<PAGE> 1
As filed with the Securities and Exchange Commission on December 23, 1997
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
CHARMING SHOPPES, INC.
(Exact name of registrant as specified in its charter)
Pennsylvania 23-1721355
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
450 Winks Lane
Bensalem, Pennsylvania 19020
(Address of principal executive offices)
CHARMING SHOPPES
VARIABLE DEFERRED COMPENSATION PLAN FOR EXECUTIVES
(Full title of the plan)
Colin D. Stern, Esq.
Charming Shoppes, Inc.
450 Winks Lane
Bensalem, Pennsylvania 19020
(Name and address of agent for service)
(215) 245-9100
(Telephone number, including area code, of agent for service)
Copy of all communications to:
Robert J. Lichtenstein, Esq.
Morgan, Lewis & Bockius LLP
2000 One Logan Square
Philadelphia, PA 19103
(215) 963-5000
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
====================================================================================================================================
Proposed maximum Proposed maximum
Title of securities Amount to be offering price aggregate Amount of
to be registered registered per unit offering price (2) registration fee
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Deferred $6,125,000 100% $6,125,000 $1806.88
Compensation
Obligations (1)
====================================================================================================================================
</TABLE>
(1) The Deferred Compensation Obligations are unsecured obligations of
Charming Shoppes, Inc. to pay deferred compensation in the future in
accordance with the terms of the Charming Shoppes Variable Deferred
Compensation Plan for Executives.
(2) Estimated solely for the purpose of determining the registration fee.
<PAGE> 2
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents filed by Charming Shoppes, Inc. with
the Securities and Exchange Commission ( the "Commission"), are incorporated by
reference in the Registration Statement:
1. Annual Report on Form 10-K, for the fiscal year Ended
February 1, 1997;
2. Quarterly Report on Form 10-Q, for the quarter ended
May 3, 1997, as amended by Form 10-Q/A;
3. Quarterly Report on Form 10-Q, for the quarter ended
August 2, 1997; and
4. Quarterly Report on Form 10-Q, for the quarter ended
November 1, 1997.
All reports and other documents subsequently filed by the
Registrant pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Securities
Exchange Act of 1934 (the "Exchange Act"), after the date of this Registration
Statement and prior to the filing of a post-effective amendment which indicates
that all securities offered hereby have been sold or which deregisters all
securities then remaining unsold, shall be deemed to be incorporated by
reference herein and to be part hereof from the date of filing of such
documents. Any statement contained in a document incorporated by reference
herein shall be deemed to be modified or superseded for purposes hereof to the
extent that a statement contained herein (or in any other subsequently filed
document that is also incorporated by reference herein) modifies or supersedes
such statement. Any such statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part hereof.
The consolidated financial statements of the Registrant
included in the Registrant's Annual Report on Form 10-K for the fiscal year
ended February 1, 1997 have been audited by Ernst & Young LLP, independent
auditors, as set forth in their reports thereon included therein and
incorporated herein by reference. Such financial statements are, and audited
financial statements to be included in subsequently filed documents will be,
incorporated herein in reliance upon the reports of Ernst & Young LLP pertaining
to such financial statements (to the extent covered by consents filed with the
Securities and Exchange Commission) given upon the authority of such firm as
experts in accounting and auditing.
ITEM 4. DESCRIPTION OF SECURITIES.
The Deferred Compensation Obligations (the "Obligations")
represent the Company's unsecured obligations to pay deferred compensation
pursuant to the Charming Shoppes Variable Deferred Compensation Plan for
Executives (the "Plan"). Under the Plan, the Registrant will provide eligible
employees the opportunity to defer a portion of their base salary and bonus
compensation. The maximum percentage of a participant's salary or bonus that may
be deferred is subject to maximum percentages determined by the Plan. In
addition, the Company will make matching contributions equal to a portion of the
amount of the deferrals, as determined by the Plan. Each participant's deferrals
and related matching contributions will be credited to the participant's account
(the "Distribution Option Account") covering a designated period (the
"Distribution Option Period"), which is generally four years. The first
enrollment agreement filed by an eligible employee during any Distribution
Option Period must set forth the participant's election as to the time and
manner of distribution from two sub-accounts, the In-Service Distribution
Account (pursuant to which distributions generally will be made to the
participant while the participant continues service with the Registrant) or the
Retirement Distribution Account (pursuant to which distributions generally will
be made following retirement). On an annual basis, the participant will indicate
the extent to which deferrals and matching contributions will be credited to
each sub-account. Payments upon termination of employment or death may be made
in a lump sum or pursuant to other distribution options that have been elected
by the participant in the first enrollment agreement filed by the participant
during a Distribution Option Period (subject, with respect to payments following
a participant's death, to a limited right to change the election
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regarding the Retirement Distribution Account.) In the event of a participant's
disability, commencement of distribution of amounts in the participant's
Retirement Distribution Account will be accelerated to the later of the year
following the year in which the participant first receives benefits under the
Company's Long-Term Disability Plan or the year in which the participant first
becomes eligible for retirement. In the event of a change of control, the
amounts in the participant's accounts will be repaid to the participant within
30 days following termination of service by the participant if the participant
terminates service for any reason within two years following the change of
control.
A participant's Distribution Option Accounts will be credited
with earnings pursuant to options (the "Earnings Crediting Options") selected by
the participant. The Earnings Crediting Options are indexed to one or more
investment funds specified in the Plan or such other investment funds as are
designated by the Company from time to time. Each participant's Distribution
Option Account will be adjusted to reflect the rate of return, positive or
negative, based upon the actual investment performance of the investment funds
corresponding to the Earnings Crediting Options selected by the participant, net
of certain asset based charges. A participant may change the Earnings Crediting
Options from time to time as set forth in the Plan.
Although the value of a participant's Distribution Option
Accounts (and, therefore, the amount of the liability under an obligation) will
be based upon the performance of the investment funds corresponding to the
Earnings Crediting Options, participants will not have an actual interest in
such funds but only in the Obligations. The Registrant is under no obligation to
invest any portion of the Obligations in any of the funds to which Earnings
Crediting Options are indexed.
No participant or beneficiary may transfer (other than by will
or the laws of descent and distribution), alienate, or otherwise encumber the
Obligations. The Registrant's obligations under the Plan are not assignable or
transferable except to (a) any corporation or partnership which acquires all or
substantially all of the Registrant's assets or (b) any corporation or
partnership into which the Registrant may be merged or consolidated.
Except as specifically provided below, a participant may not
redeem the Obligations prior to the payment dates specified by the participant
in the participant's enrollment agreements (or, with respect to certain
distributions from the Retirement Distribution Accounts, as may be changed by
the participant within such time period as is specified in the Plan). A
participant may elect to withdraw from the Plan all or a portion of the amount
due to the participant under the Obligations, or accelerate the payment of
Obligations that were being paid in installments, subject to a forfeiture of 10%
of the amount that is to be withdrawn or accelerated. In addition, upon written
request of a participant, the Plan Committee may, in its discretion, direct that
a participant be paid an amount (not to exceed the balance of the Obligations
attributable to the participant) sufficient to meet an "unforeseeable financial
emergency" as defined in the Plan. The Registrant reserves the right to amend,
suspend, discontinue or terminate the Plan at any time; provided, however, that
no such amendment, suspension, discontinuance or termination shall reduce or in
any manner adversely affect the rights of any participant with respect to
benefits that are payable or may become payable under the Plan based upon the
balance of the participant's Obligations as of the effective date of such
amendment, suspension, discontinuance or termination.
