three-year lease
with a two-year option for $4.0 million per year.
The Company also leases certain other buildings and equipment.
<TABLE>
<CAPTION>
Rental expense (in thousands) 1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Minimum rental $82,425 $70,321 $57,521
Contingent rental 12,413 11,331 9,858
- -------------------------------------------------------------------------
Total rent expense $94,838 $81,652 $67,379
- -------------------------------------------------------------------------
</TABLE>
28
<PAGE> 30
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CHARMING SHOPPES, INC. AND SUBSIDIARIES
Year Ended January 29, 1994
LEASES
Minimum annual rental commitments for all noncancelable leases for the next
five fiscal years and thereafter are:
<TABLE>
<CAPTION>
(in thousands)
<S> <C>
1995 $ 99,397
1996 95,278
1997 89,766
1998 82,244
1999 70,928
Thereafter 290,787
</TABLE>
29
<PAGE> 31
QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
<TABLE>
<CAPTION>
IN THOUSANDS EXCEPT PER SHARE AMOUNTS
---------------------------------------------------
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
---------------------------------------------------
<S> <C> <C> <C> <C>
Net sales
1994 $275,299 $308,637 $313,000 $357,186
1993 $262,462 $289,606 $289,479 $337,167
- ---------------------------------------------------------------------------
Cost of goods sold,
buying and occupancy
1994 190,083 212,017 218,630 242,651
1993 178,543 198,827 198,588 229,005
- ---------------------------------------------------------------------------
Gross profit
1994 85,216 96,620 94,370 114,535
1993 83,919 90,779 90,891 108,162
- ---------------------------------------------------------------------------
Selling, general and
administrative
1994 62,961 68,561 73,694 80,588
1993 61,593 60,625 66,675 71,913
- ---------------------------------------------------------------------------
Net income before
cumulative effect
of accounting change
1994 16,219 20,602 15,163 23,781
1993 16,125 21,726 17,385 25,891
- ---------------------------------------------------------------------------
Net income per share
before cumulative
effect of accounting
change
1994 .15 .19 .14 .22
1993 .15 .20 .16 .24
- ---------------------------------------------------------------------------
Net income
1994 $20,210 $20,602 $15,163 $23,781
1993 $16,125 $21,726 $17,385 $25,891
- ---------------------------------------------------------------------------
Net income per share
1994 .19 .19 .14 .22
1993 .15 .20 .16 .24
- ---------------------------------------------------------------------------
</TABLE>
30
<PAGE> 32
ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
There are no matters which are required to be reported under this Item 9.
PART III
ITEM 10 DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information regarding Directors of the Company is set forth under the caption
"Election of Directors" of the Company's definitive proxy statement which is
incorporated herein by reference. Information regarding Executive Officers is
set forth herein under Item 4A. "Executive Officers of the Registrant", in
Part I hereof.
ITEM 11 EXECUTIVE COMPENSATION
Information regarding executive compensation is set forth under the captions
"Management Compensation" and "Report of the Compensation and Stock Option
Committees of the Board of Directors on Executive Compensation" of the
Company's definitive proxy statement which is incorporated herein by reference.
ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Information regarding the security ownership of certain beneficial owners and
management is set forth under the caption "Principal Shareholders and
Management Ownership" of the Company's definitive proxy statement which is
incorporated herein by reference.
ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information regarding certain relationships and related transactions is set
forth under the caption "Certain Relationships and Related Transactions" of the
Company's definitive proxy statement which is incorporated herein by reference.
31
<PAGE> 33
PART IV
ITEM 14 EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM
8-K
(a) (1) FINANCIAL STATEMENTS
The following Consolidated Financial Statements of Charming Shoppes, Inc. and
its subsidiaries are included in Part II, Item 8:
<TABLE>
<S> <C>
Report of independent auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Consolidated Balance Sheets - January 29, 1994 and January 30, 1993 . . . . . . . . . . . . . . . . . 16
Consolidated Statements of Income - years ended
January 29, 1994, January 30, 1993 and February 1, 1992 . . . . . . . . . . . . . . . . 17
Consolidated Statements of Cash Flows - years ended
January 29, 1994, January 30, 1993 and February 1, 1992 . . . . . . . . . . . . . . . . 18
Consolidated Statements of Stockholders' Equity - years ended
January 29, 1994, January 30, 1993 and February 1, 1992 . . . . . . . . . . . . . . . . . . . 19
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
</TABLE>
(a) (2) FINANCIAL STATEMENT SCHEDULES
<TABLE>
<S> <C>
Schedule I - Marketable Securities - Other Investments . . . . . . . . . . . . . . . . . . . . . . 35
Schedule II - Amounts Receivable From Related Parties and Underwriters,
Promoters, and Employees Other Than Related Parties - years ended
January 29, 1994, January 30, 1993 and February 1, 1992 . . . . . . . . . . . . . . . . 36
Schedule V - Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Schedule VI - Accumulated depreciation, depletion and amortization of
property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Schedule VIII - Valuation and Qualifying Accounts. . . . . . . . . . . . . . . . . . . . . . . . . 39
Schedule X - Supplementary Income Statement Information . . . . . . . . . . . . . . . . . . . . . . 40
</TABLE>
All other schedules for which provision is made in the applicable accounting
regulation of the Securities and Exchange Commission are not required under the
related instructions or are inapplicable, and therefore have been omitted.
REPORTS ON FORM 8-K: No reports required to be filed
EXHIBITS, INCLUDING THOSE INCORPORATED BY REFERENCE
The following is a list of Exhibits filed as part of this annual report on Form
10-K. Where so indicated by footnote, Exhibits which were previously filed are
incorporated by reference. For Exhibits incorporated by reference, the
location of the Exhibit in the previous filing is indicated in parenthesis.
The page numbers listed refer to the page numbers where such Exhibits are
located using the sequential numbering system specified by Rules 0-3 and
403:
32
<PAGE> 34
ARTICLES OF INCORPORATION AND BY-LAWS
<TABLE>
<S> <C>
3.1 Restated Articles of Incorporation . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.2 By-Laws, as Amended and Restated . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
</TABLE>
INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS, INCLUDING
INDENTURES
4.1 Shareholders' Rights Plan, incorporated by reference to Form 8-K,
filed on May 23, 1989.
MATERIAL CONTRACTS
10.1.1 Note Agreement between the Registrant and Various Insurance Companies
for $30,000,000 dated June 1, 1988 and incorporated by reference to
Form 10-K of the Registrant for the year ended January 28, 1989.
(Exhibit 10-1, Pg. 63).
10.1.2 Sale and Purchase Agreement between Fashion Service Corp. and BancOhio
National Bank dated July 27, 1988 and incorporated by reference to
Form 10-K of the Registrant for the year ended January 28, 1989.
(Exhibit 10-1, Pg. 96).
10.1.3 Receivables Purchase Agreement between Fashion Service Corp. and
Mellon Bank, N.A. dated April 4, 1989 and incorporated by reference to
Form 10-K of the Registrant for the year ended January 28, 1989
(Exhibit 10-1, Pg. 114).
10.1.4 Amended and restated Receivables Purchase Agreement among Spirit of
America National Bank as Seller, Fashion Service Corp. and Charming
Shoppes, Inc. as Guarantors and Mellon Bank, N.A., as Buyer dated
November 14, 1991, and incorporated by reference to Form 10-K of the
Registrant for the year ended February 1, 1992 (Exhibit 10-1, Pg. 38).
10.1.5 Participation Agreement between the Registrant, Charming Shoppes of
Delaware, Inc., and various financial services companies for Lease
Financing of Point-of-Sale Equipment dated October 31, 1991, and
incorporated by reference to Form 10-K of the Registrant for the year
ended February 1, 1992 (Exhibit 10-1, Pg. 161).
10.1.6 Agreement and Lease between Charming Shoppes of Delaware, Inc., as
Lessee and Mellon Financial Services Corporation as Lessor dated
October 31, 1991 and incorporated by reference to Form 10-K of the
Registrant for the year ended February 1, 1992 (Exhibit 10-1, Pg.
214).
10.1.7 Pooling and Servicing Agreement between Spirit of America National
Bank as Seller and Servicer and Fidelity Bank, N.A., as Trustee for
Spirit of America Master Trust, dated December 24, 1992 and
incorporated by reference to Form 10-K of the Registrant for the year
ended January 30, 1993 (Exhibit 10-1, Pg. 62).
10.1.8 Receivables Purchase Agreement among Fidelity Bank, N.A., as Trustee
for Spirit of America Master Trust, as Seller, Fashion SPC, Inc., as
Subordinated Purchaser, Spirit of America National Bank, as Owner and
Servicer, Ciesco L.P., Corporate Asset Funding Company, Inc., and
Corporate Receivables Corporation, as Purchasers and Citicorp North
America, Inc., as Agent, dated December 24, 1992 and incorporated by
reference to Form 10-K of the registrant for the year ended January
30, 1993 (Exhibit 10-1, Pg. 184).
10.1.9 Parallel Purchase Commitment among Fidelity Bank, N.A., as Trustee,
Spirit of America Master Trust, as Seller, Fashion SPC, Inc., as
Subordinated Purchaser, Spirit of America National Bank, as Owner and
Servicer, Citibank, N.A., and Citicorp North America, Inc., as Agent,
dated December 24, 1992 and incorporated by reference to Form 10-K of
the registrant for the year ended January 30, 1993 (Exhibit 10-1,
Pg. 404).
33
<PAGE> 35
*10.1.10 Amendment Agreement, dated September 20, 1993 to Receivables Purchase
Agreement dated December 24, 1992 (Referenced in Exhibit 10.1.8)
10.1.11 Amendment Agreement, dated September 20, 1993 to Parallel Purchase
Agreement dated December 24, 1992 (Referenced in Exhibit 10.1.9)
*10.1.12 Sale and Purchase Agreement between National City Bank, Columbus, N.A.
and Fashion Service Corp., dated September 30, 1993
EMPLOYEE BENEFIT PLANS AND AGREEMENTS
10.2.1 Key Employee Stock Incentive Program, filed September 13, 1984 under
Amendment No. 1 to Registration Statement #2-92795 and incorporated
herein by reference.
10.2.2 The 1986 Employees' Stock Option Plan of Charming Shoppes, Inc., and
incorporated by reference to Form 10-K of the Registrant for the year
ended February 1, 1992 (Exhibit 10.2.2, pg. 240)
10.2.3 The 1988 Key Employee Stock Option Plan of Charming Shoppes, Inc., as
amended incorporated by reference to Form 10-K of the Registrant for
the fiscal year ended January 30, 1993 (Exhibit 10.2.3, pg. 486)
10.2.4 The 1990 Employees' Stock Incentive Plan of Charming Shoppes, Inc., as
amended incorporated by reference to Form 10-K of the Registrant for
the fiscal year ended January 30, 1993 (Exhibit 10.2.4, pg. 492)
10.2.5 The 1989 Non-Employee Director Stock Option Plan of Charming Shoppes,
Inc., as amended incorporated by reference to Form 10-K of the
Registrant for the fiscal year ended January 30, 1993 (Exhibit
10.2.5, pg. 499)
10.2.6 Non Employee Director Restricted Stock Plan as amended incorporated by
reference to Form 10-K of the Registrant for the fiscal year ended
January 30, 1993 (Exhibit 10.2.6, pg. 503)
10.2.7 Consulting Agreement with Ellis Wachs, dated as of March 2, 1990,
effective April 27, 1991, incorporated by reference to From 10-K of
the Registrant for the fiscal year ended February 3, 1990 (Exhibit
10.2.8)
10.2.8 Employment Agreement with Colin D. Stern dated as of October 3, 1989,
incorporated by reference to Form 10-K of the Registrant for the
fiscal year ended February 1, 1992 (Exhibit 10.2.12, Pg. 245)
10.2.9 Subplan and Summary Description of the Annual Incentive Plan of
Charming Shoppes, Inc., incorporated by reference to Form 10-K of the
Registrant for the fiscal year ended February 1, 1992 (Exhibit
10.2.13, Pg. 251)
10.2.10 The 1993 Employees' Stock Incentive Plan of Charming Shoppes, Inc.
10.2.11 The 1993 Employees' Stock Incentive Plan Stock Option Agreement
(regular vesting schedule) of Charming Shoppes, Inc.
10.2.12 The 1993 Employees' Stock Incentive Plan Stock Option Agreement
(accelerated vesting schedule) of Charming Shoppes, Inc.
Exhibit 22 - Subsidiaries of Registrant . . . . . . . . . . . . . . . . . . .
Exhibit 23 - Consent of independent auditors . . . . . . . . . . . . . . . .
*Portions of this exhibit have been omitted and filed separately with Secretary
of the Commission pursuant to the Registrants' Application Requesting
Confidential Treatment.
All other schedules are omitted because they are not applicable or not
required, or because the required information is included in the consolidated
financial statements or notes thereto.
34
<PAGE> 36
CHARMING SHOPPES, INC. AND SUBSIDIARIES
SCHEDULE I - MARKETABLE SECURITIES - OTHER INVESTMENTS
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- -------- -------- -------- -------- --------
AMOUNT OF WHICH
EACH PORTFOLIO OF
NUMBER OF SHARES OR MARKET VALUE EQUITY SECURITY ISSUES
UNITS-PRINCIPAL OF EACH ISSUE AND EACH OTHER SECURITY
NAME OF ISSUER AND AMOUNTS OF BONDS COST OF AT BALANCE ISSUE CARRIED IN
TITLE OF EACH ISSUE AND NOTES EACH ISSUE SHEET DATE THE BALANCE SHEET
- ------------------- --------- ---------- ---------- -----------------
<S> <C> <C> <C> <C>
Corporate Asset Funding Company, Inc.
Investor Certificates $ 27,835,000 $ 27,835,000 $ 27,835,000
Municipal Bonds 13,502,000 13,502,000 13,502,000
Other 3,953,000 3,953,000 3,953,000
--------- --------- ----------
Total Short Term Investments 45,290,000 45,290,000 45,290,000
---------- ---------- ----------
Government Agency Mortgage
Backed Securities 30,979,000 32,063,000 30,979,000
Municipal Bonds and Municipal
Bond Mutual Funds 43,363,000 43,893,000 43,363,000
Preferred Stocks 3,875,000 4,199,000 3,875,000
Low Income Housing Partnerships 2,487,000 2,487,000 2,487,000
Treasury Bonds 2,211,000 2,385,000 2,211,000
Other 780,000 760,000 780,000
------------ ----------- ------------
Total Long Term Investments $ 83,695,000 $ 85,787,000 $ 83,695,000
------------ ----------- ------------
</TABLE>
35
<PAGE> 37
CHARMING SHOPPES, INC. AND SUBSIDIARIES
SCHEDULE II - AMOUNTS RECEIVABLE FROM RELATED PARTIES AND
UNDERWRITERS, PROMOTERS, AND EMPLOYEES OTHER THAN RELATED PARTIES
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- -------- -------- -------- ----------------------- ------------------
BALANCE AT
BEGINNING BALANCE AT
NAME OF DEBTOR OF PERIOD ADDITIONS DEDUCTIONS END OF PERIOD
- -------------- --------- --------- ------------------------ ------------------
Amounts Amounts Not
Collected Written Off Current Current
--------- ----------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
YEAR ENDED JANUARY 29, 1994
NONE
YEAR ENDED JANUARY 30, 1993
Mordechay Kafry, interest bearing note
at Prime plus 1% due 6/30/93 427,671 15,331 443,002 0 0 0
Ivan Szeftel, interest bearing note at
9% due 10/31/95, collateralized by common
stock 68,675 1,507 70,182 0 0 0
YEAR ENDED FEBRUARY 1, 1992
Lionel Savadove, interest bearing note at
6% due 6/30/93, collateralized by common
stock 402,688 0 402,688 (1) 0 0 0
Mordechay Kafry, interest bearing
note at Prime plus 1% due 1/30/95 0 427,671 0 0 0 427,671
Ivan Szeftel, interest bearing note at
9% due 10/31/95, collateralized by common
stock 68,675 6,180 6,180 0 0 68,675
</TABLE>
(1) During the fiscal year ended February 1, 1992, Mr. Savadove resigned his
position with the Company and as such is no longer a related party. The note
was paid when due on 06/30/93.
36
<PAGE> 38
CHARMING SHOPPES, INC. AND SUBSIDIARIES
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
<TABLE>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- -------- -------- -------- -------- --------- --------
BALANCE AT
BEGINNING ADDITIONS RETIREMENTS/ BALANCE AT
CLASSIFICATION OF PERIOD AT COST EXCHANGES OTHER END OF PERIOD
- -------------- --------- ------- --------- ----- -------------
<S> <C> <C> <C> <C> <C>
YEAR ENDED FEBRUARY 1, 1992:
Land $ 2,810,000 $ 0 $ 0 $ 0 $ 2,810,000
Building and Improvements 42,204,000 1,017,000 0 0 43,221,000
Leasehold Improvements 104,962,000 14,125,000 4,933,000 0 114,154,000
Store Fixtures 59,641,000 9,265,000 1,570,000 0 67,336,000
Equipment 63,815,000 22,271,000 12,587,000 (1) (15,021,000) (2) 58,478,000
----------- ---------- ---------- ------------ ----------
$ 273,432,000 $ 46,678,000 $ 19,090,000 $ (15,021,000) $ 285,999,000
------------- ------------ ------------ ------------- -------------
YEAR ENDED JANUARY 30, 1993:
Land $ 2,810,000 $ 0 $ 0 $ 0 $ 2,810,000
Building and Improvements 43,221,000 6,412,000 333,000 0 49,300,000
Leasehold Improvements 114,154,000 27,759,000 5,887,000 0 136,026,000
Store Fixtures 67,336,000 14,395,000 1,407,000 0 80,324,000
Equipment 58,478,000 16,422,000 194,000 0 74,706,000
---------- ---------- ------- - ----------
$ 285,999,000 $ 64,988,000 $ 7,821,000 $ 0 $ 343,166,000
------------- ------------ ----------- --------------- ---------------
YEAR ENDED JANUARY 29, 1994:
Land $ 2,810,000 $ 575,000 $ 0 $ 0 $ 3,385,000
Building and Improvements 49,300,000 13,209,000 750,000 0 61,759,000
Leasehold Improvements 136,026,000 30,024,000 4,581,000 0 161,469,000
Store Fixtures 80,324,000 13,299,000 829,000 0 92,794,000
Equipment 74,706,000 21,916,000 0 0 96,622,000
---------- ---------- ------- --------------- ----------
$ 343,166,000 $79,023,000 $ 6,160,000 $ 0 $ 416,029,000
------------- ----------- ------------ --------------- -------------
</TABLE>
(1) $12,495,000 of this amount represents the cost of point-of-sale
equipment exchanged for new equipment during fiscal 1992. The Company received
a $3,998,000 reduction in the purchase price of the new equipment in exchange
for equipment with a book value of $2,195,000. The resulting gain of
$1,803,000 will be amortized over the life of the equipment.
(2) During fiscal 1992, the Company entered into a sale and leaseback
transaction for point-of-sale equipment with a cost of $15,021,000.
37
<PAGE> 39
CHARMING SHOPPES, INC. AND SUBSIDIARIES
SCHEDULE VI - ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION OF
PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column F
- -------- -------- -------- -------- --------
Balance at
Beginning Additions Retirements/ Balance at
Classification of Period at Cost Exchanges End of Period
- -------------- --------- ------- --------- -------------
<S> <C> <C> <C> <C>
YEAR ENDED FEBRUARY 1, 1992:
Building and Improvements $ 5,271,000 $ 1,502,000 $ 0 $ 6,773,000
Leasehold Improvements 34,350,000 9,887,000 2,478,000 41,759,000
Store Fixtures 21,122,000 6,600,000 1,568,000 26,154,000
Equipment 31,249,000 8,628,000 10,317,000 (1) 29,560,000
---------- --------- ---------- ----------
$ 91,992,000 $ 26,617,000 $ 14,363,000 $ 104,246,000
------------ ------------ ------------ -------------
YEAR ENDED JANUARY 30, 1993:
Building and Improvements $ 6,773,000 $ 702,000 $ 0 $ 7,475,000
Leasehold Improvements 41,759,000 11,653,000 3,173,000 50,239,000
Store Fixtures 26,154,000 8,660,000 1,390,000 33,424,000
Equipment 29,560,000 8,560,000 152,000 37,968,000
---------- --------- ----------- ----------
$ 104,246,000 $ 29,575,000 $ 4,715,000 $ 129,106,000
------------- ------------ ----------- -------------
YEAR ENDED JANUARY 29, 1994:
Building and Improvements $ 7,475,000 $ 1,920,000 $ 184,000 $ 9,211,000
Leasehold Improvements 50,239,000 13,784,000 2,815,000 61,208,000
Store Fixtures 33,424,000 10,201,000 829,000 42,796,000
Equipment 37,968,000 10,512,000 0 48,480,000
----------- ---------- --- ----------
$129,106,000 $ 36,417,000 $ 3,828,000 $ 161,695,000
------------ ------------ ----------- -------------
</TABLE>
(1). $10,300,000 of this amount represents the accumulated depreciation on
point-of-sale equipment exchanged for new equipment during Fiscal 1992.
38
<PAGE> 40
CHARMING SHOPPES, INC. AND SUBSIDIARIES
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- -------- -------- --------------------------------- -------- --------
(1)
ADDITIONS
BALANCE AT CHARGED TO CHARGED TO
BEGINNING COSTS AND OTHER ACCOUNTS DEDUCTIONS BALANCE AT
DESCRIPTION OF PERIOD EXPENSES (DESCRIBE) (DESCRIBE) END OF PERIOD
- ----------- --------- -------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C>
YEAR ENDED JANUARY 29, 1994 NONE
YEAR ENDED JANUARY 30, 1993
ALLOWANCE FOR DOUBTFUL ACCOUNTS $3,381,000 $ 0 $(3,381,000) (3) $ 0 $ 0
YEAR ENDED FEBRUARY 1, 1992:
ALLOWANCE FOR DOUBTFUL ACCOUNTS $2,109,000 $2,806,000 $ 1,416,000 (2) $2,950,000 $3,381,000
</TABLE>
(1) Represents uncollected accounts written off, net of recoveries.
(2) Represents reserve established at the date of purchase of the related
accounts receivable (February and October, 1991).
(3) Accounts receivable net of reserve sold December 24, 1992.
39
<PAGE> 41
CHARMING SHOPPES, INC. AND SUBSIDIARIES
SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION
<TABLE>
<CAPTION>
COLUMN A COLUMN B
- --------- ---------
CHARGED TO COSTS & EXPENSES
---------------------------
JANUARY 29 JANUARY 30 FEBRUARY 1
ITEM 1994 1993 1992
- ---- ---- ---- ----
<S> <C> <C> <C>
Advertising costs $ 13,242,000 $ 13,058,000 $ 10,709,000
</TABLE>
Other costs are not presented as such amounts are less than one percent of
total sales and revenues.
40
<PAGE> 42
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, Charming Shoppes, Inc., has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
CHARMING SHOPPES, INC.
<TABLE>
<S> <C>
S / David V. Wachs
-------------------------------------------
By: David V. Wachs
Chairman of the Board
(Chief Executive Officer)
</TABLE>
Date: March 30, 1994
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:
<TABLE>
<S> <C>
S / David V. Wachs S / Ivan Szeftel
------------------------------------------- ---------------------------------------------------
David V. Wachs, March 30, 1994 Ivan Szeftel, March 30, 1994
Chairman of the Board (Chief Financial Officer)
(Chief Executive Officer)
S / Philip Wachs S / Samuel Sidewater
------------------------------------------- -------------------------------------------
Philip Wachs, March 30, 1994 Samuel Sidewater, March 30, 1994
President and Director
Vice Chairman of the Board
(Chief Operating Officer)
S / Joseph L. Castle II S / Mordechay Kafry
------------------------------------------- -------------------------------------------
Joseph L. Castle II, March 30, 1994 Mordechay Kafry, March 30, 1994
Director Director
S / Eric Specter
-------------------------------------------
Eric Specter, March 30, 1994
(Chief Accounting Officer)
</TABLE>
<PAGE> 1
RESTATED
ARTICLES OF INCORPORATION
OF
CHARMING SHOPPES, INC.
(AS AMENDED THROUGH JULY 7, 1993)*
*Note: Approved By Shareholders 6/29/93.
Filed with PA. Dept. of State 1/7/93
<PAGE> 2
RESTATED
ARTICLES OF INCORPORATION
OF
CHARMING SHOPPES, INC.
ARTICLE 1. The name of the corporation is:
Charming Shoppes, Inc.
ARTICLE 2. The address of the registered office of the corporation in
this Commonwealth is:
450 Winks Lane
Bensalem, PA 19020
ARTICLE 3. The corporation is incorporated under the provisions of the
Business Corporation Law of the Commonwealth of Pennsylvania (the "Business
Corporation Law").
ARTICLE 4. The purpose or purposes for which the corporation is
incorporated are to have unlimited power to engage in and to do any lawful act
concerning any or all lawful business for which corporations may be
incorporated under the Business Corporation Law.
ARTICLE 5. CAPITAL STOCK.
(a) Authorized Shares. The aggregate number of shares which the
corporation shall have authority to issue is 301,000,000 of which 300,000,000
shares of the par value of $.10 per share shall be Common Stock and 1,000,000
shares of the par value of $1.00 per share shall be Series Preferred Stock.
The board of directors may authorize the issuance from time to time of the
Series Preferred Stock in one or more series and with designations,
preferences, qualifications, limitations, restrictions and special or relative
rights (which may differ with respect to each series) as the Board may fix by
resolution. Without limiting the foregoing, the board of directors is
authorized to fix with respect to each series:
(1) the number of shares which shall constitute the series
and the name of the series;
(2) the rate and times at which, and the preferences and
conditions under which, dividends shall be payable on shares of the
series, and the status of such dividends as cumulative or non-cumulative
and as participating or non- participating;
(3) the prices, times and terms, if any, at or upon which
shares of the series shall be subject to redemption;
(4) the rights, if any, of holders of shares of the series
to convert such shares into, or to exchange such shares for, shares of
any other class of stock of the corporation;
(5) the terms of the sinking fund or redemption or purchase
account, if any, to be provided for shares of the series;
(6) the rights and preferences, if any, of the holders of
shares of the series upon any liquidation, dissolution or winding up of
the affairs of, or upon any distribution of the assets of, the
corporation;
1
<PAGE> 3
(7) the limitations, if any, applicable while such series
is outstanding, on the payment of dividends or making of distributions
on, or the acquisition of, the common stock or any other class of stock
which does not rank senior to the shares of the series;
(8) the voting rights, if any, to be provided for shares
of the series.
(b) Series A Preferred Shares. The first series of the Series
Preferred Stock, par value $1.00 per share, shall consist of 300,000 shares
designated as Series A Junior Participating Preferred Shares (the "Series A
Preferred Shares"). The voting rights, designations, preferences,
qualifications, privileges, limitations, restrictions, options, conversion
rights and other special or relative rights of the Series A Preferred Shares
are as follows:
(1) Dividends and Distributions.
(A) The rate of dividends payable per share of
Series A Preferred Shares on the first day of March, June,
September and December in each year or such other quarterly
payment date as shall be specified by the board of directors
(each such date being referred to herein as a "Quarterly
Dividend Payment Date"), commencing on the first Quarterly
Dividend Payment Date after the first issuance of a share or
fraction of a share of the Series A Preferred Shares, shall be
(rounded to the nearest cent) equal to the greater of:
(i) $1.50; or
(ii) subject to the provision for adjustment
hereinafter set forth, 300 times the aggregate per
share amount of all cash dividends, and 300 times the
aggregate per share amount (payable in cash, based upon
the fair market value at the time the non-cash dividend
or other distribution is declared or paid as determined
in good faith by the board of directors) of all
non-cash dividends or other distributions other than a
dividend payable in shares of Common Stock or a
subdivision of the outstanding shares of Common Stock
(by reclassification or otherwise), declared on the
Common Stock, $.10 par value, of the corporation since
the immediately preceding Quarterly Dividend Payment
Date, or, with respect to the first Quarterly Dividend
Payment Date, since the first issuance of any share or
fraction of a share of the Series A Preferred Shares.
Dividends on the Series A Preferred Shares shall be
paid out of funds legally available for such purpose.
In the event the corporation shall at any time after
April 27, 1989 (the "Rights Declaration Date"):
(iii) declare any dividend on Common Stock
payable in shares of Common Stock;
(iv) subdivide the outstanding shares of Common
Stock; or
(v) combine the outstanding shares of Common
Stock into a smaller number of shares;
then in each such case the amounts to which holders of Series
A Preferred Shares were entitled immediately prior to such
event under clause (ii) of the preceding sentence shall be
adjusted by multiplying each such amount by a fraction, the
numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator
of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) Dividends shall begin to accrue and be cumulative on
outstanding Series A Preferred Shares from the Quarterly
Dividend Payment Date next preceding the date of issue of such
Series A Preferred Shares, unless the date of issue of such
shares is prior to the record date for the first Quarterly
Dividend Payment Date, in which case dividends on such shares
shall begin to accrue from the date of issue of such shares,
or unless the date of issue is a Quarterly Dividend Payment
Date or is a date after the record date for the determination
of holders of Series A Preferred Shares entitled to receive a
quarterly dividend and before such Quarterly Dividend Payment
Date, in either of which events such dividends shall begin to
accrue and be cumulative from such Quarterly Dividend Payment
Date. Accrued but unpaid dividends shall not bear interest.
Dividends paid on the Series A
2
<PAGE> 4
Preferred Shares in an amount less than the total amount of
such dividends at the time accrued and payable on such shares
shall be allocated pro rata on a share-by-share basis among
all such shares at the time outstanding.
(2) Voting Rights. In addition to any other voting rights
required by law, the holders of Series A Preferred Shares shall have the
following voting rights:
(A) Subject to the provision for adjustment
hereinafter set forth, each Series A Preferred Share shall
entitle the holder thereof to 300 votes on all matters
submitted to a vote of the shareholders of the corporation.
In the event the corporation shall at any time after the
Rights Declaration Date:
(i) declare any dividend on Common Stock
payable in shares of Common Stock;
(ii) subdivide the outstanding shares of Common
Stock; or
(iii) combine the outstanding shares of Common
Stock into a smaller number of shares;
then in each such case the number of votes per share to which
holders of Series A Preferred Shares were entitled immediately
prior to such event shall be adjusted by multiplying such
number by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of
Common Stock that were outstanding immediately prior to such
event.
(B) (i) In the event that dividends upon the
Series A Preferred Shares shall be in arrears to
an amount equal to six full quarterly dividends
thereon, the holders of such Series A Preferred
Shares shall become entitled to the extent
hereinafter provided to vote noncumulatively at
all elections of directors of the corporation,
and to receive notice of all shareholders'
meetings to be held for such purpose. At such
meetings, to the extent that directors are being
elected, the holders of such Series A Preferred
Shares voting as a class shall be entitled
solely to elect two members of the board of
directors of the corporation; and all other
directors of the corporation shall be elected by
the other shareholders of the corporation
entitled to vote in the election of directors.
Such voting rights of the holders of such Series
A Preferred Shares shall continue until all
accumulated and unpaid dividends thereon shall
have been paid or funds sufficient therefor set
aside, whereupon all such voting rights of the
holders of shares of such series shall cease,
subject to being again revived from time to time
upon the reoccurrence of the conditions above
described as giving rise thereto.
(ii) At any time when such right to elect
directors separately as a class shall have so
vested, the corporation may, and upon the
written request of the holders of record of not
less than 20% of the then outstanding total
number of shares of all the Series A Preferred
Shares having the right to elect directors in
such circumstances shall, call a special meeting
of holders of such Series A Preferred Shares for
the election of directors. In the case of such
a written request, such special meeting shall be
held within 90 days after the delivery of such
request, and, in either case, at the place and
upon the notice provided by law and in the
bylaws of the corporation; provided, that the
corporation shall not be required to call such a
special meeting if such request is received less
than 120 days before the date fixed for the next
ensuing annual or special meeting of
shareholders of the corporation. Upon the
mailing of the notice of such special meeting to
the holders of such Series A Preferred Shares,
or, if no such meeting be held, then upon the
mailing of the notice of the next annual or
special meeting of shareholders for the election
of directors, the number of directors of the
corporation shall, ipso facto, be increased to
the extent, but only to the extent, necessary to
provide sufficient vacancies to enable the
holders of such Series A Preferred Shares to
elect the two directors hereinabove provided
for, and all such vacancies shall be filled only
by vote of the holders of such Series A
Preferred Shares as hereinabove provided.
Whenever the number of directors of the
corporation shall have been increased, the
number as so increased may thereafter be further
increased or decreased in such manner as may be
permitted by the bylaws and without the vote of
the holders of Series A Preferred Shares,
provided that no such action shall impair the
right of the holders of Series A Preferred
Shares to elect and to be represented by two
directors as herein provided.
3
<PAGE> 5
(iii) So long as the holders of Series A
Preferred Shares are entitled hereunder to
voting rights, any vacancy in the board of
directors caused by the death or resignation of
any director elected by the holders of Series A
Preferred Shares, shall, until the next meeting
of shareholders for the election of directors,
in each case be filled by the remaining director
elected by the holders of Series A Preferred
Shares having the right to elect directors in
such circumstances.
(iv) Upon termination of the voting rights of
the holders of any series of Series A Preferred Shares
the terms of office of all persons who shall have been
elected directors of the corporation by vote of the
holders of Series A Preferred Shares or by a director
elected by such holders shall forthwith terminate.
(C) Except as otherwise provided herein, in the
articles of the corporation or by law, the holders of Series A
Preferred Shares and the holders of Common Stock (and the
holders of shares of any other series or class entitled to
vote thereon) shall vote together as one class on all matters
submitted to a vote of shareholders of the corporation.
(3) Reacquired Shares. Any Series A Preferred Shares
purchased or otherwise acquired by the corporation in any manner
whatsoever shall be retired and canceled promptly after the acquisition
thereof. All such shares shall upon their cancellation become
authorized but unissued Series Preferred Stock and may be reissued as
part of a new series of Series Preferred Stock to be created by
resolution or resolutions of the board of directors.
(4) Liquidation, Dissolution or Winding Up. In the event
of any voluntary or involuntary liquidation, dissolution or winding up
of the corporation, the holders of Series A Preferred Shares shall be
entitled to receive the greater of:
(A) $1.00 per share, plus accrued dividends to the
date of distribution, whether or not earned or declared; or
(B) an amount per share, subject to the provision
for adjustment hereinafter set forth, equal to 300 times the
aggregate amount to be distributed per share to holders of
Common Stock.
In the event the corporation shall at any time after
the Rights Declaration Date:
(C) declare any dividend on Common Stock payable in
share of Common Stock;
(D) subdivide the outstanding shares of Common
Stock; or
(E) combine the outstanding shares of Common Stock
into a smaller number of shares;
then in each such case the amount to which holders of Series A Preferred
Shares were entitled immediately prior to such event pursuant to
subsection 4(B) shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately
prior to such event.
(5) Consolidation, Merger, etc. In case the corporation
shall enter into any consolidation, merger, combination or other
transaction in which the shares of Common Stock are exchanged for or
changed into other stock or securities, cash and/or any other property,
then in any such case the Series A Preferred Shares shall at the same
time be similarly exchanged or changed in an amount per share (subject
to the provision for adjustment hereinafter set forth) equal to 300
times the aggregate amount of stock, securities, cash and/or any other
property (payable in kind), as the case may be, into which or for which
each share of Common Stock is changed or exchanged. In the event the
corporation shall at any time after the Rights Declaration Date:
(A) declare any dividend on Common Stock payable in
shares of Common Stock;
(B) subdivide the outstanding shares of Common
Stock; or
4
<PAGE> 6
(C) combine the outstanding shares of Common Stock
into a smaller number of shares;
then in each such case the amount set forth in the preceding sentence
with respect to the exchange or change of shares of Series A Preferred
Shares shall be adjusted by multiplying such amount by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number
of shares of Common Stock that were outstanding immediately prior to
such event.
(6) No Redemption. The Series A Preferred Shares shall not
be redeemable.
(7) Ranking. The Series A Preferred Shares shall rank
junior to all other series of the corporation's Series Preferred Stock
as to the payment of dividends and the distribution of assets, unless
the terms of any such series shall provide otherwise.
(8) Fractional Shares. Series A Preferred Shares may be
issued in fractions of a share which shall entitle the holder, in
proportion to such holder's fractional shares, to exercise voting
rights, receive dividends, participate in distributions and to have the
benefit of all other rights of holders of Series A Preferred Shares.
(c) No Cumulative Voting. Cumulative voting shall not be allowed
upon any vote of the shareholders of this corporation.
ARTICLE 6. BUSINESS COMBINATIONS. The vote of shareholders of the
corporation required to approve any Business Combination shall be as set forth
in this Article. The term "Business Combination" and each other capitalized
term used in this Article shall have the meaning ascribed to it in section (b).
(a) General Rule. In addition to any affirmative vote required by
law or these Articles of Incorporation:
(1) any merger or consolidation of the corporation or any
Subsidiary with:
(A) any Interested Shareholder; or
(B) any other corporation or entity (whether or not
itself an Interested Shareholder) which is, or after such
merger or consolidation would be, an Affiliate of an
Interested Shareholder; or
(2) any sale, lease, exchange, mortgage, pledge, transfer
or other disposition (in one transaction or a series of transactions) to
or with any Interested Shareholder or any Affiliate of any Interested
Shareholder of assets of the corporation or any Subsidiary having an
aggregate Fair Market Value of $5,000,000 or more; or
(3) the issuance or transfer by the corporation or any
Subsidiary (in one transaction or a series of transactions) of any
securities of the corporation or any Subsidiary to any Interested
Shareholder or any Affiliate of any Interested Shareholder in exchange
for cash, securities or other property (or a combination thereof) having
an aggregate Fair Market Value of $5,000,000 or more, other than:
(A) in connection with a purchase by the corporation
or any Subsidiary of any securities of the corporation or any
Subsidiary; or
(B) pursuant to a right of the corporation or any
Subsidiary to place any such securities with such Interested
Shareholder (or such Affiliate), which right was acquired by
the corporation or Subsidiary at a time when such person was
not an Interested Shareholder or an Affiliate of an Interested
Shareholder; or
(C) the issuance of securities upon the conversion
of the convertible securities or the exercise of options or
warrants of the corporation or any Subsidiary which were not
acquired by such Interested Shareholder (or such Affiliate)
from the corporation or a Subsidiary or were acquired by such
Interested Shareholder (or such
5
<PAGE> 7
Affiliate) at a time when such person was not an Interested
Shareholder or an Affiliate of an Interested Shareholder; or
(4) the adoption of any plan or proposal for the
liquidation or dissolution of the corporation proposed by or on behalf
of an Interested Shareholder of any Affiliate of any Interested
Shareholder; or
(5) any reclassification of securities (including any
reverse stock split), or recapitalization of the corporation, or any
merger or consolidation of the corporation with any of its Subsidiaries
or any other transaction (whether or not with or into or otherwise
involving an Interested Shareholder), other than a purchase by the
corporation or any Subsidiary of any securities of the corporation or
any Subsidiary, which in any such case has the effect, directly or
indirectly, of increasing the proportionate share of the outstanding
shares of any class or series of stock or securities convertible into
stock of the corporation or any Subsidiary which is directly or
indirectly beneficially owned by any Interested Shareholder or any
Affiliate of any Interested Shareholder;
shall not be consummated without the affirmative vote of the holders of
not less than 80% of the combined voting power of the then outstanding
shares of stock of all classes and series of the corporation entitled to
vote generally in the election of directors ("Voting Stock"), in each
case voting together as a single class (it being understood that for
purposes of this Article, each share of the Voting Stock shall have the
number of votes granted to it pursuant to Article 5 of these Articles of
Incorporation). Such affirmative vote shall be required notwithstanding
the fact that no vote may be required, or that a lesser percentage may
be specified, by law or by these Articles of Incorporation or in any
agreement with any national securities exchange or otherwise.
Notwithstanding the foregoing, the provisions of this section shall not
apply to any transaction described in subsections (a)(1) through (a)(5)
if the board of directors of the corporation shall by resolution have
approved, prior to the time that such Interested Shareholder shall have
become an Interested Shareholder, a memorandum of understanding or an
agreement with such Interested Shareholder setting forth, at least
generally, the substance of the terms upon which such transaction shall
thereafter be consummated.
(b) Definitions. For the purposes of this Article:
(1) "Affiliate" of a specified person is a person that
directly, or indirectly through one or more intermediaries, controls, or
is controlled by, or is under common control with, the person specified.
(2) "Associate" of a specified person means:
(A) any corporation or organization (other than the
person or a majority-owned subsidiary of the person) of
which such person is an officer or partner or is, directly
or indirectly, the beneficial owner of 10 percent or more
of any class of equity securities;
(B) any trust or other estate in which such person
has a substantial beneficial interest or as to which such
person serves as trustee or in a similar fiduciary
capacity; and
(C) any relative or spouse of such person, or any
relative of such spouse, who has the same home as such
person or who is a director or officer of the person or any
of its parents or subsidiaries.
(3) "Business Combination" means any transaction that is
referred to in any one or more subsections (a)(1) through (a)(5).
(4) "Disinterested Director" means any member of the
board of directors of the corporation who is unaffiliated
with, and not a nominee of, the Interested Shareholder and was
a member of the board prior to the time that the Interested
Shareholder became an Interested Shareholder, and any
successor of a Disinterested Director who is unaffiliated
with, and not a nominee of, the Interested Shareholder and who
is recommended to succeed a Disinterested Director by a
majority of Disinterested Directors then on the board of
directors.
6
<PAGE> 8
(5) "Fair Market Value" means:
(A) in the case of stock, the highest closing sale
price during the 30-day period immediately preceding the
date in question of a share of such stock on the Composite
Tape for New York Stock Exchange-Listed Stocks, or, if such
stock is not quoted on the Composite Tape, on the New York
Stock Exchange, or, if such stock is not listed on such
Exchange, on the principal United States securities
exchange registered under the Securities Exchange Act of
1934 on which such stock is listed, or, if such stock is
not listed on any such exchange, the highest closing sales
price or bid quotation with respect to a share of such
stock during the 30-day period preceding the date in
question on the National Association of Securities Dealers,
Inc. Automated Quotations System or any system then in use,
or if no such quotations are available, the fair market
value on the date in question of a share of such stock as
determined by a majority of the Disinterested Directors in
good faith; and
(B) in the case of stock of any class or series
which is not traded on any United States registered
securities exchange nor in the over-the-counter market or
in the case of property other than cash or stock, the fair
market value of such property on the date in question as
determined by a majority of the Disinterested Directors in
good faith.
(6) "Interested Shareholder" shall mean any person (other
than the corporation or any Subsidiary) who or which:
(A) is the beneficial owner, directly or indirectly,
of 10% or more of the combined voting power of the then
outstanding shares of Voting Stock; or
(B) is an Affiliate of the corporation and at any
time within the two-year period immediately prior to the
date in question was the beneficial owner, directly or
indirectly, of 10% or more of the combined voting power of
the then outstanding shares of Voting Stock; or
(C) is an assignee of or has otherwise succeeded to
the beneficial ownership of any shares of Voting Stock that
were at any time within the two-year period immediately
prior to the date in question beneficially owned by any
Interested Shareholder, if such assignment or succession
shall have occurred in the course of a transaction or
series of transactions not involving a public offering
within the meaning of the Securities Act of 1933;
provided, however, that no person who has been the beneficial
owner, directly or indirectly and including shares deemed
owned through application of subsection (b)(9), of 10% or more
of the combined voting power of the outstanding shares of
Voting Stock for more than ten years, and no Affiliate of any
such person, and no assignee or other person who has otherwise
succeeded to the beneficial ownership of shares of Voting
Stock representing 10% or more of the combined voting power of
the then outstanding shares of Voting Stock that were at any
time within the two-year period immediately prior to the date
in question beneficially owned by any such person, and no
heir, beneficiary or distributee of any such person (including
the estate of any such person), shall be deemed to be an
Interested Shareholder for purposes of this Article.
(7) A "person" shall mean any individual, firm,
corporation or other entity.
(8) "Subsidiary" means any corporation more than 50
percent of whose outstanding stock having ordinary voting
power in the election of directors is owned, directly or
indirectly, by the corporation or by a Subsidiary or by the
corporation and one or more Subsidiaries; provided, however,
that for the purposes of the definition of Interested
Shareholder set forth in subsection (b)(6), the term
"Subsidiary" shall mean only a corporation of which a majority
of each class of equity security is owned, directly or
indirectly, by the corporation.
(9) A person shall be a "beneficial owner" of any Voting
Stock:
(a) which such person or any of its Affiliates or
Associates beneficially owns, directly or indirectly; or
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<PAGE> 9
(b) which such person or any of its Affiliates has
(i) the right to acquire (whether such right is exercisable
immediately or only after the passage of time), pursuant to
any agreement, arrangement or understanding or upon the
exercise of conversion rights, exchange rights, warrants or
options, or otherwise, or (ii) the right to vote or direct
the vote pursuant to any agreement, arrangement or
understanding; or
(c) which are beneficially owned, directly or
indirectly, by any other person with which such person or
any of its Affiliates or Associates has any agreement,
arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of any shares of Voting Stock.
(10) For the purpose of determining whether a person is an
Interested Shareholder pursuant to (b)(6), the number of
shares of Voting Stock deemed to be outstanding shall include
shares deemed owned through application of subsection (b)(9),
but shall not include any other shares of Voting Stock that
may be issuable pursuant to any agreement, arrangement or
understanding, or upon exercise of conversion rights, warrants
or options, or otherwise.
(c) Determinations of Disinterested Directors. A majority of the
Disinterested Directors of the corporation shall have the power and duty to
determine, on the basis of information known to them after reasonable inquiry,
all facts necessary to determine compliance with this Article 8, including,
without limitation:
(1) whether a person is an Interested Shareholder;
(2) the number of shares of Voting Stock beneficially owned
by any person;
(3) whether a person is an Affiliate or Associate of
another person; and
(4) whether the assets which are the subject of any
Business Combination have, or the consideration to be received for the
issuance or transfer of securities by the corporation or any Subsidiary
in any Business Combination has, an aggregate Fair Market Value of
$5,000,000 or more.
The good faith determination of a majority of the Disinterested Directors on
such matters shall be conclusive and binding for all purpose of this Article.
(d) Construction. Nothing contained in this Article shall be
construed to relieve any Interested Shareholder from any fiduciary obligation
imposed by law.
(e) Amendment or Repeal. Notwithstanding anything contained in
these Articles of Incorporation to the contrary, the affirmative vote of the
holders of not less than 80% of the voting power of the Voting Stock, voting
together as a single class, shall be required to alter, amend, or repeal this
Article or to adopt any provision inconsistent therewith.
ARTICLE 7. DIRECTORS.
(a) Classes. At each annual meeting of shareholders, each
director shall be elected to hold office until the expiration of the term for
which he is elected, and until his successor has been elected and qualified.
The directors of the corporation shall be divided into three classes as nearly
equal in size as is practicable, hereby designated Class A, Class B and Class
C. At each annual meeting, directors to replace those whose terms expire at
such annual meeting shall be elected to hold office until the third succeeding
annual meeting. If the number of directors is hereafter changed, any newly
created directorships or decrease in directorships shall be so apportioned
among the classes as to make all classes as nearly equal in number as is
practicable. When the number of directors is increased by the Board and any
newly created directorships are filled by the Board, there shall be no
classification of the additional directors until the next annual meeting of the
shareholders.
(b) Removal. In addition to any vote required by law or these
Articles of Incorporation, the entire board of directors, or a class of the
Board or any individual director may be removed from office without assigning
any cause by vote of the holders of not less than 80% of the combined voting
power of the then outstanding shares of stock of all classes
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<PAGE> 10
and series of the corporation entitled to vote generally in the election of
directors ("Voting Stock"), in each case voting together as a single class (it
being understood that for purposes of this Article each share of the Voting
Stock shall have the number of votes granted to it pursuant to Article 5 of
these Articles of Incorporation). Such vote shall be required notwithstanding
the fact that a lesser percentage may be specified, by law or by these Articles
of Incorporation or in any agreement with any national securities exchange or
otherwise.
(c) Number. The number of directors constituting the entire board
of directors shall be no less than six and no more than 12, as may be fixed
from time to time by the board of directors.
(d) Amendment or Repeal. Notwithstanding anything contained in
these Articles of Incorporation to the contrary, the vote of the holders of not
less than 80% of the voting power of the Voting Stock, voting together as a
single class, shall be required to alter, amend, or repeal this Article or to
adopt any provision inconsistent therewith.
