Severance Agreement for JAMES P. FOGARTY Charming Shoppes, Inc.

Severance Agreement for

JAMES P. FOGARTY

Charming Shoppes, Inc.

APRIL 2, 2009

THIS AGREEMENT is made and entered into as of April 2, 2009 (the “Effective Date”), by and between Charming Shoppes, Inc. (hereinafter referred to as the “Company”) and James P. Fogarty (hereinafter referred to as the “Executive”).

WHEREAS, the Compensation Committee of the Company (the “Committee”) has determined that it is appropriate to provide severance compensation to recruit and retain key executives and to provide incentives to key executives to promote the interests of the Company;

WHEREAS, the Committee has approved the Company entering into severance agreements with certain key executives of the Company; and

WHEREAS, the Executive is a key executive of the Company.

NOW THEREFORE, to assure the Company that it will have the continued dedication of the Executive, and to induce the Executive to remain in the employ of the Company, and for other good and valuable consideration, the Company and the Executive agree as follows:

Article 1. Establishment, Term, and Purpose

This Agreement shall commence on the Effective Date and shall continue in effect for three (3) full years (i.e., until the day before the third anniversary of the Effective Date).  However, at the end of the first year of such three (3) year period and at the end of each additional year thereafter, the term of this Agreement shall be extended automatically for one (1) additional year, unless the Committee delivers written notice six (6) months prior to the end of the first year of such term, or extended term, to the Executive, that the Agreement will not be extended.  In such case, the Agreement will terminate at the end of the term, or extended term, then in progress.  However, in the event a Change in Control occurs during the original or any extended term, this Agreement will remain in effect for not less than the longer of: (i) twenty-four (24) months beyond the month in which such Change in Control occurs; or (ii) until all obligations of the Company hereunder have been fulfilled, and until all benefits required hereunder have been paid to the Executive.

Article 2. Definitions

Whenever used in this Agreement, the following terms shall have the meanings set forth below and, when the meaning is intended, the initial letter of the word is capitalized.

2.1 “Base Salary” means the salary of record paid to the Executive as annual salary, excluding amounts received under incentive or other bonus plans, whether or not any such salary or other amounts are deferred.

2.2 “Beneficial Owner” shall have the meaning ascribed to such term in Rule 13d-3 of the General Rules and Regulations under the Exchange Act and shall include related terms such as “Beneficial Ownership.”

2.3 “Benefit Period ” means the period as provided in Section 3.3 herein with respect to which the Executive receives severance compensation.

2.4 “Beneficiary” means the persons or entities designated or deemed designated by the Executive pursuant to Section 9.2 herein.

2.5 “Board” means the Board of Directors of the Company.

2.6 “Cause” means: (a) the Executive’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 Executive of a Notice of Termination for Good Reason), after a written demand for substantial performance is delivered to the Executive that specifically identifies the manner in which the Company believes that the Executive has willfully failed to substantially perform his or her duties, and after the Executive has failed to resume substantial performance of his or her duties on a continuous basis within thirty (30) calendar days of receiving such demand; (b) the Executive’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 Executive’s having been convicted of a felony.  For purposes of this subparagraph, no act, or failure to act, on the Executive’s part shall be deemed “willful” unless done, or omitted to be done, by the Executive not in good faith and without reasonable belief that the action or omission was in the best interests of the Company.

2.7 “Change in Control” of the Company shall be deemed to have occurred as of the first day after the Effective Date that any one or more of the following conditions is satisfied:

However, in no event shall a Change in Control be deemed to have occurred, with respect to the Executive, if the Executive is part of a purchasing group which consummates the Change in Control transaction. The Executive shall be deemed “part of a purchasing group” for purposes of the preceding sentence if the Executive is an equity participant in the purchasing company or group (except for: (i) passive ownership of less than three percent (3%) of the stock of the purchasing company; or (ii) ownership of equity participation in the purchasing company or group which is otherwise not significant, as determined prior to the Change in Control by a majority of the nonemployee continuing Directors).

2.8 “COBRA Benefits” shall refer to continued group health insurance benefits under Sections 601-607 of the federal Employee Retirement Income Security Act of 1974, as amended.

2.9 “Code” means the United States Internal Revenue Code of 1986, as amended.

2.10 “Committee” means the Compensation Committee of the Board or any other committee appointed by the Board to perform the functions of the Compensation Committee.

2.11 “Company” means Charming Shoppes, Inc., a Pennsylvania corporation, or any successor thereto as provided in Article 9 herein.  If the Executive is an officer of Charming Shoppes of Delaware, Inc. and/or any other subsidiary, direct or indirect, of Charming Shoppes, Inc. only, or an officer of any or all of  Charming Shoppes of Delaware, Inc., Charming Shoppes, Inc., and/or any other subsidiary, direct or indirect, of Charming Shoppes, Inc., the word "Company" shall be deemed to include not only Charming Shoppes, Inc. but also Charming Shoppes of Delaware, Inc., and/or such other subsidiary, direct or indirect, of Charming Shoppes, Inc., as applicable, with respect to employment matters, including termination of employment, where appropriate.  References to the "Company" with respect to a Change in Control and matters incidental to the determination of a Change in Control relate only to Charming Shoppes, Inc.

