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EXHIBIT 10.2.27

Charming Shoppes, Inc.

Compliance Rules Under Section 409A of the Internal Revenue Code
(Including Global Amendment to Certain Outstanding
Restricted Stock Units and Performance Shares)
2008 Revisions

Introduction

Section 409A of the Internal Revenue Code (“409A”) regulates deferred
compensation, which it defines very broadly to include arrangements not usually
considered to be deferred compensation.  This potentially can include Restricted
Stock Units (“RSUs”).

Most RSUs granted by Charming Shoppes, Inc. (the “Company”) under the 2004 Stock
Award and Incentive Plan (the “2004 Plan”) will not be affected by 409A in a way
that participants will notice.  These awards will qualify under the 409A
regulations’ “short-term deferral” rules, because in every circumstance these
awards will be settled – that is, shares will be delivered to the participant –
within a limited period of time after the “risk of forfeiture” lapses.  In
simple terms, the “risk of forfeiture” under 409A means the risk that, if the
participant voluntarily quits his or her employment, the RSUs will be forfeited.

Some RSUs, however, will not qualify under the short-term deferral rules, and
therefore will be fully subject to the rules under 409A (these will be referred
to here as “409A RSUs”).  Failure to comply with the 409A rules could result in
harsh income tax consequences for the participant, including treating the RSUs
as income to be taxed long before the RSUs are settled, with interest on any
unpaid taxes and a 20% tax penalty.  States may impose similar taxes and
penalties, too.

Unfortunately, it can be complicated to identify 409A RSUs.  An award of RSUs
that vests at different dates (each vesting portion is called a “tranche”) may
avoid 409A for early vesting tranches but be subject to 409A for later
tranches.  However, the actual restrictions that apply to 409A RSUs will affect
those awards only in a few circum­stances. The effects in these cases will be to
delay the distribution of shares in settlement of the 409A RSUs; however, the
409A rules do not increase the risk that a participant will forfeit the
RSUs.  For purposes of 409A, each tranche is deemed to be a separate payment.

This document (the “409A Compliance Rules”) explains the rules and procedures to
ensure compliance for 409A RSUs.  This document supersedes an earlier version
adopted in 2007; such earlier version is of no further force or effect.

 
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When Will Plan Administrators Need to Apply Special 409A Compliance Rules?

Administratively, compliance with 409A for 409A RSUs can be monitored based on
the occurrence of specific triggering events:

•  
A participant’s termination of employment which does not result in forfeiture of
RSUs

•  
A participant’s change to part-time employment or consultant

•  
A Change in Control (as defined) of the Company

During the life cycle of an award of RSUs, if these events do not occur, the
RSUs will be administered in the same way as in the past, whether or not the
RSUs are 409A RSUs.  (Note:  If a participant elects to defer settlement of RSUs
under the Company’s Variable Deferred Compensation Plan (the “VDCP”), the timing
of those elections to defer will have to comply with 409A rules.  That
compliance is governed separately by rules under the VDCP.  If deferred,
distributions will be based on the terms of the deferral election.)

Which RSUs are Deemed To Be 409A RSUs?

RSUs are 409A RSUs in these two cases:

•  
The participant has elected to defer settlement of the RSUs under the VDCP; or

•  
The participant will reach “Retirement” age somewhat before a given tranche of
RSUs is scheduled to vest.

o  
Under current RSUs, “Retirement” eligibility occurs at age 62

o  
So, if a participant will reach age 62 before the beginning of the fiscal year
in which a given tranche will vest, that tranche in many cases will be deemed to
be 409A RSUs1

o  
Even if the participant terminates before age 62, some RSUs may be 409A RSUs if
he or she would have attained age 62 before the fiscal year in which the final
tranche would have vested had employment continued

o  
Such RSUs will be 409A RSUs if the Retirement provision creates a possibility
that the participant could retire and not forfeit some RSUs that would remain
outstanding

o  
Performance Shares may permit Retirement but still require that performance
goals be achieved as a condition to earning the award (after Retirement); such
terms would constitute a “substantial risk of forfeiture” so that the
Performance Shares are not 409A RSUs.

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1           If the payout date for that tranche will be before the 15th day of
the third calendar month after the end of the fiscal year in which the
participant turned age 62, then that tranche will not be 409A RSUs.  The date
the participant reaches age 62 varies, vesting dates vary, and fiscal year-end
dates vary between January and February, so each RSU tranche will have to be
examined under this rule.  Administratively, we intend to examine this only if
the participant has a termination of employment or upon a Change in Control,
because those are the only times this complex rule will matter.

 
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What are the Effects of Being 409A RSUs?

