Document:

Exhibit 10.2

    

      EXHIBIT
        10.2

       

      

       

      
        	 	
                April
                  24, 2007

                 

              
	
                To:

              	
                Charming
                  Shoppes, Inc.

              
	 	
                450
                  Winks Lane

              
	 	
                Bensalem,
                  PA 19020

              
	 	
                Attn:
                  Treasurer

              
	 	
                Telephone:
                  215-633-4899

              
	 	
                Facsimile:
                  215-638-6759

                 

              
	
                From:

              	
                JPMorgan
                  Chase Bank, National Association

              
	 	
                P.O.
                  Box 161

              
	 	
                60
                  Victoria Embankment

              
	 	
                London
                  EC4Y 0JP

              
	 	
                England

              
	 	 
	
                Re:

              	
                Convertible
                  Bond Hedge Transaction

              

      

      

      Ladies
        and Gentlemen:

       

      The
        purpose of this communication (this “Confirmation”)
        is to
        set forth the terms and conditions of the above-referenced transaction entered
        into on the Trade Date specified below (the “Transaction”)
        between JPMorgan Chase Bank, National Association, London Branch (“JPMorgan”)
        and
Charming
        Shoppes, Inc.
        (“Counterparty”).
        This
        communication constitutes a “Confirmation”
as
        referred to in the ISDA Master Agreement specified below. 

       

      1.  This
        Confirmation is subject to, and incorporates, the definitions and provisions
        of
        the 2000 ISDA Definitions (including the Annex thereto) (the “2000
        Definitions”)
        and
        the definitions and provisions of the 2002 ISDA Equity Derivatives Definitions
        (the “Equity
        Definitions”,
        and
        together with the 2000 Definitions, the “Definitions”),
        in
        each case as published by the International Swaps and Derivatives Association,
        Inc. (“ISDA”).
        In
        the event of any inconsistency between the 2000 Definitions and the Equity
        Definitions, the Equity Definitions will govern. Certain defined terms used
        herein have the meanings assigned to them in Indenture to be dated as of
        April
        30, 2007 between Counterparty and Wells Fargo Bank, National Association
        as
        trustee (the “Indenture”)
        relating to the USD 250,000,000 principal amount of 1.125% Senior Convertible
        Notes due 2014 (the “Convertible
        Securities”).
        In
        the event of any inconsistency between the terms defined in the Indenture
        and
        this Confirmation, this Confirmation shall govern. For the avoidance of doubt,
        references herein to sections of the Indenture are based on the draft of
        the
        Indenture most recently reviewed by the parties at the time of execution
        of this
        Confirmation. If any relevant sections of the Indenture are changed, added
        or
        renumbered following execution of this Confirmation but prior to or upon
        the
        execution of the Indenture, the parties will amend this Confirmation in good
        faith to preserve the economic intent of the parties. 

       

      This
        Confirmation evidences a complete and binding agreement between JPMorgan
        and
        Counterparty as to the terms of the Transaction to which this Confirmation
        relates. This Confirmation shall be subject to an agreement (the “Agreement”)
        in the
        form of the 2002 ISDA Master Agreement (the “ISDA
        Form”)
        as if
        JPMorgan and Counterparty had executed an agreement in such form (without
        any
        Schedule but with the elections set forth in this Confirmation). For the
        avoidance of doubt, the Transaction shall be the only transaction under the
        Agreement.

       

      All
        provisions contained in, or incorporated by reference to, the Agreement will
        govern this Confirmation except as expressly modified herein. In the event
        of
        any inconsistency between this Confirmation and either the Definitions or
        the
        Agreement, this Confirmation shall govern.

       

      2.  The
        Transaction constitutes a Share Option Transaction for purposes of the Equity
        Definitions. The terms of the particular Transaction to which this Confirmation
        relates are as follows:

       

      General
        Terms:

       

      
        	
                Trade
                  Date:

                 

              	
                April
                  24, 2007

                 

              
	
                Effective
                  Date:

                 

              	
                The
                  closing date of the offering of the Convertible Securities. 

                 

              
	
                Option
                  Type:

                 

              	
                Call

                 

              
	
                Seller:

                 

              	
                JPMorgan

                 

              
	
                Buyer:

                 

              	
                Counterparty

                 

              
	
                Shares:

                 

              	
                The
                  Common Stock of Counterparty, par value USD 0.10 per share (Ticker
                  Symbol:
                  “CHRS”).

                 

              
	
                Number
                  of Options:

                 

              	
                25%
                  of the number of Convertible Securities in denominations of USD1,000
                  principal amount issued by Counterparty on the closing date for
                  the
                  initial issuance of the Convertible Securities; provided
                  that
                  if the initial purchasers (as defined in the Purchase Agreement
                  defined
                  below) exercise their option to purchase additional Convertible
                  Securities
                  pursuant to Section 2(c) of the Purchase Agreement related to the
                  purchase
                  and sale of the Convertible Securities dated as of April 24, 2007
                  among
                  Counterparty, Banc of America Securities LLC and J.P. Morgan Securities
                  Inc. (the “Purchase
                  Agreement”),
                  then on the Additional Premium Payment Date, the Number of Options
                  shall
                  be automatically increased by 25% of the number of Convertible
                  Securities
                  in denominations of USD 1,000 principal amount issued pursuant
                  to such
                  exercise (such Convertible Securities, the “Additional
                  Convertible Securities”).

                 

              
	
                Number
                  of Shares:

                 

              	
                As
                  of any date, the product of the Number of Options and the Conversion
                  Rate.

                 

              
	
                Conversion
                  Rate:

                 

              	
                As
                  defined in the Indenture, but without regard to any adjustments
                  to the
                  Conversion Rate pursuant to Sections 10.01(c) and 10.04(g) of the
                  Indenture.

                 

              
	
                Strike
                  Price:

                 

              	
                USD
                  15.3791

                 

              
	
                Premium:

                 

              	
                USD
                  20,562,500.00; provided
                  that
                  if the Number of Options is increased pursuant to the proviso to
                  the
                  definition of “Number of Options” above, an additional Premium equal to
                  the product of the number of Options by which the Number of Options
                  is so
                  increased and USD 329.00 shall be paid on the Additional Premium
                  Payment
                  Date.

                 

              
	
                Premium
                  Payment Date:

                 

              	
                April
                  30, 2007

                 

              
	
                Additional
                  Premium Payment Date:

                 

              	
                The
                  closing date for the purchase and sale of the Additional Convertible
                  Securities.

                 

              
	
                Exchange:

                 

              	
                The
                  NASDAQ
                  Global Select Market 

                 

              
	
                Related
                  Exchange:

                 

              	
                All
                  Exchanges

                 

              
	
                Procedures
                  for Exercise:

                 

              	 
	
                Potential
                  Exercise Dates:

                 

              	
                Each
                  Conversion Date.

                 

              
	
                Conversion
                  Date:

                 

              	
                Each
                  “Conversion Date” as defined in the Indenture.

                 

              
	
                Required
                  Exercise on 

              	 
	
                Conversion
                  Dates:

                 

              	
                On
                  each Conversion Date, a number of Options equal to 25% of the number
                  of
                  Convertible Securities in denominations of USD1,000 principal amount
                  submitted for conversion on such Conversion Date in accordance
                  with the
                  terms of the Indenture shall be automatically exercised, subject
                  to
                  “Notice of Exercise” below.

                 

              
	
                Expiration
                  Date:

                 

              	
                May
                  1, 2014

                 

              
	
                Automatic
                  Exercise:

                 

              	
                As
                  provided above under “Required Exercise on Conversion Dates”, subject to
                  the provisions of “Notice of Exercise” below.

                 

              
	
                Notice
                  of Exercise:

              	
                Notwithstanding
                  anything to the contrary in the Equity Definitions, in order to
                  exercise
                  any Options, Counterparty must notify JPMorgan in writing prior
                  to 5:00
                  PM, New York City time, on the Scheduled Valid Day prior to the
                  scheduled
                  first day of the applicable Settlement Averaging Period relating
                  to the
                  Convertible Securities converted on the Conversion Date occurring
                  on the
                  relevant Exercise Date (such Convertible Securities, the “Relevant
                  Convertible Securities”)
                  of (i) the number of Options being exercised on such Exercise Date,
                  (ii)
                  the scheduled first day of the applicable Settlement Averaging
                  Period,
                  (iii) the scheduled settlement date under the Indenture for the
                  Relevant
                  Convertible Securities and (iv) whether
                  Counterparty has elected to satisfy its conversion obligations
                  with
                  respect to the Relevant Convertible Securities in Shares only (as
                  described in Section 10.02(b) of the Indenture) (“Gross
                  Share Settlement”);
                  provided
                  that with respect to Options relating to Relevant Convertible Securities
                  with a Conversion Date occurring on or after November 15, 2013,
                  such
                  Notice of Exercise may be given on or prior to the second Scheduled
                  Valid
                  Day immediately preceding the Expiration Date and need only specify
                  the
                  number of Options being exercised. 

              
	 	 
	
                Notice
                  of Gross Share Settlement:

              	
                If
                  Counterparty has elected Gross Share Settlement for all Convertible
                  Securities with a Conversion Date occurring on or after November
                  15, 2013,
                  then with respect to Options relating to such Convertible Securities,
                  Counterparty
                  shall notify JPMorgan of such election before 5:00 p.m. (New York
                  City
                  time) on or prior to November
                  15, 2013.

              
	 	 
	
                JPMorgan’s
                  Telephone Number

              	 
	
                and
                  Telex and/or Facsimile Number

              	 
	
                and
                  Contact Details for purpose of

              	 
	
                Giving
                  Notice:

                 

              	
                To
                  be provided by JPMorgan.

                 

              
	 	 
	
                Settlement
                  Terms:

                 

              	 
	
                Settlement
                  Method:

                 

              	
                Net
                  Share Settlement

                 

              
	
                Net
                  Share Settlement:

                 

              	
                JPMorgan
                  will deliver to Counterparty, on the relevant Settlement Date,
                  a number of
                  Shares equal to the Net Shares in respect of any Option exercised
                  or
                  deemed exercised hereunder. In no event will the Net Shares be
                  less than
                  zero.

                 

              
	
                Net
                  Shares:

                 

              	
                In
                  respect of any Option exercised or deemed exercised, a number of
                  Shares
                  equal to (i) the sum of the quotients, for each Valid Day during
                  the
                  Settlement Averaging Period for such Exercisable Option, of (A)
                  the
                  product of (x) excess, if any, of the Relevant Price less the Strike
                  Price
                  on such Valid Day and (y) the Conversion Rate on such Valid Day
                  divided
                  by
                  (B) such Relevant Price, divided
                  by
                  (ii) the number of Valid Days in the Settlement Averaging Period;
                  provided
                  that if the calculation contained in clause (A) above results in
                  a
                  negative number, such number shall be replaced with the number
“zero”.
                  Notwithstanding the forgoing, if Counterparty has elected Gross
                  Share
                  Settlement and so specified in the Notice of Exercise, or if applicable,
                  the Notice of Gross Share Settlement, then with respect to any
                  Option
                  relating to the Relevant Convertible Securities with a Conversion
                  Date
                  occurring on or following November 15, 2013, the Net Shares shall
                  be equal
                  to the lesser of (i) a number of Shares determined as described
                  above and
                  (ii) a number of Shares equal to the Net Convertible Value for
                  such Option
                  divided
                  by
                  the Obligation Price.

                 

              
	 	
                JPMorgan
                  will deliver cash in lieu of any fractional Shares to be delivered
                  with
                  respect to any Net Shares valued at the Relevant Price for the
                  last Valid
                  Day of the Settlement Averaging Period. 

                 

              
	
                Net
                  Convertible Value:

                 

              	
                With
                  respect to an Option, (i) the Total Convertible Value for such
                  Option
                  minus
                  (ii) USD 1,000.

                 

              
	
                Total
                  Convertible Value:

                 

              	
                With
                  respect to an Option, (i) the aggregate number of Shares, if any,
                  that
                  Counterparty is obligated to deliver to the holder of an Convertible
                  Security for the relevant Conversion Date pursuant to Section 10.03(b)
                  of
                  the Indenture, multiplied
                  by
                  (ii) the Obligation Price.

                 

              
	
                Obligation
                  Price:

                 

              	
                The
                  opening price as displayed under the heading “Op” on Bloomberg page
                  CHRS.UQ <equity> (or any successor thereto) on the Obligation
                  Valuation Date.

                 

              
	
                Obligation
                  Valuation Date:

                 

              	
                Settlement
                  Date

                 

              
	
                Settlement
                  Averaging Period:

                 

              	
                For
                  any Option, (i)
                  with respect to an Option
                  with
                  a
                  Conversion
                  Date occurring prior
                  to November 15, 2013, the fifty (50) consecutive Valid Day period
                  beginning on, and including, the second Valid Day following such
                  Conversion Date (or
                  the one hundred (100) consecutive
                  Valid Day period commencing on, and including, the second Valid
                  Day
                  following such
                  Conversion Date if
                  Counterparty has elected Gross Share Settlement and specified Gross
                  Share
                  Settlement in the Notice of Exercise) or (ii) with
                  respect to an
                  Option with a
                  Conversion Date occurring on or following November
                  15, 2013, the fifty (50) consecutive Valid Day period beginning
                  on, and
                  including, the fifty-second
                  (52nd)
                  Scheduled Valid Day immediately prior to the Expiration Date (or
                  the one
                  hundred (100) consecutive
                  Valid Day period commencing
                  on, and including, the one
                  hundred and second (102nd)
                  Scheduled Valid Day immediately prior to the Expiration Date if
                  Counterparty has delivered a Notice of Gross Share Settlement to
                  JPMorgan
                  on or prior to November 15, 2013).

                 

              
	
                Settlement
                  Date:

                 

              	
                For
                  any Option, the third Valid day following the final day of the
                  applicable
                  Settlement Averaging Period with respect to such Option.

                 

              
	
                Settlement
                  Currency:

                 

              	
                USD

                 

              
	
                Valid
                  Day:

                 

              	
                A
                  day on which (i) there is no Market Disruption Event and (ii) trading
                  in
                  the Shares generally occurs on the Exchange or, if the Shares are
                  not then
                  listed on the Exchange, on the principal other U.S. national or
                  regional
                  securities exchange on which the Shares are then listed or, if
                  the Shares
                  are not then listed on a U.S. national or regional securities exchange,
                  on
                  the principal other market on which the Shares are then traded.
                  If the
                  Shares (or other security for which a Relevant Price must be determined)
                  is not so listed or quoted, a Valid Day means a Business Day.

                 

              
	
                Scheduled
                  Valid Day:

                 

              	
                A
                  day that is scheduled to be a Valid Day on the primary U.S. national
                  securities exchange or market on which the Shares are listed or
                  admitted
                  to trading.

                 

              
	
                Market
                  Disruption Event:

                 

              	
                Section
                  6.3(a) of the Equity Definitions is hereby replaced in its entirety
                  by the
                  following:

                 

              
	 	
                “‘Market
                  Disruption Event’ means in respect of a Share, (i) a failure by the
                  Exchange or, if the Shares are not then listed on the Exchange,
                  by the
                  principal other U.S. national or regional securities exchange on
                  which the
                  Shares are then listed or, if the Shares are not then listed on
                  a U.S.
                  national or regional securities exchange, by the principal other
                  market on
                  which the Shares are then traded, to open for trading during its
                  regular
                  trading session or (ii) the occurrence or existence prior to 1:00
                  p.m.,
                  New York City time, on any trading day for the Shares for an aggregate
                  one
                  half hour period of any suspension or limitation imposed on trading
                  (by
                  reason of movements in price exceeding limits permitted by the
                  stock
                  exchange or otherwise) in the Shares or in any options, contracts
                  or
                  future contracts relating to the Shares.

              
	 	 
	
                Relevant
                  Price: 

                 

              	
                On
                  any Valid Day, the per Share volume-weighted average price as displayed
                  under the heading “Bloomberg VWAP” on Bloomberg page CHRS.UQ
                  <equity> AQR (or any successor thereto) in respect of the period
                  from the scheduled opening time of the Exchange to the Scheduled
                  Closing
                  Time of the Exchange on such Valid Day (or if such volume-weighted
                  average
                  price is unavailable, the market value of one Share on such Valid
                  Day, as
                  determined by the Calculation Agent using a volume-weighted method).
                  The
                  Relevant Price will be determined without regard to after hours
                  trading or
                  any other trading outside of the regular trading session
                  hours.

                 

              
	
                Other
                  Applicable Provisions:

                 

              	
                To
                  the extent JPMorgan is obligated to deliver Shares hereunder, the
                  provisions of Sections 9.1(c), 9.8, 9.9, 9.10, 9.11 (except that
                  the
                  Representation and Agreement contained in Section 9.11 of the Equity
                  Definitions shall be modified by excluding any representations
                  therein
                  relating to restrictions, obligations, limitations or requirements
                  under
                  applicable securities laws arising as a result of the fact that
                  Counterparty is the Issuer of the Shares) and 9.12 of the Equity
                  Definitions will be applicable, except that all references in such
                  provisions to “Physically-Settled” shall be read as references to “Net
                  Share Settled”. “Net Share Settled” in relation to any Option means that
                  JPMorgan is obligated to deliver Shares hereunder.

                 

              
	
                Restricted
                  Certificated Shares:

                 

              	
                Notwithstanding
                  anything to the contrary in the Equity Definitions, JPMorgan may,
                  in whole
                  or in part, deliver Shares in certificated form representing the
                  Number of
                  Shares to be Delivered to Counterparty in lieu of delivery through
                  the
                  Clearance System. With respect to such certificated Shares, the
                  Representation and Agreement contained in Section 9.11 of the Equity
                  Definitions shall be modified by deleting the remainder of the
                  provision
                  after the word “encumbrance” in the fourth line thereof. 

                 

              
	 	 
	
                Share
                  Adjustments:

                 

              	 
	
                Method
                  of Adjustment:

                 

              	
                Notwithstanding
                  Section 11.2 of the Equity Definitions, upon the occurrence of
                  any event
                  or condition set forth in Section 10.04 of the Indenture, the Calculation
                  Agent shall make a corresponding adjustment, if necessary, to the
                  terms
                  relevant to the exercise, settlement or payment of the Transaction;
                  provided
                  that in no event shall there be any adjustment hereunder as a result
                  of an
                  adjustment to the Conversion Rate pursuant to Section 10.01(c)
                  or Section
                  10.04(g) of the Indenture.

                 

              
	 	 
	
                Extraordinary
                  Events:

                 

              	 
	
                Merger
                  Events:

                 

              	
                Notwithstanding
                  Section 12.1(b) of the Equity Definitions, a “Merger Event” means the
                  occurrence of any event or condition set forth in Section 10.06
                  of the
                  Indenture.

                 

              
	
                Tender
                  Offer:

                 

              	
                Applicable.
                  Notwithstanding Section 12.1(d) of the Equity Definitions, a “Tender
                  Offer” means the occurrence of any event or condition set forth in clause
                  (1) of the definition of “Change of Control” in Section 1.01 of the
                  Indenture.

                 

              
	
                Consequences
                  of Merger Events and

              	 
	
                Tender
                  Offers:

                 

              	
                Notwithstanding
                  Sections 12.2 and 12.3 of the Equity Definitions, upon the occurrence
                  of a
                  Merger Event or Tender Offer, the Calculation Agent shall make
                  the
                  corresponding adjustment in respect of any adjustment under the
                  Indenture
                  to any one or more of the nature of the Shares, the Number of Options,
                  the
                  Option Entitlement and any other variable relevant to the exercise,
                  settlement or payment for the Transaction; provided that
                  such adjustment shall be
                  made without regard to any adjustment to the Conversion Rate pursuant
                  to
                  Sections 10.01(c) and 10.04(g) of the Indenture; and provided
                  further
                  that the Calculation Agent may limit or alter any such adjustment
                  referenced in this paragraph so that the fair value of the Transaction
                  to
                  JPMorgan is not reduced as a result of such adjustment.

                 

              
	
                Nationalization,
                  Insolvency

              	 
	
                or
                  Delisting:

                 

              	
                Cancellation
                  and Payment (Calculation Agent Determination); provided
                  that, in addition to the provisions of Section 12.6(a)(iii) of
                  the Equity
                  Definitions, it will also constitute a Delisting if the Exchange
                  is
                  located in the United States and the Shares are not immediately
                  re-listed,
                  re-traded or re-quoted on any of the New York Stock Exchange, the
                  American
                  Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global
                  Market (or their respective successors); if the Shares are immediately
                  re-listed, re-traded or re-quoted on any such exchange or quotation
                  system, such exchange or quotation system shall thereafter be deemed
                  to be
                  the Exchange.

                 

              
	 	 
	
                Additional
                  Disruption Events: 

                 

              	 
	
                (a)
                  Change in Law:

                 

              	
                Applicable

                 

              
	
                (b)
                  Failure to Deliver:

                 

              	
                Applicable

                 

              
	
                (c)
                  Insolvency Filing:

                 

              	
                Applicable

                 

              
	
                (d)
                  Hedging Disruption:

                 

              	
                Applicable

                 

              
	
                (e)
                  Increased Cost of Hedging:

                 

              	
                Applicable

                 

              
	
                Hedging
                  Party:

                 

              	
                For
                  all applicable Additional Disruption Events, JPMorgan

                 

              
	
                Determining
                  Party:

                 

              	
                For
                  all applicable Additional Disruption Events, JPMorgan

                 

              
	
                Non-Reliance:

                 

              	
                Applicable

                 

              
	 	 
	
                Agreements
                  and Acknowledgments 

              	 
	
                Regarding
                  Hedging Activities:

                 

              	
                Applicable

                 

              
	
                Additional
                  Acknowledgments:

                 

              	
                Applicable

                 

              

      

       

      3.
        Calculation Agent:  JPMorgan

       

      4.
        Account Details:

      JPMorgan
        Payment Instructions:

       

      JPMorgan
        Chase Bank, National Association, New York

      ABA:
        021
        000 021

      Favour:
        JPMorgan Chase Bank, National Association - London

      A/C:
        0010962009 CHASUS33

       

      Counterparty
        Payment Instructions:

       

      To
        be
        provided by Counterparty.

       

      5.
        Offices:

       

      The
        Office of JPMorgan for the Transaction is: 

       

      JPMorgan
        Chase Bank, National Association

      London
        Branch

      P.O.
        Box
        161

      60
        Victoria Embankment

      London
        EC4Y 0JP

      England

      

      The
        Office of Counterparty for the Transaction is: 450 Winks Lane, Bensalem,
        PA
        19020

       

       

      6.
        Notices:
        For
        purposes of this Confirmation:

      (a) Address
        for notices or communications to Counterparty:

       

      
        	
                To:

              	
                Charming
                  Shoppes, Inc.

              
	 	
                450
                  Winks Lane

              
	 	
                Bensalem,
                  PA 19020

              
	
                Attn:
                  

              	
                Treasurer

              
	
                Telephone:
                  

              	
                215-633-4899

              
	
                Facsimile:
                  

              	
                215-638-6759

              

      

      

      (b) Address
        for notices or communications to JPMorgan:

       

      
        	
                To:

              	
                JPMorgan
                  Chase Bank, National Association

              
	 	
                277
                  Park Avenue, 11th
                  Floor

              
	 	
                New
                  York, NY 10172

              
	
                Attention:
                  

              	
                Eric
                  Stefanik

              
	
                Title:
                  

              	
                Operations
                  Analyst

              
	 	
                EDG
                  Corporate Marketing 

              
	
                Telephone:

              	
                (212)
                  622-5814

              
	
                Facsimile:

              	
                (212)
                  622-8534

              

      

      

      3.  Representations,
        Warranties and Agreements:

       

      (a) In
        addition to the representations and warranties in the Agreement and those
        contained elsewhere herein, Counterparty represents and warrants to and for
        the
        benefit of, and agrees with, JPMorgan as follows:

       

      (i) On
        the
        Trade Date, (A) none of Counterparty and its officers and directors is aware
        of
        any material nonpublic information regarding Counterparty or the Shares and
        (B)
        all reports and other documents filed by Counterparty with the Securities
        and
        Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended
        (the “Exchange
        Act”)
        when
        considered as a whole (with the more recent such reports and documents deemed
        to
        amend inconsistent statements contained in any earlier such reports and
        documents), do not contain any untrue statement of a material fact or any
        omission of a material fact required to be stated therein or necessary to
        make
        the statements therein, in the light of the circumstances in which they were
        made, not misleading.

       

      (ii) (A)
        On
        the Trade Date, the Shares or securities that are convertible into, or
        exchangeable or exercisable for Shares, are not, and shall not be, subject
        to a
“restricted period,” as such term is defined in Regulation M under the Exchange
        Act (“Regulation
        M”)
        and
        (B) Counterparty shall not engage in any “distribution,” as such term is defined
        in Regulation M, other than a distribution meeting the requirements of the
        exceptions set forth in sections 101(b)(10) and 102(b)(7) of Regulation M,
        until
        the second Exchange Business Day immediately following the Trade
        Date.

       

      (iii) On
        the
        Trade Date, neither Counterparty nor any “affiliate” or “affiliated purchaser”
(each as defined in Rule 10b-18 of the Exchange Act (“Rule
        10b-18”))
        shall
        directly or indirectly (including, without limitation, by means of any
        cash-settled or other derivative instrument) purchase, offer to purchase,
        place
        any bid or limit order that would effect a purchase of, or commence any tender
        offer relating to, any Shares (or an equivalent interest, including a unit
        of
        beneficial interest in a trust or limited partnership or a depository share)
        or
        any security convertible into or exchangeable or exercisable for Shares,
        except
        through JPMorgan or JPMorgan Chase Bank, National Association, London
        Branch.

       

      (iv) Without
        limiting the generality of Section 13.1 of the Equity Definitions, Counterparty
        acknowledges that JPMorgan is not making any representations or warranties
        with
        respect to the treatment of the Transaction under FASB Statements 128, 133
        or
        149 (each as amended) or 150, EITF Issue No. 00-19, 01-06 or 03-06 (or any
        successor issue statements) or under FASB’s Liabilities & Equity Project.

       

      (v) Without
        limiting the generality of Section 3(a)(iii) of the Agreement, the Transaction
        will not violate Rule 13e-1 or Rule 13e-4 under the Exchange Act.

       

      (vi) Prior
        to
        the Trade Date, Counterparty shall deliver to JPMorgan a resolution of
        Counterparty’s board of directors authorizing the Transaction and such other
        certificate or certificates as JPMorgan shall reasonably request.

       

      (vii) Counterparty
        is not entering into this Confirmation to create actual or apparent trading
        activity in the Shares (or any security convertible into or exchangeable
        for
        Shares) or to raise or depress or otherwise manipulate the price of the Shares
        (or any security convertible into or exchangeable for Shares) or otherwise
        in
        violation of the Exchange Act. 

       

      (viii) Counterparty
        is not, and after giving effect to the transactions contemplated hereby will
        not
        be, an “investment company” as such term is defined in the Investment Company
        Act of 1940, as amended.

       

      (ix) On
        the
        Trade Date (A) the assets of Counterparty at their fair valuation exceed
        the
        liabilities of Counterparty, including contingent liabilities, (B) the capital
        of Counterparty is adequate to conduct the business of Counterparty and (C)
        Counterparty has the ability to pay its debts and obligations as such debts
        mature and does not intend to, or does not believe that it will, incur debt
        beyond its ability to pay as such debts mature.

       

      (x) The
        representations and warranties of Counterparty set forth in Section 3 of
        the
        Agreement and Section 1 of the Purchase Agreement are true and correct and
        are
        hereby deemed to be repeated to JPMorgan as if set forth herein.

       

      (xi) Counterparty
        understands no obligations of JPMorgan to it hereunder will be entitled to
        the
        benefit of deposit insurance and that such obligations will not be guaranteed
        by
        any affiliate of JPMorgan or any governmental agency.

       

      (b) Each
        of
        JPMorgan and Counterparty agrees and represents that it is an “eligible contract
        participant” as defined in Section 1a(12) of the U.S. Commodity Exchange Act, as
        amended.