9
<PAGE> 1
BYLAWS
OF
CHARMING SHOPPES, INC.
(AS AMENDED THROUGH JUNE 29, 1993)
<PAGE> 2
B Y L A W S
OF
CHARMING SHOPPES, INC.
(a Pennsylvania Registered Corporation)
ARTICLE I
OFFICES AND FISCAL YEAR
SECTION 1.01. REGISTERED OFFICE. The registered office of the corporation
in the Commonwealth of Pennsylvania shall be at 450 Winks Lane, Bensalem,
Pennsylvania 19020, until otherwise established by an amendment of the articles
of incorporation (the "articles") or by the board of directors and a record of
such change is filed with the Department of State in the manner provided by
law.
SECTION 1.02. OTHER OFFICES. The corporation may also have offices at such
other places within or without the Commonwealth of Pennsylvania as the board of
directors may from time to time appoint or the business of the corporation may
require.
SECTION 1.03. FISCAL YEAR. The fiscal year of the corporation shall end on
the Saturday nearest January 31 in each year.
ARTICLE II
NOTICE - WAIVERS - MEETINGS GENERALLY
SECTION 2.01. MANNER OF GIVING NOTICE.
(a) General Rule -- Whenever written notice is required to be
given to any person under the provisions of the Business Corporation Law or by
the articles or these bylaws, it may be given to the person either personally
or by sending a copy thereof by first class or express mail, postage prepaid,
or by telegram (with messenger service specified), telex or TWX (with
answerback received) or courier service, charges prepaid, or by facsimile
transmission, to the address (or to the telex, TWX, facsimile or telephone
number) of the person appearing on the books of the corporation or, in the case
of directors, supplied by the director to the corporation for the purpose of
notice. If the corporation has more than 30 shareholders, notice of any
regular or special meeting of the shareholders, or any other notice required by
the Business Corporation Law or by the articles or these bylaws to be given to
all shareholders or to all holders of a class or series of shares, may be given
by any class of postpaid mail if the notice is deposited in the United States
mail at least 20 days prior to the day named for the meeting or any corporate
or shareholder action specified in the notice. If the notice is sent by mail,
telegraph or courier service, it shall be deemed to have been given to the
person entitled thereto when deposited in the United States mail or with a
telegraph office or courier service for delivery to that person or, in the case
of telex or TWX, when dispatched or, in the case of facsimile transmission,
when received. A notice of meeting shall specify the place, day and hour of
the meeting and any other information required by any other provision of the
Business Corporation Law, the articles or these bylaws.
(b) Adjourned Shareholder Meetings -- When a meeting of
shareholders is adjourned, it shall not be necessary to give any notice of the
adjourned meeting or of the business to be transacted at an adjourned meeting,
other than by announcement at the meeting at which the adjournment is taken,
unless the board fixes a new record date for the adjourned meeting in which
event notice shall be given in accordance with Section 2.03.
SECTION 2.02. NOTICE OF MEETINGS OF BOARD OF DIRECTORS. Notice of a regular
meeting of the board of directors need not be given. Notice of every special
meeting of the board of directors shall be given to each director by telephone
or in writing at least 24 hours (in
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the case of notice by telephone, telex, TWX or facsimile transmission) or 48
hours (in the case of notice by telegraph, courier service or express mail) or
five days (in the case of notice by first class mail) before the time at which
the meeting is to be held. Every such notice shall state the time and place of
the meeting. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the board need be specified in a notice of the
meeting.
SECTION 2.03. NOTICE OF MEETINGS OF SHAREHOLDERS.
(a) General Rule -- Written notice of every meeting of the
shareholders shall be given by, or at the direction of, the secretary or other
authorized person to each shareholder of record entitled to vote at the meeting
at least (1) ten days prior to the day named for a meeting (and, in case of a
meeting called to consider a merger, consolidation, share exchange or division,
to each shareholder of record not entitled to vote at the meeting) called to
consider a fundamental change under 15 Pa.C.S. Chapter 19 or (2) five days
prior to the day named for the meeting in any other case. If the secretary
neglects or refuses to give notice of a meeting, the person or persons calling
the meeting may do so. In the case of a special meeting of shareholders, the
notice shall specify the general nature of the business to be transacted.
(b) Notice of Action by Shareholders on Bylaws -- In the case of
a meeting of shareholders that has as one of its purposes action on the bylaws,
written notice shall be given to each shareholder that the purpose, or one of
the purposes, of the meeting is to consider the adoption, amendment or repeal
of the bylaws. There shall be included in, or enclosed with, the notice a copy
of the proposed amendment or a summary of the changes to be effected thereby.
(c) Notice of Action by Shareholders on Fundamental Change -- In
the case of a meeting of the shareholders that has as one of its purposes
action with respect to any fundamental change under 15 Pa.C.S. Chapter 19, each
shareholder shall be given, together with written notice of the meeting, a copy
or summary of the amendment or plan to be considered at the meeting in
compliance with the provisions of Chapter 19.
(d) Notice of Action by Shareholders Giving Rise to Dissenters
Rights -- In the case of a meeting of the shareholders that has as one of its
purposes action that would give rise to dissenters rights under the provisions
of 15 Pa.C.S. Subchapter 15D, each shareholder shall be given, together with
written notice of the meeting:
(1) a statement that the shareholders have a right to
dissent and obtain payment of the fair value of their
shares by complying with the provisions of Subchapter
15D (relating to dissenters rights); and
(2) a copy of Subchapter 15D.
SECTION 2.04. WAIVER OF NOTICE.
(a) Written Waiver -- Whenever any written notice is required to
be given under the provisions of the Business Corporation Law, the articles or
these bylaws, a waiver thereof in writing, signed by the person or persons
entitled to the notice, whether before or after the time stated therein, shall
be deemed equivalent to the giving of the notice. Neither the business to be
transacted at, nor the purpose of, a meeting need be specified in the waiver of
notice of the meeting.
(b) Waiver by Attendance -- Attendance of a person at any
meeting shall constitute a waiver of notice of the meeting except where a
person attends a meeting for the express purpose of objecting, at the beginning
of the meeting, to the transaction of any business because the meeting was not
lawfully called or convened.
SECTION 2.05. MODIFICATION OF PROPOSAL CONTAINED IN NOTICE. Whenever the
language of a proposed resolution is included in a written notice of a meeting
required to be given under the provisions of the Business Corporation Law or
the articles or these bylaws, the meeting considering the resolution may
without further notice adopt it with such clarifying or other amendments as do
not enlarge its original purpose.
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<PAGE> 4
SECTION 2.06. EXCEPTION TO REQUIREMENT OF NOTICE.
(a) General Rule -- Whenever any notice or communication is
required to be given to any person under the provisions of the Business
Corporation Law or by the articles or these bylaws or by the terms of any
agreement or other instrument or as a condition precedent to taking any
corporate action and communication with that person is then unlawful, the
giving of the notice or communication to that person shall not be required.
(b) Shareholders Without Forwarding Addresses -- Notice or other
communications need not be sent to any shareholder with whom the corporation
has been unable to communicate for more than 24 consecutive months because
communications to the shareholder are returned unclaimed or the shareholder has
otherwise failed to provide the corporation with a current address. Whenever
the shareholder provides the corporation with a current address, the
corporation shall commence sending notices and other communications to the
shareholder in the same manner as to other shareholders.
SECTION 2.07. USE OF CONFERENCE TELEPHONE AND SIMILAR EQUIPMENT. Any
director may participate in any meeting of the board of directors, and the
board of directors may provide by resolution with respect to a specific meeting
or with respect to a class of meetings that one or more persons may participate
in a meeting of the shareholders of the corporation, by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other. Participation in a meeting
pursuant to this section shall constitute presence in person at the meeting.
ARTICLE III
SHAREHOLDERS
SECTION 3.01. PLACE OF MEETING. All meetings of the shareholders of the
corporation shall be held at the registered office of the corporation unless
another place is designated by the board of directors in the notice of a
meeting.
SECTION 3.02. ANNUAL MEETING. The board of directors may fix and designate
the date and time of the annual meeting of the shareholders, but if no such
date and time is fixed and designated by the board, the meeting for any
calendar year shall be held on the second Wednesday in June in such year, if
not a legal holiday under the laws of Pennsylvania, and, if a legal holiday,
then on the next succeeding business day, not a Saturday, at 10:00 o'clock
A.M., and at said meeting the shareholders then entitled to vote shall elect
directors and shall transact such other business as may properly be brought
before the meeting. If the annual meeting shall not have been called and held
within six months after the designated time, any shareholder may call the
meeting at any time thereafter.
SECTION 3.03. SPECIAL MEETINGS. Special meetings of the shareholders may be
called at any time by the chairman of the board or the president or by
resolution of the board of directors. The person or resolution calling the
meeting may fix the date, time and place of the meeting, but if they are not so
fixed, it shall be the duty of the secretary to do so. A date fixed by the
secretary shall not be more than 60 days after the date of the adoption of the
resolution of the board calling the special meeting.
SECTION 3.04. QUORUM AND ADJOURNMENT.
(a) General Rule -- A meeting of shareholders of the corporation
duly called shall not be organized for the transaction of business unless a
quorum is present. The presence of shareholders entitled to cast at least a
majority of the votes that all shareholders are entitled to cast on a
particular matter to be acted upon at the meeting shall constitute a quorum for
the purposes of consideration and action on the matter. Shares of the
corporation owned, directly or indirectly, by it and controlled, directly or
indirectly, by the board of directors of this corporation, as such, shall not
be counted in determining the total number of outstanding shares for quorum
purposes at any given time.
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<PAGE> 5
(b) Withdrawal of a Quorum -- The shareholders present at a duly
organized meeting can continue to do business until adjournment notwithstanding
the withdrawal of enough shareholders to leave less than a quorum.
(c) Adjournments Generally -- Any regular or special meeting of
the shareholders, including one at which directors are to be elected and one
which cannot be organized because a quorum has not attended, may be adjourned
for such period and to such place as the shareholders present and entitled to
vote shall direct.
(d) Electing Directors at Adjourned Meeting -- Those
shareholders entitled to vote who attend a meeting called for the election of
directors that has been previously adjourned for lack of a quorum, although
less than a quorum as fixed in this section, shall nevertheless constitute a
quorum for the purpose of electing directors.
(e) Other Action in Absence of Quorum -- Those shareholders
entitled to vote who attend a meeting of shareholders that has been previously
adjourned for one or more periods aggregating at least 15 days because of an
absence of a quorum, although less than a quorum as fixed in this section,
shall nevertheless constitute a quorum for the purpose of acting upon any
matter set forth in the notice of the meeting if the notice states that those
shareholders who attend the adjourned meeting shall nevertheless constitute a
quorum for the purpose of acting upon the matter.
SECTION 3.05. ACTION BY SHAREHOLDERS. Except as otherwise provided in the
Business Corporation Law or the articles or these bylaws, whenever any
corporate action is to be taken by vote of the shareholders of the corporation,
it shall be authorized upon receiving the affirmative vote of a majority of the
votes cast by all shareholders entitled to vote thereon and, if any
shareholders are entitled to vote thereon as a class, upon receiving the
affirmative vote of a majority of the votes cast by the shareholders entitled
to vote as a class.
SECTION 3.06. ORGANIZATION. At every meeting of the shareholders, the
chairman of the board, if there be one, or, in the case of vacancy in office or
absence of the chairman of the board, one of the following persons present in
the order stated: the vice chairman of the board, if there be one, the
president, the vice presidents in their order of rank and seniority, or a
person chosen by vote of the shareholders present, shall act as chairman of the
meeting. The secretary or, in the absence of the secretary, an assistant
secretary, or, in the absence of both the secretary and assistant secretaries,
a person appointed by the chairman of the meeting, shall act as secretary of
the meeting.
SECTION 3.07. VOTING RIGHTS OF SHAREHOLDERS. Unless otherwise provided in
the articles, every shareholder of the corporation shall be entitled to one
vote for every share standing in the name of the shareholder on the books of
the corporation.
SECTION 3.08. VOTING AND OTHER ACTION BY PROXY.
(a) General Rule --
(1) Every shareholder entitled to vote at a meeting of
shareholders may authorize another person to act for
the shareholder by proxy.
(2) The presence of, or vote or other action at a meeting
of shareholders by a proxy of a shareholder shall
constitute the presence of, or vote or action by the
shareholder.
(3) Where two or more proxies of a shareholder are
present, the corporation shall, unless otherwise
expressly provided in the proxy, accept as the vote of
all shares represented thereby the vote cast by a
majority of them and, if a majority of the proxies
cannot agree whether the shares represented shall be
voted or upon the manner of voting the shares, the
voting of the shares shall be divided equally among
those persons.
(b) Execution and Filing -- Every proxy shall be executed in
writing by the shareholder or by the duly authorized attorney-in-fact of the
shareholder and filed with the secretary of the corporation. A telegram,
telex, cablegram, datagram or similar transmission from a shareholder or
attorney-in-fact, or a photographic, facsimile or similar reproduction of a
writing executed by a shareholder or attorney-in-fact:
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<PAGE> 6
(1) may be treated as properly executed for purposes of
this subsection; and
(2) shall be so treated if it sets forth a confidential
and unique identification number or other mark
furnished by the corporation to the shareholder for the
purposes of a particular meeting or transaction.
(c) Revocation -- A proxy, unless coupled with an interest,
shall be revocable at will, notwithstanding any other agreement or any
provision in the proxy to the contrary, but the revocation of a proxy shall not
be effective until written notice thereof has been given to the secretary of
the corporation. An unrevoked proxy shall not be valid after three years from
the date of its execution unless a longer time is expressly provided therein.
A proxy shall not be revoked by the death or incapacity of the maker unless,
before the vote is counted or the authority is exercised, written notice of the
death or incapacity is given to the secretary of the corporation.
(d) Expenses -- The corporation shall pay the reasonable
expenses of solicitation of votes, proxies or consents of shareholders by or on
behalf of the board of directors or its nominees for election to the board,
including solicitation by professional proxy solicitors and otherwise.
SECTION 3.09. VOTING BY FIDUCIARIES AND PLEDGEES. Shares of the corporation
standing in the name of a trustee or other fiduciary and shares held by an
assignee for the benefit of creditors or by a receiver may be voted by the
trustee, fiduciary, assignee or receiver. A shareholder whose shares are
pledged shall be entitled to vote the shares until the shares have been
transferred into the name of the pledgee, or a nominee of the pledgee, but
nothing in this section shall affect the validity of a proxy given to a pledgee
or nominee.
SECTION 3.10. VOTING BY JOINT HOLDERS OF SHARES.
(a) General Rule -- Where shares of the corporation are held
jointly or as tenants in common by two or more persons, as fiduciaries or
otherwise:
(1) if only one or more of such persons is present in
person or by proxy, all of the shares standing in the
names of such persons shall be deemed to be represented
for the purpose of determining a quorum and the
corporation shall accept as the vote of all the shares
the vote cast by a joint owner or a majority of them;
and
(2) if the persons are equally divided upon whether the
shares held by them shall be voted or upon the manner
of voting the shares, the voting of the shares shall be
divided equally among the persons without prejudice to
the rights of the joint owners or the beneficial owners
thereof among themselves.
(b) Exception -- If there has been filed with the secretary of
the corporation a copy, certified by an attorney at law to be correct, of the
relevant portions of the agreement under which the shares are held or the
instrument by which the trust or estate was created or the order of court
appointing them or of an order of court directing the voting of the shares, the
persons specified as having such voting power in the document latest in date of
operative effect so filed, and only those persons, shall be entitled to vote
the shares but only in accordance therewith.
SECTION 3.11. VOTING BY CORPORATIONS.
(a) Voting by Corporate Shareholders -- Any corporation that is
a shareholder of this corporation may vote at meetings of shareholders of this
corporation by any of its officers or agents, or by proxy appointed by any
officer or agent, unless some other person, by resolution of the board of
directors of the other corporation or a provision of its articles or bylaws, a
copy of which resolution or provision certified to be correct by one of its
officers has been filed with the secretary of this corporation, is appointed
its general or special proxy in which case that person shall be entitled to
vote the shares.
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(b) Controlled Shares -- Shares of this corporation owned,
directly or indirectly, by it and controlled, directly or indirectly, by the
board of directors of this corporation, as such, shall not be voted at any
meeting and shall not be counted in determining the total number of outstanding
shares for voting purposes at any given time.
SECTION 3.12. DETERMINATION OF SHAREHOLDERS OF RECORD.
(a) Fixing Record Date -- The board of directors may fix a time
prior to the date of any meeting of shareholders as a record date for the
determination of the shareholders entitled to notice of, or to vote at, the
meeting, which time, except in the case of an adjourned meeting, shall be not
more than 90 days prior to the date of the meeting of shareholders. Only
shareholders of record on the date fixed shall be so entitled notwithstanding
any transfer of shares on the books of the corporation after any record date
fixed as provided in this subsection. The board of directors may similarly fix
a record date for the determination of shareholders of record for any other
purpose. When a determination of shareholders of record has been made as
provided in this section for purposes of a meeting, the determination shall
apply to any adjournment thereof unless the board fixes a new record date for
the adjourned meeting.
(b) Determination When a Record Date is Not Fixed -- If a record
date is not fixed:
(1) the record date for determining shareholders entitled
to notice of or to vote at a meeting of shareholders
shall be at the close of business on the day next
preceding the day on which notice is given.
(2) the record date for determining shareholders for any
other purpose shall be at the close of business on the
day on which the board of directors adopts the
resolution relating thereto.
(c) Certification by Nominee -- The board of directors may adopt
a procedure whereby a shareholder of the corporation may certify in writing to
the corporation that all or a portion of the shares registered in the name of
the shareholder are held for the account of a specified person or persons.
Upon receipt by the corporation of a certification complying with the
procedure, the persons specified in the certification shall be deemed, for the
purposes set forth in the certification, to be the holders of record of the
number of shares specified in place of the shareholder making the
certification.
SECTION 3.13. VOTING LISTS.
(a) General Rule -- The officer or agent having charge of the
transfer books for shares of the corporation shall make a complete list of the
shareholders entitled to vote at any meeting of shareholders, arranged in
alphabetical order, with the address of and the number of shares held by each.
The list shall be produced and kept open at the time and place of the meeting
and shall be subject to the inspection of any shareholder during the whole time
of the meeting for the purposes thereof except that, if the corporation has
5,000 or more shareholders, in lieu of the making of the list the corporation
may make the information therein available at the meeting by any other means.
(b) Effect of List -- Failure to comply with the requirements of
this section shall not affect the validity of any action taken at a meeting
prior to a demand at the meeting by any shareholder entitled to vote thereat to
examine the list. The original share register or transfer book, or a duplicate
thereof kept in the Commonwealth of Pennsylvania, shall be prima facie evidence
as to who are the shareholders entitled to examine the list or share register
or transfer book or to vote at any meeting of shareholders.
SECTION 3.14. JUDGES OF ELECTION.
(a) Appointment -- In advance of any meeting of shareholders of
the corporation, the board of directors may appoint judges of election, who
need not be shareholders, to act at the meeting or any adjournment thereof. If
judges of election are not so appointed, the presiding officer of the meeting
may, and on the request of any shareholder shall, appoint judges of election at
the meeting. The number of judges shall be one or three. A person who is a
candidate for an office to be filled at the meeting shall not act as a judge.
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(b) Vacancies -- In case any person appointed as a judge fails
to appear or fails or refuses to act, the vacancy may be filled by appointment
made by the board of directors in advance of the convening of the meeting or at
the meeting by the presiding officer thereof.
(c) Duties -- The judges of election shall determine the number
of shares outstanding and the voting power of each, the shares represented at
the meeting, the existence of a quorum, and the authenticity, validity and
effect of proxies, receive votes or ballots, hear and determine all challenges
and questions in any way arising in connection with nominations by shareholders
or the right to vote, count and tabulate all votes, determine the result and do
such acts as may be proper to conduct the election or vote with fairness to all
shareholders. The judges of election shall perform their duties impartially,
in good faith, to the best of their ability and as expeditiously as is
practical. If there are three judges of election, the decision, act or
certificate of a majority shall be effective in all respects as the decision,
act or certificate of all.
(d) Report -- On request of the presiding officer of the meeting
or of any shareholder, the judges shall make a report in writing of any
challenge or question or matter determined by them, and execute a certificate
of any fact found by them. Any report or certificate made by them shall be
prima facie evidence of the facts stated therein.
SECTION 3.15. MINORS AS SECURITY HOLDERS. The corporation may treat a minor
who holds shares or obligations of the corporation as having capacity to
receive and to empower others to receive dividends, interest, principal and
other payments or distributions, to vote or express consent or dissent and to
make elections and exercise rights relating to such shares or obligations
unless, in the case of payments or distributions on shares, the corporate
officer responsible for maintaining the list of shareholders or the transfer
agent of the corporation or, in the case of payments or distributions on
obligations, the treasurer or paying officer or agent has received written
notice that the holder is a minor.
ARTICLE IV
BOARD OF DIRECTORS
SECTION 4.01. POWERS; PERSONAL LIABILITY.
(a) General Rule -- Unless otherwise provided by statute, all
powers vested by law in the corporation shall be exercised by or under the
authority of, and the business and affairs of the corporation shall be managed
under the direction of, the board of directors.
(b) Personal Liability of Directors -- A director shall not be
personally liable for monetary damages as such for any action taken, or any
failure to take any action, on or after January 27, 1987 unless the director
has breached or failed to perform the duties of his office under Section 8363
of the Pennsylvania Directors' Liability Act [now 15 Pa.C.S. Subch. 17B], and
the breach or failure to perform constitutes self-dealing, willful misconduct
or recklessness. The provisions of this subsection shall not apply to the
responsibility or liability of a director pursuant to any criminal statute, or
the liability of a director for the payment of taxes pursuant to local, state
or Federal law.
(The provisions of this subsection (b) were first adopted by the
shareholders of the corporation on May 20, 1987.)
(c) Notation of Dissent -- A director of the corporation who is
present at a meeting of the board of directors, or of a committee of the board,
at which action on any corporate matter is taken on which the director is
generally competent to act, shall be presumed to have assented to the action
taken unless his or her dissent is entered in the minutes of the meeting or
unless the director files his or her written dissent to the action with the
secretary of the meeting before the adjournment thereof or transmits the
dissent in writing to the secretary of the corporation immediately after the
adjournment of the meeting. The right to dissent shall not apply to a director
who voted in favor of the action. Nothing in this section shall bar a director
from asserting that minutes of the meeting incorrectly
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omitted his or her dissent if, promptly upon receipt of a copy of such minutes,
the director notifies the secretary, in writing, of the asserted omission or
inaccuracy.
SECTION 4.02. QUALIFICATIONS AND SELECTION OF DIRECTORS.
(a) Qualifications -- Each director of the corporation shall be
a natural person of full age who need not be a resident of the Commonwealth of
Pennsylvania or a shareholder of the corporation.
(b) Nomination of Candidates -- Nominations of candidates for
election to the board of directors at a meeting of the shareholders may be made
only by the board of directors or a proxy committee appointed by the board of
directors or by any shareholder entitled to vote in such election. A
nomination may be made by a shareholder only if written notice of the
nomination has been given to the secretary of the corporation not later than
the date on which a shareholder proposal would be required to be submitted to
the corporation in order to be set forth in the corporation's proxy statement
pursuant to the applicable proxy rules of the Securities and Exchange
Commission. Each such notice shall set forth:
(1) the name and address of the shareholder who intends
to make the nomination and of the person or persons to
be nominated;
(2) a representation that the shareholder is a holder of
record of shares of the corporation entitled to vote at
the meeting and intends to appear in person or by proxy
at the meeting to nominate the person or persons
specified in the notice;
(3) a description of all arrangements or understandings
between the shareholder and each nominee and any other
person or persons (naming such person or persons)
pursuant to which the nomination or nominations are to
be made by the shareholder;
(4) such other information regarding each nominee
proposed by the shareholder as would be required to be
included in a proxy statement filed pursuant to the
proxy rules of the Securities and Exchange Commission
if the nominee had been nominated by the board of
directors; and
(5) the written consent of each nominee, signed by such
nominee, to serve as a director of the corporation if
so elected.
The chairman of the meeting may refuse to acknowledge the nomination of
any person by a shareholder not made in compliance with the foregoing
procedure.
(c) Election of Directors -- In elections for directors, voting
need not be by ballot, unless required by vote of the shareholders before the
voting for the election of directors begins. The candidates receiving the
highest number of votes from each class or group of classes, if any, entitled
to elect directors separately up to the number of directors to be elected by
the class or group of classes shall be elected. If at any meeting of
shareholders, directors of more than one class are to be elected, each class of
directors shall be elected in a separate election.
(d) Alternate Directors -- A shareholder or group of
shareholders entitled to elect, appoint, designate or otherwise select one or
more directors may select an alternate for each director for a coextensive
term. After the adoption of this subsection (d) and prior to the 1993 Annual
Meeting of Shareholders, any director elected by the shareholders may resign
from office and the board of directors may elect the former director as an
alternate director, to serve until the 1993 Annual Meeting of Shareholders. An
alternate director may attend all meetings of the board of directors. In the
absence of a director from a meeting of the board, the director's alternate may
execute a written consent and exercise at the meeting or in such consent all
the powers of the absent director. When so exercising the powers of the absent
director, the alternate shall be subject in all respects to the provisions of
the Business Corporation Law, the articles and these bylaws relating to
directors of the corporation, and the term "Director", when
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used in the Business Corporation Law, the articles or these bylaws shall be
construed to include and refer to any alternate director, unless the context
requires otherwise.
(The provisions of this subsection (d) were first adopted by the board of
directors of the corporation on January 21, 1993 and amended by the board of
directors on June 29, 1993)
SECTION 4.03. NUMBER AND TERM OF OFFICE.
(a) Number -- The board of directors shall consist of such
number of directors, not less than six nor more than twelve, as may be
determined from time to time by resolution of the board of directors.
(b) Term of Office -- Each director shall hold office until the
expiration of the term for which he or she was selected and until a successor
has been selected and qualified or until his or her earlier death, resignation
or removal. A decrease in the number of directors shall not have the effect of
shortening the term of any incumbent director.
(c) Resignation -- Any director may resign at any time upon
written notice to the corporation. The resignation shall be effective upon
receipt thereof by the corporation or at such subsequent time as shall be
specified in the notice of resignation.
(d) Classified Board of Directors -- The directors shall be
classified in respect of the time for which they shall severally hold office as
follows:
(1) each class shall be as nearly equal in number as
possible.
(2) the term of office of at least one class shall expire
in each year.
(3) the members of each class shall be elected for a
period of three years.
SECTION 4.04. VACANCIES.
(a) General Rule -- Vacancies in the board of directors,
including vacancies resulting from an increase in the number of directors, may
be filled by a majority vote of the remaining members of the board though less
than a quorum, or by a sole remaining director. In the case of a vacancy in
the board of directors resulting from an increase in the number of directors,
the person selected shall serve until the next annual meeting of shareholders
and until a successor has been selected and qualified or until his or her
earlier death, resignation or removal. In any other case, each person so
selected shall be a director to serve until the next selection of the class for
which such director has been chosen, and until a successor has been selected
and qualified or until his or her earlier death, resignation or removal. When
the number of directors is increased by the board and any newly created
directorships are filled by the board, there shall be no classification of the
additional directors until the next annual meeting of the shareholders.
(b) Action by Resigned Directors -- When one or more directors
resign from the board effective at a future date, the directors then in office,
including those who have so resigned, shall have power by the applicable vote
to fill the vacancies, the vote thereon to take effect when the resignations
become effective.
SECTION 4.05. REMOVAL OF DIRECTORS.
(a) Removal by the Shareholders -- The entire board of
directors, or any class of the board, or any individual director may be removed
from office without assigning any cause only by the affirmative vote of the
holders of not less than 80% of the combined voting power of the then
outstanding shares of stock of all classes and series of the corporation
entitled to vote generally in the election of directors, in each case voting as
a single class in accordance with the articles. In case the board or a class
of the board or any one or more directors are so removed, new directors may be
elected at the same meeting.
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(b) Removal by the Board -- The board of directors may declare
vacant the office of a director who has been judicially declared of unsound
mind or who has been convicted of an offense punishable by imprisonment for a
term of more than one year or if, within 60 days after notice of his or her
selection, the director does not accept the office either in writing or by
attending a meeting of the board of directors.
SECTION 4.06. PLACE OF MEETINGS. Meetings of the board of directors may be
held at such place within or without the Commonwealth of Pennsylvania as the
board of directors may from time to time appoint or as may be designated in the
notice of the meeting.
SECTION 4.07. ORGANIZATION OF MEETINGS. At every meeting of the board of
directors, the chairman of the board, if there be one, or, in the case of a
vacancy in the office or absence of the chairman of the board, one of the
following officers present in the order stated: the vice chairman of the
board, if there be one, the president, the vice presidents in their order of
rank and seniority, or a person chosen by a majority of the directors present,
shall act as chairman of the meeting. The secretary or, in the absence of the
secretary, an assistant secretary, or, in the absence of the secretary and the
assistant secretaries, any person appointed by the chairman of the meeting,
shall act as secretary of the meeting.
SECTION 4.08. REGULAR MEETINGS. Regular meetings of the board of directors
shall be held at such time and place as shall be designated from time to time
by a majority of the board of directors or by the chairman or the president.
SECTION 4.09. SPECIAL MEETINGS. Special meetings of the board of directors
shall be held whenever called by a majority of the board of directors or by the
chairman or the president.
SECTION 4.10. QUORUM OF AND ACTION BY DIRECTORS.
(a) General Rule -- A majority of the directors in office of the
corporation shall be necessary to constitute a quorum for the transaction of
business and the acts of a majority of the directors present and voting at a
meeting at which a quorum is present shall be the acts of the board of
directors.
(b) Action by Written Consent -- Any action required or
permitted to be taken at a meeting of the directors may be taken without a
meeting if, prior or subsequent to the action, a consent or consents thereto by
all of the directors in office is filed with the secretary of the corporation.
SECTION 4.11. EXECUTIVE AND OTHER COMMITTEES.
(a) Establishment and Powers -- The board of directors may, by
resolution adopted by a majority of the directors in office, establish an
Executive Committee and one or more other committees to consist of one or more
directors of the corporation. Any committee, to the extent provided in the
resolution of the board of directors, shall have and may exercise all of the
powers and authority of the board of directors except that a committee shall
not have any power or authority as to the following:
(1) the submission to shareholders of any action
requiring approval of shareholders under the Business
Corporation Law.
(2) the creation or filling of vacancies in the board of
directors.
(3) the adoption, amendment or repeal of these bylaws.
(4) the amendment or repeal of any resolution of the
board that by its terms is amendable or repealable only
by the board.
(5) action on matters committed by a resolution of the
board of directors to another committee of the board.
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(b) Alternate Committee Members -- The board may designate one
or more directors as alternate members of any committee who may replace any
absent or disqualified member at any meeting of the committee or for the
purposes of any written action by the committee. In the absence or
disqualification of a member and alternate member or members of a committee,
the member or members thereof present at any meeting and not disqualified from
voting, whether or not constituting a quorum, may unanimously appoint another
director to act at the meeting in the place of the absent or disqualified
member.
(c) Term -- Each committee of the board shall serve at the
pleasure of the board.
(d) Committee Procedures -- The term "board of directors" or
"board," when used in any provision of these bylaws relating to the
organization or procedures of or the manner of taking action by the board of
directors, shall be construed to include and refer to the Executive Committee
or any other committee of the board, except that a meeting of the Executive
Committee may be called at any time by any member.
SECTION 4.12. COMPENSATION. The board of directors shall have the authority
to fix the compensation of directors for their services as directors and a
director may be a salaried officer of the corporation.
ARTICLE V
OFFICERS
SECTION 5.01. OFFICERS GENERALLY.
(a) Number, Qualifications and Designation -- The officers of
the corporation shall be a president, one or more vice presidents, a secretary,
a treasurer, and such other officers as may be elected in accordance with the
provisions of Section 5.03. Officers may but need not be directors or
shareholders of the corporation. The president and secretary shall be natural
persons of full age. The treasurer may be a corporation, but if a natural
person shall be of full age. The board of directors may elect from among the
members of the board a chairman of the board and one or more vice chairmen of
the board who shall be officers of the corporation. Any number of offices may
be held by the same person.
(b) Bonding -- The corporation may secure the fidelity of any or
all of its officers by bond or otherwise.
(c) Standard of Care -- In lieu of the standards of conduct
otherwise provided by law, officers of the corporation shall be subject to the
same standards of conduct, including standards of care and loyalty and rights
of justifiable reliance, as shall at the time be applicable to directors of the
corporation. An officer of the corporation shall not be personally liable, as
such, to the corporation or its shareholders for monetary damages for any
action taken, or any failure to take any action, unless the officer has
breached or failed to perform the duties of his or her office under the
articles of incorporation, these bylaws, or the applicable provisions of law
and the breach or failure to perform constitutes self-dealing, willful
misconduct or recklessness. The provisions of this subsection shall not apply
to the responsibility or liability of an officer pursuant to any criminal
statute or for the payment of taxes pursuant to local, state or federal law.
SECTION 5.02. ELECTION, TERM OF OFFICE AND RESIGNATIONS.
(a) Election and Term of Office -- The officers of the
corporation, except those elected by delegated authority pursuant to Section
5.03, shall be elected annually by the board of directors, and each such
officer shall hold office for a term of one year and until a successor has been
selected and qualified or until his or her earlier death, resignation or
removal.
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(b) Resignations -- Any officer may resign at any time upon
written notice to the corporation. The resignation shall be effective upon
receipt thereof by the corporation or at such subsequent time as may be
specified in the notice of resignation.
SECTION 5.03. SUBORDINATE OFFICERS, COMMITTEES AND AGENTS. The board of
directors may from time to time elect such other officers and appoint such
committees, employees or other agents as the business of the corporation may
require, including one or more assistant secretaries, and one or more assistant
treasurers, each of whom shall hold office for such period, have such
authority, and perform such duties as are provided in these bylaws, or as the
board of directors may from time to time determine. The board of directors may
delegate to any officer or committee the power to elect subordinate officers
and to retain or appoint employees or other agents, or committees thereof, and
to prescribe the authority and duties of such subordinate officers, committees,
employees or other agents.
SECTION 5.04. REMOVAL OF OFFICERS AND AGENTS. Any officer or agent of the
corporation may be removed by the board of directors with or without cause. The
removal shall be without prejudice to the contract rights, if any, of any
person so removed. Election or appointment of an officer or agent shall not of
itself create contract rights.
SECTION 5.05. VACANCIES. A vacancy in any office because of death,
resignation, removal, disqualification, or any other cause, may be filled by
the board of directors or by the officer or committee to which the power to
fill such office has been delegated pursuant to Section 5.03, as the case may
be, and if the office is one for which these bylaws prescribe a term, shall be
filled for the unexpired portion of the term.
SECTION 5.06. AUTHORITY.
(a) General Rule -- All officers of the corporation, as between
themselves and the corporation, shall have such authority and perform such
duties in the management of the corporation as may be provided by or pursuant
to resolutions or orders of the board of directors or, in the absence of
controlling provisions in the resolutions or orders of the board of directors,
as may be determined by or pursuant to these bylaws.
(b) Chief Executive Officer -- The chairman of the board shall
be the chief executive officer of the corporation.
(c) Voting and Acting with Respect to Securities Owned by the
Corporation -- Each of the chairman of the board and the president shall have
the power and authority to vote and act with respect to all stock and other
securities in any other corporation held by this corporation, unless the board
of directors confers such authority, which may be general or specific, upon
some other person. Any person so authorized to vote securities shall have the
power to appoint an attorney or attorneys, with general power of substitution,
as proxies for this corporation, with full power to vote and act in behalf of
this corporation with respect to such stock and other securities.
SECTION 5.07. THE CHAIRMAN OF THE BOARD. The chairman of the board shall
preside at all meetings of the shareholders and of the board of directors,
shall have general executive power to manage, control and supervise the
property, business and affairs of the corporation, subject, however, to the
control of the board of directors, and shall perform such other duties as may
from time to time be requested by the board of directors.
SECTION 5.08. VICE CHAIRMEN OF THE BOARD OF DIRECTORS. The vice chairmen of
the board, in their order of seniority as designated by the board if there be
more than one, shall preside during the temporary absence of the chairman of
the board at all meetings of the shareholders and of the board of directors and
shall perform such other duties as may from time to time be requested by the
chairman.
SECTION 5.09. THE PRESIDENT. The president shall be the chief operating
officer of the corporation and shall assist the chairman of the board in
implementing the orders and resolutions of the board. The president shall
sign, execute, and acknowledge, in the name of the corporation, deeds,
mortgages, bonds, contracts or other instruments, authorized by the board of
directors, except in cases where the signing and execution thereof shall be
expressly delegated by the board of directors, or by these bylaws, to some
other officer or agent of the corporation; and, in general, shall perform all
duties incident to the office of president and such other duties as from time
to time may be assigned by the board of directors or the chairman of the board.
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SECTION 5.10. THE VICE PRESIDENTS. The vice presidents, one or more of whom
may be designated executive, senior, group or administrative vice president or
given other descriptive titles, shall perform all duties as may from time to
time be assigned by the board of directors, the chairman of the board or the
president.
SECTION 5.11. THE SECRETARY. The secretary or an assistant secretary shall
attend all meetings of the shareholders and of the board of directors and all
committees thereof and shall record all the votes of the shareholders and of
the directors and the minutes of the meetings of the shareholders and of the
board of directors and of committees of the board in a book or books to be kept
for that purpose; shall see that notices are given and records and reports
properly kept and filed by the corporation as required by law; shall be the
custodian of the seal of the corporation and see that it is affixed to all
documents to be executed on behalf of the corporation under its seal; and, in
general, shall perform all duties incident to the office of secretary, and such
other duties as may from time to time be assigned by the board of directors or
the chairman of the board.
SECTION 5.12. THE TREASURER. The treasurer shall be the principal officer
in charge of tax and financial matters of the corporation. The treasurer or an
assistant treasurer shall have or provide for the custody of the funds or other
property of the corporation; shall collect and receive or provide for the
collection and receipt of moneys earned by or in any manner due to or received
by the corporation; shall deposit all funds in his or her custody as treasurer
in such banks or other places of deposit as the board of directors may from
time to time designate; shall, whenever so required by the board of directors,
render an account showing all transactions as treasurer, and the financial
condition of the corporation; and, in general, shall discharge such other
duties as may from time to time be assigned by the board of directors or the
chairman of the board.
SECTION 5.13. DELEGATION OF DUTIES. In the absence of any officer or for
any other reason deemed sufficient by the board of directors or the chairman of
the board, the board of directors or the chairman of the board may delegate,
for the time being, any of the powers and duties of such officer to any other
officer or director or other person.
SECTION 5.14. SALARIES. The salaries of the officers elected by the board
of directors shall be fixed from time to time by the board of directors or by
such officer or committee of the board as may be designated by resolution of
the board. The salaries or other compensation of any other officers, employees
and other agents shall be fixed from time to time by the officer or committee
to which the power to elect such officers or to retain or appoint such
employees or other agents has been delegated pursuant to Section 5.03. No
officer shall be prevented from receiving such salary or other compensation by
reason of the fact that the officer is also a director of the corporation.
ARTICLE VI
CERTIFICATES OF STOCK, TRANSFER, ETC.
SECTION 6.01. SHARE CERTIFICATES.
(a) Form of Certificates -- Certificates for shares of the
corporation shall be in such form as approved by the board of directors, and
shall state that the corporation is incorporated under the laws of the
Commonwealth of Pennsylvania, the name of the person to whom issued, and the
number and class of shares and the designation of the series (if any) that the
certificate represents. If the corporation is authorized to issue shares of
more than one class or series, certificates for shares of the corporation shall
set forth upon the face or back of the certificate (or shall state on the face
or back of the certificate that the corporation will furnish to any shareholder
upon request and without charge), a full or summary statement of the
designations, voting rights, preferences, limitations and special rights of the
shares of each class or series authorized to be issued so far as they have been
fixed and determined and the authority of the board of directors to fix and
determine the designations, voting rights, preferences, limitations and special
rights of the classes and series of shares of the corporation.
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(b) Share Register -- The share register or transfer books and
blank share certificates shall be kept by the secretary or by any transfer
agent or registrar designated by the board of directors for that purpose.
SECTION 6.02. ISSUANCE. The share certificates of the corporation shall be
numbered and registered in the share register or transfer books of the
corporation as they are issued. They shall be executed in such manner as the
board of directors shall determine.
SECTION 6.03. TRANSFER. Transfers of shares shall be made on the share
register or transfer books of the corporation upon surrender of the certificate
therefor, endorsed by the person named in the certificate or by an attorney
lawfully constituted in writing. No transfer shall be made inconsistent with
the provisions of the Uniform Commercial Code, 13 Pa.C.S. 8101 et seq., and
its amendments and supplements.
SECTION 6.04. RECORD HOLDER OF SHARES. The corporation shall be entitled to
treat the person in whose name any share or shares of the corporation stand on
the books of the corporation as the absolute owner thereof, and shall not be
bound to recognize any equitable or other claim to, or interest in, such share
or shares on the part of any other person.
SECTION 6.05. LOST, DESTROYED OR MUTILATED CERTIFICATES. The holder of any
shares of the corporation shall immediately notify the corporation of any loss,
destruction or mutilation of the certificate therefor, and the board of
directors may, in its discretion, cause a new certificate or certificates to be
issued to such holder, in case of mutilation of the certificate, upon the
surrender of the mutilated certificate or, in case of loss or destruction of
the certificate, upon satisfactory proof of such loss or destruction and, if
the board of directors shall so determine, the deposit of a bond in such form
and in such sum, and with such surety or sureties, as it may direct.
SECTION 6.06. RIGHTS. Rights issued pursuant to the Rights Agreement, dated
April 27, 1989, between the corporation and Mellon Bank (East) N.A. (the
"Rights Agreement") may be transferred by an Acquiring Person or an Associate
or Affiliate of an Acquiring Person (as such capitalized terms are defined in
the Rights Agreement) only in accordance with the terms of, and subject to the
restrictions contained in, the Rights Agreement.
ARTICLE VII
INDEMNIFICATION OF DIRECTORS, OFFICERS AND OTHER AUTHORIZED REPRESENTATIVES
(The provisions of this Article VII were first adopted by the shareholders of
the corporation on May 20, 1987.)
SECTION 7.01. GENERAL RULE. The corporation shall indemnify any person who
was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, whether formal or informal, and whether
brought by or in the right of the corporation or otherwise, by reason of the
fact that he was a director, officer or employee of the corporation (and may
indemnify any person who was an agent of the corporation), or a person serving
at the request of the corporation as a director, officer, partner, fiduciary or
trustee of another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise, to the fullest extent permitted by law,
including without limitation indemnification against expenses (including
attorneys' fees and disbursements), damages, punitive damages, judgments,
penalties, fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with such proceeding unless the act or
failure to act giving rise to the claim for indemnification is finally
determined by a court to have constituted willful misconduct or recklessness.
SECTION 7.02. ADVANCING EXPENSES. The corporation shall pay the expenses
(including attorneys' fees and disbursements) actually and reasonably incurred
in defending a civil or criminal action, suit or proceeding on behalf of any
person entitled to indemnification under Section 7.01 in advance of the final
disposition of such proceeding upon receipt of an undertaking by or on behalf
of such person to repay such amount if it shall ultimately be determined that
he is not entitled to be indemnified by the corporation, and may pay such
expenses in advance on behalf of any agent on receipt of a similar undertaking.
The financial ability of such person to make such repayment shall not be
prerequisite to the making of an advance.
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SECTION 7.03. DEFINITIONS. For the purposes of this Article:
(1) the corporation shall be deemed to have requested an
officer, director, employee or agent to serve as
fiduciary with respect to an employee benefit plan
where the performance by such person of duties to the
corporation also imposes duties on, or otherwise
involves services by, such person as a fiduciary with
respect to the plan;
(2) excise taxes assessed with respect to any transaction
with an employee benefit plan shall be deemed "fines"; and
(3) action taken or omitted by such person with respect
to an employee benefit plan in the performance of
duties for a purpose reasonably believed to be in the
interest of the participants and beneficiaries of the
plan shall be deemed to be for a purpose which is not
opposed to the best interests of the corporation.
SECTION 7.04. SECURING OF INDEMNIFICATION OBLIGATIONS. To further effect,
satisfy or secure the indemnification obligations provided herein or otherwise,
the corporation may maintain insurance, obtain a letter of credit, act as
self-insurer, create a reserve, trust, escrow, cash collateral or other fund or
account, enter into indemnification agreements, pledge or grant a security
interest in any assets or properties of the corporation, or use any other
mechanism or arrangement whatsoever in such amounts, at such costs, and upon
such other terms and conditions as the board of directors shall deem
appropriate.
SECTION 7.05. CONTRACT RIGHTS; AMENDMENT OR REPEAL. All rights of
indemnification under this Article shall be deemed a contract between the
corporation and the person entitled to indemnification under this Article
pursuant to which the corporation and each such person intend to be legally
bound. Any repeal, amendment or modification hereof shall be prospective only
and shall not limit, but may expand, any rights or obligations in respect of
any proceeding whether commenced prior to or after such change to the extent
such proceeding pertains to actions or failures to act occurring prior to such
change.
SECTION 7.06. SCOPE OF ARTICLE. The indemnification, as authorized by this
Article, shall not be deemed exclusive of any other rights to which those
seeking indemnification or advancement of expenses may be entitled under any
statute, agreement, vote of shareholders or disinterested directors or
otherwise, both as to action in an official capacity and as to action in any
other capacity while holding such office. The indemnification and advancement
of expenses provided by, or granted pursuant to, this Article shall continue as
to a person who has ceased to be an officer, director, employee or agent in
respect of matters arising prior to such time, and shall inure to the benefit
of the heirs, executors and administrators of such person.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. CORPORATE SEAL. The corporation shall have a corporate seal
in the form of a circle containing the name of the corporation, the year of
incorporation and such other details as may be approved by the board of
directors. The affixation of the corporate seal shall not be necessary to the
valid execution, assignment or endorsement by the corporation of any instrument
or other document.
SECTION 8.02. CHECKS AND OTHER INSTRUMENTS. All properly authorized checks,
notes, bonds, drafts, bills of exchange or other similar orders, and all
evidences of indebtedness of the corporation whatsoever, and all properly
authorized deeds, mortgages and other instruments requiring execution by the
corporation may be executed and delivered by the president or any vice
president or the treasurer of the corporation. The authority to sign any such
orders or instruments, which may be general or confined to specific instances,
may be conferred by the board of
15
<PAGE> 17
directors upon any other person or persons, subject to such requirements as to
countersignature or other conditions as the board of directors from time to
time may determine. Facsimile signatures on checks, notes, bonds and other
instruments may be used if authorized by the board of directors. Any person
having authority to sign on behalf of the corporation may delegate, from time
to time, by instrument in writing, all or part of such authority to any person
or persons if authorized to do so by the board of directors.
SECTION 8.03. CONTRACTS. Except as otherwise provided in the Business
Corporation Law in the case of transactions that require action by the
shareholders, the board of directors may authorize any officer or agent to
enter into any contract or to execute or deliver any instrument on behalf of
the corporation, and such authority may be general or confined to specific
instances.
SECTION 8.04. INTERESTED DIRECTORS OR OFFICERS; QUORUM.
(a) General Rule -- A contract or transaction between the
corporation and one or more of its directors or officers or between the
corporation and another corporation, partnership, joint venture, trust or other
enterprise in which one or more of its directors or officers are directors or
officers or have a financial or other interest, shall not be void or voidable
solely for that reason, or solely because the director or officer is present at
or participates in the meeting of the board of directors that authorizes the
contract or transaction, or solely because his, her or their votes are counted
for that purpose, if:
(1) the material facts as to the relationship or interest
and as to the contract or transaction are disclosed or
are known to the board of directors and the board
authorizes the contract or transaction by the
affirmative votes of a majority of the disinterested
directors even though the disinterested directors are
less than a quorum;
(2) the material facts as to his or her relationship or
interest and as to the contract or transaction are
disclosed or are known to the shareholders entitled to
vote thereon and the contract or transaction is
specifically approved in good faith by vote of those
shareholders; or
(3) the contract or transaction is fair as to the
corporation as of the time it is authorized, approved
or ratified by the board of directors or the
shareholders.
(b) Quorum -- Common or interested directors may be counted in
determining the presence of a quorum at a meeting of the board which authorizes
a contract or transaction specified in subsection (a).