The Obligations are not convertible into another security of
the Company. The Obligations will not have the benefit of a negative pledge or
any other affirmative or negative covenant on the part of the Company. No
trustee has been appointed having the authority to take action with respect to
the Obligations and each employee participant will be responsible for acting
independently with respect to, among other things, the giving of notices,
responding to any requests for consents, waivers or amendments pertaining to the
Obligations, enforcing covenants and taking action upon a default.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
2
<PAGE> 4
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Sections 1741 and 1742 of the Pennsylvania Business
Corporation Law of 1988, as amended (the "PBCL") provide that a business
corporation may indemnify directors and officers against liabilities and
expenses they may incur as such provided that the particular person acted in
good faith and in a manner he or she reasonably believed to be in, or not
opposed to, the best interests of the corporation, and, with respect to any
criminal proceeding, had no reasonable cause to believe his or her conduct was
unlawful. In general, the power to indemnify under these sections does not exist
in the case of actions against a director or officer by or in the right of the
corporation if the person otherwise entitled to indemnification shall have been
adjudged to be liable to the corporation unless it is judicially determined
that, despite the adjudication of liability but in view of all the circumstances
of the case, the person is fairly and reasonably entitled to indemnification for
specified expenses. Section 1743 of the PBCL provides that the corporation is
required to indemnify directors and officers against expenses they may incur in
defending actions against them in such capacities if they are successful on the
merits or otherwise in the defense of such actions.
Section 1713 of the PBCL permits the shareholders to adopt a
bylaw provision relieving a director (but not an officer) of personal liability
for monetary damages except where (i) the director has breached the duties of
his or her office under Chapter 17, Subchapter B of the PBCL ("Subchapter B"),
and (ii) such conduct constitutes self-dealing, willful misconduct or
recklessness. The statute provides that a director may not be relieved of
responsibility under a criminal statute or of liability for the payment of taxes
pursuant to any federal, state or local law.
Section 1746 of the PBCL grants a corporation broad authority
to indemnify its directors and officers for liabilities and expenses incurred in
such capacity, except in circumstances where the act or failure to act giving
rise to the claim for indemnification is determined by a court to have
constituted willful misconduct or recklessness.
Section 1747 of the PBCL permits a corporation to purchase and
maintain insurance on behalf of any person who is or was a director or officer
of the corporation, or is or was serving at the request of the corporation as a
representative of another corporation or other enterprise, against any liability
asserted against such person and incurred by him or her in any such capacity, or
arising out of his or her status as such, whether or not the corporation would
have the power to indemnify the person against such liability under Subchapter
B.
Section 7.01 of the Bylaws provides that the Company will
identify any person who is a party to or is threatened to be made a party to any
threatened, pending or completed proceeding (including a proceeding by or in the
right of the Registrant) by reason of the fact that such person is or was a
director, officer or employee of the Registrant or, at the request of the
Registrant was serving 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 expenses
(including attorneys' fees), damages, punitive damages, judgments, penalties,
fines and amounts paid in settlement actually and reasonably incurred by such
person unless such act or failure to act is finally determined by a court to
have constituted willful misconduct or recklessness. Section 7.02 of the Bylaws
provides for the advancement of expenses to an indemnified party upon receipt of
an undertaking by the party to repay those amounts if it is ultimately
determined that the indemnified party is not entitled to indemnification.
Section 7.04 of the Bylaws authorizes the Registrant to use
any mechanism or arrangement, as determined by the Board of Directors, to
further effect, satisfy or secure its indemnification obligations, including
purchasing and maintaining insurance, obtaining a letter of credit, creating a
reserve, trust, escrow or other fund or account, entering into indemnification
agreements or granting security interests.
Section 7.05 of the Bylaws provides that the rights of
indemnification under the Bylaws will be deemed a contract between the Company
and each person entitled to indemnification. Section 7.06 of the Bylaws
3
<PAGE> 5
states that the indemnification authorized by the Bylaws will not be exclusive
of any other rights to which persons seeking indemnification or advancement of
expenses may be entitled.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
The exhibits filed as part of this Registration Statement are
as follows:
<TABLE>
<CAPTION>
Exhibit
Number Exhibit
- ------ -------
<S> <C>
5 Opinion of Morgan, Lewis & Bockius LLP
23.1 Consent of Ernst & Young LLP
23.2 Consent of Morgan, Lewis & Bockius LLP (included in Exhibit 5)
24 Power of Attorney (contained on signature page in Part II of the Registration Statement)
99 Charming Shoppes Variable Deferred Compensation Plan for Executives
</TABLE>
ITEM 9. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or
sales are being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any
facts or events arising after the effective date of the
registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in
the registration statement; and
(iii) To include any material information
with respect to the plan of distribution not previously
disclosed in the registration statement or any material change
to such information in the registration statement;
Provided, however, that subparagraphs (a)(1)(i)
and (a)(1)(ii) of this section do not apply if the information required to be
included in a post-effective amendment by those subparagraphs is contained in
periodic reports filed with or furnished to the Commission by the Registrant
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any
liability under the Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to the
4
<PAGE> 6
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being registered that remain
unsold at the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for the
purpose of determining any liability under the Securities Act of 1933, each
filing of the Registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934 that is incorporated by reference
in the registration statement shall be deemed to be a new registration statement
relating to the securities offered therein and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
5
<PAGE> 7
SIGNATURES
Pursuant to the requirements of the Securities Act of
1933, the Registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Bensalem, Commonwealth of Pennsylvania, on
December 23, 1997.
CHARMING SHOPPES, INC.
By: /s/ Dorrit J. Bern
--------------------------------------
Dorrit J. Bern
President, Chief Executive Officer
and Chairperson of the Board
KNOW ALL MEN BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints Dorrit J. Bern and Eric M.
Specter, and each of them, such person's true and lawful attorneys-in-fact and
agents, for such person and in such person's name, place and stead, in any and
all capacities, to sign any and all amendments to this Registration Statement,
including post-effective amendments, and to file the same, with all exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in connection with such filing, as fully as such person
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents may lawfully do or cause to be done by virtue
thereof.
