Document:

exv10w59

 

Exhibit 10.59

FIRST AMENDMENT

TO

STOCK OPTION AGREEMENT

This FIRST AMENDMENT (this “Amendment”) to that certain Stock Option Agreement, dated
effective as of February 11, 2003 (the “Option Agreement”), is made by and between AMERICAN ECOLOGY
CORPORATION, a Delaware corporation (the “Company”), and STEPHEN A. ROMANO (the “Optionee”). The
Company and Optionee desire to amend the Option Agreement, effective as of December 7, 2006, as
follows:

1. Exercisability. Section 3.a. of the Option Agreement is hereby amended in
its entirety to read as follows:

	 	a.	 	The Option granted herein may be exercised in whole or in part,
to the extent then vested and subject to earlier termination as provided herein,
continuing to a date 10 years subsequent to the date hereof (the “Expiration
Date”). In the event the Option is exercised in full or in part prior to a
Change of Control of the Company, the Optionee agrees, as a condition to such
exercise, that he will, so as long as retains the title of Chief Executive
Officer of the Company, retain that number of “after-tax” shares received by him
from any such exercise which are equal in value to four (4) times Optionee’s
annual salary from the Company, valued as of the date of exercise of the Option;
provided, that such retention obligation shall terminate and no longer apply
upon a Change of Control or termination of employment without Cause or
resignation for Good Reason (as defined in the Employment Agreement) or a change
in Optionee’s title from that of Chief Executive Officer. Failure to comply
with this provision will result in Optionee’s forfeiture of the unvested portion
of the Option and ineligibility to participate in the Company’s incentive
programs.

2. Restatement of Option Agreement. The remainder of the Option Agreement, as
modified by this Amendment, shall remain in full force and effect, and shall be binding on the
parties hereto according to its terms. The Option Agreement shall be construed, to the extent
possible, so as to be consistent with this Amendment.

3. Miscellaneous. This Amendment may not be modified, supplemented or amended except
in a writing signed by the parties. This Amendment shall be binding upon, and shall inure to the
benefit of, the parties’ respective heirs, executors, representatives, successors and assigns.
This Amendment may be executed in one or more counterparts, each of which shall be deemed an
original and all of which together shall constitute one and the same instrument. Any signed
counterpart may be delivered by facsimile or other form of electronic transmission with the same
legal force and effect as delivery of an originally signed document.

IN WITNESS WHEREOF, the parties have executed this First Amendment to Stock Option Agreement
effective as of the date set forth above.

	 	 	 	 	 
	Company:

	 	 	 	AMERICAN ECOLOGY CORPORATION:
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Kenneth C. Leung
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Print Name:
	 	KENNETH C. LEUNG
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Title:
	 	Chairman of the Board of Directors
	 

	 	 	 	 
	 
	 	 	 	 
	Optionee:

	 	 	 	/s/ Stephen Anthony Romano
	 

	 	 	 	 
	 

	 	 	 	STEPHEN A. ROMANOFiled by Bowne Pure Compliance

 

Exhibit 10.1

Summary of Compensation of Named Executive Officers

President and Chief Executive Officer and Chief Financial Officer

The Compensation Committee of the Board of Directors establishes and approves the base salaries,
performance bonus criteria and other long-term compensation and benefits of the Named Executive
Officers on an annual basis. The Compensation Committee established and approved the salary
adjustments as set fort in Table I and Note I-A below and the Performance and bonus criteria as set
forth below in Table II and Note II-A and in Table III and Note III-A. The Chief Executive Officer
and Chief Financial Officer each have a Maximum Annual Bonus of up to the greater of 50% of base
salary or $125,000, in the case of the Chief Executive Officer, and up to the greater of 50% of
base salary or $110,000 in the case of the Chief Financial Officer. The performance criteria
applicable during 2007 will consist of two components: 1) an EBITDA target threshold to be measured
both semi-annually and annually as set forth in Table II and Note II-A, and 2) an annual target for
“number of moves” as set forth in Table III and Note III-A below.

 

 

 

Table I

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Performance Bonus
	 	 	 	 	 	 	 	 	Under
	 	 	 	 	Adjusted Annual Base Salary	 	Employment Contract Arrangements
	Name	 	Office	 	(Effective February 15, 2007)	 	(2007 Fiscal Year)
	Chris Sapyta

	 	President and CEO
	 	 $196,000

 See Note I-A	 	See Table II and Note II-A and
Table III and Note III-A
	Edward Johnson

	 	Chief Financial

Officer
	 	$182,400

See Note I-A
	 	See Table II and Note II-A and
Table III and Note III-A

Note I-A :

For fiscal 2007, upon the Compensation Committee’s recommendation, executive salaries were adjusted
by the Board of Directors on April 26, 2007 to be $196,000 in the case of the Chief Executive
Officer and $182,400 in the case of the Chief Financial Officer with the adjustments to be
effective from February 15, 2007.