SECTION 8.05. DEPOSITS. All funds of the corporation shall be deposited
from time to time to the credit of the corporation in such banks, trust
companies or other depositories as the board of directors may approve or
designate, and all such funds shall be withdrawn only upon checks signed by
such one or more officers or employees of the corporation as the board of
directors shall from time to time designate.
SECTION 8.06. CORPORATE RECORDS.
(a) Required Records -- The corporation shall keep complete and
accurate books and records of account, minutes of the proceedings of the
incorporators, shareholders and directors and a share register giving the names
and addresses of all shareholders and the number and class of shares held by
each. The share register shall be kept at either the registered office of the
corporation in the Commonwealth of Pennsylvania or at its principal place of
business wherever situated or at the office of its registrar or transfer agent.
Any books, minutes or other records may be in written form or any other form
capable of being converted into written form within a reasonable time.
(b) Right of Inspection -- Every shareholder shall, upon written
verified demand stating the purpose thereof, have a right to examine, in person
or by agent or attorney, during the usual hours for business for any proper
purpose, the share register, books and records of account, and records of the
proceedings of the incorporators, shareholders and directors and to make copies
or extracts therefrom. A proper purpose shall mean a purpose reasonably
related to the
16
<PAGE> 18
interest of the person as a shareholder. In every instance where an attorney
or other agent is the person who seeks the right of inspection, the demand
shall be accompanied by a verified power of attorney or other writing that
authorizes the attorney or other agent to so act on behalf of the shareholder.
The demand shall be directed to the corporation at its registered office in the
Commonwealth of Pennsylvania or at its principal place of business wherever
situated.
SECTION 8.07. CONTROL TRANSACTIONS. Pursuant to a resolution of the board
of directors adopted on February 23, 1984, the corporation's bylaws were
amended (such amendment hereby incorporated in the current amendment and
restatement of these bylaws), in pertinent part, as follows:
"Section 910 [now 15 Pa.C.S. Subch. 25E] of the Pennsylvania Business
Corporation Law, entitled 'Right of Shareholders to Receive Payment for
Shares Following a Control Transaction' [now Control Transactions] shall
not be applicable to the Company."
SECTION 8.08. CONTROL-SHARE ACQUISITIONS. Subchapter 25G (relating to
control-share acquisitions) of 15 Pa.C.S. or any corresponding provision of
succeeding law shall not be applicable to the corporation.
(The provisions of this section were adopted by the board of directors on July
12, 1990.)
SECTION 8.09. DISGORGEMENT. Subchapter 25H (relating to disgorgement by
certain controlling shareholders following attempts to acquire control) of 15
Pa.C.S. or any corresponding provision of succeeding law shall not be
applicable to the corporation.
(The provisions of this section were adopted by the board of directors on July
12, 1990.)
SECTION 8.10. AMENDMENT OF BYLAWS. These bylaws may be amended or repealed,
or new bylaws may be adopted, either (i) by vote of the shareholders at any
duly organized annual or special meeting of shareholders, or (ii) with respect
to those matters that are not by statute committed expressly to the
shareholders and regardless of whether the shareholders have previously adopted
or approved the bylaw being amended or repealed, by vote of a majority of the
board of directors of the corporation in office at any regular or special
meeting of directors. Any change in these bylaws shall take effect when
adopted unless otherwise provided in the resolution effecting the change
17
<PAGE> 19
PENNSYLVANIA BUSINESS CORPORATION
BYLAW DERIVATION TABLE
<TABLE>
<CAPTION>
BCL
BYLAW SECTION
----- -------
<S> <C>
1.01 1507
1.02 1502(a)(15)
1.03 1554
2.01 1702
2.02 1703(b)
2.03(a) 1704(b) and (c)
(b) 1504(a)
(c) 1906(c), 1913(a), 1923(a), 1952(c), 1962(b), 1973
(d) 1571(d)
2.04 1705
2.05 1706
2.06 1707
2.07 1708
3.01 1704(a)
3.02 1755(a)
3.03 1755(b), 2521
3.04(a) 1756(a)(1), 1762(c)
(b) 1756(a)(2)
(c) 1755(c), 1756(a)(3), 2522
(d) 1756(b)(1)
(e) 1756(b)(2)
3.05 1726(a)(4), 1757(a), 1766(a)
3.06 none
3.07 1758(a)
3.08(a) 1759(a)
(b) 1759(b)
(c) 1757(c)
(d) 1759(e)
3.09 1760
3.10 1761
3.11 1762(a), (c)
3.12 1763
3.13 1764
3.14 1765
3.15 1769(a)
</TABLE>
18
<PAGE> 20
<TABLE>
<CAPTION>
BCL
BYLAW SECTION
----- -------
<S> <C>
4.01(a) 1721
(b) 1712
(c) 1715
4.02(a) 1722
(b) 1758(b)
(c) 1725(a)
(d) 1725(c)
4.03(a) 1723
(b) 1724(a)
(c) 1724(a)
(d) 1724(b); Articles of Incorporation, Section 7(a)
4.04 1725(b); Articles of Incorporation, Section 7(a)
4.05 1726; Articles of Incorporation, Section 7(b)
4.06 1703(a)
4.07 none
4.08 none
4.09 none
4.10 1727
4.11 1731
4.12 1730
5.01 1732(a), 1712
5.02 1732(a)
5.03 1732(a)
5.04 1733
5.05 1732(a)
5.06 1732(b)
5.07 none
5.08 none
5.09 none
5.10 none
5.11 none
5.12 none
5.13 none
6.01(a) 1528(c), (d)
(b) 1508(a), 1732(b)
6.02 none
6.03 1529(a)
6.04 1103 (shareholder), 1764(b)
6.05 none
</TABLE>
19
<PAGE> 21
<TABLE>
<CAPTION>
BCL
BYLAW SECTION
----- -------
<S> <C>
6.06 none
7.01 1746
7.02 1746
7.03 1746
7.04 1746
7.05 1746
7.06 1746
8.01 1502(a)(3); cf. 1109 and 1506(b)
8.02 1504
8.03 1504
8.04 1728
8.05 1504
8.06 1508(a), (b)
8.07 Subch. 25E
8.08 Subch. 25G
8.09 Subch. 25H
8.10 1504
</TABLE>
20
<PAGE> 1
THE REGISTRANT HAS REQUESTED CONFIDENTIAL TREATMENT OF CERTAIN PORTIONS OF THIS
EXHIBIT FROM THE SECURITIES AND EXCHANGE COMMISSION, WHICH HAVE BEEN DELETED
AND REPLACED WITH BRACKETED BLANK SPACES.
EXECUTION COPY
AMENDMENT NO. 1
AMENDMENT AGREEMENT dated as of September 20, 1993 among FIRST
FIDELITY BANK, N.A., PENNSYLVANIA (formerly known as Fidelity Bank, National
Association), a national banking association, solely in its capacity as the
trustee for SPIRIT OF AMERICA MASTER TRUST (the "Seller"), FASHION SPC, INC., a
Delaware corporation (the "Subordinated Purchaser"), SPIRIT OF AMERICA NATIONAL
BANK, a national banking association ("Spirit"), as the owner (in such
capacity, the "Owner") and the servicer (in such capacity, the "Servicer"), and
CIESCO L.P., a New York limited partnership ("Ciesco"), CORPORATE ASSET FUNDING
COMPANY, INC., a Delaware corporation ("CAFCO") and CORPORATE RECEIVABLES
CORPORATION, a California corporation ("CRC"; Ciesco, CAFCO and CRC being
collectively referred to as the "Purchasers"), CITICORP NORTH AMERICA, INC., a
Delaware corporation ("CNAI"), as agent for the Purchasers (the "Agent") and,
as to Sections 2 and 4(b) hereof only, CHARMING SHOPPES, INC., a Pennsylvania
corporation ("Charming Shoppes"), and FASHION SERVICE CORP., a Delaware
corporation ("FSC").
Preliminary Statements. (1) The Seller, the Subordinated
Purchaser, the Owner, the Servicer, the Purchasers and CNAI as Agent, are
parties to a Receivables Purchase Agreement dated as of December 24, 1992 (the
"RPA"; capitalized terms not otherwise defined herein shall have the meanings
attributed to them in the RPA), pursuant to which a Purchaser may, in its sole
discretion, purchase Receivable Interests from the Seller;
(2) Charming Shoppes and FSC are parties to a Company
Agreement dated as of December 24, 1992 (the "Company Agreement") in favor of
the Agent, pursuant to which Charming Shoppes and FSC agree, among other
things, to cause the performance and observance by each of the Servicer and the
Seller and their respective successors and assigns of all of the terms,
covenants, conditions, agreements and undertakings on the part of the Servicer
and the Seller, respectively, to be performed or observed under the RPA;
(3) The Seller, the Subordinated Purchaser, the Owner, the
Servicer, the Purchasers and the Agent desire to amend the RPA to increase the
Purchase Limit, extend the Facility Termination Date and make certain other
changes as set forth in Section 1 hereof; and
(4) Charming Shoppes, FSC and the Agent desire to amend the
Company Agreement and confirm that the Company Agreement continues to apply to
the RPA, as amended hereby;
NOW, THEREFORE, the parties agree as follows:
<PAGE> 2
SECTION 1. Amendments to RPA. [
2
<PAGE> 3
3
<PAGE> 4
]
(f) Exhibit I to the RPA is amended as follows:
(i) The definition of Amortization
Period is amended in its entirety to read as follows:
"Amortization Period" means (a) the period
(if any) beginning at the close of business of the Agent on
the Business Day immediately preceding the Partial
Amortization Date and ending on the Partial Amortization
Ending Date or (if the Termination Date shall occur prior to
the Partial Amortization Ending Date) the Final Distribution
Date, and (b) the period beginning at the close of business of
the Agent on the Business Day immediately preceding the
Termination Date and ending on the Final Distribution Date.
(ii) The definition of "BancOhio Portfolio" is
amended by deleting the word "in" which appears in
line 3 thereof.
(iii) The definition of "Collection" is amended
by adding the following two sentences at the end
thereof:
The term "Collection" shall also include all benefits of the
Owner or FSC or any other Owner Affiliate under and all monies
due or to become due to the Owner or FSC or any other Owner
Affiliate under the Interest Rate Agreements, and any such
monies received shall be deemed a Collection of Finance Charge
Receivables and shall be considered a Collection with respect
to Pool Receivables. Notwithstanding any other provision of
the Agreement to the contrary, Collections constituting
payments in respect of the Interest Rate Agreements shall be
allocated entirely to the Purchase Interests under the
Agreement.
(iv) Clause (viii) of the definition of
"Eligible Receivable" is amended in its entirety to
read as follows: "(viii) which satisfies all
applicable requirements of the Cardholder
Guidelines;".
(v) The definition of "Eligible State" is
amended by inserting a period following the word
"Agreement" in the third line of clause (b) thereof
and deleting the remainder of such definition.
4
<PAGE> 5
(vi) A new definition entitled "Facility
Reduction Date" is added which shall read as follows:
"Facility Reduction Date" means September 15,
1994 (or such later date as the Seller, the Subordinated
Purchaser, the Owner, the Servicer and the Agent may mutually
agree in writing).
(vii) The definition of "Facility
Termination Date" in Exhibit I is amended by (x)
replacing the date "December 1, 1995" in the second
line thereof with the date "September 15, 1996 and
(y) adding a new clause at the end thereof which
shall read as follows: "or (iv) September 10, 1995,
if on or prior to September 15, 1994 the Owner shall
not have obtained extensions to or replacements for
such of the Interest Rate Agreements as may be
necessary so as to be in compliance with clause
(iii)(y) of the first sentence of the definition of
Interest Rate Agreements."
(viii) The definition of "Fixed Allocation
Percentage" is amended in its entirety to read as
follows:
"Fixed Allocation Percentage" means, for each
Due Period with respect to the Amortization Period, the ratio
(expressed as a percentage) (which shall not be in excess of
100%) computed as at the close of business of the Agent on the
Business Day immediately preceding the Partial Amortization
Date or the Termination Date (whichever triggered the
beginning of such Amortization Period), by dividing (a) the
sum of the Purchaser Capital and the Subordinated Purchaser
Capital on such Business Day by (b) the product of (i) the
Allocation Percentage for such Due Period and (ii) the total
amount of Principal Receivables on such Business Day.
(ix) The definition of "Funding Rate" is
amended in its entirety to read as follows:
"Funding Rate" for any Settlement Period
means (a) the published yield per annum for one-month
commercial paper issued by firms whose bonds are rated AA by
S&P (or the equivalent), which is reported for the date two
Business Days prior to the Distribution Date immediately
following such Settlement Period in "Selected Interest Rates"
(Publication H.15(519), Federal Reserve Statistical Release,
published by the Board of Governors of the Federal Reserve
System (or successor publication) (or, if such yield is not
5
<PAGE> 6
published, such other rate as the Agent and the Servicer
shall agree to in writing) or (b) such other rate as the Agent
and the Servicer shall agree to in writing.
(x) The definition of "Hedge Agreement" is
deleted in its entirety.
(xi) A new definition entitled "Interest
Rate Agreements" is added which shall read as follows:
"Interest Rate Agreements" mean one or more
interest rate cap or interest rate swap agreements which shall
(i) in the case of a cap agreement, provide for payments to
the Owner or an Owner Affiliate or the Seller in the event the
Funding Rate shall exceed 9% per annum, (ii) in the case of a
swap agreement, provide for payments to the Owner or an Owner
Affiliate at the Funding Rate in exchange for payments by the
Owner or such Owner Affiliate at a fixed interest rate not in
excess of 9.0% per annum, (iii) cover in the aggregate (x) a
notional balance of at least $150,000,000 through the Facility
Reduction Date, which notional balance shall either (A) remain
at least at $150,000,000 during the ten months immediately
following the Facility Reduction Date or (B) amortize on a
straight-line basis to zero over not less than 10 months
commencing with the Facility Reduction Date and (y) an
additional notional balance of at least $100,000,000 through
the Facility Termination Date, which notional balance shall
either (A) remain at least at $100,000,000 during the ten
months immediately following the Facility Termination Date or
(B) amortize on a straight-line basis to zero over not less
than 10 months immediately following the Facility Termination
Date (provided that prior to September 15, 1994, such
additional notional balance of at least $100,000,000 may have
a termination date no earlier than July 10, 1996), (iv) if
entered into after September 20, 1993, comply with the
provisions of Sections 8(e) (to the extent there is, at the
time entered into, an existing swap or cap transaction with
any of the counterparties to any of the Interest Rate
Agreements) and 8(f) of the Company Agreement, as amended, and
(v) be with such counterparties and contain such other terms
and provisions as shall be satisfactory to the Agent. The
Interest Rate Agreements, which are limited to those
agreements specified in the Owner's officer's certificate in
the form of Annex G delivered from time to time in accordance
with the Agreement, are the "Enhancement" referred to in the
Pooling and Servicing Agreement.
6
<PAGE> 7
(xii) The definition of "Mellon Cut-Off
Date" is deleted and a new definition entitled
"Separate Account Notice Date" is added, in proper
alphabetical order, which shall read as follows:
"Separate Account Notice Date" means the date
on which the Agent instructs the Owner, at least 10 Business
Days in advance and during the existence of an Early
Amortization Event or an event which, with notice or lapse of
time or both, would constitute an Early Amortization Event, to
establish a separate account to which only cash or cash
proceeds constituting Collections of the Pool Receivables are
to be sent.
(xiii) The definition of "Minimum Seller
Capital" is amended by deleting the phrase "on the
Termination Date" in line 7 thereof and inserting in
place thereof the phrase "at the close of business of
the Agent on the Business Day immediately preceding
the Partial Amortization Date or the Termination Date
(whichever triggered the beginning of such
Amortization Period)."
(xiv) A new definition entitled "Owner
Affiliate" is added which shall read as follows:
"Owner Affiliate" means Charming Shoppes, FSC
or any other wholly owned direct or indirect subsidiary of
Charming Shoppes which is approved by the Agent.
(xv) A new definition entitled "Partial
Amortization Date" is added which shall read as
follows:
"Partial Amortization Date" means the
Facility Reduction Date if on such date the Purchaser Capital
exceeds $100,000,000.
(xvi) A new definition entitled "Partial
Amortization Ending Date" is added which shall read
as follows:
"Partial Amortization Ending Date" means the
first date, following the occurrence of the Partial
Amortization Date, on which Purchaser Capital shall have been
reduced to $100,000,000 and Subordinated Purchaser Capital
shall have been reduced to $9,890,110.
(xvii) The first sentence of the definition
of "Purchase Limit" is amended in its entirety to
read as follows:
7
<PAGE> 8
"Purchase Limit" means (a) from the date of
the Agreement to October 5, 1993, $100,000,000, (b) from
October 6, 1993 to the Facility Reduction Date, $250,000,000,
and (c) following the Facility Reduction Date, $100,000,000,
in each case as such amounts may be reduced pursuant to
Section 1.01(c).
(xviii) The definition of "Purchaser Receivable
Interest" is amended by (x) deleting the phrase "the
Purchasers" in lines 2 and 3 thereof and inserting in
place thereof the phrase "Ciesco, CAFCO, CRC or their
respective successors and assigns," and (y) adding
the phrase "and payments in respect of the Interest
Rate Agreements" immediately after the phrase "Pool
Receivables" in the last line thereof.
(xix) The definition of "Revolving Period"
is amended in its entirety to read as follows:
"Revolving Period" means (a) the period
beginning on the date of the Agreement and ending at the close
of business of the Agent on the Business Day immediately
preceding the earlier of the Partial Amortization Date and the
Termination Date, and (b) the period (if any) beginning on the
date the Partial Amortization Ending Date occurs and ending at
the close of business of the Agent on the Business Day
immediately preceding the Termination Date.
(xx) The definition of Seller Interest is
amended by adding the phrase "and payments in respect
of the Interest Rate Agreements" after the phrase
"Pool Receivable" in the fifth line thereof.
(xxi) The definition of "Subordinated
Receivable Interest" is amended by adding the phrase
"and payments in respect of the Interest Rate
Agreements" immediately after the phrase "Pool
Receivables" in the last line thereof.
(xxii) The definition of "Yield" is amended
by deleting the phrase "Settlement Period" in the
third line of the definition of "AR" contained
therein and inserting the phrase "Fixed Period" in
place thereof.
(g) Paragraph 1(a) of Exhibit II to the RPA is
amended by deleting the phrase "Attribute 300/400" in line 6 thereof and
inserting in place thereof the phrase "Attribute 300, 400, 700 or 800."
8
<PAGE> 9
(h) A new paragraph 1(d) is added to Exhibit IV
to the RPA which shall read as follows:
(d) Interest Rate Agreements. The
Trustee shall not consent to any modification or
amendment of the Interest Rate Agreements without the
prior written consent of the Agent in each instance,
which consent shall not be unreasonably withheld by
the Agent.
(i) Each reference to the "Mellon Cut-Off Date"
in paragraph 2(d) of Exhibit IV to the RPA and paragraph 1(c) of
Exhibit V to the RPA shall be replaced by the term "Separate Account
Notice Date."
(j) Paragraph 2(e) of Exhibit IV to the RPA is
amended in its entirety to read as follows:
(e) Interest Rate Hedging. The Owner shall
maintain, or cause to be maintained, the Interest
Rate Agreements in full force and effect and shall
obtain, or cause to be obtained, extensions to or
replacements for the Interest Rate Agreements from
time to time so that the then effective Interest Rate
Agreements are at all times in compliance with the
first sentence of the definition of "Interest Rate
Agreements";provided, however, that the failure of
the Owner to obtain, prior to September 15, 1994,
extensions to or replacements for those Interest Rate
Agreements having a termination date of July 10, 1996
shall not constitute an Early Amortization Event, so
long as such Interest Rate Agreements are otherwise
then in compliance with the first sentence of the
definition of "Interest Rate Agreements." Whenever
the Owner shall obtain, or cause to be obtained, an
extension to or replacement for any Interest Rate
Agreement, the Owner shall immediately furnish the
Agent with an updated Annex G incorporating such
extension or replacement and a copy of such extension
or replacement, in each case certified by a
Responsible Officer of the Owner as being complete
and correct. With respect to each Interest Rate
Agreement to which the Seller is not a party, the
Owner shall cause all monies due or to become due to
the Owner (or, if applicable, an Owner Affiliate)
under such Interest Rate Agreement to be assigned to
the Seller.
(k) Paragraph 1(c) of Exhibit V to the RPA is
amended by deleting the word "designed" in line 2 of
9
<PAGE> 10
clause (iv) thereof and inserting in place thereof the word
"designated."
(l) Paragraph (e)(iii) of Exhibit VI to the RPA
is amended by inserting the phrase "or a Trust Early Amortization
Event" following each appearance of the phrase "Amortization Event" in
lines 4 and 5 thereof.
(m) A new Annex G is added to the Agreement in
the form of Annex G attached hereto.
SECTION 2. Amendments to Company Agreement. (a) The Company
Agreement shall be amended, effective as of the Effective Date, by adding the
following new subsections (e) and (f) to Section 8 thereof:
(e) Future Swap Transactions. With respect to
each Interest Rate Agreement other than a
rate cap agreement to which the Seller is a
party, not enter into or guarantee any
additional rate swap transaction with the
counterparty to any such Interest Rate
Agreement, and not permit the Owner or any
Owner Affiliate to do so, unless it shall
have obtained in each case an agreement that
such counterparty will not net or offset
payment obligations under such rate swap
transaction or guarantee against payment
obligations under such Interest Rate
Agreement; and
(f) Redocumentation of Interest Rate Agreements.
On or prior to September 15, 1994 amend or
replace all Interest Rate Agreements to which
it is a party to provide for payments to
either the defaulting or the nondefaulting
party on an early termination, to the extent
such Interest Rate Agreements do not so
provide (without limiting the form of
documentation which may be utilized, an
Interest Rate Agreement which uses the 1992
ISDA Master Agreement form and election of
the "Second Method" shall comply with this
subsection (f)).
(b) Each of Charming Shoppes and FSC agrees that
the Company Agreement (i) applies to the RPA as amended by this Amendment
Agreement and (ii) ratifies and confirms the Company Agreement in all respects
(subject, in the case of representations and warranties, to Section 4(b) of
this Amendment Agreement) and agrees that the Company Agreement, as amended
hereby, shall remain in full force and effect in accordance with its terms,
except that on and after the date hereof, each reference
10
<PAGE> 11
in the Company Agreement to "the RPA", "thereunder", "thereof" or words of like
import referring to the RPA shall mean and be a reference to the RPA as amended
by this Amendment Agreement.
SECTION 3. Conditions Precedent. The effectiveness of the
amendments set forth in Section 1 which are stated to be effective on the
Effective Date is subject to the conditions precedent that the Agent shall have
received each of the following, in form and substance satisfactory to the
Agent, on or prior to October 15, 1993:
(a) Certified copies of any necessary corporate
action of the Trustee approving this Amendment Agreement and certified
copies of all documents evidencing other necessary government
approvals, if any, with respect to this Amendment Agreement and
certification of the names and true signatures of the officers of the
Trustee authorized to sign this Amendment Agreement on behalf of the
Seller and the other documents to be delivered by the Seller
hereunder;
(b) Certified copies of the resolutions of the
Board of Directors of the Subordinated Purchaser approving this
Amendment Agreement, and certified copies of all documents evidencing
other necessary corporate action and governmental approvals, if any,
with respect to this Amendment Agreement, and certification of the
names and true signatures of the officers of the Subordinated
Purchaser authorized to sign this Amendment Agreement and the other
documents to be delivered by the Subordinated Purchaser hereunder;
(c) Certified copies of the resolutions of the
Board of Directors of the Servicer and the Owner approving this
Amendment Agreement, and certified copies of all documents evidencing
other necessary corporate action and governmental approvals, if any,
with respect to this Amendment Agreement, and certification of the
names and true signatures of the officers of the Servicer and the
Owner authorized to sign this Amendment Agreement and the other
documents to be delivered by the Servicer and the Owner hereunder;
(d) Certified copies of the resolutions of the
Board of Directors of FSC approving this Amendment Agreement, and
certified copies of all documents evidencing other necessary
corporate action and governmental approvals, if any, with respect to
this Amendment Agreement, and certification of the names and true
signatures of the officers of FSC authorized to sign this Amendment
Agreement;
(e) Certified copies of the resolutions of the
Board of Directors of Charming Shoppes approving this Amendment
Agreement, and certified copies of all documents
11
<PAGE> 12
evidencing other necessary corporate action and governmental
approvals, if any, with respect to this Amendment Agreement, and
certification of the names and true signatures of the officers of
Charming Shoppes authorized to sign this Amendment Agreement;
(f) Favorable opinions of counsel for the
Trustee, the Owner, the Servicer, the Subordinated Purchaser, FSC and
Charming Shoppes as to such matters as the Agent may reasonably
request;
(g) An amendment and restatement of the Fee Letter
and payment of all fees due thereunder;
(h) The documentation relating to the assignment
of the BancOhio Portfolio to the Owner;
(i) With respect to Additional Accounts arising
in respect of the BancOhio Portfolio, copies of the "Addition Notice,"
"Assignment" and Owner's Officer's Certificate required to be
delivered pursuant to Section 2.6(c) of the Pooling and Servicing
Agreement;
(j) An officer's certificate of the Owner meeting
the requirements of Section 1.02(a)(iii) of the RPA;
(k) Evidence that the Owner shall have duly given
the notice to Mellon Bank, N.A. contemplated under Section 3 of the
Agreement dated as of December 24, 1992 among the Owner, the Agent and
Mellon Bank, N.A. relating to certain intercreditor arrangements;
(l) Assignments to the Seller of the benefits
under each of the Interest Rate Agreements in effect on the Effective
Date, together with any necessary consents by the counterparties to
such Interest Rate Agreements;
(m) Copies of each of the Interest Rate
Agreements in effect on the Effective Date, together with a summary
thereof in the form of Annex G attached hereto, in each case certified
by a Responsible Officer of the Owner as being complete and correct;
(n) UCC financing statements relating to the
Interest Rate Agreements naming the Owner (or, if applicable, an
Owner Affiliate) as debtor and the Seller as secured party and UCC
financing statement amendments relating to the Interest Rate
Agreements with respect to each UCC financing statement filed
pursuant to the RPA;
(o) An officer's certificate of Charming Shoppes
stating that on the Effective Date none of Charming Shoppes, FSC or
the Owner is a party to or guarantor of any rate swap
12
<PAGE> 13
transaction (other than the Interest Rate Agreements) with any of the
counterparties to any of the Interest Rate Agreements in effect on the
Effective Date; and
(p) Such other approvals, opinions or documents
as the Agent may reasonably request.
SECTION 4. Representations and Warranties. (a) Each of the
Trustee, the Owner, the Servicer and the Subordinated Purchaser confirms that
each of the representations and warranties made by it contained in Exhibit III
to the RPA, as amended by this Amendment Agreement, is correct on and as of the
date hereof as though made on and as of this date.
(b) Each of Charming Shoppes and FSC confirms that each of
the representations and warranties made by it contained in Section 5 of the
Company Agreement, after giving effect to this Amendment Agreement, is correct
on and as of the date hereof as though made on and as of this date.
SECTION 5. Costs and Expenses. The Owner agrees to pay on
demand all reasonable costs and expenses in connection with the preparation,
execution and delivery of this Amendment Agreement and the other documents to
be delivered hereunder, including, without limitation, the reasonable fees and
out-of-pocket expenses of counsel for the Agent.
SECTION 6. Confirmation of RPA. Except as herein expressly
amended, the RPA is ratified and confirmed in all respects and shall remain in
full force and effect in accordance with its terms. Each reference in the RPA
to "this Agreement" shall mean the RPA as amended by this Amendment Agreement,
and as hereinafter amended or restated.
SECTION 7. GOVERNING LAW. THIS AMENDMENT AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.
SECTION 8. Execution in Counterparts. This Amendment
Agreement may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so executed shall
be deemed to be an original and all of which when taken together shall
constitute one and the same Agreement. Delivery of an executed counterpart of
a signature
13
<PAGE> 14
page to this Amendment Agreement by telecopier shall be effective as delivery
of a manually executed counterpart of this Amendment Agreement.
IN WITNESS WHEREOF, the parties have caused this Amendment
Agreement to be executed by their respective officers thereunto duly
authorized, as of the date first above written.
SELLER: FIRST FIDELITY BANK, N.A., PENNSYLVANIA
(formerly known as Fidelity Bank,
National Association),
not in its individual capacity but
solely as the Trustee for
SPIRIT OF AMERICA MASTER TRUST
By:
------------------------------
Title: Vice President
SUBORDINATED
PURCHASER: FASHION SPC, INC.
By:
------------------------------
Title:
----------------------
OWNER/SERVICER: SPIRIT OF AMERICA NATIONAL BANK,
as the Owner and the Servicer
By:
------------------------------
Title:
----------------------
AGENT: CITICORP NORTH AMERICA, INC.,
as Agent
By:
------------------------------
Vice President
14
<PAGE> 15
ACKNOWLEDGED AND AGREED AS TO
SECTIONS 2 AND 4(b) ONLY:
CHARMING SHOPPES: CHARMING SHOPPES, INC.
By:
------------------------------
Title:
------------------------
FSC: FASHION SERVICE CORP.
By:
------------------------------
Title:
------------------------
15
<PAGE> 16
ANNEX G
Summary of Interest Rate Agreements as of (Date)
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Reference Date Amorti-
No. or zation of
Date of Type Fixed Rate Notional
Confir- (Swap Notional or Cap Effective Amount Termination
Counterparty mation or Cap) Amount Rate Date Begins Date
- ------------ ------ ------- -------- ------ --------- ------ ----
</TABLE>
The Owner Affiliate party to each of the above Agreements is [FSC].
The Index for floating rate payments for each of the above Agreements
is ["USD-CP-H.15"] for one month maturities.
<PAGE> 1
EXECUTION COPY
AMENDMENT NO. 1
AMENDMENT AGREEMENT dated as of September 20, 1993 among FIRST FIDELITY
BANK, N.A., PENNSYLVANIA (formerly known as Fidelity Bank, National
Association), a national banking association, solely in its capacity as the
trustee for SPIRIT OF AMERICA MASTER TRUST (the "Seller"), FASHION SPC, INC., a
Delaware corporation (the "Subordinated Purchaser"), SPIRIT OF AMERICA NATIONAL
BANK, a national banking association ("Spirit"), as the owner (in such
capacity, the "Owner") and the servicer (in such capacity, the "Servicer"),
CITIBANK, N.A. ("Citibank"), a national banking association, CITICORP NORTH
AMERICA, INC., a Delaware corporation ("CNAI"), as agent for Citibank (the
"Agent") and, as to Sections 2 and 5(b) hereof only, CHARMING SHOPPES, INC., a
Pennsylvania corporation ("Charming Shoppes"), and FASHION SERVICE CORP., a
Delaware corporation ("FSC").
Preliminary Statements. (1) The Seller, the Subordinated Purchaser, the
Owner, the Servicer, Citibank and CNAI as Agent, are parties to a Receivables
Purchase Agreement (Parallel Purchase Commitment) dated as of December 24, 1992
(the "PPC"; capitalized terms not otherwise defined herein shall have the
meanings attributed to them in the PPC), pursuant to which Citibank agrees, in
accordance with the specified terms and conditions thereunder, to purchase
Receivable Interests from the Seller;
(2) Charming Shoppes and FSC are parties to a Company Agreement dated as
of December 24, 1992 (the "Company Agreement") in favor of the Agent, pursuant
to which Charming Shoppes and FSC agree, among other things, to cause the
performance and observance by each of the Servicer and the Seller and their
respective successors and assigns of all of the terms, covenants, conditions,
agreements and undertakings on the part of the Servicer and the Seller,
respectively, to be performed or observed under the PPC;
(3) The Seller, the Subordinated Purchaser, the Owner, the Servicer,
Citibank and the Agent desire to amend the PPC to increase the Bank Commitment,
extend the Commitment Termination Date and make certain other changes as set
forth in Section 1 hereof; and
(4) Charming Shoppes, FSC and the Agent desire to amend the Company
Agreement and confirm that the Company Agreement continues to apply to the PPC,
as amended hereby;
<PAGE> 2
NOW, THEREFORE, the parties agree as follows:
SECTION 1. Amendments to PPC. The PPC shall be amended as follows, the
amendments set forth in paragraphs (b) and (h) below to be effective on the
date hereof and the balance of such amendments to be effective as of the date
on which all of the conditions precedent set forth in Section 4 shall be
satisfied (the "Effective Date"):
(a) The second sentence of Section 1.01(a) of the PPC is amended in
its entirety to read as follows:
Under no circumstances shall the Banks be obligated to make any such
purchase on any date if after giving effect to such purchase the
aggregate outstanding Purchaser Capital, together with the aggregate
outstanding "Purchaser Capital" of "Purchaser Receivable Interests" under
the Receivables Purchase Agreement, would exceed the Total Commitment on
such date.
(b) Section 1.04 of the PPC is amended by inserting the phrase ", as
amended or restated from time to time" following the words "and the Agent"
in the third line thereof.
(c) Section 4.03(b) of the PPC is amended by deleting the phrase
"Purchase Limit" in lines 7 and 8 thereof and inserting in place thereof the
phrase "highest Total Commitment theretofore in effect under this Agreement."
(d) Clause (a) of the definition of Bank Commitment in Exhibit I to
the PPC is amended in its entirety to read as follows:
(a) (i) with respect to Citibank, from the date of the
Agreement to October 5, 1993, $100,000,000, (ii) from October 6, 1993
to the Facility Reduction Date, $250,000,000, and (iii) following the
Facility Reduction Date, $100,000,000 in each case as such amount may
be reduced by any Assignment and Acceptance entered into between
Citibank and other Banks;
(e) The definition of "Commitment Termination Date" in Exhibit I to
the PPC is amended by (x) replacing the date "June 30, 1994" in the second
line thereof with the date "September 15, 1996 and (y) adding a new clause
at the end thereof which shall read as follows: "or (iv) September 10, 1995,
if on or prior to September 15, 1994 the Owner shall not have obtained
extensions to or replacements for
2
<PAGE> 3
such of the Interest Rate Agreements as may be necessary so as to be in
compliance with clause (iii)(y) of the first sentence of the definition of
Interest Rate Agreements."
(f) A new definition entitled "Facility Reduction Date" is added to
Exhibit I to the PPC which shall read as follows:
"Facility Reduction Date" means September 15 1994 (or such later
date as the Seller, the Subordinated Purchaser, the Owner, the Servicer
and the Agent may mutually agree in writing).
(g) The first sentence of the definition of Total Commitment in
Exhibit I to the PPC is amended in its entirety to read as follows:
"Total Commitment" means (a) from the date of the Agreement to
October 5, 1993, $100,000,000, (b) from October 6, 1993 to the Facility
Reduction Date, $250,000,000, and (c) following the Facility Reduction
Date, $100,000,000, in each case as such amounts may be reduced pursuant
to Section 1.01(c).
(h) The reference to "Schedule II" in Section 2 of Exhibit I to the
PPC and in the Table of Contents to the PPC is hereby deleted.
(i) Paragraph 1(a) of Exhibit II to the PPC is amended by deleting
the phrase "Attribute 300/400" in line 6 thereof and inserting in place
thereof the phrase "Attribute 300, 400, 700 or 800."
SECTION 2. Amendments to Company Agreement. (a) The Company
Agreement shall be amended, effective as of the Effective Date, by adding the
following new subsections (e) and (f) to Section 8 thereof:
(e) Future Swap Transactions. With respect to each Interest Rate
Agreement other than a rate cap agreement to which the Seller is
a party, not enter into or guarantee any additional rate swap
transaction with the counterparty to any such Interest Rate
Agreement, and not permit the Owner or any Owner Affiliate to do
so, unless it shall have obtained in each case an agreement that
such counterparty will not net or offset payment obligations
under such rate swap transaction or guarantee against payment
obligations under such Interest Rate Agreement; and
3
<PAGE> 4
(f) Redocumentation of Interest Rate Agreements. On or prior to
September 15, 1994 amend or replace all Interest Rate Agreements
to which it is a party to provide for payments to either the
defaulting or the nondefaulting party on an early termination,
to the extent such Interest Rate Agreements do not so provide
(without limiting the form of documentation which may be
utilized, an Interest Rate Agreement which uses the 1992 ISDA
Master Agreement form and election of the "Second Method" shall
comply with this subsection (f)).
(b) Each of Charming Shoppes and FSC agrees that the Company
Agreement (i) applies to the PPC as amended by this Amendment Agreement and
(ii) ratifies and confirms the Company Agreement in all respects (subject, in
the case of representations and warranties, to Section 5(b) of this Amendment
Agreement) and agrees that the Company Agreement, as amended hereby, shall
remain in full force and effect in accordance with its terms, except that on
and after the date hereof, each reference in the Company Agreement to "the
PPC", "thereunder", "thereof" or words of like import referring to the PPC
shall mean and be a reference to the PPC as amended by this Amendment
Agreement.
SECTION 3. Consent to Amendment to Receivables Purchase Agreement. In
accordance with the last sentence of Section 2 of Exhibit I to the PPC, the
Agent hereby consents to Amendment No. 1 dated as of September 20, 1993 to the
Receivables Purchase Agreement.
SECTION 4. Conditions Precedent. The effectiveness of the amendments
set forth in Section 1 which are stated to be effective on the Effective Date
is subject to the conditions precedent that the Agent shall have received each
of the following, in form and substance satisfactory to the Agent, on or prior
to October 15, 1993:
(a) Certified copies of any necessary corporate action of the
Trustee approving this Amendment Agreement and certified copies of all
documents evidencing other necessary government approvals, if any, with
respect to this Amendment Agreement and certification of the names and true
signatures of the officers of the Trustee authorized to sign this Amendment
Agreement on behalf of the Seller and the other documents to be delivered by
the Seller hereunder;
(b) Certified copies of the resolutions of the Board of Directors of
the Subordinated Purchaser approving this Amendment Agreement, and certified
copies of all
4
<PAGE> 5
documents evidencing other necessary corporate action and governmental
approvals, if any, with respect to this Amendment Agreement, and
certification of the names and true signatures of the officers of the
Subordinated Purchaser authorized to sign this Amendment Agreement and the
other documents to be delivered by the Subordinated Purchaser hereunder;
(c) Certified copies of the resolutions of the Board of Directors of
the Servicer and the Owner approving this Amendment Agreement, and certified
copies of all documents evidencing other necessary corporate action and
governmental approvals, if any, with respect to this Amendment Agreement,
and certification of the names and true signatures of the officers of the
Servicer and the Owner authorized to sign this Amendment Agreement and the
other documents to be delivered by the Servicer and the Owner hereunder;
(d) Certified copies of the resolutions of the Board of Directors of
FSC approving this Amendment Agreement, and certified copies of all
documents evidencing other necessary corporate action and governmental
approvals, if any, with respect to this Amendment Agreement, and
certification of the names and true signatures of the officers of FSC
authorized to sign this Amendment Agreement;
(e) Certified copies of the resolutions of the Board of Directors of
Charming Shoppes approving this Amendment Agreement, and certified copies of
all documents evidencing other necessary corporate action and governmental
approvals, if any, with respect to this Amendment Agreement, and
certification of the names and true signatures of the officers of Charming
Shoppes authorized to sign this Amendment Agreement;
(f) Favorable opinions of counsel for the Trustee, the Owner, the
Servicer, the Subordinated Purchaser, FSC and Charming Shoppes as to such
matters as the Agent may reasonably request;
(g) An amendment and restatement to the Fee Letter and payment of all
fees due thereunder;
(h) The documentation relating to the assignment of the BancOhio
Portfolio to the Owner;
(i) With respect to Additional Accounts arising in respect of the
BancOhio Portfolio, copies of the "Addition Notice", "Assignment" and
Owner's Officer's Certificate required to be delivered pursuant to Section
2.6(c) of the Pooling and Servicing Agreement;
5
<PAGE> 6
(j) An officer's certificate of the Owner meeting the requirements of
Section 1.02(a)(iii) of the PPC;
(k) Evidence that the Owner shall have duly given the notice to
Mellon Bank, N.A. contemplated under Section 3 of the Agreement dated as of
December 24, 1992 among the Owner, the Agent and Mellon Bank, N.A. relating
to certain intercreditor arrangements;
(l) Assignments to the Seller of the benefits under each of the
Interest Rate Agreements in effect on the Effective Date, together with any
necessary consents by the counterparties to such Interest Rate Agreements;
(m) Copies of each of the Interest Rate Agreements in effect on the
Effective Date, together with a summary thereof in the form of Annex G
hereto, in each case certified by a Responsible Officer of the Owner as
being complete and correct;
(n) UCC financing statements relating to the Interest Rate
Agreements naming the Owner (or, if applicable, an Owner Affiliate) as
debtor and the Seller as secured party and UCC financing statement
amendments relating to the Interest Rate Agreements with respect to each UCC
financing statement filed pursuant to the PPC; and
(o) An officer's certificate of Charming Shoppes stating that on the
Effective Date none of Charming Shoppes, FSC or the Owner is a party to or
guarantor of any rate swap transaction (other than the Interest Rate
Agreements) with any of the counterparties to any of the Interest Rate
Agreements in effect on the Effective Date; and
(p) Such other approvals, opinions or documents as the Agent may
reasonably request.
SECTION 5. Representations and Warranties. (a) Each of the Trustee,
the Owner, the Servicer and the Subordinated Purchaser confirms that each of
the representations and warranties made by it contained in Exhibit III to the
PPC, as amended by this Amendment Agreement, is correct on and as of the date
hereof as though made on and as of this date.
(b) Each of Charming Shoppes and FSC confirms that each of the
representations and warranties made by it contained in Section 5 of the Company
Agreement, after giving effect to this Amendment Agreement, is correct on and
as of the date hereof as though made on and as of this date.
SECTION 6. Costs and Expenses. The Owner agrees to pay on demand all
reasonable costs and expenses in connection
6
<PAGE> 7
with the preparation, execution and delivery of this Amendment Agreement and
the other documents to be delivered hereunder, including, without limitation,
the reasonable fees and out-of-pocket expenses of counsel for the Agent.
SECTION 7. Confirmation of PPC. Except as herein expressly amended, the
PPC is ratified and confirmed in all respects and shall remain in full force
and effect in accordance with its terms. Each reference in the PPC to "this
Agreement" shall mean the PPC as amended by this Amendment Agreement, and as
hereinafter amended or restated.
SECTION 8. GOVERNING LAW. THIS AMENDMENT AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 9. Execution in Counterparts. This Amendment Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which when taken together shall constitute one and the same
Agreement. Delivery of an executed counterpart of a signature page to this
Amendment Agreement by telecopier shall be effective as delivery of a manually
executed counterpart of this Amendment Agreement.
7
<PAGE> 8
IN WITNESS WHEREOF, the parties have caused this Amendment Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
SELLER: FIRST FIDELITY BANK, N.A., PENNSYLVANIA
(formerly known as Fidelity Bank,
National Association),
not in its individual capacity but
solely as the Trustee for
SPIRIT OF AMERICA MASTER TRUST
By:
------------------------------
Title: Vice President
SUBORDINATED
PURCHASER: FASHION SPC, INC.
By:
------------------------------
Title:
-----------------------
OWNER/
SERVICER: SPIRIT OF AMERICA NATIONAL BANK,
as the Owner and the Servicer
By:
------------------------------
Title:
-----------------------
AGENT: CITICORP NORTH AMERICA, INC.,
as Agent
By:
-------------------------------
Vice President
CITIBANK CITIBANK, N.A.
By:
--------------------------------
Title:
-------------------------
8
<PAGE> 9
ACKNOWLEDGED AND AGREED AS TO
SECTIONS 2 AND 5(b) ONLY:
CHARMING SHOPPES: CHARMING SHOPPES, INC.
By:
-------------------------------
Title:
-----------------------
FSC: FASHION SERVICE CORP.
By:
------------------------------
Title:
----------------------
9
<PAGE> 10
ANNEX G
Summary of Interest Rate Agreements as of (Date)
<TABLE>
<CAPTION>
Refer- Date
ence Amorti-
No. or Fixed zation of
Date of Type Rate Notional
Confir- (Swap Notional or Cap Effective Amount Termination
Counterparty mation or Cap) Amount Rate Date Begins Date
- ------------ ----- ------- -------- ------ --------- -------- -----------
<S> <C>
The Owner Affiliate party to each of the above Agreements is [FSC].
The Index for floating rate payments for each of the above Agreements is
["USD- CP-H.15"] for one month maturities.
</TABLE>
<PAGE> 1
THE REGISTRANT HAS REQUESTED CONFIDENTIAL TREATMENT OF CERTAIN PORTIONS OF THIS
EXHIBIT FROM THE SECURITIES AND EXCHANGE COMMISSION, WHICH HAVE BEEN DELETED AND
REPLACED WITH BRACKETED BLANK SPACES.
SALE AND PURCHASE AGREEMENT
This Sale and Purchase Agreement is made as of the -------- day of
- ----------------, 1993 between NATIONAL CITY BANK, COLUMBUS, a national banking
association (the "Bank") and FASHION SERVICE CORP., a Delaware corporation
("Fashion").
PRELIMINARY STATEMENT
The Bank, Fashion and certain other corporations affiliated with Fashion are
parties to a Credit Card Plan Agreement dated October 24, 1984, as amended from
time to time (the "Plan Agreement"). Pursuant to the Plan Agreement the Bank
is operating a consumer credit program (the "Charge Plan") in the form of
revolving lines of credit used by customers of retail stores affiliated with
Fashion to purchase goods and services from such retail stores. The Bank
wishes to sell and Fashion wishes to purchase all obligations outstanding under
the Charge Plan incurred by Customers of retail stores affiliated with Fashion,
as further set forth in this Agreement.
NOW THEREFORE, in consideration of the mutual promises hereinafter set forth,
and intending to be legally bound, the parties hereto agree as follows:
ARTICLE I
GENERAL & DEFINITIONS
Section 1.01 Mutual Cooperation. It is an objective of the parties
that the sale and purchase of Account Debt and Accounts
provided for in this agreement be planned and carried out
in an effective, efficient and smooth manner and without
interruption in credit card account service to Charge
Customers. It is a further objective that the Charge Plan
and any other similar consumer credit program(s) operated
by Fashion or by a third party contractor ("Contractor")
for customers of retail stores operated by or affiliated
with Fashion (each an "Other Charge Plan") operate
concurrently in all retail stores operated by or
affiliated with Fashion without conflict or confusion
(such as the mishandling of applications for credit,
requests for authorizations, records of credit sales,
credits, allowances, payments, customer complaints,
inquiries and collection measures). Without limiting the
generality of the foregoing, the parties agree to
cooperate with, consult with and assist each other to
accomplish this objective, and to avoid practices,
procedures or statements that might result in such
confusion or impair the collectibility of any customer
obligations or damage the business and reputation of
either party, and to alert each other to potential
problems as soon as they are recognized. Fashion will use
its best efforts to obtain the cooperation of any operator
of any Other Charge Plan whenever necessary or useful to
accomplish these objectives.
Section 1.02 Definitions and Index of Definitions. As used herein, the
following terms shall have the following respective
meanings:
<PAGE> 2
"Accounts" shall mean the individual revolving lines of
credit provided by the Bank to Charge Customers for use in
retail stores operated by Fashion or one of its
affiliates.
"Account Debt" shall mean all outstanding obligations of a
Charge Customer due under an Account, including unbilled
purchases but not including unbilled finance charges.
"Account Records" shall mean information relating to
Accounts which shall include the Cardholder Master File,
the collection status of each Account and information
concerning interim transactions, if any, that occur during
the time period after the Bank stops processing
transactions under the Plan for the Accounts being
transferred and before Fashion or a Contractor starts
processing credit card transactions under the Other Charge
Plan for the transferred accounts.
"Adjusted Weighted Pricing Percentage" shall mean a
percentage calculated in the manner prescribed in Annex I.
"Aging Category" shall mean any one of the seven
categories specified in Annex I attached hereto which is
used to classify the delinquency status of Accounts.
"Applicable Interest Rate" shall mean the One Month Libor
Rate plus three-eights of one percent (3/8%) per annum.
"Cardholder Master File" shall mean a computer usable tape
containing the Bank's records used to operate the Charge
Plan, including the following information for each account
to be transferred: the names of Customers, addresses,
credit and transaction history, current balances and
Account aging.
"Charge Customers" shall mean customers of retail stores
affiliated with Fashion for whom an Account has been
opened under the Charge Plan.
"Charge Plan" shall have the meaning set forth in the
Preliminary Statement. "Contractor" shall mean the
meaning set forth in Section 1.01.
