Document:

Supplemental Executive Retirement Plan

    EXHIBIT
      10.2

     

     

    
 

     

    

     

    Charming
      Shoppes, Inc.

     

    Supplemental
      Executive Retirement Plan

    Amended
      and Restated Effective January 1, 2005

     

    

    

    

    

    

    

    

    

    

    

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    
Contents

    

    

    

    

    
      	 	 	 
	
              Article
                1.

               

            	
              Establishment,
                Purpose, and Duration

               

            	
              1

               

            
	
              Article
                2.

               

            	
              Definitions

               

            	
              1

               

            
	
              Article
                3.

               

            	
              Participation

               

            	
              4

               

            
	
              Article
                4.

               

            	
              Vesting

               

            	
              5

               

            
	
              Article
                5.

               

            	
              Retirement
                Benefit Account

               

            	
              5

               

            
	
              Article
                6.

               

            	
              Payment
                of the Retirement Benefit

               

            	
              7

               

            
	
              Article
                7.

               

            	
              Administration

               

            	
              10

               

            
	
              Article
                8.

               

            	
              Miscellaneous

               

            	
              12

               

            

    

    

     

    

    
      
        
          
            	 	
                    -i-

                  	 

          

          

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
           

        

      

    

    Article
      1.  Establishment,
      Purpose, and Duration

     

    1.1  Establishment
      of the Plan.
      Charming
      Shoppes, Inc. (the “Company”), a corporation incorporated under the laws of the
      Commonwealth of Pennsylvania, hereby amends and restates the Charming Shoppes
      Supplemental Retirement Plan (the “Plan”) effective January 1, 2005. This
      January 1, 2005 amendment and restatement shall not affect Grandfathered
      Accounts (as defined below), which shall continue to be subject to, and governed
      by, the terms of the Plan as in effect on December 31, 2004 (the “Effective
      Date”).

     

    1.2  Purpose
      of the Plan.
      The
      primary purpose of the Plan is to provide supplemental retirement benefits
      for a
      select group of management and highly compensated employees, within the meaning
      of Section 201 of ERISA, as a means to attract and retain key talent now and
      in
      the future.

     

    1.3  Duration
      of the Plan.
      The Plan
      shall commence upon approval by the Board and shall remain in effect, subject
      to
      the right of the Board of Directors of the Company to terminate the Plan at
      any
      time pursuant to Section 7.5.

     

    Article
      2.  Definitions

     

    Whenever
      used in the Plan, the following terms shall have the meanings set forth below.
      Unless the context clearly indicates to the contrary, when the defined meaning
      is intended, the initial letter of the word is capitalized:

     

    
      	(a)  	
              “Affiliate”
                means any firm, partnership, or corporation that directly or indirectly
                through one or more intermediaries, controls, is controlled by, or
                is
                under common control with the Company. “Affiliate” also includes any other
                organization similarly related to the Company that is designated
                as such
                by the Board.

            

    

     

    
      	(b)  	
              “Annual
                Bonus”
                means an amount awarded under the Company’s annual bonus plan and any
                special recognition bonus the Committee, in its sole discretion,
                declares
                to be an Annual Bonus.

            

    

     

    
      	(c)  	
              “Beneficiary”
                means the person or persons selected by the Participant, on a form
                provided by the Committee, to receive benefits provided under the
                Plan
                that are payable after the Participant’s death, or in the absence of such
                selection, the Participant’s
                estate.

            

    

     

    
      	(d)  	
              “Benefit
                Percentage”
                means the percentage, determined under Section 5.2, of Salary and
                Annual
                Bonus added each month to a Participant’s Retirement Benefit
                Account.

            

    

     

    
      	(e)  	
              “Board
                of Directors”
                or
                “Board”
                means the Board of Directors of the Company, and shall also mean
                any
                committee of the Board of Directors which has been delegated selected
                by
                the Committee), as of the close of the first business day of each
                calendar
                quarter for which earnings are determined under Section
                5.4.

            

    

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    
      	(f)  	
              
                “Cause”
                  means the occurrence of any one or more of the following:

                 

              

            

    

    
      	(i)  	
              The
                willful and continued failure by the Eligible Executive to substantially
                perform his duties of employment (other than any such failure resulting
                from the Eligible Executive’s Disability), after a written demand for
                substantial performance is delivered to the Eligible Executive that
                specifically identifies the manner in which the Committee believes
                that
                the Eligible Executive has not substantially performed his duties,
                and the
                Eligible Executive has failed to remedy the situation within a reasonable
                period of time; or

            

    

     

    
      	(ii)  	
              The
                Eligible Executive’s plea of nolo
                contendre
                to
                or conviction for committing an act of fraud, embezzlement, theft,
                or
                other constituting a felony involving moral turpitude (with all rights
                of
                appeal having been exhausted); or

            

    

     

    
      	(iii)  	
              The
                willful engaging by the Eligible Executive in gross misconduct materially
                and demonstrably injurious to the Company, monetarily or otherwise.
                However, no act or failure to act on the Eligible Executive’s part shall
                be considered “willful” unless done, or omitted to be done, by the
                Eligible Executive not in good faith and without reasonable belief
                that
                his action or omission was in the best interest of the
                Company.

            

    

     

    
      	(g)  	
              “Change
                in Control”
                means the occurrence of an event described under Section 2.10 (“Change of
                Control”) of the Amended and Restated Charming Shoppes Variable Deferred
                Compensation Plan for Executives.