       

      (c) Each
        of
        JPMorgan and Counterparty acknowledges that the offer and sale of the
        Transaction to it is intended to be exempt from registration under the
        Securities Act of 1933, as amended (the “Securities
        Act”),
        by
        virtue of Section 4(2) thereof. Accordingly, Counterparty represents and
        warrants to JPMorgan that (i) it has the financial ability to bear the economic
        risk of its investment in the Transaction and is able to bear a total loss
        of
        its investment, (ii) it is an “accredited investor” as that term is defined in
        Regulation D as promulgated under the Securities Act, (iii) it is entering
        into
        the Transaction for its own account and without a view to the distribution
        or
        resale thereof, and (iv) the assignment, transfer or other disposition of
        the
        Transaction has not been and will not be registered under the Securities
        Act and
        is restricted under this Confirmation, the Securities Act and state securities
        laws.

       

      (d) The
        parties hereto intend for: (a) the Transaction to be a “securities contract” and
        a “swap agreement” as defined in the Bankruptcy Code (Title 11 of the United
        States Code) (the “Bankruptcy
        Code”),
        and
        the parties hereto to be entitled to the protections afforded by, among other
        Sections, Sections 362(b)(6), 555 and 560 of the Bankruptcy Code; (b) a party’s
        right to liquidate the Transaction and to exercise any other remedies upon
        the
        occurrence of any Event of Default under the Agreement with respect to the
        other
        party to constitute a “contractual right” as described in the Bankruptcy Code;
        (c) any cash, securities or other property provided as performance assurance,
        credit support or collateral with respect to the Transaction to constitute
        “margin payments” and “transfers” under a “swap agreement” as defined in the
        Bankruptcy Code; and (d) all payments for, under or in connection with the
        Transaction, all payments for the Shares and the transfer of such Shares
        to
        constitute “settlement payments” and “transfers” under a “swap agreement” as
        defined in the Bankruptcy Code.

       

      (e)
         Counterparty
        shall deliver to JPMorgan an opinion of counsel, dated as of the Trade Date
        and
        reasonably acceptable to JPMorgan in form and substance, with respect to
        the
        matters set forth in Section 3(a) of the Agreement.

       

      8.
        Other
        Provisions:

       

      (a) Additional
        Termination Events.
        The
        occurrence of (i) an event of default with respect to Counterparty under
        the
        terms of the Convertible Securities as set forth in Section 6.01 of the
        Indenture, (ii) an Amendment Event or (iii) a Repayment Event shall be an
        Additional Termination Event with respect to which the Transaction is the
        sole
        Affected Transaction and Counterparty is the sole Affected Party and JPMorgan
        shall be the party entitled to designate an Early Termination Date pursuant
        to
        Section 6(b) of the Agreement; provided
        that in
        the case of a Repayment Event the Transaction shall be subject to termination
        only in respect of the number of Convertible Securities that cease to be
        outstanding in connection with or as a result of such Repayment
        Event.

       

      “Amendment
        Event”
means
        that Counterparty amends, modifies, supplements or waives any term of the
        Indenture or the Convertible Securities governing the principal amount, coupon,
        maturity, repurchase obligation of Counterparty, redemption right of
        Counterparty, any term relating to conversion of the Convertible Securities
        (including changes to the conversion price, conversion settlement dates or
        conversion conditions), or any term that would require consent of the holders
        of
        not less than 100% of the principal amount of the Convertible Securities
        to
        amend.

       

      “Repayment
        Event”
means
        that (A) any Convertible Securities are repurchased (whether in connection
        with
        or as a result of a change of control, howsoever defined, or for any other
        reason) by Counterparty or any of its subsidiaries, (B) any Convertible
        Securities are delivered to Counterparty in exchange for delivery of any
        property or assets of Counterparty or any of its subsidiaries (howsoever
        described), (C) any principal of any of the Convertible Securities is repaid
        prior to the final maturity date of the Convertible Securities (whether
        following acceleration of the Convertible Securities or otherwise) and (D)
        any
        Convertible Securities are exchanged by or for the benefit of the holders
        thereof for any other securities of Counterparty or any of its affiliates
        (or
        any other property, or any combination thereof) pursuant to any exchange
        offer
        or similar transaction; provided
        that, in
        the case of clause (B) and clause (D), conversions of the Convertible Securities
        pursuant to the terms of the Indenture as in effect on the date hereof shall
        not
        be Repayment Events.

       

      (b) Alternative
        Calculations and Payment on Early Termination and on Certain Extraordinary
        Events.
        If,
        subject to Section 8(k) below, JPMorgan shall owe Counterparty any amount
        pursuant to Section 12.2 or 12.3 of the Equity Definitions and “Consequences of
        Merger Events and Tender Offers” above, or Sections 12.6, 12.7 or 12.9 of the
        Equity Definitions (except in the event of an Insolvency, a Nationalization,
        a
        Tender Offer or a Merger Event, in each case, in which the consideration
        or
        proceeds to be paid to holders of Shares consists solely of cash) or pursuant
        to
        Section 6(d)(ii) of the Agreement (except in the event of an Event of Default
        in
        which Counterparty is the Defaulting Party or a Termination Event in which
        Counterparty is the Affected Party, that resulted from an event or events
        within
        Counterparty’s control) (a “Payment
        Obligation”),
        Counterparty shall have the right, in its sole discretion, to require JPMorgan
        to satisfy any such Payment Obligation by the Share Termination Alternative
        (as
        defined below) by giving irrevocable telephonic notice to JPMorgan, confirmed
        in
        writing within one Scheduled Trading Day, between the hours of 9:00 A.M.
        and
        4:00 P.M. New York City time on the Merger Date, Tender Offer Date, Announcement
        Date or Early Termination Date, as applicable (“Notice
        of Share Termination”);
        provided
        that if
        Counterparty does not validly request JPMorgan to satisfy its Payment Obligation
        by the Share Termination Alternative, JPMorgan shall have the right, in its
        sole
        discretion, to satisfy its Payment Obligation by the Share Termination
        Alternative, notwithstanding Counterparty’s election to the contrary. For the
        avoidance of doubt, the parties agree that in calculating the Payment Obligation
        the Determining Party may consider the purchase price paid in connection
        with
        the purchase of Share Termination Delivery Property. Upon such Notice of
        Share
        Termination, the following provisions shall apply on the Scheduled Trading
        Day
        immediately following the Merger Date, the Tender Offer Date, Announcement
        Date
        or Early Termination Date, as applicable:

       

      
        	
                Share
                  Termination Alternative: 

                 

              	
                Applicable
                  and means that JPMorgan shall deliver to Counterparty the Share
                  Termination Delivery Property on the date on which the Payment
                  Obligation
                  would otherwise be due pursuant to Section 12.7 or 12.9 of the
                  Equity
                  Definitions or Section 6(d)(ii) of the Agreement, as applicable
                  (the
                  “Share
                  Termination Payment Date”),
                  in satisfaction of the Payment Obligation. 

                 

              
	
                Share
                  Termination Delivery 

              	 
	
                Property:
                  

                 

              	
                A
                  number of Share Termination Delivery Units, as calculated by the
                  Calculation Agent, equal to the Payment Obligation divided by the
                  Share
                  Termination Unit Price. The Calculation Agent shall adjust the
                  Share
                  Termination Delivery Property by replacing any fractional portion
                  of a
                  security therein with an amount of cash equal to the value of such
                  fractional security based on the values used to calculate the Share
                  Termination Unit Price. 

                 

              
	
                Share
                  Termination Unit Price: 

                 

              	
                The
                  value of property contained in one Share Termination Delivery Unit
                  on the
                  date such Share Termination Delivery Units are to be delivered
                  as Share
                  Termination Delivery Property, as determined by the Calculation
                  Agent in
                  its discretion by commercially reasonable means and notified by
                  the
                  Calculation Agent to JPMorgan at the time of notification of the
                  Payment
                  Obligation. 

                 

              
	
                Share
                  Termination Delivery Unit: 

                 

              	
                In
                  the case of a Termination Event, Event of Default or Delisting,
                  one Share
                  or, in the case of an Insolvency, Nationalization, Merger Event
                  or Tender
                  Offer, a unit consisting of the number or amount of each type of
                  property
                  received by a holder of one Share (without consideration of any
                  requirement to pay cash or other consideration in lieu of fractional
                  amounts of any securities) in such Insolvency, Nationalization,
                  Merger
                  Event or Tender Offer. If such Insolvency, Nationalization, Merger
                  Event
                  or Tender Offer involves a choice of consideration to be received
                  by
                  holders, such holder shall be deemed to have elected to receive
                  the
                  maximum possible amount of cash.

                 

              
	
                Failure
                  to Deliver: 

                 

              	
                Applicable

                 

              
	
                Other
                  applicable provisions: 

                 

              	
                If
                  Share Termination Alternative is applicable, the provisions of
                  Sections
                  9.8, 9.9, 9.10, 9.11 (except that the Representation and Agreement
                  contained in Section 9.11 of the Equity Definitions shall be modified
                  by
                  excluding any representations therein relating to restrictions,
                  obligations, limitations or requirements under applicable securities
                  laws
                  arising as a result of the fact that Counterparty is the Issuer
                  of the
                  Shares) and 9.12 of the Equity Definitions will be applicable,
                  except that
                  all references in such provisions to “Physically-Settled” shall be read as
                  references to “settled by Share Termination Alternative” and all
                  references to “Shares” shall be read as references to “Share Termination
                  Delivery Units”.

                 

              

      

      (c) Disposition
        of Hedge Shares.
        Counterparty
        hereby agrees that if, in the good faith reasonable judgment of JPMorgan,
        any
        Shares (the “Hedge
        Shares”)
        acquired by JPMorgan for the purpose of hedging its obligations pursuant
        to the
        Transaction
        cannot
        be sold in the public market by JPMorgan without registration under the
        Securities Act, Counterparty shall, at its election: (i) in
        order
        to allow JPMorgan to sell the Hedge Shares in a registered offering, make
        available to JPMorgan an effective registration statement under the Securities
        Act to cover the resale of such Hedge Shares and (A) enter into an agreement,
        in
        form and substance satisfactory to JPMorgan, substantially in the form of
        an
        underwriting agreement for a registered offering, (B)
        provide accountant’s “comfort” letters in customary form for registered
        offerings of equity securities, (C) provide disclosure opinions of nationally
        recognized outside counsel to Counterparty reasonably acceptable to JPMorgan,
        (D) provide other customary opinions, certificates and closing documents
        customary in form for registered offerings of equity securities and (E) afford
        JPMorgan a reasonable opportunity to conduct a “due diligence” investigation
        with respect to Counterparty customary in scope for underwritten offerings
        of
        equity securities;
        provided,
        however,
        that if
        JPMorgan, in its sole reasonable discretion, is not satisfied with access
        to due
        diligence materials, the results of its due diligence investigation, or the
        procedures and documentation for the registered offering referred to above,
        then
        clause (ii) or clause (iii) of this Section 8(c) shall apply at the election
        of
        Counterparty; (ii) in order to allow JPMorgan to sell the Hedge Shares in
        a
        private placement, enter into a private placement agreement substantially
        similar to private placement purchase agreements customary for private
        placements of equity securities, in form and substance satisfactory to JPMorgan,
        including customary representations, covenants, blue sky and other governmental
        filings and/or registrations, indemnities to JPMorgan, due diligence rights
        (for
        JPMorgan or any designated buyer of the Hedge Shares from JPMorgan), opinions
        and certificates and such other documentation as is customary for private
        placements agreements, all reasonably acceptable to JPMorgan (in which case,
        the
        Calculation Agent shall make any adjustments to the terms of the Transaction
        that are necessary, in its reasonable judgment, to compensate JPMorgan for
        any
        discount from the public market price of the Shares incurred on the sale
        of
        Hedge Shares in a private placement); or (iii) purchase the Hedge Shares
        from
        JPMorgan at the Relevant Price on such Exchange Business Days, and in the
        amounts, requested by JPMorgan.

       

      (d) Amendment
        to Equity Definitions.
        The
        following amendment shall be made to the Equity Definitions:

       

      (i) Section
        12.6(a)(ii) of the Equity Definitions is hereby amended by (1) deleting from
        the
        fourth line thereof the word “or” after the word “official” and inserting a
        comma therefor, and (2) deleting the semi-colon at the end of subsection
        (B)
        thereof and inserting the following words therefor “or (C) at JPMorgan’s option,
        the occurrence of any of the events specified
        in Section 5(a)(vii) (1) through (9) of the ISDA Master Agreement with respect
        to that Issuer.”

       

      (ii)
         Section
        12.9(b)(i) of the Equity Definitions is hereby amended by (1) replacing “either
        party may elect” with “JPMorgan may elect” and (2) replacing “notice to the
        other party” with “notice to Counterparty” in the first sentence of such
        section.

       

      (e) Repurchase
        Notices.
        Counterparty shall, on any day on which Counterparty effects any repurchase
        of
        Shares, promptly give JPMorgan a written
        notice of such repurchase (a “Repurchase
        Notice”)
        on
        such day if, following such repurchase, the Notice Percentage as determined
        on
        such day is (i) greater than 6% and (ii) greater by 0.5% than the Notice
        Percentage included in the immediately preceding Repurchase Notice (or, in
        the
        case of the first such Repurchase Notice, greater than the Notice Percentage
        as
        of the date hereof). The “Notice
        Percentage”
as
        of
        any day is the fraction, expressed as a percentage, the numerator of which
        is
        the Number of Shares and the denominator of which is the number of Shares
        outstanding on such day. In the event that Counterparty fails to provide
        JPMorgan with a Repurchase Notice on the day and in the manner specified
        in this
        Section 8(e) then Counterparty agrees to indemnify and hold harmless JPMorgan,
        its affiliates and their respective directors, officers, employees, agents
        and
        controlling persons (JPMorgan and each such person being an “Indemnified
        Party”)
        from
        and against any and all losses, claims, damages and liabilities (or actions
        in
        respect thereof), joint or several, to which such Indemnified Party may become
        subject under applicable securities laws, including without limitation, Section
        16 of the Exchange Act, relating to or arising out of such failure. If for
        any
        reason the foregoing indemnification is unavailable to any Indemnified Party
        or
        insufficient to hold harmless any Indemnified Party, then Counterparty shall
        contribute, to the maximum extent permitted by law, to the amount paid or
        payable by the Indemnified Party as a result of such loss, claim, damage
        or
        liability. In addition, Counterparty will reimburse any Indemnified Party
        for
        all expenses (including reasonable counsel fees and expenses) as they are
        incurred (after notice to Counterparty) in connection with the investigation
        of,
        preparation for or defense or settlement of any pending or threatened claim
        or
        any action, suit or proceeding arising therefrom, whether or not such
        Indemnified Party is a party thereto and whether or not such claim, action,
        suit
        or proceeding is initiated or brought by or on behalf of Counterparty. This
        indemnity shall survive the completion of the Transaction contemplated by
        this
        Confirmation and any assignment and delegation of the Transaction made pursuant
        to this Confirmation or the Agreement shall inure to the benefit of any
        permitted assignee of JPMorgan. 

