Document:

exh10225jan312009.htm

    

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      EXHIBIT
10.2.25

      

      CHARMING
SHOPPES, INC.

      2004
STOCK AWARD AND INCENTIVE PLAN

       

      RESTRICTED
STOCK UNITS AGREEMENT

       

      Agreement
(the “Agreement”), dated as of ________________ (the “Grant Date”), between
CHARMING SHOPPES, INC. (the “Company”) and  ___________________ 
(the “Employee”).

       

      
        	
                1.  

              	
                Grant of Restricted
      Stock Units; Consideration; Employee
    Acknowledgments.

              

      

       

      The
Company hereby confirms the grant, under the Company’s 2004 Stock Award and
Incentive Plan (the “Plan”),  of __________ Restricted Stock Units
pursuant to the Plan.  The Restricted Stock Units are subject to the
terms and conditions of the Plan and this Agreement (and, in the case of any
elective deferral, the Company’s Variable Deferred Compensation Plan for
Executives (the “Deferred Compensation Plan”)).  Employee is required
to pay no cash consideration for the grant of the Restricted Stock Units, but
performance of services prior to the expiration of the risk of forfeiture
relating to the Restricted Stock Units and otherwise during his or her
employment, and his or her agreement to abide by the terms set forth in the
Plan, this Restricted Stock Units Agreement (the “Agreement”), and any Rules and
Regulations under the Plan, shall be deemed to be consideration for this grant
of Restricted Stock Units.  Employee acknowledges and agrees that (i)
the Restricted Stock Units are nontransferable as provided in Section 3(d)
hereof and the Plan, (ii) the Restricted Stock Units are subject to forfeiture
in the event of Employee’s termination of employment in certain circumstances,
as specified in Section 3 hereof, and (iii) sales of shares of the Company’s
common stock, par value $0.10 per share (“Shares”), following the lapse of
restrictions and settlement of the Restricted Stock Units will be subject to the
Company’s policies regulating trading by employees, including any applicable
“blackout” or other designated periods in which sales of Shares are not
permitted.

       

      
        	
                2.  

              	
                Incorporation of Plan
      and Deferred Compensation Plan by
  Reference.

              

      

       

      The
Restricted Stock Units have been granted to Employee under the
Plan.  All of the terms, conditions, and other provisions of the Plan
are hereby incorporated by reference into this Agreement.  Capitalized
terms used in this Agreement but not defined herein shall have the same meanings
as in the Plan.  If there is any conflict between the provisions of
this Agreement and the provisions of the Plan, the provisions of the Plan shall
govern.  In addition, the terms of any deferral of settlement of the
Restricted Stock Units are governed by the Deferred Compensation Plan, a copy of
which previously has been provided to Employee, which terms are also
incorporated herein by reference.  Employee hereby accepts the grant
of Restricted Stock Units, acknowledges receipt of a copy of the Plan and the
Deferred Compensation Plan, and agrees to be bound by all the terms and
provisions hereof and thereof (as presently in effect or hereafter amended), and
by all decisions and determinations of the Board or Committee under the Plan
and

       

      
        
           

        

        
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      the
Deferred Compensation Plan, or any person or committee designated by the
Committee to administer the Plan (the “Administrator”).

       

      
        	
                3.  

              	
                Restrictions on
      Restricted Stock Units.

              

      

       

      (a) Nature of Restricted Stock
Units; Restricted Period and Deferral of Settlement.  Each
Restricted Stock Unit represents the right to receive one Share, which will be
issued and delivered, after the lapse of the “Restricted Period” specified below
to the extent the Restricted Stock Units have not been forfeited, at the
settlement date applicable under Sections 6 and 7.  Restricted Stock
Units are subject to a risk of forfeiture during such Restricted Period and are
subject to restrictions on transfer and other conditions during the Restricted
Period and the additional deferral period, if any.  This Award differs
from awards of “restricted stock” in that such restricted stock awards involve
issuance of Shares at or shortly after grant, with such shares subject to
forfeiture (i.e., such shares must be returned to the Company if forfeited)
during any restricted period. With respect to Restricted Stock Units, Employee
has no voting rights or rights to actual dividends prior to the end of the
Restricted Period, but Employee is entitled to dividend equivalents in
accordance with Section 4.