If RSUs are 409A RSUs, the following restrictions will apply:

(1)           The  “six-month delay rule”

•  
The six-month delay rule will apply to 409A RSUs if these four conditions are
met:

o  
The participant has a separation from service (within the meaning of Treasury
Regulation § 1.409A-1(h))

o  
A distribution of shares is triggered by the separation from service (but not
due to death). Distributions upon termination due to disability or termination
not for Cause could be subject to this rule in some cases.

o  
The Participant is a “key employee” (as defined in Code Section 416(i) without
regard to paragraph (5) thereof).  The Company will determine status of “key
employees” annually, under administrative procedures applicable to all Section
409A plans

o  
The Company’s stock is publicly traded on an established securities market or
otherwise.

•  
If it applies, the six-month delay rule will delay a distribution in settlement
of 409A RSUs triggered by separation from service where the distribution
otherwise would be within six months after the separation

o  
Any delayed payment shall be made on the date six months after separation from
service

o  
During the six-month delay period, accelerated distribution will be permitted in
the event of the participant’s death and for no other reason (including no
acceleration upon a Change in Control), except to the extent permitted under
Section 409A

o  
Any payment that is not triggered by a separation from service, or is triggered
by a separation from service but would be made more than six months after
separation (without applying this six-month delay rule), shall be unaffected by
the six-month delay rule.

•  
RSUs generally provide for distribution upon termination due to disability or
due to termination by the Company not for Cause.  In those cases, the Company
will determine whether the six-month delay rule will apply to 409A RSUs.

•  
If the terms of an RSU agreement impose this six-month delay rule in
circumstances in which it is not required for compliance with Section 409A,
those terms shall not be given effect.

 
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(2)           Change in Control rule:

•  
Any distribution of 409A RSUs triggered by a Change in Control will be made only
if, in connection with the Change in Control, there occurs a change in the
ownership of the Company, a change in effective control of the Company, or a
change in the ownership of a substantial portion of the assets of the Company as
defined in Treasury Regulation § 1.409A-3(i)(5) (a "409A Change in Control").

o  
Note:  Events constituting a Change in Control in most instances will also
trigger a distribution under Section 409A, except an acquisition of Beneficial
Ownership of 20% of the outstanding voting securities but less than 30% of the
voting power likely would not trigger a distribution under 409A.

•  
In this case, distribution of the 409A RSUs shall occur not later than five
business days after (i) the occurrence of a 409A Change in Control occurring at
the time of or following the Change in Control or (ii) upon occurrence of the
Change in Control occurring within 90 days after the 409A Change in Control, but
only if the occurrence of the Change in Control is non-discretionary and
objectively determinable at the time of the 409A Change in Control (in this
case, the Participant shall have no influence on when during such 90-day period
the settlement shall occur).

•  
If any distribution is delayed by operation of this Change in Control rule, the
distribution shall be made at the earliest permissible time or event thereafter
that could trigger a distribution under Code Section 409A (subject to the
six-month delay rule if applicable).

•  
No accelerated distribution upon a Change in Control (even if otherwise
permitted under this Change in Control rule) applies to a distribution delayed
by application of the six-month delay rule.

(3)           Separation from Service

•  
Any distribution in settlement of the 409A RSUs that is triggered by a
termination of employment will occur only at such time as the participant has
had a “separation from service” within the meaning of Treasury Regulation
§ 1.409A-1(h), regardless of whether any other event might be viewed as a
termination of employment by the Company for any other purpose.

o  
In particular, i a participant switches to part-time employment or becomes a
consultant in connection with a termination of employment, whether that event
will be deemed a termination of employment for purposes of 409A RSUs will be
governed by the 409A rules on “separation from service.”

(4)           Other Restrictions.

•  
The settlement of 409A RSUs may not be accelerated by the Company except to the
extent permitted under Section 409A.

 
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Any restriction imposed on 409A RSUs under these 409A Compliance Rules or
imposed on RSUs under the terms of other documents solely to ensure compliance
with Section 409A shall not be applied to an RSU that is not a 409A RSU except
to the extent necessary to preserve the status of such RSU as not a 409A
RSU.  If any mandatory term required for 409A RSUs or non-409A RSUs to avoid tax
penalties under Section 409A is not otherwise explicitly provided under this
document or other applicable documents, such term is hereby incorporated by
reference and fully applicable as though set forth at length herein.