Pursuant to the requirements of the Securities Act 1933,
this Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Capacity Date
--------- -------- ----
<S> <C> <C>
/s/ Dorrit J. Bern President, Chief Executive Officer and December 23, 1997
- -------------------------------- Chairperson of the Board
Dorrit J. Bern
/s/ Joseph L. Castle, II Director December 23, 1997
- --------------------------------
Joseph L. Castle, II
/s/ Geoffrey W. Levy Director December 23, 1997
- --------------------------------
Geoffrey W. Levy
/s/ Laura Liswood Director December 19, 1997
- --------------------------------
Laura Liswood
/s/ Marjorie Margolies-Mezvinsky Director December 23, 1997
- --------------------------------
Marjorie Margolies-Mezvinsky
/s/ Alan Rosskamm Director December 23, 1997
- --------------------------------
Alan Rosskamm
</TABLE>
6
<PAGE> 8
<TABLE>
<S> <C> <C>
/s/ Marvin L. Slomowitz Director December 23, 1997
- --------------------------------
Marvin L. Slomowitz
/s/ Michael Solomon Director December 19, 1997
- --------------------------------
Michael Solomon
/s/ Eric M. Specter Executive Vice President -- Chief December 23, 1997
- -------------------------------- Financial Officer
Eric M. Specter
/s/ Jon A. Goldberg Vice President -- Corporate Controller December 23, 1997
- -------------------------------- (Chief Accounting Officer)
Jon A. Goldberg
</TABLE>
7
<PAGE> 9
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Exhibit
- ------ -------
<S> <C>
5 Opinion of Morgan, Lewis & Bockius LLP
23.1 Consent of Ernst & Young LLP
23.2 Consent of Morgan, Lewis & Bockius LLP (included in Exhibit 5)
24 Power of Attorney (contained on signature page in Part II of the Registration Statement)
99 Charming Shoppes Variable Deferred Compensation Plan for Executives
</TABLE>
8
<PAGE> 1
Exhibit 5
2000 One Logan Square Morgan, Lewis
Philadelphia , PA 19103-6993 & Bockius LLP
215-963-5000 COUNSELORS AT LAW
Fax: 215-963-5299
December 22, 1997
Charming Shoppes, Inc.
450 Winks Lane
Bensalem, PA 19020
Ladies/Gentlemen:
We have acted as counsel for Charming Shoppes, Inc. a
Pennsylvania corporation (the "Company") in connection with the proposed filing
with the Securities and Exchange Commission under the Securities Act of 1933, as
amended, of a Registration Statement on Form S-8 (the "Registration Statement")
for the purpose of registering $6,125,000 of Deferred Compensation Obligations
which represent unsecured obligations of the Company to pay deferred
compensation in accordance with the terms of the Charming Shoppes Variable
Deferred Compensation Plan for Executives (the "Plan"). We have examined such
records and have made such examination of law as we deem appropriate in
connection with rendering such opinion.
Based upon the foregoing, we advise you that, in our
opinion, when issued in accordance with the provisions of the Plan, the Deferred
Compensation Obligations will be valid and binding obligations of the Company,
enforceable in accordance with their terms except as enforcement thereof may be
limited by bankruptcy, insolvency or other laws of general applicability
relating to or affecting enforcement of creditors' rights or general equity
principles.
The opinion set forth above is limited to the laws of the
Commonwealth of Pennsylvania.
We consent to the filing of this opinion as an Exhibit to
the Registration Statement. In giving this consent we do not admit that we are
in the category of persons whose consent is required under Section 7 of the
Securities Act of 1933 or the rules and regulations of the Securities and
Exchange Commission thereunder.
Very truly yours,
/s/ Morgan, Lewis & Bockius LLP
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption
"Incorporation of Documents by Reference" in the Registration Statement on Form
S-8 pertaining to the Charming Shoppes Variable Deferred Compensation Plan for
Executives and to the incorporation by reference therein of our report dated
March 10, 1997, with respect to the consolidated financial statements of
Charming Shoppes, Inc. included in its Annual Report on Form 10-K for the year
ended February 1, 1997, filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
Philadelphia, Pennsylvania
December 17, 1997
<PAGE> 1
CHARMING SHOPPES
VARIABLE DEFERRED COMPENSATION PLAN
FOR
EXECUTIVES
<PAGE> 2
ARTICLE 1
PURPOSE
The purpose of the Charming Shoppes Variable Deferred Compensation Plan
for Executives (the "Plan") is to provide a means whereby Charming Shoppes, Inc.
(hereinafter referred to as the "Company" or "Charming Shoppes ") may afford
increased financial security, on a tax-favored basis, to a select group of key
management employees of the Company who have rendered and continue to render
valuable services to the Company which constitute an important contribution
towards the Company's continued growth and success, by providing for additional
future compensation so that such employees may be retained and their productive
efforts encouraged.
ARTICLE 2
DEFINITIONS
Affiliate. "Affiliate" means any firm, partnership, or corporation that
directly or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with the Company. "Affiliate" also
includes any other organization similarly related to the Company that is
designated as such by the Board.
Base Salary. "Base Salary" means with respect to a Participant for any
Plan Year such Participant's annual base salary, before deferral pursuant to
this Plan or any agreement or any other plan of the Company whereby compensation
is deferred, including, without limitation, a plan whereby compensation is
deferred in accordance with Code Section 401(k) or reduced in accordance with
Code Section 125 .
Base Salary Deferral. "Base Salary Deferral" means that portion of Base
Salary as to which an Eligible Employee has made an annual irrevocable election
to defer receipt of until the date specified under the In-Service Distribution
Option and/or the Retirement Distribution Option.
Beneficial Owner, Beneficially Owns and Beneficial Ownership.
"Beneficial Owner, Beneficially Owns and Beneficial Ownership" shall have the
meanings ascribed to such terms for purposes of Section 13(d) of the Securities
Exchange Act of 1934 (the "Exchange Act") and the rules thereunder, except that,
for purposes of this definition, "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.
Beneficiary. "Beneficiary" means the person or persons designated as
such in accordance with Section 12.3.
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<PAGE> 3
Board. "Board" means the Board of Directors of Charming Shoppes.
Bonus Compensation. "Bonus Compensation" means with respect to a
Participant for any Plan Year such Participant's annual bonus compensation
before deferral pursuant to this Plan or any agreement or any other plan of the
Company whereby compensation is deferred, including, without limitation, a plan
whereby compensation is deferred in accordance with Code Section 401(k) or
reduced in accordance with Code Section 125.
Bonus Compensation Deferral. "Bonus Compensation Deferral" means that
portion of Bonus Compensation as to which an Eligible Employee has made an
annual irrevocable election to defer receipt of until the date specified under
the In-Service Distribution Option and/or the Retirement Distribution Option.
Change of Control. "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
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 the day after the Charming Shoppes'
annual shareholders meeting in the Plan Year prior to the determination
constitute the Board or who thereafter are elected to the Board and
whose election, or nomination for election, to the Board was approved
by a vote of at least two-thirds (2/3) of the directors then still in
office who either were directors as of the day after the Charming
Shoppes' annual shareholders meeting in the Plan Year prior to the
determination 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 Charming Shoppes approve a merger,
consolidation, recapitalization or reorganization of Charming Shoppes,
a reverse stock split of outstanding Voting Securities, or an
acquisition of securities or assets by Charming Shoppes (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; or
-3-
<PAGE> 4
(iv) the shareholders of Charming Shoppes approve a plan of complete
liquidation of Charming Shoppes or an agreement for the sale or
disposition by Charming Shoppes of all or substantially all of Charming
Shoppes' assets other than any such transaction which would result in
Related Parties owning or acquiring more than 50 percent of the assets
owned by Charming Shoppes immediately prior to the transaction.
Code. "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
Committee. "Committee" means the persons appointed by the Company to
administer the Plan.
Company. "Company" means Charming Shoppes and any Affiliate which is
authorized by the Board to adopt the Plan and cover its Eligible Employees and
whose designation as such has become effective upon acceptance of such status by
the board of directors of the Affiliate. An Affiliate may revoke its acceptance
of such designation at any time, but until such acceptance has been revoked, all
the provisions of the Plan and amendments thereto shall apply to the Eligible
Employees of the Affiliate. In the event the designation is revoked by the board
of directors of an Affiliate, the Plan shall be deemed terminated only with
respect to such Affiliate.