       

      (f) Transfer
        and Assignment.
        JPMorgan may transfer or assign its rights and obligations hereunder and
        under
        the Agreement, in whole or in part, without the consent of Counterparty,
        to (i)
        any of its affiliates, (ii) any entities sponsored or organized by, or on
        behalf
        of or for the benefit of, JPMorgan, or (iii) any third party with a rating
        for
        its long term, unsecured and unsubordinated indebtedness equal to or better
        than
        the lesser of (i) the credit rating of JPMorgan at the time of the transfer
        and
        (ii) A- by Standard and Poor’s Rating Group, Inc. or its successor
        (“S&P”),
        or A3
        by Moody’s Investor Service, Inc. (“Moody's”)
        or, if
        either S&P or Moody’s ceases to rate such debt, at least an equivalent
        rating or better by a substitute agency rating mutually agreed by Counterparty
        and JPMorgan.
        If at
        any time at which the Equity Percentage exceeds 8%, JPMorgan, in its discretion,
        is unable to effect such a transfer or assignment after its commercially
        reasonable efforts on pricing terms reasonably acceptable to JPMorgan such
        that
        the Equity Percentage is reduced to 8% or less, JPMorgan may designate any
        Scheduled Trading Day as an Early Termination Date with respect to a portion
        (the “Terminated
        Portion”)
        of the
        Transaction, such that the Equity Percentage following such partial termination
        will be equal to or less than 8%. In the event that JPMorgan so designates
        an
        Early Termination Date with respect to a portion of the Transaction, a payment
        or delivery shall be made pursuant to Section 6 of the Agreement and Section
        8(b) of this Confirmation as if (i) an Early Termination Date had been
        designated in respect of a Transaction having terms identical to the Terminated
        Portion of the Transaction, (ii) Counterparty shall be the sole Affected
        Party
        with respect to such partial termination and (iii) such portion of the
        Transaction shall be the only Terminated Transaction. The “Equity
        Percentage”
as
        of
        any day is the fraction, expressed as a percentage, (A) the numerator of
        which
        is the sum of the number of Shares that JPMorgan or any of its affiliates
        beneficially own (within the meaning of Section 13 of the Exchange Act) on
        such
        day, other than any Shares so owned as a hedge of the Transaction, and the
        Number of Shares and (B) the denominator of which is the number of Shares
        outstanding on such day.

       

      (g) Staggered
        Settlement.
        JPMorgan may,
        by
        notice to Counterparty prior to any Settlement Date (a “Nominal
        Settlement Date”),
        elect
        to deliver the Shares on two or more dates (each, a “Staggered
        Settlement Date”)
        or at
        two or more times on the Nominal Settlement Date as follows:

       

      (i)
         in
        such
        notice, JPMorgan will specify to Counterparty the related Staggered Settlement
        Dates (each of which will be on or prior to such Nominal Settlement Date,
        but
        not prior to the beginning of the applicable Settlement Averaging Period)
        or
        delivery times and how it will allocate the Shares it is required to deliver
        hereunder among the Staggered Settlement Dates or delivery times;
        and

       

      (ii)
         the
        aggregate number of Shares that JPMorgan will deliver to Counterparty hereunder
        on all such Staggered Settlement Dates and delivery times will equal the
        number
        of Shares that JPMorgan would otherwise be required to deliver on such Nominal
        Settlement Date.

       

      (h) Right
        to Extend.
        JPMorgan may postpone any Potential Exercise Date or any other date of valuation
        or delivery by JPMorgan, with respect to some or all of the relevant Options
        (in
        which event the Calculation Agent shall make appropriate adjustments to the
        Shares it is required to deliver hereunder), if JPMorgan determines, in its
        reasonable discretion, that such extension is reasonably necessary or
        appropriate to preserve JPMorgan’s hedging or hedge unwind activity hereunder in
        light of existing liquidity conditions or to enable JPMorgan to effect purchases
        of Shares in connection with its hedging, hedge unwind or settlement activity
        hereunder in a manner that would, if JPMorgan were Counterparty or an affiliated
        purchaser of Counterparty, be in compliance with applicable legal, regulatory
        or
        self-regulatory requirements, or with related policies and procedures applicable
        to JPMorgan.

       

      (i) Disclosure.
        Effective from the date of commencement of discussions concerning the
        Transaction, Counterparty and each of its employees, representatives, or
        other
        agents may disclose to any and all persons, without limitation of any kind,
        the
        tax treatment and tax structure of the Transaction and all materials of any
        kind
        (including opinions or other tax analyses) that are provided to Counterparty
        relating to such tax treatment and tax structure.

       

      (j) Designation
        by JPMorgan.
        Notwithstanding any other provision in this Confirmation to the contrary
        requiring or allowing JPMorgan to purchase, sell, receive or deliver any
        Shares
        or other securities to or from Counterparty, JPMorgan may designate any of
        its
        affiliates to purchase, sell, receive or deliver such shares or other securities
        and otherwise to perform JPMorgan obligations in respect of the Transaction
        and
        any such designee may assume such obligations. JPMorgan shall be discharged
        of
        its obligations to Counterparty to the extent of any such
        performance.

       

      (k)  Netting
        and Set-off.
        

       

      (i) If
        on any
        date cash would otherwise be payable or Shares or other property would otherwise
        be deliverable hereunder or pursuant to the Agreement or pursuant to any
        other
        agreement between the parties by Counterparty to JPMorgan and cash would
        otherwise be payable or Shares or other property would otherwise be deliverable
        hereunder or pursuant to the Agreement or pursuant to any other agreement
        between the parties by JPMorgan to Counterparty and the type of property
        required to be paid or delivered by each such party on such date is the same,
        then, on such date, each such party’s obligation to make such payment or
        delivery will be automatically satisfied and discharged and, if the aggregate
        amount that would otherwise have been payable or deliverable by one such
        party
        exceeds the aggregate amount that would otherwise have been payable or
        deliverable by the other such party, replaced by an obligation of the party
        by
        whom the larger aggregate amount would have been payable or deliverable to
        pay
        or deliver to the other party the excess of the larger aggregate amount over
        the
        smaller aggregate amount.

       

      (ii) In
        addition to and without limiting any rights of set-off that a party hereto
        may
        have as a matter of law, pursuant to contract or otherwise, upon the occurrence
        of an Early Termination Date, JPMorgan shall have the right to terminate,
        liquidate and otherwise close out the Transaction and to set off any obligation
        or right that JPMorgan or any affiliate of JPMorgan may have to or against
        Counterparty hereunder or under the Agreement against any right or obligation
        JPMorgan or any of its affiliates may have against or to Counterparty, including
        without limitation any right to receive a payment or delivery pursuant to
        any
        provision of the Agreement or hereunder. In the case of a set-off of any
        obligation to release, deliver or pay assets against any right to receive
        assets
        of the same type, such obligation and right shall be set off in kind. In
        the
        case of a set-off of any obligation to release, deliver or pay assets against
        any right to receive assets of any other type, the value of each of such
        obligation and such right shall be determined by the Calculation Agent and
        the
        result of such set-off shall be that the net obligor shall pay or deliver
        to the
        other party an amount of cash or assets, at the net obligor’s option, with a
        value (determined, in the case of a delivery of assets, by the Calculation
        Agent) equal to that of the net obligation. In determining the value of any
        obligation to release or deliver Shares or any right to receive Shares, the
        value at any time of such obligation or right shall be determined by reference
        to the market value of the Shares at such time, as determined by the Calculation
        Agent. If an obligation or right is unascertained at the time of any such
        set-off, the Calculation Agent may in good faith estimate the amount or value
        of
        such obligation or right, in which case set-off will be effected in respect
        of
        that estimate, and the relevant party shall account to the other party at
        the
        time such obligation or right is ascertained.

       

      (iii) Notwithstanding
        any provision of the Agreement (including without limitation Section 6(f)
        thereof) and this Confirmation (including without limitation this Section
        8(k))
        or any other agreement between the parties to the contrary, (A) Counterparty
        shall not net or set off its obligations under the Transaction, if any, against
        its rights against JPMorgan under any other transaction or instrument; (B)
        JPMorgan may net and set off any rights of JPMorgan against Counterparty
        arising
        under the Transaction only against obligations of JPMorgan to Counterparty
        arising under any transaction or instrument if such transaction or instrument
        does not convey rights to JPMorgan senior to the claims of common stockholders
        in the event of Counterparty’s bankruptcy; and (C) in the event of
        Counterparty’s bankruptcy, JPMorgan waives any and all rights it may have to
        set-off in respect of the Transaction, whether arising under agreement,
        applicable law or otherwise. JPMorgan will give notice to Counterparty of
        any
        netting or set off effected under this provision.

       

      (l)  Equity
        Rights.
        JPMorgan acknowledges and agrees that this Confirmation is not intended to
        convey to it rights with respect to the Transaction that are senior to the
        claims of common stockholders in the event of Counterparty’s bankruptcy. For the
        avoidance of doubt, the parties agree that the preceding sentence shall not
        apply at any time other than during Counterparty’s bankruptcy to any claim
        arising as a result of a breach by Counterparty of any of its obligations
        under
        this Confirmation or the Agreement. 

       

      (m)  Early
        Unwind.
        In the
        event the sale by Counterparty of the Convertible Securities is not consummated
        with the initial purchasers pursuant to the Purchase Agreement for any reason
        by
        the close of business in New York on April 30, 2007 (or such later date as
        agreed upon by the parties, which in no event shall be later than May 3,
        2007)
        (April 30, 2007 or such later date being the “Early
        Unwind Date”),
        the
        Transaction shall automatically terminate (the “Early
        Unwind”),
        on
        the Early Unwind Date and (i) the Transaction and all of the respective rights
        and obligations of JPMorgan and Counterparty thereunder shall be cancelled
        and
        terminated and (ii) purchase
        from the JPMorgan on the Early Unwind Date all Shares purchased by JPMorgan
        or
        one of more of its affiliates and
        Counterparty shall pay to JPMorgan an amount in cash equal to the aggregate
        amount of costs and expenses relating to the unwinding of JPMorgan’s hedging
        activities in respect of the Transaction (including market losses incurred
        in
        reselling any Shares purchased by JPMorgan or its affiliates in connection
        with
        such hedging activities). The amount of any such reimbursement shall be
        determined by the JPMorgan in its sole good faith discretion. Following such
        termination, cancellation and payment, each party shall be released and
        discharged by the other party from and agrees not to make any claim against
        the
        other party with respect to any obligations or liabilities of either party
        arising out of and to be performed in connection with the Transaction either
        prior to or after the Early Unwind Date. JPMorgan and Counterparty represent
        and
        acknowledge to the other that upon an Early Unwind and following the payment
        referred to above, all obligations with respect to the Transaction shall
        be
        deemed fully and finally discharged.

       

      (n)  Role of
        Agent. Each
        party agrees and acknowledges that (i) J.P. Morgan Securities Inc., an affiliate
        of JPMorgan (“JPMSI”),
        has
        acted solely as agent and not as principal with respect to this Transaction
        and
        (ii) JPMSI has no obligation or liability, by way of guaranty, endorsement
        or
        otherwise, in any manner in respect of this Transaction (including, if
        applicable, in respect of the settlement thereof). Each party agrees it will
        look solely to the other party (or any guarantor in respect thereof) for
        performance of such other party’s obligations under this
        Transaction.

       

      (o)  Waiver
        of Trial by Jury.
        EACH
        OF COUNTERPARTY AND BOFA HEREBY IRREVOCABLY WAIVES (ON ITS OWN BEHALF AND,
        TO
        THE EXTENT PERMITTED BY APPLICABLE LAW, ON BEHALF OF ITS STOCKHOLDERS) ALL
        RIGHT
        TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED
        ON
        CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THE TRANSACTION
        OR
        THE ACTIONS OF BOFA OR ITS AFFILIATES IN THE NEGOTIATION, PERFORMANCE OR
        ENFORCEMENT HEREOF.

       

      (p)  Governing
        Law.
        THIS
        CONFIRMATION SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. THE
        PARTIES
        HERETO IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF
        THE
        STATE OF NEW YORK AND THE UNITED STATES COURT FOR THE SOUTHERN DISTRICT OF
        NEW
        YORK IN CONNECTION WITH ALL MATTERS RELATING HERETO AND WAIVE ANY OBJECTION
        TO
        THE LAYING OF VENUE IN, AND ANY CLAIM OF INCONVENIENT FORUM WITH RESPECT
        TO,
        THESE COURTS.

       

      

       

      Please
        confirm that the foregoing correctly sets forth the terms of our agreement
        by
        executing this Confirmation and returning it to EDG Confirmation Group, J.P.
        Morgan Securities Inc., 277 Park Avenue, 11th Floor, New York, NY 10172-3401,
        or
        by fax to (212)
        622 8519.

       

      
        	 
	
                Yours
                  faithfully,

                 

              
	
                J.P.
                  Morgan Securities Inc., as agent for JPMorgan Chase Bank, National
                  Association

              
	 
	 
	
                By:
                  _________________________

              
	
                Authorized
                  Signatory

              
	
                Name:

                 

              
	
                Agreed
                  and Accepted By:

                 

                 

                 

                CHARMING
                  SHOPPES, INC.