Performance Share Agreements

Performance Shares currently do not constitute 409A RSUs, unless they are
electively deferred.  Performance Share Agreements that provide for
non-forfeiture upon Retirement nevertheless require that the Performance Shares
be earned by performance over the designated performance period, with any
settlement to be made shortly after the end of the designated performance period
and within the short-term deferral period permitted under Treasury Regulation
§ 1.409A-1(b)(4).  In the case of certain terminations, vesting may accelerate
and distributions may be made following such terminations, but these are
permitted without causing the awards to fail to constitute “short-term
deferrals.”  Some Performance Shares provide that, in the case of termination by
the Company not for cause or retirement, a pro rata portion of the award will
remain outstanding and be earned if and to the extent that performance goals are
met for the full performance period.  Such performance requirement also
constitutes a substantial risk of forfeiture, so that the Performance Shares
still should qualify as “short-term deferrals.”  Any pro rata portion of a
tranche of Performance Shares (or RSUs, if pro rationing applies) calculated
from the stated vesting date of the previously vesting tranche (or grant date,
in the case of the first tranche) until December 31, or calculated for that
tranche for the period from January 1 until the end of the Company's then
current fiscal year, or calculated for that tranche for the period from the
beginning of the fiscal year until the next stated vesting date (or anniversary
of grant if there is no vesting in that year), shall be deemed a separate
payment for purposes of Section 409A.

If Performance Share Agreements (including any applicable elections of the
Participant) contain terms that nevertheless cause them to be deemed “deferrals
of compensation” for purposes of Section 409A2, they shall be subject to the
terms above applicable to 409A RSUs (but this provision shall not result in any
waiver of a performance condition).

Global Amendment to Agreements Governing Restricted Stock Units

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2           This could occur in the case of performance shares that a
participant can earn after retirement or termination not for cause if the
performance goals or the Change in Control acceleration terms do not constitute
a “condition related to a purpose of the compensation” under Treasury Regulation
§ 1.409A-1(d).  There is at present little guidance on what constitutes a
“condition related to a purpose of the compensation.”

 
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This document shall be deemed a global amendment to RSU agreements relating to
RSUs (and Performance Shares, to the extent provided herein) granted on or
before December 31, 2008 which vested or will vest on or after January 1, 2005
and which remain outstanding after December 31, 2008.

In addition to the provisions above which amend such RSUs, such non-409A RSUs
are amended to provide that settlement shall occur within 60 days after the
lapse of the Restricted Period (this period is generally specified in such
agreements), except that in the case of a participant who has previously
attained age 62 and for whom settlement will occur at a fixed date (i.e., the
stated vesting date of the RSUs), such RSUs will be settled within ten days of
such fixed date.

It is understood that any RSU Agreement (including any Performance Shares
Agreement) that permits accelerated vesting upon a termination for “Good Reason”
as defined in another agreement will require that the definition of Good Reason
qualify under Treasury Regulation § 1.409A-1(n)(2), and any amendment to such
other agreement to comply with this requirement shall be deemed also to amend
such RSU Agreement.

In the case of any RSU Agreement (including a Performance Shares Agreement) that
provides for accelerated lapse of the substantial risk of forfeiture and/or
settlement upon a termination due to disability, the following rules will apply:

In case of a disability of a Participant, (i) for any RSUs or Performance Shares
that constitute a short-term deferral for purposes of Section 409A, the Company
shall determine whether the Participant's circumstances are such that the
Participant will not return to service, in which case such disability will be
treated as a termination of employment for purposes of determining the time of
payment of such Award or portion thereof then subject only to service-based
vesting, and (ii) for any Award or portion thereof that constitutes a 409A
Award, the Company shall determine whether there has occurred a "separation from
service" as defined under Treasury Regulation § 1.409A-1(h) based on
Participant's circumstances, in which case such disability will be treated as a
separation from service for purposes of determining the time of payment of such
Award or portion thereof then subject only to service-based vesting.  In each
case, the Participant shall be accorded the benefit of vesting that would result
in the case of disability in the absence of this provision, so that the
operation of this provision, intended to comply with Section 409A, will not
disadvantage the Participant.  The Company's determinations hereunder will be
made within 30 days after the disability arises or there occurs a material
change in the Participant's condition that constitutes the disability.  In the
case of any short-term deferral, if (i) circumstances arise constituting a
disability but not constituting a termination of employment, (ii) the Award
would provide for vesting upon a termination due to disability, and (iii) the
Award would not qualify as a short-term deferral if the Participant were then

 
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permitted to elect the time at which to terminate employment due to the
disability, then only the Company will be entitled to act to terminate
Participant's employment due to disability.

A termination of a Retirement-eligible participant shall be deemed a Retirement
unless the termination is for cause; such termination shall not be deemed a
termination not for cause or a termination due to disability.

Any reference in a tax withholding provision to the "minimum" federal, state and
local tax withholding amount shall be understood to mean the mandatory amount
the Company is required by law to withhold upon settlement of the Restricted
Stock Units.

Nothing in these 409A Compliance Rules shall be deemed to modify the performance
goals required to be achieved as a condition to the grant of stock appreciation
rights, RSUs or other awards.

Approved by the Board of Directors December 1, 2008

 
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