2.12 “Disability” means complete and permanent inability by reason of illness or accident to perform the duties of the occupation at which the Executive was employed when such disability commenced.

2.13 “Effective Date” means the date of this Agreement set forth above.

2.14 “Effective Date of Termination” means the date of termination of active employment with the Company.

2.15 “Exchange Act” means the United States Securities Exchange Act of 1934, as amended.

2.16 “Good Reason” shall mean, without the Executive’s express written consent, the occurrence of any one or more of the following:

Notwithstanding the foregoing, the Executive shall not have Good Reason for termination if, within sixty (60) days after the date on which the Executive gives a Notice of Termination, as provided in Section 3.8, the Company corrects the action or failure to act that constitutes the grounds for termination for Good Reason as set forth in the Executive’s Notice of Termination.  If the Company does not correct the action or failure to act, the Executive must terminate his or her employment within thirty (30) days after the end of the cure period, in order for the termination to be considered a Good Reason termination.  The existence of Good Reason shall not be affected by the Executive’s temporary incapacity due to physical or mental illness not constituting a Disability.

2.17 “Notice of Termination” shall mean a written notice which shall indicate the specific termination provision in this Agreement relied upon, and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated.

2.18 “Qualifying Termination” means any of the events described in Section 3.2 herein, the occurrence of which triggers the payment of Severance Benefits hereunder.

2.19 “Related Party” means (a) a majority-owned subsidiary of the Company; or (b) a trustee or other fiduciary holding securities under an employment plan of the Company or any majority-owned subsidiary; 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.

2.20 “Retirement” means the Executive’s voluntary termination of employment in a manner which qualifies the Executive to receive immediately payable retirement benefits under the Company’s tax-qualified retirement plan or under the successor or replacement of such retirement plan if it is then no longer in effect.  The term “Retirement” shall not mean a termination of the Executive’s employment under circumstances that constitute Good Reason or that constitute an involuntary termination of the Executive’s employment by the Company.

2.21 “Separation Pay Limitation” means the lesser of (i) two (2) times the Executive's then annual compensation or (ii) two (2) times the limit on compensation then set forth in Section 401(a)(17) of the Code, as determined for purposes of the “separation pay” exception under Section 409A of the Code.

2.22 “Severance Benefits” means the payment of severance compensation as provided in Section 3.4 herein.

2.23 “Three-Year Average Bonus” means the Bonus Percentage (defined below) multiplied by the Executive’s target annual cash bonus in effect for the fiscal year in which the Effective Date of Termination occurs.  The Bonus Percentage is calculated as the average of the following percentages for each of the three (3) fiscal years preceding the Effective Date of Termination:  (i) the annual cash bonus paid to the Executive for the fiscal year, divided by (ii) the Executive’s target annual cash bonus for the fiscal year.  If the Executive has been employed for less than three (3) fiscal years at the Date of Termination, the average bonus will be based on the completed fiscal years from the date the Executive commenced employment with the Company to the Executive’s Date of Termination.

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

Article 3. Severance Benefits

3.1 Right to Severance Benefits.   The Executive shall be entitled to receive from the Company Severance Benefits, as described in Section 3.4 herein, if there has been a Qualifying Termination and a Notice of Termination for a Qualifying Termination has been delivered, provided the Executive executes and does not revoke a written release and waiver of claims, in form and substance acceptable to the Company (the “Release”), of any and all claims against the Company and all related parties with respect to all matters arising out of the Executive’s employment by the Company, or the termination thereof (other than claims based upon any severance entitlements under the terms of this Agreement or entitlements under any plans or programs of the Company under which Executive has accrued a benefit).

The Executive shall not be entitled to receive Severance Benefits if the Executive’s employment is terminated for Cause, or if his or her employment with the Company ends due to death, Disability, or Retirement or due to a voluntary termination of employment by the Executive without Good Reason.

3.2 Qualifying Termination.   The occurrence of any one or more of the following events (as evidenced by a Notice of Termination) shall be considered a Qualifying Termination under this Agreement:

3.3 Benefit Period.   In the event of a Qualifying Termination, the Executive will receive Severance Benefits with respect to the Benefit Period.  The Benefit Period shall in all events be twenty-four (24) months.

3.4 Severance Benefits.   In the event the Executive becomes entitled to receive Severance Benefits as provided in Sections 3.1 and 3.2 herein, the Executive shall receive the following Severance Benefits: