Document:

exhibit10-1aug252008.htm

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
10.1

    

    

     

    STOCK
PURCHASE AGREEMENT

     

    dated as
of

     

    August
25, 2008

     

    by and
between

     

    CROSSTOWN
TRADERS, INC.

     

    NORM
THOMPSON OUTFITTERS, INC.

     

    CHARMING
SHOPPES, INC.

     

    and

     

    THE OTHER
PERSONS LISTED ON THE SIGNATURE PAGES HERETO

     

    

     

    
      
        
           

        

         

      

      
         

        
          

        

      

      
         

        
          TABLE
OF CONTENTS

          

        

      

    

    
      	 	 	      
              Page

            
	
              Section 1.

            	
              DEFINITIONS

            	
              1

            
	
              1.1

            	
              Definitions

            	
              1

            
	
              Section
      2.

            	
              PURCHASE
      AND SALE OF SHARES

            	
              10

            
	
              2.1

            	
              Purchase
      and Sale of Shares

            	
              10

            
	
              2.2

            	
              Closing

            	
              10

            
	
              2.3

            	
              Payment
      of Indebtedness

            	
              11

            
	
              2.4

            	
              Assignment
      and Assumption

            	
              11

            
	
              Section
      3.

            	
              PURCHASE
      PRICE ADJUSTMENT

            	
              12

            
	
              3.1

            	
              Estimated
      Closing Outstanding Checks and Estimated Closing CTI Borne
      Expenses

            	
              12

            
	
              3.2

            	
              Closing
      Statement

            	
              12

            
	
              3.3

            	
              Post-Closing
      Adjustment

            	
              13

            
	
              3.4

            	
              Assumption
      of CTI Borne Expenses

            	
              14

            
	
              Section
      4.

            	
              REPRESENTATIONS
      AND WARRANTIES REGARDING CTI

            	
              14

            
	
              4.1

            	
              Organization
      and Good Standing

            	
              14

            
	
              4.2

            	
              Power
      and Authorization

            	
              15

            
	
              4.3

            	
              No
      Conflicts

            	
              15

            
	
              4.4

            	
              Ownership
      of the Shares

            	
              16

            
	
              4.5

            	
              Brokers

            	
              16

            
	
              Section
      5.

            	
              REPRESENTATIONS
      AND WARRANTIES  REGARDING THE COMPANY AND
      SUBSIDIARIES

            	
              16

            
	
              5.1

            	
              Organization
      and Good Standing

            	
              16

            
	
              5.2

            	
              No
      Conflicts

            	
              16

            
	
              5.3

            	
              Capitalization

            	
              17

            
	
              5.4

            	
              Compliance
      with Laws

            	
              18

            
	
              5.5

            	
              Litigation

            	
              18

            
	
              5.6

            	
              Financial
      Statements

            	
              18

            
	
              5.7

            	
              Inventory

            	
              19

            
	
              5.8

            	
              Absence
      of Certain Changes and Events

            	
              20

            
	
              5.9

            	
              Real
      Property

            	
              22

            
	
              5.10

            	
              Personal
      Property; Bank Accounts

            	
              22

            
	
              5.11

            	
              Material
      Contracts

            	
              22

            
	
              5.12

            	
              Insurance

            	
              24

            
	
              5.13

            	
              Intellectual
      Property

            	
              24

            
	
              5.14

            	
              Suppliers

            	
              26

            
	
              5.15

            	
              Labor
      Matters

            	
              26

            
	
              5.16

            	
              Employee
      Benefits

            	
              27

            
	
              5.17

            	
              Officers
      and Employees

            	
              28

            
	
              5.18

            	
              Environmental
      Matters

            	
              29

            
	
              5.19

            	
              Sufficiency
      of the Assets

            	
              31

            
	
              5.20

            	
              Brokers

            	
              31

            
	
              Section
      6.

            	
              REPRESENTATIONS
      AND WARRANTIES OF BUYER

            	
              31

            
	
              6.1

            	
              Organization
      and Good Standing

            	
              31

            
	
              6.2

            	
              Power
      and Authorization

            	
              31

            
	
              6.3

            	
              No
      Conflicts

            	
              32

            
	
              6.4

            	
              No
      Reliance

            	
              32

            
	
              6.5

            	
              Brokers

            	
              32

            
	
              6.6

            	
              Financing

            	
              33

            
	
              6.7

            	
              Disclaimer
      Regarding Projections

            	
              33

            
	
              6.8

            	
              No
      Additional Representations

            	
              33

            
	
              Section
      7.

            	
              COVENANTS
      OF CTI

            	
              33

            
	
              7.1

            	
              Conduct
      of Business Pending Closing

            	
              33

            
	
              7.2

            	
              Negative
      Covenants Pending Closing

            	
              34

            
	
              7.3

            	
              Governmental
      Authorizations; Consents

            	
              36

            
	
              7.4

            	
              Access
      to Information

            	
              37

            
	
              7.5

            	
              Confidential
      Information

            	
              38

            
	
              7.6

            	
              Non-Solicitation

            	
              39

            
	
              7.7

            	
              Elimination
      of Intercompany Accounts

            	
              39

            
	
              7.8

            	
              Exclusivity

            	
              39

            
	
              7.9

            	
              Financial
      Information

            	
              40

            
	
              7.10

            	
              Maintenance
      of Insurance Policies

            	
              40

            
	
              Section
      8.

            	
              COVENANTS
      OF BUYER

            	
              40

            
	
              8.1

            	
              Confidential
      Information

            	
              40

            
	
              8.2

            	
              Governmental
      Authorizations

            	
              42

            
	
              8.3

            	
              Notice
      of Breach; Failure to Satisfy Closing Condition

            	
              42

            
	
              8.4

            	
              Non-Solicitation

            	
              42

            
	
              Section
      9.

            	
              ADDITIONAL
      COVENANTS OF BUYER, THE COMPANY AND CTI

            	
              42

            
	
              9.1

            	
              Further
      Assurances

            	
              42

            
	
              9.2

            	
              Certain
      Filings and Consents

            	
              43

            
	
              9.3

            	
              Public
      Announcements

            	
              43

            
	
              9.4

            	
              Excluded
      Subsidiaries and Excluded Assets

            	
              43

            
	
              9.5

            	
              Transition
      Services

            	
              44

            
	
              9.6

            	
              Mutual
      Release

            	
              44

            
	
              Section
      10.

            	
              TAX
      MATTERS

            	
              45

            
	
              10.1

            	
              Tax
      Representations of CTI

            	
              45

            
	
              10.2

            	
              Tax
      Covenants of CTI and the Company

            	
              46

            
	
              10.3

            	
              Tax
      Indemnification

            	
              46

            
	
              10.4

            	
              Tax
      Contest

            	
              47

            
	
              10.5

            	
              Tax
      Sharing Agreements

            	
              48

            
	
              10.6

            	
              Transfer
      Taxes

            	
              48

            
	
              10.7

            	
              Section
      338(h)(10) Election

            	
              48

            
	
              10.8

            	
              Purchase
      Price Allocation

            	
              48

            
	
              Section
      11.

            	
              EMPLOYEE
      BENEFITS

            	
              49

            
	
              11.1

            	
              Listed
      Employees; Transferred Employees

            	
              49

            
	
              11.2

            	
              Comparability
      of Benefits

            	
              49

            
	
              11.3

            	
              Welfare
      Plans

            	
              50

            
	
              11.4

            	
              Service
      Credit

            	
              50

            
	
              11.5

            	
              Rollovers
      and Transfers

            	
              50

            
	
              11.6

            	
              Continuation
      Coverage

            	
              51

            
	
              11.7

            	
              Retained
      Liabilities

            	
              51

            
	
              11.8

            	
              Paid
      Time Off

            	
              52

            
	
              11.9

            	
              Third
      Party Beneficiaries; Other Limitations

            	
              52

            
	
              Section
      12.

            	
              CLOSING
      CONDITIONS

            	
              52

            
	
              12.1

            	
              Conditions
      to Obligation of Buyer

            	
              52

            
	
              12.2

            	
              Conditions
      to Obligation of CTI

            	
              53

            
	
              12.3

            	
              Frustration
      of Closing Conditions

            	
              54

            
	
              Section
      13.

            	
              TERMINATION
      AND ABANDONMENT

            	
              54

            
	
              13.1

            	
              Termination

            	
              54

            
	
              13.2

            	
              Procedure
      for Termination

            	
              55

            
	
              Section
      14.

            	
              SURVIVAL;
      INDEMNIFICATION

            	
              56

            
	
              14.1

            	
              Survival

            	
              56

            
	
              14.2

            	
              Indemnification

            	
              56

            
	
              14.3

            	
              Procedures

            	
              57

            
	
              14.4

            	
              Limitation
      on Damages

            	
              59

            
	
              14.5

            	
              Assignment
      of Claims

            	
              59

            
	
              14.6

            	
              Exclusivity

            	
              59

            
	
              14.7

            	
              Limitation
      on Liability

            	
              60

            
	
              Section
      15.

            	
              MISCELLANEOUS

            	
              60

            
	
              15.1

            	
              Costs
      and Expenses

            	
              60

            
	
              15.2

            	
              Notices

            	
              60

            
	
              15.3

            	
              Assignment

            	
              61

            
	
              15.4

            	
              Amendment,
      Modification and Waiver

            	
              61

            
	
              15.5

            	
              Governing
      Law

            	
              61

            
	
              15.6

            	
              Waiver
      of Jury Trial

            	
              62

            
	
              15.7

            	
              Consent
      to Jurisdiction

            	
              62

            
	
              15.8

            	
              Section
      Headings and Defined Terms

            	
              62

            
	
              15.9

            	
              Severability

            	
              63

            
	
              15.10

            	
              Counterparts;
      Third-Party Beneficiaries

            	
              63

            
	
              15.11

            	
              Entire
      Agreement

            	
              63

            
	
              15.12

            	
              Waiver
      of Conflicts Regarding Representation; Nonassertion of Attorney-Client
      Privilege

            	
              63

            
	
              15.13

            	
              Orchard
      Guaranty

            	
              64

            
	
              15.14

            	
              Parent
      Guaranty

            	
              65

            

    

    

    
      
        
           

        

         

      

      
         

        
          

        

      

      
         

        
           

        

      

    

    STOCK PURCHASE
AGREEMENT

     

    THIS
STOCK PURCHASE AGREEMENT, dated as of August 25, 2008 (this “Agreement”), is made
by and between CROSSTOWN TRADERS, INC., a Delaware corporation (“CTI”), CHARMING
SHOPPES, INC., a Delaware corporation (“Parent”), NORM
THOMPSON OUTFITTERS, INC., a Delaware corporation (the “Buyer”), and the
other parties listed on the signature pages hereto.  Certain terms
used herein are defined in Section 1.1
hereof.

     

    BACKGROUND

     

    CTI is
the record and beneficial owner of all of the outstanding shares of capital
stock of the Company.

     

    The
parties hereto desire to provide for the acquisition by Buyer of the Company
through the sale by CTI to Buyer of all the outstanding shares of capital stock
of the Company and for certain other matters, all on the terms and conditions
set forth in this Agreement.

     

    NOW,
THEREFORE, in consideration of the premises and the mutual representations,
warranties, covenants and agreements herein contained and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto, intending to be legally bound, agree as
follows:

     

     

    SECTION
1.  DEFINITIONS

     

    1.1 Definitions.  

     

    (a) The
following terms, as used herein, have the following meanings:

     

    “Acquired Assets” means those
assets, agreement, contracts and other items identified or described on Schedule 1.1A
hereto.

     

    “Accrued Vacation Amount” means
the lesser of (a) the product of (i) any liability for accrued vacation,
personal days, sick pay and other paid time off times (ii) 0.80, and
(b) $200,000.

     

    “Affiliate” means, with respect
to any Person, any Person directly or indirectly controlling, controlled by, or
under common control with such other Person.  For purposes of this
definition, “control,”
when used with respect to any Person, means the power to direct the management
and policies of such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise, and the terms “controlling” and “controlled” have correlative
meanings.

     

    “Assumed Liabilities” means (i)
any Liabilities resulting from, arising out of, relating to, in the nature of,
or caused by any Acquired Asset, (ii) any Liabilities included in the
calculation of the Final Closing CTI Borne Expenses that are assumed by the
Company and its Subsidiaries pursuant to Section 3.4, and
(iii) any Liabilities for accrued vacation, personal

     

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

    days,
sick pay and other paid time off that are assumed by the Company pursuant to
Section 3.4.

     

    “Business Day” means a day
other than a Saturday, Sunday or other day on which commercial banks in New
York, New York are authorized or required by Law to close.

     

    “Closing CTI Borne Expenses”
means the amount of unpaid CTI Borne Expenses as of the Closing.

     

    “Closing Outstanding Checks”
means the amount of Outstanding Checks as of the Closing.

     

    “Closing Payment” means
$35,000,000.

     

    “Company” means Arizona Mail
Order Company, Inc., a Delaware corporation.

     

    “Consent” means any approval,
consent, license, permit, franchise, grant, waiver or other
authorization.

     

    “CTI Borne Expenses” means,
with respect to the Company and its Subsidiaries, the sum of (i) the amount of
Past Due Payables (less the amount of any vendor credits (not to exceed $100,000
in the aggregate for all vendor credits) which may be used by the Company and
its Subsidiaries to reduce amounts otherwise due and owing under such Past Due
Payables to the applicable vendors) in excess of $250,000 in the aggregate, (ii)
the amount of all unprocessed customer returns/refunds that have not been
promptly processed in the ordinary course of business, (iii) any
change-of-control, retention or similar payment which is triggered in whole or
in part by the transactions contemplated by this Agreement, (iv) (A) any
liability for accrued payroll, (B) any liability for accrued bonus payments, (C)
the Accrued Vacation Amount, and (D) any other liability for accrued employee
compensation, (v) any liability for accrued severance payments, (vi) any
liability for accrued restructuring costs, (vii) any liability for Taxes, and
(viii) the amount of all payables due to Direct Marketing Services,
Inc.

     

    “Encumbrance” means any
mortgage, deed of trust, pledge, lien, security interest, charge, encumbrance,
community property interest or restriction on use, voting, transfer or receipt
of income.

     

    “Environmental Laws” means all
Laws concerning or relating to the protection of the environment and human
health as it relates to the environment.

     

    “Excluded Assets” means those
assets, agreements, contracts and other items identified or described on Schedule 1.1B
hereto.

     

    “Excluded Liabilities” any
Liabilities resulting from, arising out of, relating to, in the nature of, or
caused by any Excluded Asset or the Excluded Subsidiaries (including any
Liabilities relating to the Lane Bryant business).

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    “Excluded Subsidiaries” means
Home Etc., Inc., a Delaware corporation, and Old Pueblo Traders #8257, LLC, an
Arizona limited liability company.

     

    “GAAP” means United States
generally accepted accounting principles applied consistently with those used to
prepare the Financial Statements.

     

    “Governmental Body” means any
foreign or United States federal, state, local, municipal or other government,
agency, instrumentality or authority.

     

    “Governmental Authorization”
means any Consent issued, granted, given, or otherwise made available by or
under the authority of any Governmental Body or pursuant to any
Laws.

     

    “Hazardous Substance” means any
substance governed or regulated under any Environmental Laws, including any
substance which is: (i) petroleum, asbestos or asbestos-containing
material, or polychlorinated biphenyls; (ii) defined, designated or listed
as a “Hazardous Substance” pursuant to Sections 307 or 311 of the Clean Water
Act, 33 U.S.C. §§ 1317, 1321, Section 101(14) of CERCLA, 42 U.S.C.
§ 9601; (iii) listed in the United States Department of Transportation
Hazardous Material Tables, 49 C.F.R. § 172.101; or (iv) defined,
designated or listed as a “Hazardous Waste” under Section 1004(5) of the
Resource and Conservation and Recovery Act, 42 U.S.C. 6903(5).

     

    “Indebtedness” of a Person
means (i) any indebtedness of that Person for borrowed money or issued in
substitution for or exchange of indebtedness for borrowed money, (ii) any
indebtedness of that Person evidenced by any note, bond, debenture or other debt
security, (iii) any indebtedness for the deferred purchase price of property or
services with respect to which that Person is liable, contingently or otherwise,
as obligor or otherwise (other than trade payables or other accruals incurred in
the ordinary course of business), (iv) any commitment by which that Person
assures a creditor against loss (including, without limitation, contingent
reimbursement Liability with respect to letters of credit), (v) any indebtedness
guaranteed in any manner by that Person (including, without limitation,
guarantees in the form of an agreement to repurchase or reimburse), (vi) any
Liabilities under capitalized leases with respect to which that Person is
liable, contingently or otherwise, as obligor, guarantor or otherwise, (vii) any
indebtedness secured by an Encumbrance on that Person’s assets, (viii) any
off-balance sheet financing of that Person (other than operating leases), (ix)
any accrued and unpaid interest on, and any prepayment premiums, penalties or
similar contractual charges in respect of, any of the foregoing obligations
computed as though payment is being made in respect thereof on the Closing Date,
and (x) any Liabilities incurred by that Person (including, in the case of the
Company and its Subsidiaries, any fees, costs and expenses incurred on behalf of
CTI and any fees payable to Banc of America Securities LLC and Lehman Brothers,
Inc.) in connection with the negotiation of this Agreement, the other
Transaction Documents, the performance of such Person’s and its pre-Closing
Affiliates’ obligations hereunder and thereunder, and the consummation of the
transactions contemplated hereby and thereby.

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    “Knowledge” means the actual
knowledge of (i) with respect to CTI, any one or more of Eric Specter and
Edwin Neumann and (ii) with respect to Buyer, any one or more of Neale
Attenborough, Dave Walde and Joshua Olshansky.

     

    “Laws” means any law (including
principles of common law), constitution, statute, regulation, ordinance,
certificate, judgment, order, award or other decision or requirement of any
Governmental Body.

     

    “Liability” means any
liability, debt, obligation, assessment, fine, claim, cause of action or other
loss of any kind or nature whatsoever, whether asserted or unasserted, absolute
or contingent, known or unknown, accrued or unaccrued, liquidated or
unliquidated, and whether due or to become due and regardless of when
asserted.

     

    “Material Adverse Effect” means
any change, effect, event or condition that, individually or in the aggregate,
has had or would be reasonably likely to have a material adverse effect on
(i) the business, operations, results of operations, assets or financial
condition of the Company and the Subsidiaries, taken as a whole, or
(ii) the ability of CTI to consummate the transactions contemplated by this
Agreement or any other Transaction Document; provided, however, that any such
effect to the extent attributable to any change, effect, event or condition
(a) generally applicable to the industries and markets in which the Company
and the Subsidiaries operate and not disproportionately affecting the Company or
its Subsidiaries, (b) generally applicable to financial, banking or securities
markets, (c) relating to any change in applicable Law, in GAAP or in any
interpretation thereof occurring after the date hereof, (d) expressly
contemplated by the terms of this Agreement or any other Transaction Document or
approved by Buyer in writing, (e) resulting from the engagement by the
United States in hostilities, whether or not pursuant to the declaration of a
national emergency or war, or resulting from the occurrence of any military or
terrorist attack upon the United States, (f) resulting from seasonal
fluctuations affecting the Company or the Subsidiaries or the apparel retail
industry, or (g) resulting from the execution of this Agreement or any other
Transaction Document or the public announcement of the transactions contemplated
hereby or thereby, in any such case, shall not, in and of
itself,  constitute a “Material Adverse
Effect.”  Notwithstanding the foregoing, CTI may include in the
Disclosure Schedule disclosure with respect to items that would not have a
Material Adverse Effect within the meaning of the previous sentence, and this
inclusion shall not be deemed to be an acknowledgement by CTI that these items,
or any of them, would have a Material Adverse Effect or further change, amend or
define the meaning of the term Material Adverse Effect for purposes of this
Agreement.

     

    “Net Tax Benefit” means, with
respect to any indemnification claim, the actual reduction in the aggregate
federal and state income tax liability in the taxable period of the loss or
other adjustment for which the indemnification is payable, calculated on a with
and without basis.

     

    “Orchard” means, collectively,
Draper’s & Damon’s, Inc., a California corporation, Haband Company LLC, a
Delaware limited liability company, Johnny Appleseed’s Inc., a Massachusetts
corporation, and Blair LLC, a Delaware limited liability company, Orchard Brands
Corporation, a Delaware corporation.

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    “Outstanding Checks” the amount
of all checks written by the Company or its Subsidiaries but not cashed prior to
Closing (including, without limitation, in respect of accounts payable and
customer refunds).

     

    “Past Due Payables” means the
amount of all payables of the Company and its Subsidiaries (including any
accounts payable, notes payable and any disputed payables) and accrued expenses,
in each case, that are past due.

     

    “Permitted Encumbrances” means
(i) Encumbrances for Taxes and other governmental charges and assessments
that are not yet due and payable, (ii) Encumbrances of landlords and
Encumbrances of carriers, warehousemen, mechanics and materialmen and other like
Encumbrances arising in the ordinary course of business, (iii) other
non-consensual Encumbrances or imperfections of title to or on property that are
not material in amount and do not materially detract from the value of or impair
in any material respect the existing use of the property affected by such
Encumbrance or imperfection, (iv) all Encumbrances of record or identified in
any title reports obtained by Buyer or delivered to Buyer by CTI prior to the
date of this Agreement, (v) all local and other building and zoning Laws now or
hereafter in effect relating to or affecting any real property, (vi) all
leases, subleases, licenses and occupancy and/or use agreements affecting any
real property (or any portion thereof) which are identified on the Disclosure
Schedule, (vii) all service contracts and agreements affecting any real
property which are identified on the Disclosure Schedule, or
(viii) Encumbrances reflected in the contracts identified in Section 5.11 of the
Disclosure Schedule or which are disclosed in the notes accompanying the
Financial Statements.

     

    “Person” means any individual,
corporation (including any non-profit corporation), general or limited
partnership, limited liability company, joint venture, estate, trust,
association, organization, labor union or other entity or Governmental
Body.

     

    “Personally Identifiable Data”
means the names, addresses, email addresses, telephone numbers and fax numbers
of any individuals, or any other data likely to substantially identify any
individual, together with any other information about an individual which is
combined with or linked to any of the foregoing information, including but not
limited to, customer lists, mailing lists, telemarketing lists, email lists,
customer or prospective customer databases, credit reports, data regarding
purchases of identified customers, and databases or records of website usage by
users who are identified by any of the foregoing information.

     

    “Purchase Price” means the
Closing Payment, as finally adjusted in accordance with Section
3.

     

    “Related Party” means (i) CTI,
(ii) any Affiliate of CTI, (iii) any director or officer of CTI or its
Affiliates and (iv) any member of the immediate family of any individual
included in (iii).  For purposes of this definition, the “immediate
family” of an individual includes only the individual’s spouse, parents,
children and siblings.

     

    “Related Party Agreements”
means agreements, contracts, commitments or understandings by and between any
Related Party, on the one hand, and the Company or any

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    Subsidiary,
on the other hand, including, without limitation, any such agreements,
contracts, commitments or understandings pursuant to which a Related Party
provides or receives any information, assets, properties, support or other
services to or from the Company or any Subsidiary (including, but not limited to
accounting, tax, data processing, information technology and legal
services).

     

    “Representative” means with
respect to a particular Person, any director, member, partner, general partner,
limited partner, officer, employee, agent, consultant, advisor, or other
representative of such Person, including legal counsel, accountants, and
financial advisors.

     

    “Response,” “Removal” and “Remedial Action” shall have
the meanings ascribed to them in Sections 101(23)-101(25) of the Comprehensive
Environmental Response, Compensation and Liability Act (“CERCLA”), as amended
by the Superfund Amendments and Reauthorization Act, 42 U.S.C.
§§ 9601(23)-9601(25).

     

    “Software” means all computer
programs (whether in source code or object code form), databases, compilations
and data, and all documentation related to any of the foregoing that is owned,
leased, used or held by, granted to or licensed by the Company or any
Subsidiary.

     

    “Subsidiaries” means Bedford
Fair Apparel, Inc., a Delaware corporation, LM&B Catalog, Inc., a Delaware
corporation, and Monterey Bay Clothing Company, Inc., a Delaware
corporation.

     

    “Tax” means all federal, state,
local or foreign income, gross receipts, windfall profits, severance, property,
production, sales, use, ad valorem, transfer, franchise, capital, paid-up
capital, license, greenmail, excise, franchise, stamp, occupation, premium,
environmental, employment, withholding or other taxes, escheat, unclaimed or
abandoned property, governmental fees or other like assessments, together with
any interest, additions or penalties with respect thereto.

     

    “Tax Returns” means all
reports, returns, statements and forms with respect to Taxes.

     

    “Trade Secrets” means (i) all
customer and supplier lists, pricing and cost information, business and
marketing plans and proposals, and Personally Identifiable Data, and (ii) all
material proprietary formulas, know-how, trade secrets, business methods,
technical data, and inventions, in each case owned, leased, used or held by,
granted to or licensed by the Company or any Subsidiary.

     

    “Transaction Documents” means
this Agreement and all other agreements required to be delivered by any party
hereto pursuant to the terms of this Agreement.

     

    “Transition Period” shall mean
the period commencing on the date of this Agreement and ending on September 15,
2008, during which (i) Buyer shall develop and execute a plan to integrate the
business operations of the Company and its Subsidiaries into the business
operations of Buyer and its Affiliates, (ii) CTI shall cause the Company and the
Subsidiaries to provide Buyer and its Representatives access to certain
information as contemplated by

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    Section 7.4 and (iii)
CTI shall provide, and shall cause its Affiliates to provide, the cooperation in
connection with facilitating the Closing as contemplated by Section
7.9.

     

    “Wachovia Facility” means that
certain Second Amended and Restated Loan and Security Agreement dated as of
July 28, 2005 by and among CTI and certain of its Affiliates and a
syndicate of banks and other financial institutions identified therein,
including Wachovia Bank, National Association as agent for the lenders, as
amended.

     

    (b) Each of
the following terms is defined in the Section set forth opposite such
term:

     

    
      	
              Term

            	
              Section

            
	
              Agreement

            	
              Preamble

            
	
              Assignment
      and Assumption

            	
              2.4(a)

            
	
              Balance
      Sheet

            	
              5.6(a)

            
	
              Business

            	
              5.19

            
	
              Buyer

            	
              Preamble

            
	
              Buyer
      Group Health Plan Effective Date

            	
              11.2

            
	
              Buyer
      Material Adverse Effect

            	
              6.3(c)

            
	
              Buyer
      Plan Effective Date

            	
              11.5

            
	
              Buyer
      Transaction Documents

            	
              6.1

            
	
              Buyer’s
      Representatives

            	
              7.4

            
	
              CERCLA

            	
              1.1

            
	
              Claim

            	
              14.3(a)

            
	
              Closing

            	
              2.2

            
	
              Closing
      Date

            	
              2.2

            
	
              Closing
      Statement

            	
              3.2(a)

            
	
              Code

            	
              5.16(a)

            
	
              Company
      Account

            	
              5.10(b)

            
	
              Company
      Intellectual Property

            	
              5.13(a)

            
	
              Continuation
      Coverage Laws

            	
              11.6

            
	
              Copyrights

            	
              5.13(a)

            
	
              Covered
      Individual

            	
              11.3

            
	
              CTI

            	
              Preamble

            
	
              CTI
      Confidential Information

            	
              8.1(b)

            
	
              Current
      Representation

            	
              15.12(a)

            
	
              Damages

            	
              14.2(a)

            
	
              Defined
      Benefit Plan

            	
              5.16(d)

            
	
              Designated
      Person

            	
              15.12(a)

            
	
              DOL

            	
              5.16(a)

            
	
              Domain
      Registrations

            	
              5.13(a)

            
	
              Election

            	
              10.7

            
	
              Employee
      Benefit Plans

            	
              5.16(a)

            

    

    

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    

    
      	
              Term

            	
              Section

            
	
              Employee
      Pension Benefit Plan

            	
              5.16(c)

            
	
              ERISA

            	
              5.16(a)

            
	
              ERISA
      Affiliate

            	
              5.16(d)

            
	
              Final
      Check Excess

            	
              3.3(d)

            
	
              Final
      Closing Outstanding Checks

            	
              3.3(d)

            
	
              Final
      Closing CTI Borne Expenses

            	
              3.3(d)

            
	
              Financial
      Statements

            	
              5.6(a)

            
	
              Indemnified
      Party

            	
              14.3(a)

            
	
              Indemnifying
      Party

            	
              14.3(a)

            
	
              Independent
      Accounting Firm

            	
              3.2(c)

            
	
              IRS

            	
              10.1(c)

            
	
              Listed
      Employees

            	
              11.1

            
	
              Marks

            	
              5.13(a)

            
	
              Multiemployer
      Plan

            	
              5.16(d)

            
	
              Nasdaq

            	
              7.5(a)

            
	
              Old
      Coverage

            	
              11.2

            
	
              Orchard
      Guaranteed Obligations

            	
              15.13(a)

            
	
              Orchard
      Guaranty

            	
              15.13(a)

            
	
              Orchard
      Post-Closing Guaranteed Obligations

            	
              15.13(b)

            
	
              Orchard
      Post-Closing Guaranty

            	
              15.13(b)

            
	
              Orchard
      Pre-Closing Guaranteed Obligations

            	
              15.13(a)

            
	
              Orchard
      Pre-Closing Guaranty

            	
              15.13(a)

            
	
              Parent

            	
              Preamble

            
	
              Parent
      Guaranteed Obligations

            	
              15.14(a)

            
	
              Parent
      Guaranty

            	
              15.14(a)

            
	
              Patents

            	
              5.13(a)

            
	
              Post-Closing
      Representation

            	
              15.12(a)

            
	
              Potential
      Contributor

            	
              14.5

            
	
              Pre-Closing
      Tax Period

            	
              10.3(a)

            
	
              Purchase
      Price Allocation

            	
              10.8

            
	
              Required
      Amount

            	
              11.2

            
	
              Seller
      Transaction Documents

            	
              4.1

            
	
              Shares

            	
              2.1(a)

            
	
              Straddle
      Period

            	
              10.3(b)

            
	
              Surviving
      Representations and Warranties

            	
              14.1

            
	
              Tax
      Contest

            	
              10.4

            
	
              Terminating
      Buyer Breach

            	
              13.1(d)

            
	
              Terminating
      Seller Breach

            	
              13.1(c)

            

    

    

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    

    
      	
              Term

            	
              Section

            
	
              Third
      Party Claim

            	
              14.3(b)

            
	
              Transferred
      Employees

            	
              11.1

            
	
              Transition
      Services Agreement

            	
              9.5

            
	
              WARN
      Act

            	
              5.15(b)

            
	
              Warranty
      Breach

            	
              14.2(a)

            

    

    

    (c) Except as
otherwise provided or unless the context otherwise requires, whenever used in
this Agreement, (i) any noun or pronoun shall be deemed to include the
plural and the singular, (ii) the use of masculine pronouns shall include
the feminine and neuter, (iii) the terms “include” and “including” shall be
deemed to be followed by the phrase “without limitation,” (iv) the word
“or” shall be inclusive and not exclusive, (v) all references to Sections
refer to the Sections of this Agreement, all references to the Disclosure
Schedule refer to the Disclosure Schedule attached hereto or delivered with this
Agreement, as appropriate, and all references to Exhibits refer to the Exhibits
attached to this Agreement, each of which is made a part of this Agreement for
all purposes, (vi) each reference to “herein” means a reference to “in this
Agreement,” and (vii) accounting terms which are not otherwise defined in
this Agreement shall have the meanings given to them under GAAP; provided,
however, that to the extent that a definition of a term in this Agreement is
inconsistent with the meaning of such term under GAAP, the definition set forth
in this Agreement will control.

