After much deliberation, Charlie finally asks Alice Kinnian out to a movie and dinner to celebrate his promotion at work. Strongly attracted to his beautiful teacher, Charlie feels painfully nervous throughout the movie. Miss Kinnian admires Charlie's progress and potential, but she still worries that Charlie may be hurt in the end. Charlie tries to express his intense attraction, but he fumbles like a clumsy adolescent. Male-female relationships confuse him, and he feels rejected when Alice avoids his romantic advances. Though disappointed, Charlie resolves to give Alice a good-night kiss on their next date. Charlie's sexual feelings for Alice reappear in his dreams; pleasant visions of kisses and caresses soon warp into a bloody nightmare about a knife. Free association allows Charlie to remember how he was punished for peeking into the bathroom keyhole during his sister's bath as a child.
At Donner's Bakery, Charlie makes the astonishing discovery that Gimpy has been stealing from Mr. Donner by undercharging regular customers and splitting the remaining balance, keeping half and giving the other half to the customer. Emotionally conflicted, Charlie does not know whether to expose Gimpy or to overlook the theft. Mr. Donner deserves the truth, yet Gimpy has a family to support and Charlie does not want Gimpy to lose his job. Even worse, Charlie realizes that Gimpy used him as a tool in the theft during deliveries; Charlie had been made an unwitting accomplice. Charlie brings his moral dilemma to Alice, but she advises him to follow his own instincts. Finding a compromise, Charlie corners Gimpy and hints that he knows of Gimpy's cheating. If Gimpy stops, Mr. Donner will never have to know. Gimpy grudgingly complies.
Charlie's mind surpasses normal intelligence. It takes him merely seconds to absorb complex Calculus and ancient languages, and he now views students and professors in the college cafeteria as childish and elementary. Even Alice Kinnian seems less like a goddess in Charlie's estimation. Attending a concert in Central Park with Alice, Charlie again feels ill at the first signs of intimacy. He panics and imagines that someone is watching him. During therapy, Dr. Strauss explains these hallucinations as signs that Charlie is still an adolescent; he is sexually immature and not yet ready for a relationship.
Afraid of Charlie's unexplained intellectual boom, Charlie's agitated coworkers force Mr. Donner to fire him from the bakery. Devastated, Charlie realizes that, "It had been all right as long as they could laugh at me and appear clever at my expense, but now they were feeling inferior to the moron. I began to see that by my astonishing growth I had made them shrink and emphasized their inadequacies. I had betrayed them, and they hated me for it." PR 10, pg. 74 Alice tries to comfort Charlie, but nausea and painful childhood memories prevent Charlie from enjoying their physical closeness.