"Contractor" shall mean the meaning set forth in
Section 1.01.
"Final Settlement Date" shall mean November 2, 1993.
"Net Outstandings" shall have the meaning set forth in
Section 2.02.
"One Month LIBOR Rate" shall mean the One Month London
Interbank Offered Rate published in the Wall Street
Journal on the Record Date or, if not available on the
Record Date, on the most recent date prior to the Record
Date that such rate is published in the Wall Street
Journal.
"Other Charge Plan" shall have the meaning set forth in
Section 1.01.
-2-
<PAGE> 3
"Plan Agreement" shall have the meaning set forth in the
Preliminary Statement.
"Preliminary Settlement Date" shall mean October 6, 1993.
"Record Date" shall mean October 3, 1993.
Reference should also be made to the Annexes hereto for further definitions.
ARTICLE II
SALE AND PURCHASE
Section 2.01 Transfer of Title to Accounts. (a) As of the close of
business on the Preliminary Settlement Date, the Bank will
transfer to Fashion without recourse, except as otherwise
provided for herein, the Bank's right, title and interest
in: (i) the Account Debts, including all unbilled finance
charges relating thereto, of all Charge Customers as of
the close of business on the Record Date, together with
(ii) the Accounts of such Charge Customers (including
Charge Customers having credit or zero balances in their
Accounts, but excluding Charge Customers whose Account
Debt has been written off by the Bank). Such transfer
shall be evidenced by delivery of a bill of sale or
assignment executed by the Bank in such form as Fashion
may reasonably request. Within two days after the Record
Date, Bank shall deliver to Fashion complete and correct
copies of the Cardholder Master File and all other Account
Records with respect to the Accounts being transferred,
accompanied by the certificate signed by the Chief
Financial Officer or Chief Operations Officer of the Bank
certifying that the information contained thereon is
complete and correct to the best of Bank's knowledge as of
the Record Date.
Section 2.02 Purchase Price. (a) On the Preliminary Settlement Date,
Fashion shall pay the Bank a purchase price for the
Account Debts, including all accrued unbilled finance
charges, and Accounts transferred to Fashion on such date,
as of the Record Date, which purchase price is equal to
(i) the Net Outstandings of such Accounts as reflected in
the Cardholder Master File multiplied by the Adjusted
Weighted Pricing Percentage, (ii) plus the Preliminary
Settlement Date Finance Charge Payment, as determined in
accordance with the formula set forth in Annex II attached
hereto (the "Preliminary Settlement Date Finance Charge
Payment"); (iii) plus interest at the Applicable Interest
Rate on the amount determined in (i) above from the Record
Date until the Preliminary Settlement Date as described in
Annex I attached hereto. Fashion shall pay such purchase
price to Bank by wire transfer of immediately available
funds to an account designated by the Bank. If Bank
receives such amount up to 12:00 noon on the Preliminary
Statement Date, no interest shall accrue. If Bank
receives such amount at any time after 12:00 noon on the
Preliminary Settlement Date, interest shall accrue from
and including the Preliminary
-3-
<PAGE> 4
Statement Date until and including the date Bank receives
such amount. "Net Outstandings" means (i) the aggregate
amount of Account Debt as of the close of business on the
Record Date less (ii) all credit balances as of the close
of business on such Record Date. As part of the purchase
price Fashion shall assume all liability to Charge
Customers for credit balances that may exist in any
purchased Accounts.
(b) Upon the completion of the billing cycles during
which the Record Date occurs for each Account
transferred to Fashion, Fashion shall calculate
the Unbillable Finance Charge Rebate Payment due
to Fashion in accordance with the formula set
forth in Annex III attached hereto (the
"Unbillable Finance Charge Rebate Payment"). On
the Final Settlement Date, Bank shall pay Fashion
the Unbillable Finance Charge Rebate Payment,
including interest on the Unbillable Finance
Charges, at the Applicable Interest Rate from the
Record Date to the Final Settlement Date as
determined in Annex III. Before the Final
Settlement Date, Fashion shall deliver to the
Bank a statement and documentation showing the
calculation of the Unbillable Finance Charge
Rebate Payment according to Annex III attached
hereto, accompanied by a certificate signed by a
Vice President of Fashion certifying that the
calculation and information is complete and
correct to the best of Fashion's knowledge. The
Bank shall take a reasonable opportunity to
verify the accuracy of such statement and
documentation. Payment by the Bank to Fashion
shall be made by wire transfer of immediately
available funds to an account designated by
Fashion. If Fashion receives such amount before
12:00 noon on the Final Settlement Date, interest
shall accrue from the Preliminary Settlement Date
through and including the calendar day before the
Final Settlement Date. If Fashion receives such
amount at any time after 12:00 noon on the Final
Settlement Date, interest shall accrue through
and including the Final Settlement Date.
Section 2.03 Right to Audit. The Bank will assist Fashion and
Contractor in understanding the Conversion Plan described
in Section 4.03 and, after written notice by Fashion to
Bank of Fashion's intent to audit and the purpose of such
audit, will allow Fashion to perform audit tests with
respect to the Accounts to be transferred on the
Preliminary Settlement Date to ascertain the accuracy of
the records and information to be transferred. These
tests will be conducted according to generally accepted
auditing practices and standards and will include, but not
be limited to: testing the methods used to determine the
Aging Category of the Accounts (as defined in Annex I
attached hereto) to be transferred, reviewing the
Cardholder Master File for data inaccuracies, reviewing
for reaging, evaluating write-off policies and conduct
other audit tests to substantiate that processing controls
can be relied upon as a basis for determining the Net
Outstandings as of the Record Date. The conclusion of an
audit shall not constitute a waiver of any
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<PAGE> 5
right of either Fashion or the Bank under Section 5.02 or
otherwise to assert an adjustment to any amount payable or
paid under this Agreement.
Section 2.04 Closing. Bank agrees that if Fashion requests the Bank to
attend a loan closing or to confirm the assignment of the
Accounts being transferred in order for Fashion to secure
its loan to purchase such Accounts, unbilled finance
charges and Account Debt, Bank shall cooperate to provide
Fashion with such documents and/or assistance that Fashion
may reasonably request.
ARTICLE III
CONDITIONS TO TRANSFER
Section 3.01 Conditions to Transfer. The obligation of Fashion to
acquire title to the Account Debt, the accrued unbilled
finance charges related thereto, and the related Accounts
on the Preliminary Settlement Date is conditioned upon
satisfaction of the following conditions:
(a) Each of the representations and warranties of the
Bank set forth in this Agreement is true as of
the Record Date and the Preliminary Settlement
Date, and the Bank has performed each of its
obligations under this Agreement which is
required to be performed on or before the Record
Date and the Preliminary Settlement Date.
(b) The Bank shall have executed and delivered to
Fashion such Uniform Commercial Code financing
statements and change statements as Fashion may
reasonably request to reflect the transactions
contemplated by this Agreement.
ARTICLE IV
ACTIONS PRIOR TO TRANSFER
From and after the date hereof the Bank will continue to operate the Charge
Plan in accordance with the terms of the Plan Agreement, except that in
connection with the transfer of Accounts to be made on the Preliminary
Settlement Date, the following special procedures shall apply:
Section 4.01 Applications and Credit Standards. (a) Effective July 8,
1993, the Bank will no longer enter into new arrangements
with delinquent Charge Customers in order to reage their
Accounts if they make three (3) consecutive minimum
payments ("Hardship Reages") or reage their accounts for
any other reason whatsoever except as provided below. The
Bank, however, will continue to fulfill its commitments
with respect to arrangements for Hardship Reages that have
already been made with delinquent Charge Customers before
July 8, 1993 and will reage the accounts subject to such
arrangements if the delinquent Charge Customer meets the
requirements for a
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<PAGE> 6
Hardship Reage by October 3, 1993. Notwithstanding the
foregoing, the Bank will continue to reage delinquent
Charge Customers who: (i) have entered into a CCCS
arrangement; or (ii) are delinquent as a result of missing
or misposted payments, billing disputes, unintentional
shortage of minimum due payments, other customer service
determined valid reason for established Charge Customers
who are no more than one (1) cycle past due, or any reage
which must be done to comply with applicable law, rule or
regulation.
(b) On July 19, 1993 with respect to Quick Credit
Applications and on July 31, 1993 with respect to
Mail Applications, Fashion will or its Contractor
will assume responsibility for accepting and
processing all new credit applications. Fashion
or its Contractor will only process Quick Credit
Applications taken on or after July 31, 1993
using application forms containing the name of
Fashion or its designee ("Fashion Applications").
Further, Fashion or its Contractor shall replace
all Applications containing the name of Bank
("Bank Applications") with Fashion Applications
in Fashion Bug Stores on or before July 31, 1993.
In the event that the Bank receives any Fashion
applications after July 31, 1993, Bank shall
forward such applications to Fashion for
processing.
(c) The Bank will indemnify Fashion or its Contractor
for any Loss (as defined in Section 6.1 of the
Charge Plan Agreement) arising out of any
violation of law resulting from Fashion or its
designee issuing credit cards under new terms and
conditions to Fashion Bug customers who have
applied for a Fashion Bug charge on a Bank
Application when such application is received by
Fashion or its designee: (i) on or after July
31, 1993 in the case of a Mail Application; or
(ii) after July 19, 1993 and on or before July
31, 1993, in the case of a Quick Credit
application. The foregoing indemnification shall
be limited solely to Losses arising out of any
violation of law resulting from the situation
that the application reflects one creditor (the
Bank) and one set of terms and that the card will
be issued in the name of a different creditor and
under a different set of terms. The foregoing
indemnification may only be invoked if the
following conditions are met: (i) Fashion or its
Contractor shall have complied with Section
4.01(b) above; (ii) Fashion or its Contractor
shall, in compliance with all applicable law,
notify such customers of the change in issuer and
any changes in terms between the Bank cardholder
agreement and the Fashion cardholder agreement
(using a disclosure in the form of Exhibit A
attached hereto). This Section 4.01 replaces the
letter agreement dated July 21, 1993 between the
parties signed by Kirk Simme and Brent Bostick.
Section 4.02 Preparation for Conversion. The Bank and Fashion will
cooperate to provide each other with all information and
data
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<PAGE> 7
reasonably necessary to ensure a timely conversion carried
out in an effective and efficient manner without
interruption of credit card account services to Charge
Customers, but without unduly burdening the Bank with
unreasonable and unnecessary requests for information.
Without limiting the generality of the foregoing, the Bank
will, upon Fashion's request, provide three Cardholder
Master Files to Fashion for the Accounts transferred, one
of which will be provided on the day after the Record
Date. Such data shall be provided in printed or magnetic
form, as requested by Fashion. The Bank will provide a
retrieval service for a period of five years after the
Preliminary Settlement Date to provide Fashion, upon its
request, with copies of applications (to the extent that
such applications are available) relating to the
particular Accounts that were transferred to Fashion on
such date. The Bank shall provide copies of such
applications to Fashion as Fashion may reasonably request
(i) within five (5) days of Fashion's request in order to
respond to a specific customer inquiry, dispute or
complaint and (ii) within normal retrieval periods after
Fashion's request in connection with a specific endeavor
on the part of Fashion that may require such information
but not in excess of 10,000 applications annually. In
addition, Bank shall provide to Fashion information about
billing inquiries and collections concerning an Account
upon Fashion's request to the extent that it is available.
Section 4.03 Test Conversion. The Bank will cooperate with Fashion and
the Contractor in reviewing any plan to test the
Contractor's computer program for converting the
processing of Accounts from the Bank to the Contractor and
will cooperate with the implementation of such plan.
Without limiting the generality of the foregoing the Bank
shall, among other things, provide sample data for entry
by the Contractor in its system, assist the Contractor in
understanding the file layout and explain the Cardholder
Master File, all finance charge calculations, and the
Bank's method of payments used by the Bank in processing
the Accounts. The Bank shall bear its own internal costs
associated with such conversion efforts and reasonable
travel and out-of-pocket expenses incurred with respect to
such conversion effort.
Section 4.04 Notices. Fashion shall be responsible at its own expense
for mailing such notices that it may desire to inform
Charge Customers of the transfer and of any change in the
terms of the Charge Customer's credit card agreement. All
notices of either party described in this section shall be
submitted to the other party for approval prior to
mailing, provided that such approval shall not be
unreasonably withheld.
Section 4.05 Termination of Services. (a) Except as otherwise provided
in subsections (b) and (c), at the close of business on
the Record Date, all obligations of the Bank to provide
authorization service, customer service, collection
activities and other support services shall terminate,
except that following such date, the Bank shall refer all
customer service calls and inquiries to a new third party
customer service telephone
-7-
<PAGE> 8
number or address designated by Fashion. The Bank also
shall make available to such third party, upon the third
party's request with respect to particular accounts, all
available records that may be reasonably necessary to
respond to such inquiries.
(b) The Bank will provide authorization service to
Fashion's stores through and including one day
after the Record Date in substantially the same
manner in which authorization service has been
heretofore provided under the Plan Agreement.
Any credit extended through the Record Date shall
constitute Account Debt. Any credit extended by
Fashion after the Record Date on the basis of
such authorization service shall not constitute
Account Debt. The Bank's sole responsibility
with respect to such authorization service will
be to deliver to Fashion or the Contractor the
information normally accumulated by the Bank in
providing such service, including the account
number and amount of each approved transaction.
The Bank will use its best efforts to provide to
the authorization network a response of "Account
No. Error" (or other similar response indicating
that the Account is no longer in the Bank's file)
for all converted accounts attempted to be
authorized using Bank's authorization service for
a period of six months from the Record Date.
Bank will provide authorization service to
Fashion's stores after the Record Date and until
Fashion or the Contractor can take over
authorization, but Fashion shall pay the Bank a
daily fee of $1,000.00 for each day that the Bank
provides such authorization after the Record
Date. Such fee shall be paid to the Bank on the
Preliminary Settlement Date along with all other
amounts owed on such date.
(c) After September 27, 1993, all requests for
non-monetary changes from Charge Customers, such
as changes to Charge Customers' addresses, credit
limits, and all other non-monetary changes will
not be processed but instead such requests will
be bundled and sent to Contractor.
(d) Consistent with current practices, but not later
than 5:00 p.m. Columbus, Ohio time on the date
after the Record Date, Fashion shall transmit to
the Bank tape records of all remaining Account
Debt created through the close of business on the
Record Date.
Section 4.06 Handling of Payments. (a) By 5:00 p.m. Columbus, Ohio
time on the date after the Record Date, Fashion shall
deliver to the Bank tape records of all in-store payments
received by Fashion through the close of business on the
Record Date with respect to all Accounts.
(b) All payments received by the Bank on or before
the Record Date and all payments reported by
Fashion pursuant to subsection (a) above with
respect to Accounts shall be
-8-
<PAGE> 9
posted by the Bank no later than one day after
delivery of the last tape described in Section
4.06(a) above.
(c) All payments received by the Bank after the
Record Date will be forwarded to Fashion or its
designee.
(d) The Bank shall make arrangements for all
transactions which occur after the Record Date to
be automatically forwarded or delivered to the
Contractor, without handling or processing by the
Bank. In the event that any such correspondence
is nonetheless received by the Bank, the Bank
shall forward it to Fashion or its designee after
receipt by the Bank.
ARTICLE V
PRICING INFORMATION AND RECONCILIATION
Section 5.01 Statements of Net Outstandings, Etc. Within two (2)
business days after the Record Date, the Bank will deliver
to Fashion: (i) a statement of the Net Outstandings with
respect to the Accounts being transferred (which shall
separately state by aging category the Account Debt less
credit balances), and (ii) a statement showing
calculations of the Adjusted Weighted Pricing Percentage
and the purchase price, all in reasonable detail, prepared
from the books and records maintained by Bank in the
ordinary course of servicing the Accounts, setting forth
all adjustments of such book figures as may be necessary.
Such statement of Net Outstandings shall be certified by a
Vice President of Bank to be complete and correct to the
best of Bank's knowledge based on the Bank's books and
records. Such statement shall also include the
calculation of the Preliminary Settlement Finance Charge
Payment due Bank in reasonable detail as set forth in
Annex II. The statements and documentation relating to
the Unbillable Finance Charge Rebate Payment due Fashion
as calculated in accordance with Annex III shall be
provided by Fashion to Bank before the Final Settlement
Date as described in Sections 2.02(b) hereof.
Section 5.02 Reconciliation and Adjustment. Fashion and the Contractor
will use the Cardholder Master File tape, the payment tape
described in Section 4.06 hereof, and the tape of all
remaining Account Debt recorded by Fashion and delivered
to Bank on the date after the Record Date described in
Section 4.05(d), to verify the accuracy of the statements
described in Sections 2.02 and 5.01 and the calculation of
the purchase price as described in Section 2.02(a) and in
Annex I and Annex II. The Bank will cooperate with
Fashion and the Contractor prior to the Preliminary
Statement Date in the balancing and reconciling of the
Cardholder Master File and the balancing and reconciling
of the payment and adjustment tape and the sales and
payment information recorded by Fashion so as to verify
such statements and the purchase price calculation. Prior
to the Preliminary Settlement Date the Bank and Fashion
will use their best efforts to reconcile any
discrepancies, including, but not
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<PAGE> 10
limited to, any adjustments arising prior to but not
posted on or before the Record Date, but in any event, all
known discrepancies shall be reconciled by the Final
Settlement Date. If at any time between the Record Date
and the date six months after the Final Settlement Date
either party discovers an error or adjustment in the
aggregate Account Debt stated in the Cardholder Master
File or in the computations set forth in any statement
delivered as described in Section 2.02 or 5.01 hereof,
including items of adjustment related to events prior to
the Record Date, the parties will adjust the Purchase
Price or the accrued unbilled finance charges, as the case
may be, and the appropriate party shall promptly pay any
deficiency or refund any excess (including the effect of
any discount fees to be paid or refunded), plus interest
at the Applicable Interest Rate from the date the amount
to be adjusted was first paid through the date of
adjustment.
ARTICLE VI
OBLIGATIONS AFTER TRANSFER
Section 6.01 Records. As needed and subject to the limitations set
forth in Section 4.02 hereof, Bank will provide to Fashion
copies of such information as is available relating to the
Accounts sold to Fashion that Fashion may reasonably
request. Bank agrees that it shall retain all available
Account information for each Account for a period of five
years from the date that such Account is transferred to
Fashion. Whenever requested by the Bank, Fashion will
make available to the Bank any information or records
needed to resolve any disputes or litigation or to satisfy
any regulatory inquiries or requirements; and whenever
requested by Fashion, and subject to the limitations set
forth in this Section 6.01 and Section 4.02 hereof, the
Bank will make available to Fashion and the Contractor any
information or records needed to resolve any disputes or
litigation or to satisfy any regulatory inquiries or
requirements. In order to assist in the prompt and
efficient handling of such inquiries, each party will
designate a person who shall be available by telephone to
provide information as to the availability or location of
such records and also to supply by telephone information
which is readily available.
Section 6.02 Use of Cards. For a period of at least six months after
the Record Date, Fashion may continue to permit Charge
Customers whose Accounts were transferred on the
Preliminary Settlement Date to use any credit cards which
bear the name or trademark of the Bank, however, Bank will
use its best efforts not to authorize any such
transactions. After such period, Fashion will take all
reasonable action to cause Charge Customers to abandon use
of such cards.
Section 6.03 Repurchase of Certain Account Debt. (a) At the request of
Fashion, the Bank will repurchase from time to time any
Account Debt purchased by Fashion, plus any accrued
unbilled finance changes thereon, pursuant to this
Agreement, which Fashion or
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<PAGE> 11
the Contractor is unable to collect as a result of a
breach of any representation or warranty of the Bank set
forth in Section 7.01.
(b) The price to be paid by the Bank for such Account
Debt repurchased under this Section 6.03 shall be
equal to the price paid by Fashion to Bank on the
Preliminary Settlement Date (which includes any
Preliminary Settlement Date Finance Charge Payment
and Interest at the Applicable Interest Rate from
the Record Date to the Preliminary Settlement Date
which was previously paid) less any Unbillable
Finance Charge Rebate Payment reimbursed by Bank
to Fashion on the Final Settlement Date.
(c) Against payment of such price, Fashion and the
Contractor will assign such Account Debt as of the
Record Date to the Bank, without recourse and
without representation or warranty except that the
Account Debt is free and clear of all liens
arising through Fashion or the Contractor, and
that there are no claims or defenses arising out
of Fashion's or the Contractor's ownership or
administration of the Account.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
Section 7.01 Representations and Warranties of Bank. The Bank
represents and warrants to Fashion as follows:
(a) The making and performance of this Agreement by
the Bank have been duly authorized by all
necessary corporate action and will not; (i)
violate or conflict with any provision of any
law, rule, regulation, order, writ, judgment,
decree, determination or award presently in
effect which is applicable to the Bank or any
provision of its charter, or bylaws; or (ii)
result in a breach of or constitute a default
under any material indenture or loan or credit
agreement or any other material written agreement
or instrument to which the Bank is a party or by
which the Bank is bound or affected, which breach
or default would have a material adverse effect
on Bank's ability to perform its obligations
under this Agreement; or (iii) require the
approval of or any exemption from any court,
governmental body or regulatory authority
(Federal, state or local).
(b) The Bank has previously issued to each Charge
Customer a credit card in full compliance with
all applicable Federal and state laws and
regulations relating to the issuance of credit
cards or requests therefor.
(c) Each Credit Agreement entered into by the Bank
and each periodic billing statement rendered by
Bank with respect
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<PAGE> 12
to the Accounts was in full compliance with all
applicable Federal and state laws and regulations
relating to consumer credit and Truth-in-Lending,
and the amount, computation and disclosure, of
all finance charges and other charges and fees
imposed by the Bank with respect to the Accounts
was in full compliance with all applicable
Federal and state laws and regulations.
(d) The Account Debt and the Accounts are not subject
to any lien, claim or security interest or
encumbrance in favor of any third party except as
may exist by or through a party other than the
Bank.
(e) In performing its obligations under the Plan
Agreement, Bank has complied with all applicable
laws and regulations governing the relationship
between creditor and debtor.
(f) The information to be delivered to Fashion
pursuant to this Agreement will contain the
information as described herein with respect to
the Account Debts and the Accounts which the Bank
customarily retains in the ordinary course of its
business for the purpose of billing and collecting
such Account Debts and servicing the Accounts of
Charge Customers.
(g) The Bank's files contain a signed credit card
application for each Account except with respect
to: (i) Accounts opened under prior programs
acquired by Bank for which no signed application
was received by the Bank and (ii) all "Quick
Credit" Applications made by applicants pursuant
to Section 2.2b of the Plan Agreement.
(h) The Account Debts represent transactions reported
to the Bank by Fashion or its affiliated
corporations plus interest and fees billed to
Charge Customers according to the terms of the
Accounts. To the extent that such transactions
reflect valid sales, the Account Debts are valid
and enforceable obligations of such Charge
Customers.
Provided, however, that notwithstanding the
representations and warranties contained in
paragraphs (b), (c), (d) (e) and (h) of this
Section 7.01, the Bank expressly makes no
representation or warranty with respect to: (i)
any Accounts or Account Debts for the period of
time prior to the acquisition of such Accounts by
Bank that were originally owned by Fashion or an
affiliate and or subsidiary of Fashion (all of
which shall be collectively referred to as
"Affiliate") or a processor of Fashion and
subsequently transferred to Bank; (ii) any
Accounts or Account
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<PAGE> 13
Debts to the extent that any action or inaction by
Fashion, an Affiliate, or any Contractor adversely
affects the enforceability, validity and/or
collectibility of the Accounts and/or the Account
Debts thereunder; (iii) any Accounts or Account
Debts to the extent that the Bank not having
received a completed or signed application for a
Charge Customer in either of the situations
described in Section 7.001(g) adversely affects
the enforceability, validity and/or collectibility
of the Accounts and/or the Account Debts; (iv) any
Accounts on which credit cards have been issued
where there has been a violation of law or an act
or omission in contravention of the Plan Agreement
by Fashion and/or an Affiliate; (v) how the fact
that Fashion is not a national bank located in
Ohio may affect the ability of the manner in which
Fashion, an Affiliate or any Contractor may
operate and collect the Accounts, Accounts Debts,
and consumer credit agreements as open-end
accounts following transfer pursuant to this
Agreement; and (vi) the compliance of the Credit
Agreement, Credit Cards, Charge Plan, and the
annual percentage rate and fees charged thereunder
with the requirements of Title A, Section 8-303(7)
of Maine law.
The representations and warranties set forth in this
Section 7.01 shall survive the expiration or termination
of this Agreement and the Plan Agreement.
Section 7.02 Representations and Warranties of Fashion. Fashion
represents and warrants to Bank as follows:
The making and performance of this Agreement by Fashion
have been duly authorized by all necessary corporate
action and will not, (i) violate or conflict with any
provision of any law, rule, regulation, order, writ,
judgment, decree, determination or award presently in
effect which is applicable to Fashion or any provision of
its charter, or bylaws; (ii) result in a breach or
constitute a default under any material indenture or loan
or credit agreement or any other material written
agreement or instrument to which Fashion is a party or by
which Fashion is bound or affected, which breach or
default would have a material adverse effect on Fashion's
ability to perform its obligations under this Agreement;
or (iii) require the approval of or any exemption from any
court, governmental body or regulatory authority (Federal,
state or local).
The representations and warranties set forth in this
Section 7.02 shall survive the expiration or termination
of this Agreement and the Plan Agreement.
ARTICLE VIII
COVENANT OF BANK
Section 8.01 Use of Information. The Bank agrees that it will keep,
preserve and maintain the confidentiality of all nonpublic
information about and knowledge of the Charge Customers
and the policies, plans and operations of Fashion with
respect to Fashion's Charge Plan and business, generally.
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<PAGE> 14
Section 8.02 Preservation of Policies, Practices and Procedures.
Fashion performed a review of the Bank's aging, adjustment
and collection policies, practices and procedures (Bank's
Procedures) with respect to the Accounts effective
September 17, 1993 (the "Audit Date") and concluded that
the Bank's Procedures are consistent with the Bank's
Procedures in the past and with Fashion's expectations.
In reliance on Fashion's conclusions, Bank agrees to
administer and operate the Accounts through the
Preliminary Settlement Date in accordance with Bank's
Procedures in effect on the Audit Date. Notwithstanding
the foregoing, the audit of Accounts and Account records
relating to the Accounts to be transferred to Fashion
commencing September 27, 1993 shall occur.
ARTICLE IX
COVENANT OF FASHION
Section 9.01 Use of Information. Fashion agrees that it will keep,
preserve and maintain the confidentiality of all nonpublic
information about and knowledge of Charge Customers and
the policies, plans and operations of the Bank with
respect to the Bank's Charge Plan and the Bank's business
in general.
ARTICLE X
Section 10.01 Indemnification. Each party shall indemnify and hold
harmless the other party and their respective present,
future and former officers, directors, employees, agents,
successors and assigns from and against any and all loss
(including, without limit, lost profits), liability,
claim, damage and expense (including, without limit,
attorney fees and expenses) arising out of or resulting
from or in connection with any breach of this Agreement by
the indemnifying party or any misrepresentation made by
the indemnifying party in this Agreement or in any
agreement, document, instrument or exhibit delivered by
the indemnifying party in connection herewith.
ARTICLE XI
MISCELLANEOUS
Section 11.01 Entire Agreement. This Agreement, together with Annex I,
Annex II and Annex III, constitutes the entire Agreement
and supersede all prior agreements and understandings,
whether oral or written, (between Bank and Fashion) with
respect to the subject matter hereof.
Section 11.02 Amendment. This Agreement can be modified only by a
written instrument signed by the Bank and Fashion
referring specifically to this Agreement and the parties'
intent to amend it.
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<PAGE> 15
Section 11.03 Successors and Assigns. Neither Bank nor Fashion shall
assign this Agreement except with the prior written
consent of the other party, which consent shall not
unreasonably be withheld. Bank consents to the assignment
of all of Fashion's rights and obligations under this
Agreement to Spirit of America National Bank. This
Agreement and all obligations and rights arising hereunder
shall be binding upon and inure to the benefit of the
parties hereto and their respective successors,
transferees and assigns.
Section 11.04 Governing Law. This Agreement shall be a contract made
under and governed by the internal laws of the State of
Ohio.
Section 11.05 Approvals. When approvals or consents are required in
context under this Agreement, such approvals or consents
shall not be unreasonably withheld, unless the text
provides that such approvals or consents shall be in the
discretion of the party.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their respective duly authorized officers or
representatives as of the date first above written.
FASHION SERVICE CORP.
By:
------------------------------
Its:
------------------------------
NATIONAL CITY BANK, COLUMBUS
By:
------------------------------
Its:
------------------------------
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<PAGE> 16
ANNEX I
CALCULATION OF THE
ADJUSTED WEIGHTED PRICING PERCENTAGE
AND EXAMPLE OF PURCHASE PRICE CALCULATION
[
<PAGE> 17
]
<PAGE> 18
ANNEX II
METHODOLOGY TO CALCULATE THE PRELIMINARY
SETTLEMENT DATE FINANCE CHARGE PAYMENT DUE BANK
1. Bank will calculate an amount representing an estimate of the Bank's
portion of accrued unbilled finance charges from the last statement
cycle date up through the Record Date ("Estimated Unbilled Finance
Charges") with respect to the Accounts to be transferred to Fashion on
the Preliminary Settlement Date.
2. The Estimated Unbilled Finance Charges calculated by Bank shall be for
each Account transferred the product of a. the average daily balance
of each Account as of the Record Date, b. the Annual Percentage Rate
("APR") as of the Accounts last statement cycle date expressed as a
daily rate, and c. the number of days between the last statement cycle
date through and including the Record Date.
3. Bank will provide to Fashion at the Preliminary Settlement Date a
computer tape and report for all Accounts being transferred. Such
computer tape and report shall have the Account data sorted and
identified by the last statement cycle of the Bank prior to the Record
Date. The computer tape shall include for each Account:
Bank's Account Number
The APR, expressed as a daily rate x number of days from last
statement cycle date through and including the Record Date
The average daily balance of each Account as of the Record
Date for each Account transferred
The amount to avoid finance charges as calculated by the Bank
based on the last statement immediately prior to the Record
Date
The calculated Estimated Unbilled Finance Charges
4. Bank shall calculate the "Preliminary Settlement Date Finance Charge
Payment" using the following formula:
Preliminary = Estimated X Adjusted + Interest
Settlement Unbilled Weighted
Date Finance Pricing
Finance Charges Percentage
Charge
Payment
The following is a hypothetical example showing the calculation of the
Preliminary Settlement Date Finance Charge Payment, assuming payment
will be made by 12:00 Noon on the Preliminary Settlement Date:
<TABLE>
<S> <C>
Applicable Interest Rate 4%
Estimated Unbilled Finance Charge: $470,000.00
Adjusted Weighted Pricing Percentage: 93.01%
Record Date: 10/3/93
Preliminary Settlement Date: 10/6/93
Number of Days Between Record Date and
Preliminary Settlement Date: 2
Preliminary = $470,000 X .9301 + Interest
Settlement
Date
Finance
Charge
Payment = $437,147.00 + (437,147.00 X 2 X 4%)
-
365
= $437,147.00 + $95.81
= $437,242.81
</TABLE>
5. Fashion shall pay Bank the Preliminary Settlement Date Finance Charge
Payment on the Preliminary Settlement Date as required by Section
2.02.
<PAGE> 19
ANNEX III
METHODOLOGY TO CALCULATE UNBILLABLE FINANCE
CHARGE REBATE PAYMENT DUE FASHION
1. On or before the Final Settlement Date, Fashion will provide
to Bank a computer tape which will include the following data
for each transferred Account where the payments made between
the Record Date and the first statement cycle date after the
transfer, equal or exceed the amount to be paid to avoid
finance charges as calculated by the Bank and provided to
Fashion at the Preliminary Settlement Date:
Bank's Account Number
Total Payments, Credits, or Adjustments received
since the last statement date immediately prior to
the Record Date through the first statement cycle
date immediately after the Record Date
Total Amount of Estimated Unbilled Finance Charges to
be rebated ("Unbillable Finance Charges") subject to
paragraph 2 below
Total Amount to be paid to avoid finance charges
Date of last payment received
New Cycle Date
Fashion will provide a summary report to the Bank of the above
information which will summarize the data contained in the
computer tape.
2. On the Final Settlement Date, and based on the information
contained in the report described in 1 above, Bank shall pay
to Fashion an amount (the "Unbillable Finance Charge Rebate
Payment") as specified in Section 2.02 of the Agreement and as
computed in accordance with the methodology used in the
following hypothetical example of the calculation of
Unbillable Finance Charge Rebate Payment due Fashion:
<TABLE>
<S> <C>
Record Date: 10/3/93
Final Settlement Date: 11/2/93
Number of Days from the Record Date
up to the Final Settlement Date,
Assuming such payment will be made
by 12 Noon to Fashion on the Final
Settlement Date: 29
Applicable Interest Rate: 4%
Adjusted Weighted Pricing Percentage: 93.01%
Unbillable Finance Charges (obtained
from the Fashion Report): $190,000
Unbillable Finance Charge Rebate Payment, where:
Unbillable = Unbillable X Adjusted + Interest
Finance Finance Weighted
Charge Charges Pricing
Rebate Percentage
Payment
</TABLE>
3. Bank shall pay Fashion amount calculated above on the Final
Settlement Date as specified in Section 2.02 of the Agreement.
<TABLE>
<S> <C> <C> <C>
Unbilled = $190,000 X .9301 + Interest
Finance = $176,719 + ($176,719) X (29/365) X 4%)
Charge = $176,719 + ($561.63)
Rebate = $177,280.63
Payment
</TABLE>
<PAGE> 1
CHARMING SHOPPES, INC.
1993 EMPLOYEES' STOCK INCENTIVE PLAN
1. PURPOSE
The purpose of this 1993 Employees' Stock Incentive Plan is to assist
Charming Shoppes, Inc. (the "Company") and its Subsidiaries and Affiliates in
attracting, retaining, and rewarding employees, enabling such employees to
acquire or increase a proprietary interest in the Company in order to promote a
closer identity of interests between such employees and the Company's
shareholders, and providing to such employees an increased incentive to expend
their maximum efforts for the success of the Company's business.
2. DEFINITIONS
For purposes of the Plan, the following terms shall be defined as set
forth below:
(a) "Affiliate" means any entity other than the Company and its
Subsidiaries that is designated by the Board as a participating employer under
the Plan, provided that the Company directly or indirectly owns at least 20% of
the combined voting power of all classes of stock of such entity or at least
20% of the ownership interests in such entity.
(b) "Award" means any Option, SAR (including a Limited SAR),
Restricted Stock, Deferred Stock, Stock granted as a bonus or in lieu of other
awards, Dividend Equivalent, or Other Stock-Based Award, or any other right or
interest relating to Stock or cash, granted to a Participant under the Plan.
(c) "Award Agreement" means any written agreement, contract, or other
instrument or document evidencing an Award.
(d) "Beneficiary" shall mean any person or trust which has been
designated by a Participant in his or her most recent written beneficiary
designation filed with the Committee to receive the benefits specified under
this Plan upon such Participant's death or, if there is no designated
Beneficiary or surviving designated Beneficiary, then any person or trust
entitled by will or the laws of descent and distribution to receive such
benefits.
(e) "Board" means the Board of Directors of the Company.
(f) "Code" means the Internal Revenue Code of 1986, as amended from
time to time. References to any provision of the Code shall be deemed to
include successor provisions thereto and regulations thereunder.
(g) "Committee" means the Stock Option Committee of the Board, or
such other Board committee as may be designated by the Board to administer the
Plan; provided, however, that the Committee shall at all times consist of two
or more directors, each of whom is a "disinterested person" within the meaning
of Rule 16b-3 under the Exchange Act.
(h) "Company" means Charming Shoppes, Inc., a corporation organized
under the laws of the Commonwealth of Pennsylvania, or any successor
corporation.
(i) "Deferred Stock" means a right, granted to a Participant under
Section 6(e), to receive Stock at the end of a specified deferral period.
(j) "Dividend Equivalent" means a right, granted to a Participant
under Section 6(g), to receive cash, Stock, other Awards, or other property
equal in value to dividends paid with respect to a specified number of shares
of Stock, or other periodic payments. Dividend Equivalents may be awarded on a
free-standing basis or in connection with another Award, and may be paid
currently or on a deferred basis.
(k) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time. References to any provision of the Exchange Act
shall be deemed to include successor provisions thereto and regulations
thereunder.
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<PAGE> 2
(l) "Fair Market Value" means, with respect to Stock, Awards, or
other property, the fair market value of such Stock, Awards, or other property
determined by such methods or procedures as shall be established from time to
time by the Committee. Unless otherwise determined by the Committee, the Fair
Market Value of Stock as of any given date shall mean the closing sale price of
Stock reported on the NASDAQ National Market System (or, if Stock is then
principally traded on a national securities exchange, in the table reporting
"composite transactions" for such exchange) in the Wall Street Journal for such
date, or, if no shares of Stock were traded on that date, on the next preceding
day on which there was such a trade.
(m) "ISO" means any Option intended to be and designated as an
incentive stock option within the meaning of Section 422 of the Code.
(n) "Limited SAR" means a SAR exercisable only for cash upon a change
in control or other event, as specified by the Committee.
(o) "Option" means a right, granted to a Participant under Section
6(b), to purchase Stock, other Awards, or other property at a specified price
during specified time periods. An Option may be either an ISO or a
nonstatutory Option (an Option not intended to be an ISO).
(p) "Other Stock-Based Award" means a right, granted to a Participant
under Section 6(h), that relates to or is valued by reference to Stock, other
Awards relating to Stock, or other property.
(q) "Participant" means a person who, as an employee of the Company,
a Subsidiary, or an Affiliate, has been granted an Award under the Plan.
(r) "Plan" means this 1993 Employees' Stock Incentive Plan.
(s) "Restricted Stock" means an award of shares of Stock to a
Participant under Section 6(d) that may be subject to certain restrictions and
to a risk of forfeiture.
(t) "Rule 16b-3" means Rule 16b-3, as from time to time in effect and
applicable to the Plan and Participants, promulgated by the Securities and
Exchange Commission under Section 16 of the Exchange Act.
(u) "Stock" means the Common Capital Stock, without par value, of the
Company and such other securities as may be substituted for Stock or such other
securities pursuant to Section 4.
(v) "SAR" or "Stock Appreciation Right" means the right, granted to a
Participant under Section 6(c), to be paid an amount measured by the
appreciation in the Fair Market Value of Stock from the date of grant to the
date of exercise of the right, with payment to be made in cash, Stock, or other
Awards as specified in the Award or determined by the Committee.
(w) "Subsidiary" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if each of the
corporations (other than the last corporation in the unbroken chain) owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in the chain.
3. ADMINISTRATION
(a) Authority of the Committee. The Plan shall be administered by
the Committee. The Committee shall have full and final authority to take the
following actions, in each case subject to and consistent with the provisions
of the Plan:
(i) to select Participants to whom Awards may be granted;
(ii) to designate Affiliates;
2
<PAGE> 3
(iii) to determine the type or types of Awards to be granted to
each Participant, and denominate such Award (for example, Deferred Stock
or Other Stock-Based Awards subject to performance conditions may be
denominated "performance shares" or "performance units" if deemed
appropriate by the Committee);
(iv) to determine the number of Awards to be granted, the number
of shares of Stock to which an Award will relate, the terms and
conditions of any Award granted under the Plan (including, but not
limited to, any exercise price, grant price, or purchase price, any
restriction or condition, any schedule for lapse of restrictions or
conditions relating to transferability or forfeiture, exercisability, or
settlement of an Award, and waivers or accelerations thereof, and
waivers of or modifications to performance conditions relating to an
Award, based in each case on such considerations as the Committee shall
determine), and all other matters to be determined in connection with an
Award;
(v) to determine whether, to what extent, and under what
circumstances an Award may be settled, or the exercise price of an Award
may be paid, in cash, Stock, other Awards, or other property, or an
Award may be cancelled, forfeited, or surrendered;
(vi) to determine whether, to what extent, and under what
circumstances cash, Stock, other Awards, or other property payable with
respect to an Award will be deferred either automatically, at the
election of the Committee, or at the election of the Participant;
(vii) to prescribe the form of each Award Agreement, which need
not be identical for each Participant;
(viii) to adopt, amend, suspend, waive, and rescind such
rules and regulations and appoint such agents as the Committee may deem
necessary or advisable to administer the Plan;
(ix) to correct any defect or supply any omission or reconcile
any inconsistency in the Plan and to construe and interpret the Plan and
any Award, rules and regulations, Award Agreement, or other instrument
hereunder; and
(x) to make all other decisions and determinations as may be
required under the terms of the Plan or as the Committee may deem
necessary or advisable for the administration of the Plan.
(b) Manner of Exercise of Committee Authority. Unless authority is
specifically reserved to the Board under the terms of the Plan, the Company's
Articles of Incorporation or By-laws, or applicable law, the Committee shall
have sole discretion in exercising authority under the Plan. Any action of the
Committee with respect to the Plan shall be final, conclusive, and binding on
all persons, including the Company, Subsidiaries, Affiliates, Participants, any
person claiming any rights under the Plan from or through any Participant, and
shareholders. The express grant of any specific power to the Committee, and
the taking of any action by the Committee, shall not be construed as limiting
any power or authority of the Committee. A memorandum signed by all members of
the Committee shall constitute the act of the Committee without the necessity,
in such event, to hold a meeting. The Committee may delegate to officers or
managers of the Company or any Subsidiary or Affiliate the authority, subject
to such terms as the Committee shall determine, to perform administrative
functions and, with respect to Participants not subject to Section 16 of the
Exchange Act, to perform such other functions as the Committee may determine,
to the extent permitted under Rule 16b-3 and applicable law.
(c) Limitation of Liability. Each member of the Committee shall be
entitled to, in good faith, rely or act upon any report or other information
furnished to him by any officer or other employee of the Company or any
Subsidiary or Affiliate, 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 Committee, nor any officer or employee of the Company
acting on behalf of the Committee, shall be personally liable for any action,
determination, or interpretation taken or made in good faith with respect to
the Plan, and all members of the Committee and any officer or employee of the
Company acting on their behalf shall, to the extent permitted by law, be fully
indemnified and protected by the Company with respect to any such action,
determination, or interpretation.
3
<PAGE> 4
4. STOCK SUBJECT TO PLAN
(a) Subject to adjustment as hereinafter provided, the total number
of shares of Stock reserved and available for issuance in connection with
Awards under the Plan shall be 9,000,000, plus
(i) 9.0% of the number of shares issued after the effective
date of the Plan (other than any issuance in connection with Awards
under the Plan or any other compensatory plan of the Company not
qualifying as a broad-based plan under Rule 16b- 3(b)(3)(ii)) if and to
the extent that, following such issuance, the number of outstanding
shares exceeds 102,512,511 shares (except any shares added as a result
of this clause (i) shall not be available for grants of ISOs or SARs in
tandem with ISOs), and
(ii) the number of shares that have been authorized and reserved
for awards under the Company's 1990 Employees' Stock Incentive Plan (the
"1990 Plan") but which have not been and will not be issued under the
1990 Plan.
No Award may be granted if the number of shares to which such Award relates,
when added to the number of shares previously issued under the Plan and the
number of shares to which other then-outstanding Awards relate, exceeds the
number of shares reserved under the preceding sentence. If any shares subject
to an Award are forfeited or such Award is settled in cash or otherwise
terminates without a distribution of shares to the Participant, any shares
counted against the number of shares reserved and available under the Plan with
respect to such Award shall, to the extent of any such forfeiture, settlement,
or termination, again be available for Awards under the Plan; provided,
however, that the Committee may adopt procedures for the counting of shares
relating to any Award to ensure appropriate counting, avoid double counting
(as, for example, in the case of tandem or substitute awards), and provide for
adjustments in any case in which the number of shares actually distributed
differs from the number of shares previously counted in connection with such
Award; and provided further, that, if any such shares could not again be
available for Awards to a Participant who is subject to Section 16 of the
Exchange Act under applicable share counting requirements of Rule 16b-3, such
shares shall be available exclusively for Awards to Participants who are not
subject to Section 16.
(b) Any shares of Stock distributed pursuant to an Award may consist,
in whole or in part, of authorized and unissued shares or treasury shares.
(c) In the event that the Committee shall determine that any dividend
or other distribution (whether in the form of cash, Stock, or other property),
recapitalization, forward or reverse split, reorganization, merger,
consolidation, spin-off, combination, repurchase, or share exchange, or other
similar corporate transaction or event, affects the Stock such that an
adjustment is appropriate in order to prevent dilution or enlargement of the
rights of Participants under the Plan, then the Committee shall, in such manner
as it may deem equitable, adjust any or all of (i) the number and kind of
shares of Stock which may thereafter be issued in connection with Awards, (ii)
the number and kind of shares of Stock issued or issuable in respect of
outstanding Awards, and (iii) the exercise price, grant price, or purchase
price relating to any Award or, if deemed appropriate, make provision for a
cash payment with respect to any outstanding Award; provided, however, in each
case, that, with respect to ISOs, no such adjustment shall be authorized to the
extent that such authority would cause the Plan to violate Section 422(b)(1) of
the Code. In addition, the Committee is authorized to make adjustments in the
terms and conditions of, and the criteria included in, Awards in recognition of
unusual or nonrecurring events (including, without limitation, events described
in the preceding sentence) affecting the Company or any Subsidiary or Affiliate
or the financial statements of the Company or any Subsidiary or Affiliate, or
in response to changes in applicable laws, regulations, or accounting
principles.
5. ELIGIBILITY
Employees of the Company and its Subsidiaries and Affiliates, including
any director or officer who is also such an employee, are eligible to be
granted Awards under the Plan. The foregoing notwithstanding, directors of the
Company who are not employees and members of the Committee shall not be
eligible to be granted Awards under the Plan.
4
<PAGE> 5
6. SPECIFIC TERMS OF AWARDS
(a) General. Awards may be granted on the terms and conditions set
forth in this Section 6. In addition, the Committee may impose on any Award or
the exercise thereof, at the date of grant or thereafter (subject to Section
8(e)), such additional terms and conditions, not inconsistent with the
provisions of the Plan, as the Committee shall determine, including terms
requiring forfeiture of Awards in the event of termination of employment by the
Participant; provided, however, that the Committee shall retain full power to
accelerate or waive any such additional term or condition it may have
previously imposed. Except as provided in Sections 6(f), 6(h), 7(a), or 7(b),
only services may be required as consideration for the grant (but not the
exercise) of any Award.
(b) Options. The Committee is authorized to grant Options to
Participants (including "reload" options automatically granted to offset
specified exercises of options) on the following terms and conditions:
(i) Exercise Price. The exercise price per share of Stock
purchasable under an Option shall be determined by the Committee;
provided, however, that, in the case of an ISO granted at any time
(unless otherwise permitted under Section 7(a)), such exercise price
shall be not less than the Fair Market Value of a share on the date of
grant of such Option.
(ii) Time and Method of Exercise. The Committee shall determine
the time or times at which an Option may be exercised in whole or in
part, the methods by which such exercise price may be paid or deemed to
be paid, the form of such payment, including, without limitation, cash,
Stock, other Awards or awards issued under other Company plans, or other
property (including notes or other contractual obligations of
Participants to make payment on a deferred basis, such as through
"cashless exercise" arrangements, to the extent permitted by applicable
law), and the methods by which Stock will be delivered or deemed to be
delivered to Participants.
(iii) ISOs. The terms of any ISO granted under the Plan shall
comply in all respects with the provisions of Section 422 of the Code,
including but not limited to the requirement that no ISO shall be
granted more than ten years after the effective date of the Plan.
Unless then permitted under Section 422(b) of the Code, no ISO shall be
granted to an employee of an Affiliate. Anything in the Plan to the
contrary notwithstanding, no term of the Plan relating to ISOs shall be
interpreted, amended, or altered, nor shall any discretion or authority
granted under the Plan be exercised, so as to disqualify either the Plan
or any ISO under Section 422 of the Code.
(c) Stock Appreciation Rights. The Committee is authorized to grant
SARs to Participants on the following terms and conditions:
(i) Right to Payment. A SAR shall confer on the Participant to
whom it is granted a right to receive, upon exercise thereof, the excess
of (A) the Fair Market Value of one share of Stock on the date of
exercise (or, if the Committee shall so determine in the case of any
such right other than one related to an ISO, the Fair Market Value of
one share at any time during a specified period before or after the date
of exercise, or the Fair Market Value determined by reference to amounts
paid or payable in connection with a change in control of the Company,
as specified by the Committee), over (B) the grant price of the SAR as
determined by the Committee as of the date of grant of the SAR, which,
except as provided in Section 7(a), shall be not less than the Fair
Market Value of one share of Stock on the date of grant.