            

    

     

    
      	(h)  	
              “Committee”
                means the Compensation Committee of the Board of Directors, or other
                persons delegated pursuant to Section 7.1 to assist the Committee,
                that
                will administer the Plan in accordance with Section
                7.1.

            

    

     

    
      	(i)  	
              “Company”
                means Charming Shoppes, Inc., a corporation organized and existing
                under
                the laws of the Commonwealth of Pennsylvania or its successor or
                successors.

            

    

     

    
      	(j)  	
              “Disability”
                means a mental or physical condition which qualifies a Participant
                for
                benefits under the Charming Shoppes Long-Term Disability Plan.
                

            

    

     

    
      	(k)  	
              “Effective
                Date”
                means the effective date of the Plan as amended and restated, which
                is
                January 1, 2005.

            

    

     

    
      	(l)  	
              “Eligible
                Executive”
                means an individual member of a group of select management or highly
                compensated employees of the Company or an
                Affiliate.

            

    

     

    
      	(m)  	
              “ERISA”
                means the Employee Retirement Income Security Act of 1974, as amended
                from
                time to time, or any successor act
                thereto.

            

    

     

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    
      	(n)  	
              “Grandfathered
                Accounts”
                means that portion of a Participant’s Retirement Benefit Account that was
                earned and vested as of December 31, 2004, and shall include earnings
                whenever credited to such amount under the terms of the Plan. The
                Grandfathered Account shall be calculated in accordance with Section
                409A
                of the Code. The Company shall maintain a separate record of Grandfathered
                Accounts. All Grandfathered Accounts shall be subject to, and governed
                by,
                the terms of the Plan as in effect on December 31, 2004, as set forth
                on Exhibit A.

            

    

     

    
      	(o)  	
              Interest
                Rate”
                means the sum of (a) three percent (3%) and (b) the “10-Year Treasury Note
                Yield”, published in the Wall
                Street Journal
                (or such other business publication selected by the Committee), as
                of the
                close of the first business day of each calendar quarter for which
                earnings are determined under Section
                5.4.

            

    

     

    
      	(p)  	
              “Participant”
                means an Eligible Executive designated and selected by the Committee
                for
                participation in the Plan in accordance with the provisions of Article
                3.

            

    

     

    
      	(q)  	
              “Plan”
                means the Charming Shoppes Supplemental Executive Retirement Plan,
                the
                plan set forth herein, as amended from time to
                time.

            

    

     

    
      	(r)  	
              “Plan
                Service”
                means the product of one-twelfth (1/12) times the number of complete
                calendar months of Service a Participant has performed since February
                1,
                2003. 

            

    

     

    
      	(s)  	
              “Plan
                Year”
                means the consecutive twelve (12) month period commencing on January
                1 and
                ending on December 31.

            

    

     

    
      	(t)  	
              “Retirement
                Benefit”
                means the amount determined under Article 6 payable to a Participant
                or
                Beneficiary following the Participant’s termination of
                employment.

            

    

     

    
      	(u)  	
              “Retirement
                Benefit Account”
                means the bookkeeping account established for the Participant as
                described
                under Article 5.

            

    

     

    
      	(v)  	
              “Retirement
                Credits”
                means the amounts determined under Section 5.2 that are added to
                a
                Participant’s Retirement Benefit
                Account.

            

    

     

    
      	(w)  	
              “Salary”
                means all regular, basic wages before reduction for amounts deferred
                pursuant to any plan of the Company, payable in cash to a Participant
                for
                services to be rendered, exclusive of any Annual Bonus, other special
                fees, awards or incentive compensation, imputed income, allowances,
                or
                amounts designated by the Company as payment toward or reimbursement
                of
                expenses.

            

    

     

    
      	(x)  	
              “Service”
                means the period of time during which an employment relationship
                exists
                between an employee and the Company or an Affiliate, including any
                period
                during which the employee is on an approved leave of absence, whether
                paid
                or unpaid. 

            

    

     

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    
      	(y)  	
              “Vesting
                Percentage”
                means the percentage, determined under Article 4, of a Participant’s
                Retirement Benefit Account that the Participant is entitled to receive
                following termination of employment with the Company or an
                Affiliate.

            

    

     

    
      	(z)  	
              “Year
                of Service”
                or
                “Years
                of Service”
                means the “years of service” credited to a Participant under the Charming
                Shoppes, Inc. Employees’ Retirement Savings
                Plan.

            

    

     

    Article
      3.  Participation

     

    3.1  Participation.
      The
      Committee, in its sole discretion, reserves the right to select Eligible
      Executives to participate in the Plan.

     

    3.2  Notification. 

     

    
      	(a)  	
              Eligible
                Executives who have been selected and approved for participation
                in the
                Plan by the Committee shall be notified in writing of their selection
                at
                least thirty (30) calendar days prior to the first Plan Year of
                participation, or as soon as possible thereafter. The Participant
                shall
                not have any contractual rights under the Plan until notified. A
                Participant’s participation in the Plan shall constitute acknowledgment
                that all decisions, interpretations and determinations by the Committee
                shall be final and binding on the Company, Affiliates, Participants,
                Beneficiaries and any other persons having or claiming an interest
                thereunder. An Eligible Employee who is hired or promoted during
                a Plan
                Year and is selected and approved by the Committee for participation
                in
                the Plan to commence during the Plan Year shall be notified in writing
                of
                his or her selection as soon as practicable thereafter, but in no
                event
                later than thirty (30) calendar days after such selection and
                approval.