       

      (b) Lapse of Restricted
Period.  Unless the Restricted Period on Restricted Stock Units
has lapsed earlier under Section 3(c) or 5(a), the Restricted Period will lapse
according to the following schedule, subject to Employee’s continued employment
with the Company or a subsidiary through the relevant vesting date:

       

      
        
          
            
              	
                      Vesting Date

                    	 	
                      Restricted
      Stock Units for Which

                      the Restricted Period
  Lapses

                    
	 
      	 	 
      
	 
      	 	 
      
	 
      	 	 
      
	 
      	 	 
      

            

          

        

      

      

      The lapse
of the Restricted Period for the Restricted Stock Units is cumulative, but shall
not exceed 100%.

       

      (c) Forfeiture and Termination
of Employment.  Unless otherwise determined by the Committee,
if Employee’s employment terminates and he or she thereafter is not an employee
of the Company or any of its subsidiaries (a “Termination,” subject to Section
7(b)(i)), and such Termination is for any reason other than due to death,
permanent disability, Retirement or involuntary termination by the Company for
reasons other than “Cause,” the Restricted Stock Units as to which the
Restricted Period has not lapsed at or before such Termination shall be
forfeited at the time of such Termination.  Accordingly, unless
otherwise determined by the Committee, Employee’s voluntary Termination (other
than due to Retirement) or Termination by the Company for Cause will result in
all Restricted Stock Units as to which the Restricted Period has not lapsed
being immediately forfeited.  Vesting and forfeiture terms applicable
to other terminations are as follows:

       

      
        
          
             

          

           

        

        
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      (i) Death or
Disability.  In the event of Employee’s Termination due to
death or permanent disability, the Restricted Period on the Restricted Stock
Units shall lapse at the time of such Termination (i.e., none of the
Restricted Stock Units will be forfeited).  For purposes of this
Agreement, the existence of a “permanent disability” shall be determined by, or
in accordance with criteria and standards adopted by, the
Committee.  The special disability rules specified in Section 11(g) of
the Plan shall apply to determinations relating to disability
hereunder.  If the Employee is eligible for Retirement, his or her
Termina­tion shall be deemed a Retirement and not a Termination due to
permanent disability.

       

      (ii) Termination Not for
Cause.  In the event of Employee’s Termination due to
involuntary termination by the Company for reasons other than “Cause,” the
Restricted Period on those Restricted Stock Units (if any) as to which the
Restricted Period would have lapsed on the next anniversary of the Grant Date
pursuant to Section 3(b) in the absence of a Termination (but disregarding any
other event occurring prior to that next date) will lapse on an accelerated
basis at the time of such Termination (for example, if Termination occurs 3.5
years after the Grant Date, one additional tranche of the Restricted Stock Units
will become non-forfeitable), so those Restricted Stock Units will not be
forfeited.  The other Restricted Stock Units as to which the
Restricted Period has not lapsed at or before such Termination (i.e., any tranche as
to which the Restricted Period would not have lapsed as scheduled pursuant to
Section 3(b) assuming continued employment through the next anniversary of the
Grant Date) shall be forfeited at the time of such Termination.  If
the Employee is eligible for Retirement, his or her Termination shall be deemed
a Retirement and not a Termination not for Cause.

       

      (iii) Retirement.  In the
event of Employee’s Termination due to Retirement, Employee’s Restricted Stock
Units will not be forfeited upon such Retirement, but instead the Restricted
Period on Employee’s Restricted Stock Units shall remain in effect until the
earlier of the time such Restricted Period shall lapse under Section 3(c) or
5(a) (distribution will remain subject to Section 7, however) or Employee’s
death.  During such post-Retirement period during which the Restricted
Period remains in effect, the Restricted Stock Units shall be immediately
forfeited if Employee: (A) directly or indirectly owns any equity or proprietary
interest in any Competitor (as defined below) of the Company (except for
ownership of shares in a publicly traded company not exceeding five percent of
any class of outstanding securities), or is an employee, agent, director,
advisor, or consultant to or for, any Competitor of the Company in the United
States, whether on his or her own behalf or on behalf of any person, and is
involved in the procuring, sale, marketing, promotion, or distribution of any
product or product lines competitive with any product or product lines of the
Company at the time of Employee’s Retirement, or if Employee assists in,
manages, or supervises any of the foregoing activities, or (B) undertakes any
action to induce or cause any supplier to discontinue any part of its business
with the Company, or (C) attempts to induce any merchant, buyer, or manager or
higher level employee of the Company to terminate his or her employment with the
Company, or (D) discloses confidential or proprietary information of the Company
to any person, firm, corporation, association, or other entity for any reason or
purpose whatsoever, or makes use of any such information for his or her own
purposes, so long as such information has not otherwise been disclosed to the
public or is not otherwise in the public domain except as required by law or
pursuant to administrative or legal process.  A Termination for Cause
shall not be deemed to be a Retirement.