Table II

EBITDA Performance

	 	 	 	 	 	 	 	 	 
	January thru June	 	EBITDA	 	 	Percentage of	 
	2007	 	Actual	 	 	Bonus earned	 
	At least 90% of Budgeted (loss)
	 	$	(818,400	)	 	 	10	%
	Budget
	 	$	(744,000	)	 	 	20	%
	110% of Budget
	 	$	(669,600	)	 	 	30	%
	120% of Budget
	 	$	(595,200	)	 	 	40	%

	 	 	 	 	 	 	 	 	 
	July thru December	 	EBITDA	 	 	Percentage of	 
	2007	 	Actual	 	 	Bonus earned	 
	At Least 90% of Budget
	 	$	836,100	 	 	 	10	%
	Budget
	 	$	929,000	 	 	 	20	%
	110% of Budget
	 	$	1,021,900	 	 	 	30	%
	120% of Budget
	 	$	1,114,800	 	 	 	40	%

	 	 	 	 	 	 	 	 	 
	 	 	EBITDA	 	 	Percentage of	 
	Full Year	 	Actual	 	 	Bonus earned	 
	At least 90% Budget
	 	$	166,500	 	 	 	10	%
	Budget
	 	$	185,000	 	 	 	40	%
	110% of Budget
	 	$	203,500	 	 	 	50	%
	120% of Budget
	 	$	222,000	 	 	 	70	%

 

 

 

Note II-A

The eligible EBITDA-based component allocable to each half year during fiscal 2007 will be 40% of
the maximum annual bonus amount ($50,000 for our Chief Executive Officer and $44, 000 for our Chief
Financial Officer). These maximum half year bonus allocations will be earnable in increments of
10%, 20%, 30% or 40% based on the level of attainment relative to separately stated EBITDA hurdles
for each six month interval. The EBITDA hurdles will range from a threshold of 90% of the budgeted
amount to 100%, 110% and 120% of the budgeted levels. The full year EBITDA results will then be
measured against an annual EBITDA hurdle to determine an additional potential bonus component. The
full year EBITDA target is designed to allow for make-up of shortfall during the either six month
measurement period by providing for higher 50% and 70% increments of the maximum annual bonus to be
earnable if 110% or 120% of the full year EBITDA hurdles are reached.

Table III

Completed Moves Performance

Number of Completed Moves Component of Cash Bonus Program for the period
ended December 31, 2007

(Award under this Component is made only if the Company achieves EBITDA
breakeven or greater for year ended December 31, 2007.)

	 	 	 	 	 	 	 	 	 
	 	 	Number of	 	 	 	 
	 	 	Moves	 	 	 	 
	 	 	Completed	 	 	 	 
	 	 	between	 	 	 	 
	 	 	1/01/07	 	 	 	 
	 	 	and	 	 	Percentage of	 
	Full Year	 	12/31/07	 	 	Bonus earned	 
	Greater than 80% of Budget
	 	 	6,610	 	 	 	25	%
	Budget
	 	 	8,262	 	 	 	40	%
	110% of Budget
	 	 	9,088	 	 	 	55	%
	120% of Budget
	 	 	9,914	 	 	 	60	%

Note III-A

The company’s performance relative to a budgeted number of moves for the relevant annual
period (between 10/01/06 and 9/30/07) will be measured. This “number of moves” component will be
allocated up to 60% of the maximum annual bonus target, or $75,000 for the Chief Executive Officer
and $66,000 for the chief Financial Officer. Eligibility to receive incremental allocations of
between 25%, 40%, 55% or 60% of these maximum annual amounts will be determined based upon
attainment on a full year basis of at least an 80% threshold or 100%, 110% and 120% of the targeted
annual level of moves. This annual bonus component based on number of moves will be earnable only
if the company also achieves at least a break even level of EBITDA for the full year. If the level
of EBITDA determined on both a semi-annual and full year basis, together with full year moves
achieved would result in a calculated bonus amount in excess of the maximum annual bonus, the total
earnable bonus amount will be limited to the annual maximum of $125,000 for the CEO and $110,000
for the CFO.Exhibit 10.1

    EXHIBIT
      10.1

     

    

     

    
      	 	
              April
                24, 2007

               

            
	
              To:

            	
              Charming
                Shoppes, Inc.

            
	 	
              450
                Winks Lane

            
	 	
              Bensalem,
                PA 19020

            
	 	
              Attn:
                Treasurer

            
	 	
              Telephone:
                215-633-4899

            
	 	
              Facsimile:
                215-638-6759

               

            
	
              From:

            	
              Bank
                of America, N.A.