            

    

     

    
      	(b)  	
              In
                the event that a Participant is deemed by the Committee to be ineligible
                to continue participation in the Plan for any reason, such Participant
                shall be notified in writing of such decision and such Participant
                shall
                become an inactive Participant, retaining all the rights relating
                to the
                Retirement Benefit previously accrued, which shall continue to vest
                as
                otherwise provided herein and shall be distributed as otherwise provided
                under the Plan.

            

    

     

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    Article
      4.  Vesting

     

    4.1  Vesting
      Percentage.
      A
      Participant’s Vesting Percentage shall be measured as follows:

     

    
      	
               

              Actual
                Age + Years of Service

               

            	
               

              Vesting
                Percentage

               

            
	 	 
	
              Under
                55

            	
                
                  0%

            
	
              55
                + 10 Years of Service

            	
                  
                50%

            
	
              56
                + 10 Years of Service

            	
                  
                60%

            
	
              57
                + 10 Years of Service

            	
                  
                70%

            
	
              58
                + 10 Years of Service

            	
                  
                80%

            
	
              59
                + 10 Years of Service

            	
                  
                90%

            
	
              60
                and Over + 5 Years of Service

            	
                  100%

            
	 	 

    

    

     

    4.2  Vesting
      Upon Special Events.
      Notwithstanding the Vesting Percentage shown in the table above, a Participant’s
      Retirement Benefit Account will become fully vested, and the Participant’s
      Vesting Percentage shall equal one hundred percent (100%), upon death,
      Disability, a Change in Control, or termination of the Plan if the Participant
      is then an employee of the Company or an Affiliate.

     

    4.3  Termination
      for Cause.
      Notwithstanding anything to the contrary hereunder, if a Participant is
      terminated for Cause, whether determined before or after the Participant’s
      actual termination date, the Participant’s Vesting Percentage shall be zero
      percent (0%), and the Participant shall not be entitled to any Retirement
      Benefit under this Plan.

     

    Article
      5.  Retirement
      Benefit Account

     

    5.1  Retirement
      Benefit Account.
      The
      Company shall establish and maintain an individual bookkeeping account (the
      “Retirement Benefit Account”) in the name of each Participant. Each month a
      Participant’s Retirement Benefit Account shall be increased by Retirement
      Credits and earnings calculated for such month as determined under Section
      5.2
      and Section 5.4, respectively, and shall be decreased by any Retirement Benefit
      payment(s) occurring in such month as required under Section 5.3.

     

    5.2  Retirement
      Credits.
      At the
      end of each month during a Plan Year, if the Participant is actively employed
      by
      the Company or an Affiliate, a Retirement Credit will be calculated. The
      Retirement Credit for any given month is equal to the Benefit Percentage
      determined as of the beginning of the Plan Year times the sum of: (a) any Salary
      and (b) any Annual Bonus paid during such month (including any Salary or Annual
      Bonus deferred under the Charming Shoppes Variable Deferred Compensation Plan
      for Executives). The Benefit Percentage as of the beginning of the Plan Year
      is
      equal to the percentage reflected in the table below and modified, as
      appropriate, under Section 5.2(a) and Section 5.2(b).

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    

     

    
      	
               

              Sum
                of Age and Plan Service

              At
                Beginning of Plan Year

               

            	
               

              Benefit
                Percentage At

              Beginning
                of Plan Year

               

            
	 	 
	
              Under
                60

            	
                          8%

            
	
              60-69

            	
                          12%

            
	
              Over
                69

            	
                          15%

            
	 	 

    

    

     

    For
      purposes of calculating the Benefit Percentage as of the beginning of a Plan
      Year, the Participant’s age and Plan Service are measured in years and complete
      months. For example, a Participant who is fifty-seven (57) years and five (5)
      months old as of the beginning of a particular Plan Year and whose Plan Service
      is two (2) years and seven (7) months as of the beginning of that Plan Year
      would have a score of sixty (60) for purposes of calculating the Benefit
      Percentage for that Plan Year.

     

    
      	(a)  	
              For
                those Participants hired before February 1, 2003 who have attained
                age
                fifty (50) before February 1, 2003, the Benefit Percentages determined
                above will be increased by one percent (1%) for each full Year of
                Service
                performed prior to February 1, 2003 (up to a maximum increase often
                percent (10%)).

            

    

     

    
      	(b)  	
              Furthermore,
                for those Participants hired before February 1, 2003, the Benefit
                Percentage (as modified above, if applicable) will be increased by
                an
                additional ten percent (10%) for all Plan Years beginning after the
                Plan
                Year during which the Participant attains age
                55.

            

    

     

    Therefore,
      the maximum Benefit Percentage used to calculate a Retirement Credit is
      thirty-five percent (35%).

     

    5.3  Charges
      Against Account.
      At the
      end of each month, each Participant’s Retirement Benefit Account shall be
      charged for all Retirement Benefit payments made during such month to the
      Participant or to the Participant’s Beneficiary.

     

    5.4  Earnings
      Calculation.
      At the
      end of each calendar month, the balance of the Participant’s Retirement Benefit
      Account, determined after deducting any charges against the account but before
      adding any Retirement Credits for the month (the “end of month” balance), shall
      be increased with earnings. Such earnings shall equal one-twelfth (1/12) of
      the
      product of the end of month balance times the Interest Rate.

     

    5.5  Statements.
      The
      Committee shall furnish each Participant with a statement of the balance
      credited to the Participant’s Retirement Benefit Account on at least an annual
      basis.