Disabled. "Disabled" means a mental or physical condition which
qualifies a Participant for benefits under the Charming Shoppes Long Term
Disability Plan.
Distribution Option. "Distribution Option" means the two distribution
options which are available under the Plan, consisting of the Retirement
Distribution Option and the In-Service Distribution Option.
Distribution Option Account. "Distribution Option Account" or
"Accounts" means, with respect to a Participant, the Retirement Distribution
Account and/or the In-Service Distribution Account established on the books of
account of the Company, pursuant to Section 5.1, for each Distribution Option
Period.
Distribution Option Period. "Distribution Option Period" means a period
of four Plan Years for which an Eligible Employee elects, in the Enrollment
Agreement, the time and manner of payment of amounts credited to the Eligible
Employee's Distribution Option Accounts for such Plan Years.
Earnings Crediting Options. "Earnings Crediting Options" means the
options selected by the Participant from time to time pursuant to which earnings
are credited to the Participant's Distribution Option Accounts.
Effective Date. "Effective Date" means the effective date of the Plan
which is December 1, 1997.
-4-
<PAGE> 5
Eligible Employee. "Eligible Employee" means an Employee who is a
member of the group of selected management and/or highly compensated Employees
of the Company designated by the Company's Chief Executive Officer as eligible
to participate in the Plan.
Employee. "Employee" means any person employed by the Company on a
regular full-time salaried basis or who is an officer of the Company.
End Termination Date. "End Termination Date" means the date of
termination of a Participant's Service with the Company and its Affiliates.
Enrollment Agreement. "Enrollment Agreement" means the authorization
form which an Eligible Employee files with the Committee to participate in the
Plan.
Excess Compensation. "Excess Compensation" means amounts of Base Salary
and Bonus Compensation equal to the excess, if any, of (i) the sum of the
Participant's Base Salary and Bonus Compensation minus the amount of deferrals
under this Plan over (ii) the maximum amount of compensation permitted to be
taken into account under the terms of the Savings Plan.
In-Service Distribution Account. "In-Service Distribution Account"
means the Account maintained for a Participant for each Distribution Option
Period to which Base Salary Deferrals and/or Bonus Compensation Deferrals and
Company Matching Contributions are credited pursuant to the In-Service
Distribution Option.
In-Service Distribution Option. "In-Service Distribution Option" means
the Distribution Option pursuant to which benefits are payable in accordance
with Section 7.2.
Matching Contributions. "Matching Contributions" are those credited to
the Participant's In-Service Distribution Account and Retirement Distribution
Account by the Company.
Participant. "Participant" means an Eligible Employee who has filed a
completed and executed Enrollment Agreement with the Committee or its designee
and is participating in the Plan in accordance with the provisions of Article 4.
Person. "Person" shall have the meaning ascribed for purposes of
Section 13(d) of the Exchange Act and the rules thereunder.
Plan. "Plan" means this plan, called the Charming Shoppes Variable
Deferred Compensation Plan for Executives, as amended from time to time.
Plan Year. "Plan Year" means the 12 month period beginning on each
January 1 and ending on the following December 31 except that the first Plan
Year shall begin on the Effective Date.
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Related Party. "Related Party" means (i) a majority-owned subsidiary of
Charming Shoppes; or (ii) a trustee or other fiduciary holding securities under
an employee benefit plan of Charming Shoppes or any majority-owned subsidiary of
Charming Shoppes; or (iii) a corporation owned directly or indirectly by the
shareholders of Charming Shoppes in substantially the same proportion as their
ownership of Voting Securities.
Retirement. "Retirement" means the termination of the Participant's
Service with the Employer (for reasons other than death) at or after age 65, or,
if the Participant has 10 or more years of Service, at or after age 55.
Retirement Distribution Account. "Retirement Distribution Account"
means the Account maintained for a Participant for each Distribution Option
Period to which Base Salary Deferrals and/or Bonus Compensation Deferrals and
Company Matching Contributions are credited pursuant to the Retirement
Distribution Option.
Retirement Distribution Option. "Retirement Distribution Option" means
the Distribution Option pursuant to which benefits are payable in accordance
with Section 7.1.
Savings Plan. "Savings Plan" means the Company's Employees' Retirement
Savings Plan.
Service. "Service" means the period of time during which an employment
relationship exists between an Employee and the Company, including any period
during which the Employee is on an approved leave of absence, whether paid or
unpaid. "Service" also includes employment with an Affiliate if an Employee
transfers directly between the Company and the Affiliate.
Vesting. "Vesting" refers to the permanent ownership rights to the
Matching Contributions that a Participant earns through Years of Service. A
Participant does not fully vest until after six Years of Service. A Participant
shall vest in 20% of the Matching Contribution after 2 Years of Service and 20%
for each Year of Service in excess of two, after which the Participant will be
100% vested in the Matching Contributions. Matching Contributions and related
earnings are forfeited when service terminates, to the extent not then vested.
A Participant is 100% vested automatically if the Participant becomes
Disabled or dies. A Participant is always 100% vested in Base Salary Deferrals,
Bonus Compensation Deferrals, and related earnings.
Voting Securities. "Voting Securities" means any securities of Charming
Shoppes which carry the right to vote generally in the election of directors.
Year of Service. A "Year of Service" for Vesting purposes is a calendar
year during which a Participant is credited with 1000 Hours of Service. An
Eligible Employee will be credited with 45 Hours of Service for each week which
is counted as "Service", as defined above.
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ARTICLE 3
ADMINISTRATION OF THE PLAN
The Committee is hereby authorized to administer the Plan and
establish, adopt, or revise such rules and regulations as it may deem necessary
or advisable for the administration of the Plan. The Committee shall have
discretionary authority to construe and interpret the Plan, to make
determinations, including factual determinations, and to determine the rights,
if any, of Participants and Beneficiaries under the Plan. The Committee's
resolution of any matter concerning the Plan shall be final and binding upon any
Participant and Beneficiary affected thereby. Members of the Committee shall be
eligible to participate in the Plan while serving as members of the Committee,
but a member of the Committee shall not vote or act upon any matter which
relates solely to such member's interest in the Plan as a Participant.
ARTICLE 4
PARTICIPATION
4.1 Election to Participate. Annually, all Eligible Employees will be
offered the opportunity to defer compensation to be earned in the following Plan
Year. Any Eligible Employee may enroll in the Plan effective as of the first day
of a Plan Year by filing a completed and fully executed Enrollment Agreement
with the Committee prior to the end of the first quarter of such Plan Year;
provided, however, that the Eligible Employee's Base Salary Deferral shall be
effective prospectively only from the first payroll period of the Company next
following receipt of the Enrollment Agreement. Pursuant to said Enrollment
Agreement, the Eligible Employee shall irrevocably elect (a) the percentages, in
whole percentages, by which up to 22% of Base Salary (25% in the case of Excess
Compensation) or up to 100% of Bonus Compensation (in each case after required
payroll tax deductions) of such Eligible Employee for the Plan Year will be
deferred, and (b) the Distribution Option Accounts to which such amounts will be
credited, and shall provide such other information as the Committee shall
require. The first Enrollment Agreement filed by an Eligible Employee during any
Distribution Option Period must also set forth the Participant's election as to
the time and manner of distribution from the In-Service Distribution Account and
the Retirement Distribution Account of amounts credited for that Distribution
Option Period and related earnings. Notwithstanding anything in this Plan to the
contrary, any election by a Participant to defer Base Salary or Bonus
Compensation for any Plan Year by less than 2%, or such other amount as the
Committee may determine from time to time, shall not be given effect.