                 

              
	 
	
                By:  

              
	
                Name:

                Title:Exhibit 10.3

    EXHIBIT
      10.3

     

    

     

    
      	 	
              April
                24, 2007

               

            
	
              To:

            	
              Charming
                Shoppes, Inc.

            
	 	
              450
                Winks Lane

            
	 	
              Bensalem,
                PA 19020

            
	 	
              Attn:
                Treasurer

            
	 	
              Telephone:
                215-633-4899

            
	 	
              Facsimile:
                215-638-6759

               

            
	
              From:

            	
              Wachovia
                Capital Markets, LLC

            
	 	
              201
                South College Street

            
	 	
              Charlotte,
                NC 28288

            
	 	
              Attn:
                Equity Derivatives

            
	 	
              Telephone:
                212-214-6100

            
	 	
              Facsimile:
                212-214-5913

            
	 	 
	
              Re:

            	
              Convertible
                Bond Hedge Transaction

            

    

     

    Ladies
      and Gentlemen:

     

    The
      purpose of this communication (this “Confirmation”)
      is to
      set forth the terms and conditions of the above-referenced transaction entered
      into on the Trade Date specified below (the “Transaction”)
      between Wachovia Bank, National Association, (“Wachovia”),
      acting through the agency of Wachovia Capital Markets, LLC (the “Agent”),
      and
Charming
      Shoppes, Inc.
      (“Counterparty”).
      This
      communication constitutes a “Confirmation”
as
      referred to in the ISDA Master Agreement specified below. 

     

    1.  This
      Confirmation is subject to, and incorporates, the definitions and provisions
      of
      the 2000 ISDA Definitions (including the Annex thereto) (the “2000
      Definitions”)
      and
      the definitions and provisions of the 2002 ISDA Equity Derivatives Definitions
      (the “Equity
      Definitions”,
      and
      together with the 2000 Definitions, the “Definitions”),
      in
      each case as published by the International Swaps and Derivatives Association,
      Inc. (“ISDA”).
      In
      the event of any inconsistency between the 2000 Definitions and the Equity
      Definitions, the Equity Definitions will govern. Certain defined terms used
      herein have the meanings assigned to them in Indenture to be dated as of April
      30, 2007 between Counterparty and Wells Fargo Bank, National Association as
      trustee (the “Indenture”)
      relating to the USD 250,000,000 principal amount of 1.125% Senior Convertible
      Notes due 2014 (the “Convertible
      Securities”).
      In
      the event of any inconsistency between the terms defined in the Indenture and
      this Confirmation, this Confirmation shall govern. For the avoidance of doubt,
      references herein to sections of the Indenture are based on the draft of the
      Indenture most recently reviewed by the parties at the time of execution of
      this
      Confirmation. If any relevant sections of the Indenture are changed, added
      or
      renumbered following execution of this Confirmation but prior to or upon the
      execution of the Indenture, the parties will amend this Confirmation in good
      faith to preserve the economic intent of the parties. 

     

    This
      Confirmation evidences a complete and binding agreement between Wachovia and
      Counterparty as to the terms of the Transaction to which this Confirmation
      relates. This Confirmation shall be subject to an agreement (the “Agreement”)
      in the
      form of the 2002 ISDA Master Agreement (the “ISDA
      Form”)
      as if
      Wachovia and Counterparty had executed an agreement in such form (without any
      Schedule but with the elections set forth in this Confirmation). For the
      avoidance of doubt, the Transaction shall be the only transaction under the
      Agreement.

     

    All
      provisions contained in, or incorporated by reference to, the Agreement will
      govern this Confirmation except as expressly modified herein. In the event
      of
      any inconsistency between this Confirmation and either the Definitions or the
      Agreement, this Confirmation shall govern.

     

    2.  The
      Transaction constitutes a Share Option Transaction for purposes of the Equity
      Definitions. The terms of the particular Transaction to which this Confirmation
      relates are as follows:

     

    
      	
              General
                Terms:

               

            	 
	
              Trade
                Date:

               

            	
              April
                24, 2007

               

            
	
              Effective
                Date:

               

            	
              The
                closing date of the offering of the Convertible Securities. 

               

            
	
              Option
                Type:

               

            	
              Call

               

            
	
              Seller:

               

            	
              Wachovia

               

            
	
              Buyer:

               

            	
              Counterparty

               

            
	
              Shares:

               

            	
              The
                Common Stock of Counterparty, par value USD 0.10 per share (Ticker
                Symbol:
                “CHRS”).

               

            
	
              Number
                of Options:

               

            	
              25%
                of the number of Convertible Securities in denominations of USD1,000
                principal amount issued by Counterparty on the closing date for the
                initial issuance of the Convertible Securities; provided
                that
                if the initial purchasers (as defined in the Purchase Agreement defined
                below) exercise their option to purchase additional Convertible Securities
                pursuant to Section 2(c) of the Purchase Agreement related to the
                purchase
                and sale of the Convertible Securities dated as of April 24, 2007
                among
                Counterparty, Banc of America Securities LLC and J.P. Morgan Securities
                Inc. (the “Purchase
                Agreement”),
                then on the Additional Premium Payment Date, the Number of Options
                shall
                be automatically increased by 25% of the number of Convertible Securities
                in denominations of USD 1,000 principal amount issued pursuant to
                such
                exercise (such Convertible Securities, the “Additional
                Convertible Securities”).

               

            
	
              Number
                of Shares:

               

            	
              As
                of any date, the product of the Number of Options and the Conversion
                Rate.

               

            
	
              Conversion
                Rate:

               

            	
              As
                defined in the Indenture, but without regard to any adjustments to
                the
                Conversion Rate pursuant to Sections 10.01(c) and 10.04(g) of the
                Indenture.

               

            
	
              Strike
                Price:

               

            	
              USD
                15.3791

               

            
	
              Premium:

               

            	
              USD 20,562,500.00;
                provided
                that
                if the Number of Options is increased pursuant to the proviso to
                the
                definition of “Number of Options” above, an additional Premium equal to
                the product of the number of Options by which the Number of Options
                is so
                increased and USD 329.00
                shall be paid on the Additional Premium Payment Date.

               

            
	
              Premium
                Payment Date:

               

            	
              April
                30, 2007

               

            
	
              Additional
                Premium Payment Date:

               

            	
              The
                closing date for the purchase and sale of the Additional Convertible
                Securities.

               

            
	
              Exchange:

               

            	
              The
                NASDAQ
                Global Select Market 

               

            
	
              Related
                Exchange:

               

            	
              All
                Exchanges

               

            
	
              Procedures
                for Exercise:

               

            	 
	
              Potential
                Exercise Dates:

               

            	
              Each
                Conversion Date.

               

            
	
              Conversion
                Date:

               

            	
              Each
                “Conversion Date” as defined in the Indenture.

               

            
	
              Required
                Exercise on 

            	 
	
              Conversion
                Dates:

               

            	
              On
                each Conversion Date, a number of Options equal to 25% of the number
                of
                Convertible Securities in denominations of USD1,000 principal amount
                submitted for conversion on such Conversion Date in accordance with
                the
                terms of the Indenture shall be automatically exercised, subject
                to
                “Notice of Exercise” below.

               

            
	
              Expiration
                Date:

               

            	
              May
                1, 2014

               

            
	
              Automatic
                Exercise:

               

            	
              As
                provided above under “Required Exercise on Conversion Dates”, subject to
                the provisions of “Notice of Exercise” below.

               

            
	
              Notice
                of Exercise:

            	
              Notwithstanding
                anything to the contrary in the Equity Definitions, in order to exercise
                any Options, Counterparty must notify Wachovia in writing prior to
                5:00
                PM, New York City time, on the Scheduled Valid Day prior to the scheduled
                first day of the applicable Settlement Averaging Period relating
                to the
                Convertible Securities converted on the Conversion Date occurring
                on the
                relevant Exercise Date (such Convertible Securities, the “Relevant
                Convertible Securities”)
                of (i) the number of Options being exercised on such Exercise Date,
                (ii)
                the scheduled first day of the applicable Settlement Averaging Period,
                (iii) the scheduled settlement date under the Indenture for the Relevant
                Convertible Securities and (iv) whether
                Counterparty has elected to satisfy its conversion obligations with
                respect to the Relevant Convertible Securities in Shares only (as
                described in Section 10.02(b) of the Indenture) (“Gross
                Share Settlement”);
                provided
                that with respect to Options relating to Relevant Convertible Securities
                with a Conversion Date occurring on or after November 15, 2013, such
                Notice of Exercise may be given on or prior to the second Scheduled
                Valid
                Day immediately preceding the Expiration Date and need only specify
                the
                number of Options being exercised. 

            
	 	 
	
              Notice
                of Gross Share Settlement:

            	
              If
                Counterparty has elected Gross Share Settlement for all Convertible
                Securities with a Conversion Date occurring on or after November
                15, 2013,
                then with respect to Options relating to such Convertible Securities,
                Counterparty
                shall notify Wachovia of such election before 5:00 p.m. (New York
                City
                time) on or prior to November
                15, 2013.

            
	 	 
	
              Wachovia’s
                Telephone Number

            	 
	
              and
                Telex and/or Facsimile Number

            	 
	
              and
                Contact Details for purpose of

            	 
	
              Giving
                Notice:

               

            	
              To
                be provided by Wachovia.

               

            
	
              Settlement
                Terms:

               

            	 
	
              Settlement
                Method:

               

            	
              Net
                Share Settlement

               

            
	
              Net
                Share Settlement:

               

            	
              Wachovia
                will deliver to Counterparty, on the relevant Settlement Date, a
                number of
                Shares equal to the Net Shares in respect of any Option exercised
                or
                deemed exercised hereunder. In no event will the Net Shares be less
                than
                zero.

               

            
	
              Net
                Shares:

               

            	
              In
                respect of any Option exercised or deemed exercised, a number of
                Shares
                equal to (i) the sum of the quotients, for each Valid Day during
                the
                Settlement Averaging Period for such Exercisable Option, of (A) the
                product of (x) excess, if any, of the Relevant Price less the Strike
                Price
                on such Valid Day and (y) the Conversion Rate on such Valid Day
                divided
                by
                (B) such Relevant Price, divided
                by
                (ii) the number of Valid Days in the Settlement Averaging Period;
                provided
                that if the calculation contained in clause (A) above results in
                a
                negative number, such number shall be replaced with the number “zero”.
                Notwithstanding the forgoing, if Counterparty has elected Gross Share
                Settlement and so specified in the Notice of Exercise, or if applicable,
                the Notice of Gross Share Settlement, then with respect to any Option
                relating to the Relevant Convertible Securities with a Conversion
                Date
                occurring on or following November 15, 2013, the Net Shares shall
                be equal
                to the lesser of (i) a number of Shares determined as described above
                and
                (ii) a number of Shares equal to the Net Convertible Value for such
                Option
                divided
                by
                the Obligation Price.

               

            
	 	
              Wachovia
                will deliver cash in lieu of any fractional Shares to be delivered
                with
                respect to any Net Shares valued at the Relevant Price for the last
                Valid
                Day of the Settlement Averaging Period. 

               

            
	
              Net
                Convertible Value:

               

            	
              With
                respect to an Option, (i) the Total Convertible Value for such
                Option
                minus
                (ii) USD 1,000.

               

            
	
              Total
                Convertible Value:

               

            	
              With
                respect to an Option, (i) the aggregate number of Shares, if any,
                that
                Counterparty is obligated to deliver to the holder of an Convertible
                Security for the relevant Conversion Date pursuant to Section 10.03(b)
                of
                the Indenture, multiplied
                by
                (ii) the Obligation Price.

               

            
	
              Obligation
                Price:

               

            	
              The
                opening price as displayed under the heading “Op” on Bloomberg page
                CHRS.UQ <equity> (or any successor thereto) on the Obligation
                Valuation Date.

               

            
	
              Obligation
                Valuation Date:

               

            	
              Settlement
                Date

               

            
	
              Settlement
                Averaging Period:

               

            	
              For
                any Option, (i)
                with respect to an Option
                with
                a
                Conversion
                Date occurring prior
                to November 15, 2013, the fifty (50) consecutive Valid Day period
                beginning on, and including, the second Valid Day following such
                Conversion Date (or
                the one hundred (100) consecutive
                Valid Day period commencing on, and including, the second Valid Day
                following such
                Conversion Date if
                Counterparty has elected Gross Share Settlement and specified Gross
                Share
                Settlement in the Notice of Exercise) or (ii) with
                respect to an
                Option with a
                Conversion Date occurring on or following November
                15, 2013, the fifty (50) consecutive Valid Day period beginning on,
                and
                including, the fifty-second
                (52nd)
                Scheduled Valid Day immediately prior to the Expiration Date (or
                the one
                hundred (100) consecutive
                Valid Day period commencing
                on, and including, the one
                hundred and second (102nd)
                Scheduled Valid Day immediately prior to the Expiration Date if
                Counterparty has delivered a Notice of Gross Share Settlement to
                Wachovia
                on or prior to November 15, 2013).

               

            
	
              Settlement
                Date:

               

            	
              For
                any Option, the third Valid day following the final day of the applicable
                Settlement Averaging Period with respect to such Option.

               

            
	
              Settlement
                Currency:

               

            	
              USD

               

            
	
              Valid
                Day:

               

            	
              A
                day on which (i) there is no Market Disruption Event and (ii) trading
                in
                the Shares generally occurs on the Exchange or, if the Shares are
                not then
                listed on the Exchange, on the principal other U.S. national or regional
                securities exchange on which the Shares are then listed or, if the
                Shares
                are not then listed on a U.S. national or regional securities exchange,
                on
                the principal other market on which the Shares are then traded. If
                the
                Shares (or other security for which a Relevant Price must be determined)
                is not so listed or quoted, a Valid Day means a Business Day.

               

            
	
              Scheduled
                Valid Day:

               

            	
              A
                day that is scheduled to be a Valid Day on the primary U.S. national
                securities exchange or market on which the Shares are listed or admitted
                to trading.