     

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    Article
      6.  Payment
      of the Retirement Benefit

     

    6.1  Retirement
      Benefit.
      The
      Retirement Benefit is a lump-sum amount equal to the product of: (a) the balance
      in the Participant’s Retirement Benefit Account (immediately preceding the date
      of payment) times (b) the Participant’s Vesting Percentage determined as of the
      date the Participant’s termination of Service occurs. Any unvested portion of
      the Retirement Benefit Account shall be forfeited as of the date of the
      Participant’s termination of Service.

     

    6.2  Distribution
      of the Retirement Benefit.
      

     

    
      	(a)  	
              Except
                as otherwise required by Section 6.3(a) or Section 6.9, the vested
                Retirement Benefit shall be distributable to the Participant (or
                the
                Participant’s Beneficiary, if applicable) as soon as practicable (but no
                later than 90 days) after the Participant terminates Service with
                the
                Company. 

            

    

     

    
      	(b)  	
              In
                accordance with the election made by the Participant pursuant to
                Section
                6.6, 6.7 or 6.8, as applicable, the Participant’s vested Retirement
                Benefit shall be distributed in (i) a lump sum equal to the value
                of the
                Participant’s vested Retirement Benefit as of the day preceding the date
                of payment, or (ii) annual installments over a period not to exceed
                ten
                (10) years. Annual installment payments shall be equal to (i) the
                value of
                such vested Retirement Benefit as of the day preceding the date of
                payment, divided by (ii) the number of annual installment payments
                elected
                by the Participant in the election. The remaining annual installments
                shall be paid in each succeeding Plan Year on the anniversary date
                of the
                date the Participant terminated Service, in an amount equal to (i)
                the
                value of such vested Retirement Benefit as of the day preceding the
                date
                of payment divided by (ii) the number of installments remaining.
                Earnings
                shall continue to be added to the Participant’s Retirement Benefit Account
                as required under Section 5.4 until the vested Retirement Benefit
                Account
                is fully distributed. 

            

    

     

    
      	(c)  	
              Except
                as otherwise provided in an election made pursuant to Section 6.6,
                6.7 or
                6.8, or as required pursuant to paragraph (a), above, or Section
                6.9, all
                Retirement Benefit distributions will occur or commence as soon as
                practicable (but no later than 90 days) after the Participant terminates
                Service.

            

    

     

    6.3  Form
      of Payment. 

     

    
      	(a)  	
              In
                the case of a Participant whose vested Retirement Benefit (including
                any
                amounts in a Grandfathered Account and amounts credited to a Participant
                under the Company’s Variable Deferred Compensation Plan or any other
                account balance deferred compensation plan that is required to be
                aggregated with this Plan within the meaning of Code Section 409A)
                is less
                than $50,000 at the time of the Participant’s termination of Service, the
                Participant’s vested Retirement Benefit (excluding any Grandfathered
                account) shall be distributed in the form of a lump sum payment as
                soon as
                practicable, but not later than 90 days following the Participant’s
                termination of Service, except as otherwise required by Section 6.9.
                

            

    

     

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    
      	(b)  	
              In
                the case of a Participant whose vested Retirement Benefit (including
                any
                amounts in a Grandfathered Account and amounts credited to a Participant
                under the Company’s Variable Deferred Compensation Plan or any other
                account balance deferred compensation plan that is required to be
                aggregated with this Plan within the meaning of Code Section 409A)
                is at
                least $50,000 at termination of Service, the Participant’s vested
                Retirement Benefit (excluding any Grandfathered account shall be
                distributed in accordance with the Participant’s election as to the time
                and manner of distribution made pursuant to Section 6.6, 6.7 or 6.8
                and in
                accordance with the options set forth in Section 6.2(b), except as
                otherwise required by Section 6.9. A Participant who fails to make
                a
                distribution election will receive his vested Retirement Benefit
                in a lump
                sum. 

            

    

     

    6.4  Payment
      to Beneficiary.
      In the
      event of a Participant’s death prior to the payment of all benefits due the
      Participant under Section 6.2, remaining Retirement Benefit payments otherwise
      due the Participant shall be paid to the Participant’s Beneficiary. Each
      Participant may designate a Beneficiary or Beneficiaries (which Beneficiary
      may
      be an entity other than a natural person) to receive any payments which may
      be
      made following the Participant’s death. Such designation may be changed or
      canceled at any time without the consent of any such Beneficiary. Any such
      designation, change, or cancellation must be made in a form approved by the
      Committee and shall not be effective until received by the Committee, or its
      designee. If no Beneficiary has been named, or the designated Beneficiary or
      Beneficiaries shall have predeceased the Participant, the Beneficiary shall
      be
      the Participant’s estate. If a Participant designates more than one Beneficiary,
      the interests of such Beneficiaries shall be paid in equal shares, unless the
      Participant has specifically designated otherwise.

     

    6.5  Facility
      of Payment.
      If, in
      the Committee’s judgment, any person to whom benefits are payable hereunder is
      under a legal disability or unable to care for his affairs because of illness,
      accident, or other incapacity, any payment due may be paid to his spouse,
      parent, brother, sister, or any other person as the Committee may determine
      (unless prior claim therefore shall have been made by a duly qualified guardian,
      committee, or other legal representative). Any such payment shall be payment
      for
      the account of such person and shall, to the extent thereof, be a complete
      discharge of any liability under the Plan to such person.