(ii) Other Terms. The Committee shall determine the time or
times at which a SAR may be exercised in whole or in part, the method of
exercise, method of settlement, form of consideration payable in
settlement, method by which Stock will be delivered or deemed to be
delivered to Participants, whether or not a SAR shall be in tandem with
any other Award, and any other terms and conditions of any SAR. Limited
SARs that may only be exercised in connection with a change in control
or other event as specified by the Committee may be granted on such
terms, not inconsistent with this Section 6(c), as the Committee may
determine. Limited SARs may be either freestanding or in tandem with
other Awards.
5
<PAGE> 6
(d) Restricted Stock. The Committee is authorized to grant
Restricted Stock to Participants on the following terms and conditions:
(i) Issuance and Restrictions. Restricted Stock shall be
subject to such restrictions on transferability and other restrictions,
if any, as the Committee may impose, which restrictions may lapse
separately or in combination at such times, under such circumstances, in
such installments, or otherwise, as the Committee may determine. Except
to the extent restricted under the terms of the Plan and any Award
Agreement relating to the Restricted Stock, a Participant granted
Restricted Stock shall have all of the rights of a shareholder
including, without limitation, the right to vote Restricted Stock or the
right to receive dividends thereon.
(ii) Forfeiture. Except as otherwise determined by the
Committee, upon termination of employment during the applicable
restriction period, Restricted Stock that is at that time subject to
restrictions shall be forfeited and reacquired by the Company; provided,
however, that the Committee may provide, by rule or regulation or in any
Award Agreement, or may determine in any individual case, that
restrictions or forfeiture conditions relating to Restricted Stock will
be waived in whole or in part in the event of terminations resulting
from specified causes, and the Committee may in other cases waive in
whole or in part the forfeiture of Restricted Stock.
(iii) Certificates for Stock. Restricted Stock granted under the
Plan may be evidenced in such manner as the Committee shall determine.
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.
(iv) Dividends. Dividends paid on Restricted Stock shall be
either paid at the dividend payment date in cash or in shares of
unrestricted Stock having a Fair Market Value equal to the amount of
such dividends, or the payment of such dividends shall be deferred
and/or the amount or value thereof automatically reinvested in
additional Restricted Stock, other Awards, or other investment vehicles,
as the Committee shall determine or permit the Participant to elect.
Unless otherwise determined by the Committee, Stock distributed in
connection with a Stock split or Stock dividend, and other property
distributed as a dividend, shall be subject to restrictions and a risk
of forfeiture to the same extent as the Restricted Stock with respect to
which such Stock or other property has been distributed.
(e) Deferred Stock. The Committee is authorized to grant Deferred
Stock to Participants, subject to the following terms and conditions:
(i) Award and Restrictions. Delivery of Stock will occur upon
expiration of the deferral period specified for an Award of Deferred
Stock by the Committee (or, if permitted by the Committee, as elected by
the Participant). In addition, Deferred Stock shall be subject to such
restrictions as the Committee may impose, if any, which restrictions may
lapse at the expiration of the deferral period or at earlier specified
times, separately or in combination, in installments, or otherwise, as
the Committee may determine.
(ii) Forfeiture. Except as otherwise determined by the
Committee, upon termination of employment (as determined under criteria
established by the Committee) during the applicable deferral period or
portion thereof to which forfeiture conditions apply (as provided in the
Award Agreement evidencing the Deferred Stock), all Deferred Stock that
is at that time subject to deferral (other than a deferral at the
election of the Participant) shall be forfeited; provided, however, that
the Committee may provide, by rule or regulation or in any Award
Agreement, or may determine in any individual case, that restrictions or
forfeiture conditions relating to Deferred Stock will be waived in whole
or in part in the event of terminations resulting from specified causes,
and the Committee may in other cases waive in whole or in part the
forfeiture of Deferred Stock.
6
<PAGE> 7
(f) Bonus Stock and Awards in Lieu of Cash Obligations. The
Committee is authorized to grant Stock as a bonus, or to grant Stock or other
Awards in lieu of Company obligations to pay cash or deliver other property
under other plans or compensatory arrangements, provided that, in the case of
Participants subject to Section 16 of the Exchange Act, such cash amounts are
determined under such other plans in a manner that complies with applicable
requirements of Rule 16b-3 so that the acquisition of Stock or Awards hereunder
shall be exempt from Section 16(b) liability. Stock or Awards granted
hereunder shall be subject to such other terms as shall be determined by the
Committee.
(g) Dividend Equivalents. The Committee is authorized to grant
Dividend Equivalents to Participants. The Committee may provide that Dividend
Equivalents shall be paid or distributed when accrued or shall be deemed to
have been reinvested in additional Stock, Awards, or other investment vehicles
as the Committee may specify.
(h) Other Stock-Based Awards. The Committee is authorized, subject
to limitations under applicable law, to grant to Participants such other Awards
that may be denominated or payable in, valued in whole or in part by reference
to, or otherwise based on, or related to, Stock, as deemed by the Committee to
be consistent with the purposes of the Plan, including, without limitation,
convertible or exchangeable debt securities, other rights convertible or
exchangeable into Stock, purchase rights for Stock, Awards with value and
payment contingent upon performance of the Company or any other factors
designated by the Committee, and Awards valued by reference to the book value
of Stock or the value of securities of or the performance of specified
Subsidiaries or Affiliates. The Committee shall determine the terms and
conditions of such Awards. Stock delivered pursuant to an Award in the nature
of a purchase right granted under this Section 6(h) shall be purchased for such
consideration, paid for at such times, by such methods, and in such forms,
including, without limitation, cash, Stock, other Awards, or other property, as
the Committee shall determine. Cash awards, as an element of or supplement to
any other Award under the Plan, shall also be authorized pursuant to this
Section 6(h).
7. CERTAIN PROVISIONS APPLICABLE TO AWARDS
(a) Stand-Alone, Additional, Tandem, and Substitute Awards. Awards
granted under the Plan may, in the discretion of the Committee, be granted
either alone or in addition to, in tandem with, or in substitution for, any
other Award granted under the Plan or any award granted under any other plan of
the Company, any Subsidiary or Affiliate, or any business entity to be acquired
by the Company or a Subsidiary or Affiliate, or any other right of a
Participant to receive payment from the Company or any Subsidiary or Affiliate.
If an Award is granted in substitution for another Award or award, the
Committee shall require the surrender of such other Award or award in
consideration for the grant of the new Award. Awards granted in addition to or
in tandem with other Awards or awards may be granted either as of the same time
as or a different time from the grant of such other Awards or awards. The per
share exercise price of any Option, grant price of any SAR, or purchase price
of any other Award conferring a right to purchase Stock:
(i) Granted in substitution for an outstanding Award or award
shall be not less than the lesser of the Fair Market Value of a share of
Stock at the date such substitute Award is granted or such Fair Market
Value at that date reduced to reflect the Fair Market Value at that date
of the Award or award required to be surrendered by the Participant as a
condition to receipt of the substitute Award; or
(ii) Retroactively granted in tandem with an outstanding Award
or award shall be not less than the lesser of the Fair Market Value of a
share of Stock at the date of grant of the later Award or at the date of
grant of the earlier Award or award.
(b) Exchange and Buy Out Provisions. The Committee may at any time
offer to exchange or buy out any previously granted Award for a payment in
cash, Stock, other Awards (subject to Section 7(a)), or other property based on
such terms and conditions as the Committee shall determine and communicate to
the Participant at the time that such offer is made.
(c) Term of Awards. The term of each Award shall be for such period
as may be determined by the Committee; provided, however, that in no event
shall the term of any ISO or any SAR granted in tandem therewith exceed a
period of ten years from the date of its grant (or such shorter period as may
be applicable under Section 422 of the Code).
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<PAGE> 8
(d) Form of Payment Under Awards. Subject to the terms of the Plan
and any applicable Award Agreement, payments to be made by the Company or a
Subsidiary or Affiliate upon the grant or exercise of an Award may be made in
such forms as the Committee shall determine, including, without limitation,
cash, Stock, other Awards, or other property, and may be made in a single
payment or transfer, in installments, or on a deferred basis. Such payments
may include, without limitation, provisions for the payment or crediting of
reasonable interest on installment or deferred payments or the grant or
crediting of Dividend Equivalents in respect of installment or deferred
payments denominated in Stock.
(e) Rule 16b-3 Compliance.
(i) Six-Month Holding Period. Unless a Participant could
otherwise transfer an equity security, derivative security, or Shares
issued upon exercise of a derivative security granted under the Plan
without incurring liability under Section 16(b) of the Exchange Act, (i)
an equity security issued under the Plan, other than an equity security
issued pursuant to the exercise of a derivative security granted under
the Plan, shall be held for at least six months from the date of
acquisition, and (ii) at least six months shall elapse from the date of
acquisition of a derivative security to the date of disposition of the
derivative security (other than upon exercise or conversion) or
disposition of any underlying equity security issued pursuant to the
exercise or conversion of such derivative security.
(ii) Nontransferability. Awards which constitute derivative
securities (including any Option, SAR, Limited SAR, or similar right),
and any right that comes within the general definition of "derivative
security" of Rule 16a-1(c) under the Exchange Act, shall not be
transferable by a Participant who is subject to Section 16 of the
Exchange Act except by will or the laws of descent and distribution
(except pursuant to a beneficiary designation authorized under Section
8(b)), and shall be exercisable during the lifetime of such a
Participant only by such Participant or his guardian or legal
representative.
(iii) Other Rule 16b-3 Compliance Provisions. It is the intent
of the Company that this Plan comply in all respects with applicable
provisions of Rule 16b-3 or Rule 16a-1(c)(3) under the Exchange Act in
connection with any grant of Awards to or other transaction by a
Participant who is subject to Section 16 of the Exchange Act (except for
transactions exempted under alternative Exchange Act Rules or
acknowledged in writing to be non-exempt by such Participant).
Accordingly, if any provision of this Plan or any Award Agreement does
not comply with the requirements of Rule 16b-3 or Rule 16a-1(c)(3) as
then applicable to any such transaction, such provision will be
construed or deemed amended to the extent necessary to conform to the
applicable requirements of Rule 16b-3 or Rule 16a-1(c)(3) so that such
Participant shall avoid liability under Section 16(b). In addition, the
per share exercise price of any Option, grant price of any SAR, or
purchase price of any other Award conferring a right to purchase Stock
shall be not less than 50% of the Fair Market Value of Stock at the date
of grant of the later Award, if such pricing limitation is required in
order to comply with Rule 16b-3 at the time of grant of such Award.
(f) Loan Provisions. With the consent of the Committee, and subject
at all times to, and only to the extent, if any, and in accordance with, laws
and regulations and other binding obligations or provisions applicable to the
Company, the Company may make, guarantee, or arrange for a loan or loans to a
Participant with respect to the exercise of any Option or other payment in
connection with any Award, including the payment by a Participant of any or all
federal, state, or local income or other taxes due in connection with any
Award. Subject to such limitations, the Committee shall have full authority to
decide whether to make a loan or loans hereunder and to determine the amount,
terms, and provisions of any such loan or loans, including the interest rate to
be charged in respect of any such loan or loans, whether the loan or loans are
to be with or without recourse against the borrower, the terms on which the
loan is to be repaid and conditions, if any, under which the loan or loans may
be forgiven.
(g) 1990 Plan. Upon effectiveness of the Plan, no further grants of
options or other awards will be made under the 1990 Plan, provided, however,
that the authority to grant further options and awards under the 1990 Plan
shall be reinstated if shareholders do not approve the Plan in accordance with
Section 8(k).
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<PAGE> 9
8. GENERAL PROVISIONS
(a) Compliance With Legal and Other Requirements. The Plan, the
granting and exercising of Awards thereunder, and the other obligations of the
Company under the Plan and any Award Agreement, shall be subject to all
applicable federal and state laws, rules, and regulations, and to such
approvals by any regulatory or governmental agency as may be required. The
Company may, in its discretion, postpone the issuance or delivery of Stock
under any Award until completion of such registration or qualification of such
Stock or other required action under any federal or state law, rule, or
regulation, listing or other required action with respect to any automated
quotation system or stock exchange upon which the Stock or other Company
securities are designated or listed, or compliance with any other contractual
obligation of the Company, as the Company may consider appropriate, and may
require any Participant to make such representations and furnish such
information as it may consider appropriate in connection with the issuance or
delivery of Stock in compliance with applicable laws, rules, and regulations,
designation or listing requirements, or other contractual obligations.
(b) Limits on Encumbering Awards; Beneficiaries. In addition to the
restrictions on transferability set forth in Section 7(e)(ii), no right or
interest of a Participant in any Award shall be pledged, encumbered, or
hypothecated to or in favor of any party other than the Company or a Subsidiary
or Affiliate, or shall be subject to any lien, obligation, or liability of such
Participant to any party other than the Company or a Subsidiary or Affiliate.
Unless otherwise determined by the Committee (subject to the requirements of
Section 7(e)(ii)), no Award subject to any restriction shall be assignable or
transferable by a Participant otherwise than by will or the laws of descent and
distribution except to the Company under the terms of the Plan; provided,
however, that a Participant may, in the manner established by the Committee,
designate a Beneficiary to exercise the rights of the Participant, and to
receive any distribution, with respect to any Award, upon the death of the
Participant. A Beneficiary, guardian, legal representative, or other person
claiming any rights under the Plan from or through any Participant shall be
subject to all terms and conditions of the Plan and any Award Agreement
applicable to such Participant, except to the extent the Plan and such Award
Agreement or agreement otherwise provide with respect to such persons, and to
any additional restrictions deemed necessary or appropriate by the Committee.
(c) No Right to Continued Employment. Neither the Plan nor any
action taken hereunder shall be construed as giving any employee the right to
be retained in the employ of the Company or any of its Subsidiaries or
Affiliates, nor shall it interfere in any way with the right of the Company or
any of its Subsidiaries to terminate any employee's employment at any time.
(d) Taxes. The Company or any Subsidiary or Affiliate is authorized
to withhold from any Award granted, any payment relating to an Award under the
Plan, including from a distribution of Stock, or any payroll or other payment
to a Participant, amounts of withholding and other taxes due in connection with
any transaction involving an Award, and to take such other action as the
Committee may deem advisable to enable the Company and Participants to satisfy
obligations for the payment of withholding taxes and other tax obligations
relating to any Award. This authority shall include authority to withhold or
receive Stock or other property and to make cash payments in respect thereof in
satisfaction of a Participant's tax obligations.
(e) Changes to the Plan and Awards. The Board may amend, alter,
suspend, discontinue, or terminate the Plan or the Committee's authority to
grant Awards under the Plan without the consent of shareholders or
Participants, except that any such amendment, alteration, suspension,
discontinuation, or termination shall be subject to the approval of the
Company's shareholders within one year after such Board action if such
shareholder approval is required by any federal or state law or regulation or
the rules of any stock exchange or automated quotation system on which the
Stock may then be listed or quoted, and the Board may otherwise, in its
discretion, determine to submit other such changes to the Plan to shareholders
for approval; provided, however, that, without the consent of an affected
Participant, no amendment, alteration, suspension, discontinuation, or
termination of the Plan may materially and adversely affect the rights of such
Participant under any Award theretofore granted to him. The Committee may
waive any conditions or rights under, or amend, alter, suspend, discontinue, or
terminate, any Award theretofore granted and any Award Agreement relating
thereto; provided, however, that, without the consent of an affected
Participant, no such amendment, alteration, suspension, discontinuation, or
termination of any Award may materially and adversely affect the rights of such
Participant under such Award. The foregoing notwithstanding, any performance
condition specified in connection with an Award shall not be deemed a fixed
contractual term, but shall remain subject to adjustment by the Committee, in
its discretion, at any time in view of the Committee's assessment of the
Company's strategy, performance of comparable companies, and other
circumstances.
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<PAGE> 10
(f) No Rights to Awards; No Shareholder Rights. No Participant or
employee shall have any claim to be granted any Award under the Plan, and there
is no obligation for uniformity of treatment of Participants and employees. No
Award shall confer on any Participant any of the rights of a shareholder of the
Company unless and until Stock is duly issued or transferred to the Participant
in accordance with the terms of the Award.
(g) Unfunded Status of Awards; Creation of Trusts. The Plan is
intended to constitute an "unfunded" plan for incentive and deferred
compensation. With respect to any payments not yet made to a Participant or
obligation to issue Stock pursuant to an Award, nothing contained in the Plan
or any Award shall give any such Participant any rights that are greater than
those of a general creditor of the Company; provided, however, that the
Committee may authorize the creation of trusts or make other arrangements to
meet the Company's obligations under the Plan to deliver cash, Stock, other
Awards, or other property pursuant to any Award, which trusts or other
arrangements shall be consistent with the "unfunded" status of the Plan unless
the Committee otherwise determines with the consent of each affected
Participant. If and to the extent authorized by the Committee, the Company may
deposit into such a trust Stock for delivery to the Participant in satisfaction
of the Company's obligations under any Award. If so provided by the Committee,
upon such a deposit of Stock or other assets for the benefit of a Participant,
there shall be substituted for the rights of the Participant to receive
delivery of Stock and other payments under this Agreement a right to receive
the assets of the trust (to the extent that the deposited or other assets
represented the full amount of the Company's obligation under the Award at the
date of deposit). The trustee of the trust may be authorized to dispose of
trust assets and reinvest the proceeds in alternative investments, subject to
such terms and conditions as the Committee may specify and in accordance with
applicable law.
(h) Nonexclusivity of the Plan. Neither the adoption of the Plan by
the Board nor its submission to the shareholders of the Company for approval
shall be construed as creating any limitations on the power of the Board to
adopt such other incentive arrangements as it may deem desirable, including,
without limitation, the granting of stock options otherwise than under the
Plan, and such arrangements may be either applicable generally or only in
specific cases.
(i) No Fractional Shares. No fractional shares of Stock shall be
issued or delivered pursuant to the Plan or any Award. The Committee shall
determine whether cash, other Awards, or other property shall be issued or paid
in lieu of such fractional shares or whether such fractional shares or any
rights thereto shall be forfeited or otherwise eliminated.
(j) Governing Law. The validity, construction, and effect of the
Plan, any rules and regulations relating to the Plan, and any Award Agreement
shall be determined in accordance with the Pennsylvania Business Corporation
Law, to the extent applicable, other laws (including those governing contracts)
of the Commonwealth of Pennsylvania, without giving effect to principles of
conflicts of laws, and applicable federal law.
(k) Effective Date; Plan Termination. The Plan shall become
effective as of April 1, 1993; provided, however, that, within one year after
such date, the Plan shall have been approved by the affirmative votes of the
holders of a majority of voting securities present in person or represented by
proxy, and entitled to vote at a meeting of Company shareholders duly held in
accordance with the Pennsylvania Business Corporation Law, or any adjournment
thereof, or by the written consent of the holders of a majority of voting
securities entitled to vote, in accordance with applicable provisions of the
Pennsylvania Business Corporation Law. Any Awards granted under the Plan prior
to such approval of shareholders shall be effective when granted (unless, with
respect to any Award, the Committee specifies otherwise at the time of grant),
but no such Award may be exercised or settled, no restrictions relating to any
Award may lapse, no Stock (other than Restricted Stock) may be issued prior to
such shareholder approval, and, if shareholders fail to approve the Plan as
specified hereunder, any previously granted Award shall be forfeited and
cancelled, and Participants shall repay to the Company any payments received
pursuant to Dividend Equivalents or dividend payments on Restricted Stock. The
Plan shall terminate at such time as no Stock remains available for issuance
pursuant to Section 4 and the Company has no further obligations with respect
to any Award granted under the Plan.
Adopted by the Board of Directors: April 1, 1993
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<PAGE> 1
CHARMING SHOPPES, INC.
1993 EMPLOYEES' STOCK INCENTIVE PLAN
STOCK OPTION AGREEMENT
Agreement dated as of ------------------ between CHARMING SHOPPES,
INC. (the "Company") and ------------------ (the "Employee").
It is agreed as follows:
1. GRANT OF OPTION; CONSIDERATION
The Company hereby confirms the grant, under and pursuant to the
Company's 1993 Employees' Stock Incentive Plan (the "Plan"), to the Employee on
- --------------- of a nonqualified stock option to purchase up to *------------*
shares of the Company's common stock, par value $.10 per share (the "Shares"),
at an exercise price of $----------------- per share (the "Option"). The
Option granted hereunder is not intended to constitute an incentive stock
option within the meaning of Section 422 of the Code.
The Employee shall be required to pay no consideration for the grant of
the Option except for his agreement to provide services to the Company prior to
exercise and other agreements set forth herein.
2. INCORPORATION OF PLAN BY REFERENCE
The Option has been granted to the Employee under the Plan, a copy of
which is attached hereto. All of the terms, conditions and other provisions of
the Plan are hereby incorporated by reference into this Employee Stock Option
Agreement (the "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.
3. DATE WHEN EXERCISABLE
(a) This Option may not be exercised unless and only to the extent
that it has become exercisable as specified in this Agreement. Subject to
acceleration as provided in this Section 3, and Sections 7 and 8 below,
limitations on exercisability imposed in Section 8 below, and all other terms
and conditions of this Agreement, this Option shall become exercisable as
follows: The Employee may purchase up to one-fifth of the total number of
shares granted hereunder commencing one (1) year after the date of grant of
this Option, an additional one-fifth commencing two (2) years after the date of
grant of this Option, an additional one-fifth commencing three (3) years after
the date of grant of this Option, an additional one-fifth commencing four (4)
years after the date of grant of this Option, and the remaining shares granted
hereunder commencing five (5) years after the date of grant of this Option.
Except as otherwise specifically provided herein, the Option to purchase any
and all Shares covered by this Agreement shall expire at 5:00 p.m. on the date
ten (10) years after the date of grant of this Option.
(b) The number of Shares with respect to which the Option may be
exercised shall be cumulative so that if, in any of the aforementioned periods,
the full number of Shares shall not have been purchased, any such unpurchased
Shares shall continue to be included in the number of Shares with respect to
which this Option shall then be exercisable along with any other Shares as to
which this Option may become exercisable in accordance with its terms.
THE DATE OF GRANT OF THIS OPTION IS:
GRANT NUMBER:
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<PAGE> 2
(c) The provisions contained in Section 3(a) above notwithstanding,
the Committee may, in its sole discretion, at any time, upon written notice to
the Employee, accelerate the vesting described in Section 3(a) so that the
Option shall become immediately exercisable to the extent of all or any portion
of the Shares covered hereunder. Acceleration pursuant to this Section 3(c)
shall be separate and independent from any acceleration pursuant to Section 7
of this Agreement, and the provisions of Sections 3(d) and (e) shall not apply
in the case of acceleration pursuant to Section 7 of this Agreement.
(d) In the event that the acceleration described in Section 3(c)
occurs prior to the time that all of the Options would have otherwise been
exercisable in accordance with Section 3(a), in consideration of such
acceleration, the Employee, if so requested by the Company at the time, agrees
to hold and not dispose of that number of Shares covered by this Option for
which this Option would not have been exercisable at the time of such
acceleration, if such acceleration had not occurred, and further agrees to
dispose of such Shares only at such time and to the extent of that number of
Shares for which this Option would have been exercisable in accordance with the
schedule set forth in Section 3(a) as if the acceleration had not occurred. In
addition, if the Employee's employment with the Company or any of its
subsidiaries shall be voluntarily terminated (other than for a temporary leave
of absence approved by the Company or retirement at age 65 or older or through
early retirement with the consent of the Company pursuant to any retirement
plan of the Company or any subsidiary) prior to a Change of Control and prior
to the expiration of five (5) years after the date of grant of this Option, the
Employee shall be obligated, at the Company's option exercisable within 60 days
after termination of the Employee's employment, to sell to the Company any
Shares theretofore acquired by the Employee upon exercise of this Option at a
price which is equal to the price that the Employee paid for such Shares, but
only to the extent that the Option would not have been exercisable at the date
of termination of employment in accordance with Section 3(a) were it not for
the acceleration provided for herein.
(e) The Employee acknowledges that the certificates representing
those Shares received upon exercise of the Option at a time the Option would
not otherwise have been exercisable but for an acceleration pursuant to Section
3(c) may bear an appropriate legend giving notice of the foregoing
restrictions, including the restriction on transfer of the Shares.
4. METHOD OF EXERCISE
The Option may be exercised as to any part of the Shares which may then
be purchased by delivery to and receipt by the Secretary of the Company at 450
Winks Lane, Bensalem, Pennsylvania 19020, of a written notice, signed by the
Employee, specifying the number of Shares which the Employee wishes to
purchase, accompanied by payment in full of the exercise price therefor in
accordance with Section 5. As soon as practicable after the receipt of such
notice and payment, the Company shall deliver to the Employee a stock
certificate for the Shares so purchased, with any requisite legend affixed.
Subject to the provisions of the Plan, such exercise may include instructions
to the Company to deliver Shares due upon exercise of the Option to any
registered broker or dealer designated by the Committee (a "Designated Broker")
in lieu of delivery to the Employee. Such instructions must designate the
account into which the Shares are to be deposited. The Employee may tender
this notice of exercise, which has been properly executed by the Employee, and
the aforementioned delivery instructions to any Designated Broker together with
irrevocable instructions to the Designated Broker to promptly deliver to the
Company the cash amount of sale or loan proceeds from the Shares sufficient to
pay the exercise price, and thereupon the Company may issue Shares and deliver
them to such Designated Broker.
5. PAYMENT OF EXERCISE PRICE
The exercise price of the Option shall be payable in cash or by
certified or bank cashier's check, provided, however, that, in lieu of payment
in full in cash or by such check, the exercise price may, with the approval of
the Committee, upon written request of the Employee, be paid in full or in part
by delivery and transfer to the Company of that number of shares of the
Company's common stock otherwise owned by the Employee with an aggregate fair
market value (determined in accordance with procedures for valuing shares as
set forth in rules and regulations adopted by the Committee and in effect at
the time the Employee's notice of exercise is received by the Company) equal to
the aggregate exercise price of that number of Shares for which the Option is
being exercised or such lesser portion of the aggregate purchase price as may
be specified by the Employee (in which case the balance must be paid in cash or
by certified or bank cashier's check).
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<PAGE> 3
6. TAX WITHHOLDING
Whenever Shares are to be delivered upon exercise of the Option, the
Company shall be entitled to require as a condition of delivery that the
Employee remit or, in appropriate cases, agree to remit when due an amount
sufficient to satisfy all federal, state and local withholding tax requirements
relating thereto. Subject to the approval of the Committee, the Employee will
be entitled to elect to have the Company withhold from the Shares to be
delivered upon the exercise of the Option, or to elect to deliver to the
Company from shares of the Company's common stock owned separately by the
Employee, a sufficient number of such shares to satisfy the Employee's federal,
state and local tax obligations relating to the Option exercise (and the
Company's withholding obligations), to the extent, if any, permitted under
rules and regulations adopted by the Committee and in effect at the time of the
exercise of the Option. In such case, the Shares withheld or the shares
surrendered will be valued at the fair market value determined in accordance
with procedures for valuing shares as set forth in rules and regulations
adopted by the Committee and otherwise in effect at the time of the exercise of
the Option.
7. CHANGE OF CONTROL PROVISIONS
(a) Acceleration of Exercisability. In the event of a Change of
Control at a time that the Employee is employed by the Company or any of its
subsidiaries, this Option shall become immediately and fully exercisable upon
the occurrence of such Change of Control, and no restriction or limitation on
the rights of the Employee set forth in Section 3 hereof shall have any further
force or effect.
(b) Definitions of Certain Terms. For purposes of this Agreement,
the following definitions shall apply:
(1) "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 7, "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.
(2) "Change of Control" means and shall be deemed to
have occurred if
(i) 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
(ii) those individuals who as of April 1, 1993
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 April 1, 1993
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
(iii) the shareholders of the Company
approve 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"), or consummation of such a Transaction
if shareholder approval is not obtained, 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; provided, however, a Change of Control shall
not be deemed to have occurred if the Board of
Directors shall have determined, by action taken
prior to the approval of the Transaction by
shareholders or
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<PAGE> 4
consummation of the Transaction if shareholder
approval is not obtained, that such Transaction shall
not constitute a Change of Control for purposes of
all options then outstanding under the Plan, which
determination, if made with respect to a Transaction,
shall not be deemed to constitute a determination
with respect to any subsequent Transaction; or
(iv) the shareholders of the Company approve a
plan of complete liquidation of the Company or an
agreement for the 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.
(3) "Person" shall have the meaning ascribed for purposes
of Section 13(d) of the Exchange Act and the rules thereunder.
(4) "Related Party" means (i) a majority-owned subsidiary
of the Company; or (ii) a trustee or other fiduciary holding securities
under an employee benefit plan of the Company or any majority-owned
subsidiary of the Company; or (iii) a corporation owned directly or
indirectly by the shareholders of the Company in substantially the same
proportion as their ownership of Voting Securities; or (iv) 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.
(5) "Voting Securities" means any securities of the
Company which carry the right to vote generally in the election of
directors.
8. TERMINATION OF EMPLOYMENT
(a) This Option shall terminate and no longer be exercisable at the
earlier of the scheduled expiration time of the Option, as set forth in Section
3(a) above, or the earliest time specified below at or following a termination
of employment of the Employee; provided, however, that in the event of
termination of the employment of the Employee, this Option shall be exercisable
during the period, if any, between the occurrence of such termination and the
time designated for the termination of this Option only to the extent indicated
below:
(1) at the time of involuntary termination of the
Employee's employment with the Company or any of its subsidiaries for
reasons of moral turpitude, at which time this Option shall immediately
terminate; provided, however, that, the provisions of Section 3(a)
notwithstanding, this Option may not be exercised during any period
prior to a Change of Control during which the Company, having given
notice to the Employee, is investigating a claim that the Employee has
engaged in one or more acts of moral turpitude; or
(2) at the time of voluntary or involuntary termination
of the Employee's employment with the Company or any of its subsidiaries
for any reason at any time prior to the expiration of one year after the
date of grant of this Option and prior to any Change of Control, other
than by reason of the Employee's death or disability, at which time this
Option shall immediately terminate; or
(3) at the expiration of three months after the voluntary
or, if for cause (other than for reasons of moral turpitude), the
involuntary termination of the Employee's employment with the Company or
any of its subsidiaries, in either case at any time (A) after the
expiration of one year after the date of grant of this Option, except as
may be otherwise provided in Section 8(a)(7) below, during which
three-month period this Option shall be exercisable only to
the extent that it was exercisable at the date of the Employee's
termination of employment; or (B) after a Change of Control, except as
may be otherwise provided in Section 8(a)(7) below, during which
three-month period this Option shall be exercisable in full; or
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<PAGE> 5
(4) at the expiration of three months after the
involuntary termination of the Employee's employment, other than for
reasons of cause, moral turpitude, death or disability, with the Company
or any of its subsidiaries at any time (A) after the expiration of one
year after the date of grant of this Option except as may be otherwise
provided in Section 8(a)(7) below, during which three-month period this
Option shall be exercisable to purchase the greater of (i) a number of
Shares determined pursuant to the Option Formula (as set forth in
Section 8(e) below) and (ii) the number of Shares as to which this
Option was exercisable at the date of the Employee's termination of
employment; or (B) after a change of Control, except as may be otherwise
provided in Section 8(a)(7) below, during which three-month period this
Option shall be exercisable in full; or
(5) at the expiration of three years after the date this
Option is scheduled to become exercisable in full under Section 3 above
if the Employee's termination results from his normal retirement at age
65 or thereafter ("Normal Retirement") or early retirement after
reaching age 60 and prior to age 65 with the consent of the Company
pursuant to any retirement plan ("Early Retirement"), or such longer or
shorter period as may be provided in Section 8(a)(6) below, provided
that (i) during the period betwen Normal Retirement or Early Retirement,
as the case may be, and termination of the Option as specified in this
Section 8(a)(5) (the "Exercisability Period") this Option 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, except
as may be otherwise provided in Section 8(a)(6) below, and (ii) at the
time of Normal Retirement or Early Retirement, as the case may be, the
Employee enters into an agreement not to engage, directly or indirectly,
in any business activity in competition with any business then engaged
in by the Company or any of its subsidiaries during the Exercisability
Period, and containing such other terms and conditions as may be
specified by the Company; or
(6) at the expiration of one year after the Employee's
death if the Employee dies while employed by the Company or any of its
subsidiaries or dies during the Exercisability Period specified in
Section 8(a)(5) above, during which one-year period this Option shall be
exercisable in full; or
(7) at the expiration of one year after the Employee's
death if the Employee dies during the three-month periods referred to in
Sections 8(a)(3) or (4) above, during which one-year period this Option
shall be exercisable to the same extent provided in Section 8(a)(3) or
(4) above (whichever was applicable prior to the Employee's death); or
(8) at the expiration of one year after the termination
of the Employee's employment with the Company or any of its subsidiaries
by reason of the Employee's permanent disability if the Employee becomes
permanently disabled while employed by the Company or any of its
subsidiaries, during which one-year period this Option shall be
exercisable in full.
(b) For purposes hereof, "cause" shall mean the Employee's chronic
neglect, refusal or failure to fulfill his or her employment duties and
responsibilities, other than for reasons of sickness, accident or other similar
causes beyond the Employee's control. Such neglect, refusal or failure shall
be determined in the sole and reasonable judgment of the Committee.
(c) For purposes hereof, the existence of a "disability" shall be
determined by, or in accordance with criteria and standards adopted by, the
Committee.
(d) For purposes hereof, "moral turpitude" shall mean the
Employee's dishonesty or intentional wrongdoing committed against the Company,
its agents or employees or otherwise in connection with his or her employment
by the Company or conviction of a crime, whether or not in connection with
employment, other than a traffic infraction or other minor violation. The
Committee shall have the sole discretion to determine whether the Employee has
committed an act of moral turpitude.
(e) For purposes hereof, the "Option Formula" shall be the product
of (i) the total number of Shares covered by this Option at the date of
termination of employment times (ii) a fraction, the numerator of which shall
be the lesser of five (5) or the number of full and partial years that the
Employee has been employed by the Company or any of its subsidiaries between
the date of grant of this Option and the date of termination of employment and
the denominator of which shall be the number five (5).
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(f) Except as provided in Section 9, an Employee shall not be
deemed to have terminated his employment for purposes of this Section 8 if his
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.
9. 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 him to contribute to the success of the Company on at least as great a
level as that to which he 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 or moral
turpitude) in respect of all or a portion of this Option.
10. LIMITS ON TRANSFER OF OPTION; BENEFICIARIES
No right or interest of a participant in this Option 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 Option shall not be transferable to any third party by the
Employee otherwise than by will or the laws of descent and distribution, and
this Option 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 rights under this
Option upon the death of Employee, in the manner and to the extent permitted by
the Committee under rules and regulations adopted by the Committee under the
Plan.
11. INVESTMENT REPRESENTATION
Unless, at the time of any exercise of this Option, 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 Option and the delivery
of any certificates representing Shares, appropriate evidence, satisfactory in
form and substance to the Company, that he 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 of 1933 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.
12. EMPLOYEE BOUND BY PLAN
The Employee hereby acknowledges receipt of the attached copy of the
Plan and agrees to be bound by all the terms and provisions thereof (as
presently in effect or hereafter amended), and by all decisions and
determinations of the Committee thereunder.
13. 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 Option, and supersedes
any prior agreements or documents with respect to the Option. 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
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<PAGE> 7
Employee with respect to the Option 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:
---------------------------------------
EMPLOYEE:
------------------------------------------
7
<PAGE> 1
CHARMING SHOPPES, INC.
1993 EMPLOYEES' STOCK INCENTIVE PLAN
PERFORMANCE-ACCELERATED STOCK OPTION AGREEMENT
Agreement dated as of ------------ between CHARMING SHOPPES, INC. (the
"Company") and --------------------- (the "Employee").
It is agreed as follows:
1. GRANT OF OPTION; CONSIDERATION
The Company hereby confirms the grant, under and pursuant to the
Company's 1993 Employees' Stock Incentive Plan (the "Plan"), to the Employee on
- ---------------------- of a nonqualified stock option to purchase up to
*----------* shares of the Company's common stock, par value $.10 per share (the
"Shares"), at an exercise price of $ ---------------- per share (the
"Option"). The Option granted hereunder is not intended to constitute an
incentive stock option within the meaning of Section 422 of the Code.
The Employee shall be required to pay no consideration for the grant of
the Option except for his agreement to provide services to the Company prior to
exercise and other agreements set forth herein.
2. INCORPORATION OF PLAN BY REFERENCE
The Option has been granted to the Employee under the Plan, a copy of
which is attached hereto. All of the terms, conditions and other provisions of
the Plan are hereby incorporated by reference into this Employee Stock Option
Agreement (the "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.
3. DATE WHEN EXERCISABLE; PERFORMANCE ACCELERATION
(a) This Option may not be exercised unless and only to the extent that
it has become exercisable as specified in this Agreement. Subject to
acceleration as provided in this Section 3, and Sections 7 and 8 below,
limitations on exercisability imposed in Section 8 below, and all other terms
and conditions of this Agreement, this Option shall become exercisable as
follows: The Employee may purchase up to one-fifth of the total number of
shares subject to this Option commencing five (5) years after the date of grant
of this Option, an additional one-fifth commencing six (6) years after the date
of grant of this Option, an additional one- fifth commencing seven (7) years
after the date of grant of this Option, an additional one-fifth commencing
eight (8) years after the date of grant of this Option, and all remaining
shares subject to this Option commencing nine (9) years after the date of grant
of this Option. Except as otherwise specifically provided herein, the Option
to purchase any and all Shares covered by this Agreement shall expire at 5:00
p.m. on the date ten (10) years after the date of grant of this Option.
THE DATE OF GRANT OF THIS OPTION IS:
GRANT NUMBER:
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<PAGE> 2
(b) In the event that, during any period of three consecutive fiscal
years from fiscal XXXX through fiscal XXXX (i.e. fiscal XXXX-XXXX, XXXX-XXXX,
or XXXX-XXXX), the Company's compounded rate of growth of its earnings per
share equals or exceeds xxxx percent (xx%) based on such rate for the entire
three-year period ("Achievement of the Performance Condition"), the Option will
become exercisable on an accelerated basis as follows: The Employee may
purchase up to one-half of the total number of shares subject to this Option
commencing on the first anniversary of the date of grant following Achievement
of the Performance Condition, and all remaining shares subject to the Option
commencing on the second anniversary of the date of grant following Achievement
of the Performance Condition. The Committee's determination as to whether
Achievement of the Performance Condition has occurred will be final and binding
on the Company and the Employee. For purposes of making such determination,
the Committee may, in its discretion, adjust the amount of earnings per share
as reported in the Company's financial statements for any year or years in
order to ensure consistency in the manner of calculation of earnings per share
over the three-year performance periods and/or to take into account changes in
accounting principles, business operations of the Company, extraordinary gains
or losses, or other circumstances the Committee may deem relevant.
(c) The number of Shares with respect to which the Option may be
exercised shall be cumulative so that if, in any of the aforementioned periods,
the full number of Shares shall not have been purchased, any such unpurchased
Shares shall continue to be included in the number of Shares with respect to
which this Option shall then be exercisable along with any other Shares as to
which this Option may become exercisable in accordance with its terms.
(d) The provisions contained in Section 3(a) and (b) above
notwithstanding, the Committee may, in its sole discretion, at any time, upon
written notice to the Employee, accelerate the vesting described in Section
3(a) or (b) so that the Option shall become immediately exercisable to the
extent of all or any portion of the Shares covered hereunder. Acceleration
pursuant to this Section 3(d) shall be separate and independent from any
acceleration pursuant to Section 7 of this Agreement, and the provisions of
Sections 3(e) and (f) shall not apply in the case of acceleration pursuant to
Section 7 of this Agreement.
(e) In the event that the acceleration described in Section 3(d) occurs
prior to the time that all of the Options would have otherwise been exercisable
in accordance with Section 3(a) or, if applicable, Section 3(b), in
consideration of such acceleration, the Employee, if so requested by the
Company at the time, agrees to hold and not dispose of that number of Shares
covered by this Option for which this Option would not have been exercisable at
the time of such acceleration, if such acceleration had not occurred, and
further agrees to dispose of such Shares only at such time and to the extent of
that number of Shares for which this Option would have been exercisable in
accordance with the schedule set forth in Section 3(a), or earlier in
accordance with the schedule set forth in Section 3(b), if applicable, as if
the acceleration had not occurred. In addition, if the Employee's employment
with the Company or any of its subsidiaries shall be voluntarily terminated
(other than for a temporary leave of absence approved by the Company or
retirement at age 65 or older or through early retirement with the consent of
the Company pursuant to any retirement plan of the Company or any subsidiary)
prior to a Change of Control and prior to the expiration of nine (9) years
after the date of grant of this Option, the Employee shall be obligated, at the
Company's option exercisable within 60 days after termination of the Employee's
employment, to sell to the Company any Shares theretofore acquired by the
Employee upon exercise of this Option at a price which is equal to the price
that the Employee paid for such Shares, but only to the extent that the Option
would not have been exercisable at the date of termination of employment in
accordance with Section 3(a) or 3(b) were it not for the acceleration provided
for herein.
(f) The Employee acknowledges that the certificates representing those
Shares received upon exercise of the Option at a time the Option would not
otherwise have been exercisable but for an acceleration pursuant to Section
3(d) may bear an appropriate legend giving notice of the foregoing
restrictions, including the restriction on transfer of the Shares.
4. METHOD OF EXERCISE
The Option may be exercised as to any part of the Shares which may then
be purchased by delivery to and receipt by the Secretary of the Company at 450
Winks Lane, Bensalem, Pennsylvania 19020, of a written notice, signed by the
Employee, specifying the number of Shares which the Employee wishes to
purchase, accompanied by payment in full of the exercise price therefor in
accordance with Section 5. As soon as practicable after the receipt of such
notice and payment, the Company shall deliver to the Employee a stock
certificate for the Shares so purchased, with any requisite legend affixed.
Subject to the provisions of the Plan, such exercise may include instructions
to the Company to deliver Shares due upon exercise of the Option to any
registered broker or dealer designated by the Committee (a "Designated Broker")
in lieu of delivery to the
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<PAGE> 3
Employee. Such instructions must designate the account into which the Shares
are to be deposited. The Employee may tender this notice of exercise, which
has been properly executed by the Employee, and the aforementioned delivery
instructions to any Designated Broker together with irrevocable instructions to
the Designated Broker to promptly deliver to the Company the cash amount of
sale or loan proceeds from the Shares sufficient to pay the exercise price, and
thereupon the Company may issue Shares and deliver them to such Designated
Broker.
5. PAYMENT OF EXERCISE PRICE
The exercise price of the Option shall be payable in cash or by
certified or bank cashier's check, provided, however, that, in lieu of payment
in full in cash or by such check, the exercise price may, with the approval of
the Committee, upon written request of the Employee, be paid in full or in part
by delivery and transfer to the Company of that number of shares of the
Company's common stock otherwise owned by the Employee with an aggregate fair
market value (determined in accordance with procedures for valuing shares as
set forth in rules and regulations adopted by the Committee and in effect at
the time the Employee's notice of exercise is received by the Company) equal to
the aggregate exercise price of that number of Shares for which the Option is
being exercised or such lesser portion of the aggregate purchase price as may
be specified by the Employee (in which case the balance must be paid in cash or
by certified or bank cashier's check).
6. TAX WITHHOLDING
Whenever Shares are to be delivered upon exercise of the Option, the
Company shall be entitled to require as a condition of delivery that the
Employee remit or, in appropriate cases, agree to remit when due an amount
sufficient to satisfy all federal, state and local withholding tax requirements
relating thereto. Subject to the approval of the Committee, the Employee will
be entitled to elect to have the Company withhold from the Shares to be
delivered upon the exercise of the Option, or to elect to deliver to the
Company from shares of the Company's common stock owned separately by the
Employee, a sufficient number of such shares to satisfy the Employee's federal,
state and local tax obligations relating to the Option exercise (and the
Company's withholding obligations), to the extent, if any, permitted under
rules and regulations adopted by the Committee and in effect at the time of the
exercise of the Option. In such case, the Shares withheld or the shares
surrendered will be valued at the fair market value determined in accordance
with procedures for valuing shares as set forth in rules and regulations
adopted by the Committee and otherwise in effect at the time of the exercise of
the Option.
7. CHANGE OF CONTROL PROVISIONS
(a) Acceleration of Exercisability. In the event of a Change of
Control at a time that the Employee is employed by the Company or any of its
subsidiaries, this Option shall become immediately and fully exercisable upon
the occurrence of such Change of Control, and no restriction or limitation on
the rights of the Employee set forth in Section 3 hereof shall have any further
force or effect.
(b) Definitions of Certain Terms. For purposes of this Agreement, the
following definitions shall apply:
(1) "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 7, "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.
(2) "Change of Control" means and shall be deemed to have
occurred if
(i) 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
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<PAGE> 4
(ii) those individuals who as of April 1,
1993 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 April 1, 1993 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
(iii) the shareholders of the Company approve
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"), or consummation of such a
Transaction if shareholder approval is not obtained,
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; provided,
however, a Change of Control shall not be deemed to
have occurred if the Board of Directors shall have
determined, by action taken prior to the approval of
the Transaction by shareholders or consummation of
the Transaction if shareholder approval is not
obtained, that such Transaction shall not constitute
a Change of Control for purposes of all options then
outstanding under the Plan, which determination, if
made with respect to a Transaction, shall not be
deemed to constitute a determination with respect to
any subsequent Transaction; or
(iv) the shareholders of the Company approve
a plan of complete liquidation of the Company or an
agreement for the 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.
(3) "Person" shall have the meaning ascribed for
purposes of Section 13(d) of the Exchange Act and the rules
thereunder.
(4) "Related Party" means (i) a majority-owned
subsidiary of the Company; or (ii) a trustee or other
fiduciary holding securities under an employee benefit plan of
the Company or any majority-owned subsidiary of the Company;
or (iii) a corporation owned directly or indirectly by the
shareholders of the Company in substantially the same
proportion as their ownership of Voting Securities; or (iv)
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.
(5) "Voting Securities" means any securities of the
Company which carry the right to vote generally in the
election of directors.
8. TERMINATION OF EMPLOYMENT
(a) This Option shall terminate and no longer be exercisable at the
earlier of the scheduled expiration time of the Option, as set forth in Section
3(a) above, or the earliest time specified below at or following a termination
of employment of the Employee; provided, however, that in the event of
termination of the employment of the Employee, this Option shall be exercisable
during the period, if any, between the occurrence of such termination and the
time designated for the termination of this Option only to the extent indicated
below:
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<PAGE> 5
(1) at the time of involuntary termination of the
Employee's employment with the Company or any of its
subsidiaries for reasons of moral turpitude, at which time
this Option shall immediately terminate; provided, however,
that, the provisions of Section 3(a) and (b) notwithstanding,
this Option may not be exercised during any period prior to a
Change of Control during which the Company, having given
notice to the Employee, is investigating a claim that the
Employee has engaged in one or more acts of moral turpitude;
or
(2) at the time of voluntary or involuntary termination
of the Employee's employment with the Company or any of its
subsidiaries for any reason at any time prior to the
expiration of three years after the date of grant of this
Option and prior to any Change of Control, other than by
reason of the Employee's death or disability, at which time
this Option shall immediately terminate; or
(3) at the expiration of three months after the
voluntary or, if for cause (other than for reasons of moral
turpitude), the involuntary termination of the Employee's
employment with the Company or any of its subsidiaries, in
either case at any time (A) after the expiration of three
years after the date of grant of this Option, except as may be
otherwise provided in Section 8(a)(7) below, during which
three-month period this Option shall be exercisable only to
the extent that it was exercisable at the date of the
Employee's termination of employment, or (B) after a Change of
Control, except as may be otherwise provided in Section
8(a)(7) below, during which three- month period this Option
shall be exercisable in full; or
(4) at the expiration of three months after the
involuntary termination of the Employee's employment, other
than for reasons of cause, moral turpitude, death or
disability, with the Company or any of its subsidiaries at any
time (A) after the expiration of three years after the date of
grant of this Option, except as may be otherwise provided in
Section 8(a)(7) below, during which three-month period this
Option shall be exercisable to purchase the greater of (i) a
number of Shares determined pursuant to the Option Formula (as
set forth in Section 8(e) below) and (ii) the number of Shares
as to which this Option was exercisable at the date of the
Employee's termination of employment, or (B) after a Change of
Control, except as may be otherwise provided in Section
8(a)(7) below, during which three-month period this Option
shall be exercisable in full; or
(5) at the scheduled expiration time of this Option, as
set forth in Section 3(a) above, if the Employee's termination
results from his normal retirement at age 65 or thereafter
("Normal Retirement") or early retirement after reaching age
60 and prior to age 65 with the consent of the Company
pursuant to any retirement plan ("Early Retirement"), or such
shorter period as may be provided in Section 8(a)(6) below,
provided that (i), during the period after Normal Retirement
or Early Retirement, as the case may be, and until such
scheduled expiration time of this Option (the "Exercisability
Period"), this Option 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, except as may
be otherwise provided in Section 8(a)(6) below, and (ii) at
the time of Normal Retirement or Early Retirement, as the case
may be, the Employee enters into an agreement not to engage,
directly or indirectly, in any business activity in
competition with any business then engaged in by the Company
or any of its subsidiaries during the Exercisability Period,
and containing such other terms and conditions as may be
specified by the Company; or
(6) at the expiration of one year after the Employee's
death if the Employee dies while employed by the Company or
any of its subsidiaries or dies during the Exercisability
Period specified in Section 8(a)(5) above, during which
one-year period this Option shall be exercisable in full; or
(7) at the expiration of one year after the Employee's
death if the Employee dies during the three-month periods
referred to in Sections 8(a)(3) or (4) above, during which
one-year period this Option shall be exercisable to the same
extent provided in Section 8(a)(3) or (4) above (whichever was
applicable prior to the Employee's death); or
(8) at the expiration of one year after the termination
of the Employee's employment with the Company or any of its
subsidiaries by reason of the Employee's permanent disability
if the Employee becomes permanently disabled while employed by
the Company or any of its subsidiaries, during which one-year
period this Option shall be exercisable in full.