               

            
	
              Market
                Disruption Event:

               

            	
              Section
                6.3(a) of the Equity Definitions is hereby replaced in its entirety
                by the
                following:

               

            
	 	
              “‘Market
                Disruption Event’ means in respect of a Share, (i) a failure by the
                Exchange or, if the Shares are not then listed on the Exchange, by
                the
                principal other U.S. national or regional securities exchange on
                which the
                Shares are then listed or, if the Shares are not then listed on a
                U.S.
                national or regional securities exchange, by the principal other
                market on
                which the Shares are then traded, to open for trading during its
                regular
                trading session or (ii) the occurrence or existence prior to 1:00
                p.m.,
                New York City time, on any trading day for the Shares for an aggregate
                one
                half hour period of any suspension or limitation imposed on trading
                (by
                reason of movements in price exceeding limits permitted by the stock
                exchange or otherwise) in the Shares or in any options, contracts
                or
                future contracts relating to the Shares.

            
	 	 
	
              Relevant
                Price: 

               

            	
              On
                any Valid Day, the per Share volume-weighted average price as displayed
                under the heading “Bloomberg VWAP” on Bloomberg page CHRS.UQ
                <equity> AQR (or any successor thereto) in respect of the period
                from the scheduled opening time of the Exchange to the Scheduled
                Closing
                Time of the Exchange on such Valid Day (or if such volume-weighted
                average
                price is unavailable, the market value of one Share on such Valid
                Day, as
                determined by the Calculation Agent using a volume-weighted method).
                The
                Relevant Price will be determined without regard to after hours trading
                or
                any other trading outside of the regular trading session
                hours.

               

            
	
              Other
                Applicable Provisions:

               

            	
              To
                the extent Wachovia is obligated to deliver Shares hereunder, the
                provisions of Sections 9.1(c), 9.8, 9.9, 9.10, 9.11 (except that
                the
                Representation and Agreement contained in Section 9.11 of the Equity
                Definitions shall be modified by excluding any representations therein
                relating to restrictions, obligations, limitations or requirements
                under
                applicable securities laws arising as a result of the fact that
                Counterparty is the Issuer of the Shares) and 9.12 of the Equity
                Definitions will be applicable, except that all references in such
                provisions to “Physically-Settled” shall be read as references to “Net
                Share Settled”. “Net Share Settled” in relation to any Option means that
                Wachovia is obligated to deliver Shares hereunder.

               

            
	
              Restricted
                Certificated Shares:

               

            	
              Notwithstanding
                anything to the contrary in the Equity Definitions, Wachovia may,
                in whole
                or in part, deliver Shares in certificated form representing the
                Number of
                Shares to be Delivered to Counterparty in lieu of delivery through
                the
                Clearance System. With respect to such certificated Shares, the
                Representation and Agreement contained in Section 9.11 of the Equity
                Definitions shall be modified by deleting the remainder of the provision
                after the word “encumbrance” in the fourth line thereof. 

               

            
	
              Share
                Adjustments:

               

            	 
	
              Method
                of Adjustment:

               

            	
              Notwithstanding
                Section 11.2 of the Equity Definitions, upon the occurrence of any
                event
                or condition set forth in Section 10.04 of the Indenture, the Calculation
                Agent shall make a corresponding adjustment, if necessary, to the
                terms
                relevant to the exercise, settlement or payment of the Transaction;
                provided
                that in no event shall there be any adjustment hereunder as a result
                of an
                adjustment to the Conversion Rate pursuant to Section 10.01(c) or
                Section
                10.04(g) of the Indenture.

               

            
	
              Extraordinary
                Events:

               

            	 
	
              Merger
                Events:

               

            	
              Notwithstanding
                Section 12.1(b) of the Equity Definitions, a “Merger Event” means the
                occurrence of any event or condition set forth in Section 10.06 of
                the
                Indenture.

               

            
	
              Tender
                Offer:

               

            	
              Applicable.
                Notwithstanding Section 12.1(d) of the Equity Definitions, a “Tender
                Offer” means the occurrence of any event or condition set forth in clause
                (1) of the definition of “Change of Control” in Section 1.01 of the
                Indenture.

               

            
	
              Consequences
                of Merger Events and

            	 
	
              Tender
                Offers:

               

            	
              Notwithstanding
                Sections 12.2 and 12.3 of the Equity Definitions, upon the occurrence
                of a
                Merger Event or Tender Offer, the Calculation Agent shall make the
                corresponding adjustment in respect of any adjustment under the Indenture
                to any one or more of the nature of the Shares, the Number of Options,
                the
                Option Entitlement and any other variable relevant to the exercise,
                settlement or payment for the Transaction; provided that
                such adjustment shall be
                made without regard to any adjustment to the Conversion Rate pursuant
                to
                Sections 10.01(c) and 10.04(g) of the Indenture; and provided
                further
                that the Calculation Agent may limit or alter any such adjustment
                referenced in this paragraph so that the fair value of the Transaction
                to
                Wachovia is not reduced as a result of such adjustment.

               

            
	
              Nationalization,
                Insolvency

            	 
	
              or
                Delisting:

               

            	
              Cancellation
                and Payment (Calculation Agent Determination); provided
                that, in addition to the provisions of Section 12.6(a)(iii) of the
                Equity
                Definitions, it will also constitute a Delisting if the Exchange
                is
                located in the United States and the Shares are not immediately re-listed,
                re-traded or re-quoted on any of the New York Stock Exchange, the
                American
                Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global
                Market (or their respective successors); if the Shares are immediately
                re-listed, re-traded or re-quoted on any such exchange or quotation
                system, such exchange or quotation system shall thereafter be deemed
                to be
                the Exchange.

               

            
	
              Additional
                Disruption Events: 

               

            	 
	
              (a)
                Change in Law:

               

            	
              Applicable

               

            
	
              (b)
                Failure to Deliver:

               

            	
              Applicable

               

            
	
              (c)
                Insolvency Filing:

               

            	
              Applicable

               

            
	
              (d)
                Hedging Disruption:

               

            	
              Applicable

               

            
	
              (e)
                Increased Cost of Hedging:

               

            	
              Applicable

               

            
	
              Hedging
                Party:

               

            	
              For
                all applicable Additional Disruption Events, Wachovia

               

            
	
              Determining
                Party:

               

            	
              For
                all applicable Additional Disruption Events, Wachovia

               

            
	
              Non-Reliance:

               

            	
              Applicable

               

            
	
              Agreements
                and Acknowledgments 

            	 
	
              Regarding
                Hedging Activities:

               

            	
              Applicable

               

            
	
              Additional
                Acknowledgments:

               

            	
              Applicable

               

            

    

    

     

     

    3.
      Calculation Agent: Wachovia

    

     

    4.
      Account Details:

     

    Wachovia
      Payment Instructions:

     

    Wachovia
      Bank, National Association

    Charlotte,
      NC

    ABA:
      053-000-219

    A/C:
      04659360009768

    Attn:
      Equity Derivatives

    

     

    Counterparty
      Payment Instructions: 

     

    To
      be
      provided by Counterparty.

     

    5.
      Offices:

     

    The
      Office of Wachovia for the Transaction is: 

     

    Wachovia
      Bank, National Association

    375
      Park
      Avenue

    New
      York,
      NY 10152

     

    The
      Office of Counterparty for the Transaction is: 450 Winks Lane, Bensalem, PA
      19020

     

    6.
      Notices:
      For
      purposes of this Confirmation:

     

    (a) Address
      for notices or communications to Counterparty:

     

    
      	
              To:

            	
              Charming
                Shoppes, Inc.

            
	 	
              450
                Winks Lane

            
	 	
              Bensalem,
                PA 19020

            
	
              Attn:
                

            	
              Treasurer

            
	
              Telephone:
                

            	
              215-633-4899

            
	
              Facsimile:
                

            	
              215-638-6759

            

    

    

    (b) Address
      for notices or communications to Wachovia:

     

    
      	
              To:

            	
              Wachovia
                Bank, National Association

            
	 	
              375
                Park Avenue

            
	 	
              New
                York, NY 10152 

            
	
              Attn:

            	
              Head
                of Documentation

            
	
              Telephone:

            	
              212-214-6100

            
	
              Facsimile:

            	
              212-214-5913

            

    

    

    3.  Representations,
      Warranties and Agreements:

     

    (a) In
      addition to the representations and warranties in the Agreement and those
      contained elsewhere herein, Counterparty represents and warrants to and for
      the
      benefit of, and agrees with, Wachovia as follows:

     

    (i) On
      the
      Trade Date, (A) none of Counterparty and its officers and directors is aware
      of
      any material nonpublic information regarding Counterparty or the Shares and
      (B)
      all reports and other documents filed by Counterparty with the Securities and
      Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended
      (the “Exchange
      Act”)
      when
      considered as a whole (with the more recent such reports and documents deemed
      to
      amend inconsistent statements contained in any earlier such reports and
      documents), do not contain any untrue statement of a material fact or any
      omission of a material fact required to be stated therein or necessary to make
      the statements therein, in the light of the circumstances in which they were
      made, not misleading.

     

    (ii) (A)
      On
      the Trade Date, the Shares or securities that are convertible into, or
      exchangeable or exercisable for Shares, are not, and shall not be, subject
      to a
“restricted period,” as such term is defined in Regulation M under the Exchange
      Act (“Regulation
      M”)
      and
      (B) Counterparty shall not engage in any “distribution,” as such term is defined
      in Regulation M, other than a distribution meeting the requirements of the
      exceptions set forth in sections 101(b)(10) and 102(b)(7) of Regulation M,
      until
      the second Exchange Business Day immediately following the Trade
      Date.

     

    (iii) On
      the
      Trade Date, neither Counterparty nor any “affiliate” or “affiliated purchaser”
(each as defined in Rule 10b-18 of the Exchange Act (“Rule
      10b-18”))
      shall
      directly or indirectly (including, without limitation, by means of any
      cash-settled or other derivative instrument) purchase, offer to purchase, place
      any bid or limit order that would effect a purchase of, or commence any tender
      offer relating to, any Shares (or an equivalent interest, including a unit
      of
      beneficial interest in a trust or limited partnership or a depository share)
      or
      any security convertible into or exchangeable or exercisable for Shares, except
      through Wachovia or JPMorgan Chase Bank, National Association, London
      Branch.

     

    (iv) Without
      limiting the generality of Section 13.1 of the Equity Definitions, Counterparty
      acknowledges that Wachovia is not making any representations or warranties
      with
      respect to the treatment of the Transaction under FASB Statements 128, 133
      or
      149 (each as amended) or 150, EITF Issue No. 00-19, 01-06 or 03-06 (or any
      successor issue statements) or under FASB’s Liabilities & Equity Project.

     

    (v) Without
      limiting the generality of Section 3(a)(iii) of the Agreement, the Transaction
      will not violate Rule 13e-1 or Rule 13e-4 under the Exchange Act.

     

    (vi) Prior
      to
      the Trade Date, Counterparty shall deliver to Wachovia a resolution of
      Counterparty’s board of directors authorizing the Transaction and such other
      certificate or certificates as Wachovia shall reasonably request.

     

    (vii) Counterparty
      is not entering into this Confirmation to create actual or apparent trading
      activity in the Shares (or any security convertible into or exchangeable for
      Shares) or to raise or depress or otherwise manipulate the price of the Shares
      (or any security convertible into or exchangeable for Shares) or otherwise
      in
      violation of the Exchange Act. 

     

    (viii) Counterparty
      is not, and after giving effect to the transactions contemplated hereby will
      not
      be, an “investment company” as such term is defined in the Investment Company
      Act of 1940, as amended.

     

    (ix) On
      the
      Trade Date (A) the assets of Counterparty at their fair valuation exceed the
      liabilities of Counterparty, including contingent liabilities, (B) the capital
      of Counterparty is adequate to conduct the business of Counterparty and (C)
      Counterparty has the ability to pay its debts and obligations as such debts
      mature and does not intend to, or does not believe that it will, incur debt
      beyond its ability to pay as such debts mature.

     

    (x) The
      representations and warranties of Counterparty set forth in Section 3 of the
      Agreement and Section 1 of the Purchase Agreement are true and correct and
      are
      hereby deemed to be repeated to Wachovia as if set forth herein.

     

    (xi) Counterparty
      understands no obligations of Wachovia to it hereunder will be entitled to
      the
      benefit of deposit insurance and that such obligations will not be guaranteed
      by
      any affiliate of Wachovia or any governmental agency.

     

    (b) Each
      of
      Wachovia and Counterparty agrees and represents that it is an “eligible contract
      participant” as defined in Section 1a(12) of the U.S. Commodity Exchange Act, as
      amended.

     

    (c) Each
      of
      Wachovia and Counterparty acknowledges that the offer and sale of the
      Transaction to it is intended to be exempt from registration under the
      Securities Act of 1933, as amended (the “Securities
      Act”),
      by
      virtue of Section 4(2) thereof. Accordingly, Counterparty represents and
      warrants to Wachovia that (i) it has the financial ability to bear the economic
      risk of its investment in the Transaction and is able to bear a total loss
      of
      its investment, (ii) it is an “accredited investor” as that term is defined in
      Regulation D as promulgated under the Securities Act, (iii) it is entering
      into
      the Transaction for its own account and without a view to the distribution
      or
      resale thereof, and (iv) the assignment, transfer or other disposition of the
      Transaction has not been and will not be registered under the Securities Act
      and
      is restricted under this Confirmation, the Securities Act and state securities
      laws.

     

    (d) Each
      of
      Wachovia and Counterparty agrees and acknowledges that Wachovia is a “financial
      institution,” “swap participant” and “financial participant” within the meaning
      of Sections 101(22), 101(53C) and 101(22A) of Title 11 of the United States
      Code
      (the “Bankruptcy
      Code”).
      The
      parties hereto further agree and acknowledge (A) that this Confirmation is
      (i) a
“securities contract,” as such term is defined in Section 741(7) of the
      Bankruptcy Code, with respect to which each payment and delivery hereunder
      is a
“settlement payment,” as such term is defined in Section 741(8) of the
      Bankruptcy Code, and (ii) a “swap agreement,” as such term is defined in Section
      101(53B) of the Bankruptcy Code, with respect to which each payment and delivery
      hereunder is a “transfer,” as such term is defined in Section 101(54) of the
      Bankruptcy Code, and (B) that Wachovia is entitled to the protections afforded
      by, among other sections, Section 362(b)(6), 362(b)(17), 546(e), 546(g), 555
      and
      560 of the Bankruptcy Code.