     

    6.6  Retirement
      Benefit Distribution Election. Within
      30
      days of the date notified of selection pursuant to Section 3.2, a Participant
      may elect, on a form and according to such terms as the Committee may determine,
      to have his Retirement Benefit distributed in a lump sum or in annual
      installments over a period not to exceed ten years as described in Section
      6.2
      and the date, which shall not be earlier than the Participant’s termination of
      Service, for distribution (or commencement thereof). 

     

    6.7  Special
      2006 Elections.
      Notwithstanding anything in this Article 6 to the contrary, to the extent
      permitted under section 409A of the Code and the regulations issued thereunder,
      a Participant may make an election on or before December 31, 2006 as to the
      time
      and manner of payment of amounts credited to his Retirement Benefit Account
      on
      such terms as shall be determined by the Committee, provided that a Participant
      shall not be permitted in calendar year 2006 to (a) change payment elections
      in
      a manner that will defer distribution of amounts
      that the Participant otherwise would have received in 2006 or (b) cause payments
      to be made in 2006 pursuant to the special 2006 election. 

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    6.8  Special
      Second Election Rules.
      To the
      extent permitted under section 409A of the Code and the regulations issued
      thereunder, a Participant may change the timing and/or method previously
      selected for distribution of his Retirement Benefit Account at any time by
      submitting a new distribution election form to the Committee. However, a change
      in time or manner of any distribution shall be effective only if: (a) the
      Committee receives the new distribution election form at least 12 full months
      before distributions under the Plan related to that change commence, (b) the
      new
      distribution election is not effective for a period of 12-months from the date
      made, (c) the first payment with respect to which the new election is made
      is
      deferred for a period of five years from the date such payment otherwise would
      have been made, and (d) the new election does not result in an impermissible
      acceleration of payment as described in section 409A of the Code and the
      regulations thereunder.

     

    6.9  Special
      Rule for Key Employees.
      

     

    
      	(a)  	
              Notwithstanding
                any provision of the Plan to the contrary, if a Participant who is
                a Key
                Employee (as defined below) becomes entitled to receive a distribution
                on
                account of separation from Service, the distribution may not be made
                earlier than six months following the date of the Participant’s separation
                from Service, if required by section 409A of the Code and the regulations
                thereunder. If distributions are delayed pursuant to section 409A
                of the
                Code, the accumulated amounts withheld on account of section 409A
                shall be
                paid on the first business day after the end of the six-month period.
                If
                the Participant dies during such six-month period, the amounts withheld
                on
                account of section 409A shall be paid to the Participant’s Beneficiary on
                or around 90 days after the date of the Participant’s death.
                

            

    

     

    
      	(b)  	
              The
                term “Key Employee” means (i)
                an officer of the Company or its Affiliates having annual compensation
                greater than $130,000 (adjusted for inflation as described in section
                416(i) of the Code), (ii) a five percent owner of the Company and
                its
                Affiliates, or (iii) a one percent owner of the Company and its Affiliates
                who has annual compensation from the Company and its Affiliates greater
                than $150,000, as determined by the Committee in accordance with
                section
                409A of the Code. The number of officers who are considered Key Employees
                shall be limited to 50 employees as described in section 416(i) of
                the
                Code. The Committee shall determine the Key Employees each year in
                accordance with section 416(i) of the Code, the “specified employee”
                requirements of section 409A of the Code, and applicable regulations.
                Key
                employees shall be identified as of December 31 of each year with
                respect
                to the 12-month period beginning on the next following April
                1.

            

    

     

    
      	(c)  	
              The
                terms of this Plan as amended and restated effective January 1, 2005,
                including this Section 6.9, shall not apply to Grandfathered Accounts,
                which shall continue to be subject to, and governed by, the terms
                of the
                Plan as in effect on December 31,
                2004.

            

    

     

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    Article
      7.  Administration

     

    7.1  Committee.
      The
      Committee shall administer the Plan and it shall have the full power,
      discretion, and authority to interpret and administer the Plan in a manner
      that
      is consistent with the Plan’s provisions. The Committee shall have the authority
      to delegate administrative duties to officers, employees, or directors of the
      Company. Each Participant by participating in the Plan, agrees to accept the
      terms of the Plan and the authority and discretion of the Committee as set
      forth
      in the Plan.

     

    7.2  Powers
      and Duties of the Committee.
      The
      Committee shall carry out the duties assigned to it under the Plan and shall
      administer the Plan in accordance with its terms. The Committee shall have
      all
      powers as may be necessary to carry out its duties under the Plan, including,
      but not by way of limitation, the following: (a) to construe and interpret
      the
      provisions of the Plan; (b) to decide any disputes which may arise under the
      Plan; (c) to decide all questions that shall arise under the Plan, including
      questions as to the eligibility to become Participants, and the amount, manner,
      and time of payment of any benefits under the Plan; (d) to employ or appoint
      legal counsel, accountants, actuaries, consultants, or any person to assist
      in
      the administration of the Plan and any other agents it deems advisable. The
      Committee shall also have the power to allocate and delegate responsibilities.
      The Committee shall have the power and authority to direct the investment of
      a
      trust fund created pursuant to Section 8.3, and in connection with such power,
      may delegate in writing authority to manage assets of the trust fund to one
      or
      more investment managers. The Committee may adopt from time to time written
      investment policies and guidelines which shall govern the manner in which the
      assets of such trust fund are to be invested, which policies and guidelines
      shall be followed by the investment managers.