     

    (d) Any
matter set forth in any Section of the Disclosure Schedule shall be deemed set
forth in all other Sections to the Disclosure Schedule to the extent the
applicability of such matter to such other Sections is reasonably
apparent.  The inclusion of any information (including dollar amounts)
in any Section of the Disclosure Schedule shall not be deemed to be an admission
or acknowledgment by CTI that such information is material to or outside the
ordinary course of the business of CTI, the Company or any
Subsidiary.  Matters reflected in the Disclosure Schedule are not
necessarily limited to matters required by this Agreement to be reflected in the
Disclosure Schedule.  The information contained in this Agreement, the
Exhibits hereto and the Disclosure Schedule is disclosed solely for purposes of
this Agreement, and no information contained herein or therein shall be deemed
to be an admission by any party hereto to any third party of any matter
whatsoever (including, without limitation, any violation of Law or breach of
contract).

     

    (e) The
provisions of this Agreement shall be construed according to their fair meaning
and neither for nor against any party hereto irrespective of which party caused
such provisions to be drafted.  Each of the parties hereto
acknowledges that it has been represented by an attorney in connection with the
preparation and execution of this Agreement and the other Transaction
Documents.

     

    (f) Unless
expressly provided otherwise, the measure of a period of one month or one year
for purposes of this Agreement shall be that date of the following month or year
corresponding to the starting date, provided that if no corresponding date
exists, the measure shall be that date of the following month or year
corresponding to the next day

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    following
the starting date.  For example, one month following February 18th is
March 18th, and one month following March 31 is May 1.

     

     

    SECTION
2.   PURCHASE AND SALE OF SHARES

     

    2.1 Purchase and Sale of
Shares.  

     

    (a) Upon the
terms and subject to the conditions of this Agreement, at the Closing, CTI shall
sell, transfer and deliver to Buyer, and Buyer shall purchase from CTI, all of
the outstanding shares of Common Stock, par value $0.01 per share, of the
Company (the “Shares”), free and
clear of any Encumbrance (except for restrictions imposed generally by
applicable securities Laws).

     

    (b) Upon the
terms and subject to the conditions of this Agreement, in consideration for
CTI’s delivery of the Shares, Buyer shall pay to CTI the Purchase
Price.

     

    2.2 Closing.  The
closing of the purchase and sale of the Shares (the “Closing”) pursuant to
this Agreement shall take place at the offices of Drinker Biddle &
Reath LLP, One Logan Square, 18th and
Cherry Streets, Philadelphia, PA 19103, commencing at 10:00 A.M., Eastern time,
on a date to be mutually agreed by Buyer and CTI (the “Closing Date”), which
shall be no later than the later of (x) three Business Days after satisfaction
or waiver of the conditions set forth in Section 12, and (y)
September 30, 2008.  Buyer and CTI will work in good faith to effect
the Closing on or prior to the termination of the Transition Period or as soon
as reasonably practicable thereafter.  At the Closing, in addition to
the other actions contemplated elsewhere herein:

     

    (a) CTI shall
deliver to Buyer:

     

    (i) certificates
representing all of the Shares, duly endorsed for transfer or with stock powers
affixed thereto executed in blank in proper form for transfer;

     

    (ii) a
certificate, dated the Closing Date and signed by an authorized person of CTI
(in his or her capacity as such), certifying as to the satisfaction of the
conditions to Closing set forth in Sections 12.1(b) and
(c);

     

    (iii) copies of
the resolutions of the board of directors and sole stockholder of CTI,
authorizing the execution, delivery and performance of this Agreement and the
other Seller Transaction Documents, certified as of the Closing Date by an
authorized person (in his or her capacity as such) of CTI;

     

    (iv) certificates
representing all of the outstanding shares or membership interests of each
Subsidiary (to the extent applicable), registered in the name of the
Company;

     

    (v) the
original corporate seals, minute books and stock transfer and record books of
the Company and each Subsidiary as they exist on the Closing Date;

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    (vi) a
certificate, dated the Closing Date and signed by an authorized person of CTI
(in his or her capacity as such), certifying as to the payment of Indebtedness
and release of Encumbrances pursuant to Section
2.3;

     

    (vii) a copy of
the Assignment and Assumption, duly executed and delivered by each of the
parties thereto; and

     

    (viii) the other
documents and agreements required to be delivered pursuant to Section
12.1.

     

    (b) Buyer
shall deliver to CTI:

     

    (i) an amount
equal to the Closing Payment plus or minus the adjustment provided for in Section 3.1(b) by
wire transfer of immediately available funds to such account or accounts as
shall, at least two Business Days before Closing, be designated by CTI in
writing to Buyer;

     

    (ii) certificates,
dated the Closing Date and signed by an authorized person of Buyer (in their
respective capacities as such), certifying as to the satisfaction of the
conditions to Closing set forth in Sections 12.2(b)
and (c);

     

    (iii) copies of
the resolutions of the board of directors Buyer, authorizing the execution,
delivery and performance by Buyer of this Agreement and the other Buyer
Transaction Documents, certified as of the Closing by an authorized person of
Buyer (in their respective capacities as such); and

     

    (iv) the other
documents and agreements required to be delivered pursuant to Section 12.2.

     

    2.3 Payment of
Indebtedness.  At the Closing, immediately upon receipt of the
Closing Payment (plus or minus the adjustment provided for in Section 3.1(b)), CTI
shall repay all Indebtedness of the Company and its Subsidiaries outstanding
immediately prior to the Closing and shall cause all Encumbrances relating to
such Indebtedness to be released.  At Closing, CTI shall certify as to
the payment of such Indebtedness and the release of such Encumbrances.

     

    2.4 Assignment and
Assumption.  

     

    (a) Prior to
the Closing, the Company, its Subsidiaries, CTI, Parent, and Charming Shoppes of
Delaware, Inc. shall enter into an Assignment and Assumption and Shared Contract
Agreement in the form attached hereto as Exhibit A (the “Assignment and
Assumption”), pursuant to which (i) the Company and its Subsidiaries will
assign the Excluded Assets to CTI or one of its Affiliates (other than the
Company or one of its Subsidiaries); (ii) CTI or one of its Affiliates shall
assume the Excluded Liabilities; (iii) CTI will assign to the Company or its
Subsidiaries the Acquired Assets; (iv) the Company and/or its Subsidiaries shall
assume the Assumed Liabilities described in clause (i) of the definition of
Assumed Liabilities; and (v) the parties thereto will provide one another
certain benefits under their agreements with certain third-party vendors
following the Closing.  The transfer of

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    assets
and assumption of liabilities contemplated by the Assignment and Assumption
shall be consummated prior to the Closing.

     

    (b) If Buyer,
the Company or CTI identifies, prior to Closing or within one year after
Closing, any assets which are owned by CTI and its Affiliates and not included
as part of the Acquired Assets that are related primarily to the operation of
the Business or otherwise reasonably necessary to operate the Business in the
same manner in which it was operated prior to the Closing recognizing that the
parties intend for certain assets to be made available to Buyer, the Company or
its Subsidiaries through the Transition Services Agreement and the Assignment
and Assumption, then CTI shall, and shall cause its Affiliates to, promptly
transfer, convey and/or assign such assets to the Company or its Subsidiaries,
at no additional cost to Buyer; provided, that CTI and its Affiliates shall not
be obligated to transfer, convey and/or assign any such assets that are, or that
primarily relate to, the Excluded Assets.  As a condition to the
assignment of any asset pursuant to this Section this Section 2.4(b), the
Company or one of its Subsidiaries shall assume all Liabilities resulting from,
arising out of, relating to, in the nature of, or caused by such
assets.

     

     

    SECTION
3.   PURCHASE PRICE ADJUSTMENT

     

    3.1 Estimated Closing
Outstanding Checks and Estimated Closing CTI Borne Expenses.

     

    (a) Not less
than one Business Day prior to the Closing Date and following reasonable advance
consultation with Buyer, CTI shall deliver to Buyer a certificate (the “Estimate
Certificate”) of an executive officer of CTI setting forth CTI’s good
faith estimate of (i) the amount of the Closing Outstanding Checks (the “Estimated Closing
Outstanding Checks”) and (ii) the amount of the Closing CTI Borne
Expenses (the “Estimated Closing CTI Borne
Expenses”). The Estimated Closing CTI Borne Expenses set forth on the
Estimate Certificate shall be calculated in accordance with the provisions of
Section
3.2(a).  The amount, if any, by which the Estimated Closing
Outstanding Checks exceeds $2,500,000 is referred to herein as the “Estimated Check
Excess”.

     

    (b) If the
sum of the (i) Estimated Check Excess plus (ii) the Estimated Closing CTI Borne
Expenses exceeds the amount of cash actually in the bank accounts of the Company
and its Subsidiaries at Closing, the amount of such excess shall be subtracted
from the Closing Payment to be made by Buyer pursuant to Section 2.2(b)(i).

     

    3.2 Closing
Statement.

     

    (a) As
promptly as practicable, but no later than 60 days, after the Closing Date, CTI
will cause to be prepared and delivered to Buyer a statement of Closing
Outstanding Checks and Closing CTI Borne Expenses (the “Closing Statement”).
The Closing Statement will be accompanied by a certificate of an executive
officer of CTI specifying that the Closing Statement was prepared in accordance
with the provisions of this Section 3.2(a). The
determination of Closing CTI Borne Expenses shall be made by applying the
principles, policies and practices used in connection with the preparation of
the relevant portions of the Balance Sheet so long as they are in accordance
with GAAP.

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    (b) If Buyer
disagrees with CTI’s calculation of the Closing Outstanding Checks or Closing
CTI Borne Expenses set forth in the Closing Statement, Buyer may, within 45 days
after delivery of the certificate referred to in Section 3.2(a),
deliver a notice to CTI disagreeing with such calculation and setting forth
Buyer’s calculation of such amount. Any such notice of disagreement shall
specify those items or amounts as to which Buyer disagrees, and Buyer shall be
deemed to have agreed with all other items and amounts contained in the Closing
Statement.

     

    (c) If a
notice of disagreement shall be duly delivered pursuant to Section 3.2(b), Buyer
and CTI shall, during the 30 days following such delivery, use their reasonable
best efforts to reach agreement on the disputed items or amounts of Closing
Outstanding Checks and Closing CTI Borne Expenses. If, following such period,
Buyer and CTI are unable to reach such agreement, they shall promptly thereafter
cause an independent accountant of nationally recognized standing reasonably
satisfactory to Buyer and CTI (who shall not have any material relationship with
Buyer or CTI) (the “Independent Accounting
Firm”), promptly to review this Agreement and the disputed items or
amounts for the purpose of calculating the Closing Outstanding Checks and
Closing CTI Borne Expenses.  In making such calculation, the
Independent Accounting Firm shall consider only those items or amounts in the
Closing Outstanding Checks and Closing CTI Borne Expenses as to which Buyer has
disagreed.  The Independent Accounting Firm shall deliver to Buyer and
CTI, as promptly as practicable, a report setting forth such calculation, it
being understood that neither the Closing Outstanding Checks nor the Closing CTI
Borne Expenses calculated by the Independent Accounting Firm shall be less than
the amount thereof shown in the Closing Statement nor more than the amount
thereof shown in Buyer’s calculation delivered pursuant to Section
3.2(b).  Such report shall be final and binding upon the
parties hereto. The cost of such review and report shall be allocated to be paid
by CTI, on the one hand, and/or the Buyer, on the other hand, based upon the
percentage which the portion of the contested amount not awarded to each party
bears to the amount actually contested by such party, as determined by the
Independent Accounting Firm.

     

    (d) Buyer and
CTI agree that they will, and agree to cause their respective independent
accountants and the Company and each Subsidiary to, cooperate and assist in the
preparation of the Closing Statement and the calculation of the Closing
Outstanding Checks and Closing CTI Borne Expenses and in the conduct of the
audits or reviews referred to in Section
3.2(c).

     

    3.3 Post-Closing
Adjustment.  

     

    (a) If an
adjustment to the Closing Payment was made pursuant to Section 3.1(b) and
(i) the sum of (A) the Final Check Excess plus (B) the Final Closing CTI Borne
Expenses exceeds (ii) the sum of (A) Estimated Check Excess plus (B) the
Estimated Closing CTI Borne Expenses, then CTI shall pay Buyer, in the manner
provided in Section
3.3(e), the amount of such excess.

     

    (b) If no
adjustment to the Closing Payment was made pursuant to Section 3.1(b) and
the sum of (i) the Final Check Excess plus (ii) the Final Closing CTI Borne
Expenses exceeds the amount of cash actually in the bank accounts of the Company
and its

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    Subsidiaries
at Closing, CTI shall pay Buyer, in the manner provided in Section 3.3(e), the
amount of such excess.

     

    (c) If an
adjustment to the Closing Payment was made pursuant to Section 3.1(b) and
the (i) the sum of (A) Estimated Check Excess plus (B) the Estimated Closing CTI
Borne Expenses, exceeds (i) the sum of (A) the Final Check Excess plus (B) the
Final Closing CTI Borne Expenses, Buyer shall pay to CTI, in the manner provided
in Section
3.3(e), the lesser of (x) the amount of such excess and (y) the amount of
the adjustment to the Closing Payment made pursuant to Section
3.1(b).

     

    (d) “Final Check Excess”
means the amount, if any, by which the Final Closing Outstanding Checks exceeds
$2,500,000.  “Final Closing Outstanding
Checks” means Closing Outstanding Checks as shown in CTI’s calculation
delivered pursuant to Section 3.2(a), if no
notice of disagreement with respect thereto is duly delivered pursuant to Section 3.2(b), or if
such a notice of disagreement is delivered, as agreed by Buyer and CTI pursuant
to Section
3.2(c) or in the absence of such agreement, as shown in the Independent
Accounting Firm’s calculation delivered pursuant to Section
3.2(c).  “Final Closing CTI Borne
Expenses” means Closing CTI Borne Expenses as shown in CTI’s calculation
delivered pursuant to Section 3.2(a), if no
notice of disagreement with respect thereto is duly delivered pursuant to Section 3.2(b), or if
such a notice of disagreement is delivered, as agreed by Buyer and CTI pursuant
to Section
3.2(c) or in the absence of such agreement, as shown in the Independent
Accounting Firm’s calculation delivered pursuant to Section
3.2(c).

     

    (e) Any
payment made by Buyer or CTI pursuant to Sections 3.3(a),
(b) or (c) shall be made
within five days after such calculation has been determined by delivery by Buyer
or CTI, as the case may be, in immediately available funds by wire transfer to
an account of CTI (in the case of a payment by Buyer) or Buyer (in the case of a
payment by CTI).

     

    3.4 Assumption of CTI Borne
Expenses.  Effective as of the Closing, the Company shall
assume any and all Liabilities included in the calculation of the Final Closing
CTI Borne Expenses (to the extent such Liabilities are not already Liabilities
of the Company and its Subsidiaries at Closing) and all Liabilities for accrued
vacation, personal days, sick pay and other paid time off for all the
Transferred Employees (to the extent such Liabilities are not already included
in the calculation of Final Closing CTI Borne Expenses) and shall pay, discharge
and perform all such Liabilities as they become due.

     

     

    SECTION
4.   REPRESENTATIONS AND WARRANTIES REGARDING CTI

     

    CTI
hereby represents and warrants to Buyer that, as of the date of this Agreement
and as of the Closing Date, except as set forth on the Disclosure Schedule
attached hereto:

     

    4.1 Organization and Good
Standing.  CTI is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
all necessary corporate power and authority to perform all of its obligations
under this Agreement and the other Transaction Documents to which it is a party
(collectively, the “Seller Transaction
Documents”).

     

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

    4.2 Power and
Authorization.  CTI has all legal right, power and authority to
execute and deliver this Agreement and each other Seller Transaction Document,
to perform its obligations hereunder and thereunder, and to carry out the
transactions contemplated hereby and thereby.  All necessary corporate
and stockholder action has been taken by CTI to authorize the execution,
delivery and performance of this Agreement and each other Seller Transaction
Document by CTI, and the consummation by CTI of the transactions contemplated
hereby and thereby.  CTI has duly executed and delivered this
Agreement and, at or prior to the Closing, will have duly executed and delivered
each other Seller Transaction Document.  This Agreement is, and each
other Seller Transaction Document, when duly executed and delivered at Closing
by CTI, will be, the legal, valid and binding obligation of CTI, enforceable
against CTI in accordance with their respective terms, except as enforceability
of such obligations may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws now or hereafter in effect relating to or
limiting creditors’ rights generally and general principles of equity relating
to the availability of specific performance and injunctive and other forms of
equitable relief.

     

    4.3 No
Conflicts.

     

    (a) The
execution, delivery and performance by CTI of this Agreement and the other
Seller Transaction Documents do not and will not (with or without the passage of
time or the giving of notice, or both):

     

    (i) contravene,
conflict with or result in a violation of (A) the certificate of
incorporation or bylaws of CTI; (B) any resolution adopted by the board of
directors or stockholders of CTI; or (C)  in any material respect any Laws
or Governmental Authorizations binding upon or applicable to CTI;
or

     

    (ii) contravene,
conflict with, result in a violation or breach of or constitute a default or
otherwise cause any loss of benefit under, any material agreement or other
obligation to which CTI is a party or by which it or any of CTI’s assets are
bound, or give to others any rights (including rights of termination,
foreclosure, cancellation, modification or acceleration) in or with respect to
any of the Shares.

     

    (b) Section 4.3(b) of the
Disclosure Schedule contains a complete and accurate list of each other material
Consent of, or material registration, notification, filing or declaration with,
any Governmental Body, creditor, lessor or other Person, in each case required
to be given or made by CTI, its Affiliates, the Company or any Subsidiary in
connection with the execution, delivery and performance of this Agreement and
the other Seller Transaction Documents.

     

    (c) There are
no judicial, administrative or other governmental actions, proceedings or
investigations pending or, to the Knowledge of CTI, threatened, which
individually or in the aggregate, have had or would reasonably be expected to
materially affect the ability of CTI to perform its obligations under this
Agreement or any other Seller Transaction Document.

     

    
      
         

      

      
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    4.4 Ownership of the
Shares.  CTI owns the Shares beneficially and of record, free
and clear of any Encumbrance.  Other than this Agreement, there are no
options, warrants, purchase rights, or other contracts, commitments or
agreements to which CTI is a party that could require CTI to sell, transfer or
otherwise dispose of any of the Shares or that could affect the right of CTI to
convey the Shares to Buyer at Closing, and CTI has the absolute right,
authority, power and capacity to sell, assign and transfer the Shares to Buyer
free and clear of any Encumbrance (except for restrictions imposed generally by
applicable securities Laws).  CTI is not a party to any voting trust,
proxy or other agreement or understanding with respect to the voting of any of
the Shares.  Upon delivery at the Closing by CTI to Buyer of the
certificates for the Shares, Buyer will acquire good, valid and marketable title
to such Shares, free and clear of any Encumbrance (except for applicable
securities Laws restrictions).

     

    4.5 Brokers.  Other
than Banc of America Securities LLC and Lehman Brothers Inc., there is no
investment banker, broker, finder or other intermediary which has been retained
by or is authorized to act on behalf of CTI or any of its Affiliates that might
be entitled to any fee or commission in connection with the transactions
contemplated by this Agreement or any other Seller Transaction
Document.

     

     

    SECTION
5.   REPRESENTATIONS AND WARRANTIES  REGARDING THE
COMPANY AND SUBSIDIARIES

     

    CTI
hereby represents and warrants to Buyer, as of the date of this Agreement and as
of the Closing Date, that, except as set forth on the Disclosure Schedule
attached hereto:

     

    5.1 Organization and Good
Standing.  The Company and each Subsidiary is duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation, formation or organization, as applicable, and has all necessary
corporate or limited liability company, as applicable, power and authority to
carry on its business as presently conducted, to own and lease the
assets which it owns and leases, and to perform all of its obligations under
each agreement to which it is a party or by which it or its assets are
bound.  The Company and each Subsidiary is duly qualified to do
business as a foreign corporation and is in good standing in each jurisdiction
identified in Section
5.1 of the Disclosure Schedule, which includes each jurisdiction in which
its ownership or leasing of assets or properties or the nature of its activities
requires such qualification, except where the failure to be so qualified would
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.  

     

    5.2 No
Conflicts.  The execution, delivery and performance by CTI of
this Agreement and the other Seller Transaction Documents do not and will not
(with or without the passage of time or the giving of notice, or
both):

     

    (a) contravene,
conflict with or result in a violation of (A) the certificate or articles
of incorporation or bylaws (or other organizational documents) of the Company or
any Subsidiary; (B) any resolution adopted by the board of directors, the
board of managers (or similar governing body), or stockholders or members, as
applicable, of the Company or any

     

    
      
         

      

      
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    Subsidiary;
or (C) in any material respect any Laws or Governmental Authorizations binding
upon or applicable to the Company or any Subsidiary;

     

    (b) contravene,
conflict with, result in a violation or breach of or constitute a default or
otherwise cause any loss of benefit under, any material agreement or other
obligation to which the Company or any Subsidiary is a party or by which they or
any of their assets are bound, or give to others any rights (including rights of
termination, foreclosure, cancellation, modification or acceleration) in or with
respect to the Company or any Subsidiary or any of their respective assets;
or

     

    (c) result
in, require or permit the creation or imposition of any Encumbrance (other than
a Permitted Encumbrance) upon or with respect to any assets owned or leased by
the Company or any Subsidiary.

     

    5.3 Capitalization.

     

    (a) The
Company’s authorized, issued and outstanding capital stock and its other equity
securities are fully and accurately described in Section 5.3(a) of the
Disclosure Schedule.  The Company has not granted to any Person any
preemptive or other similar rights with respect to any of such equity interests
or other equity securities and there are no offers, options, warrants, rights,
agreements or commitments of any kind (contingent or otherwise) relating to the
issuance, voting, conversion, exchange, registration, sale or transfer of any
equity interests or other equity securities of the Company (including the
Shares) or obligating the Company or any other Person to purchase or redeem any
of such equity interests or other equity securities or to make capital
contributions, advances or loans to or on behalf of the Company.  The
Shares (i) constitute all of the issued and outstanding shares of capital
stock of the Company and other equity securities, (ii) have been duly
authorized, (iii) are validly issued and outstanding, fully paid and
nonassessable, and (iv) have been issued in compliance in all material
respects with all applicable securities Laws.

     

    (b) The
authorized, issued and outstanding capital stock and other equity securities of,
or the membership interests in, each Subsidiary, as applicable, are fully and
accurately described in Section 5.3(b) of the
Disclosure Schedule.  All the outstanding capital stock and other
equity securities of, or equity interests in, each Subsidiary, as applicable,
are owned of record and beneficially by the Company.  No Person has
any preemptive or other similar rights with respect to any such equity interests
or other equity securities and there are no offers, options, warrants, rights,
agreements or commitments of any kind (contingent or otherwise) relating to the
issuance, voting, conversion, exchange, registration, sale or transfer of any
equity interests or other securities of any Subsidiary, or obligating the
Company, any Subsidiary, or any other Person to purchase or redeem any such
equity interests or other equity securities or to make capital contributions,
advances or loans to or on behalf of any Subsidiary.  All of the
issued and outstanding shares of capital stock (or equivalent equity interests)
of each Subsidiary have been duly authorized and are validly issued and
outstanding, fully paid and non-assessable and have been issued in compliance in
all material respects with applicable securities Laws.  Other than the
Subsidiaries and the Excluded Subsidiaries, the Company does not own or control
or have any right to acquire (directly or

     

    
      
         

      

      
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    indirectly)
any stock, partnership interest, joint venture interest, equity participation or
other security or interest in any other Person.

     

    5.4 Compliance with Laws.
 

     

    (a) The
Company and each Subsidiary is, and at all times since January 29, 2006 has
been, in compliance in all material respects with all applicable Laws and
Governmental Authorizations.  Neither the Company nor any of the
Subsidiaries have, since January 29, 2006, received any written notice,
order or other communication from any Governmental Body of any alleged, actual
or potential violation of, or failure to comply in any material respect with,
any Laws or Governmental Authorizations which has not been resolved in all
material respects.

     

    (b) Section 5.4(b) of the
Disclosure Schedule lists all material Governmental Authorizations required for
the operation of the business of the Company and each Subsidiary as currently
conducted.  Each Governmental Authorization listed or required to be
listed in Section
5.4(b) of the Disclosure Schedule is in full force and effect without any
default or violation thereunder in any material respect by the Company, any
Subsidiary or, to the Knowledge of CTI, by any other party
thereto.  No proceeding is pending or, to the Knowledge of CTI,
threatened by any Person to revoke or deny the renewal of any material
Governmental Authorization of the Company or any Subsidiary.

     

    5.5 Litigation.  Since
January 29, 2006, there have not been, nor are there currently pending, any
material claims, actions, suits or proceedings (arbitration or otherwise) or, to
the Knowledge of CTI, investigations involving or affecting the Company or any
Subsidiary, their businesses or assets (including, as of the Closing, the
Acquired Assets), any Employee Benefit Plan (other than routine claims for
benefits), or, to the Knowledge of CTI, their respective directors or officers
in their capacities as such before or by any Governmental Body, or before any
arbitrator of any kind.  To the Knowledge of CTI, no such claim,
action, suit, proceeding or investigation is presently
threatened.  There are no unsatisfied material judgments, penalties or
awards against or affecting the Company or any Subsidiary or any of their
businesses, properties or assets (including, as of the Closing, the Acquired
Assets).

     

    5.6 Financial
Statements. 

     

    (a) Section 5.6(a) of the
Disclosure Schedule includes the unaudited consolidated balance sheet of the
Company and the Subsidiaries as of February 2, 2008 (the “Balance Sheet”) and
February 3, 2007 and the related unaudited consolidated statements of income and
cash flow for the fiscal years ended February 2, 2008 and February 3, 2007,
respectively (collectively, the “Financial
Statements”).  The Financial Statements fairly present in all
material respects the consolidated financial condition, cash flow and results of
operations of the Company and the Subsidiaries as of the respective dates
thereof and for the periods therein referred to, all in accordance with GAAP as
consistently applied, except to the extent that the Financial Statements do not
reflect (i) federal and state income taxes (including provision for income
taxes, income taxes payable and deferred income taxes); (ii) Liabilities
associated with terminated leases and assets related to prepayments of rent;
(iii) Liabilities associated with non-qualified retirement and deferred
compensation plan obligations related

     

    
      
         

      

      
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    to CTI’s
or its Affiliates’ employees; (iv) goodwill and other intangible assets and
related amortization; (v) Liabilities for third-party insurance and
self-insurance for certain risks, including workers’ compensation, medical,
dental, automobile and general liability claims; (vi) the costs related to share
based compensation accounted for under Statement of Financial Accounting
Standard No. 123R; (vii) certain other miscellaneous assets and Liabilities
accounted for on a centralized basis (including miscellaneous real estate and
construction assets and liabilities) that were not material, individually or in
the aggregate, to the Company or the Subsidiaries; and (viii) costs not
allocated to the Company and the Subsidiaries.

     

    (b) CTI
maintains a system of internal accounting controls designed to provide
reasonable assurances that (i) transactions engaged in by the Company or
any of the Subsidiaries are executed in material compliance with the general
policies of the Company and the Subsidiaries and/or the general or specific
authorizations of management of the Company and the Subsidiaries,
(ii) access to material assets of the Company and the Subsidiaries is
permitted only in accordance with the general policies of the Company and the
Subsidiaries and/or the general or specific authorizations of management of the
Company and the Subsidiaries, and (iii) all intercompany transactions,
charges and expenses among or between the Company, any of the Subsidiaries, CTI
and/or their respective Affiliates are accurately reflected at fair arms’ length
value on the books and records of the Company and the Subsidiaries.

     

    (c) Neither
the Company nor any of its Subsidiaries has any material Liability arising out
of transactions entered into at or prior to the Closing, or any action or
inaction at or prior to the Closing, or any state of facts existing at or prior
to the Closing, except (i) Liabilities under agreements described in Section 5.11 of the
Disclosure Schedule or under agreements which are not required to be disclosed
thereon (but not Liabilities for breaches thereof), (ii) Liabilities reflected
on the face of the Balance Sheet, (iii) Liabilities which have arisen in the
ordinary course of business, consistent with past practice and otherwise in
accordance with the terms and conditions of this Agreement (none of which is a
Liability for breach of contract, breach of warranty, tort or infringement or a
claim or lawsuit or an environmental Liability), and (iv) Liabilities disclosed
in Section
5.6(c) of the Disclosure Schedule.

     

    5.7 Inventory.  Subject
to any reserve therefor included in the Balance Sheet, at the date of the
Balance Sheet, all inventories of the Company and its Subsidiaries (including
inventory ordered but not yet received) consisted of items of a quality usable
or saleable in the normal course of the business of the Company consistent with
past practices and were to the Knowledge of CTI in quantities sufficient for the
normal operation of the business of the Company in accordance with past
practices.  The values at which inventories are reflected on the
Balance Sheet have been determined in accordance with the customary valuation
policy of the Company (which is the lower of cost or fair market value thereof)
and in accordance with GAAP.  Since the date of the Balance Sheet, the
Company and its Subsidiaries have continued to replenish its inventory and to
seek to dispose of out-of-season and slow-moving inventory in a normal and
customary manner consistent with past practices prevailing in the business of
the Company.