     

    (e)
       Counterparty
      shall deliver to Wachovia an opinion of counsel, dated as of the Trade Date
      and
      reasonably acceptable to Wachovia in form and substance, with respect to the
      matters set forth in Section 3(a) of the Agreement.

     

    8.
      Other
      Provisions:

     

    (a) Additional
      Termination Events.
      The
      occurrence of (i) an event of default with respect to Counterparty under the
      terms of the Convertible Securities as set forth in Section 6.01 of the
      Indenture, (ii) an Amendment Event or (iii) a Repayment Event shall be an
      Additional Termination Event with respect to which the Transaction is the sole
      Affected Transaction and Counterparty is the sole Affected Party and Wachovia
      shall be the party entitled to designate an Early Termination Date pursuant
      to
      Section 6(b) of the Agreement; provided
      that in
      the case of a Repayment Event the Transaction shall be subject to termination
      only in respect of the number of Convertible Securities that cease to be
      outstanding in connection with or as a result of such Repayment
      Event.

     

    “Amendment
      Event”
means
      that Counterparty amends, modifies, supplements or waives any term of the
      Indenture or the Convertible Securities governing the principal amount, coupon,
      maturity, repurchase obligation of Counterparty, redemption right of
      Counterparty, any term relating to conversion of the Convertible Securities
      (including changes to the conversion price, conversion settlement dates or
      conversion conditions), or any term that would require consent of the holders
      of
      not less than 100% of the principal amount of the Convertible Securities to
      amend.

     

    “Repayment
      Event”
means
      that (A) any Convertible Securities are repurchased (whether in connection
      with
      or as a result of a change of control, howsoever defined, or for any other
      reason) by Counterparty or any of its subsidiaries, (B) any Convertible
      Securities are delivered to Counterparty in exchange for delivery of any
      property or assets of Counterparty or any of its subsidiaries (howsoever
      described), (C) any principal of any of the Convertible Securities is repaid
      prior to the final maturity date of the Convertible Securities (whether
      following acceleration of the Convertible Securities or otherwise) and (D)
      any
      Convertible Securities are exchanged by or for the benefit of the holders
      thereof for any other securities of Counterparty or any of its affiliates (or
      any other property, or any combination thereof) pursuant to any exchange offer
      or similar transaction; provided
      that, in
      the case of clause (B) and clause (D), conversions of the Convertible Securities
      pursuant to the terms of the Indenture as in effect on the date hereof shall
      not
      be Repayment Events.

     

    (b) Alternative
      Calculations and Payment on Early Termination and on Certain Extraordinary
      Events.
      If,
      subject to Section 8(k) below, Wachovia shall owe Counterparty any amount
      pursuant to Section 12.2 or 12.3 of the Equity Definitions and “Consequences of
      Merger Events and Tender Offers” above, or Sections 12.6, 12.7 or 12.9 of the
      Equity Definitions (except in the event of an Insolvency, a Nationalization,
      a
      Tender Offer or a Merger Event, in each case, in which the consideration or
      proceeds to be paid to holders of Shares consists solely of cash) or pursuant
      to
      Section 6(d)(ii) of the Agreement (except in the event of an Event of Default
      in
      which Counterparty is the Defaulting Party or a Termination Event in which
      Counterparty is the Affected Party, that resulted from an event or events within
      Counterparty’s control) (a “Payment
      Obligation”),
      Counterparty shall have the right, in its sole discretion, to require Wachovia
      to satisfy any such Payment Obligation by the Share Termination Alternative
      (as
      defined below) by giving irrevocable telephonic notice to Wachovia, confirmed
      in
      writing within one Scheduled Trading Day, between the hours of 9:00 A.M. and
      4:00 P.M. New York City time on the Merger Date, Tender Offer Date, Announcement
      Date or Early Termination Date, as applicable (“Notice
      of Share Termination”);
      provided
      that if
      Counterparty does not validly request Wachovia to satisfy its Payment Obligation
      by the Share Termination Alternative, Wachovia shall have the right, in its
      sole
      discretion, to satisfy its Payment Obligation by the Share Termination
      Alternative, notwithstanding Counterparty’s election to the contrary. For the
      avoidance of doubt, the parties agree that in calculating the Payment Obligation
      the Determining Party may consider the purchase price paid in connection with
      the purchase of Share Termination Delivery Property. Upon such Notice of Share
      Termination, the following provisions shall apply on the Scheduled Trading
      Day
      immediately following the Merger Date, the Tender Offer Date, Announcement
      Date
      or Early Termination Date, as applicable:

     

    
      	
              Share
                Termination Alternative: 

               

            	
              Applicable
                and means that Wachovia shall deliver to Counterparty the Share
                Termination Delivery Property on the date on which the Payment Obligation
                would otherwise be due pursuant to Section 12.7 or 12.9 of the Equity
                Definitions or Section 6(d)(ii) of the Agreement, as applicable (the
                “Share
                Termination Payment Date”),
                in satisfaction of the Payment Obligation. 

               

            
	
              Share
                Termination Delivery 

            	 
	
              Property:
                

               

            	
              A
                number of Share Termination Delivery Units, as calculated by the
                Calculation Agent, equal to the Payment Obligation divided by the
                Share
                Termination Unit Price. The Calculation Agent shall adjust the Share
                Termination Delivery Property by replacing any fractional portion
                of a
                security therein with an amount of cash equal to the value of such
                fractional security based on the values used to calculate the Share
                Termination Unit Price. 

               

            
	
              Share
                Termination Unit Price: 

               

            	
              The
                value of property contained in one Share Termination Delivery Unit
                on the
                date such Share Termination Delivery Units are to be delivered as
                Share
                Termination Delivery Property, as determined by the Calculation Agent
                in
                its discretion by commercially reasonable means and notified by the
                Calculation Agent to Wachovia at the time of notification of the
                Payment
                Obligation. 

               

            
	
              Share
                Termination Delivery Unit: 

               

            	
              In
                the case of a Termination Event, Event of Default or Delisting, one
                Share
                or, in the case of an Insolvency, Nationalization, Merger Event or
                Tender
                Offer, a unit consisting of the number or amount of each type of
                property
                received by a holder of one Share (without consideration of any
                requirement to pay cash or other consideration in lieu of fractional
                amounts of any securities) in such Insolvency, Nationalization, Merger
                Event or Tender Offer. If such Insolvency, Nationalization, Merger
                Event
                or Tender Offer involves a choice of consideration to be received
                by
                holders, such holder shall be deemed to have elected to receive the
                maximum possible amount of cash.

               

            
	
              Failure
                to Deliver: 

               

            	
              Applicable

               

            
	
              Other
                applicable provisions: 

               

            	
              If
                Share Termination Alternative is applicable, the provisions of Sections
                9.8, 9.9, 9.10, 9.11 (except that the Representation and Agreement
                contained in Section 9.11 of the Equity Definitions shall be modified
                by
                excluding any representations therein relating to restrictions,
                obligations, limitations or requirements under applicable securities
                laws
                arising as a result of the fact that Counterparty is the Issuer of
                the
                Shares) and 9.12 of the Equity Definitions will be applicable, except
                that
                all references in such provisions to “Physically-Settled” shall be read as
                references to “settled by Share Termination Alternative” and all
                references to “Shares” shall be read as references to “Share Termination
                Delivery Units”.

               

            

    

    (c) Disposition
      of Hedge Shares.
      Counterparty
      hereby agrees that if, in the good faith reasonable judgment of Wachovia, any
      Shares (the “Hedge
      Shares”)
      acquired by Wachovia for the purpose of hedging its obligations pursuant to
      the
      Transaction
      cannot
      be sold in the public market by Wachovia without registration under the
      Securities Act, Counterparty shall, at its election: (i) in
      order
      to allow Wachovia to sell the Hedge Shares in a registered offering, make
      available to Wachovia an effective registration statement under the Securities
      Act to cover the resale of such Hedge Shares and (A) enter into an agreement,
      in
      form and substance satisfactory to Wachovia, substantially in the form of an
      underwriting agreement for a registered offering, (B)
      provide accountant’s “comfort” letters in customary form for registered
      offerings of equity securities, (C) provide disclosure opinions of nationally
      recognized outside counsel to Counterparty reasonably acceptable to Wachovia,
      (D) provide other customary opinions, certificates and closing documents
      customary in form for registered offerings of equity securities and (E) afford
      Wachovia a reasonable opportunity to conduct a “due diligence” investigation
      with respect to Counterparty customary in scope for underwritten offerings
      of
      equity securities;
      provided,
      however,
      that if
      Wachovia, in its sole reasonable discretion, is not satisfied with access to
      due
      diligence materials, the results of its due diligence investigation, or the
      procedures and documentation for the registered offering referred to above,
      then
      clause (ii) or clause (iii) of this Section 8(c) shall apply at the election
      of
      Counterparty; (ii) in order to allow Wachovia to sell the Hedge Shares in a
      private placement, enter into a private placement agreement substantially
      similar to private placement purchase agreements customary for private
      placements of equity securities, in form and substance satisfactory to Wachovia,
      including customary representations, covenants, blue sky and other governmental
      filings and/or registrations, indemnities to Wachovia, due diligence rights
      (for
      Wachovia or any designated buyer of the Hedge Shares from Wachovia), opinions
      and certificates and such other documentation as is customary for private
      placements agreements, all reasonably acceptable to Wachovia (in which case,
      the
      Calculation Agent shall make any adjustments to the terms of the Transaction
      that are necessary, in its reasonable judgment, to compensate Wachovia for
      any
      discount from the public market price of the Shares incurred on the sale of
      Hedge Shares in a private placement); or (iii) purchase the Hedge Shares from
      Wachovia at the Relevant Price on such Exchange Business Days, and in the
      amounts, requested by Wachovia.

     

    (d) Amendment
      to Equity Definitions.
      The
      following amendment shall be made to the Equity Definitions:

     

    (i) Section
      12.6(a)(ii) of the Equity Definitions is hereby amended by (1) deleting from
      the
      fourth line thereof the word “or” after the word “official” and inserting a
      comma therefor, and (2) deleting the semi-colon at the end of subsection (B)
      thereof and inserting the following words therefor “or (C) at Wachovia’s option,
      the occurrence of any of the events specified
      in Section 5(a)(vii) (1) through (9) of the ISDA Master Agreement with respect
      to that Issuer.”

     

    (ii)
       Section
      12.9(b)(i) of the Equity Definitions is hereby amended by (1) replacing “either
      party may elect” with “Wachovia may elect” and (2) replacing “notice to the
      other party” with “notice to Counterparty” in the first sentence of such
      section.

     

    (e) Repurchase
      Notices.
      Counterparty shall, on any day on which Counterparty effects any repurchase
      of
      Shares, promptly give Wachovia a written
      notice of such repurchase (a “Repurchase
      Notice”)
      on
      such day if, following such repurchase, the Notice Percentage as determined
      on
      such day is (i) greater than 6% and (ii) greater by 0.5% than the Notice
      Percentage included in the immediately preceding Repurchase Notice (or, in
      the
      case of the first such Repurchase Notice, greater than the Notice Percentage
      as
      of the date hereof). The “Notice
      Percentage”
as
      of
      any day is the fraction, expressed as a percentage, the numerator of which
      is
      the Number of Shares and the denominator of which is the number of Shares
      outstanding on such day. In the event that Counterparty fails to provide
      Wachovia with a Repurchase Notice on the day and in the manner specified in
      this
      Section 8(e) then Counterparty agrees to indemnify and hold harmless Wachovia,
      its affiliates and their respective directors, officers, employees, agents
      and
      controlling persons (Wachovia and each such person being an “Indemnified
      Party”)
      from
      and against any and all losses, claims, damages and liabilities (or actions
      in
      respect thereof), joint or several, to which such Indemnified Party may become
      subject under applicable securities laws, including without limitation, Section
      16 of the Exchange Act, relating to or arising out of such failure. If for
      any
      reason the foregoing indemnification is unavailable to any Indemnified Party
      or
      insufficient to hold harmless any Indemnified Party, then Counterparty shall
      contribute, to the maximum extent permitted by law, to the amount paid or
      payable by the Indemnified Party as a result of such loss, claim, damage or
      liability. In addition, Counterparty will reimburse any Indemnified Party for
      all expenses (including reasonable counsel fees and expenses) as they are
      incurred (after notice to Counterparty) in connection with the investigation
      of,
      preparation for or defense or settlement of any pending or threatened claim
      or
      any action, suit or proceeding arising therefrom, whether or not such
      Indemnified Party is a party thereto and whether or not such claim, action,
      suit
      or proceeding is initiated or brought by or on behalf of Counterparty. This
      indemnity shall survive the completion of the Transaction contemplated by this
      Confirmation and any assignment and delegation of the Transaction made pursuant
      to this Confirmation or the Agreement shall inure to the benefit of any
      permitted assignee of Wachovia. 

     

    (f) Transfer
      and Assignment.
      Wachovia may transfer or assign its rights and obligations hereunder and under
      the Agreement, in whole or in part, without the consent of Counterparty, to
      (i)
      any of its affiliates, (ii) any entities sponsored or organized by, or on behalf
      of or for the benefit of, Wachovia, or (iii) any third party with a rating
      for
      its long term, unsecured and unsubordinated indebtedness equal to or better
      than
      the lesser of (i) the credit rating of Wachovia at the time of the transfer
      and
      (ii) A- by Standard and Poor’s Rating Group, Inc. or its successor
      (“S&P”),
      or A3
      by Moody’s Investor Service, Inc. (“Moody's”)
      or, if
      either S&P or Moody’s ceases to rate such debt, at least an equivalent
      rating or better by a substitute agency rating mutually agreed by Counterparty
      and Wachovia.
      If at
      any time at which the Equity Percentage exceeds 8%, Wachovia, in its discretion,
      is unable to effect such a transfer or assignment after its commercially
      reasonable efforts on pricing terms reasonably acceptable to Wachovia such
      that
      the Equity Percentage is reduced to 8% or less, Wachovia may designate any
      Scheduled Trading Day as an Early Termination Date with respect to a portion
      (the “Terminated
      Portion”)
      of the
      Transaction, such that the Equity Percentage following such partial termination
      will be equal to or less than 8%. In the event that Wachovia so designates
      an
      Early Termination Date with respect to a portion of the Transaction, a payment
      or delivery shall be made pursuant to Section 6 of the Agreement and Section
      8(b) of this Confirmation as if (i) an Early Termination Date had been
      designated in respect of a Transaction having terms identical to the Terminated
      Portion of the Transaction, (ii) Counterparty shall be the sole Affected Party
      with respect to such partial termination and (iii) such portion of the
      Transaction shall be the only Terminated Transaction. The “Equity
      Percentage”
as
      of
      any day is the fraction, expressed as a percentage, (A) the numerator of which
      is the sum of the number of Shares that Wachovia or any of its affiliates
      beneficially own (within the meaning of Section 13 of the Exchange Act) on
      such
      day, other than any Shares so owned as a hedge of the Transaction, and the
      Number of Shares and (B) the denominator of which is the number of Shares
      outstanding on such day.