     

    7.3  Amendment
      and Termination.
      The Plan
      may be amended, suspended, discontinued or terminated at any time by the Board;
      provided, however, that no such amendment, suspension, discontinuance, or
      termination shall reduce or in any manner adversely affect the rights of any
      Participant or Beneficiary with respect to benefits that are payable or would
      become payable under the terms of the Plan assuming there had not been such
      amendment, suspension, discontinuance or termination, and assuming a Retirement
      Credit of zero for all months following such amendment, suspension,
      discontinuance or termination.

     

    7.4  Merger
      or Consolidation of Plan.
      In the
      event of any merger or consolidation of the Plan with another retirement or
      pension plan, provision shall be made so that each Participant in the Plan
      as of
      the date of such merger or consolidation will receive a benefit after the merger
      or consolidation which is actuarially equivalent to or greater than the benefit
      he would have been entitled to receive immediately prior to the merger or
      consolidation if the Plan had then terminated.

     

    7.5  Payment
      Upon Plan Termination.
      In the
      event of termination of the Plan pursuant to Section 7.3, the vested amount
      credited to the Retirement Benefit Account of each Participant, determined
      in
      accordance with Section 4.2, shall be paid to the Participant in accordance
      with
      Article 6 of the Plan or in a lump sum payment, consistent with section
      409A of the Code. Notwithstanding anything in the Plan to the contrary, if
      a
      Change in Control that constitutes a “change in control” event within the
      meaning of Code section 409A occurs, the Plan
      shall terminate as of the date of the Change in Control and the Retirement
      Benefit of each Participant shall be distributed in a lump sum payment as soon
      as practicable thereafter, but no later than 90 days after such termination
      consistent with section 409A. 

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    7.6  Indemnification.
      The
      Company shall indemnify each member of the Committee, and the directors,
      officers, and employees of the Company involved in the operation and
      administration of the Plan against any and all claims, losses, damages,
      expenses, and liabilities arising from any action or failure to act, except
      when
      the same is determined by the Board of Directors to be due to gross negligence
      or willful misconduct of such member.

     

    7.7  Claims
      Procedure. A
      Participant or Beneficiary shall have the right to file a claim, inquire if
      he
      has any right to benefits and the amounts thereof; or appeal the denial of
      a
      claim.

     

    
      	(a)  	
              Initial
                Claim. A
                claim will be considered as having been filed when a written communication
                is made by the Participant, Beneficiary, or his or her authorized
                representative to the attention of the Committee (the “claimant”). The
                Committee shall notify the claimant in writing within ninety (90)
                days
                after receipt of the claim if the claim is wholly or partially denied.
                If
                an extension of time beyond the initial ninety (90) day period for
                processing the claim is required, written notice of the extension
                shall be
                provided to the claimant prior to the expiration of the initial ninety
                (90) day period. In no event shall the period, as extended, exceed
                one
                hundred eighty (180) days. The extension notice shall indicate the
                special
                circumstances requiring an extension of time and the date by which
                the
                Committee expects to render a final
                decision.

            

    

     

    
      	(b)  	
              Content
                of Denial.
                Notice of a wholly or partially denied claim for benefits will be
                in
                writing, in a manner calculated to be understood by the claimant,
                and
                shall include:

            

    

     

    
      	(i)  	
              The
                specific reason or reasons for
                denial;

            

    

     

    
      	(ii)  	
              Specific
                reference to the Plan provisions on which the denial is
                based;

            

    

     

    
      	(iii)  	
              A
                description of any additional material or information necessary for
                the
                claimant to perfect the claim and an explanation of why such material
                or
                information is necessary, and

            

    

     

    
      	(iv)  	
              An
                explanation of the Plan’s claim appeal procedure, including a statement of
                the claimant’s right to bring a civil action under Section 502(a) of ERISA
                following an adverse benefit determination on
                appeal.

            

    

     

    
      	(c)  	
              Right
                to Appeal.
                If
                a claim is wholly or partially denied, the claimant may file a written
                appeal requesting the Committee to conduct a full and fair review
                of his
                or her claim. For purposes of this review, the Committee may appoint
                an
                individual or committee (other than the individual or committee that
                heard
                the initial claim) to act on its behalf. An appeal must be made in
                writing
                no more than sixty (60) days after the claimant receives written
                notice of
                the denial. The claimant may submit
                written comments, documents, records, and other information relating
                to
                the claim for benefits, and may access and copy (free of charge)
                all
                documents, records, and other information relevant to the claimant’s
                claim. The Committee shall take into account all comments, documents,
                records, and other information submitted by the claimant in reviewing
                the
                claim, without regard to whether such information was submitted in
                the
                initial determination.

            

    

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    
      	(d)  	
              Notice
                of Appeal Determination.
                The decision of the Committee regarding the appeal shall be given
                to the
                claimant in writing no later than sixty (60) days following receipt
                of the
                appeal. However, if the Committee, in its sole discretion, grants
                a
                hearing, or there are special circumstances involved, the decision
                will be
                given no later than one hundred twenty (120) days after receiving
                the
                appeal. If such an extension of time for review is required, written
                notice of the extension shall be furnished to the claimant prior
                to the
                commencement of the extension. In the case of an adverse benefit
                determination, the Committee’s decision shall
                include:

            

    

     

    
      	(i)  	
              The
                specific reason or reasons for
                denial;

            

    

     

    
      	(ii)  	
              Specific
                reference to the Plan provisions on which the denial is
                based;

            

    

     

    
      	(iii)  	
              A
                statement that the claimant is entitled to access and copy (free
                of
                charge) all documents, records, and other information relevant to
                the
                claimant’s claim for benefits; and

            

    

     

    
      	(iv)  	
              A
                statement of the claimant’s right to bring a civil action under Section
                502(a) of ERISA following an adverse benefit
                determination.