     

    
      
         

      

      
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    5.8 Absence of Certain Changes
and Events.  Since the date of the Balance Sheet, the Company
and the Subsidiaries have in all material respects conducted their businesses
only in the usual and ordinary course consistent with past practice and, except
as expressly contemplated by this Agreement or any other Transaction Document,
there has not, with respect to the Company or a Subsidiary, or in the case of
Sections 5.8(f)
and (q), with
respect to CTI and its Affiliates, been any:

     

    (a) event,
condition, occurrence, contingency or development that has had or would
reasonably be expected to have a Material Adverse Effect;

     

    (b) any
repurchase, redemption or other acquisition by the Company or any Subsidiary of
any of shares of capital stock or other securities of the Company or any
Subsidiary or any dividends or other distributions or payments in respect of any
shares of capital stock of the Company or any Subsidiary other than
distributions payable solely in cash and distributions of the capital stock or
membership interests of the Excluded Subsidiaries;

     

    (c) amendment
of any term of any outstanding security of the Company or any
Subsidiary;

     

    (d) making of
any loan, advance or capital contribution to or investment in any Person by the
Company or any Subsidiary, other than loans, advances or capital contributions
to a Subsidiary, travel and similar advances to employees, and advances and
extended payment terms to suppliers, in each case in the ordinary course of
business consistent with past practice;

     

    (e) material
change in the accounting methods, principles or practices followed by the
Company or any Subsidiary (except for any such change required by reason of a
change in GAAP);

     

    (f) (i)
adoption, amendment or modification in any material respect of an Employee
Benefit Plan, other than an amendment or modification to comply with applicable
Laws and adoptions, amendments and modifications that do not apply to any Listed
Employee or officer, employee or consultant of the Company or any Subsidiary
(ii) grant of severance or termination pay or any other compensation of any kind
or nature payable, in whole or in part, by reason of the transactions
contemplated by this Agreement to any Listed Employee or any officer, employee
or consultant of the Company or any Subsidiary, or (iii) any change in
employment terms (including compensation or benefits) for any Listed Employee or
any officer, employee or consultant of the Company or any Subsidiary or increase
in the contingent and non-contingent compensation of, or payment of any bonus
to, any Listed Employee or any officer, employee or consultant of the Company or
any Subsidiary;

     

    (g) material
damage, destruction or loss to any material asset or property of the Company and
the Subsidiaries, taken as a whole, other than damage that has been repaired,
damaged assets that have been replaced or damage for the repair of which
insurance proceeds have been received and used for the repair
thereof;

     

    (h) sale
(other than sales of inventory and customer list rentals and exchanges in the
ordinary course of business consistent with past practice),
assignment,

     

    
      
         

      

      
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    transfer,
hypothecation, conveyance, lease or other disposition of any material asset or
property of the Company or any Subsidiary other than the Excluded Assets or
mortgage, pledge or imposition of any Encumbrance on any material asset or
property of the Company or any Subsidiary (except for Permitted
Encumbrances);

     

    (i) failure
to pay when due any material indebtedness or other material Liabilities, except
with respect to any such Liabilities being contested in good faith by the
Company or any Subsidiary which are identified in Section 5.8(i) of the
Disclosure Schedule;

     

    (j) cancellation,
discharge or satisfaction of any debts, liabilities, obligations or claims
that are material to the Company and the Subsidiaries, taken as a whole, or any
amendment, termination or waiver of any material rights of value to the Company
and the Subsidiaries, taken as a whole;

     

    (k) write
down or write off of the value of any assets that are material to the Company
and the Subsidiaries, taken as a whole, except for write downs and write offs of
accounts receivable and inventory in the ordinary course of business consistent
with past practice;

     

    (l) failure
to pay accounts payable or collect accounts receivable other than in the
ordinary course consistent with past practice;

     

    (m) entry
into, amendment, termination or receipt of notice of termination of any lease or
sublease of real property that is (or would be) required to be disclosed in
Section 5.9 of
the Disclosure Schedule or of any agreement or other document that is required
to be disclosed in Section 5.11 of
the Disclosure Schedule;

     

    (n) merger or
consolidation with any other Person, acquisition of any equity securities of any
other Person, or acquisition of assets from any other Person, other than (i) the
acquisition of inventory in the ordinary course of business in accordance with
past practice, and (ii) capital expenditures in an amount in the aggregate not
more than those set forth in the capital expenditure budget for the current
fiscal year previously provided to Buyer;

     

    (o) material
change in the business or operations of the Company and the Subsidiaries, taken
as a whole, or in the manner of conducting the same or entry by the Company or
any Subsidiary into any material transaction (other than the transactions
contemplated hereby), other than in the ordinary course of business consistent
with past practice;

     

    (p) any
material capital expenditure or commitments therefor, other
than  capital expenditures of not more than those set forth in the
capital expenditure budget for the current fiscal year previously provided to
Buyer; or

     

    (q) agreement,
whether or not in writing, to do any of the foregoing by the Company, any
Subsidiary or, with respect to the Business, CTI.

     

    
      
         

      

      
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    5.9 Real
Property.  Section 5.9 of the
Disclosure Schedule describes each interest in real property leased by the
Company or any Subsidiary, including the location thereof and the lessor of any
such leased property.  Neither the Company nor any Subsidiary owns any
real property in fee title.  Either the Company or one of its
Subsidiaries owns all right, title and interest in all leasehold estates granted
by the leases and other agreements required to be listed in Section 5.9 of
the Disclosure Schedule, in each case free and clear of all Encumbrances except
for Permitted Encumbrances.  To the Knowledge of CTI, all of the
buildings and structures to the extent of the premises owned or leased by the
Company or any Subsidiary are structurally sound with no material defects, are
in good operating condition and repair, and each has adequate rights of ingress
and egress for the operation in the ordinary course of business consistent with
past practice.  No such building or structure, or any appurtenance
thereto or equipment therein or the operation or maintenance thereof, violates
in any material respect any restrictive covenant.  With respect to any
real property leased by the Company or any Subsidiary, no event or condition
exists that, with or without the passage of time or the giving of notice, or
both, would constitute a material default or breach by the Company or any
Subsidiary pursuant to any lease agreement governing such
property.  To the Knowledge of CTI, each landlord under each such
lease agreement has complied with its material obligations
thereunder.  No condemnation proceeding is pending or, to the
Knowledge of CTI, threatened with respect to any real property identified in
Section 5.9 of
the Disclosure Schedule.

     

    5.10 Personal Property; Bank
Accounts.

     

    (a) The
Company and each Subsidiary have good and valid title to all of their material
properties and assets used in the conduct of their respective businesses free
and clear of all Encumbrances (other than Permitted
Encumbrances).  All material properties and assets owned or leased by
the Company or any Subsidiary are in the possession or under the control of the
Company and the Subsidiaries, taken as a whole, and are in good condition and
repair, ordinary wear and tear excepted.

     

    (b) Section 5.10(b) of
the Disclosure Schedule lists each bank, checking, money market, investment or
similar account (each, a “Company Account”)
owned by or used for the business and operations of the Company and the
Subsidiaries and each individual authorized to have access to and make
transactions under each Company Account.

     

    (c) Notwithstanding
the foregoing, this Section 5.10 does not
address any real estate matters, which are addressed in Section 5.9, or any
intellectual property matters, which are addressed in Section
5.13.

     

    5.11 Material Contracts.

     

    (a) Except as
expressly provided by this Agreement or the Transaction Documents and except for
any agreement or contract included in the Excluded Assets, neither the Company
nor any Subsidiary is a party to or is bound by any:

     

    
      
         

      

      
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    (i) agreement,
indenture or other instrument relating to Indebtedness for money borrowed or
capital leases (excluding capital leases providing for annual payments of less
than $25,000) or any guarantee or similar undertaking in respect of any
indebtedness or obligations of any Person (other than in connection with
relocation of employees or the endorsement of negotiable instruments for
collection in the ordinary course of business consistent with past
practice);

     

    (ii) Encumbrance
of any nature (other than Permitted Encumbrances) relating to or affecting any
of the material assets or properties of the Company and the Subsidiaries, taken
as a whole;

     

    (iii) agreement,
contract or commitment relating to a single capital expenditure of greater than
$100,000 or any number of such agreements, contracts or commitments relating to
capital expenditures of greater than $250,000 in the aggregate;

     

    (iv) loan or
advance to, or investment in, any Person (other than a Subsidiary) in any case
in an amount in excess of $25,000, or $100,000 in the aggregate for all such
loans, advances and investments or any agreement, contract or commitment
relating to the making of any such loan, advance or investment, other than
travel and similar advances to employees in the ordinary course of business
consistent with past practice;

     

    (v) management
service, sales agency, sales representative, distributorship or any other
similar contract with any Person (other than a Related Party), in each case
under which the amount of payments required to be made thereunder in any fiscal
year is greater than $100,000;

     

    (vi) contract,
agreement or commitment limiting in any material respect the freedom of the
Company or any Subsidiary to engage in any line of business or to compete with
any Person;

     

    (vii) contract,
agreement, purchase order or other commitment involving the performance of
services or delivery of goods or materials, other than inventory purchased or
sold in the ordinary course of business, by or to the Company or any Subsidiary
(A) outside the continental United States or (B) of an aggregate amount in
excess of $100,000 and which is not terminable by the Company or such Subsidiary
without payment of penalty or premium on not more than sixty days
notice;

     

    (viii) contract,
agreement or commitment providing for payments to or by any Person in excess of
$100,000 in any fiscal year based on sales, purchases or profits, other than
direct payments for goods or services;

     

    (ix) agreement,
contract or commitment related to the license to any Person (other than a
Related Party) of any material item of Company Intellectual
Property;

     

    
      
         

      

      
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    (x) any
material agreement, license, contract or commitment pursuant to which any Trade
Secrets of the Company or any Subsidiary may be transferred, disclosed to or
used by any third party (other than a Related Party);

     

    (xi) any
partnership, joint venture or similar agreement or arrangement; or

     

    (xii) any other
contract, agreement or commitment which is material to the business, operations,
results of operations, assets or financial condition of the Company and the
Subsidiaries, taken as a whole.

     

    (b) The
Company and each Subsidiary have furnished or made available to Buyer true and
complete copies of each agreement, plan and other document required to be
disclosed in Section
5.11 of the Disclosure Schedule.

     

    (c) Each
material contract, agreement or commitment disclosed or required to be disclosed
in Section 5.11
of the Disclosure Schedule (including any such contract, agreement or commitment
included in the Acquired Assets) is in full force and effect and is valid,
binding and enforceable against the Company or the Subsidiary party thereto in
accordance with its terms, except in each case as enforceability of such
agreements may be limited by bankruptcy, insolvency, reorganization, moratorium
and other similar laws now or hereafter in effect relating to or limiting
creditors’ rights generally and general principles of equity relating to the
availability of specific performance and injunctive and other forms of equitable
relief.  Neither the Company nor any Subsidiary is in violation in any
material respect of any such contract, agreement or commitment, and, to the
Knowledge of CTI, all of the material covenants to be performed by each other
party thereto have been performed in all material respects.

     

    5.12 Insurance.  Section 5.12 of
the Disclosure Schedule lists each policy and binder of insurance (including
property, casualty, liability, life, health, accident, workers’ compensation and
disability insurance and bonding arrangements) owned by, or maintained for the
benefit of, or respecting which, any premiums are paid directly or indirectly by
the Company or any Subsidiary, in each case identifying, with respect to the
Company and the Subsidiaries: (i) the respective issuers and expiration
dates thereof; (ii) all deductible amounts and amounts of coverage
available and outstanding thereunder; (iii) whether such policies and
binders are “claims made” or “occurrences” policies; (iv) all
self-insurance programs or arrangements; and (v) any retrospective premium
adjustments of which CTI has Knowledge.  Neither the Company nor any
of the Subsidiaries is in material default under any such insurance
policy.  All premiums due have been paid on such insurance
policies.

     

    5.13 Intellectual
Property.

     

    (a) Section 5.13(a)
of the Disclosure Schedule lists each (i)  fictitious business name, trade
name, registered and unregistered trademark, service mark and related
application (“Marks”), (ii) 
patent and patent application (collectively, “Patents”),
(iii) issued and pending copyright registration in published and material
unpublished works of authorship including Software works (“Copyrights”), (iv)
Internet domain name registration and related

     

    
      
         

      

      
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    application
(collectively “Domain
Registrations”), in each case, owned by or licensed to the Company or any
Subsidiary or used in connection with the Businesses, including, in each case,
at the Closing, the Acquired Assets (collectively, the “Company Intellectual
Property”).  The Company and the Subsidiaries are the sole
owners of, and have all right, title and interest in and to, or have a valid and
enforceable right to use pursuant to a license agreement described in Section 5.11 of the
Disclosure Schedule, all Company Intellectual Property, free and clear of all
Encumbrances (other than Permitted Encumbrances).  Neither the Company
nor any Subsidiary has granted or licensed to any Person any rights with respect
to any Company Intellectual Property and no other Person has any material rights
in or to any of the Company Intellectual Property.  The rights of the
Company and the Subsidiaries in and to any of such Company Intellectual Property
will not be limited or otherwise affected in any material respect by reason of
any of the transactions contemplated hereby.  The Company Intellectual
Property is sufficient for the conduct of the Business in the same manner as the
Business was conducted before the Closing in all material
respects. 

     

    (b) The list
of Marks set forth in Section 5.13(a)
of the Disclosure Schedule sets forth: (i) the name of the owner of such
Mark; (ii) the jurisdictions by or in which such Mark has been issued or
registered or in which an application for such issuance or registration has been
filed; and (iii) the registration and application numbers of such
Mark.  The list of Copyrights set forth in Section 5.13(a)
of the Disclosure Schedule sets forth: (i) the name of the author and
copyright claimant of such Copyright; and (ii) the registration numbers of
such Copyright.  The list of Patents set forth in Section 5.13(a)
of the Disclosure Schedule sets forth the name of each jurisdiction in which
such Patents have been granted and applied for and all application
numbers.  The Company and each Subsidiary have taken all reasonable
precautions to preserve and protect the secrecy, confidentiality and value of
their material Trade Secrets.

     

    (c) To the
Knowledge of CTI, no Company Intellectual Property is the subject of any
outstanding judgment, injunction, order or decree restricting in any material
respect the use thereof by the Company or any Subsidiary or restricting the
licensing thereof by the Company or any Subsidiary to any Person.  To
the Knowledge of CTI, no Mark, Domain Registration, Copyright, Patent or
Software owned by or licensed to the Company or any Subsidiary has in any
material respect been infringed, challenged or threatened in any material
respect.  To the Knowledge of CTI, no Mark or Patent owned by or
licensed to the Company or any Subsidiary is currently involved in any material
interference, reissue, re-examination, opposition, invalidation or cancellation
proceeding and, to the Knowledge of CTI, no such proceeding is
threatened.

     

    (d) Neither
the Company nor any of the Subsidiaries has infringed, diluted, misappropriated
or otherwise conflicted with, and the operation of their business as currently
conducted does not infringe, dilute, misappropriate or otherwise conflict with,
any Intellectual Property of any third party in any material
respect.

     

    (e) The
representations and warranties set forth in this Section 5.13, along
with the applicable representations in Section 5.4, Section 5.5 and Section 5.11
constitute CTI’s sole and exclusive representations and warranties related to
intellectual property matters.

     

    
      
         

      

      
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    5.14 Suppliers.  Section 5.14 of
the Disclosure Schedule lists the names of the five suppliers and vendors (other
than any Related Party or Affiliate thereof) from whom the Company and the
Subsidiaries made the most purchases (in terms of dollar amounts) during the
fiscal year ended February 2, 2008 and a good faith approximation of the
aggregate expenditures attributable to each in such year.  No such
vendor or supplier that accounted for more than of 5% of the consolidated
purchases of the Company and the Subsidiaries during the fiscal year ended
February 2, 2008 has terminated or materially reduced, or has given written
notice to the Company or any Subsidiary that it intends to terminate or
materially reduce, the amount of business done with the Company or any
Subsidiary.  CTI does not have any Knowledge of any such intention on
the part of any such supplier or vendor, whether or not in connection with or as
a result of, the transactions contemplated by this Agreement or any other
Transaction Document. 

     

    5.15 Labor
Matters.

     

    (a) No
application or petition for certification of a collective bargaining agent is
currently pending, and no union or bargaining representative is currently
certified as a representative of the employees of CTI, its Affiliates, the
Company or any Subsidiary.  Since January 29, 2006, neither CTI,
its Affiliates, the Company nor any Subsidiary has been the subject of a
representation campaign to organize any group of CTI’s, its Affiliates’, the
Company’s or such Subsidiary’s employees.  Since January 29,
2006, there has not been and there is not currently pending any material labor
arbitration or proceeding relating to the grievance of any employee of CTI, its
Affiliates, the Company or the Subsidiaries, any application, charge or
complaint filed by any such employee or union with the National Labor Relations
Board or any comparable state or local agency, any strike, slowdown, picketing
or work stoppage by any employees at any facility of CTI, the Company or any
Subsidiary, any lockout of any such employees, or any other labor related
controversy materially affecting the operations, assets, results of operations,
financial condition or business of the Company or the Subsidiaries taken as a
whole.  Except for the terms of the real property leases to which the
Company or any of the Subsidiaries is currently a party, no agreement to which
the Company or any of the Subsidiaries is a party restricts in any material
respect the Company or any Subsidiary from relocating, closing or terminating
any of their operations or facilities or any portion thereof.

     

    (b) During
the last 90 days prior to the date hereof, neither CTI, the Company nor any
Subsidiary has (i) effectuated a “plant closing” (as defined in the Worker
Adjustment and Retraining Act of 1988, as amended (the “WARN Act”)) affecting
any site of employment or one or more facilities or operating units within any
site of employment or facility of CTI, the Company or any Subsidiary; or (ii)
effectuated a “mass layoff” (as defined in the WARN Act) affecting any site of
employment or facility of CTI, the Company or any Subsidiary, or (iii)
terminated or announced the termination of the employment of more than a total
of 20 employees (other than “seasonal workers,” as defined by the WARN Act,
terminated in the ordinary course of business).

     

    (c) The
representations and warranties set forth in this Section 5.15, along
with the applicable representations in Section 5.4 and Section 5.5,
constitute CTI’s sole and exclusive representations and warranties related to
labor matters.

     

    
      
         

      

      
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    5.16 Employee Benefits.

     

    (a) Section 5.16(a) of
the Disclosure Schedule contains a complete and correct list of all benefit
plans and arrangements (whether or not employee benefit plans as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”)),
including sick leave, vacation pay, severance pay, salary continuation for
disability, consulting or other compensation arrangements, retirement, deferred
compensation, bonus, incentive compensation, stock purchase, stock option,
health including hospitalization, medical and dental, life insurance and
scholarship programs maintained for the benefit of any present or former
employees of CTI, the Company, any Subsidiary or any ERISA Affiliate to which
CTI, the Company, any Subsidiary or any ERISA Affiliate has since
January 29, 2006 contributed or otherwise has any liability or is or was
since January 29, 2006 obligated to make payments excluding, in the case of
CTI or an ERISA Affiliate, any such plan, arrangement or program that does not
cover or does not apply to a Listed Employee, where neither the Company nor any
Subsidiary has any liability with respect to such plan (collectively, the “Employee Benefit
Plans”).  The Company has delivered or made available to Buyer,
with respect to all such Employee Benefit Plans, true, complete and correct
copies of the following:  all plan documents and handbooks; the most
recent summary plan descriptions and any subsequent summaries of material
modifications; Forms series 5500 as filed with the United States Department of
Labor (“DOL”)
since January 29, 2006; all trust agreements with respect to Employee
Benefit Plans; plan contracts with service providers or with insurers providing
benefits for participants; the most recent annual audit and accounting of plan
assets for all funded plans; and the most recent IRS determination letter for
all plans qualified under Section 401(a) of the Internal Revenue Code of 1986,
as amended (the “Code”).

     

    (b) Each
Employee Benefit Plan has been administered in compliance in all material
respects with its terms and is in compliance in all material respects with the
applicable provisions of ERISA, the Code and all other applicable
Laws.

     

    (c) Each
Employee Benefit Plan which is an “Employee Pension Benefit
Plan” (as defined in Section 3(2) of ERISA) and which is intended to be
“qualified” within the meaning of Section 401(a) of the Code has been issued a
favorable determination (or opinion) letter from the IRS, and to the Knowledge
of CTI, since January 29, 2006 there has been no act or condition that
would reasonably be expected to result in the loss of tax-qualified status of
such Employee Benefit Plan or the loss of exemption from federal income tax
under Section 501(a) of the Code of any trust created pursuant to any such
Employee Pension Benefit Plan.

     

    (d) Neither
CTI, the Company, any Subsidiary nor any ERISA Affiliate maintains or since
January 29, 2006 has maintained or been obligated to contribute to a “Multiemployer Plan”
(as such term is defined by Section 3(37) of ERISA) or to a “Defined Benefit Plan”
(as such term is defined by Section 3(35) of ERISA).  Neither the
Company nor any Subsidiary has any actual or potential Liability, including as a
result of being under common control with an ERISA Affiliate, with respect to a
Multiemployer Plan or a Defined Benefit Plan.  As used herein, “ERISA Affiliate”
shall refer to any corporation or trade or

     

    
      
         

      

      
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    business,
whether or not incorporated, under common control with the Company within the
meaning of Section 414(b), (c), (m) or (o) of the Code.

     

    (e) With
respect to each Employee Benefit Plan, no material unsatisfied Liabilities to
participants, the IRS, the DOL, the Pension Benefit Guaranty Corporation or to
any other Person have been incurred as a result of the cessation of
contributions under, the transfer of sponsorship of, or the termination of any
Employee Benefit Plan.

     

    (f) Neither
CTI, the Company, any Subsidiary nor any ERISA Affiliate maintains any retiree
life and/or retiree health insurance plans which provide for continuing benefits
or coverage for any former employee, employee, or any beneficiary of an employee
or former employee of CTI, the Company, any Subsidiary or any ERISA Affiliate
after such employee’s termination of employment, other than (i) benefits that
are required to be provided pursuant to Title X of the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended, or state continuation coverage
rights or (ii) a plan maintained by CTI or an ERISA Affiliate that does not
cover or does not apply to a Listed Employee, where neither the Company nor any
Subsidiary has any liability with respect to such plan.

     

    (g) Section 5.16(g) of
the Disclosure Schedule lists each employment, retention, severance, change of
control, consulting, commission, agency and representative agreement or
arrangement to which CTI, the Company, any Subsidiary or any ERISA Affiliate is
a party or is otherwise bound with respect to any Listed Employee, including all
agreements and commitments relating to wages, hours or other terms or conditions
of employment (other than unwritten employment arrangements terminable at
will).

     

    (h) Except as
required under any Employee Pension Benefit Plan or the Code with respect to any
Employee Pension Benefit Plan, or as expressly contemplated by this Agreement
and subject to the terms of Section 10.1(g), the
consummation of the transactions contemplated by this Agreement and the other
Transaction Documents will not, alone or together with any other event: (i)
entitle any person to severance pay, unemployment compensation or termination
benefits or any other payment; (ii) accelerate the time of payment or vesting
of, or materially increase the amount of compensation due to any person or (iii)
result in forfeiture of compensation or benefits to any employee of the Company
and its Subsidiaries or any Listed Employee.

     

    (i) The
representations and warranties set forth in this Section 5.16 along
with the applicable representations and warranties set forth in Sections 5.4, 5.5, 5.6, 5.8 and 5.17, constitute
CTI’s sole and exclusive representations and warranties related to employee
benefits matters.

     

    5.17 Officers and
Employees. Section 5.17 of
the Disclosure Schedule sets forth the following information for each
consultant, agent and independent contractor regularly retained by the Company
or any Subsidiary, whose aggregate compensation for the last fiscal year ended
exceeded $100,000 or whose current aggregate annual rate of compensation exceeds
such amount (including each such person on leave or layoff status), and each
Listed Employee: (i) employer and location of employment; (ii) name
and job title; (iii) current annual rate of compensation (identifying
bonuses separately) and any change in

     

    
      
         

      

      
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    compensation
since the date of the Balance Sheet; (iv) vacation accrued; and
(v) service credited for purposes of vesting and eligibility to participate
in applicable Employee Benefit Plans.  

     

    5.18 Environmental
Matters.  

     

    (a) Since
January 29, 2006, and to the Knowledge of CTI, prior to January 29,
2006, the Company, each Subsidiary and their respective predecessors, including
all of their businesses and operations, have been operated in compliance in all
material respects with all Environmental Laws.

     

    (b) Neither
the Company nor any Subsidiary has, since January 29, 2006, caused, and to
the Knowledge of CTI, none of the Company, any Subsidiary or any predecessor
entity thereof did, prior to January 29, 2006, cause, and to the Knowledge
of CTI, none of the Company, any Subsidiary or any predecessor entity thereof
has permitted any other Person to cause, any conditions on, about, beneath or
arising from any real property, which is currently, or since January 29,
2006, was owned, leased or operated, or to the Knowledge of CTI, was at any time
prior to January 29, 2006, owned, leased or operated, by the Company, any
Subsidiary or their respective predecessors, which (i) give rise to
material liability (contingent or otherwise) or the imposition of a statutory
lien under any Environmental Law, or (ii) require any material Response,
Removal or Remedial Action or other action under any Environmental
Law.

     

    (c) Neither
the Company nor any Subsidiary has received since January 29, 2006, or to
the Knowledge of CTI, prior to January 29, 2006, any written or oral
notification of a material release or threat of a material release of a
Hazardous Substance with respect to any real property that is currently, or was
at any time since January 29, 2006, owned, leased or operated, or to the
Knowledge of CTI, was at any time prior to January 29, 2006, owned, leased
or operated, by the Company or any Subsidiary or their respective
predecessors.

     

    (d) No
Hazardous Substances have been used, handled, generated, processed, treated,
stored, transported to or from, released, discharged or disposed of by the
Company or any Subsidiary or, to the Knowledge of CTI, any third party, and no
Person has been exposed to any Hazardous Substances, on, about or beneath any
property that is currently, or that has at any time since January 29, 2006
been, owned, leased or operated, or to the Knowledge of CTI, that was at any
time prior to January 29, 2006, owned, leased or operated, by the Company
or any Subsidiary or their respective predecessors so as to give rise to any
material liabilities (contingent or otherwise) under any Environmental
Laws.

     

    (e) There are
not currently, and since January 29, 2006 there have not been, any above
ground or, to the Knowledge of CTI, underground storage tanks, asbestos
containing materials, or transformers containing or, to the Knowledge of CTI,
contaminated with polychlorinated biphenyls on, about or beneath any real
property that is currently, or since January 29, 2006 has been, owned,
leased or operated, or to the Knowledge of CTI, that was at any time prior to
January 29, 2006, owned, leased or operated, by the Company or any
Subsidiary or their respective predecessors in violation in any material respect
of, or as would give rise to any material liabilities under, any Environmental
Laws.

     

    
      
         

      

      
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    (f) To the
Knowledge of CTI, since January 29, 2006, neither the Company nor any
Subsidiary has received written notice of:

     

    (i) any
material claim, demand, investigation, enforcement action, Response, Removal,
Remedial Action, statutory lien or governmental or regulatory action instituted
or threatened against the Company or any Subsidiary or any real property
formerly or currently owned, leased or operated by the Company or any Subsidiary
pursuant to any of the Environmental Laws; or

     

    (ii) any
material claim, demand notice, suit or action, made or threatened by any Person
against the Company, any Subsidiary, or any real property formerly or currently
owned, leased or operated by the Company or any Subsidiary relating to (A) any
material damage, loss or injury resulting from, or claimed to result from, any
Hazardous Substance on, about, beneath or arising from any real property
formerly or currently owned, leased or operated by the Company or any Subsidiary
or any other real property or (B) any alleged material violation of
Environmental Laws by the Company or any Subsidiary.

     

    (g) CTI has
no Knowledge of any communication to or from any Governmental Body arising out
of or in connection with Hazardous Substances on, about, beneath, arising from
or generated at any real property formerly or currently owned, leased or
operated by the Company or any Subsidiary.

     

    (h) No wastes
generated by the Company or any Subsidiary, have since January 29, 2006, or
to the Knowledge of CTI, prior to January 29, 2006, been sent, transferred,
transported to, treated, stored, or disposed of at any site requiring
investigation or clean-up, including any site listed, or to the Knowledge of
CTI, formerly proposed for listing, on the National Priority List promulgated
pursuant to CERCLA or to any site listed on any state list of sites requiring or
recommended for investigation or clean-up.  To the Knowledge of CTI,
none of the real property that is currently, or since January 29, 2006 has
been, owned, leased or operated, or to the Knowledge of CTI, prior to
January 29, 2006, has been owned, leased or operated, by the Company or any
Subsidiary or their respective predecessors, is listed on the National
Priorities List or any state list of sites requiring or recommended for
investigation or clean up.

     

    (i) neither
the Company nor any of its Subsidiaries has assumed, undertaken, provided an
indemnity with respect to, or otherwise become subject to any material
liabilities of any other Person relating to any Environmental Law.

     

    (j) There has
been no written environmental audit, investigation, inspection, report, sampling
report, remediation report or other related report conducted by or on behalf of
the Company, any Subsidiary or, to the Knowledge of CTI, any Governmental Body
or other Person, of or related to the Company or its Subsidiaries or Affiliates,
or the environmental condition of any property that is currently or since
January 29, 2006 has been, owned, leased or operated, or to the Knowledge
of CTI, prior to January 29, 2006, has been, owned, leased or operated, by
the Company or any Subsidiary, which has not been made available to Buyer prior
to the date hereof.

     

    
      
         

      

      
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    (k) Notwithstanding
anything in this Agreement to the contrary, Buyer acknowledges and agrees that
this Section 5.18
contains the sole and exclusive representations and warranties in this Agreement
relating to environmental matters.

     

    5.19 Sufficiency of the
Assets.  As of the Closing, the assets of the Company and the
Subsidiaries (excluding the Excluded Assets but including the Acquired Assets)
together with the services and assets provided to the Company and the
Subsidiaries pursuant to the Transition Services Agreement and the sharing of
certain contracts as contemplated by the Assignment and Assumption, will be
sufficient to conduct the business of the Company and the Subsidiaries
substantially as conducted on the date hereof, which business includes the
Crosstown Traders business of the Company and its Subsidiaries, namely, the
direct marketing of women’s apparel, footwear and accessories from the locations
specified on Section
5.9 of the Disclosure Schedule, through the Company’s and its
Subsidiaries’ Old Pueblo Traders, Intimate Appeal, Coward Shoes, Bedford Fair
Lifestyles, Bedford Fair Shoestyles, Willow Ridge, Lew Magram, Brownstone
Studios and Monterey Bay Clothing Company catalog titles (collectively, the
“Business”).

     

    5.20 Brokers.  Other
than Banc of America Securities LLC and Lehman Brothers Inc., there is no
investment banker, broker, finder or other intermediary which has been retained
by or is authorized to act on behalf of the Company or any Subsidiary that might
be entitled to any fee or commission in connection with the transactions
contemplated by this Agreement or any other Transaction Document.

     

     

    SECTION
6.   REPRESENTATIONS AND WARRANTIES OF BUYER

     

    Buyer
hereby represents and warrants to CTI, as of the date of this Agreement and as
of the Closing Date, that:

     

    6.1 Organization and Good
Standing.  Buyer is duly organized, validly existing and in
good standing under the laws of its jurisdiction of formation and has all
necessary power and authority to perform all of its obligations under this
Agreement and the other Transaction Documents to which it is a party
(collectively, the “Buyer Transaction
Documents”).  

     

    6.2 Power and
Authorization.  Buyer has all legal right, power and authority
to execute and deliver this Agreement and the other Buyer Transaction Documents,
to perform its obligations hereunder and thereunder and to carry out the
transactions contemplated hereby and thereby.  All necessary
corporate, shareholder and other legal action has been taken by Buyer to
authorize the execution, delivery and performance by it of this Agreement and
each other Buyer Transaction Document, and the consummation by Buyer of the
transactions contemplated hereby and thereby. Buyer has duly executed and
delivered this Agreement and, at or prior to the Closing, will have duly
executed and delivered each other Buyer Transaction Document.  This
Agreement is, and each other Buyer Transaction Document, when duly executed and
delivered at or prior to the Closing by Buyer, will be, the legal, valid and
binding obligation of Buyer, enforceable against Buyer in accordance with their
respective terms, except as enforceability of such obligations may be limited by
bankruptcy, insolvency, reorganization, moratorium and other similar laws now or
hereafter in

     

    
      
         

      

      
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    effect
relating to or limiting creditors’ rights generally and general principles of
equity relating to the availability of specific performance and injunctive and
other forms of equitable relief.

     

    6.3 No
Conflicts.

     

    (a) The
execution and delivery by Buyer of this Agreement does not, the execution and
delivery by Buyer of each Buyer Transaction Document to which it is, or is
specified to be, a party will not, and the consummation of the transactions
contemplated hereby and thereby and compliance by Buyer with the terms hereof
and thereof will not conflict with, or result in any violation or breach of or
constitute a default (with or without notice or lapse of time, or both) under,
or give rise to a right of termination, cancellation or acceleration of any
obligation or to a loss of a material benefit under, or result in the creation
of any Encumbrance (other than a Permitted Encumbrance) upon any of the material
properties or assets of Buyer under, any provision of (i) the certificate
of incorporation, by-laws or other similar organizational documents Buyer,
(ii) any material agreement or other material obligation to which Buyer is
a party or by which any of their property or assets are bound or (iii) any
material Laws or Governmental Authorizations binding upon or applicable to
Buyer.

     

    (b) No
material Consents or registrations, notifications, filings or declarations with,
any Governmental Body, creditor, lessor or other Person are required to be given
or made by Buyer in connection with the execution, delivery and performance of
this Agreement or any other Buyer Transaction Document.