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<PAGE> 6
(b) For purposes hereof, "cause" shall mean the Employee's chronic
neglect, refusal or failure to fulfill his or her employment duties and
responsibilities, other than for reasons of sickness, accident or other similar
causes beyond the Employee's control. Such neglect, refusal or failure shall
be determined in the sole and reasonable judgment of the Committee.
(c) For purposes hereof, the existence of a "disability" shall be
determined by, or in accordance with criteria and standards adopted by, the
Committee.
(d) For purposes hereof, "moral turpitude" shall mean the Employee's
dishonesty or intentional wrongdoing committed against the Company, its agents
or employees or otherwise in connection with his or her employment by the
Company or conviction of a crime, whether or not in connection with employment,
other than a traffic infraction or other minor violation. The Committee shall
have the sole discretion to determine whether the Employee has committed an act
of moral turpitude.
(e) For purposes hereof, the "Option Formula" shall be the product of
(i) the total number of Shares covered by this Option at the date of
termination of employment times (ii) a fraction, the numerator of which shall
be the lesser of five (5) or the number of full and partial years that the
Employee has been employed by the Company or any of its subsidiaries between
the fifth anniversary of the date of grant of this Option and the date of
termination of employment and the denominator of which shall be the number five
(5).
(f) Except as provided in Section 9, an Employee shall not be deemed to
have terminated his employment for purposes of this Section 8 if his 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.
9. 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 him to contribute to the success of the Company on at least as great a
level as that to which he 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 or moral
turpitude) in respect of all or a portion of this Option.
10. LIMITS ON TRANSFER OF OPTION; BENEFICIARIES
No right or interest of a participant in this Option 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 Option shall not be transferable to any third party by the
Employee otherwise than by will or the laws of descent and distribution, and
this Option 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 rights under this
Option upon the death of Employee, in the manner and to the extent permitted by
the Committee under rules and regulations adopted by the Committee under the
Plan.
11. INVESTMENT REPRESENTATION
Unless, at the time of any exercise of this Option, 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 Option and the delivery
of any certificates representing Shares, appropriate evidence, satisfactory in
form and substance to the Company, that he 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 of 1933 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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<PAGE> 7
12. EMPLOYEE BOUND BY PLAN
The Employee hereby acknowledges receipt of the attached copy of the
Plan and agrees to be bound by all the terms and provisions thereof (as
presently in effect or hereafter amended), and by all decisions and
determinations of the Committee thereunder.
13. 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 Option, and supersedes
any prior agreements or documents with respect to the Option. 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 Option 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:
----------------------------------
EMPLOYEE:
-------------------------------------
(4/1/93)
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<PAGE> 1
Subsidiaries of Registrant
There is set forth a list of all subsidiaries of the Company, each
of which is directly and wholly owned by its immediate parent, Charming
Shoppes, Inc., and all of which are included in the consolidated financial
statements of Charming Shoppes, Inc., and subsidiaries, except as noted.
CHARM-FIN STORES,INC. (2) DELAWARE
CHARMING F.S. COMPANY,INC. (2) PENNSYLVANIA
CHARMING SHOPPES OF CHESTER,INC. (2) PENNSYLVANIA
CHARMING SHOPPES OF COLONIAL PARK,INC. PENNSYLVANIA
CHARMING SHOPPES OF CUMBERLAND,INC. PENNSYLVANIA
CHARMING SHOPPES OF DELAWARE,INC. PENNSYLVANIA
CHARMING SHOPPES OF ECHELON,INC. NEW JERSEY
CHARMING SHOPPES OF FRANKFORD, INC (2) PENNSYLVANIA
CHARMING SHOPPES OF NORRISTOWN,INC. (2) PENNSYLVANIA
CHARMING SHOPPES OF TRENTON,INC. NEW JERSEY
CHARMING SHOPPES OF WOODBURY, INC NEW JERSEY
CHARMING SHOPPES/FASHION BUG OF OLEAN,INC. (2) NEW YORK
COLUMBIA DEVELOPMENT CO., INC. (1) (2) TENNESSEE
CSBC, INC. (2) DELAWARE
CSI CHARITIES (2) PENNSYLVANIA
CSI HONDURAS,INC. (2) PENNSYLVANIA
CSI INDUSTRIES,INC. (2) PENNSYLVANIA
CSI-DR,INC. (2) PENNSYLVANIA
C.S.A.C.,INC. (2) DELAWARE
C.S.F.CORP. (2) DELAWARE
C.S.I.C.,INC. (2) DELAWARE
DIVERSIFIED FASHIONS,INC. (2) PENNSYLVANIA
ERICOOL CO LTD. (2) HONG KONG
EVATONE TRADING LTD. (2) HONG KONG
EXECUTIVE FLIGHTS,INC. (2) DELAWARE
FASHION ACCEPTANCE CORP (2) DELAWARE
FASHION BUG OF 640 PLAZA, INC. TENNESSEE
FASHION BUG OF AKRON, INC. (2) OHIO
FASHION BUG OF ALEXANDRIA, INC. (2) VIRGINIA
FASHION BUG OF ALIQUIPPA, INC. (2) PENNSYLVANIA
FASHION BUG OF ALLENTOWN, INC. PENNSYLVANIA
FASHION BUG OF ALLIANCE,INC. OHIO
FASHION BUG OF ALPENA, INC. MICHIGAN
FASHION BUG OF ALTOONA,INC. PENNSYLVANIA
FASHION BUG OF AMHERST PLAZA, INC. (2) NEW YORK
FASHION BUG OF AMHERST, INC. NEW YORK
FASHION BUG OF ANDORRA, INC. PENNSYLVANIA
FASHION BUG OF APPLE VALLEY SQUARE, INC. VIRGINIA
FASHION BUG OF ARAMINGO,INC. (2) PENNSYLVANIA
FASHION BUG OF ARLEN,INC. (2) PENNSYLVANIA
FASHION BUG OF ARLINGTON HEIGHTS,INC. (2) ILLINOIS
FASHION BUG OF ASBURY PARK, INC. NEW JERSEY
FASHION BUG OF ASHEVILLE, INC. (2) NORTH CAROLINA
FASHION BUG OF ASH-HAN,INC. VIRGINIA
FASHION BUG OF ASHLAND,INC. (2) KENTUCKY
FASHION BUG OF ASHTABULA,INC. (2) OHIO
FASHION BUG OF ATHENS,INC. (2) OHIO
FASHION BUG OF AUDUBON,INC. NEW JERSEY
FASHION BUG OF AURORA, INC. ILLINOIS
FASHION BUG OF BARBERTON, INC. OHIO
FASHION BUG OF BAYONET POINT,INC. (2) FLORIDA
FASHION BUG OF BEAVER FALLS, INC. (2) PENNSYLVANIA
FASHION BUG OF BECKLEY,INC. WEST VIRGINIA
FASHION BUG OF BELDEN VILLAGE, INC. (2) OHIO
FASHION BUG OF BELLEVILLE, INC. MICHIGAN
FASHION BUG OF BELMONT, INC. MICHIGAN
FASHION BUG OF BELVEDERE PLAZA, INC. (2) GEORGIA
FASHION BUG OF BETHLEHEM, INC. PENNSYLVANIA
FASHION BUG OF BINGHAMTON, INC. (2) NEW YORK
FASHION BUG OF BIRMINGHAM, INC. ALABAMA
FASHION BUG OF BLOOMSBURG,INC. PENNSYLVANIA
FASHION BUG OF BLUE ASH, INC. OHIO
FASHION BUG OF BLUEFIELD, INC. WEST VIRGINIA
FASHION BUG OF BOARDMAN PLAZA, INC. OHIO
FASHION BUG OF BOLINGBROOK, INC. ILLINOIS
FASHION BUG OF BOND, INC. PENNSYLVANIA
FASHION BUG OF BORDENTOWN,INC. NEW JERSEY
FASHION BUG OF BOWLING GREEN,INC. OHIO
FASHION BUG OF BRADFORD,INC. PENNSYLVANIA
FASHION BUG OF BRICKTOWN PLAZA,INC. NEW JERSEY
FASHION BUG OF BRIDGEVIEW, INC. ILLINOIS
<PAGE> 2
FASHION BUG OF BRIDGEVILLE,INC. (2) PENNSYLVANIA
FASHION BUG OF BRISTOL, CT, INC. CONNECTICUT
FASHION BUG OF BRISTOL,INC. PENNSYLVANIA
FASHION BUG OF BRUNSWICK,INC. NEW JERSEY
FASHION BUG OF BUCKINGHAM,INC. (2) PENNSYLVANIA
FASHION BUG OF BUCYRUS,INC. OHIO
FASHION BUG OF BUFFALO, INC. NEW YORK
FASHION BUG OF BUSH RIVER MALL COLUMBIA,S.C.,IN (2) PENNSYLVANIA
FASHION BUG OF BUTLER,INC. (2) PENNSYLVANIA
FASHION BUG OF CAMBRIDGE, INC. MARYLAND
FASHION BUG OF CAPE MAY, INC. NEW JERSEY
FASHION BUG OF CARLISLE,INC. PENNSYLVANIA
FASHION BUG OF CARROLLTON,INC. MARYLAND
FASHION BUG OF CASSELBERRY, INC. FLORIDA
FASHION BUG OF CASTOR AVENUE,INC. PENNSYLVANIA
FASHION BUG OF CENTURY III MALL,INC. PENNSYLVANIA
FASHION BUG OF CHAMBERSBURG,INC. (2) PENNSYLVANIA
FASHION BUG OF CHARLOTTESVILLE, INC. VIRGINIA
FASHION BUG OF CHERRY HILL,INC. (2) NEW JERSEY
FASHION BUG OF CHESTER SPRINGS,INC. NEW JERSEY
FASHION BUG OF CHESTERTOWN,INC. MARYLAND
FASHION BUG OF CHICOPEE, INC. (2) MASSACHUSETTS
FASHION BUG OF CHILLICOTHE,INC. OHIO
FASHION BUG OF CLARION, INC. PENNSYLVANIA
FASHION BUG OF CLARKSBURG,INC. WEST VIRGINIA
FASHION BUG OF CLEARFIELD,INC. PENNSYLVANIA
FASHION BUG OF CLEARVIEW MALL, INC. PENNSYLVANIA
FASHION BUG OF CLEVELAND, INC. OHIO
FASHION BUG OF CLINTON, INC. MARYLAND
FASHION BUG OF COCKEYSVILLE, INC. MARYLAND
FASHION BUG OF COLLEGE SQUARE,INC. DELAWARE
FASHION BUG OF COLUMBIA,INC. (2) MARYLAND
FASHION BUG OF COLUMBUS OHIO,INC. (2) OHIO
FASHION BUG OF CONCORD,INC. DELAWARE
FASHION BUG OF CONNELLSVILLE,INC. (2) PENNSYLVANIA
FASHION BUG OF CONNERSVILLE, INC. (2) INDIANA
FASHION BUG OF CORBIN,INC. (2) KENTUCKY
FASHION BUG OF CORTLAND, INC. (2) NEW YORK
FASHION BUG OF COSHOCTON, INC. (2) OHIO
FASHION BUG OF COTTMAN,INC. PENNSYLVANIA
FASHION BUG OF COUNTRYSIDE, INC. PENNSYLVANIA
FASHION BUG OF COVENTRY MALL,INC. PENNSYLVANIA
FASHION BUG OF COVINGTON, INC. (2) KENTUCKY
FASHION BUG OF CRANBERRY, INC. PENNSYLVANIA
FASHION BUG OF CREST HILL, INC. (2) ILLINOIS
FASHION BUG OF CROMWELL FIELD, INC. MARYLAND
FASHION BUG OF CRYSTAL LAKE, INC. ILLINOIS
FASHION BUG OF CULPEPPER, INC. VIRGINIA
FASHION BUG OF CUMBERLAND MALL,INC. (2) GEORGIA
FASHION BUG OF CUYAHOGA FALLS,INC. OHIO
FASHION BUG OF DADE CITY, INC. (2) FLORIDA
FASHION BUG OF DANBURY, INC. CONNECTICUT
FASHION BUG OF DANVILLE,INC. ILLINOIS
FASHION BUG OF DAYTON MALL,INC. (2) OHIO
FASHION BUG OF DAYTON, INC. (2) OHIO
FASHION BUG OF DEARBORN,INC. MICHIGAN
FASHION BUG OF DECATUR, INC. GEORGIA
FASHION BUG OF DECKER MALL COLUMBIA,S.C.,INC. (2) PENNSYLVANIA
FASHION BUG OF DEKALB, INC. ILLINOIS
FASHION BUG OF DELAND,INC. (2) FLORIDA
FASHION BUG OF DELAWARE SQUARE, INC. (2) OHIO
FASHION BUG OF DES PLAINES, INC. ILLINOIS
FASHION BUG OF DEVON, INC. CONNECTICUT
FASHION BUG OF DIXIE MANOR, INC. (2) KENTUCKY
FASHION BUG OF DOVER PLAZA,INC. NEW JERSEY
FASHION BUG OF DOVER,INC. DELAWARE
FASHION BUG OF DUBOIS,INC. PENNSYLVANIA
FASHION BUG OF DUNBAR, INC. WEST VIRGINIA
FASHION BUG OF EAST HANOVER,INC. NEW JERSEY
FASHION BUG OF EAST HARTFORD,INC. CONNECTICUT
FASHION BUG OF EAST MANSFIELD, INC. OHIO
FASHION BUG OF EAST PARK, INC. MARYLAND
FASHION BUG OF EAST WASHINGTON,INC. INDIANA
FASHION BUG OF EAST WINDSOR, INC. NEW JERSEY
FASHION BUG OF EASTON,INC. MARYLAND
FASHION BUG OF EASTSIDE PLAZA, INC. ILLINOIS
FASHION BUG OF EASTWOOD MALL, INC. OHIO
FASHION BUG OF EDGEWOOD,INC. MARYLAND
FASHION BUG OF EDWARDSVILLE,INC. PENNSYLVANIA
FASHION BUG OF EGG HARBOR, INC. (2) NEW JERSEY
<PAGE> 3
FASHION BUG OF ELDERSBURG,INC. MARYLAND
FASHION BUG OF ELGIN, INC. ILLINOIS
FASHION BUG OF ELIZABETHTOWN, INC. (2) KENTUCKY
FASHION BUG OF ELKIN, INC. WEST VIRGINIA
FASHION BUG OF ELKTON,INC. MARYLAND
FASHION BUG OF ELSTON PLAZA,INC. ILLINOIS
FASHION BUG OF ELWOOD CITY, INC. PENNSYLVANIA
FASHION BUG OF ENGLISHTOWN, INC. (2) NEW JERSEY
FASHION BUG OF ERIE,INC. (2) PENNSYLVANIA
FASHION BUG OF ESSEX,INC. (2) MARYLAND
FASHION BUG OF EUSTIS,INC. (2) FLORIDA
FASHION BUG OF EVANSVILLE, INC. INDIANA
FASHION BUG OF EXTON,INC. (2) PENNSYLVANIA
FASHION BUG OF FAIR PLAZA, INC. (2) OHIO
FASHION BUG OF FAIRFIELD, INC. CONNECTICUT
FASHION BUG OF FAIRMONT,INC. WEST VIRGINIA
FASHION BUG OF FALL RIVER, INC. MASSACHUSETTS
FASHION BUG OF FALLS CHURCH, INC. VIRGINIA
FASHION BUG OF FARMINGDALE,INC. (2) NEW YORK
FASHION BUG OF FITCHBURG, INC. MASSACHUSETTS
FASHION BUG OF FLEMINGTON,INC. NEW JERSEY
FASHION BUG OF FLINT,INC. MICHIGAN
FASHION BUG OF FOREST PARK MALL,INC. ILLINOIS
FASHION BUG OF FOREST PLAZA, INC. ILLINOIS
FASHION BUG OF FOREST SQUARE, INC. (2) GEORGIA
FASHION BUG OF FORESTVILLE,INC. (2) MARYLAND
FASHION BUG OF FORT LAUDERDALE, INC. (2) FLORIDA
FASHION BUG OF FORT SAGINAW, INC. (2) MICHIGAN
FASHION BUG OF FOSTORIA,INC. OHIO
FASHION BUG OF FOX VALLEY COMMONS,INC. (2) ILLINOIS
FASHION BUG OF FRACKVILLE, INC. PENNSYLVANIA
FASHION BUG OF FRANKFORT,INC. KENTUCKY
FASHION BUG OF FRANKLIN COUNTY, INC. PENNSYLVANIA
FASHION BUG OF FRANKLIN,INC. PENNSYLVANIA
FASHION BUG OF FREDERICKSBURG,INC. VIRGINIA
FASHION BUG OF FREEHOLD, INC. NEW JERSEY
FASHION BUG OF FREEPORT, INC. (2) ILLINOIS
FASHION BUG OF FRONT ROYAL, INC. VIRGINIA
FASHION BUG OF FT. FINDLAY,INC. OHIO
FASHION BUG OF FT. MYERS,INC. FLORIDA
FASHION BUG OF FULLERTON, INC. MARYLAND
FASHION BUG OF GARFIELD HEIGHTS, INC. OHIO
FASHION BUG OF GEORIA SQUARE,INC. (2) GEORGIA
FASHION BUG OF GIBBSTOWN,INC. NEW JERSEY
FASHION BUG OF GLEN BURNIE, INC. MARYLAND
FASHION BUG OF GLEN ELLYN, INC. ILLINOIS
FASHION BUG OF GORHAM, INC. NEW HAMPSHIRE
FASHION BUG OF GREENBRIAR,INC. (2) GEORGIA
FASHION BUG OF GREENVILLE PLAZA, INC. PENNSYLVANIA
FASHION BUG OF GREENVILLE,INC. (2) SOUTH CAROLINA
FASHION BUG OF GROVE CITY, INC. PENNSYLVANIA
FASHION BUG OF HACKENSACK,INC. NEW JERSEY
FASHION BUG OF HACKETTSTOWN,INC. NEW JERSEY
FASHION BUG OF HAGERSTOWN,INC. MARYLAND
FASHION BUG OF HAMDEN, INC. CONNECTICUT
FASHION BUG OF HAMILTON SQUARE, INC. NEW JERSEY
FASHION BUG OF HAMPTON,INC. VIRGINIA
FASHION BUG OF HANNIBAL, INC. MISSOURI
FASHION BUG OF HANOVER,INC. PENNSYLVANIA
FASHION BUG OF HARFORD, INC. MARYLAND
FASHION BUG OF HARRISBURG, ILL, INC. (2) ILLINOIS
FASHION BUG OF HARRISBURG,INC. PENNSYLVANIA
FASHION BUG OF HAZARD,INC. KENTUCKY
FASHION BUG OF HAZELTON,INC. PENNSYLVANIA
FASHION BUG OF HAZLET, INC. (2) NEW JERSEY
FASHION BUG OF HENRIETTA,INC. NEW YORK
FASHION BUG OF HERSHEY,INC. PENNSYLVANIA
FASHION BUG OF HIGHLAND HEIGHTS, INC. (2) KENTUCKY
FASHION BUG OF HIGHLAND RIDGE,INC. OHIO
FASHION BUG OF HIGHLAND, INC. INDIANA
FASHION BUG OF HILLSIDE, INC. ILLINOIS
FASHION BUG OF HILLVIEW SQUARE,INC. (2) KENTUCKY
FASHION BUG OF HINESVILLE, INC. GEORGIA
FASHION BUG OF HOFFMAN ESTATES, INC. ILLINOIS
FASHION BUG OF HOLYOKE, INC. MASSACHUSETTS
FASHION BUG OF HOMEWOOD, INC. (2) ILLINOIS
FASHION BUG OF HONESDALE,INC. PENNSYLVANIA
FASHION BUG OF HOUGHTON,INC. MICHIGAN
FASHION BUG OF HOWELL,INC. NEW JERSEY
FASHION BUG OF HUNTINGTON PLAZA, INC. INDIANA
<PAGE> 4
FASHION BUG OF HUNTINGTON, INC. WEST VIRGINIA
FASHION BUG OF INDIANA, INC. PENNSYLVANIA
FASHION BUG OF IROQUOIS MANOR,INC. KENTUCKY
FASHION BUG OF JACKSONVILLE,INC. ILLINOIS
FASHION BUG OF JACKSON, INC. TENNESSEE
FASHION BUG OF JASPER, INC. INDIANA
FASHION BUG OF JERSEY CITY, INC. (2) NEW JERSEY
FASHION BUG OF JOHNSTON, INC. RHODE ISLAND
FASHION BUG OF JOHNSTOWN, INC. (2) PENNSYLVANIA
FASHION BUG OF JOLIET, INC. ILLINOIS
FASHION BUG OF KALAMAZOO,INC. (2) MICHIGAN
FASHION BUG OF KANKAKEE, INC. (2) ILLINOIS
FASHION BUG OF KEDZIE,INC. ILLINOIS
FASHION BUG OF KENT, INC. OHIO
FASHION BUG OF KING OF PRUSSIA,INC. (2) PENNSYLVANIA
FASHION BUG OF KITTANING, INC. (2) PENNSYLVANIA
FASHION BUG OF KNOXVILLE, INC. (2) TENNESSEE
FASHION BUG OF KOKOMO,INC. INDIANA
FASHION BUG OF KUTZTOWN, INC. PENNSYLVANIA
FASHION BUG OF LAKE WALES, INC. FLORIDA
FASHION BUG OF LAKELAND, INC. FLORIDA
FASHION BUG OF LAKEMORE PLAZA, INC. OHIO
FASHION BUG OF LAKEWOOD,INC. (2) COLORADO
FASHION BUG OF LANCASTER OHIO,INC. (2) OHIO
FASHION BUG OF LANCASTER,INC. PENNSYLVANIA
FASHION BUG OF LANGLEY PARK,INC. MARYLAND
FASHION BUG OF LANSING, INC. MICHIGAN
FASHION BUG OF LATROBE,INC. (2) PENNSYLVANIA
FASHION BUG OF LAUREL, INC. MARYLAND
FASHION BUG OF LAVALE, INC. MARYLAND
FASHION BUG OF LAWRENCEVILLE,INC. NEW JERSEY
FASHION BUG OF LEBANON,INC. PENNSYLVANIA
FASHION BUG OF LEDGEWOOD,INC. NEW JERSEY
FASHION BUG OF LEESBURG, INC. VIRGINIA
FASHION BUG OF LEETSDALE, INC. PENNSYLVANIA
FASHION BUG OF LENOIR,INC. NORTH CAROLINA
FASHION BUG OF LENOX SQUARE,INC. (2) GEORGIA
FASHION BUG OF LEWISBURG,INC. PENNSYLVANIA
FASHION BUG OF LEWISTON, INC. MAINE
FASHION BUG OF LEWISTOWN,INC. (2) PENNSYLVANIA
FASHION BUG OF LEXINGTON, INC. KENTUCKY
FASHION BUG OF LIMA,INC. (2) OHIO
FASHION BUG OF LINCOLN KNOLLS, INC. (2) OHIO
FASHION BUG OF LINCOLN, INC. (2) ILLINOIS
FASHION BUG OF LIVONIA,INC. MICHIGAN
FASHION BUG OF LOCK HAVEN, INC. (2) PENNSYLVANIA
FASHION BUG OF LOCKPORT,INC. NEW YORK
FASHION BUG OF LOGAN, INC. WEST VIRGINIA
FASHION BUG OF LONGMONT, INC. (2) COLORADO
FASHION BUG OF LORAIN, INC. OHIO
FASHION BUG OF LOUISVILLE, INC. KENTUCKY
FASHION BUG OF LOWER BURRELL, INC. PENNSYLVANIA
FASHION BUG OF LYNCHBURG, INC. VIRGINIA
FASHION BUG OF LYNN, INC. MASSACHUSETTS
FASHION BUG OF MACDADE,INC. PENNSYLVANIA
FASHION BUG OF MANAHAWKIN, INC. NEW JERSEY
FASHION BUG OF MANASSAS,INC. VIRGINIA
FASHION BUG OF MANCHESTER, INC. (2) CONNECTICUT
FASHION BUG OF MANCHESTER, N.H., INC. NEW HAMPSHIRE
FASHION BUG OF MANSFIELD, INC. (2) OHIO
FASHION BUG OF MAPLE HEIGHTS, INC. OHIO
FASHION BUG OF MARQUETTE, INC. MICHIGAN
FASHION BUG OF MARTIN PLAZA,INC. MARYLAND
FASHION BUG OF MASON CITY,INC. IOWA
FASHION BUG OF MASSILLON,INC. OHIO
FASHION BUG OF MATTESON, INC. (2) ILLINOIS
FASHION BUG OF MAULDIN,INC. SOUTH CAROLINA
FASHION BUG OF MAYFAIR, INC. PENNSYLVANIA
FASHION BUG OF MAYFIELD HEIGHTS, INC. OHIO
FASHION BUG OF MCKEESPORT,INC. (2) PENNSYLVANIA
FASHION BUG OF MEADVILLE,INC. PENNSYLVANIA
FASHION BUG OF MEDFORD, INC. NEW JERSEY
FASHION BUG OF MELROSE PARK, INC. (2) ILLINOIS
FASHION BUG OF MERRILLVILLE,INC. INDIANA
FASHION BUG OF MERRITT ISLAND, INC. FLORIDA
FASHION BUG OF MICHIGAN CITY,INC. (2) INDIANA
FASHION BUG OF MIDDLESBORO,INC. KENTUCKY
FASHION BUG OF MIDDLETOWN PLAZA, INC. NEW JERSEY
FASHION BUG OF MIDDLETOWN,INC. (2) OHIO
FASHION BUG OF MIDLAND PLAZA,INC. MICHIGAN
<PAGE> 5
FASHION BUG OF MIDWAY, INC. MINNESOTA
FASHION BUG OF MOBILE, INC. ALABAMA
FASHION BUG OF MONROE SHOPPING CENTER,INC. (2) MICHIGAN
FASHION BUG OF MONROEVILLE, INC. PENNSYLVANIA
FASHION BUG OF MONROEVILLE,INC. (2) PENNSYLVANIA
FASHION BUG OF MONROE, INC. NORTH CAROLINA
FASHION BUG OF MONTGOMERYVILLE, INC. PENNSYLVANIA
FASHION BUG OF MONTGOMERY, INC. (2) ALABAMA
FASHION BUG OF MONTPELIER, INC. VERMONT
FASHION BUG OF MOORESTOWN MALL,INC. NEW JERSEY
FASHION BUG OF MOOSIC,INC. PENNSYLVANIA
FASHION BUG OF MOREHEAD,INC. KENTUCKY
FASHION BUG OF MORGANTOWN,INC. WEST VIRGINIA
FASHION BUG OF MORRIS COUNTY,INC. NEW JERSEY
FASHION BUG OF MOUNT PLEASANT,INC. MICHIGAN
FASHION BUG OF MOUNT VERNON, INC. ILLINOIS
FASHION BUG OF MT. CLEMENS,INC. MICHIGAN
FASHION BUG OF MUNDELEIN, INC. ILLINOIS
FASHION BUG OF MURRAY, INC. KENTUCKY
FASHION BUG OF MUSKEGON, INC. MICHIGAN
FASHION BUG OF NANTICOKE,INC. PENNSYLVANIA
FASHION BUG OF NASHVILLE, INC. TENNESSEE
FASHION BUG OF NATRONA,INC. PENNSYLVANIA
FASHION BUG OF NESHAMINY,INC. PENNSYLVANIA
FASHION BUG OF NEW BRITIAN, INC. CONNECTICUT
FASHION BUG OF NEW CASTLE,INC. PENNSYLVANIA
FASHION BUG OF NEW HAVEN,INC. (1) (2) CONNECTICUT
FASHION BUG OF NEW HOLLAND, INC. PENNSYLVANIA
FASHION BUG OF NEW LONDON,INC. CONNECTICUT
FASHION BUG OF NEW MARTINSVILLE,INC. (2) WEST VIRGINIA
FASHION BUG OF NEW PHILADELPHIA,INC. OHIO
FASHION BUG OF NEWARK, INC. (2) OHIO
FASHION BUG OF NILES, INC. (2) OHIO
FASHION BUG OF NORA, INC. (2) INDIANA
FASHION BUG OF NORFOLK,INC. (2) VIRGINIA
FASHION BUG OF NORMAL, INC. (2) ILLINOIS
FASHION BUG OF NORTH ADAMS, INC. MASSACHUSETTS
FASHION BUG OF NORTH AVENUE, INC. (2) ILLINOIS
FASHION BUG OF NORTH BRUNSWICK, INC. NEW JERSEY
FASHION BUG OF NORTH CARROLL,INC. (2) PENNSYLVANIA
FASHION BUG OF NORTH CICERO,INC. ILLINOIS
FASHION BUG OF NORTH EAST, INC. MARYLAND
FASHION BUG OF NORTH MILWAUKEE, INC. (2) PENNSYLVANIA
FASHION BUG OF NORTH PARK,INC. (2) KENTUCKY
FASHION BUG OF NORTH POINT,INC. MARYLAND
FASHION BUG OF NORTH TOWNE MALL, INC. ILLINOIS
FASHION BUG OF NORTH VERSAILLES,INC. (2) PENNSYLVANIA
FASHION BUG OF NORTHLAKE MALL,INC. GEORGIA
FASHION BUG OF NORTHWEST PLAZA, INC. OHIO
FASHION BUG OF NORWELL, INC. MASSACHUSETTS
FASHION BUG OF NORWIN, INC. PENNSYLVANIA
FASHION BUG OF NOVI, INC. MICHIGAN
FASHION BUG OF N. ROANOKE,INC. VIRGINIA
FASHION BUG OF OAK RIDGE,INC. TENNESSEE
FASHION BUG OF OCALA,INC. (2) FLORIDA
FASHION BUG OF OCOEE,INC. (2) FLORIDA
FASHION BUG OF OIL CITY, INC. PENNSYLVANIA
FASHION BUG OF OLD COLONY SQUARE,INC. NEW JERSEY
FASHION BUG OF OLEAN,INC. NEW YORK
FASHION BUG OF OPELIKA, INC. (2) ALABAMA
FASHION BUG OF ORLAND PARK, INC. (2) ILLINOIS
FASHION BUG OF OSHKOSH, INC. WISCONSIN
FASHION BUG OF OTTAWA, INC. (2) ILLINOIS
FASHION BUG OF OXON HILL, INC. MARYLAND
FASHION BUG OF PADUCAH,INC. KENTUCKY
FASHION BUG OF PAINTSVILLE,INC. KENTUCKY
FASHION BUG OF PAKA PLAZA,INC. MICHIGAN
FASHION BUG OF PALM HARBOR, INC. FLORIDA
FASHION BUG OF PANAMA CITY,INC. FLORIDA
FASHION BUG OF PARKERSBURG,INC. WEST VIRGINIA
FASHION BUG OF PARKSIDE, INC. (2) MARYLAND
FASHION BUG OF PARLIN,INC. (2) NEW JERSEY
FASHION BUG OF PATCHOQUE,INC. NEW YORK
FASHION BUG OF PELHAM,INC. (1) (2) NEW YORK
FASHION BUG OF PENDLETON PIKE,INC. INDIANA
FASHION BUG OF PENNSVILLE,INC. NEW JERSEY
FASHION BUG OF PEORIA,INC. ILLINOIS
FASHION BUG OF PERIMETER MALL,INC. (2) GEORGIA
FASHION BUG OF PERRING,INC. MARYLAND
FASHION BUG OF PETERSBURG, INC. (2) VIRGINIA
<PAGE> 6
FASHION BUG OF PHILLIPSBURG, INC. NEW JERSEY
FASHION BUG OF PIKEVILLE,INC. KENTUCKY
FASHION BUG OF PIQUA, INC. (2) OHIO
FASHION BUG OF PITTSTON,INC. PENNSYLVANIA
FASHION BUG OF PLYMOUTH MEETING,INC. (2) PENNSYLVANIA
FASHION BUG OF PONTIAC,INC. (2) MICHIGAN
FASHION BUG OF PORTSMOUTH,INC. OHIO
FASHION BUG OF POTTSVILLE,INC. PENNSYLVANIA
FASHION BUG OF QUAKERTOWN,INC. (2) PENNSYLVANIA
FASHION BUG OF QUEENS,INC. (2) NEW YORK
FASHION BUG OF RACINE, INC. (2) WISCONSIN
FASHION BUG OF RADCLIFF, INC. (2) KENTUCKY
FASHION BUG OF RAVENSWOOD, INC. WEST VIRGINIA
FASHION BUG OF RAYNHAM, INC. MASSACHUSETTS
FASHION BUG OF READING MALL,INC. (2) PENNSYLVANIA
FASHION BUG OF REDFORD, INC. (2) MICHIGAN
FASHION BUG OF REISTERTOWN, INC. MARYLAND
FASHION BUG OF REVERE, INC. MASSACHUSETTS
FASHION BUG OF REYNOLDSBURG, INC. OHIO
FASHION BUG OF RICHLAND, INC. (2) PENNSYLVANIA
FASHION BUG OF RICHMOND IND, INC. (2) INDIANA
FASHION BUG OF RICHMOND,INC. VIRGINIA
FASHION BUG OF RICHMOND,VIRGINIA,INC. (2) VIRGINIA
FASHION BUG OF RIDGE VILLAGE, INC. (2) COLORADO
FASHION BUG OF RISING SUN, INC. PENNSYLVANIA
FASHION BUG OF RIVERHEAD, INC. NEW YORK
FASHION BUG OF RIVERSIDE SQUARE, INC. ILLINOIS
FASHION BUG OF RIVERTOWNE COMMONS,INC. MARYLAND
FASHION BUG OF ROANOKE RAPIDS, INC. NORTH CAROLINA
FASHION BUG OF ROCKFORD, INC. ILLINOIS
FASHION BUG OF ROGERS PLAZA, INC. MICHIGAN
FASHION BUG OF ROME, INC. (2) GEORGIA
FASHION BUG OF ROSWELL,INC. (2) GEORGIA
FASHION BUG OF ROYAL OAK, INC. MICHIGAN
FASHION BUG OF RUMFORD, INC. RHODE ISLAND
FASHION BUG OF SAGINAW, INC. MICHIGAN
FASHION BUG OF SALEM, INC. MASSACHUSETTS
FASHION BUG OF SALISBURY, INC. (2) MARYLAND
FASHION BUG OF SAUGUS,INC. MASSACHUSETTS
FASHION BUG OF SAUGUS,INC. (2) MASSACHUSETTS
FASHION BUG OF SAVANNAH, INC. GEORGIA
FASHION BUG OF SCOTTSDALE, INC. (2) ILLINOIS
FASHION BUG OF SCRANTON,INC. PENNSYLVANIA
FASHION BUG OF SEAFORD,INC. DELAWARE
FASHION BUG OF SECURITY, INC. MARYLAND
FASHION BUG OF SEVERNA PARK,INC. (2) MARYLAND
FASHION BUG OF SHADY BROOK,INC. TENNESSEE
FASHION BUG OF SHARONVILLE,INC. OHIO
FASHION BUG OF SHARON,INC. PENNSYLVANIA
FASHION BUG OF SHIRLEY,INC. (2) NEW YORK
FASHION BUG OF SMYRNA, INC. GEORGIA
FASHION BUG OF SOLON, INC. OHIO
FASHION BUG OF SOMERS POINT, INC. NEW JERSEY
FASHION BUG OF SOMERSET, INC. (2) KENTUCKY
FASHION BUG OF SOUTH BEND, INC. INDIANA
FASHION BUG OF SOUTH FLINT, INC. MICHIGAN
FASHION BUG OF SOUTH HILLS VILLAGE,INC. (2) PENNSYLVANIA
FASHION BUG OF SOUTH PLAINFIELD,INC. NEW JERSEY
FASHION BUG OF SOUTHFIELD, INC. MICHIGAN
FASHION BUG OF SOUTHGATE PLAZA,INC. NEW HAMPSHIRE
FASHION BUG OF SOUTHGATE, INC. MICHIGAN
FASHION BUG OF SOUTHLAKE MALL,INC. (2) GEORGIA
FASHION BUG OF SOUTHLAND,INC. (2) OHIO
FASHION BUG OF SPEEDWAY SHOPPING CENTER, INC. INDIANA
FASHION BUG OF SPOTSYLVANIA,INC. VIRGINIA
FASHION BUG OF SPRINGFIELD PLAZA, INC. MASSACHUSETTS
FASHION BUG OF SPRINGFIELD, INC. (2) PENNSYLVANIA
FASHION BUG OF STATE COLLEGE,INC. PENNSYLVANIA
FASHION BUG OF STATEN ISLAND,INC. NEW YORK
FASHION BUG OF STRATFORD,INC. CONNECTICUT
FASHION BUG OF STREAMWOOD, INC. ILLINOIS
FASHION BUG OF STROUDSBURG,INC. PENNSYLVANIA
FASHION BUG OF STRUTHERS, INC. OHIO
FASHION BUG OF STURGIS, INC. MICHIGAN
FASHION BUG OF ST. ALBANS,INC. WEST VIRGINIA
FASHION BUG OF ST. CLAIR SHORES, INC. MICHIGAN
FASHION BUG OF SUN RAY, INC. MINNESOTA
FASHION BUG OF SUNBURY PLAZA, INC. PENNSYLVANIA
FASHION BUG OF TALLAHASSEE MALL, INC. FLORIDA
FASHION BUG OF TAYLOR, INC. MICHIGAN
<PAGE> 7
FASHION BUG OF TECH PLAZA, INC. MICHIGAN
FASHION BUG OF THE CITADEL, INC. (2) COLORADO
FASHION BUG OF THE GALLERY, INC. PENNSYLVANIA
FASHION BUG OF THE MARKET PLACE,INC. TENNESSEE
FASHION BUG OF THE PALISADES OF BIRMINGHAM,INC. ALABAMA
FASHION BUG OF THORNDALE, INC. PENNSYLVANIA
FASHION BUG OF TIFFIN, INC. OHIO
FASHION BUG OF TITUSVILLE,INC. FLORIDA
FASHION BUG OF TOLEDO, INC. OHIO
FASHION BUG OF TOMS RIVER, INC. NEW JERSEY
FASHION BUG OF TOPSHAM, INC. MAINE
FASHION BUG OF TOTOWA,INC. NEW JERSEY
FASHION BUG OF TOWN & COUNTRY, INC. (2) OHIO
FASHION BUG OF TOWNE MALL,INC. (2) KENTUCKY
FASHION BUG OF TROY, INC. NEW YORK
FASHION BUG OF TRUMBULL PLAZA, INC. OHIO
FASHION BUG OF TUNKHANNOCK, INC. PENNSYLVANIA
FASHION BUG OF TURNERSVILLE,INC. NEW JERSEY
FASHION BUG OF UNIONTOWN, INC. PENNSYLVANIA
FASHION BUG OF UNION, INC. NEW JERSEY
FASHION BUG OF UNIVERSITY MALL,INC. OHIO
FASHION BUG OF UNIVERSITY PLAZA, INC. TENNESSEE
FASHION BUG OF UPPER ARLINGTON, INC. (2) OHIO
FASHION BUG OF VALLEY PLAZA, INC. PENNSYLVANIA
FASHION BUG OF VAN BUREN, INC. OHIO
FASHION BUG OF VENTNOR,INC. (2) NEW JERSEY
FASHION BUG OF VINELAND, INC. NEW JERSEY
FASHION BUG OF VIRGINIA BEACH, INC. VIRGINIA
FASHION BUG OF WALNUTPORT,INC. PENNSYLVANIA
FASHION BUG OF WARREN PLAZA, INC. OHIO
FASHION BUG OF WARRENTON,INC. VIRGINIA
FASHION BUG OF WARREN, INC. PENNSYLVANIA
FASHION BUG OF WARSAW, INC. INDIANA
FASHION BUG OF WATERBURY, INC. CONNECTICUT
FASHION BUG OF WATERWORKS,INC. PENNSYLVANIA
FASHION BUG OF WAUKEGAN, INC. ILLINOIS
FASHION BUG OF WAYNESBURG, INC. PENNSYLVANIA
FASHION BUG OF WEBSTER,INC. MASSACHUSETTS
FASHION BUG OF WEIRTON,INC. WEST VIRGINIA
FASHION BUG OF WEST DEVON, INC. (2) ILLINOIS
FASHION BUG OF WEST FRANKFORT, INC. ILLINOIS
FASHION BUG OF WEST MANCHESTER, INC. PENNSYLVANIA
FASHION BUG OF WEST MIFFLIN,INC. PENNSYLVANIA
FASHION BUG OF WEST SPRINGFIELD, INC. (2) MASSACHUSETTS
FASHION BUG OF WEST ST. PAUL, INC. MINNESOTA
FASHION BUG OF WEST TOWN ,INC. (1) (2) PENNSYLVANIA
FASHION BUG OF WEST TOWN, INC. (2) ILLINOIS
FASHION BUG OF WESTERNPORT,INC. (2) MARYLAND
FASHION BUG OF WESTMINSTER, INC. (2) COLORADO
FASHION BUG OF WESTWOOD, INC. OHIO
FASHION BUG OF WHARTON SQUARE,INC. PENNSYLVANIA
FASHION BUG OF WHEATON,INC. (2) MICHIGAN
FASHION BUG OF WHITMAN PLAZA, INC. PENNSYLVANIA
FASHION BUG OF WILKES BARRE,INC. PENNSYLVANIA
FASHION BUG OF WILLIAMSON, INC. KENTUCKY
FASHION BUG OF WILLIAMSPORT, INC. PENNSYLVANIA
FASHION BUG OF WILLIAMSTOWN,INC. NEW JERSEY
FASHION BUG OF WILLINGBORO,INC. NEW JERSEY
FASHION BUG OF WILMINGTON, INC. MASSACHUSETTS
FASHION BUG OF WINSTON-SALEM, INC. NORTH CAROLINA
FASHION BUG OF WISCONSIN RAPIDS, INC. WISCONSIN
FASHION BUG OF WOODBRIDGE,INC. NEW JERSEY
FASHION BUG OF WOODHAVEN,INC. (2) PENNSYLVANIA
FASHION BUG OF WOODLYN, INC. PENNSYLVANIA
FASHION BUG OF WOONSOCKET,INC. (2) RHODE ISLAND
FASHION BUG OF WYNCOTE, INC. (2) PENNSYLVANIA
FASHION BUG OF XENIA, INC. OHIO
FASHION BUG OF YORKSHIRE PLAZA, INC. (2) ILLINOIS
FASHION BUG OF YORK,INC. (2) PENNSYLVANIA
FASHION BUG OF YOUNGSTOWN,INC. OHIO
FASHION BUG OF ZANESVILLE, INC. OHIO
FASHION BUG PLUS OF ADRIAN, INC. (2) MICHIGAN
FASHION BUG PLUS OF AMERICAN MALL, INC. OHIO
FASHION BUG PLUS OF ANN ARBOR, INC. (2) MICHIGAN
FASHION BUG PLUS OF APPLETON, INC. WISCONSIN
FASHION BUG PLUS OF ASHTABULA PLAZA,INC. (2) OHIO
FASHION BUG PLUS OF AURORA, INC. (2) ILLINOIS
FASHION BUG PLUS OF BALTIMORE, INC. MARYLAND
FASHION BUG PLUS OF BARTOW, INC. (2) FLORIDA
FASHION BUG PLUS OF BEAVER VALLEY, INC. (2) PENNSYLVANIA
<PAGE> 8
FASHION BUG PLUS OF BECKLEY, INC. (2) WEST VIRGINIA
FASHION BUG PLUS OF BELOIT,INC. WISCONSIN
FASHION BUG PLUS OF BLOOMINGTON,INC. MINNESOTA
FASHION BUG PLUS OF BRADFORD, INC. (2) PENNSYLVANIA
FASHION BUG PLUS OF BRICKTOWN, INC. (2) NEW JERSEY
FASHION BUG PLUS OF BRIDGEVILLE,INC. (2) PENNSYLVANIA
FASHION BUG PLUS OF BUCKINGHAM SQUARE, INC. (2) COLORADO
FASHION BUG PLUS OF CAPITAL HEIGHTS,INC. (2) MARYLAND
FASHION BUG PLUS OF CAPITAL PLAZA,INC. (2) MARYLAND
FASHION BUG PLUS OF CARLISLE,INC. (2) PENNSYLVANIA
FASHION BUG PLUS OF CARROLLTON, INC. (2) MARYLAND
FASHION BUG PLUS OF CENTERVILLE,INC. (2) OHIO
FASHION BUG PLUS OF CHAMPAIGN,INC. (2) ILLINOIS
FASHION BUG PLUS OF CHARLESTON, INC. WEST VIRGINIA
FASHION BUG PLUS OF CINDERELLA CITY, INC. (2) COLORADO
FASHION BUG PLUS OF CLARION, INC. (2) PENNSYLVANIA
FASHION BUG PLUS OF CLEVELAND HEIGHTS, INC. (2) OHIO
FASHION BUG PLUS OF CLEVELAND, INC. OHIO
FASHION BUG PLUS OF COCOA,INC. (2) FLORIDA
FASHION BUG PLUS OF COLLEGE PLAZA, INC. (2) OHIO
FASHION BUG PLUS OF DEFIANCE,INC. (2) OHIO
FASHION BUG PLUS OF DERBY,INC. (2) CONNECTICUT
FASHION BUG PLUS OF DETROIT,INC. (2) MICHIGAN
FASHION BUG PLUS OF DETROIT,INC. (1) (2) MICHIGAN
FASHION BUG PLUS OF DUBOIS, INC. PENNSYLVANIA
FASHION BUG PLUS OF DUNBAR, INC. (2) WEST VIRGINIA
FASHION BUG PLUS OF EAU CLAIRE,INC. (2) WISCONSIN
FASHION BUG PLUS OF EDGEWOOD, INC. (2) MARYLAND
FASHION BUG PLUS OF ELKTON, INC. (2) MARYLAND
FASHION BUG PLUS OF ELLWOOD CITY,INC. (2) PENNSYLVANIA
FASHION BUG PLUS OF ERIE, INC. PENNSYLVANIA
FASHION BUG PLUS OF ESSEXVILLE, INC. MICHIGAN
FASHION BUG PLUS OF FAIRMONT,INC. (2) WEST VIRGINIA
FASHION BUG PLUS OF FLINT,INC. MICHIGAN
FASHION BUG PLUS OF FOND DU LAC, INC. (2) WISCONSIN
FASHION BUG PLUS OF FORESTVILLE, INC. (2) MARYLAND
FASHION BUG PLUS OF FORT LAUDERDALE,INC. (2) FLORIDA
FASHION BUG PLUS OF FORT WAYNE, INC. (2) INDIANA
FASHION BUG PLUS OF FREDERICK, INC. MARYLAND
FASHION BUG PLUS OF GALESBURG, INC. (2) ILLINOIS
FASHION BUG PLUS OF GRAFTON, INC. (2) WISCONSIN
FASHION BUG PLUS OF GREENFIELD, INC. (2) WISCONSIN
FASHION BUG PLUS OF HACKETTSTOWN, INC. (2) NEW JERSEY
FASHION BUG PLUS OF HADLEY, INC. MASSACHUSETTS
FASHION BUG PLUS OF HAGERSTOWN, INC. MARYLAND
FASHION BUG PLUS OF HARRISBURG, INC. PENNSYLVANIA
FASHION BUG PLUS OF HARVARD SQUARE, INC. (2) MICHIGAN
FASHION BUG PLUS OF HAZARD,INC. (2) KENTUCKY
FASHION BUG PLUS OF HAZLET,INC. (2) NEW JERSEY
FASHION BUG PLUS OF HICKORY POINT, INC. (2) ILLINOIS
FASHION BUG PLUS OF HIGHLAND RIDGE,INC. (2) OHIO
FASHION BUG PLUS OF HOMEWOOD, INC. ILLINOIS
FASHION BUG PLUS OF HUNT VALLEY, INC. MARYLAND
FASHION BUG PLUS OF HUNTINGTON,INC. (2) NEW YORK
FASHION BUG PLUS OF HUTCHINSON,INC. (2) MINNESOTA
FASHION BUG PLUS OF HYATTSVILLE, INC. MARYLAND
FASHION BUG PLUS OF JANESVILLE, INC. (2) WISCONSIN
FASHION BUG PLUS OF LAKESIDE MALL, INC. (2) COLORADO
FASHION BUG PLUS OF LANCASTER PLAZA, INC. PENNSYLVANIA
FASHION BUG PLUS OF LANCASTER, INC. (2) OHIO
FASHION BUG PLUS OF LAWNSIDE, INC. NEW JERSEY
FASHION BUG PLUS OF LEO MALL, INC. (2) PENNSYLVANIA
FASHION BUG PLUS OF LINCOLN MALL, INC. (2) RHODE ISLAND
FASHION BUG PLUS OF LIVONIA MALL, INC. MICHIGAN
FASHION BUG PLUS OF LIVONIA,INC. (2) MICHIGAN
FASHION BUG PLUS OF MANASSAS, INC. VIRGINIA
FASHION BUG PLUS OF MANCHESTER, INC. NEW HAMPSHIRE
FASHION BUG PLUS OF MANITOWOC, INC. (2) WISCONSIN
FASHION BUG PLUS OF MARION,INC. OHIO
FASHION BUG PLUS OF MARION,IND.,INC. (2) INDIANA
FASHION BUG PLUS OF MARTIN PLAZA, INC. MARYLAND
FASHION BUG PLUS OF MEADVILLE, INC. PENNSYLVANIA
FASHION BUG PLUS OF MELBOURNE, INC. (2) FLORIDA
FASHION BUG PLUS OF MELROSE PARK,INC. ILLINOIS
FASHION BUG PLUS OF MEMPHIS,INC. (2) TENNESSEE
FASHION BUG PLUS OF MICHIGAN CITY, INC. INDIANA
FASHION BUG PLUS OF MONROEVILLE, INC. PENNSYLVANIA
FASHION BUG PLUS OF MT PLEASANT, INC. MICHIGAN
FASHION BUG PLUS OF MT. GREENWOOD,INC. ILLINOIS
FASHION BUG PLUS OF MUNCIE, INC. (2) INDIANA
<PAGE> 9
FASHION BUG PLUS OF NATRONA HEIGHTS, INC. (2) PENNSYLVANIA
FASHION BUG PLUS OF NEW BEDFORD,INC. (2) MASSACHUSETTS
FASHION BUG PLUS OF NEW HAVEN,INC. (2) CONNECTICUT
FASHION BUG PLUS OF NEW PHILADELPHIA,INC. (2) OHIO
FASHION BUG PLUS OF NORTH CICERO,INC. (2) ILLINOIS
FASHION BUG PLUS OF NORTH FT MYERS, INC. FLORIDA
FASHION BUG PLUS OF NORTH VERSAILLES, INC. (2) PENNSYLVANIA
FASHION BUG PLUS OF NORTHWEST PLAZA, INC. OHIO
FASHION BUG PLUS OF ORLANDO, INC. FLORIDA
FASHION BUG PLUS OF OWENSBORO,INC. ERR KENTUCKY
FASHION BUG PLUS OF PEKIN, INC, ILLINOIS
FASHION BUG PLUS OF PERU, INC. (2) ILLINOIS
FASHION BUG PLUS OF PHILLIPSBURG, INC. (2) NEW JERSEY
FASHION BUG PLUS OF PITTSFIELD,INC. MASSACHUSETTS
FASHION BUG PLUS OF PITTSTON,INC. (2) PENNSYLVANIA
FASHION BUG PLUS OF PONTIAC,INC. MICHIGAN
FASHION BUG PLUS OF PORTSMOUTH, INC. (2) OHIO
FASHION BUG PLUS OF RADCLIFF, INC. (2) KENTUCKY
FASHION BUG PLUS OF RAINBOW CENTRE,INC. (2) NEW YORK
FASHION BUG PLUS OF RANDOLPH, INC. (2) MASSACHUSETTS
FASHION BUG PLUS OF ROCKLAND, INC. MASSACHUSETTS
FASHION BUG PLUS OF ROSEVILLE, INC. (2) MICHIGAN
FASHION BUG PLUS OF SANDUSKY, INC. (2) OHIO
FASHION BUG PLUS OF SCRANTON, INC. (2) PENNSYLVANIA
FASHION BUG PLUS OF SEAFORD,INC. (2) DELAWARE
FASHION BUG PLUS OF SHARON HILL, INC. PENNSYLVANIA
FASHION BUG PLUS OF SHARON, INC. (2) PENNSYLVANIA
FASHION BUG PLUS OF SHEBOYGAN,INC. WISCONSIN
FASHION BUG PLUS OF SKOKIE,INC. (2) ILLINOIS
FASHION BUG PLUS OF SOUTH ATTLEBORO, INC. MASSACHUSETTS
FASHION BUG PLUS OF SOUTH MALL,INC. (2) PENNSYLVANIA
FASHION BUG PLUS OF SOUTH STREET, INC. (2) PENNSYLVANIA
FASHION BUG PLUS OF SOUTHINGTON, INC. (2) CONNECTICUT
FASHION BUG PLUS OF SPRINGFIELD,INC. (2) MASSACHUSETTS
FASHION BUG PLUS OF ST AUGUSTINE, INC. (2) FLORIDA
FASHION BUG PLUS OF ST CLAIRSVILLE, INC. (2) OHIO
FASHION BUG PLUS OF STEVENS POINT,INC. (2) WISCONSIN
FASHION BUG PLUS OF ST. ALBANS,INC. (2) WEST VIRGINIA
FASHION BUG PLUS OF TECH PLAZA,INC. (2) MICHIGAN
FASHION BUG PLUS OF THORNTON, INC. (2) COLORADO
FASHION BUG PLUS OF TUNKHANNOCK,INC. (2) PENNSYLVANIA
FASHION BUG PLUS OF TURFLAND MALL, INC. KENTUCKY
FASHION BUG PLUS OF VILLAGE MALL, INC. MASSACHUSETTS
FASHION BUG PLUS OF WALLKILL,INC. NEW YORK
FASHION BUG PLUS OF WASHINGTON,INC. (2) PENNSYLVANIA
FASHION BUG PLUS OF WASHINGTON,INC. (2) WASHINGTON, D.C.