            

    

     

    
      	(e)  	
              Exhaustion
                of Administrative Remedy. Notwithstanding
                any provision in the Plan to the contrary, no employee or Participant
                may
                bring any legal or administrative claim or cause of action against
                the
                Plan, the Committee, or the Company in court or any other venue until
                the
                employee or Participant has exhausted its administrative remedies
                under
                this Section 7.7.

            

    

     

    
      	(f)  	
              Suspension
                of Payment.
                If
                the Committee is in doubt concerning the entitlement of any person
                to any
                payment claimed under the Plan, the Company may suspend payment until
                satisfied as to the person’s entitlement to the payment. Notwithstanding
                the foregoing, no Participant or Beneficiary may bring a claim for
                Plan
                benefits to arbitration, court, or through any other legal action
                or
                process until the administrative claims process of this Section 7.7
                has
                been exhausted.

            

    

     

    Article
      8.  Miscellaneous

     

    8.1  Unfunded
      Plan.
      This
      Plan is intended to be an unfunded plan maintained primarily to provide
      supplemental pension benefits for “a select group of management or highly
      compensated employees” within the meaning of Sections 201, 301, and 401 of
      ERISA, and therefore is further intended to be exempt from the provisions of
      Parts 2, 3, and 4 of Title I of ERISA.
      Accordingly, the Committee may terminate the Plan, subject to Article 7 herein,
      for any or all Participants, in order to achieve and maintain this intended
      result.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    8.2  Unsecured
      General Creditor.
      Participants and their Beneficiaries, heirs, successors, and assigns shall
      have
      no secured legal or equitable rights, interest, or claims in any property or
      assets of the Company or its Affiliates, nor shall they be Beneficiaries of;
      or
      have any rights, claims, or interests in any life insurance policies, annuity
      contracts, or the proceeds therefrom owned or which may be acquired by the
      Company or its Affiliates. Except as provided under Section 8.3, such policies,
      annuity contracts, or other assets of the Company or its Affiliates shall not
      be
      held under any trust for the benefit of Participants, their beneficiaries,
      heirs, successors, or assigns, or held in any way as collateral security for
      the
      fulfilling of the obligations of the Company under this Plan. Any and all of
      the
      Company’s assets and policies, and those of its Affiliates, shall be, and
      remain, the general, unpledged, unrestricted assets of the Company or of its
      Affiliates as the case may be. The Company’s obligation under this Plan shall be
      that of an unfunded and unsecured promise to pay money in the
      future.

     

    8.3  Authorization
      for Trust.
      The
      Company may, but shall not be required to, establish one (1) or more trusts,
      with such trustee as the Committee may approve, for the purpose of providing
      for
      the payment of benefits under the Plan. Such trust or trusts may be irrevocable,
      but the assets thereof shall be subject to the claims of the Company’s
      creditors. To the extent any amounts payable under the Plan are actually paid
      from any such trust, the Company shall have no further obligation with respect
      thereto, but to the extent not so paid, such amounts shall remain the obligation
      of, and shall be paid by, the Company.

     

    8.4  Costs
      of the Plan.
      All
      costs of implementing and administering the Plan, and all costs incurred in
      providing the benefits described herein, shall be borne by the
      Company.

     

    8.5  Tax
      Withholding. The
      Company shall have the right to require Participants to remit to the Company
      an
      amount sufficient to satisfy federal, state, and local tax withholding
      requirements, or to deduct from all payments made pursuant to the Plan amounts
      sufficient to satisfy such withholding requirements.

     

    8.6  Nontransferability.
      Except
      as provided under a court-approved divorce agreement, the interest of an
      individual or an entity to a benefit under the Plan shall not be anticipated,
      alienated, sold, transferred, assigned, pledged, encumbered, or subjected to
      any
      charge or legal process. No interest or right to receive a benefit may be taken,
      either voluntarily or involuntarily, for the satisfaction of the debts of,
      or
      other obligations or claims against, such individual or entity, including claims
      for alimony, support, separate maintenance, and claims in bankruptcy
      proceedings.

     

    8.7  Successors.
      All
      obligations of the Company under the Plan shall be binding upon any successor
      to
      the Company, whether the existence of such successor is the result of a direct
      or indirect purchase, merger, consolidation, or otherwise, of all or
      substantially all of the business and/or assets of the Company.

     

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    8.8  Severability.
      In the
      event any provision of the Plan shall be held illegal or invalid for any reason,
      the illegality or invalidity shall not affect the remaining parts of the Plan,
      and the Plan shall be construed and enforced as if the illegal or invalid
      provision had not been included.

     

    8.9  Applicable
      Law.
      To the
      extent not preempted by federal law, the Plan shall be governed by and construed
      in accordance with the laws of the Commonwealth of Pennsylvania without giving
      effect to principles of conflicts of laws.

     

    8.10  No
      Enlargement of Rights.
      The Plan
      is strictly a voluntary undertaking on the part of the Company and shall not
      be
      deemed to constitute an employment contract between the Company and any
      Participant, or to be consideration for, or an inducement to, or condition
      of,
      the employment of any Participant. Nothing contained in the Plan shall be deemed
      to give any Participant employment rights with the Company or to interfere
      with
      the right of the Company to discharge any Participant at any time regardless
      of
      the effect such discharge shall have upon him as a Participant of the Plan.
      No
      Participant shall have any right to a Retirement Benefit, except to the extent
      provided in the Plan.