     

    (c) There are
no judicial, administrative or other governmental actions, proceedings or
investigations pending or, to the Knowledge of Buyer, threatened, which
individually or in the aggregate, have had or would reasonably be expected to
have a material adverse effect on the ability of Buyer to perform its
obligations under this Agreement or any other Buyer Transaction Document or on
the ability of Buyer to consummate the transactions contemplated hereby or
thereby (a “Buyer
Material Adverse Effect”).

     

    6.4 No
Reliance.  Buyer (a) is an informed and sophisticated buyer and
has engaged expert advisors, experienced in the evaluation of transactions such
as those contemplated in this Agreement, (b) has made its own inquiry and
investigation into, and, based thereon, has formed an independent judgment
concerning, the Company, the Subsidiaries and their businesses, and (c) has been
furnished with or given adequate access to such information about the Company,
each Subsidiary and their businesses as it has reasonably desired or reasonably
requested.  Buyer’s Representatives have had adequate opportunity to
meet with management and employees of the Company to discuss the businesses and
assets of the Company and the Subsidiaries.  Buyer acknowledges that
the business of the Company and the Subsidiaries has not been operated on a
stand-alone basis.  No provision of this Section 6.4 shall
limit or otherwise impair any representations or warranties made by any party
hereto.

     

    6.5 Brokers.  There
is no investment banker, broker, finder or other financial intermediary that has
been retained by or is authorized to act on behalf of Buyer or any of
its

     

    
      
         

      

      
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    Affiliates
that might be entitled to any fee or commission in connection with the
transactions contemplated by this Agreement or any other Transaction
Document.

     

    6.6 Financing.   Buyer
has committed financing upon which it intends to draw to pay the Closing Payment
at Closing.  Buyer acknowledges that its obligations under the
Transaction Documents are not subject to its obtaining financing in order to pay
the Closing Payment or to satisfy any of its other obligations under the Buyer
Transaction Documents.

     

    6.7 Disclaimer Regarding
Projections.  In connection with Buyer’s investigation of the
Company and the Subsidiaries, Buyer has received from CTI and/or its Affiliates
certain projections, estimates and other forecasts and business plan
information.  Buyer acknowledges that there are uncertainties inherent
in attempting to make such projections, estimates and other forecasts and plans
and that it is taking full responsibility for making its own evaluation of the
adequacy and accuracy of all projections, estimates and other forecasts and
plans so furnished to it.  Accordingly, Buyer acknowledges, agrees and
confirms that CTI, the Company and each of their respective Affiliates,
officers, directors, employees, agents and representatives, do not make, have
not made nor shall be deemed to have made any representation or warranty to
Buyer, express or implied, at law or in equity, with respect to any such
projections, estimates, forecasts or plans.

     

    6.8 No Additional
Representations.  Buyer acknowledges that none of CTI, the
Company, the Subsidiaries or any other Person has made any representation or
warranty, expressed or implied, as to the accuracy or completeness of any
written or oral information regarding the Company and the Subsidiaries furnished
or made available to Buyer and its Representatives or otherwise with respect to
the Company, the Subsidiaries or their operations, business, financial
condition, assets, liabilities or prospects, except as set forth in Sections 4,
5 and 10.  Buyer
shall acquire the Company and the Subsidiaries without any representation or
warranty as to merchantability or fitness for any particular purpose, in an “as
is” condition and on a “where as” basis, except as otherwise represented or
warranted in Sections 4,
5 and 10.

     

     

    SECTION
7.   COVENANTS OF CTI 

     

    7.1 Conduct of Business Pending
Closing.  From the date hereof until the Closing, except as
expressly contemplated by any of the Transaction Documents or as set forth in
Section 7.1 of
the Disclosure Schedule, CTI shall cause the Company and each Subsidiary to, and
with respect to Sections 7.1(e),
(f) and (k), CTI also
shall:

     

    (a) maintain
their corporate (or other organizational) existence, pay and discharge all of
their respective material debts, Liabilities and obligations as they become due,
and operate their respective businesses in all material respects in the ordinary
course in a manner consistent with past practice;

     

    (b) maintain
their facilities and assets in all material respects in the same state of
repair, order and condition as they were in on the date hereof, reasonable wear
and tear excepted;

     

    
      
         

      

      
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    (c) maintain
their books and records in accordance with past practice in all material
respects and use reasonable commercial efforts to maintain in full force and
effect all material Governmental Authorizations and all material insurance
policies and binders in an amount and scope consistent with any such insurance
policies in effect as of the date hereof;

     

    (d) use their
commercially reasonable efforts to preserve their present business organization
in all material respects and maintain their relations and goodwill with their
material suppliers, vendors, customers and employees;

     

    (e) promptly
advise Buyer upon obtaining Knowledge of any threat or commencement of any
material dispute, claim, action, suit, proceeding, arbitration or investigation
by or against the Company, any Subsidiary or any of their operations, properties
or assets;

     

    (f) promptly
advise Buyer upon obtaining Knowledge of (i) the existence of any fact or
condition that would constitute a breach in any material respect of any of CTI’s
representations and warranties contained in this Agreement or (ii) the
occurrence of any breach in any material respect of any covenant of CTI in this
Agreement; provided, however, that no such notice shall be deemed to amend or
otherwise modify the Disclosure Schedule delivered on the date hereof or the
representations and warranties of CTI contained herein, have any effect on the
satisfaction of the conditions to Buyer’s obligations to consummate the Closing
hereunder, or limit Buyer’s right to indemnification under any applicable
provision of this Agreement;

     

    (g) conduct
its cash management customs and practices in the ordinary course of business
consistent with past practice (including, without limitation, with respect to
maintenance of normalized working capital balances and normalized inventory
levels taking into account seasonal fluctuations, collection of accounts
receivable, payment of accounts payable, accrued liabilities and other
Liabilities and pricing and credit policies);

     

    (h) continue
planning circulation and investment in any associated prepaid expenses in the
ordinary course in a manner consistent with past practice taking into account
seasonal fluctuations;

     

    (i) continue
placing orders for inventory, receiving inventory, and liquidating inventory in
the ordinary course in a manner consistent with past practice taking into
account seasonal fluctuations;

     

    (j) promptly
process all customer refunds; and

     

    (k) otherwise
report periodically to Buyer concerning the status of the business, operations
and finances of the Company and each Subsidiary.

     

    7.2 Negative Covenants Pending
Closing.  From the date hereof until the Closing, except as
expressly contemplated by any of the Transaction Documents or as set forth in
Section 7.2 of
the Disclosure Schedule, without the prior written consent of Buyer, CTI shall
cause the Company and each of the Subsidiaries not to, and with respect to Sections 7.2(j),
(o) and (p), CTI also shall
not and shall cause each of its Affiliates not to:

     

    
      
         

      

      
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    (a) (i) make
any change in the Company’s or any Subsidiary’s authorized or issued capital
stock or other securities; (ii) grant any stock option or other right to
purchase shares of the Company’s or any Subsidiary’s capital stock or other
securities; (iii) issue or make any commitment to issue any equity security of
the Company or any Subsidiary, including any security convertible into the
Company’s or any Subsidiary’s capital stock; (iv) grant any registration rights
with respect to the Company’s or any Subsidiary’s capital stock or other
securities; or (v) purchase, redeem, retire or make any other acquisition of any
shares of the Company’s or any Subsidiary’s capital stock or other
securities;

     

    (b) adopt or
propose any change in the certificate or articles of incorporation or bylaws (or
equivalent governing documents) of the Company or any Subsidiary;

     

    (c) merge or
consolidate with any other Person, acquire any equity securities of any other
Person, or acquire assets from any other Person, other than (i) the acquisition
of inventory in the ordinary course of business in accordance with past
practice, (ii) capital expenditures of not more than those set forth in the
capital expenditure budget for the current fiscal year previously provided to
Buyer;

     

    (d) sell,
lease, license or otherwise dispose of any material assets or property
(including any Intellectual Property but excluding the Excluded Assets) of the
Company and the Subsidiaries, considered as a whole, except the sale of
inventory and customer list rentals and exchanges, in each case in the ordinary
course of business consistent with past practice;

     

    (e) make any
material change in the Company’s or any Subsidiary’s inventory policies or
procedures, operating policies or procedures, or advertising and promotional
policies or procedures;

     

    (f) enter
into or materially modify or amend any financing arrangements, including any
financings with respect to the receivables of the Company and the Subsidiaries,
or create any Encumbrance on any assets or properties (including any
Intellectual Property) of the Company other than Permitted
Encumbrances;

     

    (g) enter
into or materially modify or amend any lease or sublease of real property
(excluding any lease included in the Excluded Assets) or enter into or
materially modify or amend any agreement, plan and other document that is
required to be disclosed in Section 5.11 of the
Disclosure Schedule or terminate or cause or permit the extension of the term of
any such lease, agreement, or plan or other document;

     

    (h) make any
loan, advance or capital contribution to or investment in any Person, other than
(i) loans, advances or capital contributions to a Subsidiary, (ii) travel and
similar advances to employees, and (iii) advances and extended payment terms to
suppliers, in each case in the ordinary course of business consistent with past
practice;

     

    (i) change
the independent accountants of the Company or its Subsidiaries or the accounting
methods, principles or change in any material respect the practices
followed

     

    
      
         

      

      
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    by the
Company or any Subsidiary (except for any such change required by reason of a
change in GAAP or Law);

     

    (j) (i)
adopt, amend or modify an Employee Benefit Plan other than an amendment or
modification to comply with applicable Laws and adoptions, amendments and
modifications that do not apply to any Listed Employee or any officer, employee
or consultant of the Company or any Subsidiary, (ii) grant any severance or
termination pay or any other compensation of any kind or nature payable, in
whole or in part, by reason of the transactions contemplated by this Agreement
to any Listed Employee or any officer, employee or consultant of the Company or
any Subsidiary, (iii) make any change in employment terms, including,
compensation or other benefits for any Listed Employee or any officer, employee
or consultant of the Company or any Subsidiary or increase the contingent or
non-contingent compensation of, or pay any bonus to, any Listed Employee or any
officer, employee or consultant of the Company or any Subsidiary, and (iv) hire,
commit to hire or terminate any Listed Employee or any employee of the Company
or any Subsidiary, except, in the case of clauses (iii) and (iv), in the
ordinary course of business consistent with past practice with respect to any
non-management Listed Employee;

     

    (k) cancel,
discharge, waive, compromise or release any debts, Liabilities or other amounts
owed to the Company and the Subsidiaries that are material to the Company and
the Subsidiaries, taken as a whole, by a Person other than a Related Party, or
amend, terminate, or waive any other material rights of value to the Company or
any Subsidiary;

     

    (l) settle
any claim or lawsuit for an amount involving in excess of $25,000 in the
aggregate or involving equitable or injunctive relief;

     

    (m) write
down or write off the value of any asset material to the Company and the
Subsidiaries, taken as a whole, except as required by GAAP and for write downs
and write offs of accounts receivable and inventory in the ordinary course of
business consistent with past practice;

     

    (n) except as
specifically permitted by this Agreement and the other Transaction Documents,
take any other action or engage in any other practice that would reasonably be
expected to cause the Company and its Subsidiaries to be delivered at the
Closing with more Liabilities or fewer assets than they would have been had the
Company and its Subsidiaries operated their respective businesses in the
ordinary course in a manner consistent with past practice taking into account
seasonal fluctuations;

     

    (o) take, or
omit to take, any action with respect to the Business, that if taken or omitted
on or prior to the date hereof, would have been required to be disclosed on
Schedule 5.8
hereof; or

     

    (p) make any
commitment to do any of the foregoing with respect to the Business.

     

    7.3 Governmental Authorizations;
Consents.  Promptly after the date of this Agreement, CTI shall
use its commercially reasonable efforts to (i) obtain (and cooperate with
the other parties hereto in obtaining) all Governmental Authorizations necessary
for or

     

    
      
         

      

      
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    required
in connection with the consummation of the transactions contemplated by the
Transaction Documents, (ii) obtain (and cooperate with the other parties hereto
in obtaining) the Consents set forth in Section 7.3 of the
Disclosure Schedule in connection with the consummation of the transactions
contemplated by the Transaction Documents and (iii) make (and cooperate
with the other parties hereto in making) all filings required to be made by CTI
pursuant to applicable Laws in order to consummate the transactions contemplated
by the Transaction Documents.

     

    7.4 Access to
Information. 

     

    (a) From the
date hereof to the Closing, CTI shall cause the Company and the Subsidiaries to,
(i) give Buyer and its Representatives (collectively, “Buyer’s
Representatives”) reasonable access to the books, records, plants,
offices and other facilities and properties and personnel (including independent
accountants and outside counsel) of the Company and the Subsidiaries, and, to
the extent related to the Company and the Subsidiaries, to the books and records
of CTI and its Affiliates, during normal business hours and upon reasonable
prior notice, (ii) permit Buyer and Buyer’s Representatives to make such
inspections thereof as such Persons may reasonably request, (iii) furnish
to Buyer and Buyer’s Representatives such financial, operating data and other
information regarding the respective businesses, agreements, commitments,
liabilities, personnel and properties of the Company and the Subsidiaries as
such Person may reasonably request, and (iv) instruct the Representatives
of CTI, the Company and each Subsidiary to reasonably cooperate with Buyer and
Buyer’s Representatives in their investigation of the Company and the
Subsidiaries.  Buyer shall request that its Affiliates and
Representatives agree to comply with Buyer’s undertakings in Section 8.1 with
respect to any confidential information of or relating to CTI, its Affiliates,
the Company and the Subsidiaries obtained pursuant to this Section 7.4; provided
that Buyer shall be responsible for any breach of this Section 7.4 by its
Affiliates and Representatives to whom or to which such confidential or
proprietary information was disclosed by Buyer or any Buyer
Representative.  Any inspections pursuant to this Section 7.4 shall be
conducted in such a manner as not to interfere unreasonably with the conduct of
the business of CTI, the Company, the Subsidiaries or any of their
Affiliates.  Notwithstanding the foregoing, from the date hereof until
the Closing, Buyer shall not have access to personnel records of any Listed
Employee relating to individual performance or evaluation records, medical
histories, any Personally Identifiable Data or other information the disclosure
of which, in CTI’s good faith judgment, would subject CTI, the Company, the
Subsidiaries or any of their Affiliates to any risk of liability, and Buyer
shall not have access to the personnel records of any employee of CTI or its
Affiliates who is not a Listed Employee.

     

    (b) From and
after the Closing Date, CTI and its Affiliates will afford promptly to Buyer and
its counsel, auditors and other authorized representatives reasonable access to
its books of account, financial and other records, employees and auditors to the
extent they relate to the Company or its Subsidiaries or the Transferred
Employees and to the extent necessary to permit Buyer to determine any matter
relating to its rights and obligations in connection with any audit,
investigation, dispute or litigation involving any Governmental Body or other
third Person or any other reasonable business purpose relating to the Company or
its Subsidiaries or the Transferred Employees; provided that any such access by
Buyer and

     

    
      
         

      

      
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    its
counsel, auditors and other authorized representatives shall not unreasonably
interfere with the conduct of the business of CTI or any of its
Affiliates.

     

    7.5 Confidential
Information.  

     

    (a) From and
after the date of this Agreement until the third anniversary of the date of this
Agreement, CTI acknowledges and agrees that neither it nor any of its Affiliates
shall use for any purpose, other than in connection with the transactions
contemplated hereby, or shall disclose, any confidential or proprietary
information of or relating to Buyer to any Person (other than its
Representatives and Affiliates) without the prior written consent of Buyer;
provided, however, that the foregoing restriction shall not apply to
(i) any information which is or becomes publicly known without violation of
this Agreement by CTI or its Representatives, (ii) any information which is
lawfully obtained from a third party that, to CTI’s Knowledge, is not bound by a
contractual, legal or other confidentiality obligation to Buyer or its
Affiliates, (iii) any information that is independently developed by CTI and its
Affiliates without reference to such confidential or proprietary information,
(iv) any disclosure required by applicable Law, any final order or judgment
of a Governmental Body, any rule or regulation of the Nasdaq Stock Market
(“Nasdaq”) or
another securities exchange applicable to CTI or its Affiliates (so long as it
promptly notifies Buyer of such requirement and reasonably cooperates with
Buyer’s efforts to obtain a protective order or other assurance that
confidential treatment will be afforded to such information), or (v) in
connection with the enforcement of CTI’s rights under the Transaction
Documents.

     

    (b) From and
after the Closing Date until the third anniversary of the date of this
Agreement, CTI acknowledges and agrees that neither it nor any of its Affiliates
shall use for any purpose, other than in connection with the transactions
contemplated hereby, or shall disclose, any confidential or proprietary
information of or relating to the Company or any Subsidiary or the Transferred
Employees to any Person (other than its Representatives and Affiliates) without
the prior written consent of Buyer; provided, however, that the foregoing
restriction shall not apply to (i) any information which is or becomes
publicly known without violation of this Agreement by CTI or its
Representatives, (ii) any information which is lawfully obtained from a third
party that, to CTI’s Knowledge, is not bound by a contractual, legal or other
confidentiality obligation to Buyer or its Affiliates, (iii) any information
that is independently developed by CTI and its Affiliates without reference to
such confidential or proprietary information, (iv) any disclosure required
by applicable Law, any final order or judgment of a Governmental Body, any rule
or regulation of Nasdaq or another securities exchange applicable to CTI or its
Affiliates (so long as it promptly notifies Buyer of such requirement and
reasonably cooperates with Buyer’s efforts to obtain a protective order or other
assurance that confidential treatment will be afforded to such information), or
(v) in connection with the enforcement of CTI’s rights under the Transaction
Documents.  For the avoidance of doubt, the confidential information
protected by this Section 7.5(b) shall
include the names and addresses and other information relating to the customers
of the Business, and such information shall be the exclusive property of the
Company following the Closing, recognizing that certain of such customers may
also have made purchases from the other businesses of CTI and its Affiliates and
the names and addresses and other information relating to such customers, to the
extent such information

     

    
      
         

      

      
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    relates
to such other businesses, shall be the exclusive property of CTI or its
Affiliates following the Closing.  In furtherance of the foregoing,
CTI and its Affiliates shall not solicit any customer of the Business, through
the mailing of catalogs or otherwise, regardless of whether CTI or its
Affiliates have previously solicited such customers or included such customers
on its mailing lists, unless either (x) such customers have also made purchases
from CTI’s and its Affiliates’ businesses other than the Business and are
therefore customers of CTI and its Affiliates, or (y) CTI and its Affiliates
have received the name and address of such customers from a third party that, to
CTI’s and its Affiliates’ knowledge, is not bound by a contractual, legal or
other confidentiality obligation to the Company and its Affiliates with respect
to such customer information.

     

    (c) CTI shall
use commercially reasonable methods to ensure its Representatives comply with
the undertakings in this Section 7.5; provided
that, in any event, CTI shall be responsible for any breach of the terms hereof
by any of its Representatives to whom or to which such confidential or
proprietary information was disclosed by CTI.

     

    7.6 Non-Solicitation.  

     

    (a) Commencing
from and after the date of this Agreement until the expiration of 18 months from
the date of this Agreement, CTI shall not, and shall cause its Affiliates not
to, without the prior written approval of Buyer, directly or indirectly,
solicit for employment (as an employee, consultant or otherwise) any employee of
Buyer or any of its Affiliates with whom CTI, its Affiliates or its
Representatives had contact at any time during the process of Buyer considering,
investigating, negotiating and consummating the transactions contemplated by
this Agreement; provided that the foregoing restrictions on solicitation shall
not prohibit solicitation conducted through an independent employment or
recruitment firm (so long as the firm was not directed to solicit such person or
the personnel of Buyer or its Affiliates) or as a result of the use of a general
solicitation (such as an advertisement) not specifically directed to such person
or the personnel of Buyer or its Affiliates.

     

    (b) Commencing
from and after the Closing until the expiration of 18 months from the date of
the Closing, CTI shall not, and shall cause its Affiliates not to, without the
prior written approval of Buyer, directly or indirectly solicit for
employment  or hire (as an employee, consultant or otherwise) any
Transferred Employee; provided, however, that the foregoing shall not prevent
CTI from soliciting or hiring any Transferred Employee whose employment with the
Company was terminated by the Company as part of a general reduction in force
during such period.

     

    7.7 Elimination of Intercompany
Accounts.  Prior to the Closing, CTI shall cause all
intercompany accounts between CTI and any of its Affiliates, on the one hand,
and the Company and its Subsidiaries on the other, to be collected, paid,
eliminated or otherwise settled without any further liability or obligation of
any kind or natures to the Company and its Subsidiaries.

     

    7.8 Exclusivity.  Prior
to the first to occur of the Closing or the termination of this Agreement in
accordance with its terms, CTI shall not, and shall cause each of its
Affiliates

     

    
      
         

      

      
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    and each
of its and its Affiliates’ respective Representatives not to discuss or pursue
or enter into any agreement regarding a possible sale, recapitalization or other
disposition of the Company or its Subsidiaries or a substantial portion of the
assets or securities of the Company or its Subsidiaries or any interest therein
with any Person (other than Buyer and its Affiliates) or provide any information
to any Person (other than Buyer and its Affiliates) in connection
therewith.  CTI represents that it has suspended (and has caused each
of its Affiliates and each of its and its Affiliates’ respective Representatives
to suspend), and shall cease until the termination of this Agreement in
accordance with its terms, all contacts, discussions and negotiations with third
parties (other than Buyer and its Affiliates) regarding any proposal to acquire
the Company or its Subsidiaries or a substantial portion of the assets or
securities of the Company or its Subsidiaries.  

     

    7.9 Financial
Information.  CTI shall provide, and shall cause its Affiliates
to provide, all reasonable cooperation in connection with facilitating the
Closing, including, without limitation, (a) furnishing to Buyer any information
or documents requested by Buyer which is in CTI’s and its Affiliates’ possession
or to which CTI and its Affiliates have reasonable access, (b) providing Buyer
such other assistance as Buyer may reasonably request in connection with Buyer’s
preparation of any audited financial statements of the Company and its
Subsidiaries in a form complying with Regulation S-X with respect to pre-Closing
periods, (c) assisting Buyer in the completion of inventory appraisals and a
physical inventory, and (d) assisting Buyer in obtaining landlord waivers and
other documentation required by Buyer’s financing sources.  Buyer
shall reimburse CTI and its Affiliates for all costs incurred in furnishing such
information or documents or providing such assistance pursuant to this
covenant.

     

    7.10 Maintenance of Insurance
Policies.  Prior to the Closing, CTI and its Affiliates will
use reasonable efforts to maintain insurance policies for the Company and the
Subsidiaries and their assets, properties and employees in an amount and scope
consistent with any such insurance policies in effect as of the date
hereof.

     

     

    SECTION
8.   COVENANTS OF BUYER

     

    8.1 Confidential
Information.  

     

    (a) From and
after the date of this Agreement until the first to occur of the Closing or the
third anniversary of the date of this Agreement, Buyer acknowledges and agrees
that neither it nor its Affiliates shall use for any purpose, other than in
connection with the transactions contemplated hereby, or shall disclose, any
confidential or proprietary information provided to it by CTI, its Affiliates,
the Company or any Subsidiary to any Person (other than its Representatives)
without the prior written consent of CTI; provided, however, that the foregoing
restriction shall not apply to (i) any information which is or becomes publicly
known without violation of this Agreement by Buyer or its Representatives, (ii)
any information which is lawfully obtained from a third party that, to Buyer’s
Knowledge, is not bound by a contractual, legal or other confidentiality
obligation to CTI or its post-Closing Affiliates, (iii) any information that is
independently developed by Buyer or its Affiliates without reference to such
confidential or proprietary information, (iv) any disclosure required by
applicable Law, any final order or judgment of a Governmental Body (so long as
it

     

    
      
         

      

      
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    promptly
notifies CTI of such requirement and reasonably cooperates with CTI’s efforts to
obtain a protective order or other assurance that confidential treatment will be
afforded to such information), or (v) in connection with the enforcement of
Buyer’s rights under the Transaction Documents.  For the avoidance of
doubt, the confidential information protected by this Section 8.1(a) shall
include the names and addresses and other information relating to the customers
of the businesses of CTI and its Affiliates other than the Business, and such
information shall be the exclusive property of CTI and its Affiliates following
the Closing, recognizing that certain of such customers may also have made
purchases from the Business and the names and addresses and other information
relating to such customers, to the extent such information relates to the
Business, shall be the exclusive property of the Company and its Subsidiaries
following the Closing.  In furtherance of the foregoing, the Buyer and
its Affiliates (including the Company and its Subsidiaries) shall not solicit
any customer of CTI and its post-Closing Affiliates, through the mailing of
catalogs or otherwise, regardless of whether the Company and its Subsidiaries
have previously solicited such customers or included such customers on their
mailing lists, unless either (x) such customers have also made purchases from
the Business and are therefore customers of the Business, (y) the Company and
its Subsidiaries have received the name and address of such customers from a
third party that, to Company’s and its Subsidiaries’ knowledge, is not bound by
a contractual, legal or other confidentiality obligation to CTI or its
post-Closing Affiliates with respect to such customer information or (z) such
customers are customers of the Buyer and its Affiliates or the Buyer and its
Affiliates were otherwise in possession the name and address of such customers
prior to the Closing.

     

    (b) Commencing
from and after the Closing until the third anniversary of the date of this
Agreement, Buyer acknowledges and agrees that neither it nor its Affiliates
shall use for any purpose, other than in connection with the transactions
contemplated hereby, or shall disclose, any confidential or proprietary
information provided to it by CTI, its Affiliates, the Company or any Subsidiary
that relates to CTI and its post-Closing Affiliates and not the Company, the
Subsidiaries or the Transferred Employees (the “CTI Confidential
Information”) to any Person (other than its Representatives) without the
prior written consent of CTI; provided, however, that the foregoing restriction
shall not apply to (i) any information which is or becomes publicly known
without violation of this Agreement by Buyer or its Representatives, (ii) any
information which is lawfully obtained from a third party that, to Buyer’s
Knowledge, is not bound by a contractual, legal or other confidentiality
obligation to CTI or its post-Closing Affiliates, (iii) any information that is
independently developed by Buyer or its Affiliates without reference to the CTI
Confidential Information, (iv) any disclosure required by applicable Law, any
final order or judgment of a Governmental Body (so long as it promptly notifies
CTI of such requirement and reasonably cooperates with CTI’s efforts to obtain a
protective order or other assurance that confidential treatment will be afforded
to such information), or (v) in connection with the enforcement of Buyer’s
rights under the Transaction Documents.

     

    (c) Buyer
shall use commercially reasonable methods to ensure its Representatives comply
with the undertakings in this Section 8.1; provided
that, in any event, Buyer shall be responsible for any breach of the terms of
this Section
8.1 by any of its Representatives.

     

    
      
         

      

      
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    8.2 Governmental
Authorizations.  Promptly after the date of this Agreement,
Buyer shall use its commercially reasonable efforts to (i) obtain (and
cooperate with the other parties hereto in obtaining) all Governmental
Authorizations necessary for or required in connection with the consummation of
the transactions contemplated by the Transaction Documents, (ii) make (and
cooperate with the other parties hereto in making) all filings required to be
made by Buyer pursuant to applicable Laws in order to consummate the
transactions contemplated by the Transaction Documents, and (iii) obtain the
release of CTI and/or its Affiliates, as applicable, under the guarantees set
forth in Section
8.2 of the Disclosure Schedule.  

     

    8.3 Notice of Breach; Failure to
Satisfy Closing Condition.  From the date hereof until the
Closing, Buyer shall promptly advise CTI upon obtaining Knowledge of (a) any
threat or commencement of any material dispute, claim, action, suit, proceeding,
arbitration or investigation by, against or affecting Buyer or any of its
Affiliates or any of their properties, operations or assets that would have a
Buyer Material Adverse Effect, (b) the existence of any fact or condition that
would constitute a breach in any material respect of any of Buyer’s
representations or warranties contained herein, or (c) the occurrence of any
breach in any material respect of any covenant of Buyer in this Agreement that,
in all cases, would be reasonably likely to make the satisfaction of the
conditions in Section
12.2 impossible or unlikely.

     

    8.4 Non-Solicitation.  Commencing
from and after the date of this Agreement until the expiration of 18 months from
the date of this Agreement, Buyer shall not, and shall cause its Affiliates not
to, without the prior written approval of CTI, directly or indirectly solicit
for employment (as an employee, consultant or otherwise) any employee of CTI or
its Affiliates (other than the Listed Employees) with whom Buyer had contact at
any time during the process of Buyer considering, investigating, negotiating and
consummating the transactions contemplated by this Agreement; provided that the
foregoing restrictions on solicitation shall not prohibit solicitation conducted
through an independent employment or recruitment firm (so long as the firm was
not directed to solicit such person or the personnel of CTI or its Affiliates)
or as a result of the use of a general solicitation (such as an advertisement)
not specifically directed to such person or the personnel of CTI or its
Affiliates.  

     

     

    SECTION
9.   ADDITIONAL COVENANTS OF BUYER, THE COMPANY AND
CTI

     

    9.1 Further
Assurances.  Subject to the terms and conditions of this
Agreement and the other Transaction Documents, each party hereto shall use its
commercially reasonable efforts to take, or cause to be taken, all actions and
to do, or cause to be done, all things necessary or desirable under applicable
Laws to consummate the transactions contemplated by the Transaction Documents
(including each party hereto using its commercially reasonable efforts to cause
the Closing to occur on or prior to September 30, 2008) and shall, from
time to time and without further consideration, either before or after the
Closing, execute such further instruments and take such other actions as any
other party hereto shall reasonably request in order to fulfill its obligations
under any of the Transaction

     

    
      
         

      

      
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    Documents,
to effectuate the purposes of the Transaction Documents and to provide for the
orderly and efficient transition of the ownership of the Company and its
Subsidiaries to Buyer. 

     

    9.2 Certain Filings and
Consents.  Each party to this Agreement shall cooperate with
one another (i) in determining whether any action by or in respect of, or
filing with, any Governmental Body is required, or whether any Consents are
required to be obtained from parties to any material contracts, in connection
with the consummation of the transactions contemplated by the Transaction
Documents, and (ii) subject to the terms and conditions of this Agreement
and the other Transaction Documents, in taking such commercially reasonable
actions or making any such filings, furnishing information required in
connection therewith and seeking timely to obtain any such Consents; provided
that no party shall be obligated to expend any money or grant any other
consideration or compensation to obtain any such Consent.  Buyer and
CTI shall use their respective reasonable best efforts to keep the other party
informed in all material respects with respect to any communication given or
received in connection with any filing, submission, investigation or proceeding
relating to the transactions contemplated by the Transaction
Documents.

     

    9.3 Public
Announcements.  Each party hereto agrees that no public release
or announcement concerning the transactions contemplated by this Agreement and
the other Transaction Documents shall be issued by any such party without the
prior written consent of the other parties hereto (which consent shall not be
unreasonably withheld or delayed), except any release that may be required by
applicable Laws or the rules or regulations of Nasdaq (including on Form 8-K of
the Securities and Exchange Commission); provided however, in such case, the
party required to make the release or announcement shall, to the extent
practicable, allow the other parties reasonable time to comment on such release
or announcement in advance of such issuance and shall use commercially
reasonable efforts to incorporate such other party’s comments into such release
or announcement.  Notwithstanding the foregoing, no provision of this
Agreement shall relieve Buyer or any of its Representatives or Affiliates from
any of their obligations under Section 8.1 or CTI or
any of its Representatives or Affiliates from any of their obligations under
Section
7.5.