4.2 New Eligible Employees. The Committee may, in its discretion,
permit Employees who first become Eligible Employees after the beginning of a
Plan Year to enroll in the Plan for that Plan Year by filing a completed and
fully executed Enrollment Agreement, in accordance with Section 4.1, as soon as
practicable following the date the Employee becomes an Eligible Employee but, in
any event, within 30 days after such date. Notwithstanding the foregoing,
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however, any election by an Eligible Employee, pursuant to this section, to
defer Base Salary and/or Bonus Compensation shall apply only to such amounts as
are earned by the Eligible Employee after the date on which such Enrollment
Agreement is filed.
4.3 Matching Contributions. An Eligible Employee who elects to
participate in the Plan pursuant to Section 4.1 and/or Section 4.2 shall be
eligible to receive Matching Contributions by the Company if, and only when,
such Eligible Employee is eligible to receive matching contributions under the
Savings Plan. The amount of such Matching Contributions for a Plan Year shall be
1 1/2% of the Base Salary Deferral and Bonus Compensation Deferral to the extent
that any such deferral relates to compensation less than or equal to the maximum
amount of compensation permitted to be taken into account under the terms of the
Savings Plan and 50% of the Base Salary Deferrals and Bonus Compensation
Deferrals made under this P lan to the extent that such deferrals do not exceed
3% of Base Salary and Bonus Compensation; provided, however, that the Matching
Contributions shall equal 50% of the Base Salary Deferrals and Bonus
Compensation Deferrals made under the Plan to the extent the deferrals relate to
Excess Compensation and to the extent that such deferrals do not exceed 6% of
Base Salary and Bonus Compensation.
Matching Contributions will be credited to the Distribution Option
Account to which the matched Base Salary or Bonus Compensation Deferrals are
credited. Matching Contributions will be credited as frequently as determined by
the Committee, acting on behalf of the Company, but in any event at least once
per year. Matching Contributions will be credited as soon as practicable in the
Participant's final year of Participation.
ARTICLE 5
DISTRIBUTION OPTION ACCOUNTS
5.1 Distribution Option Accounts. The Committee shall establish and
maintain separate Distribution Option Accounts with respect to a Participant for
each Distribution Option Period. A Participant's Distribution Option Accounts
shall consist of the Retirement Distribution Account and/or the In-Service
Distribution Account. The amount of Base Salary and/or Bonus Compensation
deferred pursuant to Section 4.1 or Section 4.2 shall be credited by the Company
to the Participant's Distribution Option Accounts no later than the first day of
the month following the month in which such Base Salary and/or Bonus
Compensation would otherwise have been paid, in accordance with the Distribution
Option irrevocably elected by the Participant in the Enrollment Agreement. Any
amount once taken into account as Base Salary and/or Bonus Compensation for
purposes of this Plan shall not be taken into account thereafter. Matching
Contributions, when credited, are credited to the Distribution Option Accounts
in the same proportion as the Base Salary and/or Bonus Compensation they match.
The Participant's Distribution Option Accounts shall be reduced by the amount of
payments made by the Company to the Participant or the Participant's Beneficiary
pursuant to this Plan.
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5.2 Earnings on Distribution Option Accounts. A Participant's
Distribution Option Accounts shall be credited with earnings in accordance with
the Earnings Crediting Options elected by the Participant from time to time.
Participants may allocate each of their Retirement Distribution Accounts and/or
In-Service Distribution Accounts among the Earnings Crediting Options available
under the Plan only in whole percentages of not less than five (5) percent. The
deemed rate of return, positive or negative, credited under each Earnings
Crediting Option is based upon the actual investment performance of the
corresponding investment portfolios of the Hudson River Trust or EQ Advisers
Trust, open-end management investment companies under the Investment Company Act
of 1940, as amended from time to time, or such other investment fund(s) as the
Company may designate from time to time, and shall equal the total return of
such investment fund net of asset based charges, including, without limitation,
money management fees, fund expenses and mortality and expense risk insurance
contract charges. The Company reserves the right, on a prospective basis, to add
or delete Earnings Crediting Options.
5.3 Earnings Crediting Options. Except as otherwise provided pursuant
to Section 5.2, the Earnings Crediting Options available under the Plan shall
consist of options which correspond to certain investment portfolios of both the
Hudson River Trust and EQ Advisers Trust.
Notwithstanding that the rates of return credited to Participants'
Distribution Option Accounts under the Earnings Crediting Options are based upon
the actual performance of the corresponding portfolios of these Trusts, or such
other investment funds as the Company may designate, the Company shall not be
obligated to invest any Base Salary and/or Bonus Compensation deferred by
Participants under this Plan, Matching Contributions, or any other amounts, in
such portfolios or in any other investment funds.
5.4 Changes in Earnings Crediting Options. A Participant may change the
Earnings Crediting Options to which his Distribution Option Accounts are deemed
to be allocated not more frequently than four (4) times per Plan Year. Each such
change may include (a) reallocation of the Participant's existing Accounts in
whole percentages of not less than five (5) percent, and/or (b) change in
investment allocation of amounts to be credited to the Participant's Accounts in
the future, as the Participant may elect. Notwithstanding the foregoing,
however, in the event the Company deletes an Earnings Crediting Option, a
Participant whose Accounts are allocated to such Earnings Crediting Option, in
whole or in part, shall be entitled to reallocate his Distribution Option
Accounts and/or any amounts to be credited in the future to such Distribution
Option Accounts among the remaining Earnings Crediting Options, at the time of
such deletion, without regard to the annual limit of four (4) such changes.
5.5 Valuation of Accounts. The value of a Participant's Distribution
Option Accounts as of any date shall equal the amounts theretofore credited to
such Accounts, including any earnings (positive or negative) deemed to be earned
on such Accounts in accordance with Section 5.2 through the day preceding such
date, less the amounts theretofore deducted from such Accounts.
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5.6 Statement of Accounts. The Committee shall provide to each
Participant, not less frequently than quarterly, a statement in such form as the
Committee deems desirable setting forth the balance standing to the credit of
each Participant in each of his Distribution Option Accounts.
5.7 Distributions from Accounts. Any distribution made to or on behalf
of a Participant from one or more of his Distribution Option Accounts in an
amount which is less than the entire balance of any such Account shall be made
pro rata from each of the Earnings Crediting Options to which such Account is
then allocated.
ARTICLE 6
DISTRIBUTION OPTIONS
6.1 Election of Distribution Option. In the first completed and fully
executed Enrollment Agreement filed with the Committee for each Distribution
Option Period, an Eligible Employee shall elect the time and manner of payment
pursuant to which the Eligible Employee's Distribution Option Accounts for that
Distribution Option Period will be distributed. Annually, the Eligible Employee
shall allocate his deferrals and Matching Contributions between the Distribution
Options in increments of ten percent, provided, however that 100 percent of such
deferrals and Matching Contributions may be allocated to one or the other of the
Distribution Options.
6.2 Retirement Distribution Option. Subject to Section 7.1,
distribution of the Participant's Retirement Distribution Account for any
Distribution Option Period shall commence upon (a) the Participant's Retirement,
or (b) if later, the Participant's attainment of age 65, as elected by the
Participant in the Enrollment Agreement pursuant to which such Retirement
Distribution Account was established or otherwise as permitted under Section
7.1(a).