       

      
        
          
             

          

           

        

        
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      (iv) Definitions.

       

      (A) For
purposes of this Agreement, “Cause” shall mean: (a) the Employee’s willful and
continued failure to substantially perform his or her duties with the Company
(other than any such failure resulting from disability or occurring after
issuance by the Employee of a notice of termination), after a written demand for
substantial performance is delivered to the Employee that specifically
identifies the manner in which the Company believes that the Employee has
willfully failed to substantially perform his or her duties, and after the
Employee has failed to resume substantial performance of his or her duties on a
continuous basis within 30 calendar days of receiving such demand; (b) the
Employee’s willfully engaging in conduct (other than conduct covered under (a)
above) which is demonstrably and materially injurious to the Company, monetarily
or otherwise; or (c) the Employee’s having been convicted of a
felony.  For purposes of this subparagraph, no act, or failure to act,
on the Employee’s part shall be deemed “willful” unless done, or omitted to be
done, by the Employee not in good faith and without reasonable belief that the
action or omission was in the best interests of the Company.

       

      (B) For
purposes of this Agreement, “Competitor” shall mean any individual or
organization that procures, sources, markets, promotes, sells or distributes any
products or product lines that are, or are actually planned or under
consideration to be, procured, sourced, marketed, promoted, sold or distributed
by the Company during the Employee’s employment by the Company.

       

      (C) For
purposes of this Agreement, “Retirement” shall mean a retirement at or after
Employee has attained age 62.

       

      (d) Nontransferability.  Restricted
Stock Units and all related rights hereunder shall not be transferable or
assignable by Employee other than by will or the laws of descent and
distribution, and shall not be pledged, hypothecated, or otherwise encumbered in
any way or subject to execution, attachment, lien, or similar
process.

       

      
        	
                4.  

              	
                Employee’s Account,
      Dividend Equivalents and
Adjustments.

              

      

       

      (a) Account.  Restricted
Stock Units are bookkeeping units, and do not constitute ownership of Shares or
any other equity security.  The Company shall maintain a bookkeeping
account for Employee (the “Account”) reflecting the number of Restricted Stock
Units then credited to Employee hereunder as a result of this grant of
Restricted Stock Units and any crediting of additional Restricted Stock Units to
Employee pursuant to payments equivalent to dividends paid on Shares under
Section 4(b) (“Dividend Equivalents”).

       

      (b) Dividend
Equivalents.  Dividend Equivalents shall be credited in
accordance with the provisions of the Deferred Compensation Plan and the
methodology specified by the Company for crediting dividend equivalents on Share
units in effect from time to time thereunder.  It is understood that
the intention hereunder is that Dividend Equivalents be credited in a manner
that provides an economic benefit to Employee equivalent to dividends on
Shares

       

      
        
          
             

          

           

        

        
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      without
undue administrative burdens on the Company.  Accordingly, no interest
will be credited on any cash amount (if any) of such dividend equivalents from
the dividend date to the time of settlement of the Restricted Stock
Units.  All Dividend Equivalents shall be deemed reinvested in
additional Restricted Stock Units and shall be subject to the same risk of
forfeiture, Restricted Period, and other restrictions and payment terms as apply
to the original Restricted Stock Units.  Employee shall not be
entitled to receive actual dividends in respect of Restricted Stock Units prior
to the issuance of Shares in settlement thereof.

       

      (c) Adjustments.  The
number of Restricted Stock Units credited to Employee’s Account shall be
adjusted by the Committee, in accordance with Section 10(c) of the Plan, in
order to preserve without enlarging Employee’s rights with respect to such
Restricted Stock Units.  Any such adjustment shall be made taking into
account any crediting of Restricted Stock Units or cash to the Employee under
Section 4(b) in connection with such transaction or event.

       

      
        	
                5.  

              	
                Change of
      Control.

              

      

       

      (a) Accelerated Expiration of
Restricted Period.  In the event of a Change of Control at a
time when Employee is employed by the Company or any of its subsidiaries (or
simultaneously with Employee’s Termination) and after the Grant Date of the
Restricted Stock Units, the Restricted Period on the Restricted Stock Units
shall lapse immediately prior to the Change of Control (distributions will
remain subject to Section 7(b)(iii), however).