     

    9.4 Excluded Subsidiaries and
Excluded Assets.  

     

    (a) Buyer
acknowledges that the outstanding capital stock and other equity securities of,
or equity interests in, the Excluded Subsidiaries owned of record and
beneficially by the Company and all of the Excluded Assets have been or will be
transferred to CTI or an affiliate of CTI on or prior to the Closing Date, and
that CTI is not selling, and Buyer is not acquiring, any interest in the
Excluded Subsidiaries or in any asset thereof or any other Excluded Asset as a
result of the transactions contemplated in this Agreement or
otherwise.

     

    (b) The
representations and warranties of CTI made in Sections 4 and 5 of this Agreement
and the Disclosure Schedules, as of the Closing Date, assume that the transfer
of assets and assumption of liabilities contemplated by the Assignment and
Assumption shall have been consummated prior to the Closing pursuant to the
terms of such Assignment and Assumption, so that, as of the Closing, (i) the
Excluded Assets shall no longer be held by the Company or it Subsidiaries, (ii)
the Company and its Subsidiaries shall no longer have any

     

    
      
         

      

      
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    Liabilities
with respect to any Excluded Liabilities, (iii) the Acquired Assets shall be
held by the Company or one of it Subsidiaries, and (iv) the Company and its
Subsidiaries shall be liable with respect to the Assumed Liabilities; provided,
however, the disclosure of any Excluded Liabilities or Excluded Assets on the
Disclosure Schedules shall not be deemed to limit or impair in any manner
whatsoever the right of Buyer, the Company and their Affiliates to seek
indemnification pursuant to Section
14.2(a)(iii).

     

    9.5 Transition
Services.  At the Closing, Charming Shoppes of Delaware, Inc.
and the Company will enter into a Transition Services Agreement (the “Transition Services
Agreement”), the form of which is attached as Exhibit
9.5.

     

    9.6 Mutual
Release.  

     

    (a) Effective
immediately prior to the Closing, CTI hereby irrevocably waives, releases and
discharges the Company and its Subsidiaries from any and all Liabilities and
obligations to CTI and its Affiliates of any kind or nature whatsoever
(including, without limitation, in respect of rights of contribution or
indemnification), in each case whether absolute or contingent, liquidated or
unliquidated, known or unknown, and whether arising under any agreement or
understanding, or the limited liability agreement, articles, bylaws or other
constitutive documents of the Company or any of its Subsidiaries or otherwise at
law or equity, and CTI and its Affiliates shall not seek to recover any amounts
in connection therewith or thereunder from Buyer, the Company or its
Subsidiaries.  The foregoing waiver, release and discharge shall not
apply in respect of any liability or obligation arising under (i) any of the
Transaction Documents or (ii) any agreement entered into on or after the Closing
Date.

     

    (b) At the
Closing, Buyer shall cause the Company and its Subsidiaries to irrevocably
waive, release and discharge CTI and its Affiliates from any and all liabilities
and obligations to the Company and its Subsidiaries of any kind or nature
whatsoever (including, without limitation, in respect of rights of contribution
or indemnification), in each case whether absolute or contingent, liquidated or
unliquidated, known or unknown, and whether arising under any agreement or
understanding, or the articles, bylaws or other constitutive documents of the
Company or any of its Subsidiaries or otherwise at law or equity, and Buyer, the
Company or its Subsidiaries shall not seek to recover any amounts in connection
therewith or thereunder from CTI and its Affiliates.  The foregoing
waiver, release and discharge shall not apply in respect of any liability or
obligation arising under (i) any of the Transaction Documents or (ii) any
agreement entered into on or after the Closing Date.

     

    (c) CTI shall
cause all Related Party Agreements to be cancelled as of the Closing Date, and
neither CTI or its Affiliates nor the Company or its Subsidiaries shall have any
further liability or obligation with respect thereto.  From and after
the Closing, all transactions between the Company or any Subsidiary, on the one
hand, and CTI or its Affiliates, on the other hand, shall be governed by the
Transaction Documents.

     

    
      
         

      

      
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    SECTION
10.   TAX MATTERS

     

    10.1 Tax Representations of
CTI.  CTI hereby represents and warrants to Buyer that, except
as set forth in Section 10.1 of the Disclosure Schedule attached
hereto:

     

    (a) All Tax
Returns, or extensions relating thereto, required to be filed by or with respect
to the Company and its Subsidiaries have been timely and properly filed, and all
such Tax Returns are correct and complete in all respects.

     

    (b) All
liabilities for Taxes of the Company and its Subsidiaries (including any Tax
liabilities relating to other consolidated group members under Treasury
Regulation Section 1.1502-6 and any estimated Taxes) with respect to taxable
periods ending on or before, and the portion of any interim period up to and
including, the Closing Date have been properly and timely paid (to the extent
due and payable) or, in the case of Taxes not yet due, properly provided for on
the Balance Sheet or, in the case of Taxes accruing after the date thereof, on
the books and records of the Company and its Subsidiaries in accordance with
past practice and such amounts accrued for Taxes are sufficient to pay any Taxes
of the Company and its Subsidiaries through the Closing
Date.  Notwithstanding anything to the contrary in this Agreement, no
representation or warranty is made with respect to the tax effects of any
transactions entered into after the time of Closing based on instructions of the
Buyer and its agents.  There are no Encumbrances relating to Taxes,
other than Permitted Encumbrances, existing or, to the Knowledge of CTI,
threatened or pending with respect to any asset of the Company and its
Subsidiaries.

     

    (c) No issues
have been raised in writing with the Company and its Subsidiaries (or are
currently pending) by the Internal Revenue Service (“IRS”) or any other
taxing authority in connection with any of the Tax Returns (including any
assertion by a taxing authority that a required Tax Return was not filed), and
no waivers of statutes of limitations have been given with respect to any such
Tax Returns or with respect to any Taxes.

     

    (d) Section 10.1(d) of
the Disclosure Schedule identifies all Tax Returns of or with respect to the
Company or any of its Subsidiaries that are currently under examination by the
IRS or by other taxing authorities.  There are no unpaid deficiencies
asserted or assessments made by any taxing authority against the Company or any
of its Subsidiaries.

     

    (e) Neither
the Company nor any Subsidiary (i) has made any transfer of any intangible
property with respect to which Code Section 367(d) or 482 will require the
recognition of additional income after the Closing Date or (ii) owns stock in a
“passive foreign investment company” within the meaning of Code Section
1297(a).

     

    (f) Neither
the Company nor any Subsidiary (i) is a party to any agreement, with any Person
other than any Affiliate providing for the allocation or sharing of Taxes, or
(ii) has been included in any “consolidated,” “unitary” or “combined” Tax Return
with any such Person since October 30, 2002.

     

    
      
         

      

      
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    (g) Neither
the Company nor any Subsidiary is a party to any agreement, contract,
arrangement or plan that has resulted or will result, separately or in the
aggregate, in the payment of any “excess parachute payment” within the meaning
of Code Section 280G.

     

    (h) The
Company and each of its Subsidiaries has properly withheld and paid all Taxes
required to have been withheld and paid in connection with amounts paid or owing
to any shareholder, employee, creditor, independent contractor, or other third
party.

     

    (i) The
representations made by CTI in this Section 10.1 are the only representations
and warranties made in this Agreement with respect to Taxes and Tax matters and
are made only with respect to taxable periods that end on or prior to the
Closing Date and the pre-Closing Date portion of any taxable period that
includes the Closing Date and ends after such date.  CTI makes no
representations or warranties regarding any Tax positions taken on or after the
Closing Date.  Neither the Company nor any Subsidiary (A) has been a
member of an affiliated group filing a consolidated federal income Tax Return
(other than a group the common parent of which was Parent) since October 30,
2002 and (B) has any liability for the Taxes of any Person (other than any of
the Company or its Subsidiaries) under Treas. Reg. Section 1.1502-6 (or any
similar provision of state, local, or non-US law), as a transferee or successor,
by contract, or otherwise.

     

    10.2 Tax Covenants of CTI and the
Company.  

     

    (a) Neither
Buyer nor the Company shall amend any Tax Return filed on or before the Closing
Date without the written consent of CTI, except for the purpose of claiming a
refund resulting from a carryback from a period ending after the Closing
Date.

     

    (b) Refunds
of Taxes of the Company (net of any Taxes or costs incurred with respect
thereto) with respect to taxable years ended on or before the Closing Date,
aside from any refunds resulting from carrybacks from periods ending after the
Closing Date, shall be for CTI’s account and, if received by Buyer or the
Company, shall be paid over to CTI within 10 Business Days of receipt
thereof.

     

    (c) CTI shall
provide to Buyer at Closing (i) a certification of non-foreign status, in
accordance with Treas. Reg. Section 1.1445-2(b)(2), that CTI is not a foreign
person for United States federal income tax purposes and (ii) a certification
issued by the Company in accordance with Treas. Reg. Section 1.1445-2(c), that
stock in the Company is not a United States real property interest.

     

    10.3 Tax
Indemnification.  

     

    (a) CTI shall
indemnify Buyer, the Company and its Subsidiaries and hold them harmless from
and against (A) all Taxes (or the non-payment thereof) of the Company and its
Subsidiaries for all taxable periods ending on or before the Closing Date and
the portion through the end of the Closing Date for any taxable period that
includes (but does not end on) the Closing Date (each such taxable period, a
“Pre-Closing Tax
Period”), (B) any and all Taxes of any member of an affiliated,
consolidated, combined, or unitary group of which the Company or any
Subsidiaries (or any of their predecessors) is or was a member on or prior to
the Closing Date, including pursuant to Treasury Regulation Section 1.1502-6 or
any

     

    
      
         

      

      
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    analogous
or similar state, local, or foreign law or regulation, and (C) any and all Taxes
of any Person (other than the Company and its Subsidiaries) imposed on the
Company and its Subsidiaries as a transferee or successor, by contract or
pursuant to any law, rule or regulation, which Taxes relate to an event or
transaction occurring before the Closing, except in each case, to the extent
such Taxes were taken into account in the final determination of Final Closing
CTI Borne Expenses.  Except as otherwise provided in this Agreement,
CTI shall not indemnify Buyer, the Company or its Subsidiaries for Taxes
resulting from actions taken after the time of Closing based on instructions of
the Buyer and its agents.  CTI shall reimburse Buyer for any Taxes of
the Company and its Subsidiaries which are the responsibility of CTI pursuant to
this Section
10.3 no later than five business days prior to payment of such Taxes by
Buyer or the Company.

     

    (b) In the
case of any taxable period that includes (but does not end on) the Closing Date
(a “Straddle
Period”), the amount of any Taxes based on or measured by income or
receipts of the Company and its Subsidiaries for the Pre-Closing Tax Period
shall be determined based on an interim closing of the books as of the close of
business on the Closing Date, and the amount of other Taxes of the Company and
its Subsidiaries for a Straddle Period which relate to the Pre-Closing Tax
Period shall be deemed to be the amount of such Tax for the entire Taxable
period multiplied by a fraction the numerator of which is the number of days in
the Taxable period ending on the Closing Date and the denominator of which is
the number of days in the Straddle Period.

     

    10.4 Tax
Contest.  Notwithstanding Section 14.3, if
Buyer receives any written claim or notification which involves the assertion of
any claim, or the commencement of any investigation, examination, audit, suit,
action or proceeding relating to a matter that is the subject of the
representations or covenants set forth in this Section 10 (a
“Tax Contest”),
Buyer shall, within ten days of receiving notice of such claim, notify CTI in
writing of such Tax Contest and shall give CTI such information with respect to
the Tax Contest as CTI may reasonably request.  Except as otherwise
provided in this Section 10.4, CTI
shall, at its own expense, participate in and control any Tax Contest for which
CTI is providing indemnification pursuant to Section 10.3 or Section 14.2(a), and
may, at its own expense, participate in and, assume control over the defense of
any matter at issue in such Tax Contest.  In connection with any Tax
Contest with respect to which CTI elects to assume control, CTI shall, except
with respect to items indirectly affecting Taxes of the Company or any
Subsidiary for which CTI has not agreed to be liable and subject to Buyer’s
right to consent contained in this Section 10.4, have
the exclusive power to contest, settle, prosecute, defend and make decisions and
elections in respect of such Tax Contest, and determine the manner in which the
prosecution or defense is conducted, the contest or settlement occurs, or the
decisions or elections are made.  Buyer may, at its own expense,
participate in any such Tax Contest other than a Tax Contest that involves the
consolidated, combined or unitary group that includes CTI.  At no time
shall Buyer or the Company settle or otherwise compromise, prosecute or defend
without the prior written consent of CTI, any Tax Contest of which CTI assumes
control in accordance with this Section 10.4 and any
settlement or compromise made by Buyer or the Company with respect to such Tax
Contest shall not be effective and shall be null and void with respect to CTI to
the extent CTI is prejudiced by such action.  Each of the parties
hereto and their respective Representatives shall cooperate with each other
party hereto and their respective Representatives, as reasonably requested
thereby, in the prosecution,

     

    
      
         

      

      
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    defense,
settlement or contest of any Tax Contest.  Buyer shall promptly
provide CTI with copies of all notices and other correspondence and information
received by Buyer or the Company with respect to any Tax
Contest.  Buyer hereby grants any Tax practitioner retained by CTI, in
connection with any Tax Contest of which CTI assumes or continues control in
accordance with this Section 10.4, with
power of attorney to act on behalf of Buyer and the Company in respect of such
Tax Contest; provided, however, that the terms of any settlement or agreement,
to the extent such settlement or agreement (i) provides that Buyer or the
Company take or refrain from taking any actions or make any payments for which
Buyer is not fully indemnified pursuant to Section 14.2 or (ii)
would cause any material detriment to the Buyer or the Company in any period
ending after the Closing Date, shall be on terms and conditions reasonably
acceptable to Buyer and, if applicable, the Company and subject to Buyer’s
consent to such Settlement, not to be unreasonably withheld.  Buyer
shall provide, or cause the Company to provide, to CTI a separate power of
attorney granting CTI the power to control a particular Tax Contest in the
manner set forth in this Agreement in form and substance reasonably satisfactory
to Buyer and CTI. 

     

    10.5 Tax Sharing
Agreements.  All tax sharing agreements or similar agreements
with respect to or involving the Company and its Subsidiaries shall be
terminated as of the Closing Date, and, after the Closing Date, the Company and
its Subsidiaries shall not be bound thereby or have any Liability
thereunder.

     

    10.6 Transfer
Taxes.  All transfer, documentary, sales, use, stamp,
registration and other such Taxes, and all conveyance fees, recording charges
and other fees and charges (including any penalties and interest) incurred in
connection with the consummation of the transactions contemplated by this
Agreement shall be borne 50% by Buyer and 50% by CTI.  Each of Buyer
and CTI agree to take any reasonable action to reduce such Taxes incurred in
connection with the consummation of the transactions contemplated by this
Agreement.  

     

    10.7 Section 338(h)(10)
Election.  At or before the Closing, Buyer and CTI shall cause
to be prepared, executed and exchanged between the parties IRS Form 8023 and any
other forms necessary to make a joint election under Section 338(h)(10) of the
Code with respect to the purchase of the Shares of the Company and under any
similar provisions of state, local or foreign law (the “Election”).  CTI
shall timely cause such Election to be filed.  Neither Buyer nor CTI
shall take any action or file any document inconsistent with the Election.

     

    10.8 Purchase Price Allocation
.  Within 60 days of the Closing Date, Buyer shall provide CTI
with an allocation of the Purchase Price and the liabilities of the Company
(plus other relevant items) to the assets of the Company for all purposes
(including Tax and financial accounting) (the “Purchase Price
Allocation”). Buyer shall permit CTI to review and comment on the
Purchase Price Allocation and shall make such revisions as are reasonably
requested by CTI.  Buyer, the Company, and CTI shall file all Tax
Returns (including amended returns and claims for refund) and information
reports in a manner consistent with the Purchase Price Allocation.

     

    
      
         

      

      
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    SECTION
11.   EMPLOYEE BENEFITS

     

    11.1 Listed Employees;
Transferred Employees.  On the Closing Date, CTI and its
Affiliates shall terminate the employment of, and Buyer shall offer employment
with Buyer or one of Buyer’s Affiliates, to each of the employees listed on
Schedule 11.1
hereto (each, a “Listed Employee” and
collectively, the “Listed Employees”),
at a rate of pay comparable to, and with severance entitlements not less
favorable than, the rate of pay and severance entitlements, respectively,
provided to the Listed Employee immediately prior to the Closing
Date.  For this purpose, “pay” shall include base salary or wages, but
exclude any equity-based or incentive compensation.  Buyer, at the
time it extends such employment offers, shall provide appropriate information
regarding employment terms and conditions to the Listed Employees, which shall
conform in all respects to the provisions of this Section
11.1.  Each Listed Employee who accepts such offer of
employment shall become an employee of the Buyer or its Affiliates on the
Closing Date and is referred to as a “Transferred
Employee,” and all such employees are collectively referred to as the
“Transferred
Employees.”  Buyer shall, or shall cause its Affiliates to,
continue to provide each Transferred Employee with the pay (while such
Transferred Employees remain employed by Buyer or its Affiliates) and severance
entitlements described in this Section at least until January 1,
2009.  On and after January 2, 2009, the severance program applicable
to such employees shall be comparable to that provided to similarly situated
employees of Buyer. 

     

    11.2 Comparability of
Benefits.  For the period commencing on the Closing Date and
ending on the first anniversary of the Closing Date, Buyer shall, or shall cause
its Affiliates (including the Company or the Subsidiaries), to provide employee
benefits (other than equity-based compensation arrangements) to each Transferred
Employee as of the Closing Date that are no less favorable in the aggregate than
the employee benefits (other than equity-based compensation arrangements)
provided to similarly situated employees of Buyer; provided, however, that with
respect to the period beginning on the Closing Date and ending immediately prior
to January 1, 2009 or such earlier date that Buyer provides medical coverage,
dental coverage, vision coverage and health-care flexible spending accounts to
Transferred Employees through one or more group health plans maintained by Buyer
or its Affiliates (the “Buyer Group Health Plan
Effective Date”), CTI and its Affiliates shall provide medical, dental,
vision and/or health-care flexible spending accounts (as elected by a
Transferred Employee or the Transferred Employee’s beneficiaries) to Transferred
Employees (and their beneficiaries) provided that Buyer pays the “Required
Amount” to CTI within three Business Days of the date the Transferred Employee
would have been required to pay the COBRA premium for such coverage (without
regard to any grace period) if CTI had required the Transferred Employee (and
not the Buyer) to pay the COBRA premium.  With respect to medical,
dental and vision coverage, the Required Amount shall be the applicable COBRA
premium required for terminating employees (and their beneficiaries) to receive
COBRA coverage under the applicable plan maintained by CTI’s
Affiliate.  With respect to health-care flexible spending accounts,
the “Required Amount” shall be the amount that the Transferred Employee (or his
or her beneficiary) would have been required to pay for COBRA coverage with
respect to health-care flexible spending accounts if CTI had required the
Transferred Employee (and not the Buyer) to pay the COBRA premium. 

     

    
      
         

      

      
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    11.3 Welfare
Plans.  With respect to any Transferred Employee who was
covered by a medical, dental or health plan maintained by CTI or any of its
Affiliates on the day before the Closing Date (and beneficiaries thereof) (each,
a “Covered
Individual”), if such coverage (the “Old Coverage”) is
changed on or after the Closing Date and before the first anniversary of the
Closing Date, Buyer shall, or shall cause its Affiliates, to use commercially
reasonable efforts (i) to waive all pre-existing conditions, exclusions and
waiting periods with respect to participation and coverage requirements
applicable to each Covered Individual under the new group health coverage, other
than conditions, exclusions or waiting periods that are already in effect with
respect to any such Covered Individual under the Old Coverage that have not been
satisfied as of the date such new coverage is put in place, and (ii) if the Old
Coverage is changed prior to January 1, 2009, to provide each such Covered
Individual with credit for any deductibles and co-payments applied or made with
respect to him or her under the Old Coverage (to the same extent that such
credit was given under such Old Coverage prior to the date such new coverage was
put in place) in satisfying any applicable deductible or out-of-pocket
requirements under any such plans in which such individuals may be eligible to
participate after the Closing Date; provided, however, that the foregoing shall
not apply to the extent it would result in duplication of benefits. For the
period commencing on the Closing Date and ending immediately prior to January 1,
2009, Buyer shall, or shall cause its Affiliates (including the Company or the
Subsidiaries), to limit the participant contribution required for Covered
Individuals to obtain such medical, dental and vision coverage to no more than
the participant contribution required of Covered Individuals for similar
coverage under the Employee Benefit Plans immediately prior to the Closing Date.

     

    11.4 Service
Credit.  Buyer shall give each Transferred Employee full credit
for purposes of eligibility and vesting under the employee benefit plans and
arrangements (including, but not limited to, employee benefit plans within the
meaning of Section 3(3) of ERISA, vacation and severance plans or arrangements)
maintained or sponsored by Buyer or any of its Affiliates (including the Company
and the Subsidiaries) in which such Transferred Employees participate after the
Closing for services rendered by such Transferred Employees to CTI, the Company
or the Subsidiaries prior to the Closing, except to the extent such credit would
result in an unintended duplication of benefits.

     

    11.5 Rollovers and
Transfers.  Effective as of the Closing Date, CTI shall cause
its Affiliates to fully vest all account balances of each Transferred Employee
under the Charming Shoppes, Inc. Employees’ Retirement Savings Plan and the
Charming Shoppes Variable Deferred Compensation Plan for
Executives.  As soon as practicable after the “Buyer Plan Effective
Date,” Buyer shall, or shall cause its Affiliates (including the Company and the
Subsidiaries), to take the following actions with respect to each Transferred
Employee who continues to be employed by the Company, a Subsidiary or an
Affiliate of Buyer on the date of the rollover (with respect to rollovers
described in subsection (a)) and the date of the transfer (with respect to
transfers described in subsection (b)):  (a) permit each such
Transferred Employee to make rollovers (in the form of cash and notes associated
with plan loans) from the Charming Shoppes, Inc. Employees’ Retirement Savings
Plan to a 401(k) plan sponsored by Buyer or one of its Affiliates (including the
Company and the Subsidiaries) after the Closing Date, provided such
distributions are eligible rollover distributions as defined in Section
402(c)(4) of the Code, and (b) accept transfers from the health-care and
dependent-care flexible spending accounts in which such Transferred Employees
participated

     

    
      
         

      

      
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    immediately
prior to the Buyer Plan Effective Date to comparable flexible spending accounts
maintained by Buyer or one of its Affiliates (including the Company and the
Subsidiaries) of an amount equal to the positive excess of (A) over (B),
determined separately for each such employee and separately for the health-care
flexible spending account and the dependent-care flexible spending account,
where (A) is the total salary reduction contributions made by such employee
before the Buyer Plan Effective Date with respect to such account for 2008, and
(B) is the total expenses paid from such account before the Buyer Plan Effective
Date with respect to expenses incurred in 2008.  As soon as
practicable after the Buyer Plan Effective Date, CTI shall pay to Buyer the
aggregate amount of the account transfers credited pursuant to clause (b) of the
preceding sentence.  Buyer (or an Affiliate thereof, as applicable)
will make appropriate adjustments to their respective cafeteria plans to reflect
this transfer.  Buyer (or an Affiliate thereof, as applicable) shall
upon such transfer be responsible to reimburse for all eligible claims under the
terms of Buyer’s (or the Affiliate’s) plan, including claims incurred during
2008 and before Closing, up to the amount of such employee’s election in the
case of a health-care flexible spending account, and up to the amount of such
employee’s 2008 contributions in the case of a dependent-care flexible spending
account, reduced by amounts previously reimbursed by CTI, if any.  For
purposes of this Section 11.5, “Buyer
Plan Effective Date” shall mean (a) with respect to rollovers from the Charming
Shoppes, Inc. Retirement Savings Plan and transfers of dependent-care flexible
spending accounts, the Closing Date, or (b) with respect to health-care flexible
spending accounts, the Buyer Group Health Plan Effective Date. Notwithstanding
the foregoing, in the event the Buyer Group Health Plan Effective Date is
January 1, 2009, there shall be no transfer with respect to health-care flexible
spending accounts under this Section 11.5. CTI and
its Affiliates shall not place any Transferred Employee’s 401(k) plan loan into
default unless the Transferred Employee fails to elect a rollover to Buyer’s (or
an Affiliate’s) 401(k) plan within 55 days of the Closing Date.  Buyer
and CTI shall take (or cause to be taken) all actions necessary and desirable to
effect this Section
11.5.

     

    11.6 Continuation
Coverage.  Effective as of the Buyer Group Health Plan
Effective Date, Buyer shall, or shall cause its Affiliates (including the
Company and its Subsidiaries), to (a) assume sole responsibility for any
liabilities and obligations arising under Title X of the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended, and applicable state continuation
coverage rights laws (collectively, “Continuation Coverage
Laws”) on or after the Buyer Group Health Plan Effective Date resulting
from the actions (or inactions) of the Buyer or its Affiliates on or after the
Buyer Group Health Plan Effective Date with respect to Buyer’s group health
plans.  CTI and its Affiliates shall continue to provide coverage
under the Continuation Coverage Laws for former employees (and their
beneficiaries) of, and eligible beneficiaries of employees of, CTI, the Company
or any Subsidiary who are receiving such coverage or are eligible to elect to
receive such coverage prior to the Buyer Group Health Plan Effective
Date.

     

    11.7 Retained
Liabilities.  Except to the extent taken into account in the
final determination of Final Closing CTI Borne Expenses with respect to accrued
payroll, bonus payments and vacation, personal days, sick pay and other paid
time off or otherwise expressly assumed by the Company pursuant to Section 3.4
hereof, CTI and its post-Closing Affiliates, including Parent, will retain and
be responsible for the satisfaction of, and shall indemnify and hold Buyer, the
Company and its Subsidiaries harmless from, all liabilities and
obligations

     

    
      
         

      

      
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    relating
to the Employee Benefit Plans and all such other employee compensation or
benefit plans, programs, agreements and arrangements that have been sponsored,
maintained or contributed to by Parent, CTI or any other entity that, together
with Parent, CTI, the Company or any Subsidiary, is or was treated as a single
employer under Section 414 of the Code.  For the avoidance of doubt,
Buyer, the Company and their Affiliates shall not be required to pay or
otherwise be responsible for (whether as a variable cost under the Transition
Services Agreement or otherwise) the amount of any severance payments or any
change-of-control, retention or similar payments or bonuses payable to any
employee of Parent, CTI or any of their post-Closing Affiliates (other than such
amounts payable to Transferred Employees, if any, to the extent such amounts are
taken into account in the final determination of Final Closing CTI Borne
Expenses).

     

    11.8 Paid Time
Off.  From and after the Closing Date, Buyer shall, or shall
cause its Affiliates, to assume, honor and be solely responsible for paying,
providing and satisfying when due all vacation, personal days, sick pay and
other paid time off for Transferred Employees accrued but unused as of the
Closing Date, on terms and conditions not less favorable than the terms and
conditions in effect immediately prior to the Closing Date.

     

    11.9 Third Party Beneficiaries;
Other Limitations.  Nothing contained in this Agreement,
express or implied, (a) shall be construed to establish, amend, or modify any
benefit plan, program, agreement or arrangement, (b) shall alter or limit the
ability of Buyer, the Company or its Subsidiaries to amend, modify or terminate
any benefit plan, program, agreement or arrangement at any time established,
sponsored or maintained by any of them, (c) is intended to confer upon any
Person any right to employment or continued employment for any period of time by
reason of this Agreement, or any right to a particular term or condition of
employment, or (d) is intended to confer upon any Person any other rights as a
third-party beneficiary of this Agreement. 

     

     

    SECTION
12.   CLOSING CONDITIONS

     

    12.1 Conditions to Obligation of
Buyer.  The obligation of Buyer to purchase the Shares and to
take the other actions required to be taken by Buyer at Closing is subject to
the satisfaction or waiver by Buyer at the Closing of each of the following
conditions: 

     

    (a) Performance.  CTI
shall have (i) executed and delivered to Buyer this Agreement and the other
Seller Transaction Documents and (ii) delivered to Buyer certificates
representing all of the Shares, duly endorsed for transfer or with stock powers
affixed thereto executed in blank in proper form for transfer.

     

    (b) Representations and
Warranties.  The representations and warranties of CTI
contained in this Agreement shall have been true and correct as of the date of
this Agreement and shall be true and correct as of the Closing Date, as if made
at and as of the Closing Date (except to the extent such representations and
warranties expressly relate to an earlier date, in which case they shall have
been true and correct as of such earlier date), except in both cases for such
breaches of representations and warranties which, individually or in the
aggregate, would not have or, would not reasonably be expected to have, a
Material Adverse

     

    
      
         

      

      
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    Effect;
provided, however, the representations and warranties of CTI in Section 4.2, Section 4.4 and Section 5.3 shall
each then be true and correct in all respects.

     

    (c) Performance of
Covenants.  CTI shall have performed or complied in all
material respects with all of the agreements and covenants required by this
Agreement to be performed or complied with by it before or at the
Closing.

     

    (d) Legal
Matters.  No temporary, preliminary, permanent or final order,
injunction or judgment of a court of competent jurisdiction or other
Governmental Body shall have been issued or rendered that would prevent or
render unlawful the consummation of the transactions contemplated by this
Agreement or any other Transaction Document.

     

    (e) Resignation of
Directors.  Buyer shall have received resignations from all of
the directors of the Company and each Subsidiary.

     

    (f) Indebtedness,
Liens.  The Company and each Subsidiary shall have been fully
and unconditionally released as parties to the Wachovia Facility, and any liens
or Encumbrances (other than Permitted Encumbrances) on the assets or properties
of the Company or the Subsidiaries, whether or not related to the Wachovia
Facility, shall have been released and Buyer shall have received satisfactory
evidence of the foregoing.

     

    (g) Tax
Certifications.  Buyer shall have received each certification
described in Section
10.2(c).

     

    (h) CTI’s Delivery of Transition
Services Agreement.  Charming Shoppes of Delaware, Inc. shall
have executed and delivered the Transition Services Agreement to
Buyer.

     

    (i) Consents.  CTI
and its Affiliates shall have received all Consents listed on Schedule
7.3.

     

    (j) Proprietary Credit Card
Program Agreements.  Each of the following agreements shall be
in full force and effect: (i) that certain Private Label Credit Card Plan
Agreement, dated as of the date hereof, between Spirit of America National Bank
and Buyer, the Company and its Subsidiaries; (ii) that certain Private Label
Credit Card Plan Agreement, dated as of the date hereof, between World Financial
Network National Bank and Buyer; and (iii) that certain Purchase Agreement,
dated as of the date hereof, by and between Spirit of America National Bank and
World Financial Network National Bank, provided in the case of clauses (i) and
(ii), this condition shall be deemed satisfied if the failure of such agreements
to be in full force and effect is primarily related to or arises from any breach
or violation of such agreements by Buyer or any of its Affiliates.

     

    (k) Assignment and
Assumption.  The transactions contemplated by the Assignment
and Assumption shall have been consummated.

     

    12.2 Conditions to Obligation of
CTI.  The obligation of CTI to sell the Shares and to take the
other actions required to be taken by CTI at Closing is subject to the
satisfaction or waiver by CTI at the Closing of each of the following
conditions: 

     

    
      
         

      

      
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    (a) Performance.  Buyer
shall have executed and delivered to CTI this Agreement and the other Buyer
Transaction Documents and Buyer shall have made the payments required to have
been made by Buyer pursuant to Section
2.2.