6.3 In-Service Distribution Option. Subject to Section 7.2, the
Participant's In-Service Distribution Account for any Distribution Option Period
shall be distributed commencing in the year elected by the Participant in the
Enrollment Agreement pursuant to which such In-Service Distribution Account was
established. Notwithstanding the foregoing, if a Participant elects to receive a
distribution of his In-Service Distribution Account for any Distribution Option
Period commencing in a year which is within such Distribution Option Period, the
Participant shall not be entitled to allocate any additional deferrals and
Matching Contributions to such In-Service Distribution Account within two Plan
Years of the date on which such Account is distributed and such additional
deferrals during the Distribution Option Period shall instead be allocated to
the Retirement Distribution Account.
6.4 Distribution following Change of Control. In the event that a
Participant terminates Service for any reason within two years following a
Change of Control, notwithstanding anything else in this Article 6 to the
contrary, the Participant's Distribution Option Accounts
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shall be distributed, in a single lump sum, within thirty days following the
date of the termination of Service.
ARTICLE 7
BENEFITS TO PARTICIPANTS
7.1 Benefits Under the Retirement Distribution Option. Benefits under
the Retirement Distribution Option shall be paid to a Participant as follows:
(a) Benefits Upon Retirement. In the case of a Participant
whose Service with the Employer terminates on account of his Retirement, the
Participant's Retirement Distribution Account with respect to any Distribution
Option Period shall be distributed in one of the following methods, as elected
by the Participant in writing either in the Enrollment Agreement or in a
separate election made prior to the date of the Participant's Retirement: (i) in
a lump sum; (ii) in 5, 10, 15, or 20 annual installments; or (iii) by any other
formula that is mathematically derived, as long as distribution is completed
within 20 years following Retirement. Any lump-sum benefit payable in accordance
with this paragraph shall be paid in, but not later than January 31, of the Plan
Year following the Plan Year in which occurs the Participant's Retirement or, if
later, attainment of age 65 as elected by the Participant in accordance with
this Section or Section 6.2, in an amount equal to the value of such Retirement
Distribution Account as of the last business day of the Plan Year preceding the
date of payment. Annual installment payments, if any, shall commence not later
than January 31 of the Plan Year following the Plan Year in which occurs the
Participant's Retirement or if later, attainment of age 65, as elected by the
Participant in accordance with this Section or Section 6.2, in an amount equal
to (i) the value of such Retirement Distribution Account as of the last business
day of the Plan Year preceding the date of payment, divided by (ii) the number
of annual installment payments elected by the Participant in the Enrollment
Agreement pursuant to which such Retirement Distribution Account was
established. The remaining annual installments shall be paid not later than
January 31 of each succeeding Plan Year in an amount equal to (i) the value of
such Retirement Distribution Account as of the last business day of the
immediately preceding Plan Year divided by (ii) the number of installments
remaining. A Participant may change the election regarding the manner of payment
as described in Section 6.1 of the Participant's Account at any time prior to
the beginning of the Plan Year in which occurs the Participant's Retirement or
attainment of age 65, if later, and elected as the distribution date by the
Participant in accordance with Section 6.1.
(b) Benefits Upon Termination of Employment. In the case of a
Participant whose Service with the Employer terminates prior to the earliest
date on which the Participant is eligible for Retirement, other than on account
of becoming Disabled or by reason of death, the vested portion of a
Participant's Retirement Distribution Account with respect to any Distribution
Option Period shall be distributed in a lump sum as soon as practicable
following the Participant's End Termination Date or attainment of age 65, as
irrevocably elected by the
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Participant in the Enrollment Agreement pursuant to which such Retirement
Distribution Account was established.
7.2 Benefits Under the In-Service Distribution Option. Benefits under
the In-Service Distribution Option shall be paid to a Participant as follows:
(a) In-Service Distributions. In the case of a Participant who
continues in Service with the Employer, the vested portion of a Participant's
In-Service Distribution Account for any Distribution Option Period shall be paid
to the Participant commencing no later than January 31 of the Plan Year
irrevocably elected by the Participant in the Enrollment Agreement pursuant to
which such In-Service Distribution Account was established, which may be no
earlier than the third Plan Year following the end of the last Plan Year in the
Distribution Option Period in which deferrals are to be credited to the
In-Service Distribution Account for that Distribution Option Period, in one lump
sum or in annual installments payable over 2, 3, 4, or 5 years. Any lump-sum
benefit payable in accordance with this paragraph shall be paid not later than
January 31 of the Plan Year elected by the Participant in accordance with
Section 6.3, in an amount equal to the vested value of such In-Service
Distribution Account as of the last business day of the Plan Year preceding the
date of payment. Annual installment payments, if any, shall commence not later
than January 31 of the Plan Year as elected by the Participant in accordance
with Section 6.3, in an amount equal to (i) the vested value of such In-Service
Distribution Account as of the last business day of the Plan Year preceding the
date of payment, divided by (ii) the number of annual installment payments
elected by the Participant in the Enrollment Agreement pursuant to which such
In-Service Distribution Account was established. The remaining annual
installments shall be paid not later than January 31 of each succeeding year in
an amount equal to (i) the vested value of such In-Service Distribution Account
as of the last business day of the immediately preceding Plan Year divided by
(ii) the number of installments remaining. If a Participant is not fully vested
when the In-Service Distribution Account is to be paid, the non-vested portion
at the date of first payment will automatically be transferred to the Retirement
Distribution Account.
(b) Benefits Upon Termination of Employment. In the case of a
Participant whose Service with the Employer terminates prior to the date on
which the Participant's In-Service Distribution Account with respect to any
Distribution Option Period would otherwise be distributed, other than on account
of becoming Disabled or by reason of death, the vested portion of such
In-Service Distribution Account shall be distributed either (i) in a lump sum as
soon as is practicable following the Participant's End Termination Date; (ii) in
annual installments commencing on the date such In-Service Distribution Account
would otherwise have been distributed; or (iii) in a lump sum on the date such
In-Service Distribution Account would otherwise have been distributed, all as
irrevocably elected by the Participant in the Enrollment Agreement pursuant to
which such In-Service Distribution Account was established; provided, however,
that the Company may override a Participant's election and cause a distribution
under clause (i) notwithstanding any other election by the Participant.
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ARTICLE 8
DISABILITY
In the event a Participant becomes Disabled, the Participant's right to
make any further deferrals under this Plan shall terminate as of the date for
which the Participant first receives benefits under the Company's Long-Term
Disability Benefit Plan, as amended from time to time. The Participant's
Distribution Option Accounts shall continue to be credited with earnings in
accordance with Section 5.2 until such Accounts are fully distributed. For
purposes of this Plan, a Disabled Participant will not be treated as having
terminated Service. The Participant's Retirement Distribution Accounts, if any,
shall be distributed to the Participant in accordance with Section 7.1(a),
provided, however, that distribution of the Participant's Retirement
Distribution Accounts, if any, shall commence not later than January 31 of the
Plan Year immediately following the later of (a) the Plan Year in which the
Participant first becomes eligible for Retirement, or (b) the Plan Year in which
the Participant first received benefits under the Company's Long-Term Disability
Plan, as amended from time to time. The Participant's In-Service Distribution
Accounts, if any, will be distributed to the Participant in accordance with
Section 7.2(a) without regard to the fact that the Participant became Disabled.