            
	 	
              c/o
                Banc of America Securities LLC

            
	 	
              9
                West 57th
                Street

            
	 	
              New
                York, NY 10019

            
	 	
              Attn:
                John Servidio

            
	 	
              Telephone:
                212-583-8373

            
	 	
              Facsimile:
                212-230-8610

            
	 	 
	
              Re:

            	
              Convertible
                Bond Hedge Transaction

            
	 	
              (Transaction
                Reference Number: NY28949)

               

            

    

    

     

    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 Bank of America, N.A. (“BofA”),
      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 BofA 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
      BofA 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:

               

            	
              BofA

               

            
	
              Buyer:

               

            	
              Counterparty

               

            
	
              Shares:

               

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

               

            
	
              Number
                of Options:

               

            	
              50%
                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 50% 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
                41,125,000.00; 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 50% 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 BofA 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 BofA of such election before 5:00 p.m. (New York City
                time)
                on or prior to November
                15, 2013.

            

    

    

     

    
      	
              BofA’s
                Telephone Number

            	 
	
              and
                Telex and/or Facsimile Number

            	 
	
              and
                Contact Details for purpose of

            	 
	
              Giving
                Notice:

               

            	
              To
                be provided by BofA.

               

            
	
              Settlement
                Terms:

               

            	 
	
              Settlement
                Method:

               

            	
              Net
                Share Settlement

               

            
	
              Net
                Share Settlement:

               

            	
              BofA
                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.

               

            
	 	
              BofA
                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
                BofA 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 BofA 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 BofA is obligated
                to deliver Shares hereunder.

               

            
	
              Restricted
                Certificated Shares:

               

            	
              Notwithstanding
                anything to the contrary in the Equity Definitions, BofA 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
                BofA 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, BofA

               

            
	
              Determining
                Party:

               

            	
              For
                all applicable Additional Disruption Events, BofA

               

            
	
              Non-Reliance:

               

            	
              Applicable

               

            
	
              Agreements
                and Acknowledgments 

            	 
	
              Regarding
                Hedging Activities:

               

            	
              Applicable

               

            
	
              Additional
                Acknowledgments:

               

            	
              Applicable

               

            
	
              3.
                Calculation Agent:
                

               

            	
              BofA

               

            
	
              4.
                Account Details:

               

            	 
	
              BofA
                Payment Instructions:

            	 
	
              Bank
                of America, N.A.

            	 
	
              New
                York, NY

            	 
	
              SWIFT:
                BOFAUS3N

            	 
	
              Bank
                Routing: 026-009-593

            	 
	
              Account
                Name: Bank of America

            	 
	
              Account
                No. : 0012333-34172

            	 
	 	 
	
              Counterparty
                Payment Instructions:

               

            	 
	
              To
                be provided by Counterparty.

               

            	 
	
              5.
                Offices:

               

            	 
	
              The
                Office of BofA for the Transaction is: 

            	 
	
              Bank
                of America, N.A.

            	 
	
              c/o
                Banc of America Securities LLC

            	 
	
              Equity
                Financial Products

            	 
	
              9
                West 57th
                Street, 40th
                Floor

            	 
	
              New
                York, NY 10019

            	 
	 	 
	
              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 BofA:

               

            
	
              To:

            	
              Bank
                of America, N.A.

            
	 	
              c/o
                Banc of America Securities LLC

            
	 	
              Equity
                Financial Products 

            
	 	
              9
                West 57th
                Street, 40th
                Floor 

            
	 	
              New
                York, NY 10019

            
	
              Attn:

            	
              John
                Servidio

            
	
              Telephone:

            	
              212-583-8373

            
	
              Facsimile:

            	
              212-230-8610

            

    

    

    

    7.
      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, BofA 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 BofA or JPMorgan Chase Bank, National Association, London
      Branch.

     

    (iv) Without
      limiting the generality of Section 13.1 of the Equity Definitions, Counterparty
      acknowledges that BofA 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 BofA a resolution of
      Counterparty’s board of directors authorizing the Transaction and such other
      certificate or certificates as BofA 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 BofA as if set forth herein.