     

    (b) Representations and
Warranties.  The representations and warranties of Buyer
contained in this Agreement shall have been true and correct as of the date of
this Agreement and shall be true and correct as of the Closing Date (except to
the extent such representations and warranties expressly relate to an earlier
date, in which case they shall have been true and correct as of such earlier
date), except in both cases for such breaches of representations and warranties
which, individually or in the aggregate, would not have, or would not reasonably
be expected to have, a Buyer Material Adverse Effect; provided, however, the
representations and warranties of Buyer in Section 6.2, shall
then be true and correct in all respects.

     

    (c) Performance of
Covenants.  Buyer shall have performed or complied in all
material respects with all of the agreements and covenants required by this
Agreement and each other Buyer Transaction Document to be performed or complied
with by it before or at the Closing.

     

    (d) Legal
Matters.  No temporary, preliminary, permanent or final order,
injunction or judgment of a court of competent jurisdiction or other
Governmental Body shall have been issued or rendered that would prevent or
render unlawful the consummation of the transactions contemplated by this
Agreement or any other Transaction Document.

     

    (e) Buyer’s Delivery of
Transition Services Agreement.  The Company shall have executed
and delivered the Transition Services Agreement to Charming Shoppes of Delaware,
Inc.

     

    12.3 Frustration of Closing
Conditions.  None of the parties hereto may rely on the failure
of any condition set forth in this Section 12 to be
satisfied if such failure was caused by such party’s failure to act in good
faith or to use its commercially reasonable efforts to cause the Closing to
occur, in each case as required hereunder.

     

     

    SECTION
13.   TERMINATION AND ABANDONMENT

     

    13.1 Termination.  This
Agreement may be terminated and the transactions contemplated herein may be
abandoned at any time before the Closing:

     

    (a) by Buyer
or CTI, if the Closing has not occurred by October 1, 2008; provided, however,
that neither Buyer nor CTI may terminate this Agreement pursuant to this clause
if the Closing shall not have been consummated by October 1, 2008 by reason of
the failure of such party to perform in all material respects any of its
covenants or agreements contained in this Agreement;

     

    (b) by the
mutual consent of Buyer and CTI;

     

    
      
         

      

      
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    (c) by Buyer,
upon a material breach of any pre-Closing covenant or agreement on the part of
CTI or the Company set forth in this Agreement, or if any representation or
warranty of CTI herein shall be or become untrue in any case such that the
conditions set forth in Section 12.1 would
not be satisfied (any such breach or occurrence, a “Terminating Seller
Breach”); provided, however, that, if such Terminating Seller Breach is
curable by CTI through the exercise of its commercially reasonable efforts, CTI
shall have been given a period of 10 days to cure such Terminating Seller
Breach;

     

    (d) by CTI,
upon a material breach of any pre-Closing covenant or agreement on the part of
Buyer set forth in this Agreement, or if any representation or warranty of Buyer
herein shall be or become untrue in any case such that the conditions set forth
in Section 12.2
would not be satisfied (any such breach or occurrence, a “Terminating Buyer
Breach”); provided, however, that, if such Terminating Buyer Breach is
curable by Buyer through the exercise of its commercially reasonable efforts,
Buyer shall have been given a period of 10 days to cure such Terminating Buyer
Breach; or

     

    (e) by either
Buyer or CTI, if any court of competent jurisdiction or other Governmental Body
shall issue any final non-appealable judgment, order or decree or take such
other action permanently enjoining, restraining or otherwise prohibiting the
consummation of the transactions contemplated hereby or under any other
Transaction Document.

     

    13.2 Procedure for
Termination.  A party terminating this Agreement pursuant to
Section 13.1
shall give written notice thereof to each other party hereto, whereupon this
Agreement shall terminate and the transactions contemplated hereby shall be
abandoned without further action by any party.  If this Agreement is
terminated as permitted by this Section 13, such
termination shall be without liability of any party (or any of its Affiliates,
Representatives or Representatives of its Affiliates) to any other party to this
Agreement; provided, however, that if such termination is by Buyer pursuant to
Section 13.1(c)
as a result of a material breach by CTI or the Company, as applicable, of any
representation, warranty or covenant contained in this Agreement, or if such
termination is by CTI pursuant to Section 13.1(d) as a
result of a material breach by Buyer of any representation, warranty or covenant
contained in this Agreement, nothing herein shall affect the non-breaching
party’s right to damages on account of such other party’s breach (subject to the
limitations set forth in Section
14.7).  Except to the extent required in connection with
enforcing or preserving any rights or obligations it may have arising out of
such termination, in the event that this Agreement and the transactions
contemplated hereby are terminated pursuant to Section 13.1, this
Agreement shall terminate, each party hereto shall return or destroy all
documents and other materials received from the other parties hereto relating to
this Agreement and the other Transaction Documents and the transactions
contemplated hereby and thereby; provided, however, that the
provisions set forth in Section 7.5, Section 7.6(a), Section 8.1, Section 8.4, Section 9.3, Section 14.7, Section 15 and this
Section 13.2
shall survive any such termination.

     

    
      
         

      

      
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    SECTION
14.   SURVIVAL; INDEMNIFICATION

     

    14.1 Survival.  None
of the representations and warranties of CTI or Buyer contained in this
Agreement shall survive the Closing Date, except that the representations and
warranties contained in (i) Section 4.1, Section 4.2, Section 4.3, Section 4.4, Section 5.1, Section 5.2, Section 5.3, Section 6.1, Section 6.2, Section 6.3, and
Section 10.1
shall survive until the latest date permitted by Law, and (ii) Section 5.4, Section 5.5, Section 5.6, Section 5.10(a),
Section 5.13,
Section
5.15(b), and Section 5.19 shall
survive until the first anniversary of the Closing Date (the representations and
warranties listed in clauses (i) and (ii), the “Surviving Representations
and Warranties”). Except as specifically set forth in the preceding
sentence, no other representation or warranty of any party set forth in this
Agreement will survive the Closing, and no party will have any rights or
remedies after the Closing with respect to any misrepresentation of or
inaccuracy in any such representation or warranty.  The covenants and
agreements of Buyer, CTI and the Company contained in this Agreement shall
survive Closing and shall continue in full force and effect indefinitely or for
the shorter period specified in this Agreement. Any breach of representation,
warranty, covenant or agreement in respect of which indemnity may be sought
under this Agreement shall survive the time at which it would otherwise
terminate pursuant to Section 14.1 if
notice of the inaccuracy or breach thereof giving rise to such right of
indemnity shall have been given to the party against whom such indemnity may be
sought prior to such time.  Notwithstanding any provision in this
Agreement to the contrary, an Indemnified Party shall be entitled to the
indemnification or other remedies provided in this Agreement by reason of any
breach of any surviving representation, warranty, covenant or agreement by the
Indemnifying Party notwithstanding whether any employee, representative or agent
of the Indemnified Party seeking to enforce a remedy knew or had reason to know
of such breach and regardless of any investigation by such Person.

     

    14.2 Indemnification.

     

    (a) From and
after Closing, CTI shall indemnify Buyer and its Affiliates against and hold
each of them harmless from any and all damage, loss, liability and expense
(including, without limitation, reasonable expenses of investigation and
reasonable attorneys’ fees and expenses in connection with any action, suit or
proceeding) (“Damages”) actually
incurred or suffered by Buyer or any of its Affiliates arising out of or
resulting from (i) any inaccuracy or breach of any Surviving Representation and
Warranty (each such inaccuracy and breach, a “Warranty Breach”) or
breach of a covenant, in each case of CTI or the Company, as applicable,
contained in this Agreement (it being agreed that, in the case of the inaccuracy
or breach of the representation and warranty contained in Section 5.19, in
addition to any other rights that CTI may have under this Agreement or under
applicable Law, CTI shall first have ten Business Days following delivery of
notice by Buyer of an alleged breach thereof to cure such breach to the
reasonable satisfaction of Buyer), (ii) any failure by CTI to pay any investment
banker, broker, finder or other intermediary that might be entitled to any fee
or other compensation in connection with the transactions contemplated hereby as
a result of any actual or alleged agreement by any of CTI, the Company, its
Subsidiaries or their Affiliates; (iii) the assertion against Buyer, the Company
or any of their Affiliates of any Excluded Liability; (iv) any claims, actions,
suits or proceedings alleging the Company or any

     

    
      
         

      

      
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    of the
Subsidiaries has infringed, diluted, misappropriated or otherwise conflicted
with Intellectual Property of Leisure Shoe Co., Inc. prior to the Closing,
including any claims, actions, suits or proceedings by Leisure Shoe Co., Inc.
based upon, arising from or in any way related to or in consequence of the
circumstances cited in the June 6, 2008 complaint of Leisure Shoes Co., Inc., as
plaintiff, v. Arizona Mail Order Co., Inc., Crosstown/Traders, Inc. and Charming
Shoppes, Inc., as defendants, in the United States District Court, Central
District of California, case number CV08-03731SJO; and (v) any claims, actions,
suits or proceedings alleging the Company or any of the Subsidiaries has
infringed, diluted, misappropriated or otherwise conflicted with Intellectual
Property of Grupo Denim CA and its affiliates prior to the Closing, including
any claims, actions, suits or proceedings based upon, arising from or in any way
related to or in consequence of the circumstances cited in the letter from
McDermott Will & Emery dated May 21, 2008 regarding claim of patent
infringement with respect to Secret Slimmer pants and jeans.

     

    (b) From and
after Closing, Buyer shall indemnify CTI and its Affiliates against and hold
them harmless from any and all Damages actually incurred or suffered by them
arising out of or related in any way to (i) any Warranty Breach or breach of a
covenant, in each case of Buyer contained in this Agreement, (ii) any failure by
Buyer to pay any investment banker, broker, finder or other intermediary that
might be entitled to any fee or other compensation in connection with the
transaction contemplated hereby as a result of any actual or alleged agreement
by Buyer or its pre-Closing Affiliates, (iii) the assertion against CTI and its
Affiliates of any Assumed Liability or (iv) any amounts required to be paid by
CTI or its Affiliates in its or their capacity as a surety, as applicable, in
connection with any guarantee or other credit support provided for the benefit
of the Company and/or its Subsidiaries.

     

    (c) Notwithstanding
anything to the contrary herein, (i) Buyer and its Affiliates shall not be
indemnified for Damages pursuant to this Section 14.2 (in the
absence of fraud or intentional misrepresentation) with respect to any Warranty
Breach of the representations and warranties contained in Section 5.4, Section 5.5, Section 5.6, Section 5.10(a),
Section 5.13,
Section
5.15(b), and Section 5.19 unless
and until the aggregate amount of all such Damages exceeds $350,000, and then
only to the extent of such excess, and (ii) the total liability of CTI to
indemnify and hold Buyer and its Affiliates harmless in respect of Damages
arising as a result of a Warranty Breach of the representations and warranties
contained in Section
5.4, Section
5.5, Section
5.6, Section
5.10(a), Section 5.13, Section 5.15(b), and
Section 5.19
shall be limited (in the absence of fraud or intentional misrepresentation) to
$3,500,000 in the aggregate.

     

    (d) Notwithstanding
any of the provisions of this Section 14, the
procedures set forth in Section 10.3 shall
govern any claim for indemnification based on any breach by CTI of the
representations set forth in Section
10.1.

     

    14.3 Procedures.

     

    (a) The party
seeking indemnification under Section 14.2 (the
“Indemnified
Party”) shall give prompt notice to the party against whom indemnity is
sought (the “Indemnifying Party”)
of the assertion of any claim, or the commencement of any suit,

     

    
      
         

      

      
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    action or
proceeding (“Claim”) in respect of
which indemnity may be sought under such section and will provide the
Indemnifying Party such information with respect thereto as the Indemnifying
Party may reasonably request. The failure to so notify the Indemnifying Party
shall not relieve the Indemnifying Party of its obligations hereunder, except to
the extent such failure shall have adversely prejudiced the Indemnifying
Party.

     

    (b) The
Indemnifying Party shall be entitled to participate in the defense of any Claim
asserted by any third party (“Third Party Claim”)
and, subject to the limitations set forth in this Section 14.3(b),
shall be entitled to control the defense of such Third Party Claim and appoint
lead counsel for such defense, in each case at its own expense. Notwithstanding
the foregoing, the Indemnifying Party shall not have the right to assume control
of such defense if the claim of which the Indemnifying Party seeks to assume
control (i) to the extent such claim seeks non-monetary relief,
(ii) involves criminal allegations, or (iii) involves a claim which would
be reasonably like to result in Damages to the Indemnified Party in excess of
the amount of Damages the Indemnified Party is entitled to recover from the
Indemnifying Party hereunder.

     

    (c) If the
Indemnifying Party shall assume the control of the defense of any Third Party
Claim in accordance with the provisions of this Section 14.3, (i) the
Indemnifying Party shall obtain the prior written consent of the Indemnified
Party (which shall not be unreasonably withheld, conditioned or delayed) before
entering into any settlement of such Third Party Claim, if the settlement does
not release the Indemnified Party from all liabilities and obligations with
respect to such Third Party Claim or the settlement imposes injunctive or other
equitable relief against the Indemnified Party, and (ii) the Indemnified Party
shall be entitled to participate in the defense of such Third Party Claim and to
employ separate counsel of its choice for such purpose. The fees and expenses of
such separate counsel shall be paid by the Indemnified Party unless the
Indemnifying Party has been advised by counsel that a reasonable likelihood
exists of a conflict of interest between the Indemnifying Party and the
Indemnified Party.

     

    (d) Each
party shall cooperate, and cause its respective Affiliates to cooperate, in the
defense or prosecution of any Third Party Claim and shall furnish or cause to be
furnished such records, information and testimony, and attend such conferences,
discovery proceedings, hearings, trials or appeals, as may be reasonably
requested in connection therewith.

     

    (e) Each
Indemnified Party shall use commercially reasonable efforts
to  mitigate in accordance with applicable Law any loss for which such
Indemnified Party seeks indemnification under this Agreement. If such
Indemnified Party mitigates its loss after the Indemnifying Party has paid the
Indemnified Party under any indemnification provision of this Agreement in
respect of that loss, the Indemnified Party shall notify the Indemnifying Party
and pay to the Indemnifying Party the extent of the value of the benefit (or, if
less, the amount of any such loss previously paid by the Indemnifying Party) to
the Indemnified Party of that mitigation (less the Indemnified Party’s
reasonable costs of mitigation) within two Business Days after the benefit is
received.

     

    
      
         

      

      
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    (f) Each
Indemnified Party shall use commercially reasonable efforts to collect any
amounts available under insurance coverage, or from any other Person alleged to
be responsible, for any Damages payable under Section
14.2.

     

    14.4 Limitation on
Damages. 

     

    (a) The
amount of any Damages payable under Section 14.2 by the
Indemnifying Party shall be net of (i) any amounts actually recovered by the
Indemnified Party under applicable insurance policies (determined after giving
effect to any increase in premiums resulting therefrom and other costs of
collection and enforcement) and (ii) the amount of any Net Tax Benefit, as and
when realized, as a result of such Damages and indemnification with respect
thereto.

     

    (b) The
Indemnifying Party shall not be liable under Section 14.2 for any (i) Damages
relating to any matter to the extent that such Damages are taken into account in
the final determination of Final Closing CTI Borne Expenses or (ii) punitive
(except to the extent paid or payable to an unrelated third party), special,
indirect or consequential Damages (including diminution in the value of the
Shares and Damages for lost profits).

     

    14.5 Assignment of Claims.
If the Indemnified Party receives any payment from an Indemnifying Party in
respect of any Damages pursuant to Section 14.2 and the
Indemnified Party could have recovered all or a part of such Damages from a
third party (other than from the Company, any Subsidiary, any Affiliate of the
Company or any current or former employee or agent of any such Persons (a “Potential
Contributor”) based on the underlying Claim asserted against the
Indemnifying Party, the Indemnified Party shall assign such of its rights to
proceed against the Potential Contributor as are necessary to permit the
Indemnifying Party to recover from the Potential Contributor the amount of such
payment. 

     

    14.6 Exclusivity. Except
as specifically set forth in this Agreement, Buyer hereby irrevocably waives any
rights and claims it may have against CTI or any of its Affiliates, whether in
law or in equity, relating to the Company or any of its Subsidiaries or any of
their respective assets, business or operations, the Shares or the transactions
contemplated hereby, and CTI waives any such rights and claims CTI and its
Affiliates may have against Buyer or any of its Affiliates (including the
Company and any of its Subsidiaries), except in either case, any claim for
fraud.  The rights and claims waived hereby include, without
limitation, claims for contribution or other rights of recovery arising out of
or relating to any Environmental Law, claims for breach of contract, breach of
representation or warranty, negligent misrepresentation and all other claims for
breach of duty other than fraud or intentional
misrepresentation.  After the Closing, Section 10 and Section 14 shall
provide the sole and exclusive remedy for any misrepresentation, breach of
warranty, covenant or other agreement contained in this Agreement (other than
any claim for fraud or intentional
misrepresentation).  Notwithstanding the foregoing, it is understood
that, subject to Section 14.7, below,
nothing herein shall prohibit any party hereto from exercising its rights to
seek equitable relief with respect to a breach of covenant or agreement under
any Transaction Document.

     

    
      
         

      

      
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    14.7 Limitation on
Liability.  In the event that the Closing does not occur for
any reason, Buyer (and, for the avoidance of doubt, Orchard) shall not be liable
to CTI for any damages in excess of $10,000,000 for any breach by Buyer of any
representation, warranty or covenant contained in this Agreement. Prior to the
Closing, CTI’s right to damages (subject to the limitation set forth in the
preceding sentence) shall be CTI’s sole remedy for any breach by Buyer of any
representation, warranty or covenant contained in this Agreement (other than a
breach of Section
8.1, Section
8.4 or Section
9.3).

     

     

    SECTION
15.  MISCELLANEOUS

     

    15.1 Costs and
Expenses.  Except to the extent otherwise expressly provided
herein, all costs and expenses incurred in connection with the Transaction
Documents shall be paid by the party incurring such cost or
expense.

     

    15.2 Notices.  All
notices or other communications permitted or required under this Agreement shall
be in writing and shall be sufficiently given if and when hand delivered to the
persons set forth below or if sent by documented overnight delivery service or
registered or certified mail, postage prepaid, return receipt requested, or by
telegram, telex or telecopy, receipt acknowledged, addressed as set forth below
or to such other Person or Persons and/or at such other address or addresses as
shall be furnished in writing by any party hereto to the other parties
hereto.  Any such notice or communication shall be deemed to have been
given as of the date received, in the case of personal delivery, or on the date
shown on the receipt or confirmation therefor in all other cases.

     

    To
Buyer:

     

    c/o
Golden Gate Private Equity, Inc.

    One
Embarcadero Center, Suite 3900

    San
Francisco, CA 94111

    Attention:  Stefan
Kaluzny and Joshua Olshansky

    Facsimile:  415-983-2701

     

    with a
copy to (which shall not constitute notice):

     

    Kirkland &
Ellis LLP

    200 East
Randolph Drive, 58th Floor

    Chicago,
IL 60601

    Attention:  Gary
M. Holihan, P.C.

    Telecopy:  (312)
861-2200

     

    
      
         

      

      
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    To CTI:

     

    c/o
Charming Shoppes, Inc.

    3750
State Road

    Bensalem,
PA 19020

    Attention:  General
Counsel

    Fax:  215-638-6648

     

    With a
copy to (which shall not constitute notice):

     

    Drinker
Biddle & Reath LLP

    One Logan
Square

    18th and
Cherry Streets

    Philadelphia,
PA  19103-6996

    Attention:  F.
Douglas Raymond, III, Esq.

    Fax:  (215) 988-2757

    

    15.3 Assignment.  Neither
this Agreement nor any of the rights, interests or obligations hereunder may be
assigned, by operation of Law or otherwise, by any party hereto to any other
Person without the prior written consent of Buyer and CTI, and any such
attempted assignment shall be null and void; provided, however, that (i) Buyer
may, without the prior written consent of CTI, assign its rights and obligations
under this Agreement and the other Transaction Documents (A) in whole or in part
to any Affiliates (provided that Buyer shall remain primarily liable hereunder
following any such assignment), (B) for collateral security purposes to any
lender providing financing to Buyer, the Company or any of the Subsidiaries and
(C) to any subsequent purchaser of Buyer, the Company, the Subsidiaries or any
of their divisions or any material portion of their assets (whether such sale is
structured as a sale of stock, sale of assets, merger, recapitalization or
otherwise) (provided that Buyer shall remain primarily liable hereunder
following any such assignment) and (ii) CTI may assign its rights and
obligations under this Agreement to any of its Affiliates without the prior
written consent of Buyer (provided that CTI shall remain primarily liable
hereunder).  Any purported assignment effected without consent shall
be void.  Subject to the foregoing, this Agreement and the rights and
obligations set forth herein shall inure to the benefit of, and be binding upon,
the parties hereto, and each of their respective successors, heirs, and
assigns.

     

    15.4 Amendment, Modification and
Waiver.  Any provision of this Agreement may be amended,
modified, waived or extended if, but only if, such amendment, modification,
waiver or extension is in writing and is signed by Buyer and CTI.  The
waiver by a party of any breach of any provision of this Agreement shall not
constitute or operate as a waiver of any other breach of such provision or of
any other provision hereof, nor shall any failure to enforce any provision
hereof operate as a waiver of such provision or of any other provision
hereof.  

     

    15.5 Governing
Law.  This Agreement is made pursuant to, and shall be
construed and enforced in accordance with, the laws of the State of New York
(and the United States federal law, to the extent applicable), irrespective of
the principal place of busi­ness,

     

    
      
         

      

      
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    residence
or domicile of the parties hereto, and without giving effect to otherwise
applicable principles of conflicts of Law.  Nothing contained herein
or in any Transaction Document shall prevent or delay any party hereto from
seeking, in any court of competent jurisdiction, specific performance or other
equitable remedies in the event of any breach or intended breach by another
party of any of its obligations hereunder.

     

    15.6 Waiver of Jury
Trial.  EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT
TO ANY PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION
WITH THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT ENTERED INTO IN CONNECTION
HEREWITH OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY. EACH PARTY
(A) CERTIFIES THAT NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF ANY
CLAIM, ACTION OR PROCEEDING, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO
ENTER INTO THIS AGREEMENT AND THE OTHER AGREEMENTS CONTEMPLATED HEREBY, AS
APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
THIS SECTION
15.6.

     

    15.7 Consent to
Jurisdiction.  Each party hereto irrevocably submits to the
exclusive jurisdiction of (a) the Supreme Court of the State of New York, New
York County and (b) the United States District Court for the Southern District
of New York, for purposes of any claim, action or proceeding arising out of this
Agreement or any transaction contemplated hereby.  Each party hereto
agrees to commence any such claim, action or proceeding only in the United
States District Court for the Southern District of New York or, if such claim,
action or proceeding cannot be brought in such court for jurisdictional reasons,
in the Supreme Court of the State of New York, New York County.  Each
of the parties hereby waives, and agrees not to assert in any such dispute, to
the fullest extent permitted by applicable Law, any claim that (a) such party is
not personally subject to the jurisdiction of such courts, (b) such party and
such party’s property is immune from any legal process issued by such courts or
(c) any claim, action or proceeding commenced in such courts is brought in an
inconvenient forum.  Each party hereto further agrees that service of
any process, summons, notice or document by United States registered mail to
such party’s address set forth in Section 15.2 above
shall be effective service of process for any claim, action or proceeding with
respect to any matters to which it has submitted to jurisdiction in this Section 15.7 or
otherwise.

     

    15.8 Section Headings and Defined
Terms.  The section headings contained herein are for reference
purposes only and shall not in any way affect the meaning or interpretation of
this Agreement.  The terms defined herein and in any other Transaction
Document include the plural as well as the singular and the singular as well as
the plural.  Except as otherwise indicated, all agreements defined
herein refer to the same as from time to time amended or supplemented or the
terms thereof waived or modified in accordance herewith and
therewith.  All references to “$” or “dollars” shall be to United
States dollars and all references to “days” shall be to calendar days unless
otherwise specified.

     

    
      
         

      

      
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    15.9 Severability.  If
any term or other provision of this Agreement (or portion thereof) or the
application of any such term or other provision (or portion thereof) to any
Person or circumstance is determined by a court of competent jurisdiction to be
invalid, illegal or incapable of being enforced pursuant to any applicable Law
or public policy, all other terms and provisions of this Agreement (or remaining
portion of such term or other provision) will nevertheless remain in full force
and effect. Upon such determination by a court of competent jurisdiction that
any term or other provision (or portion thereof) of this Agreement is invalid,
illegal or incapable of being enforced, the parties hereto will negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that
transactions contemplated hereby are fulfilled to the extent
possible.

     

    15.10 Counterparts; Third-Party
Beneficiaries.  This Agreement may be executed in two or more
counterparts, including by facsimile transmission, each of which shall be deemed
an original; and any Person may become a party hereto by executing a counterpart
hereof, but all of such counterparts together shall be deemed to be one and the
same agreement.  This Agreement will be binding upon and inure solely
to the benefit of each party hereto, and nothing in this Agreement, express or
implied, is intended to or will confer upon any other Person any right, benefit
or remedy of any nature whatsoever under or by reason of this Agreement.

     

    15.11 Entire
Agreement.  This Agreement, together with the Disclosure
Schedule and the agreements, exhibits, schedules and certificates referred to
herein or delivered pursuant hereto, constitute the entire agreement between the
parties hereto with respect to the purchase and sale of the Shares and supersede
all prior and contemporaneous agreements and understandings, both written and
oral, with respect to the subject matter hereof and thereof. 

     

    15.12 Waiver of Conflicts
Regarding Representation; Nonassertion of Attorney-Client
Privilege.

     

    (a) Buyer
waives and will not assert, and, after the Closing, will cause the Company and
the Subsidiaries to waive and not to assert, any conflict of interest arising
out of or relating to the representation, after the Closing (the “Post-Closing
Representation”), of CTI, or any officer or employee of the Company or of
any of the Subsidiaries, or any Affiliate of any of the foregoing (any such
Person, a “Designated
Person”) in any matter involving this Agreement, the Transaction
Documents or any other agreements or transactions contemplated thereby, by any
legal counsel currently representing CTI, the Company or any Subsidiary in
connection with this Agreement, the Transaction Documents or any other
agreements or transactions contemplated thereby (the “Current
Representation”).

     

    (b) Buyer
waives and will not assert, and after the Closing, will cause the Company and
the Subsidiaries to waive and not to assert, any attorney-client privilege with
respect to any communication between any legal counsel and any Designated Person
occurring during the Current Representation in connection with any Post-Closing
Representation, including in connection with a dispute with Buyer, and following
the Closing, with the Company or any of the Subsidiaries, it being the intention
of the parties hereto that

     

    
      
         

      

      
        63

        
          

        

      

      
         

      

    

    all such
rights to such attorney-client privilege and to control such attorney-client
privilege shall be retained by CTI; provided that the foregoing waiver and
acknowledgment of retention shall not extend to any communication not involving
this Agreement, the Transaction Documents or any other agreements or
transactions contemplated thereby, or to communications with any Person other
than the Designated Persons.

     

    15.13 Orchard
Guaranty. 

     

    (a) Orchard
hereby, jointly and severally, unconditionally and irrevocably, guarantees (the
“Orchard Pre-Closing
Guaranty”) by way of an independent obligation to CTI, the due and
punctual payment of the obligations of Buyer under this Agreement up to the
amount of the limitation on damages specified in Section 14.7, when
and as the same shall arise and become due and payable in accordance with the
terms of and subject to the conditions contained in this Agreement (the “Orchard Pre-Closing
Guaranteed Obligations”).  This Section 15.13(a)
shall automatically terminate without any action on the part of any Person
immediately upon the payment of the Purchase Price to CTI at the
Closing.

     

    (b) Orchard
hereby, jointly and severally, unconditionally and irrevocably, guarantees (the
“Orchard Post-Closing
Guaranty”, and together with the “Orchard Pre-Closing
Guaranty”, the “Orchard Guaranty”) by
way of an independent obligation to CTI and its Affiliates, (i) the due and
punctual payment by the Company of the amounts invoiced by Charming Shoppes of
Delaware, Inc. to the Company for services actually rendered by Charming Shoppes
of Delaware, Inc., its Affiliates and other third-parties to the Company under
and in accordance with the terms of the Transition Services Agreement (and not
of any other Liabilities thereunder) when and as the same shall arise and become
due and payable in accordance with the terms of and subject to the conditions
contained in the Transition Services Agreement, and (ii) the due and punctual
payment of the obligations of the Company and its Subsidiaries as Recipients (as
defined in the Assignment and Assumption) under Section 2 of the Assignment and
Assumption, when and as the same shall arise and become due and payable in
accordance with the terms of and subject to the conditions contained in the
Assignment and Assumption (collectively, the “Orchard Post-Closing
Guaranteed Obligations”, and together with the “Orchard Pre-Closing
Guaranteed Obligations”, the “Orchard Guaranteed
Obligations”).

     

    (c) This is a
guaranty of payment and performance and not of collection only.  If
for any reason whatsoever Buyer (in the case of the Orchard Pre-Closing
Guaranteed Obligations) or the Company (in the case of the Orchard Post-Closing
Guaranteed Obligations) shall fail or be unable to perform or comply with its
Orchard Guaranteed Obligation, Orchard will promptly upon receipt of notice
thereof from CTI forthwith pay or cause to be paid in lawful money of the United
States the unpaid Orchard Guaranteed Obligation then due and payable (at the
place specified and in the amounts and to the extent required of the Buyer or
the Company, as applicable).

     

    (d) Orchard
waives any and all notice of the creation, renewal, extension or accrual of the
Orchard Guaranteed Obligation and notice of or proof of reliance by CTI and its
Affiliates upon this Orchard Guaranty or acceptance of this Orchard Guaranty;
the Orchard Guaranteed Obligation shall conclusively be deemed to have been
created, contracted or

     

    
      
         

      

      
        64

        
          

        

      

      
         

      

    

    incurred,
or renewed, extended, amended or waived, in reliance upon this Orchard Guaranty;
and all dealings between Buyer and, after the Closing, the Company and its
Subsidiaries, on the one hand, and CTI and its Affiliates (other than the
Company and its Subsidiaries), on the other hand, likewise shall be conclusively
presumed to have been had or consummated in reliance upon this Orchard
Guaranty.  Orchard agrees that (i) any notice provided under this
Agreement (including any demand for payment or notice of default or non payment)
shall be deemed to constitute notice to Orchard for purposes hereof and (ii) any
knowledge of Buyer and, after the Closing, the Company and its Subsidiaries
shall be deemed knowledge of Orchard for purposes hereof.  Nothing in
this Section
15.13 shall be deemed to constitute a waiver of, or prevent Orchard from
asserting, any valid defense that may be asserted by Buyer and, after the
Closing, the Company or its Subsidiaries.  When making any demand
hereunder or otherwise pursuing its rights and remedies hereunder against
Orchard, CTI and its Affiliates may, but shall be under no obligation to, make a
similar demand on or otherwise pursue such rights and remedies as it may have
against Orchard or any other person, and any failure by CTI or its Affiliates to
make any such demand, to pursue such other rights or remedies or to collect any
payments from Buyer and, after the Closing, the Company and its Subsidiaries or
any other person shall not relieve Orchard of any obligation or liability
hereunder, and shall not impair or affect the rights and remedies, whether
express, implied or available as a matter of law, of CTI or its Affiliates
against Orchard.  For the purposes hereof “demand” shall include the
commencement and continuance of any legal proceedings

     

    15.14 Parent Guaranty. 

     

    (a) Parent
hereby, unconditionally and irrevocably, guarantees (the “Parent Guaranty”) by
way of an independent obligation to Buyer, the due and punctual payment of (i)
the obligations of CTI and its Affiliates under this Agreement, when and as the
same shall arise and become due and payable in accordance with the terms of and
subject to the conditions contained in this Agreement, (ii) the obligations
of Charming Shoppes of Delaware, Inc. and its Affiliates under the Transition
Services Agreement, when and as the same shall arise and become due and payable
in accordance with the terms of and subject to the conditions of such agreement,
and (iii) the obligations of CTI and its Affiliates (other than the Company and
its Subsidiaries) as Recipients (as defined in the Assignment and Assumption)
under Section 2 of the Assignment and Assumption, when and as the same shall
arise and become due and payable in accordance with the terms of and subject to
the conditions contained in this the Assignment and Assumption (the “Parent Guaranteed
Obligation”).