ARTICLE 9
SURVIVOR BENEFITS
9.1 Death of Participant Prior to the Commencement of Benefits. In the
event of a Participant's death prior to the commencement of benefits in
accordance with Article 7, benefits shall be paid to the Participant's
Beneficiary, as determined under Section 12.3, pursuant to Section 9.2 or 9.3,
whichever is applicable, in lieu of any benefits otherwise payable under the
Plan to or on behalf of such Participant.
9.2 Survivor Benefits Under the Retirement Distribution Option. In the
case of a Participant with respect to whom the Company has established one or
more Retirement Distribution Accounts, and who dies prior to the commencement of
benefits under such Retirement Distribution Accounts pursuant to Section 7.1,
distribution of such Retirement Distribution Accounts shall be made (a) in a
lump sum as soon as practicable following the Participant's death, or (b) in the
manner and at such time as such Retirement Distribution Accounts would otherwise
have been distributed in accordance with Section 7.1 had the Participant lived,
as elected by the Participant in the Enrollment Agreement pursuant to which such
Retirement Distribution Accounts were established or as may have been changed by
the Participant. The amount of any lump sum benefit payable in accordance with
this Section shall equal the value of such Retirement Distribution Accounts as
of the last business day of the calendar month immediately preceding the date on
which such benefit is paid. The amount of any annual installment benefit payable
in accordance with this Section shall equal (a) the value of such Retirement
Distribution Accounts as of the last business day of the calendar month
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immediately preceding the date on which such installment is paid, divided by (b)
the number of annual installments remaining to be paid pursuant to the election
of the Participant in the Enrollment Agreement pursuant to which such Retirement
Distribution Accounts were established or as may have been changed by the
Participant.
9.3 Survivor Benefits Under the In-Service Distribution Option. In the
case of a Participant with respect to whom the Company has established one or
more In-Service Distribution Accounts, and who dies prior to the date on which
such In-Service Distribution Accounts are to be paid pursuant to Section 7.2,
distribution of such In-Service Distribution Accounts shall be made (a) in a
lump sum as soon as practicable following the Participant's death, or (b) at
such time and in such form as such In-Service Distribution Accounts would
otherwise have been distributed in accordance with Section 7.2 had the
Participant lived, as irrevocably elected by the Participant in the Enrollment
Agreement pursuant to which such In-Service Distribution Accounts were
established. The amount of any lump sum benefit payable in accordance with this
Section shall equal the value of such In-Service Distribution Accounts as of the
last business day of the calendar month immediately preceding the date on which
such benefit is paid.
9.4 Death of Participant After Benefits Have Commenced. In the event a
Participant who elected the Retirement Distribution Option for any Distribution
Option Period dies after annual installment benefits payable under Section 7.1
from one or more of the Participant's Retirement Distribution Accounts have
commenced, but before the entire balance of such Retirement Distribution
Accounts has been paid, any remaining installments shall continue to be paid to
the Participant's Beneficiary, as determined under Section 11.3, at such times
and in such amounts as they would have been paid to the Participant had he
survived.
ARTICLE 10
EMERGENCY BENEFIT
In the event that the Committee, upon written request of a Participant,
determines, in its sole discretion, that the Participant has suffered an
unforeseeable financial emergency, the Company shall pay to the Participant from
the vested portion of his Distribution Option Account, as soon as practicable
following such determination, an amount necessary to meet the emergency, after
deduction of any and all taxes as may be required pursuant to Section 12.9 (the
"Emergency Benefit"). For purposes of this Plan, an unforeseeable financial
emergency is an unexpected need for cash arising from an illness, casualty loss,
sudden financial reversal, or other such unforeseeable occurrence. Cash needs
arising from foreseeable events such as the purchase of a house or education
expenses for children shall not be considered to be the result of an
unforeseeable financial emergency. Emergency Benefits shall be paid first from
the Participant's In-Service Distribution Accounts, if any, to the extent the
vested balance of one or more of such In-Service Distribution Accounts is
sufficient to meet the emergency, in the order in which such Accounts would
otherwise be distributed to the Participant. If the distribution exhausts the
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vested In-Service Distribution Accounts, the vested Retirement Distribution
Accounts may be accessed. With respect to that portion of any Distribution
Option Account which is distributed to a Participant as an Emergency Benefit, in
accordance with this Article, no further benefit shall be payable to the
Participant under this Plan. Notwithstanding anything in this Plan to the
contrary, a Participant who receives an Emergency Benefit in any Plan Year shall
not be entitled to make any further deferrals for the remainder of such Plan
Year. It is intended that the Plan Administrator's determination as to whether a
Participant has suffered an "unforeseeable financial emergency" shall be made
consistent with the requirements under Section 457(d) of the Code.
ARTICLE 11
ACCELERATED DISTRIBUTION
11.1 Availability of Withdrawal Prior to Retirement. Upon the
Participant's written election, the Participant may elect to withdraw all or a
portion of the Participant's Distribution Option Account at any time prior to
the time such Distribution Option Account otherwise becomes payable under the
Plan, provided the conditions specified in Section 11.3, Section 11.4, and
Section 11.5 are satisfied.
11.2 Acceleration of Periodic Distributions. Upon the Participant's
written election, the Participant or Participant's Beneficiary who is receiving
installment payments under the Plan may elect to have the remaining installments
distributed in the form of an immediately payable lump sum, provided the
condition specified in Section 11.3 is satisfied.
11.3 Forfeiture Penalty. In the event of a withdrawal pursuant to
Section 11.1, or an accelerated distribution pursuant to Section 11.2, the
Participant shall forfeit from his Distribution Option Account from which the
withdrawal is made an amount equal to 10% of the amount of the withdrawal or
accelerated distribution, as the case may be. The forfeited amount shall be
deducted from the applicable Distribution Option Account prior to giving effect
to the requested withdrawal or acceleration. The Participant and the
Participant's Beneficiary shall not have any right or claim to the forfeited
amount, and the Company shall have no obligation whatsoever to the Participant,
the Participant's Beneficiary or any other person with regard to the forfeited
amount.
11.4 Minimum Withdrawal. In no event shall the amount withdrawn in
accordance with Section 11.1 be less than 25% of the amount credited to the
Participant's Distribution Option Account immediately prior to the withdrawal.
11.5 Suspension from Deferrals. In the event of a withdrawal pursuant
to Section 11.1, a Participant who is otherwise eligible to make deferrals under
Article 4 shall be prohibited from making any deferrals with respect to the Plan
Year immediately following the Plan Year during
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which the withdrawal was made, and any election previously made by the
Participant with respect to deferrals for that Plan Year shall be void and of no
effect.
ARTICLE 12
MISCELLANEOUS
12.1 Amendment and Termination. The Plan may be amended, suspended,
discontinued or terminated at any time by Charming Shoppes; provided, however,
that no such amendment, suspension, discontinuance or termination shall reduce
or in any manner adversely affect the rights of any Participant with respect to
benefits that are payable or may become payable under the Plan based upon the
balance of the Participant's Accounts as of the effective date of such
amendment, suspension, discontinuance or termination.