     

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

     

    (b) Each
      of
      BofA 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
      BofA 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 BofA 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
      BofA and Counterparty agrees and acknowledges that BofA 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 BofA 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 BofA an opinion of counsel, dated as of the Trade Date and
      reasonably acceptable to BofA 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 BofA 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, BofA 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 BofA
      to
      satisfy any such Payment Obligation by the Share Termination Alternative (as
      defined below) by giving irrevocable telephonic notice to BofA, 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 BofA to satisfy its Payment Obligation
      by
      the Share Termination Alternative, BofA 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 BofA 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 BofA 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 BofA, any Shares
      (the “Hedge
      Shares”)
      acquired by BofA for the purpose of hedging its obligations pursuant to the
      Transaction
      cannot
      be sold in the public market by BofA without registration under the Securities
      Act, Counterparty shall, at its election: (i) in
      order
      to allow BofA to sell the Hedge Shares in a registered offering, make available
      to BofA 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 BofA, 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 BofA, (D)
      provide other customary opinions, certificates and closing documents customary
      in form for registered offerings of equity securities and (E) afford BofA 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
      BofA, 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 BofA 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 BofA, including customary
      representations, covenants, blue sky and other governmental filings and/or
      registrations, indemnities to BofA, due diligence rights (for BofA or any
      designated buyer of the Hedge Shares from BofA), opinions and certificates
      and
      such other documentation as is customary for private placements agreements,
      all
      reasonably acceptable to BofA (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 BofA 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 BofA at the Relevant Price
      on such Exchange Business Days, and in the amounts, requested by
      BofA.

     

    (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 BofA’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 “BofA 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 BofA 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 BofA
      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 BofA, its
      affiliates and their respective directors, officers, employees, agents and
      controlling persons (BofA 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 BofA. 

     

    (f) Transfer
      and Assignment.
      BofA
      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, BofA, 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 BofA 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 BofA.
      If at
      any time at which the Equity Percentage exceeds 8%, BofA, in its discretion,
      is
      unable to effect such a transfer or assignment after its commercially reasonable
      efforts on pricing terms reasonably acceptable to BofA such that the Equity
      Percentage is reduced to 8% or less, BofA 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 BofA 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 BofA 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.
      BofA
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, BofA 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 BofA will deliver to Counterparty hereunder
      on
      all such Staggered Settlement Dates and delivery times will equal the number
      of
      Shares that BofA would otherwise be required to deliver on such Nominal
      Settlement Date.

     

    (h) Right
      to Extend.
      BofA
      may postpone any Potential Exercise Date or any other date of valuation or
      delivery by BofA, 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 BofA determines, in its reasonable
      discretion, that such extension is reasonably necessary or appropriate to
      preserve BofA’s hedging or hedge unwind activity hereunder in light of existing
      liquidity conditions or to enable BofA to effect purchases of Shares in
      connection with its hedging, hedge unwind or settlement activity hereunder
      in a
      manner that would, if BofA 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 BofA.

     

    (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 BofA.
      Notwithstanding any other provision in this Confirmation to the contrary
      requiring or allowing BofA to purchase, sell, receive or deliver any Shares
      or
      other securities to or from Counterparty, BofA may designate any of its
      affiliates to purchase, sell, receive or deliver such shares or other securities
      and otherwise to perform BofA obligations in respect of the Transaction and
      any
      such designee may assume such obligations. BofA 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 BofA 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 BofA 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, BofA shall have the right to terminate, liquidate
      and otherwise close out the Transaction and to set off any obligation or right
      that BofA or any affiliate of BofA may have to or against Counterparty hereunder
      or under the Agreement against any right or obligation BofA 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 BofA under any other transaction or instrument; (B) BofA
      may
      net and set off any rights of BofA against Counterparty arising under the
      Transaction only against obligations of BofA to Counterparty arising under
      any
      transaction or instrument if such transaction or instrument does not convey
      rights to BofA senior to the claims of common stockholders in the event of
      Counterparty’s bankruptcy; and (C) in the event of Counterparty’s bankruptcy,
      BofA waives any and all rights it may have to set-off in respect of the
      Transaction, whether arising under agreement, applicable law or otherwise.
      BofA
      will give notice to Counterparty of any netting or set off effected under this
      provision.

     

    (l)  Equity
      Rights.
      BofA
      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 BofA and Counterparty thereunder shall be cancelled and
      terminated and (ii) purchase
      from the BofA on the Early Unwind Date all Shares purchased by BofA or one
      of
      more of its affiliates and
      Counterparty shall pay to BofA an amount in cash equal to the aggregate amount
      of costs and expenses relating to the unwinding of BofA’s hedging activities in
      respect of the Transaction (including market losses incurred in reselling any
      Shares purchased by BofA or its affiliates in connection with such hedging
      activities). The amount of any such reimbursement shall be determined by the
      BofA 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.
      BofA 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)  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 BofA)
      correctly sets forth the terms of the agreement between BofA 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
      John
      Servidio, Facsimile No. 212-230-8610.

     

    
      	 
	
              Yours
                faithfully,

               

            
	
              BANK
                OF AMERICA, N.A.

               

            
	 
	
              By: 

            
	
              Name:

            
	
              Title:

            
	
              Agreed
                and Accepted By:

               

               

               

              CHARMING
                SHOPPES, INC.

               

            
	 
	
              By:  

            
	
              Name:

              Title:

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