FASHION BUG PLUS OF WEST END MALL,INC. (2) GEORGIA
FASHION BUG PLUS OF WESTWOOD PLAZA,INC. PENNSYLVANIA
FASHION BUG PLUS OF WHITEHAVEN,INC. TENNESSEE
FASHION BUG PLUS OF WILKES BARRE, INC. (2) PENNSYLVANIA
FASHION BUG PLUS OF WORCESTER,INC. MASSACHUSETTS
FASHION BUG PLUS OF YOUNGSTOWN,INC. (2) OHIO
FASHION BUG PLUS PROMOTIONS,INC. (1) (2) PENNSYLVANIA
FASHION BUG PLUS #8001,INC. (1) (2) NORTH DAKOTA
FASHION BUG PLUS #8002,INC. (1) (2) SOUTH DAKOTA
FASHION BUG PLUS #8003,INC. (1) (2) NEBRASKA
FASHION BUG PLUS #8004,INC. (1) (2) NORTH CAROLINA
FASHION BUG PLUS #8005,INC. NEW JERSEY
FASHION BUG PLUS #8006,INC. (2) NEW JERSEY
FASHION BUG PLUS #8007,INC. (2) PENNSYLVANIA
FASHION BUG PLUS #8008,INC. (2) PENNSYLVANIA
FASHION BUG PLUS #8009,INC. (2) MAINE
FASHION BUG PLUS #8010 OF ROCKY POINT,INC. NEW YORK
FASHION BUG PLUS #8011,INC. (2) NEW JERSEY
FASHION BUG PLUS #8012,INC. (2) ILLINOIS
FASHION BUG PLUS #8013,INC. (2) INDIANA
FASHION BUG PLUS #8014,INC. PENNSYLVANIA
FASHION BUG PLUS #8015 OF MEDFORD,INC. (1) (2) NEW YORK
FASHION BUG PLUS #8016,INC. (2) MINNESOTA
FASHION BUG PLUS #8017 OF RIVERHEAD,INC. NEW YORK
FASHION BUG PLUS #8018 OF NORTH BABYLON,INC. NEW YORK
FASHION BUG PLUS #8019,INC. PENNSYLVANIA
FASHION BUG PLUS #8020,INC. (1) (2) INDIANA
FASHION BUG PLUS #8021,INC. (2) FLORIDA
FASHION BUG PLUS #8023,INC. VIRGINIA
FASHION BUG PLUS #8024,INC. NEW JERSEY
FASHION BUG PLUS #8025,INC. (2) IOWA
FASHION BUG PLUS #8026,INC. MARYLAND
FASHION BUG PLUS #8027,INC. (1) (2) OHIO
FASHION BUG PLUS #8028,INC. CONNECTICUT
<PAGE> 10
FASHION BUG PLUS #8029,INC. (2) MICHIGAN
FASHION BUG PLUS #8030,INC. (2) MARYLAND
FASHION BUG PLUS #8031,INC. (2) MICHIGAN
FASHION BUG PLUS #8032,INC. (2) PENNSYLVANIA
FASHION BUG PLUS #8033,INC. (1) (2) ILLINOIS
FASHION BUG PLUS #8034,INC. PENNSYLVANIA
FASHION BUG PLUS #8036,INC. (1) (2) NEW JERSEY
FASHION BUG PLUS #8037,INC. (1) (2) NEW JERSEY
FASHION BUG PLUS #8038,INC. MARYLAND
FASHION BUG PLUS #8039,INC. (1) (2) OHIO
FASHION BUG PLUS #8040,INC. PENNSYLVANIA
FASHION BUG PLUS #811,INC. MICHIGAN
FASHION BUG PLUS #818 OF AUBURN,INC. NEW YORK
FASHION BUG PLUS #819,INC. (2) INDIANA
FASHION BUG PLUS #824,INC. NEW JERSEY
FASHION BUG PLUS #881,INC. MICHIGAN
FASHION BUG PLUS #904, INC. FLORIDA
FASHION BUG PLUS #932,INC. KENTUCKY
FASHION BUG PLUS #941,INC. (2) NEW JERSEY
FASHION BUG PLUS #942,INC. OHIO
FASHION BUG PLUS #950,INC. (2) MINNESOTA
FASHION BUG PLUS #952,INC. (1) (2) WISCONSIN
FASHION BUG PLUS #954,INC. (2) KENTUCKY
FASHION BUG PLUS #955 OF FLUSHING,INC. (1) (2) NEW YORK
FASHION BUG PLUS #956,INC. (2) OHIO
FASHION BUG PLUS #957,INC. PENNSYLVANIA
FASHION BUG PLUS #958,INC. SOUTH DAKOTA
FASHION BUG PLUS #960,INC. (2) IOWA
FASHION BUG PLUS #961,INC. (1) (2) INDIANA
FASHION BUG PLUS #962,INC. (2) WEST VIRGINIA
FASHION BUG PLUS #963,INC. MICHIGAN
FASHION BUG PLUS #964,INC. OHIO
FASHION BUG PLUS #966,INC. WEST VIRGINIA
FASHION BUG PLUS #968,INC. (2) MICHIGAN
FASHION BUG PLUS #969,INC. (2) MINNESOTA
FASHION BUG PLUS #970,INC. GEORGIA
FASHION BUG PLUS #971,INC. NEW JERSEY
FASHION BUG PLUS #972,INC. (2) ILLINOIS
FASHION BUG PLUS #973,INC. (2) WISCONSIN
FASHION BUG PLUS #974 OF E. ROCHESTER,INC. (2) NEW YORK
FASHION BUG PLUS #975 OF HORSEHEADS,INC. NEW YORK
FASHION BUG PLUS #976,INC. WISCONSIN
FASHION BUG PLUS #977,INC. (2) CONNECTICUT
FASHION BUG PLUS #978,INC. (2) MINNESOTA
FASHION BUG PLUS #979,INC. MISSOURI
FASHION BUG PLUS #980,INC. MAINE
FASHION BUG PLUS #981,INC. PENNSYLVANIA
FASHION BUG PLUS #982,INC. (2) KENTUCKY
FASHION BUG PLUS #983,INC. (2) NEW JERSEY
FASHION BUG PLUS #984,INC. (2) IOWA
FASHION BUG PLUS #985,INC. MINNESOTA
FASHION BUG PLUS #986,INC. (2) SOUTH DAKOTA
FASHION BUG PLUS #987,INC. PENNSYLVANIA
FASHION BUG PLUS #990,INC. (2) MARYLAND
FASHION BUG PLUS #991,INC. IOWA
FASHION BUG PLUS #992,INC. (2) INDIANA
FASHION BUG PLUS #993,INC. (1) (2) NEW JERSEY
FASHION BUG #108,INC. MICHIGAN
FASHION BUG #123,INC. (2) NEW JERSEY
FASHION BUG #131,INC. (2) OHIO
FASHION BUG #138,INC. (1) (2) INDIANA
FASHION BUG #139,INC. (1) (2) INDIANA
FASHION BUG #141,INC. NEW JERSEY
FASHION BUG #142,INC. (2) VIRGINIA
FASHION BUG #142,INC.(RE-OPENED DUE TO TORNATO) VIRGINIA
FASHION BUG #144,INC. (1) (2) INDIANA
FASHION BUG #149,INC. OHIO
FASHION BUG #157,INC. OHIO
FASHION BUG #168,INC. (1) (2) INDIANA
FASHION BUG #2002 OF FISHKILL,INC. (2) NEW YORK
FASHION BUG #2003,INC. OHIO
FASHION BUG #2004,INC. MICHIGAN
FASHION BUG #2005,INC. MICHIGAN
FASHION BUG #2006,INC. KENTUCKY
FASHION BUG #2007,INC. (1) (2) LOUISIANA
FASHION BUG #2008,INC. PENNSYLVANIA
FASHION BUG #2009,INC. PENNSYLVANIA
FASHION BUG #2010,INC. MICHIGAN
FASHION BUG #2011,INC. MARYLAND
FASHION BUG #2012,INC. (1) (2) DELAWARE
<PAGE> 11
FASHION BUG #2014,INC. MICHIGAN
FASHION BUG #2015,INC. INDIANA
FASHION BUG #2017,INC. (1) (2) OKLAHOMA
FASHION BUG #2018,INC. MICHIGAN
FASHION BUG #2019,INC. NORTH DAKOTA
FASHION BUG #2020,INC. VIRGINIA
FASHION BUG #2021,INC. OHIO
FASHION BUG #2022,INC. INDIANA
FASHION BUG #2023,INC. PENNSYLVANIA
FASHION BUG #2024,INC. MASSACHUSETTS
FASHION BUG #2026,INC. PENNSYLVANIA
FASHION BUG #2027,INC. NEBRASKA
FASHION BUG #2028,INC. GEORGIA
FASHION BUG #2029,INC. NEW HAMPSHIRE
FASHION BUG #2030,INC. PENNSYLVANIA
FASHION BUG #2031,INC. KANSAS
FASHION BUG #2032,INC. MICHIGAN
FASHION BUG #2033,INC. (1) (2) DELAWARE
FASHION BUG #2034,INC. MISSOURI
FASHION BUG #2035,INC. MASSACHUSETTS
FASHION BUG #2036,INC. OHIO
FASHION BUG #2037,INC. MICHIGAN
FASHION BUG #2038,INC. (1) (2) KENTUCKY
FASHION BUG #2038,INC. (1) (2) ALABAMA
FASHION BUG #2039,INC. OHIO
FASHION BUG #2040,INC. (1) (2) KENTUCKY
FASHION BUG #2040,INC. (1) (2) OHIO
FASHION BUG #2042,INC. (1) (2) NORTH DAKOTA
FASHION BUG #2043,INC. INDIANA
FASHION BUG #2044,INC. NORTH CAROLINA
FASHION BUG #2045 OF EAST GREENBUSH,INC. NEW YORK
FASHION BUG #2046 OF ONONDAGA PLAZA,INC. NEW YORK
FASHION BUG #2047,INC. MASSACHUSETTS
FASHION BUG #2048,INC. KENTUCKY
FASHION BUG #2049,INC. MARYLAND
FASHION BUG #204,INC. (2) MICHIGAN
FASHION BUG #2050 OF MASSENA,INC. NEW YORK
FASHION BUG #2051,INC. ILLINOIS
FASHION BUG #2052,INC. MINNESOTA
FASHION BUG #2053,INC. MISSOURI
FASHION BUG #2054,INC. OHIO
FASHION BUG #2055,INC. (1) (2) MASSACHUSETTS
FASHION BUG #2055,INC. (1) (2) NORTH CAROLINA
FASHION BUG #2056,INC. (1) (2) ALABAMA
FASHION BUG #2056,INC. (1) (2) OHIO
FASHION BUG #2057,INC. CONNECTICUT
FASHION BUG #2058,INC. MASSACHUSETTS
FASHION BUG #2059,INC. (1) (2) NEW JERSEY
FASHION BUG #2060,INC. MINNESOTA
FASHION BUG #2061,INC. (1) (2) DELAWARE
FASHION BUG #2062 OF RONKONKOMA,INC. (1) (2) NEW YORK
FASHION BUG #2063,INC. KANSAS
FASHION BUG #2064,INC. (1) (2) KENTUCKY
FASHION BUG #2064,INC. OHIO
FASHION BUG #2065,INC. GEORGIA
FASHION BUG #2066,INC. (2) GEORGIA
FASHION BUG #2067,INC. TENNESSEE
FASHION BUG #2068,INC. MAINE
FASHION BUG #2069,INC. ARKANSAS
FASHION BUG #2070 OF BROOKLYN,INC. NEW YORK
FASHION BUG #2071 OF FREEPORT,INC. NEW YORK
FASHION BUG #2072 OF ISLANDIA,INC. NEW YORK
FASHION BUG #2073,INC. MARYLAND
FASHION BUG #2074,INC. KENTUCKY
FASHION BUG #2075,INC. ILLINOIS
FASHION BUG #2076,INC. ILLINOIS
FASHION BUG #2077,INC. MICHIGAN
FASHION BUG #2078,INC. MICHIGAN
FASHION BUG #2079,INC, OHIO
FASHION BUG #2080,INC. OHIO
FASHION BUG #2081 OF OGDENSBURG,INC. NEW YORK
FASHION BUG #2082,INC. NEW JERSEY
FASHION BUG #2083,INC. GEORGIA
FASHION BUG #2084,INC. OHIO
FASHION BUG #2085,INC. KANSAS
FASHION BUG #2086,INC. ILLINOIS
FASHION BUG #2087,INC. (2) MICHIGAN
FASHION BUG #2088,INC. CONNECTICUT
FASHION BUG #2089,INC. TENNESSEE
FASHION BUG #2090,INC. FLORIDA
<PAGE> 12
FASHION BUG #2091,INC. FLORIDA
FASHION BUG #2092,INC. WISCONSIN
FASHION BUG #2093,INC. ILLINOIS
FASHION BUG #2094,INC. ILLINOIS
FASHION BUG #2095,INC. OHIO
FASHION BUG #2096,INC. MICHIGAN
FASHION BUG #2097,INC. NEW JERSEY
FASHION BUG #2099,INC. FLORIDA
FASHION BUG #2100 OF BATAVIA,INC. NEW YORK
FASHION BUG #2101,INC. (1) (2) PENNSYLVANIA
FASHION BUG #2102,INC. WASHINGTON
FASHION BUG #2103,INC. WASHINGTON
FASHION BUG #2104,INC. (1) (2) MICHIGAN
FASHION BUG #2105,INC. NEW HAMPSHIRE
FASHION BUG #2106 OF DEPEW,INC. NEW YORK
FASHION BUG #2107,INC. (2) OHIO
FASHION BUG #2108,INC. (2) MICHIGAN
FASHION BUG #2109,INC. GEORGIA
FASHION BUG #210,INC. (1) (2) KENTUCKY
FASHION BUG #2110,INC. (1) (2) NEW JERSEY
FASHION BUG #2111,INC. NEW JERSEY
FASHION BUG #2112,INC. FLORIDA
FASHION BUG #2113,INC. GEORGIA
FASHION BUG #2114,INC. MISSOURI
FASHION BUG #2115,INC. WISCONSIN
FASHION BUG #2116,INC. FLORIDA
FASHION BUG #2117,INC. (1) (2) OHIO
FASHION BUG #2117,INC. (1) (2) NEW JERSEY
FASHION BUG #2118 OF NEWBURGH,INC. NEW YORK
FASHION BUG #2119,INC. OHIO
FASHION BUG #211,INC. (1) (2) MINNESOTA
FASHION BUG #2120,INC. OHIO
FASHION BUG #2121,INC. INDIANA
FASHION BUG #2122,INC. WASHINGTON
FASHION BUG #2123,INC. VIRGINIA
FASHION BUG #2124,INC. PENNSYLVANIA
FASHION BUG #2125,INC. WASHINGTON
FASHION BUG #2126,INC. MICHIGAN
FASHION BUG #2127,INC. MICHIGAN
FASHION BUG #2128,INC. CONNECTICUT
FASHION BUG #2129,INC. OHIO
FASHION BUG #2130,INC. ILLINOIS
FASHION BUG #2131,INC. WISCONSIN
FASHION BUG #2132,INC. MISSOURI
FASHION BUG #2133,INC. WISCONSIN
FASHION BUG #2134,INC. ILLINOIS
FASHION BUG #2135,INC. VERMONT
FASHION BUG #2136,INC. (1) (2) FLORIDA
FASHION BUG #2137,INC. INDIANA
FASHION BUG #2138,INC. OHIO
FASHION BUG #2139,INC. OREGON
FASHION BUG #2140,INC. VIRGINIA
FASHION BUG #2141,INC. MICHIGAN
FASHION BUG #2142,INC. CONNECTICUT
FASHION BUG #2143,INC. NEBRASKA
FASHION BUG #2144,INC. VIRGINIA
FASHION BUG #2145,INC. MICHIGAN
FASHION BUG #2146,INC. WISCONSIN
FASHION BUG #2147,INC. WISCONSIN
FASHION BUG #2148,INC. WISCONSIN
FASHION BUG #2149,INC. MASSACHUSETTS
FASHION BUG #2150,INC. NEW HAMPSHIRE
FASHION BUG #2151,INC. NEW HAMPSHIRE
FASHION BUG #2152,INC. VIRGINIA
FASHION BUG #2153,INC. TENNESSEE
FASHION BUG #2154,INC. WISCONSIN
FASHION BUG #2155,INC. OHIO
FASHION BUG #2156,INC. RHODE ISLAND
FASHION BUG #2157 OF ONEIDA,INC. NEW YORK
FASHION BUG #2158,INC. MISSOURI
FASHION BUG #2159,INC. FLORIDA
FASHION BUG #2160,INC. WISCONSIN
FASHION BUG #2161,INC. (1) (2) NEBRASKA
FASHION BUG #2162,INC. NORTH CAROLINA
FASHION BUG #2163,INC. NORTH CAROLINA
FASHION BUG #2164,INC. FLORIDA
FASHION BUG #2165,INC. FLORIDA
FASHION BUG #2166,INC. IOWA
FASHION BUG #2167,INC. (1) (2) WASHINGTON
FASHION BUG #2168,INC. WASHINGTON
<PAGE> 13
FASHION BUG #2169,INC. WASHINGTON
FASHION BUG #2170,INC. WASHINGTON
FASHION BUG #2171,INC. PENNSYLVANIA
FASHION BUG #2172,INC. KENTUCKY
FASHION BUG #2173,INC. INDIANA
FASHION BUG #2174,INC. MICHIGAN
FASHION BUG #2175,INC. CALIFORNIA
FASHION BUG #2176,INC. PENNSYLVANIA
FASHION BUG #2177,INC. PENNSYLVANIA
FASHION BUG #2180,INC. FLORIDA
FASHION BUG #2181,INC. CALIFORNIA
FASHION BUG #2182,INC. CALIFORNIA
FASHION BUG #2183,INC. OHIO
FASHION BUG #2184 of WEBSTER,INC. NEW YORK
FASHION BUG #2185,INC. OHIO
FASHION BUG #2186,INC. OREGON
FASHION BUG #2187,INC. MINNESOTA
FASHION BUG #2188,INC. MINNESOTA
FASHION BUG #2189,INC. INDIANA
FASHION BUG #2190,INC. WISCONSIN
FASHION BUG #2191,INC. PENNSYLVANIA
FASHION BUG #2192,INC. OHIO
FASHION BUG #2193,INC. MASSACHUSETTS
FASHION BUG #2194,INC. WISCONSIN
FASHION BUG #2195,INC. WEST VIRGINIA
FASHION BUG #2196 OF NEWARK,INC. NEW YORK
FASHION BUG #2197,INC. OHIO
FASHION BUG #2198,INC. INDIANA
FASHION BUG #2199,INC. MARYLAND
FASHION BUG #2200,INC. OREGON
FASHION BUG #2201,INC. WASHINGTON
FASHION BUG #2202,INC. CALIFORNIA
FASHION BUG #2203,INC. MAINE
FASHION BUG #2204 OF HORNELL, INC. (1) (2) NEW YORK
FASHION BUG #2204,INC. (1) (2) WISCONSIN
FASHION BUG #2205,INC. (1) (2) MINNESOTA
FASHION BUG #2206,INC. NEW HAMPSHIRE
FASHION BUG #2207,INC. VIRGINIA
FASHION BUG #2208,INC. VIRGINIA
FASHION BUG #2209,INC. ILLINOIS
FASHION BUG #2210 OF KINGSTON,INC. NEW YORK
FASHION BUG #2211,INC. MARYLAND
FASHION BUG #2212,INC. WISCONSIN
FASHION BUG #2213,INC. FLORIDA
FASHION BUG #2214,INC. MINNESOTA
FASHION BUG #2215,INC. (1) (2) MASSACHUSETTS
FASHION BUG #2215,INC. FLORIDA
FASHION BUG #2216,INC. CALIFORNIA
FASHION BUG #2217,INC. IDAHO
FASHION BUG #2218,INC. MINNESOTA
FASHION BUG #2219,INC. WASHINGTON
FASHION BUG #2220,INC. OHIO
FASHION BUG #2221,INC. OHIO
FASHION BUG #2222,INC. KENTUCKY
FASHION BUG #2223,INC. IDAHO
FASHION BUG #2224,INC. WASHINGTON
FASHION BUG #2225,INC. VERMONT
FASHION BUG #2226,INC. MICHIGAN
FASHION BUG #2227,INC. MICHIGAN
FASHION BUG #2228,INC. WISCONSIN
FASHION BUG #2229,INC. MICHIGAN
FASHION BUG #2230,INC. MICHIGAN
FASHION BUG #2231,INC. MICHIGAN
FASHION BUG #2232,INC. MICHIGAN
FASHION BUG #2233,INC. MAINE
FASHION BUG #2234,INC. MASSACHUSETTS
FASHION BUG #2235,INC. INDIANA
FASHION BUG #2236,INC. MINNESOTA
FASHION BUG #2237,INC. PENNSYLVANIA
FASHION BUG #2238,INC. MASSACHUSETTS
FASHION BUG #2239,INC. OREGON
FASHION BUG #2240,INC. IDAHO
FASHION BUG #2241,INC. (2) IDAHO
FASHION BUG #2242,INC. PENNSYLVANIA
FASHION BUG #2243,INC. WASHINGTON
FASHION BUG #2244 OF CANANDAIGUA,INC. NEW YORK
FASHION BUG #2245,INC. MARYLAND
FASHION BUG #2246,INC. MARYLAND
FASHION BUG #2247,INC. OHIO
FASHION BUG #2248,INC. MINNESOTA
<PAGE> 14
FASHION BUG #2249,INC. OHIO
FASHION BUG #2250,INC. OHIO
FASHION BUG #2251,INC. CALIFORNIA
FASHION BUG #2252 OF BAYSHORE,INC. NEW YORK
FASHION BUG #2253,INC. CALIFORNIA
FASHION BUG #2254,INC. WISCONSIN
FASHION BUG #2255,INC. MARYLAND
FASHION BUG #2256,INC. CALIFORNIA
FASHION BUG #2257,INC. ILLINOIS
FASHION BUG #2258,INC. ILLINOIS
FASHION BUG #2259,INC. ILLINOIS
FASHION BUG #2260,INC. ILLINOIS
FASHION BUG #2261,INC. (1) (2) MARYLAND
FASHION BUG #2262,INC. WEST VIRGINIA
FASHION BUG #2263,INC. INDIANA
FASHION BUG #2264,INC. OHIO
FASHION BUG #2265 OF STATEN ISLAND,INC. (1) (2) NEW YORK
FASHION BUG #2266,INC. ILLINOIS
FASHION BUG #2268,INC. CALIFORNIA
FASHION BUG #2269 OF PLATTSBURGH,INC. (2) NEW YORK
FASHION BUG #2270,INC. OREGON
FASHION BUG #2271,INC. (1) (2) TEXAS
FASHION BUG #2272,INC. (1) (2) TEXAS
FASHION BUG #2273,INC. (1) (2) TEXAS
FASHION BUG #2274,INC. CALIFORNIA
FASHION BUG #2275,INC. MICHIGAN
FASHION BUG #2276,INC. MICHIGAN
FASHION BUG #2277,INC. (1) (2) VIRGINIA
FASHION BUG #2278,INC. NORTH CAROLINA
FASHION BUG #2279,INC. (1) (2) OHIO
FASHION BUG #2279,INC. WISCONSIN
FASHION BUG #2280,INC. WISCONSIN
FASHION BUG #2281,INC. OHIO
FASHION BUG #2282,INC. ILLINOIS
FASHION BUG #2283,INC. OHIO
FASHION BUG #2284,INC. OHIO
FASHION BUG #2285,INC. CALIFORNIA
FASHION BUG #2286,INC. WISCONSIN
FASHION BUG #2287,INC. (1) (2) WISCONSIN
FASHION BUG #2288,INC. WASHINGTON
FASHION BUG #2289 OF GARDEN CITY,INC. NEW YORK
FASHION BUG #2290,INC. RHODE ISLAND
FASHION BUG #2291,INC. INDIANA
FASHION BUG #2292,INC. MICHIGAN
FASHION BUG #2293,INC. OHIO
FASHION BUG #2295,INC. WISCONSIN
FASHION BUG #2296,INC. (1) (2) MASSACHUSETTS
FASHION BUG #2297,INC. MICHIGAN
FASHION BUG #2298,INC. (1) (2) WEST VIRGINIA
FASHION BUG #2299,INC. (1) (2) WEST VIRGINIA
FASHION BUG #229,INC. (2) MARYLAND
FASHION BUG #2300,INC. FLORIDA
FASHION BUG #2301,INC. FLORIDA
FASHION BUG #2302,INC. NORTH CAROLINA
FASHION BUG #2303,INC. (1) (2) NEW JERSEY
FASHION BUG #2304,INC. VIRGINIA
FASHION BUG #2305,INC. PENNSYLVANIA
FASHION BUG #2306,INC. CALIFORNIA
FASHION BUG #2308,INC. MICHIGAN
FASHION BUG #2309,INC. INDIANA
FASHION BUG #2310,INC. (1) (2) CALIFORNIA
FASHION BUG #2311,INC. GEORGIA
FASHION BUG #2313,INC. WASHINGTON
FASHION BUG #2314,INC. INDIANA
FASHION BUG #2315,INC. WISCONSIN
FASHION BUG #2316,INC. VIRGINIA
FASHION BUG #2317,INC. (2) PENNSYLVANIA
FASHION BUG #2318,INC. DELAWARE
FASHION BUG #2320,INC. TENNESSEE
FASHION BUG #2321,INC. CALIFORNIA
FASHION BUG #2322,INC. MAINE
FASHION BUG #2323,INC. CALIFORNIA
FASHION BUG #2324,INC. CALIFORNIA
FASHION BUG #2325,INC. MICHIGAN
FASHION BUG #2326,INC. PENNSYLVANIA
FASHION BUG #2327,INC. (1) (2) KENTUCKY
FASHION BUG #2328,INC. MINNESOTA
FASHION BUG #2329,INC. CALIFORNIA
FASHION BUG #2330,INC. PENNSYLVANIA
FASHION BUG #2331,INC. VERMONT
<PAGE> 15
FASHION BUG #2332,INC. VIRGINIA
FASHION BUG #2333,INC. FLORIDA
FASHION BUG #2334,INC. CALIFORNIA
FASHION BUG #2335,INC. CALIFORNIA
FASHION BUG #2336,INC. CALIFORNIA
FASHION BUG #2337,INC. OHIO
FASHION BUG #2338,INC. WISCONSIN
FASHION BUG #2339,INC. RHODE ISLAND
FASHION BUG #2340,INC. MICHIGAN
FASHION BUG #2341,INC. (2) MICHIGAN
FASHION BUG #2342 OF LONG ISLAND CITY,INC. NEW YORK
FASHION BUG #2343,INC. WISCONSIN
FASHION BUG #2344,INC. FLORIDA
FASHION BUG #2345,INC. PENNSYLVANIA
FASHION BUG #2346,INC. CONNECTICUT
FASHION BUG #2347,INC. NEW HAMPSHIRE
FASHION BUG #2348,INC. WASHINGTON
FASHION BUG #2349,INC. INDIANA
FASHION BUG #2350,INC. NEW HAMPSHIRE
FASHION BUG #2351,INC. MINNESOTA
FASHION BUG #2352,INC. WEST VIRGINIA
FASHION BUG #2353,INC. MICHIGAN
FASHION BUG #2354,INC. CALIFORNIA
FASHION BUG #2355,INC. PENNSYLVANIA
FASHION BUG #2356,INC. GEORGIA
FASHION BUG #2357,INC. MICHIGAN
FASHION BUG #2358,INC. MAINE
FASHION BUG #2359,INC. PENNSYLVANIA
FASHION BUG #2360,INC. PENNSYLVANIA
FASHION BUG #2361,INC. (1) (2) NEW JERSEY
FASHION BUG #2362,INC. PENNSYLVANIA
FASHION BUG #2363,INC. FLORIDA
FASHION BUG #2364, OF NORTH TONAWANDA,INC. NEW YORK
FASHION BUG #2365,INC. CALIFORNIA
FASHION BUG #2366,INC. NEVADA
FASHION BUG #2367,INC. (1) (2) NEW JERSEY
FASHION BUG #2368,INC. OHIO
FASHION BUG #2369,INC. SOUTH CAROLINA
FASHION BUG #2370 OF MALONE,INC. NEW YORK
FASHION BUG #2371 OF POUGHKEEPSIE,INC. NEW YORK
FASHION BUG #2372,INC. (1) (2) CALIFORNIA
FASHION BUG #2373,INC. MAINE
FASHION BUG #2374,INC. WISCONSIN
FASHION BUG #2375,INC. (1) (2) ILLINOIS
FASHION BUG #2376,INC. ILLINOIS
FASHION BUG #2377,INC. NEW HAMPSHIRE
FASHION BUG #2378,INC. NEVADA
FASHION BUG #2379,INC. MASSACHUSETTS
FASHION BUG #2380,INC. NORTH CAROLINA
FASHION BUG #2381,INC. (1) (2) CALIFORNIA
FASHION BUG #2382,INC. TENNESSEE
FASHION BUG #2383,INC. WISCONSIN
FASHION BUG #2384 OF ROCHESTER,INC. NEW YORK
FASHION BUG #2385,INC. MAINE
FASHION BUG #2386 OF BROOKLYN,INC. NEW YORK
FASHION BUG #2387,INC. PENNSYLVANIA
FASHION BUG #2388,INC. OREGON
FASHION BUG #2389,INC. (1) (2) PENNSYLVANIA
FASHION BUG #2390,INC. NORTH DAKOTA
FASHION BUG #2391,INC. VIRGINIA
FASHION BUG #2392,INC. NEW JERSEY
FASHION BUG #2393,INC. VERMONT
FASHION BUG #2394,INC. INDIANA
FASHION BUG #2395,INC. MARYLAND
FASHION BUG #2396 OF BIG FLATS,INC. NEW YORK
FASHION BUG #2397,INC. CONNECTICUT
FASHION BUG #2398,INC. NEW HAMPSHIRE
FASHION BUG #2399,INC. MICHIGAN
FASHION BUG #2400,INC. (1) (2) CALIFORNIA
FASHION BUG #2401,INC. (1) (2) CALIFORNIA
FASHION BUG #2402,INC. CALIFORNIA
FASHION BUG #2403,INC. CONNECTICUT
FASHION BUG #2404,INC. MARYLAND
FASHION BUG #2405,INC. NORTH CAROLINA
FASHION BUG #2406,INC. MISSOURI
FASHION BUG #2407,INC. NEW HAMPSHIRE
FASHION BUG #2408 OF BRUNSWICK,INC. (1) (2) NEW YORK
FASHION BUG #2409,INC. PENNSYLVANIA
FASHION BUG #2410,INC. (1) (2) VIRGINIA
FASHION BUG #2411,INC. MASSACHUSETTS
<PAGE> 16
FASHION BUG #2412,INC. MASSACHUSETTS
FASHION BUG #2413,INC. CONNECTICUT
FASHION BUG #2414,INC. GEORGIA
FASHION BUG #2415,INC. PENNSYLVANIA
FASHION BUG #2416,INC. MASSACHUSETTS
FASHION BUG #2417,INC. (1) (2) MARYLAND
FASHION BUG #2418,INC. SOUTH CAROLINA
FASHION BUG #2419,INC. NEW JERSEY
FASHION BUG #2420,INC. MISSOURI
FASHION BUG #2421,INC. NEVADA
FASHION BUG #2422,INC. WASHINGTON
FASHION BUG #2423,INC. MASSACHUSETTS
FASHION BUG #2424,INC. MINNESOTA
FASHION BUG #2425,INC. CONNECTICUT
FASHION BUG #2426 OF EAST AURORA,INC. NEW YORK
FASHION BUG #2427 OF GLENS FALLS,INC. (1) (2) NEW YORK
FASHION BUG #2428,INC. (1) (2) KENTUCKY
FASHION BUG #2429,INC. INDIANA
FASHION BUG #2430,INC. MINNESOTA
FASHION BUG #2431,INC. SOUTH DAKOTA
FASHION BUG #2432,INC. PENNSYLVANIA
FASHION BUG #2433,INC. FLORIDA
FASHION BUG #2434,INC. NORTH CAROLINA
FASHION BUG #2435,INC. OHIO
FASHION BUG #2436,INC. MAINE
FASHION BUG #2437,INC. PENNSYLVANIA
FASHION BUG #2438,INC. MASSACHUSETTS
FASHION BUG #2439,INC. MASSACHUSETTS
FASHION BUG #2440,INC. PENNSYLVANIA
FASHION BUG #2441,INC. CALIFORNIA
FASHION BUG #2442,INC. CALIFORNIA
FASHION BUG #2443,INC. MINNESOTA
FASHION BUG #2444,INC. MINNESOTA
FASHION BUG #2445,INC. SOUTH DAKOTA
FASHION BUG #2446,INC. PENNSYLVANIA
FASHION BUG #2447,INC. (1) (2) MAINE
FASHION BUG #2448,INC. OHIO
FASHION BUG #2449,INC. NEVADA
FASHION BUG #2450,INC. ALABAMA
FASHION BUG #2451,INC. (1) (2) ALABAMA
FASHION BUG #2452,INC. CONNECTICUT
FASHION BUG #2453,INC. MASSACHUSETTS
FASHION BUG #2454 OF SCHENECTADY,INC. NEW YORK
FASHION BUG #2455 OF WILTON,INC. NEW YORK
FASHION BUG #2456,INC. WASHINGTON
FASHION BUG #2457,INC. VIRGINIA
FASHION BUG #2458,INC. NEW HAMPSHIRE
FASHION BUG #2459,INC. MICHIGAN
FASHION BUG #2460,INC. MASSACHUSETTS
FASHION BUG #2461,INC. (1) (2) SOUTH CAROLINA
FASHION BUG #2461,INC. SOUTH CAROLINA
FASHION BUG #2462,INC. OREGON
FASHION BUG #2463,INC. (1) (2) VIRGINIA
FASHION BUG #2464,INC. WISCONSIN
FASHION BUG #2466,INC. PENNSYLVANIA
FASHION BUG #2467,INC. KENTUCKY
FASHION BUG #2468 OF BATH,INC. NEW YORK
FASHION BUG #2469,INC. (1) (2) INDIANA
FASHION BUG #2470 OF BINGHAMPTON,INC. NEW YORK
FASHION BUG #2471,INC. MASSACHUSETTS
FASHION BUG #2472,INC. CONNECTICUT
FASHION BUG #2473,INC. MICHIGAN
FASHION BUG #2474,INC. OHIO
FASHION BUG #2475,INC. MINNESOTA
FASHION BUG #2476 OF MIDDLE ISLAND,INC. NEW YORK
FASHION BUG #2477,INC. MICHIGAN
FASHION BUG #2478,INC. GEORGIA
FASHION BUG #2479,INC. IOWA
FASHION BUG #2480,INC. MINNESOTA
FASHION BUG #2482,INC. IOWA
FASHION BUG #2483,INC. PENNSYLVANIA
FASHION BUG #2484,INC. WASHINGTON
FASHION BUG #2485,INC. MARYLAND
FASHION BUG #2486,INC. IOWA
FASHION BUG #2487,INC. INDIANA
FASHION BUG #2488,INC. MINNESOTA
FASHION BUG #2489,INC. MINNESOTA
FASHION BUG #2490 OF NEW HARTFORD,INC. (1) (2) NEW YORK
FASHION BUG #2491,INC. MICHIGAN
FASHION BUG #2492,INC. PENNSYLVANIA
<PAGE> 17
FASHION BUG #2493,INC. WISCONSIN
FASHION BUG #2494,INC. MINNESOTA
FASHION BUG #2495 OF IRONDEQUIOT,INC. NEW YORK
FASHION BUG #2496,INC. MASSACHUSETTS
FASHION BUG #2497,INC. MASSACHUSETTS
FASHION BUG #2498,INC. (1) (2) CALIFORNIA
FASHION BUG #2499,INC. (1) (2) NEVADA
FASHION BUG #2500,INC. NEBRASKA
FASHION BUG #2501,INC. MICHIGAN
FASHION BUG #2502,INC. WISCONSIN
FASHION BUG #2503,INC. ILLINOIS
FASHION BUG #2504,INC. VIRGINIA
FASHION BUG #2505 OF HUDSON,INC. (1) (2) NEW YORK
FASHION BUG #2506,INC. IDAHO
FASHION BUG #2507,INC. (1) (2) PENNSYLVANIA
FASHION BUG #2508,INC. MISSOURI
FASHION BUG #2509,INC. (1) (2) NEW JERSEY
FASHION BUG #2510,INC. OHIO
FASHION BUG #2511,INC. INDIANA
FASHION BUG #2512,INC. NEW HAMPSHIRE
FASHION BUG #2513,INC. MAINE
FASHION BUG #2514,INC. PENNSYLVANIA
FASHION BUG #2515,INC. (1) (2) SOUTH CAROLINA
FASHION BUG #2516,INC. NEW JERSEY
FASHION BUG #2517,INC. (1) (2) CONNECTICUT
FASHION BUG #2518,INC. NEW HAMPSHIRE
FASHION BUG #2519 OF FULTON,INC. (1) (2) NEW YORK
FASHION BUG #2520,INC. MASSACHUSETTS
FASHION BUG #2521,INC. GEORGIA
FASHION BUG #2522,INC. FLORIDA
FASHION BUG #2523,INC. FLORIDA
FASHION BUG #2524,INC. CALIFORNIA
FASHION BUG #2525,INC. ARIZONA
FASHION BUG #2526,INC. CALIFORNIA
FASHION BUG #2527,INC. ARIZONA
FASHION BUG #2528,INC. (1) (2) ARIZONA
FASHION BUG #2529,INC. ARIZONA
FASHION BUG #2530,INC. (1) (2) ARIZONA
FASHION BUG #2531,INC. GEORGIA
FASHION BUG #2531,INC. (1) (2) FLORIDA
FASHION BUG #2532,INC. MINNESOTA
FASHION BUG #2533,INC. NEW JERSEY
FASHION BUG #2534,INC. NEW JERSEY
FASHION BUG #2535,INC. (1) (2) PENNSYLVANIA
FASHION BUG #2536,INC. PENNSYLVANIA
FASHION BUG #2537,INC. KENTUCKY
FASHION BUG #2538,INC. VIRGINIA
FASHION BUG #2539,INC. (1) (2) FLORIDA
FASHION BUG #2540,INC. FLORIDA
FASHION BUG #2541,INC. NORTH CAROLINA
FASHION BUG #2542,INC. PENNSYLVANIA
FASHION BUG #2543,INC. CONNECTICUT
FASHION BUG #2544,INC. (1) (2) VIRGINIA
FASHION BUG #2545,INC. SOUTH CAROLINA
FASHION BUG #2546,INC. (1) (2) NEW JERSEY
FASHION BUG #2547,INC. VIRGINIA
FASHION BUG #2548,INC. PENNSYLVANIA
FASHION BUG #2549,INC. NEBRASKA
FASHION BUG #2550,INC. VIRGINIA
FASHION BUG #2551 OF CLAY,INC. NEW YORK
FASHION BUG #2552,INC. NEW HAMPSHIRE
FASHION BUG #2553,INC. OHIO
FASHION BUG #2554,INC. (1) (2) ILLINOIS
FASHION BUG #2555,INC. MAINE
FASHION BUG #2556,INC. OHIO
FASHION BUG #2557,INC. UTAH
FASHION BUG #2558,INC. UTAH
FASHION BUG #2559,INC. UTAH
FASHION BUG #255,INC. MAINE
FASHION BUG #2560,INC. UTAH
FASHION BUG #2561,INC. OHIO
FASHION BUG #2562,INC. OHIO
FASHION BUG #2563,INC. (1) (2) WISCONSIN
FASHION BUG #2564,INC. KENTUCKY
FASHION BUG #2565,INC. KENTUCKY
FASHION BUG #2566,INC. NORTH DAKOTA
FASHION BUG #2567,INC. NORTH DAKOTA
FASHION BUG #2568,INC. FLORIDA
FASHION BUG #2569,INC. (1) (2) CALIFORNIA
FASHION BUG #2570,INC. (1) (2) ARIZONA
<PAGE> 18
FASHION BUG #2571,INC. OHIO
FASHION BUG #2572,INC. (1) (2) NEW JERSEY
FASHION BUG #2573,INC. WISCONSIN
FASHION BUG #2574,INC. NEW HAMPSHIRE
FASHION BUG #2575,INC. TENNESSEE
FASHION BUG #2576,INC. NORTH CAROLINA
FASHION BUG #2577,INC. KENTUCKY
FASHION BUG #2578,INC. (1) (2) OHIO
FASHION BUG #2579,INC. PENNSYLVANIA
FASHION BUG #2580,INC. OHIO
FASHION BUG #2581,INC. NEBRASKA
FASHION BUG #2582,INC. SOUTH CAROLINA
FASHION BUG #2583,INC. (1) (2) WEST VIRGINIA
FASHION BUG #2584,INC. NEW YORK
FASHION BUG #2585,INC. (1) (2) MARYLAND
FASHION BUG #2586,INC. OHIO
FASHION BUG #2587,INC. OHIO
FASHION BUG #2588,INC. RHODE ISLAND
FASHION BUG #2589,INC. (1) (2) TENNESSEE
FASHION BUG #258,INC. TENNESSEE
FASHION BUG #2590,INC. TENNESSEE
FASHION BUG #2591,INC. (1) (2) CALIFORNIA
FASHION BUG #2592,INC. CALIFORNIA
FASHION BUG #2593,INC. ARIZONA
FASHION BUG #2594,INC. CALIFORNIA
FASHION BUG #2595,INC. (1) (2) ARIZONA
FASHION BUG #2596,INC. NEBRASKA
FASHION BUG #2597 OF COLONIE,INC. NEW YORK
FASHION BUG #2598,INC. CALIFORNIA
FASHION BUG #2599,INC. (1) (2) CALIFORNIA
FASHION BUG #2600,INC. (1) (2) MAINE
FASHION BUG #2601,INC. INDIANA
FASHION BUG #2602,INC. IOWA
FASHION BUG #2603,INC. KENTUCKY
FASHION BUG #2604 OF VESTAL,INC. NEW YORK
FASHION BUG #2605,INC. MARYLAND
FASHION BUG #2606,INC. OHIO
FASHION BUG #2607,INC. NEW JERSEY
FASHION BUG #2608,INC. WISCONSIN
FASHION BUG #2609,INC. (1) (2) WISCONSIN
FASHION BUG #2610,INC. MICHIGAN
FASHION BUG #2611,INC. (1) (2) MICHIGAN
FASHION BUG #2612,INC. ALABAMA
FASHION BUG #2613,INC. (1) (2) WEST VIRGINIA
FASHION BUG #2614,INC. MISSISSIPPI
FASHION BUG #2615,INC. (1) (2) CONNECTICUT
FASHION BUG #2616,INC. MASSACHUSETTS
FASHION BUG #2617,INC. WASHINGTON
FASHION BUG #2618,INC. VIRGINIA
FASHION BUG #2619,INC. (1) (2) ILLINOIS
FASHION BUG #2620,INC. GEORGIA
FASHION BUG #2621,INC. PENNSYLVANIA
FASHION BUG #2622,INC. (1) (2) MASSACHUSETTS
FASHION BUG #2623,INC. IDAHO
FASHION BUG #2624,INC. (1) (2) ILLINOIS
FASHION BUG #2625 OF PLATTSBURG,INC. NEW YORK
FASHION BUG #2626,INC. ILLINOIS
FASHION BUG #2627 OF WEST SENECA,INC. NEW YORK
FASHION BUG #2628 OF NIAGRA FALLS,INC. NEW YORK
FASHION BUG #2629,INC. MICHIGAN
FASHION BUG #2630,INC. (1) (2) NORTH CAROLINA
FASHION BUG #2631,INC. TENNESSEE
FASHION BUG #2632,INC. (1) (2) FLORIDA
FASHION BUG #2633,INC. MINNESOTA
FASHION BUG #2634,INC. (1) (2) CALIFORNIA
FASHION BUG #2635 OF GENESEO,INC. NEW YORK
FASHION BUG #2636,INC. NEW HAMPSHIRE
FASHION BUG #2637,INC. IOWA
FASHION BUG #2638,INC. RHODE ISLAND
FASHION BUG #2639,INC. ARIZONA
FASHION BUG #263,INC. OHIO
FASHION BUG #2640,INC. (1) (2) IDAHO
FASHION BUG #2641,INC. (1) (2) MICHIGAN
FASHION BUG #2642,INC. MINNESOTA
FASHION BUG #2643,INC. OHIO
FASHION BUG #2644,INC. UTAH
FASHION BUG #2645,INC. MASSACHUSETTS
FASHION BUG #2646,INC. CALIFORNIA
FASHION BUG #2647,INC. CALIFORNIA
FASHION BUG #2648,INC. (1) (2) CALIFORNIA
<PAGE> 19