12.2 Claims Procedure.
a. Claim
A person who believes that he is being denied a benefit to
which he is entitled under the Plan (hereinafter referred to as a "Claimant")
may file a written request for such benefit with the Benefits Department of the
Company, setting forth his claim.
b. Claim Decision
Upon receipt of a claim, the Benefits Department of the
Company shall advise the Claimant that a reply will be forthcoming within ninety
(90) days and shall, in fact, deliver such reply within such period. The
Benefits Department of the Company may, however, extend the reply period for an
additional ninety (90) days for reasonable cause.
If the claim is denied in whole or in part, the Claimant shall
be provided a written opinion, using language calculated to be understood by the
Claimant, setting forth:
(a) The specific reason or reasons for such denial;
(b) The specific reference to pertinent provisions of this
Agreement on which such denial is based;
(c) A description of any additional material or information
necessary for the Claimant to perfect his claim and an explanation why such
material or such information is necessary;
(d) Appropriate information as to the steps to be taken if the
Claimant wishes to submit the claim for review; and
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(e) The time limits for requesting a review under subsection
(c) and for review under subsection (d) hereof.
c. Request for Review
Within sixty (60) days after the receipt by the Claimant of
the written opinion described above, the Claimant may request in writing that
the Committee review the determination of the Benefits Department of the
Company. The Claimant or his duly authorized representative may, but need not,
review the pertinent documents and submit issues and comment in writing for
consideration by the Committee. If the Claimant does not request a review of the
initial determination within such sixty (60) day period, the Claimant shall be
barred and estopped from challenging the determination.
d. Review of Decision
Within sixty (60) days after the Committee's receipt of a
request for review, it will review the initial determination. After considering
all materials presented by the Claimant, the Committee will render a written
opinion, written in a manner calculated to be understood by the Claimant,
setting forth the specific reasons for the decision and containing specific
references to the pertinent provisions of this Agreement on which the decision
is based. If special circumstances require that the sixty (60) day time period
be extended, the Committee will so notify the Claimant and will render the
decision as soon as possible, but no later than one hundred twenty (120) days
after receipt of the request for review.
12.3 Designation of Beneficiary. Each Participant may designate a
Beneficiary or Beneficiaries (which Beneficiary may be an entity other than a
natural person) to receive any payments which may be made following the
Participant's death. Such designation may be changed or canceled at any time
without the consent of any such Beneficiary. Any such designation, change or
cancellation must be made in a form approved by the Committee and shall not be
effective until received by the Committee, or its designee. If no Beneficiary
has been named, or the designated Beneficiary or Beneficiaries shall have
predeceased the Participant, the Beneficiary shall be the Participant' s estate.
If a Participant designates more than one Beneficiary, the interests of such
Beneficiaries shall be paid in equal shares, unless the Participant has
specifically designated otherwise.
12.4 Limitation of Participant's Right. Nothing in this Plan shall be
construed as conferring upon any Participant any right to continue in the
employment of the Company, nor shall it interfere with the rights of the Company
to terminate the employment of any Participant and/or to take any personnel
action affecting any Participant without regard to the effect which such action
may have upon such Participant as a recipient or prospective recipient of
benefits under the Plan.
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12.5 No Limitation on Company Actions. Nothing contained in the Plan
shall be construed to prevent the Company from taking any action which is deemed
by it to be appropriate or in its best interest. No Participant, Beneficiary, or
other person shall have any claim against the Employer as a result of such
action. Any decisions, actions or interpretations to be made under the Plan by
the Company or the Board, or the Committee acting on behalf of the Company,
shall be made in its respective sole discretion, not as a fiduciary, need not be
uniformly applied to similarly situated individuals and shall be final, binding
and conclusive on all persons interested in the Plan.
12.6 Obligations to Company. If a Participant becomes entitled to a
distribution of benefits under the Plan, and if at such time the Participant has
outstanding any debt, obligation, or other liability representing an amount
owing to the Employer, then the Employer may offset such amount owed to it
against the amount of benefits otherwise distributable. Such determination shall
be made by the Committee.
12.7 Nonalienation of Benefits. Except as expressly provided herein, no
Participant or Beneficiary shall have the power or right to transfer (otherwise
than by will or the laws of descent and distribution), alienate, or otherwise
encumber the Participant's interest under the Plan. The Company's obligations
under this Plan are not assignable or transferable except to (a) any corporation
or partnership which acquires all or substantially all of the Company's assets
or (b) any corporation or partnership into which the Company may be merged or
consolidated. The provisions of the Plan shall inure to the benefit of each
Participant and the Participant's Beneficiaries, heirs, executors,
administrators or successors in interest.
12.8 Protective Provisions. Each Participant shall cooperate with the
Employer by furnishing any and all information requested by the Employer in
order to facilitate the payment of benefits hereunder, taking such physical
examinations as the Employer may deem necessary and taking such other relevant
action as may be requested by the Employer. If a Participant refuses to
cooperate, the Employer shall have no further obligation to the Participant
under the Plan, other than payment to such Participant of the then current
balance of the Participant's Distribution Option Accounts in accordance with his
prior elections.
12.9 Withholding Taxes. The Company may make such provisions and take
such action as it may deem necessary or appropriate for the withholding of any
taxes which the Company is required by any law or regulation of any governmental
authority, whether Federal, state or local, to withhold in connection with any
benefits under the Plan, including, but not limited to, the withholding of
appropriate sums from any amount otherwise payable to the Participant (or his
Beneficiary). Each Participant, however, shall be responsible for the payment of
all individual tax liabilities relating to any such benefits.
12.10 Unfunded Status of Plan. The Plan is intended to constitute an
"unfunded" plan of deferred compensation for Participants. Benefits payable
hereunder shall be payable out of the general assets of the Company, and no
segregation of any assets whatsoever for such benefits
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shall be made. Notwithstanding any segregation of assets or transfer to a
grantor trust, with respect to any payments not yet made to a Participant,
nothing contained herein shall give any such Participant any rights to assets
that are greater than those of a general creditor of the Company.
12.11 Severability. If any provision of this Plan is held
unenforceable, the remainder of the Plan shall continue in full force and effect
without regard to such unenforceable provision and shall be applied as though
the unenforceable provision were not contained in the Plan.
12.12 Governing Law. The Plan shall be construed in accordance with and
governed by the laws of the Commonwealth of Pennsylvania, without reference to
the principles of conflict of laws.
12.13 Headings. Headings are inserted in this Plan for convenience of
reference only and are to be ignored in the construction of the provisions of
the Plan.
12.14 Gender, Singular and Plural. All pronouns and any variations
thereof shall be deemed to refer to the masculine, feminine, or neuter, as the
identity of the person or persons may require. As the context may require, the
singular may read as the plural and the plural as the singular.
12.15 Notice. Any notice or filing required or permitted to be given to
the Committee under the Plan shall be sufficient if in writing and hand
delivered, or sent by registered or certified mail, to the Benefits Department,
or to such other entity as the Committee may designate from time to time. Such
notice shall be deemed given as to the date of delivery, or, if delivery is made
by mail, as of the date shown on the postmark on the receipt for registration or
certification.
ARTICLE 13
SIGNATURE
This Plan is hereby adopted and approved, to be effective as of this
4th day of December, 1997.
Charming Shoppes, Inc.
By: /s/ Eric M. Specter
---------------------------------------
Name: Eric M. Specter
Title: Executive Vice President --
Chief Financial Officer
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