     

    (g) Staggered
      Settlement.
      Wachovia may,
      by
      notice to Counterparty prior to any Settlement Date (a “Nominal
      Settlement Date”),
      elect
      to deliver the Shares on two or more dates (each, a “Staggered
      Settlement Date”)
      or at
      two or more times on the Nominal Settlement Date as follows:

     

    (i)
       in
      such
      notice, Wachovia will specify to Counterparty the related Staggered Settlement
      Dates (each of which will be on or prior to such Nominal Settlement Date, but
      not prior to the beginning of the applicable Settlement Averaging Period) or
      delivery times and how it will allocate the Shares it is required to deliver
      hereunder among the Staggered Settlement Dates or delivery times;
      and

     

    (ii)
       the
      aggregate number of Shares that Wachovia will deliver to Counterparty hereunder
      on all such Staggered Settlement Dates and delivery times will equal the number
      of Shares that Wachovia would otherwise be required to deliver on such Nominal
      Settlement Date.

     

    (h) Right
      to Extend.
      Wachovia may postpone any Potential Exercise Date or any other date of valuation
      or delivery by Wachovia, with respect to some or all of the relevant Options
      (in
      which event the Calculation Agent shall make appropriate adjustments to the
      Shares it is required to deliver hereunder), if Wachovia determines, in its
      reasonable discretion, that such extension is reasonably necessary or
      appropriate to preserve Wachovia’s hedging or hedge unwind activity hereunder in
      light of existing liquidity conditions or to enable Wachovia to effect purchases
      of Shares in connection with its hedging, hedge unwind or settlement activity
      hereunder in a manner that would, if Wachovia were Counterparty or an affiliated
      purchaser of Counterparty, be in compliance with applicable legal, regulatory
      or
      self-regulatory requirements, or with related policies and procedures applicable
      to Wachovia.

     

    (i) Disclosure.
      Effective from the date of commencement of discussions concerning the
      Transaction, Counterparty and each of its employees, representatives, or other
      agents may disclose to any and all persons, without limitation of any kind,
      the
      tax treatment and tax structure of the Transaction and all materials of any
      kind
      (including opinions or other tax analyses) that are provided to Counterparty
      relating to such tax treatment and tax structure.

     

    (j) Designation
      by Wachovia.
      Notwithstanding any other provision in this Confirmation to the contrary
      requiring or allowing Wachovia to purchase, sell, receive or deliver any Shares
      or other securities to or from Counterparty, Wachovia may designate any of
      its
      affiliates to purchase, sell, receive or deliver such shares or other securities
      and otherwise to perform Wachovia obligations in respect of the Transaction
      and
      any such designee may assume such obligations. Wachovia shall be discharged
      of
      its obligations to Counterparty to the extent of any such
      performance.

     

    (k)  Netting
      and Set-off.
      

     

    (i) If
      on any
      date cash would otherwise be payable or Shares or other property would otherwise
      be deliverable hereunder or pursuant to the Agreement or pursuant to any other
      agreement between the parties by Counterparty to Wachovia and cash would
      otherwise be payable or Shares or other property would otherwise be deliverable
      hereunder or pursuant to the Agreement or pursuant to any other agreement
      between the parties by Wachovia to Counterparty and the type of property
      required to be paid or delivered by each such party on such date is the same,
      then, on such date, each such party’s obligation to make such payment or
      delivery will be automatically satisfied and discharged and, if the aggregate
      amount that would otherwise have been payable or deliverable by one such party
      exceeds the aggregate amount that would otherwise have been payable or
      deliverable by the other such party, replaced by an obligation of the party
      by
      whom the larger aggregate amount would have been payable or deliverable to
      pay
      or deliver to the other party the excess of the larger aggregate amount over
      the
      smaller aggregate amount.

     

    (ii) In
      addition to and without limiting any rights of set-off that a party hereto
      may
      have as a matter of law, pursuant to contract or otherwise, upon the occurrence
      of an Early Termination Date, Wachovia shall have the right to terminate,
      liquidate and otherwise close out the Transaction and to set off any obligation
      or right that Wachovia or any affiliate of Wachovia may have to or against
      Counterparty hereunder or under the Agreement against any right or obligation
      Wachovia or any of its affiliates may have against or to Counterparty, including
      without limitation any right to receive a payment or delivery pursuant to any
      provision of the Agreement or hereunder. In the case of a set-off of any
      obligation to release, deliver or pay assets against any right to receive assets
      of the same type, such obligation and right shall be set off in kind. In the
      case of a set-off of any obligation to release, deliver or pay assets against
      any right to receive assets of any other type, the value of each of such
      obligation and such right shall be determined by the Calculation Agent and
      the
      result of such set-off shall be that the net obligor shall pay or deliver to
      the
      other party an amount of cash or assets, at the net obligor’s option, with a
      value (determined, in the case of a delivery of assets, by the Calculation
      Agent) equal to that of the net obligation. In determining the value of any
      obligation to release or deliver Shares or any right to receive Shares, the
      value at any time of such obligation or right shall be determined by reference
      to the market value of the Shares at such time, as determined by the Calculation
      Agent. If an obligation or right is unascertained at the time of any such
      set-off, the Calculation Agent may in good faith estimate the amount or value
      of
      such obligation or right, in which case set-off will be effected in respect
      of
      that estimate, and the relevant party shall account to the other party at the
      time such obligation or right is ascertained.

     

    (iii) Notwithstanding
      any provision of the Agreement (including without limitation Section 6(f)
      thereof) and this Confirmation (including without limitation this Section 8(k))
      or any other agreement between the parties to the contrary, (A) Counterparty
      shall not net or set off its obligations under the Transaction, if any, against
      its rights against Wachovia under any other transaction or instrument; (B)
      Wachovia may net and set off any rights of Wachovia against Counterparty arising
      under the Transaction only against obligations of Wachovia to Counterparty
      arising under any transaction or instrument if such transaction or instrument
      does not convey rights to Wachovia senior to the claims of common stockholders
      in the event of Counterparty’s bankruptcy; and (C) in the event of
      Counterparty’s bankruptcy, Wachovia waives any and all rights it may have to
      set-off in respect of the Transaction, whether arising under agreement,
      applicable law or otherwise. Wachovia will give notice to Counterparty of any
      netting or set off effected under this provision.

     

    (l)  Equity
      Rights.
      Wachovia acknowledges and agrees that this Confirmation is not intended to
      convey to it rights with respect to the Transaction that are senior to the
      claims of common stockholders in the event of Counterparty’s bankruptcy. For the
      avoidance of doubt, the parties agree that the preceding sentence shall not
      apply at any time other than during Counterparty’s bankruptcy to any claim
      arising as a result of a breach by Counterparty of any of its obligations under
      this Confirmation or the Agreement. 

     

    (m)  Early
      Unwind.
      In the
      event the sale by Counterparty of the Convertible Securities is not consummated
      with the initial purchasers pursuant to the Purchase Agreement for any reason
      by
      the close of business in New York on April 30, 2007 (or such later date as
      agreed upon by the parties, which in no event shall be later than May 3, 2007)
      (April 30, 2007 or such later date being the “Early
      Unwind Date”),
      the
      Transaction shall automatically terminate (the “Early
      Unwind”),
      on
      the Early Unwind Date and (i) the Transaction and all of the respective rights
      and obligations of Wachovia and Counterparty thereunder shall be cancelled
      and
      terminated and (ii) purchase
      from the Wachovia on the Early Unwind Date all Shares purchased by Wachovia
      or
      one of more of its affiliates and
      Counterparty shall pay to Wachovia an amount in cash equal to the aggregate
      amount of costs and expenses relating to the unwinding of Wachovia’s hedging
      activities in respect of the Transaction (including market losses incurred
      in
      reselling any Shares purchased by Wachovia or its affiliates in connection
      with
      such hedging activities). The amount of any such reimbursement shall be
      determined by the Wachovia in its sole good faith discretion. Following such
      termination, cancellation and payment, each party shall be released and
      discharged by the other party from and agrees not to make any claim against
      the
      other party with respect to any obligations or liabilities of either party
      arising out of and to be performed in connection with the Transaction either
      prior to or after the Early Unwind Date. Wachovia and Counterparty represent
      and
      acknowledge to the other that upon an Early Unwind and following the payment
      referred to above, all obligations with respect to the Transaction shall be
      deemed fully and finally discharged.

     

    (n)  Terms
      relating to the Agent.

     

    (i)
       The
      Agent
      is registered as a broker-dealer with the U.S. Securities and Exchange
      Commission and the National Association of Securities Dealers, is acting
      hereunder for and on behalf of Wachovia solely in its capacity as agent for
      Wachovia pursuant to instructions from Wachovia, and is not and will not be
      acting as Counterparty’s agent, broker, advisor or fiduciary in any respect
      under or in connection with this Transaction.

     

    (ii)
       In
      addition to acting as Wachovia’s agent in executing this Transaction, the Agent
      is authorized from time to time to give written payment and/or delivery
      instructions to Counterparty directing it to make its payments and/or deliveries
      under this Transaction to an account of the Agent for remittance to Wachovia
      (or
      its designee), and for that purpose any such payment or delivery by Counterparty
      to the Agent shall be treated as a payment or delivery to Wachovia.

     

    (iii)
       Except
      as
      otherwise provided herein, any and all notices, demands, or communications
      of
      any kind transmitted in writing by either Wachovia or Counterparty under or
      in
      connection with this Transaction will be transmitted exclusively by such party
      to the other party through the Agent at the following address:

     

    Wachovia
      Capital Markets, LLC

    201
      South
      College Street, 6th Floor

    Charlotte,
      NC 28288-0601

    Facsimile
      No.: (704) 383-8425

    Telephone
      No.: (704) 715-8086

    Attention:
      Equity Derivatives

     

    (iv)
       The
      Agent
      shall have no responsibility or liability to Wachovia or Counterparty for or
      arising from (A) any failure by either Wachovia or Counterparty to perform
      any
      of their respective obligations under or in connection with this Transaction,
      (B) the collection or enforcement of any such obligations, or (C) the exercise
      of any of the rights and remedies of either Wachovia or Counterparty under
      or in
      connection with this Transaction. Each of Wachovia and Counterparty agrees
      to
      proceed solely against the other to collect or enforce any such obligations,
      and
      the Agent shall have no liability in respect of this Transaction except for
      its
      gross negligence or willful misconduct in performing its duties as the agent
      of
      Wachovia.

     

    (v)
       Upon
      written request, the Agent will furnish to Wachovia and Counterparty the date
      and time of the execution of this Transaction and a statement as to the source
      and amount of any remuneration received or to be received by the Agent in
      connection with this Transaction.

     

    (n)  Waiver
      of Trial by Jury.
      EACH
      OF COUNTERPARTY AND BOFA HEREBY IRREVOCABLY WAIVES (ON ITS OWN BEHALF AND,
      TO
      THE EXTENT PERMITTED BY APPLICABLE LAW, ON BEHALF OF ITS STOCKHOLDERS) ALL
      RIGHT
      TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON
      CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THE TRANSACTION
      OR
      THE ACTIONS OF BOFA OR ITS AFFILIATES IN THE NEGOTIATION, PERFORMANCE OR
      ENFORCEMENT HEREOF.

     

    (o)  Governing
      Law.
      THIS
      CONFIRMATION SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. THE PARTIES
      HERETO IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE
      STATE OF NEW YORK AND THE UNITED STATES COURT FOR THE SOUTHERN DISTRICT OF
      NEW
      YORK IN CONNECTION WITH ALL MATTERS RELATING HERETO AND WAIVE ANY OBJECTION
      TO
      THE LAYING OF VENUE IN, AND ANY CLAIM OF INCONVENIENT FORUM WITH RESPECT TO,
      THESE COURTS.

     

    

     

    Counterparty
      hereby agrees (a) to check this Confirmation carefully and immediately upon
      receipt so that errors or discrepancies can be promptly identified and rectified
      and (b) to confirm that the foregoing (in the exact form provided by
      Wachovia) correctly sets forth the terms of the agreement between Wachovia
      and
      Counterparty with respect to the Transaction, by manually signing this
      Confirmation or this page hereof as evidence of agreement to such terms and
      providing the other information requested herein and immediately returning
      an
      executed copy to us by facsimile at 212-214-5913 (Attention: Equity Division
      Documentation Unit, by telephone contact 212-214-6100).

     

    

     

    
      	
              Yours
                faithfully,

               

            
	 
	
              WACHOVIA
                BANK, NATIONAL ASSOCIATION 

              By:
                Wachovia Capital Markets, LLC, 

              acting
                solely in its capacity as its Agent

               

            
	 
	
              By:
                     

              Name:
                

            
	
              Title:

            
	 
	
              WACHOVIA
                CAPITAL MARKETS, LLC, 

              acting
                solely in its capacity as Agent

            
	
              of
                Wachovia Bank, National Association

               

            
	 
	
              By:
                     

            
	
              Name:\

            
	
              Title:

               

            

    

    

     

    
      	
              Agreed
                and Accepted By:

               

              CHARMING
                SHOPPES, INC.

               

            
	 
	
              By:________________________________________

            
	
              Name:

              Title:

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