       

      (b) Definitions of Certain
Terms.  For purposes of this Agreement, the following
definitions shall apply:

       

      (i) “Beneficial
Owner,” “Beneficially Owns,” and “Beneficial Ownership” shall have the meanings
ascribed to such terms for purposes of Section 13(d) of the Exchange Act and the
rules thereunder, except that, for purposes of this Section 5, “Beneficial
Ownership” (and the related terms) shall include Voting Securities that a Person
has the right to acquire pursuant to any agreement, or upon exercise of
conversion rights, warrants, options, or otherwise, regardless of whether any
such right is exercisable within 60 days of the date as of which Beneficial
Ownership is to be determined.

       

      (ii) “Change
of Control” means and shall be deemed to have occurred if

       

      (A) any
Person, other than the Company or a Related Party, acquires directly or
indirectly the Beneficial Ownership of any Voting Security of the Company and
immediately after such acquisition such Person has, directly or indirectly, the
Beneficial Ownership of Voting Securities representing 20 percent or more of the
total voting power of all the then-outstanding Voting Securities;
or

       

      (B) those
individuals who as of the Grant Date constitute the Board or who thereafter are
elected to the Board and whose election, or nomination for election, to the
Board was approved by a vote of at least two-thirds (2/3) of the directors then
still in office who

       

      
        
          
             

          

           

        

        
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      either
were directors as of the Grant Date or whose election or nomination for election
was previously so approved, cease for any reason to constitute a majority of the
members of the Board; or

       

      (C) there is
consummated a merger, consolidation, recapitalization, or reorganization of the
Company, a reverse stock split of outstanding Voting Securities, or an
acquisition of securities or assets by the Company (a “Transaction”), other than
a Transaction which would result in the holders of Voting Securities having at
least 80 percent of the total voting power represented by the Voting Securities
outstanding immediately prior thereto continuing to hold Voting Securities or
voting securities of the surviving entity having at least 60 percent of the
total voting power represented by the Voting Securities or the voting securities
of such surviving entity outstanding immediately after such Transaction and in
or as a result of which the voting rights of each Voting Security relative to
the voting rights of all other Voting Securities are not
altered;  or

       

      (D) there is
implemented or consummated a plan of complete liquidation of the Company or sale
or disposition by the Company of all or substantially all of the Company’s
assets other than any such transaction which would result in Related Parties
owning or acquiring more than 50 percent of the assets owned by the Company
immediately prior to the transaction.

       

      (iii) “Person”
shall have the meaning ascribed for purposes of Section 13(d) of the Exchange
Act and the rules thereunder.

       

      (iv) “Related
Party” means (a) a majority-owned subsidiary of the Company; or (b) a trustee or
other fiduciary holding securities under an employee benefit plan of the Company
or any majority-owned subsidiary of the Company; or (c) a corporation owned
directly or indirectly by the shareholders of the Company in substantially the
same proportion as their ownership of Voting Securities; or (d) if, prior to any
acquisition of a Voting Security which would result in any Person Beneficially
Owning more than ten percent of any outstanding class of Voting Security and
which would be required to be reported on a Schedule 13D or an amendment
thereto, the Board approved the initial transaction giving rise to an increase
in Beneficial Ownership in excess of ten percent and any subsequent transaction
giving rise to any further increase in Beneficial Ownership; provided, however,
that such Person has not, prior to obtaining Board approval of any such
transaction, publicly announced an intention to take actions which, if
consummated or successful (at a time such Person has not been deemed a “Related
Party”), would constitute a Change of Control.

       

      (v) “Voting
Securities” means any securities of the Company which carry the right to vote
generally in the election of directors.

       

      
        	
                6.  

              	
                Settlement.