     

    (b) This is a
guaranty of payment and performance and not of collection only.  If
for any reason whatsoever CTI or one of its Affiliates shall fail or be unable
to perform or comply with its Parent Guaranteed Obligation, Parent will promptly
upon receipt of notice thereof from the Buyer, the Company or its Subsidiaries
forthwith pay or cause to be paid in lawful money of the United States the
unpaid Parent Guaranteed Obligation then due and payable (at the place specified
and in the amounts and to the extent required of CTI or one of its Affiliates,
as applicable).

     

    (c) Parent
waives any and all notice of the creation, renewal, extension or accrual of the
Parent Guaranteed Obligation and notice of or proof of reliance by the
Buyer,

     

    
      
         

      

      
        65

        
          

        

      

      
         

      

    

    the
Company or its Subsidiaries upon this Parent Guaranty or acceptance of this
Parent Guaranty; the Parent Guaranteed Obligation shall conclusively be deemed
to have been created, contracted or incurred, or renewed, extended, amended or
waived, in reliance upon this Parent Guaranty; and all dealings between CTI and
its Affiliates (other than the Company and its Subsidiaries), on the one hand,
and Buyer and, after the Closing, the Company and its Subsidiaries, on the other
hand, likewise shall be conclusively presumed to have been had or consummated in
reliance upon this Parent Guaranty.  Parent agrees that (i) any notice
provided under this Agreement to CTI or its Affiliates (including any demand for
payment or notice of default or non payment) shall be deemed to constitute
notice to Parent for purposes hereof and (ii) any knowledge of CTI or its
Affiliates shall be deemed knowledge of Parent for purposes
hereof.  Nothing in this Section 15.14 shall
be deemed to constitute a waiver of, or prevent Parent from asserting, any valid
defense that may be asserted by CTI or one of its Affiliates.  When
making any demand hereunder or otherwise pursuing its rights and remedies
hereunder against Parent, Buyer and, after the Closing, the Company and its
Subsidiaries may, but shall be under no obligation to, make a similar demand on
or otherwise pursue such rights and remedies as it may have against CTI, one of
its Affiliates (other than the Company and its Subsidiaries) or any other
person, and any failure by the Buyer, the Company or its Subsidiaries to make
any such demand, to pursue such other rights or remedies or to collect any
payments from CTI, its Affiliates or any other person shall not relieve Parent
of any obligation or liability hereunder, and shall not impair or affect the
rights and remedies, whether express, implied or available as a matter of law,
of the Buyer, the Company or its Subsidiaries against Parent.  For the
purposes hereof “demand” shall include the commencement and continuance of any
legal proceedings.

     

    [Signature
Page Follows]

     

    
      
         

      

      
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          -

        

      

    

    IN
WITNESS WHEREOF, the parties hereto have caused this Agreement, to be signed the
day and year first above written.

     

    
      	 
      	
              CROSSTOWN
      TRADERS, INC.

               

              By:                                                                       

                    Name:

                    Title:

            
	 
      	
               

               

              NORM
      THOMPSON OUTFITTERS, INC.

               

              By:                                                                       

                    Name:

                    Title:

            

    

    

    

    
      	 
      	
               

              Solely
      for the purposes of Section 15.14:

              CHARMING
      SHOPPES, INC.

               

              By:                                                                       

                    Name:

                    Title:

            

    

    

    [signatures
continued on next page]

    
      
         

      

      
        67

        
          

        

      

      
         

      

    

    

    
      	 
      	
              Solely
      for the purposes of Section 15.13:

              DRAPER’S
      & DAMON’S, INC.

               

              By:                                                                       

                    Name:

                    Title:

            
	 
      	
               

               

              HABAND
      COMPANY LLC

               

              By:                                                                       

                    Name:

                    Title:

            
	 
      	
               

               

              JOHNNY
      APPLESEED’S INC.

               

              By:                                                                       

                    Name:

                    Title:

            
	 
      	
               

               

              BLAIR
      LLC

               

              By:                                                                       

                    Name:

                    Title:

            
	 
      	
               

               

              ORCHARD
      BRANDS CORPORATION

               

              By:                                                                       

                    Name:

                    Title:

            

    

    

    
      
         

      

      
        68exhibit10-2aug252008.htm

    
      
         

      

      
         

        
          

        

      

      
         

        
          EXHIBIT
10.2

        

      

    

    

    PURCHASE
AGREEMENT

    

    THIS
PURCHASE AGREEMENT (this “Agreement”) executed August ___, 2008 (the “Execution
Date”) between SPIRIT OF
AMERICA NATIONAL BANK, a national bank (“Seller”), with a principal
place of business in Milford, Ohio and an address at 450 Winks Lane, Bensalem,
PA 19020, and World Financial Network National Bank (“Purchaser”), with an address
at 3100 Easton Square Place, Columbus, OH  43219. 

    

    

    W
I T N E S S E T H:

    

    WHEREAS,
Seller and Arizona Mail Order Company, Inc. (“Company”), a subsidiary of
Crosstown Traders, Inc. (“Crosstown”), are parties to
the Existing Merchant Services Agreement (as hereafter defined) pursuant to
which Seller issues Credit Cards;

    

    WHEREAS,
in connection with Crosstown’s sale of the Company to Norm Thompson Outfitters,
Inc. or one of its affiliates (“Golden Gate”), Seller is willing to sell and
Purchaser, is willing to purchase, the Assets to be Sold (as hereafter defined)
on the terms and subject to the conditions set forth herein;

    

    NOW,
THEREFORE, in consideration of the foregoing premises, the mutual covenants and
agreements set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Purchaser and Seller,
each intending to be legally bound, hereby agree as follows:

    

    1.           Definitions    For
purposes of this Agreement, the following terms shall have the meanings
indicated:

    

               “Account”
means a credit account on which a purchase transaction may be or has been made
by (or by a person authorized by) the Cardholder pursuant to a Credit
Card.

    

               “Account
Balance” means, as to any Eligible Account, any and all amounts owing to Seller
in respect of such Account by the Cardholder (including principal amounts for
the payment of goods and services, accrued interest, periodic finance charges,
late charges, fees and other finance and service charges) whether or not
billed.

    

               “Account
Duties” means the duties to the Cardholders of Eligible Accounts under the
applicable Cardholder Agreements to bill, administer and collect the Assets to
be Sold other than any duties associated with Credit Balances existing as of the
Transfer Date.

    

               “Action”
has the meaning set forth in Section 7.3(a) hereof.

    

    “Adjusted
Closing Statement” has the meaning set forth in Section 3.2(b).

     

    “Adjusted
Payment Amount” means an amount calculated in the same manner as the Payment
Amount, except that such amount shall be calculated to take into account (w)
transactions occurring between the Valuation Date and the Transfer Date, (x) any
transactions that were unposted or unaccounted for as of the Transfer Date,
including without limitation payments, credits, unallocated items, errors and
other similar items relating to periods ending on or prior to the Transfer Date
but posted to the Accounts after the Transfer Date, (y) the resolution on or
after the Transfer Date of Cardholder Disputes, provided, however, that nothing
herein shall limit Seller’s ability to pursue its chargeback rights against the
Company as set forth in the Existing Merchant Services Agreement related to
disputes (other than credit disputes) pending on the Transfer Date, and (z) information
which became known to the parties which would (i) cause an Account to be
classified as of the Transfer Date as an Ineligible Account or (ii) cause any
portion of an Account Balance to be classified as Ineligible Account Dollars as
of the Adjustment Date due to matters arising on or before the Transfer
Date.  It is understood that the Transfer Date will occur in the
middle of a Cycle for most Accounts.  In order to determine the
Adjusted Payment Amount as contemplated by this definition, Purchaser and Seller
will, prior to the Adjustment Date, cooperate and in good faith mutually
determine whether the circumstances giving rise to such adjustment (each, an
“Adjustment Event”) occurred on or prior to the Transfer
Date.  Purchaser and Seller shall each provide such documentation as
the other may reasonably request to validate its determination with respect to
the timing of any disputed Adjustment Event hereunder.

     

     “Adjustment
Amount” has the meaning set forth in Section 3.2(b).

     

    “Adjustment
Date” means the sixtieth (60th) day
after the Closing Date (or, if such day is not a Business Day, the next
succeeding Business Day).

     

    “Adjustment
Event” shall have the meaning given in the definition of “Adjusted Payment
Amount”.

     

               “Agreement”
means this Purchase Agreement, including all schedules and exhibits hereto, and,
if amended, modified or supplemented, as the same may be so amended, modified or
supplemented from time to time.

    

               “Assets
to be Sold” shall have the meaning set forth in Section 2.1.

    

               “Assignment
and Bill of Sale” means that document delivered by Seller to Purchaser on the
Closing Date which provides for, among other things, the assignment and transfer
to Purchaser of all of Seller’s rights, title and interest in the Assets to be
Sold in substantially the form of Exhibit 2.

    

    “Assumed
Liabilities” means the Account Duties of Seller first arising from and after the
Transfer Date to the extent related to the Assets to be Sold.

    

    “Assumption
Agreement” means an assumption agreement from Purchaser to Seller substantially
in the form of Exhibit 3, pursuant to which, among other things, Purchaser
confirms its assumption and agreement to perform and discharge the Assumed
Liabilities.

    

     

    “Books
and Records” means, to the extent in Seller’s possession or control as of the
Transfer Date, the additional information delivered pursuant to Schedule 8.3,
all applications for Eligible Accounts, all Cardholder Agreements related to
Eligible Accounts, all sales orders under Eligible Accounts, all customer
service information (commonly referred to as “memo screens”) and copies thereof
relating to Eligible Accounts, and any written correspondence pertaining to
pending Cardholder inquiries in respect of the Eligible Accounts; provided, that “Books
and Records” shall not include any comments or text entered onto Seller’s
proprietary systems or hard copy prints of such information which are commonly
referred to as “collections comments,” or any hardcopy formats containing
Seller’s system screen formats.

     

    

    “Business
Day” means a day (not being a Saturday or Sunday) on which banks are open for
normal banking business in Ohio.

    

               “Cardholder”
means a person to whom a Credit Card is issued and in whose name the Account, in
connection with which the Credit Card may be used, is established.

    

               “Cardholder
Agreement” means an agreement between Seller and a Cardholder under which one or
more Credit Cards are issued or utilized.

    

               “Cardholder
Dispute” means, as to any Eligible Account, any billing dispute raised by a
Cardholder which arises out of or relates to the business or operations of any
of the Assets to be Sold prior to the Transfer Date.

    

               “Cardholder
List” means the Cardholders’ names, telephone numbers, e-mail addresses and
physical addresses for the Eligible Accounts which shall be set forth in the
Closing Tapes delivered to Purchaser on the Transfer Date.

    

               “Charged
Off Account” means any Account as to which the related account balance has been
written off, or should have been written off, by Seller on Seller’s books on or
prior to the Transfer Date in accordance with Seller’s normal and customary
policies as in effect on the date of this Agreement including, without
limitation, any Account which is more than one hundred seventy nine (179) days
contractually past due as of the Transfer Date.

    

               “Closing”
shall have the meaning set forth in Section 4.

    

               “Closing
Date” means the Transfer Date.

    

               “Closing
Statement” means a statement prepared by one party hereto (subject to
confirmation by the other party hereto) with respect to the Assets to be Sold as
of the Transfer Date in the same form, and on the same basis, as the statement
attached hereto as Exhibit 1.

    

    “Closing
Tape” means an Account and Cardholder master file tape or
tapes  including such information which exists on Seller’s system as
of up to one (1) Business Day prior to the Transfer Date  and
including with respect to all Eligible Accounts: (i) Cardholder customer service
notes; (ii) the Cardholder List; (iii) transactions since last cycle dates; (iv)
current and historical (at least twelve (12) months) transaction and transaction
detail; (v) library of layouts; (vi) balancing report; and (vii) cycle to date
history file, in a mutually agreed format; provided, that in
preparing the Closing Tape, Seller shall only be required to include such
information as is maintained by Seller and/or its servicer and available
pursuant to Seller and or its servicer’s ordinary course system
capabilities.

    

               “Company”
means Arizona Mail Order Company, Inc., a Delaware corporation.

    

               “Company
Purchase Agreement” means that certain Asset Purchase Agreement dated of even
date herewith pursuant to which Crosstown Traders, Inc. has agreed to sell the
Company to Golden Gate.

    

               “Conversion
Schedule” means (i) the plan and schedule for the Closing as agreed upon in
writing by the Purchaser and Seller and (ii) Annex I, TSYS Support; as the same may be amended from
time to time by mutual written agreement of the Purchaser and
Seller.

    

               “Conveyance
Documents” shall have the meaning set forth in Section 10.4(a).

    

               “Credit
Balance” means, as to any Eligible Account, any and all amounts owing by Seller
to the Cardholder in respect of such Account as a credit balance whether or not
billed.

    

               “Credit
Card” means a card issued by Seller or its Predecessor in Interest and bearing
one or more of the Trade Names, including without limitation all credit cards
subject to the Existing Merchant Services Agreement and commonly known as a
credit card but expressly excluding any credit cards bearing the name Lane
Bryant, Lane Bryant Catalog or Lane Bryant Woman.

    

               “Cycle”
shall mean each monthly billing cycle for an Account, as determined by Seller or
Purchaser (as applicable) in accordance with its normal practice (or as
otherwise mutually agreed).

    

     

    “Domain Name Assignment” means those certain transfer
authorization codes necessary to effectuate the transfer and assignment to
Purchaser’s parent company Alliance Data Systems Corporation of the Domain
Names.

     

    “Domain Names” means the following domain
names:

    

    STATEMENT-BEDFORDFAIRCARD.COM;

    STATEMENT-BROWNSTONESTUDIOCARD.COM;

    STATEMENT-COWARDSHOECARD.COM;

    STATEMENT-INTIMATEAPPEALCARD.COM;

    STATEMENT-LEWMAGRAMCARD.COM;

    STATEMENT-OLDPUEBLOTRADERSCARD.COM;

    STATEMENT-REGALIAONLINECARD.COM;

    STATEMENT-SHOPTHEBAYCARD.COM; 

    STATEMENT-WILLOWRIDGECATALOGCARD.COM;

    AMOCARD.COM;

    BEDFORDFAIRCARD.COM;

    BROWNSTONE-STUDIOCARD.COM;

    BROWNSTONESTUDIOCARD.COM;

    COWARDSHOECARD.COM;

    INTIMATEAPPEALCARD.COM;

    LEW-MAGRAMCARD.COM;

    LEWMAGRAMCARD.COM;

    OLDPUEBLOTRADERSCARD.COM;

    REGALIAONLINECARD.COM;

    SHOPTHEBAYCARD.COM; and

    WILLOWRIDGECATALOGCARD.COM

    

    “Eligible
Account” means any Account which is not an Ineligible Account.

    

    “Estimated
Payment Amount” has the meaning set forth in Section 3.2(a).

    

    “Execution
Date” shall have the meaning set forth in the first paragraph of this
Agreement.

    

    “Existing
Merchant Services Agreement” means the agreement between Seller (or its
affiliate) and Golden Gate (or its affiliate) dated as of the Execution Date
pursuant to which Seller will provide credit card servicing for the Company
prior to the Transfer Date.

    

               “Financial
Information Computation Date” shall have the meaning set forth in Section 8.3
hereof.

    

               “Ineligible
Account” means any of the following:

    

    (a) Any
Account the Cardholder of which has, prior to the Transfer Date, filed a
petition or a petition has been filed against the Cardholder seeking relief
under the federal bankruptcy law or any other law dealing with the insolvency of
a consumer or the inability of a consumer to pay his/her debt, in either case
for which notice of the same has been received by Seller or Purchaser not later
than sixty (60) days after the Transfer Date;

    

    (b) Any
Account which, on the Transfer Date represents a Charged Off Account on Seller’s
books;

    

    (c) Any
Account as to which Seller shall, at any time prior to the Adjustment Date, have
received notification, not thereafter rescinded, of any actual or possible fraud
loss or lost or stolen Credit Card occurring prior to the Transfer Date, except
to the extent the Account has been reaffirmed;

    

    (d) Any
Account that as of the Transfer Date is subject to pending litigation (unless
Purchaser and Seller elect to transfer such Account prior to the Transfer
Date);

    

    (e) Any
Account for which Seller has been notified prior to the Transfer Date that the
Cardholder thereof has died;

    

    (f) Accounts
in which the Cardholder’s address as of the Transfer Date is not within the
United States, District of Columbia, Puerto Rico or another United States
territory, Mexico or Canada or is not a U.S. APO or U.S. F.P.O.
account;

    

    (g) Accounts
in which the Cardholder as of the date the Account was opened had not attained
the age of eighteen (unless the Cardholder subsequently affirmed the Account
after attaining the age of eighteen, it being agreed that use of the Credit Card
by the Cardholder after attaining the age of eighteen shall be deemed an
affirmation of the  Account). If an Account is a joint account, such
Account shall be an Ineligible Account only if no Cardholder of the Account has
attained the age of eighteen;

    

    (h) Accounts
in which as of the Transfer Date the Cardholder is a business or which, to
Seller’s knowledge, otherwise represent a commercial receivable;
and

    

    

    (i)           Accounts
which have a zero balance and which had a date of last purchase greater than
eighteen (18) months  preceding the Transfer Date and are classified
by Seller, in the ordinary course of Seller’s business, as “inactive”
accounts.

    

    “Ineligible
Account Dollars” means the dollar amounts associated with the Cardholder
Disputes that are not resolved by the Transfer Date as specified in Section
6.1.

     

     “Interested
Parties” means with respect to any securitization or other transfer of the
Account Balances attributable to the Accounts, brokers, placement agents, rating
agencies, certificate holders, investors, credit enhancement providers and other
persons that may acquire an interest in the Account Balances (whether or not
evidenced by securities), and their respective affiliates, accountants,
attorneys and other representatives.

     

    “Interim
Period” means the interval from the Execution Date to and including the Transfer
Date.

    

    “Liens”
means all assignments, security interests, claims, liens, encumbrances or rights
or other interests of third parties whatsoever including, without limitation,
the liens of any Securitization Agreements.

    

    “Loss”
has the meaning set forth in Section 7.1 hereof.

    

    “New
Merchant Services Agreement” has the meaning set forth in Section 9.8
hereof.

    

               “Payment
Amount” shall have the meaning set forth in Section 3.2.

    

               “Predecessor
in Interest” means Arizona Mail Order Company, Inc., Bedford Fair Apparel, Inc.,
LM&B Catalog, Inc., Monterey Bay Clothing Company, Inc., Crosstown Traders,
Inc. and any
special purpose entities created or administered by Seller or any of the
foregoing, which in any case is in the chain of title of the Assets to be
Sold.

    

               “Purchased
Account” means, from and after the Transfer Date, an Eligible Account which is
actually purchased by Purchaser pursuant to the terms of this
Agreement.

    

               “Repurchase
Price” means, for any Ineligible Account, an amount equal to (i) 100% of the
Payment Amount originally paid for such Account by Purchaser, plus (ii) the aggregate
amount of any purchases made on such Account after the Transfer Date, plus (iii) all fees and
accrued interest on such Account from the Transfer Date to the date of
repurchase (whether or not billed) less (iv) the aggregate
amount of any payments received by Purchaser relating to such Account, less (v) the aggregate amount
of any credits posted to such Account after the Transfer Date.

    

               “Securitization
Agreement” shall mean any agreement between Seller and a third party pursuant to
which any part of the Assets to be Sold is transferred, assigned, pledged or
subject to a security interest.

    

    “Tax”
(and, with correlative meaning, “Taxes”) shall mean any federal, state, local or
foreign net income, gross income, gross receipts, windfall profit, property,
production, sales, use, license, excise, franchise, employment, payroll,
withholding, alternative or add-on minimum, ad valorem, goods and services,
value added, transfer, stamp, or environmental tax, or any other tax, custom,
duty, governmental fee or other like assessment or charge of any kind
whatsoever, together with any interest or penalty, additional tax or additional
amount imposed by any governmental authority.

     

    “Trade
Names” mean the following names, symbols and/or logos associated with the AMO
credit program: AMO, Arizona Mail Order, Old Pueblo Traders, BFA, Bedford Fair
Lifestyles, Willow Ridge, Lew Magram, Brownstone Studios and Monterey Bay
clothing company. Trade Names do not include the tradenames Home, Etc., Lane
Bryant Woman, Lane Bryant Catalog, or Lane Bryant.

     

               “Transfer
Date” means the close of business on October 31, 2008 or such other date as the
parties may mutually agree.

    

    “Valuation
Date” means a mutually agreeable date not less than one (1) Business Day nor
more than four (4) Business Days prior to the Transfer Date.

    

    
      	
              2.  

            	
              Assets to be
      Sold

            

    

    

    
      	
              2.1  

            	
              Sale
      and Purchase

            

    

    

    On the
Transfer Date, Seller agrees to sell, assign and transfer to Purchaser, and
Purchaser agrees to purchase from Seller, all rights, titles and interests of
Seller in and to the following assets and properties as in existence on the
Transfer Date (collectively, the “Assets to be Sold”):

    

    
      	
              (i)  

            	
              All
      Eligible Accounts (including the Account Balances
    thereunder);

            

    

    

    
      	
              (ii)  

            	
              All
      Cardholder Agreements relating to Eligible Accounts;
  

            

    

    

    
      	
              (iii)  

            	
              All
      Books and Records relating to Eligible Accounts;
  and

            

    

    

    
      	
              (iv)  

            	
              All
      Credit Cards related to the Eligible
Accounts.

            

    

    

    The sale
of the Eligible Accounts (including the Account Balances thereunder) and the
other Assets to be Sold is made without recourse to Seller, subject only to
Seller’s representations and warranties and indemnification set forth in this
Agreement.

    

    
      	
              2.2  

            	
              Transfer
      and Assumption

            

    

    

    On the
Transfer Date Purchaser agrees to assume, and Seller agrees to assign and
transfer to Purchaser, the Assets to be Sold and the Assumed Liabilities,
including without limitation the Account Duties by execution and delivery to
Purchaser on the Transfer Date of the Assignment and Bill of Sale (and such
other documents as are required to effectuate such sale) and Purchaser agrees to
confirm such assumption by execution and delivery to Seller on the Transfer
Date, of the Assumption Agreement.

    

    
      	
              2.3  

            	
              Consents

            

    

    

    Seller
shall obtain all consent(s) required to be obtained by Seller in connection with
the sale, transfer and assignment to Purchaser of the Assets to be Sold
including, without limitation, the consents specified in Section 5.5
hereof.

    

    
      	
              2.4  

            	
              Books
      and Records

            

    

    

    Seller
shall deliver to Purchaser on the Transfer Date the Books and Records; provided,
however, that Seller may retain any part of the Books and Records directly
relating to Ineligible Accounts (provided that if such part of the Books and
Records also relate to Eligible Accounts, Seller may retain the original thereof
and deliver a copy to Purchaser) and provided further that Seller may retain
copies of any part of the Books and Records for regulatory compliance purposes
or pursuant to Seller’s bona fide document retention policies, subject to the
confidentiality obligations and use restrictions otherwise set forth in this
Agreement (except with respect to those portions of the Books and Records
retained by Seller as relating to Ineligible Accounts).

    

    
      	
              2.5  

            	
              Excluded
      Assets

            

    

    

    Nothing
contained in this Agreement, or in any document executed in connection herewith,
shall be deemed to transfer any of Seller’s right, title and interest in, and
the Assets to be Sold shall not include, the Ineligible Accounts, the Credit
Balances, any other credit card accounts owned by Seller, Seller’s names or
marks used in association with the Accounts, or any other asset of Seller not
specifically identified in Section 2.1 (the “Excluded Assets”) and Purchaser
shall have no obligations or liabilities with respect to any Excluded
Assets.

    

    
      	
              3.  

            	
              Transfer Date,
      Conversion and Consideration for Assets to be
  Sold

            

    

    

    
      	
              3.1  

            	
              Transfer
      Date and Conversion

            

    

    

    During
the Interim Period, Seller and Purchaser shall mutually cooperate and take all
action reasonably necessary to plan for and effectuate the orderly conversion
and delivery on the Transfer Date by Seller to Purchaser’s processing system of
the Closing Tape and the Books and Records.  The parties
agree to use commercially reasonable efforts to comply (and in the case of
Seller to cause its service provider, TSYS, to comply) with the Conversion Schedule and Seller shall use commercially reasonable efforts
to deliver (and cause TSYS to
deliver) to Purchaser the support and information specified therein on
the dates specified in the Conversion Schedule (as the same may be revised by
mutual agreement).  Purchaser agrees that it will (x) conduct the
conversion of Assets to be Sold onto its systems, including without limitation,
the processing of Cardholder change in terms and other notifications, and (y)
administer the Assets to be Sold from and after the Closing Date, each in
compliance with all applicable laws, rules, regulations and orders. Seller will
pay the costs associated with the de-conversion of the applicable Assets to be
Sold from its and/or its servicer’s systems, and Purchaser will pay the costs
associated with the conversion onto its designated processing system of the
applicable Assets to be Sold.

    

    
      	
              3.2  

            	
              Payment
      Amount; Adjustments

            

    

    

    (a)           The
amount to be paid by Purchaser to Seller for the Assets to be Sold shall be an
amount equal to (x) one hundred percent (100%) of the total of the Account
Balances on all Eligible Accounts less (y) the Ineligible Account Dollars as of
the Transfer Date (the “Payment Amount”).  At least two (2) Business
Days before the Transfer Date, Seller shall deliver a Valuation Date Closing
Statement (the “Preliminary Closing Statement”) to Purchaser setting forth the
estimated Payment Amount as of the Valuation Date (the “Estimated Purchase
Price”) and specifying in reasonable detail the calculation thereof including
the aggregate number of Eligible Accounts and the aggregate dollar amount of the
Account Balances and all other information set forth in the form of Preliminary
Closing Statement attached hereto as Exhibit 1.  At the Closing,
Purchaser will pay Seller or Seller’s assignee by wire transfer in immediately
available funds to an account designated by Seller an amount equal to the
Estimated Purchase Price (subject to mutually agreed
adjustments).  Within sixty (60) days after the Transfer Date, the
parties shall perform a “true-up” of the Payment Amount, as set forth in clause
(b) below to determine the Adjusted Payment Amount, which Adjusted Payment
Amount shall be the Payment Amount hereunder.  For the avoidance of
doubt, Purchaser is not acquiring or assuming liability with respect to, and the
calculation of the Payment Amount set forth in this Section 3.2(a) shall not
take into account, any Credit Balances on Eligible Accounts, the refund of which
shall remain the responsibility of the Seller following the Closing Date as set
forth in Section 6.4.  Seller shall refund all Credit Balances known
as of the Valuation Date on or before the Closing Date and any remaining Credit
Balances as of the Closing Date shall be refunded within ten (10) days after the
Adjustment Date.

    

    (b)           Within
five (5) Business Days after finalization of the Adjusted Closing Statement as
set forth in this Section 3.2(b), the Payment Amount shall be adjusted and
either Purchaser or Seller, as the case may be, shall pay to an account
designated by the other party, by wire transfer in immediately available funds,
the Adjustment Amount.  On the Adjustment Date, Purchaser shall
prepare and deliver to Seller an adjusted Closing Statement relating to and
specifying in reasonable detail the calculation of the Adjustment Amount and the
Adjusted Payment Amount, together with the total Account Balance for each of the
Eligible Accounts as of the Transfer Date and all other information set forth in
the form of Preliminary Closing Statement attached hereto as Exhibit 1 (as
modified by mutual agreement of the Purchaser and Seller, the “Adjusted Closing
Statement”) and shall provide Seller and its authorized representatives
reasonable access to its books and records relating to same as necessary to
verify such calculation.  The “Adjustment Amount” shall be the
difference between (i) the Estimated Payment Amount, and (ii) the Adjusted
Payment Amount as set forth on the Adjusted Closing Statement, together with
interest on such difference calculated at the federal funds rate (at weighted
average daily rates reported by the Federal Reserve System) from the Transfer
Date to the date of payment.  A positive Adjustment Amount shall be
payable by Seller to Purchaser; a negative Adjustment Amount shall be payable by
Purchaser to Seller.

    

    (c)           Dispute
Resolution.   In the event Seller shall disagree with any
item on the Adjusted Closing Statement provided by Purchaser, and if, after good
faith discussion, the parties are not able to agree to such modification,
adjustment or other change, then such dispute shall be handled in accordance
with Section 14.1 of this Agreement.   Any such request related
thereto shall be in writing, with a copy provided simultaneously to Purchaser,
and shall specify with particularity the adjustment, modification or other
change requested.  The determination of the Adjustment Amount rendered
thereby shall be final.  Any payment (including interest) required by
either Seller or Purchaser based on the final determination of the Adjustment
Amount shall be made no later than five (5) Business Days following receipt of
notice of the final determination. The net amount due by either party shall be
accompanied by interest on such amount calculated on the basis of the federal
funds rate, for each day commencing on the later of the Transfer Date or the
Closing Date, as the case may be, through and including the date of such
payment. The fees and disbursements relating to any such determination by the
Accountant shall be borne by the non-prevailing party or allocated
proportionately between the parties in the event that each party prevails as to
some disputed items.

    

    (d)           For
a period of ninety (90) days following the Closing Date (the “Repurchase
Period”), in the event any Purchased Account is discovered by Purchaser or
Seller to have been an Ineligible Account as of the Transfer Date (and to the
extent such Ineligible Account has not been returned and accounted for in the
Adjusted Closing Statement), Purchaser may request that Seller repurchase such
Ineligible Account and Seller shall repurchase such Ineligible Account for an
amount equal to the Repurchase Price.  To the extent Purchaser has
discovered that any Purchased Account is an Ineligible Account prior to
completion of the Adjusted Closing Statement, Purchaser shall submit such
Ineligible Account to Seller for repurchase under this Section 3.2(d) as part of
the Adjusted Closing Statement in accordance with Section 3.2(b)). Purchaser may
submit to Seller an additional list of any Ineligible Accounts subsequently
identified by Purchaser or Seller prior to the expiration of the Repurchase
Period.  Following its
receipt of the Repurchase Price from Seller in respect of an Ineligible Account,
Purchaser shall promptly return to Seller all Assets to be Sold in its
possession or control in respect of such Ineligible Account, and the Parties
shall thereafter take such action as is reasonably necessary to ensure that
title to such Ineligible Account is fully vested in Seller free and clear of all
liens and encumbrances.

     

    4.           Closing

    

    The
closing in respect of the sale and purchase of the Assets to be Sold (the
“Closing”) shall take place on the Transfer Date (or such other date as may be
mutually agreed to by the parties, it being agreed that in the absence of
agreement, the Closing shall take place on the Transfer Date) and shall take
place through the wire transfer of the Estimated Purchase Price, and facsimile
exchange, together with subsequent overnight courier exchange, of the required
closing documents and upon receipt by Seller of such payment and facsimile
documents, hand-delivery to Purchaser’s representative of two (2) copies of the
Closing Tape.