     

    8.11  Gender
      and Number. The
      masculine gender, where appearing in the Plan, shall be deemed to include the
      feminine gender, and the singular may include the plural, unless the context
      clearly indicates to the contrary. The words “hereof,” “herein,” “hereunder,”
and other similar compounds of the word “here” shall mean and refer to the
      entire Plan, not to any particular provision or Section. Section headings are
      included for convenience of reference and are not intended to add to, or
      subtract from, the terms of the Plan.

     

    8.12  Notice
      of Address.
      Each
      person entitled to benefits under the Plan must file with the Committee, in
      writing, his post office address and each change of post office address. Any
      communication, statement, or notice addressed to such a person at his latest
      post office address as filed with the Committee will be binding upon such person
      for all purposes of the Plan, and neither the trustee nor the Company shall
      be
      obliged to search for or ascertain the whereabouts of any such person. In
      addition, any notice or filing required or permitted to be given to the
      Committee under the Plan shall be sufficient if in writing and hand delivered,
      or sent by registered or certified mail, to the Company’s human resources
      department, or to such other entity as the Committee may designate from time
      to
      time. Such notice shall be deemed given as to the date of delivery, or, if
      delivery is made by mail, as of the date shown on the postmark on the receipt
      for registration or certification.

     

    8.13  Headings
      and Captions.
      Headings
      and captions are inserted in this Plan for convenience of reference only and
      are
      to be ignored in the construction of the provisions of the Plan.

     

    8.14  Section
      409A of the Code.
      The
      Plan is intended to comply with the applicable requirements of section 409A
      of
      the Code and its corresponding regulations and related guidance, and shall
      be
      maintained and administrated in accordance with section 409A of the Code to
      the
      extent section 409A of the Code applies to the Plan. Notwithstanding anything
      in
      the Plan to the contrary, distributions from the Plan may only be made in a
      manner, and upon an event, permitted by section 409A of the Code. 

     

    

     

    
      
        
        

        
        

      

      
        14

        
          

        

      

      
        
        

        
          

        

      

    

    Exhibit
      A

     

    [Supplemental
      Executive Retirement Plan

     

    Effective
      February 1, 2003]Dear Jeff:

September 20, 2006

 

Dear Jeff:

The Company appreciates your agreement to act as the interim Chief Financial Officer of the Company in order to give the Company the opportunity to designate a Chief Financial Officer.  In return for your agreement to serve in this position the Company will:

	Continue your base compensation at the rate of $294,000 per annum plus an executive allowance equal to that paid to members of the CEO's Leadership Team for the period during which you act as interim Chief Financial Officer.
	Pay you a guaranteed bonus under the Company's Incentive Compensation Plan (i) for the 2006 fiscal year of  $220,500 provided that you have not voluntarily terminated your employment with the Company or been terminated by the Company for Cause (as that term is defined in the Company's Severance Plan) on or prior to the day 2006 bonuses are paid, or March 15, 2007, whichever is earlier and (ii) for any portion of the 2007 fiscal year during which you serve as interim Chief Financial Officer ("2007 Interim Service") in an amount equal to 75% of your base compensation (at the rate set forth in paragraph (1) above) for the period of your 2007 Interim Service provided that you have not voluntarily terminated your employment with the Company or been terminated by the company for Cause while serving as interim Chief Financial Officer.  It is further understood that said bonus amounts may, at the discretion of the Company, be increased based upon Company and/or individual performance in accordance with the terms contained in the Incentive Compensation Plan.

 

	The Compensation Committee shall take action on September 20, 2006 to award you 20,000 shares of Restricted Stock pursuant to the terms of the 2003 Omnibus Long Term Incentive Compensation Plan.   Said shares shall vest on December 31, 2007 provided that you are an employee of the Company on such date.  Said shares shall vest on any earlier date should your employment be terminated by the Company for other than Cause.
	Should you be entitled to benefits under the Company's Change in Control Plan (which requires, among other Plan provisions, that you be an employee of the Company on the date of a Change in Control) or Severance Plan during the period in which you are serving as the interim Chief Financial Officer and for six months thereafter, you shall be paid any benefits due under the terms of such Plans as if you were a member of the Senior Executive Leadership Team.

It is agreed and understood that, at the Company's discretion, it may terminate your acting as the interim Chief Financial Officer at anytime.  Upon such termination, you will reassume the position of Vice President, Finance.

Notwithstanding any of the above, you shall at all times be an employee at will and, as such, the Company and you, individually, retain the right to terminate your employment at anytime with or without Cause.  Should such termination of employment take place prior to the full payment of the benefits set forth in (1) through (4) above, the provisions relating to a termination of employment set forth in such paragraphs above shall be applicable with respect to your continued entitlement to such benefits.

All other provisions of your employment as in effect on the date hereof which are not in conflict with, or replaced with increased benefits by, this letter shall continue to be applicable.

Please indicate your agreement to the terms of this letter by executing and returning a copy to me.

 

 

Very truly yours,

 

 

Dean Mitchell
President and Chief Executive Officer

Accepted:

 

___________________

Jeff Campbell

 

 

 

K:\Legal\Corporate\EMPLOYMENT MATTERS\Campbell, Jeff\Sept 2006 Agreement.doc

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