              

      

       

      (a) Time of
Settlement.  Settlement of Restricted Stock Units shall occur
within 60 days following the date on which the Restricted Period lapses;
provided, however, that (i) if

       

      
        
          
             

          

           

        

        
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      Employee
made a timely election to defer payment under the Deferred Compensation Plan,
the settlement of the Restricted Stock Units will be made on the applicable date
specified for payment in accordance with the Restricted Stock Units Election
that was filed by Employee under the Deferred Compensation Plan; (ii) settlement
shall be delayed to the extent specified in and in accordance with Section 7,
and (iii), in the case of any tranche of Restricted Stock Units as to which
Employee has become eligible for Retirement before the fixed vesting date (i.e.,
the stated vesting date applicable to such tranche), such RSUs will be settled
within ten days rather than within 60 days (assuming clauses (i) and (ii) do not
apply).  The Company shall settle the Restricted Stock Units by
delivering Shares to Employee equal to the number of Restricted Stock Units that
are payable on the settlement date.  The Company may make delivery of
Shares in settlement of Restricted Stock Units by either delivering one or more
certificates representing such Shares to the Employee, registered in the name of
the Employee (and any joint name, if so directed by the Employee), or by
depositing such Shares into a stock brokerage account maintained for the
Employee (or of which the Employee is a joint owner, with the consent of the
Employee).  If the Company determines to settle Restricted Stock Units
by making a deposit of Shares into such an account, the Company may settle any
fractional Restricted Stock Unit by means of such deposit.  In other
circumstances or if so determined by the Company, the Company shall instead pay
cash in lieu of fractional Shares, on such basis as the Committee or the Board
may determine.  In no event will the Company issue fractional
Shares.

       

      (b) Effect of
Settlement.  Upon settlement of Restricted Stock Units, all
obligations of the Company in respect of such Restricted Stock Units shall be
terminated.

       

      7. Compliance
with Section 409A.

       

      (a)           General.  Notwithstanding
the foregoing, the provisions of this Section 7 will apply in order that the
Restricted Stock Units will comply with Section 409A of the Internal Revenue
Code (the “Code”).  For this purpose, each tranche of Restricted Stock
Units shall be deemed to be a separate payment under Code Section
409A.   The requirements of Code Section 409A and regulations
thereunder shall apply to the extent necessary so that Employee is not subject
to constructive receipt of income under Code Section 409A prior to the actual
distribution of Restricted Stock Units hereunder or to tax penalties under Code
Section 409A.  Other restrictions and limitations under the Deferred
Compensation Plan with respect to distributions apply to electively deferred
Restricted Stock Units subject to Code Section 409A, and if those provisions
apply and are compliant with Code Section 409A, they shall take precedence over
inconsistent provisions of this Section 7.

       

      

      
        
          
             

          

           

        

        
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      (b)           Restrictions on 409A
RSUs.  In the case of any RSUs that constitute a "deferral of
compensation" under Code Section 409A ("409A RSUs"), the following restrictions
will apply:

      

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

      

      (ii)           Six-Month
Delay Rule.  The "six-month delay rule" will apply to 409A RSUs
if these four conditions are met:

      

      
        	
                 
      

              	
                (A)

              	
                Employee
      has a separation from service (within the meaning of Treasury Regulation
      § 1.409A-1(h)).

              

      

      
        	
                 
      

              	
                (B)

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

              

      

      
        
          	
                   
      

                	
                  (C)

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

                
	 	
                  (D)

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

                

        

      

      
        	
                 
      

              	
                 

              

      

      

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

      

      
        	
                 
      

              	
                (E)

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

              

      

      
        	
                 
      

              	
                (F)

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

              

      

      
        	
                 
      

              	
                (G)

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

              

      

      

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

      
        
          
             

          

           

        

        
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                (A)

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

              

      

      
        	
                 
      

              	
                (B)

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

              

      

      

      (c)           Other Compliance
Provisions.  The following
provisions apply to Restricted Stock Units (including, if so specified, non-409A
RSUs):

      

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

      (ii)           If
Employee is entitled under any agreement with the Company to accelerated vesting
of non-409A RSUs upon a Termination for "Good Reason," it is understood that
such Good Reason will be limited to circumstances that qualify under Treasury
Regulation § 1.409A-1(n)(2), and any amendment to such other agreement to
so qualify such definition of Good Reason shall apply to the non-409A RSUs
hereunder.

      (iii)           Any
election to defer settlement of Restricted Stock Units must comply with the
election timing rules under the Deferred Compensation Plan and with election
timing rules under Section 409A.

      (iv)           Any
restriction imposed on 409A RSUs hereunder or under the terms of other documents
solely to ensure compliance with Section 409A shall not be applied to an RSU
that is not a 409A RSU except to the extent necessary to preserve the status of
such RSU as not being a "deferral of compensation" under Section
409A.