FASHION BUG #2649,INC. NEW MEXICA
FASHION BUG #2650,INC. (1) (2) IOWA
FASHION BUG #2650,INC. IOWA
FASHION BUG #2651,INC. MINNESOTA
FASHION BUG #2652,INC. PENNSYLVANIA
FASHION BUG #2653,INC. (1) (2) TENNESSEE
FASHION BUG #2654,INC. CONNECTICUT
FASHION BUG #2655,INC. (1) (2) WISCONSIN
FASHION BUG #2656,INC. WISCONSIN
FASHION BUG #2657,INC. (1) (2) PENNSYLVANIA
FASHION BUG #2658,INC. PENNSYLVANIA
FASHION BUG #265,INC. MAINE
FASHION BUG #2660,INC. OHIO
FASHION BUG #2661 OF LAKEWOOD, INC. NEW YORK
FASHION BUG #2662,INC. (1) (2) NEW JERSEY
FASHION BUG #2663,INC. PENNSYLVANIA
FASHION BUG #2664,INC. VIRGINIA
FASHION BUG #2665,INC. WISCONSIN
FASHION BUG #2666,INC. VIRGINIA
FASHION BUG #2667,INC. (2) VIRGINIA
FASHION BUG #2668,INC. (1) (2) ILLINOIS
FASHION BUG #2669,INC. FLORIDA
FASHION BUG #2670,INC. MARYLAND
FASHION BUG #2671,INC. MICHIGAN
FASHION BUG #2672,INC. (1) (2) MICHIGAN
FASHION BUG #2673,INC. NORTH CAROLINA
FASHION BUG #2674,INC. MASSACHUSETTS
FASHION BUG #2675,INC. (1) (2) COLORADO
FASHION BUG #2676,INC. OHIO
FASHION BUG #2677,INC. ILLINOIS
FASHION BUG #2678,INC. FLORIDA
FASHION BUG #2679,INC. CALIFORNIA
FASHION BUG #2680,INC. IOWA
FASHION BUG #2681,INC. OHIO
FASHION BUG #2682,INC. (1) (2) COLORADO
FASHION BUG #2684,INC. UTAH
FASHION BUG #2685,INC. MISSOURI
FASHION BUG #2687,INC. TENNESSEE
FASHION BUG #2688,INC. KENTUCKY
FASHION BUG #2689,INC. UTAH
FASHION BUG #2690,INC. (1) (2) DELAWARE
FASHION BUG #2691,INC. (1) (2) OHIO
FASHION BUG #2692,INC. OHIO
FASHION BUG #2693,INC. GEORGIA
FASHION BUG #2694,INC. CONNECTICUT
FASHION BUG #2695,INC. WISCONSIN
FASHION BUG #2696,INC. CALIFORNIA
FASHION BUG #2697,INC. MASSACHUSETTS
FASHION BUG #2698,INC. (1) (2) MASSACHUSETTS
FASHION BUG #2699,INC. MASSACHUSETTS
FASHION BUG #2700 OF PORT JEFFERSON,INC. NEW YORK
FASHION BUG #2701,INC. CALIFORNIA
FASHION BUG #2702,INC. INDIANA
FASHION BUG #2703,INC. (1) (2) KENTUCKY
FASHION BUG #2704,INC. MARYLAND
FASHION BUG #2705,INC. OHIO
FASHION BUG #2706,INC. (1) (2) TEXAS
FASHION BUG #2707,INC. MARYLAND
FASHION BUG #2708,INC. OHIO
FASHION BUG #2709,INC. OHIO
FASHION BUG #2710,INC. MASSACHUSETTS
FASHION BUG #2711,INC. (1) (2) MICHIGAN
FASHION BUG #2712,INC. (1) (2) MICHIGAN
FASHION BUG #2713,INC. IOWA
FASHION BUG #2714,INC. GEORGIA
FASHION BUG #2715 OF SYRACUSE,INC. (1) (2) NEW YORK
FASHION BUG #2716,INC. INDIANA
FASHION BUG #2717,INC. WISCONSIN
FASHION BUG #2718,INC. GEORGIA
FASHION BUG #2719,INC. IOWA
FASHION BUG #2720,INC. WEST VIRGINIA
FASHION BUG #2721,INC. PENNSYLVANIA
FASHION BUG #2722,INC. INDIANA
FASHION BUG #2723,INC. OHIO
FASHION BUG #2724,INC. (1) (2) INDIANA
FASHION BUG #2725,INC. (1) (2) CONNECTICUT
FASHION BUG #2726,INC. (1) (2) CALIFORNIA
FASHION BUG #2727,INC. CALIFORNIA
FASHION BUG #2728,INC. MINNESOTA
FASHION BUG #2729,INC. WISCONSIN
<PAGE> 20
FASHION BUG #2730,INC. DELAWARE
FASHION BUG #2731,INC. DELAWARE
FASHION BUG #2732,INC. GEORGIA
FASHION BUG #2733,INC. (1) (2) MISSOURI
FASHION BUG #2734,INC. (1) (2) IOWA
FASHION BUG #2735,INC. (1) (2) SOUTH DAKOTA
FASHION BUG #2736,INC. (1) (2) MISSOURI
FASHION BUG #2737,INC. MICHIGAN
FASHION BUG #2738,INC. KENTUCKY
FASHION BUG #2739 OF ROTTERDAM,INC. NEW YORK
FASHION BUG #2740,INC. (1) (2) KANSAS
FASHION BUG #2741,INC. (1) (2) OHIO
FASHION BUG #2742,INC. (1) (2) MASSACHUSETTS
FASHION BUG #2743,INC. (1) (2) CALIFORNIA
FASHION BUG #2744,INC. MASSACHUSETTS
FASHION BUG #2745,INC. MARYLAND
FASHION BUG #2748,INC. (1) (2) ILLINOIS
FASHION BUG #2748,INC. (1) (2) ILLINOIS
FASHION BUG #2749,INC. (1) (2) MINNESOTA
FASHION BUG #2750,INC. (1) (2) PENNSYLVANIA
FASHION BUG #2751,INC. INDIANA
FASHION BUG #2752,INC. ALABAMA
FASHION BUG #2753,INC. MISSISSIPPI
FASHION BUG #2754,INC. TENNESSEE
FASHION BUG #2755,INC. (1) (2) MISSOURI
FASHION BUG #2755,INC. (1) (2) MISSOURI
FASHION BUG #2756,INC. MAINE
FASHION BUG #2757,INC. (1) (2) SOUTH CAROLINA
FASHION BUG #2758,INC. GEORGIA
FASHION BUG #2759,INC. (1) (2) PENNSYLVANIA
FASHION BUG #2760,INC. NORTH CAROLINA
FASHION BUG #2761,INC. (1) (2) KENTUCKY
FASHION BUG #2762,INC. NEW JERSEY
FASHION BUG #2763,INC. PENNSYLVANIA
FASHION BUG #2764,INC. (1) (2) KENTUCKY
FASHION BUG #2765,INC. (1) (2) WASHINGTON
FASHION BUG #2766,INC. OHIO
FASHION BUG #2767,INC. PENNSYLVANIA
FASHION BUG #2768,INC. (1) (2) INDIANA
FASHION BUG #2769,INC. WYOMING
FASHION BUG #2770,INC. UTAH
FASHION BUG #2771,INC. IDAHO
FASHION BUG #2772,INC. (1) (2) OREGON
FASHION BUG #2773,INC. IDAHO
FASHION BUG #2774,INC. (1) (2) NEVADA
FASHION BUG #2775,INC. (1) (2) INDIANA
FASHION BUG #2775,INC. INDIANA
FASHION BUG #2777,INC. (1) (2) MICHIGAN
FASHION BUG #2778,INC. (1) (2) GEORGIA
FASHION BUG #2779,INC. OHIO
FASHION BUG #2780,INC. (1) (2) MICHIGAN
FASHION BUG #2782,INC. TEXAS
FASHION BUG #2783,INC. MINNESOTA
FASHION BUG #2784,INC. (1) (2) MISSOURI
FASHION BUG #2785,INC. (1) (2) ALABAMA
FASHION BUG #2786,INC. NEW HAMPSHIRE
FASHION BUG #2787,INC. MAINE
FASHION BUG #2788,INC. CALIFORNIA
FASHION BUG #2789,INC. VIRGINIA
FASHION BUG #2790,INC. WASHINGTON
FASHION BUG #2791,INC. OHIO
FASHION BUG #2792,INC. (1) (2) CALIFORNIA
FASHION BUG #2793,INC. (1) (2) CALIFORNIA
FASHION BUG #2794,INC. NEVADA
FASHION BUG #2795,INC. (1) (2) WISCONSIN
FASHION BUG #2796 OF COBLESKILL, INC. (1) (2) NEW YORK
FASHION BUG #2797,INC. (1) (2) NEW JERSEY
FASHION BUG #2798,INC. FLORIDA
FASHION BUG #2799,INC. (1) (2) FLORIDA
FASHION BUG #279,INC. OHIO
FASHION BUG #2800,INC. (1) (2) NORTH CAROLINA
FASHION BUG #2800,INC. (1) (2) NORTH CAROLINA
FASHION BUG #2802,INC. PENNSYLVANIA
FASHION BUG #2803,INC. TEXAS
FASHION BUG #2804,INC. TEXAS
FASHION BUG #2805,INC. TEXAS
FASHION BUG #2806,INC. (1) (2) VERMONT
FASHION BUG #2807,INC. (1) (2) INDIANA
FASHION BUG #2808,INC. KANSAS
FASHION BUG #2809,INC. INDIANA
<PAGE> 21
FASHION BUG #2810,INC. OHIO
FASHION BUG #2811,INC. NEW JERSEY
FASHION BUG #2812,INC. (1) (2) TEXAS
FASHION BUG #2813,INC. (1) (2) NEW JERSEY
FASHION BUG #2814,INC. WYOMING
FASHION BUG #2815,INC. (1) (2) FLORIDA
FASHION BUG #2816,INC. MASSACHUSETTS
FASHION BUG #2817,INC. (1) (2) MISSOURI
FASHION BUG #2818,INC. (1) (2) ILLINOIS
FASHION BUG #2819,INC. (1) (2) ILLINOIS
FASHION BUG #2820,INC. CONNECTICUT
FASHION BUG #2821,INC. VIRGINIA
FASHION BUG #2822,INC. (1) (2) MICHIGAN
FASHION BUG #2823,INC. (1) (2) CALIFORNIA
FASHION BUG #2824,INC. ARIZONA
FASHION BUG #2825,INC. (1) (2) CONNECTICUT
FASHION BUG #2826,INC. RHODE ISLAND
FASHION BUG #2827,INC. (1) (2) KENTUCKY
FASHION BUG #2828,INC. (1) (2) OHIO
FASHION BUG #2829,INC. OHIO
FASHION BUG #2830,INC. WASHINGTON
FASHION BUG #2831,INC. (1) (2) MAINE
FASHION BUG #2832,INC. (1) (2) MAINE
FASHION BUG #2833,INC. (1) (2) IOWA
FASHION BUG #2834,INC. (1) (2) MICHIGAN
FASHION BUG #2835,INC. NEBRASKA
FASHION BUG #2836,INC. (1) (2) UTAH
FASHION BUG #2836,INC. UTAH
FASHION BUG #2837,INC. (1) (2) GEORGIA
FASHION BUG #2837,INC. (1) (2) GEORGIA
FASHION BUG #2838,INC. (1) (2) OREGON
FASHION BUG #2839,INC. (1) (2) CALIFORNIA
FASHION BUG #2840,INC. (1) (2) NEVADA
FASHION BUG #2841,INC. INDIANA
FASHION BUG #2842,INC. ILLINOIS
FASHION BUG #2843,INC. TEXAS
FASHION BUG #2844,INC. (1) (2) PENNSYLVANIA
FASHION BUG #2845,INC. CALIFORNIA
FASHION BUG #2846,INC. (1) (2) NEW MEXICA
FASHION BUG #2848,INC. NEW JERSEY
FASHION BUG #2849,INC. RHODE ISLAND
FASHION BUG #2850,INC. MICHIGAN
FASHION BUG #2851,INC. (1) (2) NEW JERSEY
FASHION BUG #2852,INC. COLORADO
FASHION BUG #2853 OF ROME, INC. (1) (2) NEW YORK
FASHION BUG #2854,INC. COLORADO
FASHION BUG #2855,INC. ILLINOIS
FASHION BUG #2856,INC. (1) (2) WISCONSIN
FASHION BUG #2857,INC. OHIO
FASHION BUG #2858,INC. CALIFORNIA
FASHION BUG #2859,INC. (1) (2) GEORGIA
FASHION BUG #2860,INC. (1) (2) CALIFORNIA
FASHION BUG #2861,INC. (1) (2) ALABAMA
FASHION BUG #2862,INC. (1) (2) CALIFORNIA
FASHION BUG #2863,INC. MASSACHUSETTS
FASHION BUG #2864,INC. (1) (2) OHIO
FASHION BUG #2865,INC. (1) (2) TEXAS
FASHION BUG #2866,INC. (1) (2) IOWA
FASHION BUG #2867,INC. (1) (2) ARIZONA
FASHION BUG #2868,INC. (1) (2) ARIZONA
FASHION BUG #2869,INC. (1) (2) MARYLAND
FASHION BUG #2870,INC. CALIFORNIA
FASHION BUG #2871 OF ALBANY,INC. (1) (2) NEW YORK
FASHION BUG #2872,INC. (1) (2) WISCONSIN
FASHION BUG #2873,INC. (1) (2) GEORGIA
FASHION BUG #2874,INC. (1) (2) INDIANA
FASHION BUG #2876,INC. IOWA
FASHION BUG #2877,INC. (1) (2) ALABAMA
FASHION BUG #2878,INC. (1) (2) OHIO
FASHION BUG #2879,INC. OREGON
FASHION BUG #2880,INC. (1) (2) CALIFORNIA
FASHION BUG #2881,INC. NEW HAMPSHIRE
FASHION BUG #2883,INC. (1) (2) WEST VIRGINIA
FASHION BUG #2884,INC. TEXAS
FASHION BUG #2885,INC. (1) (2) TEXAS
FASHION BUG #2886,INC. (1) (2) ILLINOIS
FASHION BUG #2887,INC. (1) (2) TEXAS
FASHION BUG #2888,INC. (1) (2) TEXAS
FASHION BUG #2889,INC. (1) (2) VERMONT
FASHION BUG #2890,INC. TENNESSEE
<PAGE> 22
FASHION BUG #2891,INC. TEXAS
FASHION BUG #2892,INC. IDAHO
FASHION BUG #2893,INC. (1) (2) MONTANA
FASHION BUG #2894,INC. ILLINOIS
FASHION BUG #2895,INC. TENNESSEE
FASHION BUG #2896,INC. (1) (2) UTAH
FASHION BUG #2897,INC. FLORIDA
FASHION BUG #2898,INC. CALIFORNIA
FASHION BUG #2899,INC. (1) (2) WASHINGTON
FASHION BUG #2900,INC. (1) (2) CALIFORNIA
FASHION BUG #2901,INC (1) (2) CALIFORNIA
FASHION BUG #2902,INC. (1) (2) IOWA
FASHION BUG #2903,INC. (1) (2) NEBRASKA
FASHION BUG #2904,INC. (1) (2) SOUTH DAKOTA
FASHION BUG #2905,INC. (1) (2) INDIANA
FASHION BUG #2906,INC. (1) (2) INDIANA
FASHION BUG #2907,INC. (1) (2) ILLINOIS
FASHION BUG #2908,INC. (1) (2) PENNSYLVANIA
FASHION BUG #2909,INC. (1) (2) PENNSYLVANIA
FASHION BUG #2910 OF POUGHKEEPSIE, INC. (1) (2) NEW YORK
FASHION BUG #2911,INC. (1) (2) TENNESSEE
FASHION BUG #2912 OF VICTOR,INC. (1) (2) NEW YORK
FASHION BUG #2913,INC. (1) (2) PENNSYLVANIA
FASHION BUG #2914,INC. (1) (2) WYOMING
FASHION BUG #2915,INC. (1) (2) MASSACHUSETTS
FASHION BUG #2916,INC. (1) (2) NEW JERSEY
FASHION BUG #2917,INC. (1) (2) GEORGIA
FASHION BUG #2918,INC. (1) (2) FLORIDA
FASHION BUG #2919,INC. (1) (2) FLORIDA
FASHION BUG #2920,INC. (1) (2) WASHINGTON
FASHION BUG #2921,INC. (1) (2) TEXAS
FASHION BUG #2922,INC. (1) (2) PENNSYLVANIA
FASHION BUG #2923 OF AMSTERDAM,INC. (1) (2) NEW YORK
FASHION BUG #2924,INC. (1) (2) WISCONSIN
FASHION BUG #2925,INC. (1) (2) KANSAS
FASHION BUG #2927,INC. (1) (2) NEW JERSEY
FASHION BUG #2928,INC. (1) (2) RHODE ISLAND
FASHION BUG #2929,INC. (1) (2) MASSACHUSETTS
FASHION BUG #2930,INC. (1) (2) ILLINOIS
FASHION BUG #2931,INC. (1) (2) INDIANA
FASHION BUG #2932,INC. (1) (2) MASSACHUSETTS
FASHION BUG #2934,INC. (1) (2) CALIFORNIA
FASHION BUG #2936,INC. (1) (2) NORTH CAROLINA
FASHION BUG #2937,INC. (1) (2) GEORGIA
FASHION BUG #2940,INC (1) (2) TEXAS
FASHION BUG #2941,INC. (1) (2) DELAWARE
FASHION BUG #2942,INC. (1) (2) UTAH
FASHION BUG #2944,INC. (1) (2) CALIFORNIA
FASHION BUG #2945 OF MEDIA,INC. (1) (2) NEW YORK
FASHION BUG #2947,INC. (1) (2) GEORGIA
FASHION BUG #2948,INC. (1) (2) FLORIDA
FASHION BUG #2949,INC. (1) (2) MICHIGAN
FASHION BUG #2950,INC. (1) (2) CALIFORNIA
FASHION BUG #2951,INC. (1) (2) NORTH CAROLINA
FASHION BUG #2952,INC. (1) (2) OHIO
FASHION BUG #2953,INC. (1) (2) ILLINOIS
FASHION BUG #2954,INC. (1) (2) MICHIGAN
FASHION BUG #2955,INC. (1) (2) VIRGINIA
FASHION BUG #2956,INC. (1) (2) MICHIGAN
FASHION BUG #2957,INC. (1) (2) MASSACHUSETTS
FASHION BUG #2958,INC. (1) (2) MICHIGAN
FASHION BUG #2959 OF BUFFALO,INC. (1) (2) NEW YORK
FASHION BUG #2964,INC. (1) (2) CALIFORNIA
FASHION BUG #2965,INC. (1) (2) TENNESSEE
FASHION BUG #2966,INC. (1) (2) INDIANA
FASHION BUG #2967,INC. (1) (2) MINNESOTA
FASHION BUG #2968,INC. (1) (2) OREGON
FASHION BUG #2969,INC. (1) (2) WYOMING
FASHION BUG #2970,INC. (1) (2) PENNSYLVANIA
FASHION BUG #2971,INC. (1) (2) CONNECTICUT
FASHION BUG #2972,INC. (1) (2) TEXAS
FASHION BUG #2973,INC. (1) (2) TEXAS
FASHION BUG #2974,INC. (1) (2) MICHIGAN
FASHION BUG #2975,INC. (1) (2) MISSOURI
FASHION BUG #2976,INC. (1) (2) KENTUCKY
FASHION BUG #2977,INC. (1) (2) TEXAS
FASHION BUG #2978,INC. (1) (2) OHIO
FASHION BUG #2980,INC. (1) (2) FLORIDA
FASHION BUG #2981,INC. (1) (2) FLORIDA
FASHION BUG #2982,INC. (1) (2) VERMONT
<PAGE> 23
FASHION BUG #336,INC. (1) (2) INDIANA
FASHION BUG #418,INC. NEW JERSEY
FASHION BUG #429,INC. MINNESOTA
FASHION BUG #42,INC. (1) (2) MISSOURI
FASHION BUG #44,INC. PENNSYLVANIA
FASHION BUG #461,INC. (2) OKLAHOMA
FASHION BUG #467 OF LEVITTOWN,INC. (2) NEW YORK
FASHION BUG #471,INC. MINNESOTA
FASHION BUG #47,INC. INDIANA
FASHION BUG #507, INC. (2) NEW YORK
FASHION BUG #508, INC. ILLINOIS
FASHION BUG #519, INC. WEST VIRGINIA
FASHION BUG #520, INC. MASSACHUSETTS
FASHION BUG #527,INC. KANSAS
FASHION BUG #529 OF HAMBURG,INC. NEW YORK
FASHION BUG #533, INC. (2) MICHIGAN
FASHION BUG #534,INC. INDIANA
FASHION BUG #535, INC. MICHIGAN
FASHION BUG #538,INC. MAINE
FASHION BUG #544,INC. (2) OHIO
FASHION BUG #545, INC. VERMONT
FASHION BUG #548, INC. MAINE
FASHION BUG #554,INC. PENNSYLVANIA
FASHION BUG #558,INC. TENNESSEE
FASHION BUG #560 OF GLOVERSVILLE, INC. NEW YORK
FASHION BUG #561,INC. FLORIDA
FASHION BUG #562,INC. NEW JERSEY
FASHION BUG #563,INC. ILLINOIS
FASHION BUG #564,INC. MISSOURI
FASHION BUG #565,INC. MICHIGAN
FASHION BUG #566,INC. INDIANA
FASHION BUG #567,INC. ILLINOIS
FASHION BUG #568,INC. WISCONSIN
FASHION BUG #569,INC. (2) ILLINOIS
FASHION BUG #570 OF CLIFTON PARK,INC. NEW YORK
FASHION BUG #571,INC. TENNESSEE
FASHION BUG #572,INC. (2) LOUISIANA
FASHION BUG #573,INC. PENNSYLVANIA
FASHION BUG #574 OF SYRACUSE,INC. NEW YORK
FASHION BUG #575,INC. MINNESOTA
FASHION BUG #576,INC. NEW JERSEY
FASHION BUG #577,INC. MICHIGAN
FASHION BUG #578,INC. (2) PENNSYLVANIA
FASHION BUG #579,INC. (2) MAINE
FASHION BUG #580,INC. MAINE
FASHION BUG #581,INC. NEW HAMPSHIRE
FASHION BUG #582,INC. (2) VIRGINIA
FASHION BUG #583,INC. KENTUCKY
FASHION BUG #584 OF YONKERS,INC. NEW YORK
FASHION BUG #585,INC. NEW JERSEY
FASHION BUG #586,INC. NEW JERSEY
FASHION BUG #587,INC. (2) MICHIGAN
FASHION BUG #588,INC. ILLINOIS
FASHION BUG #589,INC. ILLINOIS
FASHION BUG #591,INC. MISSOURI
FASHION BUG #592,INC. ILLINOIS
FASHION BUG #593 OF SELDEN,INC. NEW YORK
FASHION BUG #594,INC. KANSAS
FASHION BUG #595,INC. INDIANA
FASHION BUG #596,INC. CONNECTICUT
FASHION BUG #597,INC. MINNESOTA
FASHION BUG #599,INC. MASSACHUSETTS
FASHION BUG #600,INC. PENNSYLVANIA
FASHION BUG #601,INC. SOUTH CAROLINA
FASHION BUG #602,INC. PENNSYLVANIA
FASHION BUG #603 OF HUDSON AVENUE,INC. (1) (2) NEW YORK
FASHION BUG #604,INC. (1) (2) IOWA
FASHION BUG #605,INC. MICHIGAN
FASHION BUG #606,INC. MICHIGAN
FASHION BUG #607,INC. MICHIGAN
FASHION BUG #608,INC. (2) FLORIDA
FASHION BUG #609,INC. MASSACHUSETTS
FASHION BUG #610,INC. (1) (2) RHODE ISLAND
FASHION BUG #611,INC. (2) ALABAMA
FASHION BUG #612,INC. OHIO
FASHION BUG #613,INC. PENNSYLVANIA
FASHION BUG #614,INC. MASSACHUSETTS
FASHION BUG #615,INC. PENNSYLVANIA
FASHION BUG #616,INC. (2) CONNECTICUT
FASHION BUG #617,INC. MASSACHUSETTS
<PAGE> 24
FASHION BUG #618,INC. SOUTH CAROLINA
FASHION BUG #619,INC. (2) PENNSYLVANIA
FASHION BUG #620,INC. (1) (2) ILLINOIS
FASHION BUG #621,INC. PENNSYLVANIA
FASHION BUG #622,INC. WISCONSIN
FASHION BUG #623,INC. ILLINOIS
FASHION BUG #624,INC. MISSOURI
FASHION BUG #625,INC. (2) PENNSYLVANIA
FASHION BUG #626,INC. MARYLAND
FASHION BUG #627,INC. OHIO
FASHION BUG #628,INC. MICHIGAN
FASHION BUG #629,INC. NEW JERSEY
FASHION BUG #630,INC. INDIANA
FASHION BUG #631,INC. PENNSYLVANIA
FASHION BUG #632,INC. (2) KENTUCKY
FASHION BUG #633 OF DEWITT, INC. (2) NEW YORK
FASHION BUG #634,INC. (2) VIRGINIA
FASHION BUG #635,INC. PENNSYLVANIA
FASHION BUG #636,INC. ILLINOIS
FASHION BUG #637,INC. TENNESSEE
FASHION BUG #638,INC. MICHIGAN
FASHION BUG #639,INC. MARYLAND
FASHION BUG #640,INC. (1) (2) NEW JERSEY
FASHION BUG #641,INC. NEW JERSEY
FASHION BUG #642,INC. PENNSYLVANIA
FASHION BUG #643,INC. PENNSYLVANIA
FASHION BUG #644,INC. GEORGIA
FASHION BUG #645,INC. MICHIGAN
FASHION BUG #646,INC. OHIO
FASHION BUG #647,INC. MAINE
FASHION BUG #648,INC. (2) OHIO
FASHION BUG #649,INC. PENNSYLVANIA
FASHION BUG #650,INC. VIRGINIA
FASHION BUG #651,INC. MICHIGAN
FASHION BUG #652,INC. (2) LOUISIANA
FASHION BUG #653,INC. NEW JERSEY
FASHION BUG #654,INC. ALABAMA
FASHION BUG #655,INC. (1) (2) WASHINGTON
FASHION BUG #656,INC. FLORIDA
FASHION BUG #657,INC. MISSOURI
FASHION BUG #658,INC. MASSACHUSETTS
FASHION BUG #659,INC. MINNESOTA
FASHION BUG #660 OF ALBANY,INC. NEW YORK
FASHION BUG #661,INC. WEST VIRGINIA
FASHION BUG #662,INC. PENNSYLVANIA
FASHION BUG #663,INC. PENNSYLVANIA
FASHION BUG #664,INC. COLORADO
FASHION BUG #665,INC. (2) COLORADO
FASHION BUG #666,INC. (1) (2) MICHIGAN
FASHION BUG #667,INC. MICHIGAN
FASHION BUG #668 OF SHIRLEY,INC. NEW YORK
FASHION BUG #669,INC. (2) MICHIGAN
FASHION BUG #670,INC. MASSACHUSETTS
FASHION BUG #671,INC. (1) (2) VIRGINIA
FASHION BUG #672,INC. MICHIGAN
FASHION BUG #673,INC. KENTUCKY
FASHION BUG #674,INC. ILLINOIS
FASHION BUG #675,INC. (2) LOUISIANA
FASHION BUG #676 OF OZONE PARK,INC. NEW YORK
FASHION BUG #677,INC. (2) FLORIDA
FASHION BUG #678,INC. OHIO
FASHION BUG #679 OF WATERTOWN,INC. NEW YORK
FASHION BUG #680,INC. (2) PENNSYLVANIA
FASHION BUG #681,INC. INDIANA
FASHION BUG #682,INC. (2) GEORGIA
FASHION BUG #683,INC. WISCONSIN
FASHION BUG #684,INC. NORTH CAROLINA
FASHION BUG #685,INC. (2) OHIO
FASHION BUG #686,INC. ILLINOIS
FASHION BUG #687,INC. ILLINOIS
FASHION BUG #688,INC. (2) PENNSYLVANIA
FASHION BUG #689,INC. PENNSYLVANIA
FASHION BUG #690,INC. (2) OHIO
FASHION BUG #691,INC. MARYLAND
FASHION BUG #692,INC. (2) MISSOURI
FASHION BUG #693,INC. MICHIGAN
FASHION BUG #694,INC. (2) MICHIGAN
FASHION BUG #695,INC. OHIO
FASHION BUG #696,INC. VIRGINIA
FASHION BUG #697,INC. OHIO
<PAGE> 25
FASHION BUG #698,INC. OHIO
FASHION BUG #699,INC. NEW JERSEY
FASHION BUG #712,INC. (2) IOWA
FASHION BUG #716, INC. RHODE ISLAND
FASHION BUG #717,INC. MICHIGAN
FASHION BUG #718,INC. (2) ILLINOIS
FASHION BUG #719,INC. OHIO
FASHION BUG #720 OF OSWEGO,INC. NEW YORK
FASHION BUG #721,INC. MASSACHUSETTS
FASHION BUG #722,INC. (2) LOUISIANA
FASHION BUG #723,INC. ALABAMA
FASHION BUG #724,INC. NEW HAMPSHIRE
FASHION BUG #725,INC. ERR ERR FLORIDA
FASHION BUG #726,INC. KANSAS
FASHION BUG #727,INC. MAINE
FASHION BUG #728,INC. (2) ALABAMA
FASHION BUG #729,INC. MICHIGAN
FASHION BUG #730,INC. OHIO
FASHION BUG #731,INC. ILLINOIS
FASHION BUG #732,INC. MICHIGAN
FASHION BUG #733,INC. INDIANA
FASHION BUG #734 OF DUNKIRK,INC. NEW YORK
FASHION BUG #735,INC. (2) TENNESSEE
FASHION BUG #736,INC. MISSOURI
FASHION BUG #737,INC. MASSACHUSETTS
FASHION BUG #738,INC. NORTH CAROLINA
FASHION BUG #739,INC. OHIO
FASHION BUG #740,INC. WISCONSIN
FASHION BUG #741,INC. OHIO
FASHION BUG #742,INC. OHIO
FASHION BUG #743,INC. OHIO
FASHION BUG #744,INC. (1) (2) FLORIDA
FASHION BUG #745,INC. MICHIGAN
FASHION BUG #746,INC. (2) LOUISIANA
FASHION BUG #747,INC. (2) LOUISIANA
FASHION BUG #748,INC. OHIO
FASHION BUG #749,INC. (2) CONNECTICUT
FASHION BUG #750,INC. (2) MAINE
FASHION BUG #751,INC. MICHIGAN
FASHION BUG #752,INC. VERMONT
FASHION BUG #753 OF RIDGEMONT PLAZA,INC. (2) NEW YORK
FASHION BUG #754,INC. PENNSYLVANIA
FASHION BUG #755,INC. MAINE
FASHION BUG #756,INC. CONNECTICUT
FASHION BUG #757 OF BROCKPORT,INC. NEW YORK
FASHION BUG #758,INC. WISCONSIN
FASHION BUG #759,INC. MICHIGAN
FASHION BUG #760 OF PINE PLAZA,INC. NEW YORK
FASHION BUG #761,INC. MISSOURI
FASHION BUG #762,INC. MISSOURI
FASHION BUG #763,INC. MISSOURI
FASHION BUG #764,INC. ILLINOIS
FASHION BUG #765 OF LACKAWANNA,INC. (2) NEW YORK
FASHION BUG #766,INC. OHIO
FASHION BUG #767,INC. WEST VIRGINIA
FASHION BUG #768,INC. VIRGINIA
FASHION BUG #769,INC. OHIO
FASHION BUG #770,INC. (1) (2) MICHIGAN
FASHION BUG #771,INC. MICHIGAN
FASHION BUG #772 OF MIDDLETOWN,INC. NEW YORK
FASHION BUG #773,INC. TENNESSEE
FASHION BUG #774,INC. PENNSYLVANIA
FASHION BUG #775,INC. VERMONT
FASHION BUG #776,INC. KENTUCKY
FASHION BUG #778,INC. PENNSYLVANIA
FASHION BUG #779,INC. KENTUCKY
FASHION BUG #780,INC. (2) VIRGINIA
FASHION BUG #781,INC. OHIO
FASHION BUG #782,INC. INDIANA
FASHION BUG #784,INC. VIRGINIA
FASHION BUG #785,INC. MICHIGAN
FASHION BUG #786,INC. CONNECTICUT
FASHION BUG #787,INC. RHODE ISLAND
FASHION BUG #788,INC. MASSACHUSETTS
FASHION BUG #789,INC. (2) MISSOURI
FASHION BUG #790,INC. OHIO
FASHION BUG #791,INC. ILLINOIS
FASHION BUG #792,INC. NORTH CAROLINA
FASHION BUG #793,INC. VIRGINIA
FASHION BUG #794,INC. (2) OKLAHOMA
<PAGE> 26
FASHION BUG #795,INC. MICHIGAN
FASHION BUG #796,INC. (2) OHIO
FASHION BUG #797,INC. KANSAS
FASHION BUG #798,INC. OHIO
FASHION BUG #799,INC. VIRGINIA
FASHION BUG #84 OF QUEENS,INC. NEW YORK
FASHION BUG #95,INC.(907) MARYLAND
FASHION BUG & FASHION BUG PLUS #2179,INC. FLORIDA
FASHION OUTLET OF DELAWARE,INC. (2) PENNSYLVANIA
FASHION SERVICE CORP (2) DELAWARE
FASHION VALUE OUTLET OF CAMPHILL,INC. (2) PENNSYLVANIA
FB APPAREL INDIANA
FB CLOTHING,INC. (1) (2) INDIANA
FB DISTRO INDIANA
FSC SERVICE CORP. (1) (2) PENNSYLVANIA
FSHC,INC. (1) (2) DELAWARE
F.B. PLUS WOMEN'S APPAREL OF JOHNSON CITY, INC. NEW YORK
F.B. PLUS WOMEN'S APPAREL OF KINGSTON, INC. NEW YORK
F.B. PLUS WOMEN'S APPAREL OF PINE PLAZA, INC. (2) NEW YORK
F.B. PLUS WOMEN'S APPAREL OF RIVERSIDE,INC. (2) NEW YORK
F.B. PLUS WOMEN'S APPAREL OF RIVERSIDE,INC. (2) NEW YORK
F.B. PLUS WOMEN'S APPAREL OF WEST SENECA, INC. (2) NEW YORK
F.B. WOMEN'S APPAREL OF AMSTERDAM, INC. NEW YORK
F.B. WOMEN'S APPAREL OF CAMILLUS,INC. (2) NEW YORK
F.B. WOMEN'S APPAREL OF CLAY, INC. NEW YORK
F.B. WOMEN'S APPAREL OF COLONIE, INC. (2) NEW YORK
F.B. WOMEN'S APPAREL OF DELMAR, INC. NEW YORK
F.B. WOMEN'S APPAREL OF DEPEW, INC. NEW YORK
F.B. WOMEN'S APPAREL OF ONEONTA,INC. NEW YORK
F.B. WOMEN'S APPAREL OF PANORAMA PLAZA, INC. NEW YORK
F.B. WOMEN'S APPAREL OF RIVERSIDE,INC. (2) NEW YORK
F.B. WOMEN'S APPAREL OF SARATOGA SPRINGS, INC. (2) NEW YORK
F.B. WOMEN'S APPAREL OF SCHENECTADY, INC. (2) NEW YORK
F.B. WOMEN'S APPAREL OF SHOP CITY, INC. NEW YORK
F.B. WOMEN'S APPAREL OF UTICA,INC. (2) NEW YORK
F.B. WOMEN'S APPAREL OF WEST SENECA,INC. (1) (2) NEW YORK
F.B. WOMEN'S APPAREL OF YORKTOWN HEIGHTS, INC. NEW YORK
F.B. WOMEN'S APPAREL #2481 OF RIVERSIDE,INC. NEW YORK
HOUGHTON LAKE #2611 DEVELOPMENT CO.,INC. (1) (2) MICHIGAN
INTERNATIONAL APPAREL (1) (2) PENNSYLVANIA
J.G.RYCE OF LEVITTOWN,INC. (2) PENNSYLVANIA
J.G.RYCE OF SANDY PLAZA,INC. (2) NEW YORK
J.M. BALTER CO (1) (2) PENNSYLVANIA
J.P.A. SERVICE CO. GEORGIA
J.P.A. SERVICE CO. (1) (2) PENNSYLVANIA
KIRKSTONE LTD (1) (2) HONG KONG
LEWISVILLE #2782 DEVELOPMENT CO.,INC. (1) (2) TEXAS
MACOMB #2619 DEVELOPMENT CO., INC. (1) (2) ILLINOIS
MACOMB #2916 DEVELOPMENT CO.,INC. (1) (2) ILLINOIS
MARWIN AVENUE,INC. (2) PENNSYLVANIA
ORLE (1) (2) DELAWARE
OWENSBORO #2976 DEVELOPMENT CO.,INC. (1) (2) KENTUCKY
PRESQUE ISLE #2756 DEVELOPMENT CO.,INC. (1) (2) MAINE
PRICE APPEAL #11000,INC. (2) WASHINGTON, D.C.
PRICE APPEAL #5000,INC. (2) NEW JERSEY
PRICE APPEAL #5001 OF STATEN ISLAND,INC. (1) (2) NEW YORK
PRICE APPEAL #5002,INC. (2) PENNSYLVANIA
PRICE APPEAL #5003,INC. (2) DELAWARE
PRICE APPEAL #5004,INC. (2) NEW JERSEY
PRICE APPEAL #5005,INC. (2) MARYLAND
PRICE APPEAL #5006,INC. (2) MASSACHUSETTS
PRICE APPEAL #5007,INC. (2) MASSACHUSETTS
PRICE APPEAL #5008,INC. (2) MARYLAND
PRICE APPEAL #5009,INC. (2) VIRGINIA
PRICE APPEAL #5010,INC. (2) MARYLAND
PRICE APPEAL #5011,INC. (2) NEW YORK
PRICE APPEAL #5012,INC. (2) MARYLAND
PRICE APPEAL #5013,INC. (2) PENNSYLVANIA
PRICE APPEAL #5014,INC. (2) CONNECTICUT
PRICE APPEAL #5015,INC. (1) (2) NEW JERSEY
PRICE APPEAL #5016,INC. (2) PENNSYLVANIA
PRICE APPEAL #5017,INC. (2) NEW JERSEY
PRICE APPEAL #5018,INC. (2) NEW JERSEY
PRICE APPEAL #5019,INC. (1) (2) NEW JERSEY
PRICE APPEAL #5020,INC. (1) (2) OHIO
PRICE APPEAL #5021,INC. (1) (2) NEW JERSEY
PRICE APPEAL #5022,INC. (1) (2) OHIO
PRICE APPEAL #5023,INC. (2) OHIO
PRICE APPEAL #5024,INC. (1) (2) NEW JERSEY
PRICE APPEAL #5025,INC. (1) (2) OHIO
<PAGE> 27
PRICE APPEAL #5026,INC. (1) (2) VIRGINIA
PRICE APPEAL #5027,INC. (1) (2) PENNSYLVANIA
PRICE APPEAL #5028,INC. (1) (2) NEW JERSEY
PRICE APPEAL #5029,INC. (1) (2) PENNSYLVANIA
PRICE APPEAL #5030,INC. (2) NEW JERSEY
PRICE APPEAL #5031,INC. (2) ILLINOIS
PRICE APPEAL #5032,INC. (2) ILLINOIS
PRICE APPEAL #5033,INC. (2) OHIO
PRICE APPEAL #5034,INC. (2) ILLINOIS
PRICE APPEAL #5035,INC. (2) ILLINOIS
PRICE APPEAL #5037,INC. (2) PENNSYLVANIA
PRICE APPEAL #5038,INC. (2) NEW JERSEY
PRICE APPEAL #5039,INC. (2) PENNSYLVANIA
PRICE APPEAL #5041,INC. (2) VIRGINIA
PRICE APPEAL #5042,INC. (2) MARYLAND
PRICE APPEAL #5043,INC. (2) MARYLAND
PRICE APPEAL #5044,INC. (2) MARYLAND
PRICE APPEAL #5045,INC. (2) OHIO
PRICE APPEAL #5046,INC. (2) PENNSYLVANIA
PRICE APPEAL #5047,INC. (2) MARYLAND
PRICE APPEAL #5048,INC. (2) MICHIGAN
PRICE APPEAL #5049,INC. (2) MICHIGAN
PRICE APPEAL #5050,INC. (2) MICHIGAN
PRICE APPEAL #5051,INC. (2) MASSACHUSETTS
PRICE APPEAL #5052,INC. (1) (2) WASHINGTON, D.C.
PRICE APPEAL #5053,INC. (1) (2) MARYLAND
PRICE APPEAL #5054,INC. (1) (2) MARYLAND
PRICE APPEAL #5055,INC. (1) (2) OHIO
PRICE APPEAL #5056,INC. (1) (2) MARYLAND
PRICE APPEAL #5057,INC. (1) (2) MARYLAND
PRICE APPEAL #5058,INC. (2) OHIO
PRICE APPEAL #5059,INC. (2) OHIO
PRICE APPEAL #5060,INC. (1) (2) MICHIGAN
PRICE APPEAL #5061,INC. (2) WASHINGTON, D.C.
P'ZAZZ FASHIONS OF BARBOURSVILLE,INC. (2) WEST VIRGINIA
P'ZAZZ FASHIONS OF FRANKLIN,INC. (1) (2) PENNSYLVANIA
P'ZAZZ FASHIONS OF FT LAUDERDALE, INC. (2) FLORIDA
P'ZAZZ FASHIONS OF HAGERSTOWN, INC. (2) MARYLAND
P'ZAZZ FASHIONS OF HARRISBURG EAST MALL,INC. (1) (2) PENNSYLVANIA
P'ZAZZ FASHIONS OF KALAMAZOO,INC. (2) MICHIGAN
P'ZAZZ FASHIONS OF OZONE,INC. (2) NEW YORK
P'ZAZZ FASHIONS OF PELHAM,INC. (2) NEW YORK
P'ZAZZ FASHIONS OF ROSEVILLE,INC. (2) MICHIGAN
P'ZAZZ FASHIONS OF SCRANTON,INC. (2) PENNSYLVANIA
P'ZAZZ FASHIONS OF SEAFORD, INC. (2) DELAWARE
P'ZAZZ FASHIONS OF SNYDER PLAZA,INC. (2) PENNSYLVANIA
P'ZAZZ FASHIONS OF ST ALBANS, INC. (2) WEST VIRGINIA
P'ZAZZ FASHIONS OF TOWER MALL,INC. (2) VIRGINIA
P'ZAZZ FASHIONS OF TOWER MALL,INC. (2) VIRGINIA
P'ZAZZ FASHIONS OF UNIONTOWN,INC. (2) PENNSYLVANIA
P'ZAZZ FASHIONS OF WYNCOTE,INC. (2) PENNSYLVANIA
ROLLA #2685 DEVELOPMENT CO., INC. (1) (2) MISSOURI
S A FUNDING,INC. (2) PENNSYLVANIA
SALINA #2926 DEVELOPMENT CO.,INC. (1) (2) KANSAS
SAN ANGELO #2973 DEVELOPMENT CO.,INC. (1) (2) TEXAS
SENTANI TRADING LTD. (1) (2) HONG KONG
SIKESTON #2736 DEVELOPMENT CO., (1) (2) MISSOURI
SPECIALTY FIXTURES,INC. (1) (2) PENNSYLVANIA
SPIRIT OF AMERICA NATIONAL BANK (1) (2) PENNSYLVANIA
ST JOSEPH #2784 DEVELOPMENT CO.,INC. (1) (2) MISSOURI
VICTORIA #2972 DEVELOPMENT CO.,INC. (1) (2) TEXAS
WINKS LANE,INC. (1) (2) PENNSYLVANIA
W.L. DISTRIBUTORS,INC. (1) (2) PENNSYLVANIA
YARDARM TRADING LTD. (1) (2) HONG KONG
YUCCA #2524 DEVELOPMENT CO.,INC. (1) (2) CALIFORNIA
NOTES:
(1) These companies are not included in the consolidated financial
statements for the fiscal year ended January 29, 1994, as they had
not then commenced operations and the original capitalization was
not then paid in.
(2) These companies currently do not operate stores.
<PAGE> 1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in Registration Statement (Form
S-8, No.33-39558), dated March 25, 1991, Registration Statement (Form S-8 No.
2-92975) dated September 17, 1984 and Registration Statement (Form S-3, No.
33-00074) dated September 25, 1985 of our report dated March 8, 1994 with
respect to the consolidated financial statements and schedules of Charming
Shoppes, Inc. included in this Annual Report (Form 10-K) for the year ended
January 29, 1994.
ERNST & YOUNG
Philadelphia, Pennsylvania
March 29, 1994