      (v)           If
any mandatory term required for 409A RSUs or non-409A RSUs to avoid tax
penalties under Section 409A is not otherwise explicitly provided under this
document or other applicable documents, such term is hereby incorporated by
reference and fully applicable as though set forth at length
herein.

      

       

      7.           Tax
Withholding.

       

      The
Company will withhold from the number of Shares to be delivered upon settlement
a number of whole shares which has a Fair Market Value equal to the mandatory
federal, state and local tax withholding obligation relating to such
settlement.  The Shares withheld will be valued at the Fair Market
Value determined in accordance with procedures for valuing Shares as determined
by the Committee and otherwise in effect at the time of settlement, including
under the Deferred Compensation Plan.

       

      8.           Miscellaneous.

       

      This
Agreement shall be binding upon the heirs, executors, administrators, and
successors of the parties.  This Agreement constitutes the entire
agreement between the parties with respect to the Restricted Stock Units granted
hereby, and supersedes any prior agreements or documents

       

      
        
          
             

          

           

        

        
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      with
respect to such Restricted Stock Units.  No amendment, alteration,
suspension, discontinuation, or termination of this Agreement which may impose
any additional obligation upon the Company or materially and adversely affect
the rights of Employee with respect to the Restricted Stock Units shall be valid
unless in each instance such amendment, alteration, suspension, discontinuation,
or termination is expressed in a written instrument duly executed in the name
and on behalf of the Company and by Employee.

       

      By
accepting this grant of Restricted Stock Units, Employee agrees to the terms of
this Agreement and agrees to be bound by all the terms and provisions of the
Agreement, the Plan (as presently in effect or hereafter amended), and the
Deferred Compensation Plan, and by all decisions and determinations of the
Committee and the Administrator.

       

      
        
          
            
              
                
                  	
                          CHARMING
      SHOPPES, INC.

                        
	
                          BY:
      ______________________                                                                

                        
	
                          Colin
      D. Stern

                        
	
                          Employee
      Vice President

                        
	 
	 
	 
	
                          EMPLOYEE:

                        
	
                           
      

                           

                           

                          _________________________

                        

                

              

            

          

        

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      
        
          
             

          

           

        

        
          10exh10227jan312009.htm

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
10.2.27

    

    Charming
Shoppes, Inc.

    

    

    Compliance
Rules Under Section 409A of the Internal Revenue Code

    (Including
Global Amendment to Certain Outstanding

    Restricted
Stock Units and Performance Shares)

    2008
Revisions

    

    Introduction

    

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

    

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

    

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

    

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

    

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

    

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

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

    

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

    

    
      	
              •  

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

            

    

    
      	
              •  

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

            

    

    
      	
              •  

            	
              A
      Change in Control (as defined) of the
Company

            

    

    

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

    

    Which
RSUs are Deemed To Be 409A RSUs?

    

    RSUs are 409A RSUs in these two
cases:

    

    
      	
              •  

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

            

    

    

    
      	
              •  

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

            

    

    
      	
              o  

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

            

    

    
      	
              o  

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

            

    

    
      	
              o  

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

            

    

    
      	
              o  

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

            

    

    
      	
              o  

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

            

    

    

      

    

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

    

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    

    What
are the Effects of Being 409A RSUs?

    

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

    

    (1)           The  “six-month
delay rule”

    

    
      	
              •  

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

            

    

    
      	
              o  

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

            

    

    
      	
              o  

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

            

    

    
      	
              o  

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

            

    

    
      	
              o  

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

            

    

    
      	
              •  

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

            

    

    
      	
              o  

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

            

    

    
      	
              o  

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

            

    

    
      	
              o  

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

            

    

    
      	
              •  

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

            

    

    
      	
              •  

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

            

    

    

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    (2)           Change in Control
rule:

    

    
      	
              •  

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

            

    

    
      	
              o  

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

            

    

    
      	
              •  

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

            

    

    
      	
              •  

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

            

    

    
      	
              •  

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

            

    

    

    (3)           Separation from
Service

    

    
      	
              •  

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

            

    

    
      	
              o  

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

            

    

    

    (4)           Other
Restrictions.

    

    
      	
              •  

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

            

    

    

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

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

    

    Performance
Share Agreements

    

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

    

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

    

    Global
Amendment to Agreements Governing Restricted Stock Units

    

    

      

    

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

    

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

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

    

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

    

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

    

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

    

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

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

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

    

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

    

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

    

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

    

    

    Approved
by the Board of Directors December 1, 2008

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    
      
         

      

      
        7

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