    

    5.           Agreements of Seller During
Interim Period

    

    During
the Interim Period:

    

    
      	
              5.1  

            	
              Information

            

    

    

    Seller
shall provide Purchaser with such information related to the Eligible Accounts
as agreed by the parties in good faith that is reasonably required by the
Purchaser to facilitate the conversion of the Accounts by the Transfer Date in
accordance with the Conversion Schedule.

    

    
      	
              5.2  

            	
              Communications
      with Cardholders

            

    

    

    During
the Interim Period, Purchaser shall be entitled to communicate with and deliver
information and other communications to Cardholders of the Eligible Accounts
concerning the transactions contemplated by this Agreement and the business and
operations of Purchaser and the Company as approved in advance by Seller in its
reasonable discretion (including written correspondence and messages on Seller’s
customer website). In
furtherance thereof, Seller, if so requested by Purchaser, shall on behalf of
Purchaser, and subject to Seller’s normal insertion and review and approval
requirements, insert a communication from Purchaser to the Cardholders of the
Eligible Accounts in all periodic billing statements (mail or electronic)
advising of the purchase and of any terms or changes which Purchaser proposes to
make.  In addition to the foregoing, Seller will at the written
request of Purchaser deliver a file of the names and address of Cardholders of
the Eligible Accounts to Purchaser for the sole purpose of enabling Purchaser to
effect a single, simultaneous blanket mailing to all Cardholders, informing such
Cardholders of the expected Transfer Date and of any terms or changes which will
be imposed or made by Purchaser effective as of the Transfer
Date.  Except for costs such as envelopes and postage (except for
excess postage caused by the insertion of any such communications which shall be
borne by Purchaser) which would otherwise be incurred by Seller in connection
with the billing statement referred to in the second sentence of this Section
5.2, Purchaser shall pay all of the costs of communications referred to in this
Section.  All notices and forms provided by Purchaser shall comply
with all applicable laws and regulations.

    

    
      	
              5.3  

            	
              Conduct
      of Business During the Interim
Period

            

    

    

    Except as
may be otherwise required by law or regulatory requirement (including the rules
of any national securities exchange on which Seller’s affiliates’ securities are
listed), or unless Purchaser otherwise consents in writing (which consent shall
not be unreasonably withheld), during the Interim Period:

    

    a. Seller
will manage, administer and operate the Assets to be Sold (including, without
limitation, performing collection activities thereon) in the ordinary course of
business consistent with past practices (except as otherwise required hereunder)
and in accordance with the Existing Merchant Services Agreement;

    

    b. Seller
will keep and maintain records and books of all revenues relating to the Assets
to be Sold and shall pay all expenses relating to the Assets to be Sold, in the
same manner as it has in the past and as in effect on the date of this
Agreement;

    

    c. Seller
will duly comply in all material respects with all laws, rules and regulations
as the same relate to the Assets to be Sold and Seller’s administration
thereof;

    

    d. Seller
will not transfer, assign, encumber or otherwise dispose of, or enter into any
contract, agreement or understanding to transfer, assign, encumber or otherwise
dispose of, any Eligible Accounts or Assets to be Sold, except for assignments
of Eligible Accounts for collection in the ordinary course of business
consistent with past practices or activities in connection with the
securitization of Eligible Accounts pursuant to the Securitization Agreements
consistent with past practices;

    

    e. Seller
will promptly advise Purchaser in writing of any material actions, suits or
proceedings which, to Seller’s knowledge, are commenced, threatened or arise
against or affecting the Assets to be Sold and will promptly advise Purchaser in
writing of any other actual or, to the extent known by Seller, prospective
material adverse change in the Assets to be Sold;

    

    f. Notwithstanding
the prior provisions of this Section 5.3, commencing on the date seven (7) days
prior to the Transfer Date, Seller shall not accept or process any applications
for new Accounts. In the event Seller receives any such applications for new
Accounts following such date, Seller shall, to the extent permitted by
applicable law, rule or regulation, promptly deliver the same to
Purchaser.  During such period, Seller shall not be restricted from
issuing Credit Cards with respect to applications that were processed by Seller
prior to ceasing to accept or process new applications; and

    

    g.           If
Seller maintains any toll free customer service telephone numbers or toll free
authorizations numbers which, in each case, are dedicated solely to servicing
the Accounts, Seller shall execute and deliver to Purchaser or such other party
as appropriate such documents as are necessary to enable Purchaser to acquire
the customer service toll-free numbers associated with the Accounts by the
Transfer Date.

    

    5.4           Debt
Cancellation.

    

    Seller
represents that it does not maintain any debt cancellation or credit insurance
programs with respect to the accounts.

    

    5.5           Securitization
Agreements.

    

    On and
prior to the Transfer Date Seller shall take all actions required pursuant to
its Securitization Agreements in order to enable Seller to transfer the Assets
to Be Sold to Purchaser free and clear of all liens and security interests on
the Transfer Date. Seller shall be responsible for all filing costs and fees
necessary to terminate any security interest in the Assets to be Sold prior to
transfer.  On the Transfer Date Seller shall provide Purchaser
evidence of termination of any such security interest.  On the
Transfer Date Seller shall provide to Purchaser fully executed and in full force
and effect UCC-3 amendments with respect to each financing statement filed
against Seller in Delaware or in Ohio, in each case releasing the Assets to be
Sold from the collateral covered by such financing statement.

    

    5.6           Lockbox/Payments During
Interim Period

    

    Commencing
on the date specified in the Conversion Schedule, and thereafter during the
Interim Period, Seller shall revise the billing remittance address on all
periodic statements for (i) Eligible Accounts and (ii) Ineligible Accounts to
Purchaser’s lockbox account address held by ADS Alliance Data Systems, Inc. at
the address specified by Purchaser in writing. During the Interim Period,
Purchaser shall direct ADS Alliance Data Systems, Inc. to overnight all
correspondence and remittances received at such lockbox (unopened) directly to
Seller on a daily basis at such single address as Seller may designate from time
to time on not less than three (3) days’ prior notice to
Purchaser.  On the date specified in the Conversion Schedule Seller
will revise the billing remittance address on all periodic statements for
Ineligible Accounts retained by Seller to any address selected by
Seller.

    

    6.           Certain Agreements of
Purchaser and Seller

    

    
      	
              6.1  

            	
              Cardholder
      Disputes

            

    

    

    Subject
to its chargeback rights against Company pursuant to the Existing Merchant
Services Agreement (which chargeback rights
shall survive the termination of the Existing Merchant Services Agreement),
Seller shall be responsible for final resolution of all Cardholder Disputes
(involving matters within Seller’s control) of which Seller receives notice on
or before the Transfer Date.  Seller shall either resolve such
Cardholder Disputes prior to the Transfer Date in accordance with its normal
procedures and applicable law and regulations, or if it is unable to so resolve
the Cardholder Dispute, mail such acknowledgements as are required by law or
regulation, and promptly furnish to Purchaser all materials relating to the
Cardholder Dispute.  To the extent any such Cardholder Disputes are
not resolved by the Transfer Date, the dollar amount associated with the
Cardholder Dispute shall be Ineligible Account Dollars. Subject to adjustment
for Cardholder Disputes received between the Transfer Date and the Adjustment
Date relating to matters existing prior to the Transfer Date, Purchaser shall be
responsible for the final resolution of all Cardholder Disputes for which notice
is received after the Transfer Date; provided that Seller will, during the
90-day period following the Transfer Date, use commercially reasonable efforts
to assist Purchaser in resolving such other Cardholder
Disputes.  

    

    6.2 Purchaser’s
Securitization of Accounts.

    

    The
Seller shall make available such additional information regarding the Assets to
be Sold as is reasonably requested by Purchaser or Purchaser’s potential
investors and their representatives in connection with a securitization by
Purchaser of the Eligible Accounts and Purchaser may disclose information
regarding the Seller and the origination and servicing of the Accounts (and
performance information on the Assets to be Sold) to rating agencies,
representatives and such potential investors without the requirement of
execution of a confidentiality agreement provided such disclosure is consistent
with normal and customary standards with respect to securitization offerings of
asset backed securities.  Notwithstanding the
foregoing, Purchaser shall advise such potential investors and their
representatives of the confidential nature of the
information.   Purchaser may assign its rights and remedies under
this Agreement and the Conveyance Documents to subsequent holders of the Assets
to be Sold in conjunction with Purchaser’s securitization of the Eligible
Accounts.

    

    
      	
              6.3  

            	
              Confidentiality
      of Information

            

    

    

    (a)           Purchaser’s
affiliate ADS
Alliance Data Systems, Inc. (“ADS”) and Seller are parties to that certain
Mutual Non-Disclosure Agreement effective as of May 21, 2008 (the
“Confidentiality Agreement”).  Purchaser agrees to be bound by the
terms and conditions of the Confidentiality Agreement on the same terms and
conditions applicable to ADS as if Purchaser had originally executed the
Confidentiality Agreement. Except as otherwise set forth herein, the
Confidentiality Agreement shall survive and continue in full force and effect on
its terms following the execution and delivery of this Agreement, and the
parties hereto shall continue to be bound by their respective obligations
thereunder.  Notwithstanding the foregoing, Purchaser shall be
entitled to share Confidential Information of the Seller to (i) Interested
Parties as necessary in connection with Purchaser’s securitization of the Assets
to be Sold and (ii) with Golden Gate and/or its affiliate as may be necessary in
connection with performing Purchaser’s obligations under the New Merchant
Services Agreement and this Agreement.

    

    (b)           Except
for those portions of the Books and Records retained by Seller as relating to
Ineligible Accounts pursuant to Section 2.4, from and after the Transfer Date,
the Books and Records (including, without limitation, the Cardholder List) shall
constitute Confidential Information of Purchaser and shall not be used by Seller
for any purpose other than as contemplated by this Agreement and in connection
with Seller’s internal administration of its business related to the
Accounts.

    

    
      	
              6.4  

            	
              Payments
      Received by Seller and Purchaser; Credit
  Balances

            

    

    

    (a)           Seller
will hold in trust for and promptly remit to Purchaser all monies on Purchased
Accounts which are received by Seller after the Transfer Date, in accordance
with the following procedures.

     

    (i)           from
the Transfer Date through the date ninety (90) days after the Transfer Date,
Seller shall, on each Business Day, (x) wire transfer to an account designated
by Purchaser an amount equal to the aggregate of all sums received by Seller on
account of the Purchased Accounts during such Business Day and any non-Business
Day occurring since Seller’s previous wire transfer and (y) provide to Purchaser
by encrypted email to an address specified by Purchaser in writing (in an
industry standard encrypted, password protected file) an electronic common
deliminated file in the format agreed to by the parties (the “File”) setting
forth all payments received by Seller and the Account number to which such
payment relates in respect of the Purchased Accounts during such Business Day
and any non-Business Day occurring since Seller’s previous submission of a File
to Purchaser hereunder;

     

    (ii)           from
the date ninety-one (91) days after the Transfer Date through the date one
hundred eighty (180) days after the Transfer Date, Seller shall, within five (5)
Business Days after receipt of payment, (x) wire transfer to an account
designated by Purchaser an amount equal to the aggregate of all sums received by
Seller on account of the Purchased Accounts during such Business Day and any
other day occurring since Seller’s previous wire transfer and (y) provide to
Purchaser by encrypted email to an address specified by Purchaser in writing the
File listing all payments received by Seller in respect of the Purchased
Accounts during such Business Day and any other day occurring since Seller’s
previous submission of a File to Purchaser hereunder;

     

     (iii)           commencing
on the date one hundred eighty-one (181) days after the Transfer Date, and
thereafter, Seller shall return any payment received on account of any Purchased
Account to the sender together with a letter setting forth Purchaser’s
remittance address.  Purchaser acknowledges and agrees that Seller
shall have no obligation to remit payments in respect of Eligible Accounts to
Purchaser after more than one hundred eighty-one (181) days after the Transfer
Date.

     

    Notwithstanding
the foregoing, Seller shall have the right to offset against such monies due to
Purchaser the amounts due to Seller from any payments related to Purchased
Accounts which are returned, refused or rejected for payment by the issuing bank
after the Transfer Date and Seller shall provide Purchaser with reasonable
documentation thereof.

     

    (b)
Commencing on the Transfer Date, Seller hereby authorizes and empowers Purchaser
to sign and endorse Seller’s name on all checks, drafts, money orders or other
forms of payment relating to the Purchased Accounts.  In addition,
Seller shall within thirty (30) days after the Transfer Date cease accepting
payment by credit card on the Purchased Accounts.

     

    (c)           Purchaser
agrees that it will use commercially reasonable efforts to forward or remit to
Seller any payment or the amount of any payment, as the case may be, on any
Ineligible Account, and will promptly forward any other document pertaining to
any Ineligible Account received after the Closing Date.   In
performing its obligations under the preceding sentence, Purchaser will adhere
to the following payment method until the date ninety (90) days after the
Transfer Date or such earlier date as Seller and Purchaser reasonably determine
that the volume of remittals no longer justifies it and thereafter may lengthen
the remittance period or discontinue forwarding payments and return payments to
the sender:  Within two (2) Business Days after receipt of the
payment, Purchaser will (i) provide to Seller by encrypted email to an address
specified by Seller in writing a File  listing all payments received
by Purchaser in respect of the Ineligible Accounts during such Business Days and
any non-Business Day occurring since Purchaser’s previous submission of a File
to Seller hereunder, and (ii) remit to Seller by wire transfer pursuant to the
instructions applicable to Purchaser as provided in writing by Seller the
aggregate amount of such payments as set forth therein.  Anything in
this Section 6.4 (b) to the contrary notwithstanding, Seller acknowledges and
agrees that Purchaser shall have no obligation to remit payments in respect of
Ineligible Accounts to Seller after the date which is six (6) months after the
Transfer Date, and that Purchaser shall thereafter return any such payment or
amount to the sender.

     

     

    (d)           Seller
shall use commercially reasonable efforts to refund to Cardholders all Credit
Balances known by Seller ten (10) days prior to the Closing Date by the Closing
Date and, in any event, Seller shall refund to Cardholders all Credit Balances
existing as of the Closing Date no later than ten (10) Business Days following
the Closing Date.

     

    

    
      	
              6.5  

            	
              Collection
      of Purchased Accounts

            

    

    

    Purchaser
shall have the right to take, or cause to be taken, such action to enforce
Purchaser’s rights with respect to any Purchased Account as Purchaser may deem
necessary or appropriate in the circumstances.  Upon Purchaser’s
request, Seller shall execute in favor of Purchaser such Account-specific
assignment documents as may be reasonably necessary to allow Purchaser to
pursue, in Purchaser’s own name, collection or enforcement action on the
Purchased Accounts.  Seller hereby constitutes and appoints Purchaser
its true and lawful attorney-in-fact for such purpose, with full power of
substitution in the premises, which appointment shall include (but shall not be
limited to) the power to demand, sue for, collect and receive any and all
amounts owing at any time on any Purchased Account and owed to Purchaser, and to
endorse checks, drafts, orders and other instruments tendered in payment of any
Account and to settle, compromise, prosecute or defend any claims Purchaser or
Seller may have with respect to such instruments.  This power of
attorney shall be deemed to be a power coupled with an interest.  Any
collection of such Accounts by Purchaser shall be performed in accordance with
all applicable laws and regulations.

    

    
      	
              6.6  

            	
              Further
      Assurances/Post Closing Covenants

            

    

    

    The
parties hereto hereby covenant as follows, which covenants shall survive the
Transfer Date:

    

    (a) On and
after the Transfer Date, Seller shall (for itself and for its Predecessor(s) in
Interest) (i) execute, acknowledge and deliver all such acknowledgements,
certificates, assignments and other instruments and take such further action as
may be reasonably necessary and appropriate effectively to vest in Purchaser the
full legal and equitable title to the Assets to be Sold, free and clear of all
Liens, and (ii) use reasonable efforts to assist Purchaser in the orderly
transition of the operations acquired by Purchaser.  In addition, to
the extent transferable, on or before the Transfer Date, Seller shall assist in
the acquisition by Purchaser (or relinquish for the benefit of Purchaser) of any
toll-free customer service telephone numbers maintained by Seller exclusively
for the purpose of servicing the Accounts.

    

    (b) On and
after the Transfer Date, Purchaser shall execute, acknowledge and deliver all
such acknowledgements and other instruments and take such further action as may
be necessary and appropriate to relieve and discharge effectively Seller from
any obligations remaining under those liabilities and obligations assumed by
Purchaser pursuant to the terms hereof.

    

    (c)           Within
thirty (30) days after the Transfer Date, Seller shall provide to the credit
reporting agencies used by Seller in connection with the Eligible Accounts a
letter of closure or deletion of the Seller’s trade line records with respect to
such Eligible Accounts.

    

    (d)           Seller
shall, for a period of ninety (90) days after the Transfer Date, for no
additional consideration, reasonably cooperate with the Purchaser in connection
with the conversion of the Eligible Accounts to Purchaser’s processor by
answering questions regarding the Closing Tape and the Books and Records to the
extent within Seller’s knowledge.

    

    (e)           Seller
agrees that Seller will at all times comply with Seller’s privacy policy
regarding the Cardholder List and will comply with Seller’s obligations under
the Company Purchase Agreement and Existing Merchant Services Agreement with
respect thereto.

    

    (f)           Seller
agrees that Company shall be entitled to continue accepting the existing Credit
Cards issued to Eligible Accounts following the Transfer Date for a reasonable
period of time following the Transfer Date. Not more than sixty (60) days
following the Transfer Date Purchaser shall either issue new credit cards to the
Cardholders associated with all active Purchased Accounts or notify such
Cardholders of account termination.  In the event the Cardholder of
inactive or never active Eligible Account desires to activate their Eligible
Account following the Transfer Date, Purchaser shall either issue a new credit
card to such Cardholder or notify such Cardholder of account
termination.

    

    (g)           Between
the Execution Date and the Transfer Date, subject to the terms and conditions of
this Agreement, each party shall use its commercially reasonable efforts to
take, or cause to be taken, all action, and to do, or cause to be done, all
things necessary or appropriate hereunder to consummate the transactions
contemplated by this Agreement.  Each party further agrees to use its
commercially reasonable efforts to obtain consents of all third parties and
governmental agencies necessary for the consummation of the transactions
contemplated by this Agreement.

    

    (h)           During
the period beginning on the Transfer Date and ending on the date two (2) years
after the Transfer Date, to the extent the requested information is in Seller’s
possession or control, Seller will provide to Purchaser within ten (10) Business
Days after Purchaser’s request from time to time the following information
related to the Purchased Accounts (in each case for the twenty-five (25) month
period immediately preceding the Transfer Date), (i) historical billing
statements, (ii) transaction history, (iii) completed applications, (iv)
customer service correspondence from and to Cardholders, (v) any applicable
consumer credit counseling agreements with Cardholders, and (vi) customer
service notes. In addition, Seller will, for the ninety (90) day period
immediately following the Transfer Date, forward to Purchaser any document or
correspondence pertaining to any Purchased Account received after the Transfer
Date.  Seller shall maintain all documents in its possession and
control in accordance with its normal and customary document retention policies
and as required by all applicable laws.

    

    (i)           For
a period of ninety (90) days after the Transfer Date, Seller will cause its
“customer service department” to direct telephone inquiries received from any
Cardholder on any Purchased Account to the applicable cardholder customer
service telephone number(s) designated by Purchaser.

    

                          (j)   Through
and until the date ninety (90) days after the Transfer Date, Seller shall
continue to maintain its existing Cardholder electronic customer service
websites for Company’s businesses operating under the Trade Names and shall
direct Cardholders to Purchaser’s website as set forth on Schedule 5.2 through
such date.

    

                          (k)          If
at anytime during the period beginning on the Transfer Date and ending on the
date five (5) years after the Transfer Date Seller desires or intends to sell,
assign or otherwise transfer the Charged-Off Accounts to any third party (other
than assignments to Seller’s collection agencies and affiliates in the ordinary
course as a part of Seller’s collection efforts), then Purchaser shall have the
first right and/or option of purchasing the Charged-Off Accounts on the same
terms otherwise available to such third party. In the event Seller shall obtain
a bona fide written offer from the third party to purchase the Charged-Off
Accounts on terms which Seller is willing to accept (the “Offer”), Seller shall
promptly notify Purchaser of the Offer (together with a copy of the Offer) and
Purchaser shall have the option for a period of thirty (30) days after receipt
of the Offer to elect to purchase the Charged-Off Accounts on the same terms as
are otherwise set forth in the Offer, except that closing thereunder shall not
occur until the later of the date set forth in the Offer or sixty (60) days
after Purchaser’s receipt of the notice of the Offer.  Failure on the
part of Purchaser to elect to purchase the Charged-Off Accounts pursuant to the
Offer shall be deemed a waiver of this option right as to such particular Offer
only and if a sale is not consummated pursuant to such Offer, Purchaser shall
have the right to purchase the Charged-Off Accounts under this section (k) if
subsequent Offers are received by Seller.  In addition to the
foregoing, prior to offering the Charged-Off Accounts for sale, Seller shall
first contact Purchaser and provide to Purchaser the right of first negotiation
as to the purchase of the Charged-Off Accounts.   If Purchaser
elects not to purchase the Charged-Off Accounts Purchaser shall have no further
rights to purchase the Charged-Off Accounts under this Section and Seller shall
have no further obligations to offer to sell to Purchaser.

    

               6.7           Taxes.  Each of Purchaser
and Seller shall promptly pay in full and when due any Tax imposed upon it under
applicable law on the sale of the Assets to be Sold from Seller to Purchaser
under this Agreement.

    
 

    6.8           Public
Announcements

     

    (a)           The
parties shall consult with each other before they or any of their respective
affiliates or agents issue any press releases or otherwise make, any public
statements with respect to this Agreement and the transactions contemplated
hereby, and none of them nor any affiliate of any of them shall issue any such
press release or make any such public statement prior to receiving express
written approval of the other party except, in each case, as may be required by
applicable law or regulation (including a reporting requirement of the
Securities Exchange Commission or as reasonably required in connection with
Purchaser’s securitization of the Accounts). 

     

     

    (b)           Section
6.8 (a) to the contrary notwithstanding, if either party or its affiliates (for
the purposes of this Section 6.8 (b) the “Filing Party”) are obligated to file
periodic reports with the Securities and Exchange Commission, then the filing
party shall have the right to file a copy of this Agreement with the applicable
commission or governmental agency to the extent necessary, in such party’s
reasonable opinion, to comply with any applicable disclosure laws or regulations
(including any reporting requirement of the Securities Exchange Commission), or
any listing requirement of any stock exchange applicable to the Filing
Party.

     

     

    6.9           Transfer of Domain Names 

     

               Seller shall transfer to Purchaser’s parent company
Alliance Data Systems Corporation, simultaneously with the Closing, all right,
title and interest in and to the Domain Names and provide the Domain Name
Assignment. 

    
 

    7.           Indemnification

    

    
      	
              7.1  

            	
              Indemnification
      by Seller

            

    

    

    Subject
to Section 7.4, Seller will defend and indemnify Purchaser and its successors
and assigns and hold Purchaser, its successors and assigns harmless for, from
and against any claim, demand, liability, loss, cost or expense, including
reasonable attorneys’ fees, (collectively, “Losses”) which shall result from or
arise out of or be incurred in connection with (i) the untruthfulness of any of
Seller’s representations or warranties contained in this Agreement, (ii) the
breach by Seller of any of its covenants or agreements herein contained, (iii)
the breach by Seller of any of its covenants or agreements in the Assignment or
Bill of Sale,  (iv) any liability or obligation, contingent or
otherwise, of Seller relating to the Assets to be Sold that is not assumed by
Purchaser pursuant to this Agreement or the Assumption Agreement and which
exists on, or arises out of any event or condition occurring or existing at any
time prior to, the Transfer Date (including without limitation liabilities
arising from any Account Duties existing as of the Transfer Date which have not
been fulfilled by Seller prior to the Transfer Date or which relate to periods
prior to the Transfer Date), or (v) any and all Taxes which are the
responsibility of Seller pursuant to Section 6.7 (collectively, “Purchaser
Indemnified Losses”); provided, however, in no event shall Seller be obligated
under this Section 7.1 to defend, indemnify and hold Purchaser harmless, for,
from and against any Losses to the extent the same shall result from Purchaser’s
willful misconduct or gross negligence.

    

    
      	
              7.2  

            	
              Indemnification
      by Purchaser

            

    

    

    Subject
to Section 7.4, Purchaser will defend and indemnify Seller and its successors
and assigns and hold it and its successors and assigns harmless for, from and
against any Losses which shall result from or arise out of or be incurred in
connection with (i) the untruthfulness of any of Purchaser’s representations or
warranties in this Agreement, (ii) the breach by Purchaser of any of its
covenants or agreements herein contained, (iii) the breach by Purchaser of any
of its covenants or agreements in the Assumption Agreement, (iv) any
liabilities, contingent or otherwise, assumed by Purchaser pursuant to this
Agreement or the Assumption Agreement; (v) any liabilities or obligations,
contingent or otherwise, of Seller arising from or relating to Purchaser’s
communications with the Cardholders of the Eligible Accounts prior to the
Transfer Date pursuant to Section 5.2, (vi) any and all Taxes which are the
responsibility of Purchaser pursuant to Section 6.7, or (vii) the operation by
Purchaser of the Assets to be Sold from and after the Transfer Date; provided,
however, that in no event shall Purchaser be obligated under this Section 7.2 to
defend and indemnify Seller and hold Seller harmless for, from and against any
Losses to the extent the same shall result from Seller’s willful misconduct or
gross negligence.

    

    7.3           Indemnification
Procedures.

    

    (a)           In
case any claim, suit, action or proceeding (any “Action”) is made or commenced
against either Seller or Purchaser in respect of which indemnification may be
sought under Section 7.1 or 7.2 (the “Indemnitee”), the Indemnitee shall
promptly give the other party (the “Indemnitor”) written notice thereof provided
that the Indemnitor shall not be relieved of its obligation to indemnify the
Indemnitee as a result of the Indemnitee’s failure to promptly give such prompt
notice, except to the extent that the defense of such Action is materially and
irrevocably prejudiced by such failure.  The Indemnitor shall be
entitled to participate in (or, if the Indemnitee does not desire to defend, to
conduct) the defense thereof with counsel reasonably acceptable to the
Indemnitee at the Indemnitor’s expense.  The Indemnitor may (but need
not) defend or participate in the defense of any Action, but the Indemnitor
shall promptly notify the Indemnitee if the Indemnitor shall not desire to
defend or participate in the defense of any such Action.  If the
Indemnitor fails to provide a defense of any such claim and the Indemnitee
provides the defense, the Indemnitor shall be responsible for payment of the
reasonable legal fees incurred by the Indemnitee in connection with such
participation.  If, within fifteen (15) days of receipt of such notice
the Indemnitor notifies the Indemnitee in writing of its intent to assume the
defense of such Action, the Indemnitor shall not be liable to the Indemnitee
under this Section 7.3 for any legal or other expenses subsequently incurred by
the Indemnitee in connection with the defense thereof. Notwithstanding the
foregoing, the Indemnitee shall have the right to engage its own counsel if the
Indemnitee elects to assume the defense of the Action, but the fees and expenses
of such counsel shall be at the Indemnitee’s expense unless (i) the employment
of such counsel shall have been authorized in writing by the Indemnitor, (ii)
the Indemnitor shall not have employed counsel to take charge of the defense of
such Action within thirty (30) days after receiving electing to assume the
defense of such Action or (iii) there is a reasonable basis on which the
Indemnitee’s interests may differ from those of the Indemnitor, in any of which
events the Indemnitor will be responsible for the reasonable fees and expenses
incurred by the Indemnitee in connection with defending such
Action.

    

    The
Indemnitee shall notify the Indemnitor of its intention to settle or compromise
any Action against the Indemnitee in respect of which payments may be sought by
the Indemnitee hereunder (and in the defense of which the Indemnitor has not
previously elected to participate), and the Indemnitee may settle or compromise
any such Action unless the Indemnitor notifies the Indemnitee in writing (within
ten (10) Business Days after the Indemnitee has given the Indemnitor written
notice of its intention to settle or compromise) that the Indemnitor intends to
conduct the defense of such Action.  Any such settlement or compromise
of, or any final judgment or decree entered into or in, any Action which the
Indemnitee defended or participated in the defense in accordance herewith shall
be deemed to have been consented to by, and shall be binding upon, the
Indemnitor as fully as if the Indemnitor had assumed the defense thereof and a
final judgment or decree had been entered in or with regard to such Action by a
court of competent jurisdiction for the amount of such settlement, compromise,
judgment or decree. In the event that the Indemnitor reimburses the Indemnitee
for any third party claim, the Indemnitee shall promptly remit to the Indemnitor
any reimbursement the Indemnitee subsequently received for such third party
claim.

    

    (b)           Without
limiting their respective rights and obligations as set forth elsewhere in this
Article 7, and subject to the procedures for indemnification claims set forth in
this Article 7, Seller or Purchaser as an Indemnitee, as the case may be, will
act in good faith, will use commercially reasonable efforts to mitigate any
losses, will use similar discretion in the use of personnel and the incurring of
expenses as the Indemnitee would use if they were engaged and acting entirely at
their own cost and for their own account, will render to the Indemnitor such
assistance as Indemnitor may reasonably require in order to insure prompt and
adequate defense of any Action, and will consult regularly with the Indemnitor
regarding the conduct of any proceedings or the taking of any action for which
indemnification may be sought.

    

    (c)           In
calculating the amount of any Losses of any Indemnitee under this Article 7,
there will be subtracted the amount of any third-party payments (including
insurance payments) actually received by the Indemnitee with respect to such
Losses; provided, however that nothing herein shall limit such third party's
rights to pursue recovery against the Indemnitor for any such payments made by
such third party. In the event that the Indemnitor reimburses the Indemnitee for
any Losses prior to the occurrence of the events contemplated above, the
Indemnitee will remit to the Indemnitor any such amounts that the Indemnitee
subsequently receives in reimbursement of such Losses (not to exceed the amount
previously reimbursed in respect thereof).

    

    (d)           After
the Closing Date, except for those matters expressly addressed in Article 3,
this Article 7 will constitute Purchaser’s and Seller’s exclusive remedy for any
of the matters set forth in this Agreement or with respect to any document or
instrument delivered in connection herewith; provided, however, that nothing
contained herein shall prevent an Indemnitee from pursuing remedies as may be
available to such party under applicable law in the event of an Indemnitor’s
failure to comply with its indemnification obligations hereunder.

    

    7.4           Limitation
of Liability.

    

    Notwithstanding
anything to the contrary contained in this Agreement, except for Losses arising
from a breach of Seller’s representations set forth in Sections 8.7 (Condition
of Assets to be Sold) and 8.11 (Conveyance of Assets to be Sold), and 8.12
(Securitization) each of which shall not be subject to the Floor or Ceiling (as
hereafter defined), following the Transfer Date (and subject to the provisions
of this Section 7.4): (i) neither party shall have any obligation with respect
to any indemnification payments payable pursuant to this Article 7 except to the
extent that the aggregate of all of such obligations (including all costs and
reasonable attorneys fees incurred in connection therewith as otherwise provided
above) exceed One Hundred Thousand Dollars ($100,000.00) (the “Floor”); in which
case Indemnitor shall be responsible for all obligations in excess of the Floor;
(ii) the indemnification provided for herein shall not cover, and in no event
shall any party hereto be liable for, any indirect damages claimed by the
Indemnitee, including consequential, incidental, exemplary or punitive damages
claimed by the Indemnitee (except that the indemnification provided for herein
shall cover reasonable attorneys fees incurred by the Indemnitee as otherwise
provided above and shall also cover judgments awarded to third parties for
indirect damages, including consequential and punitive damages); and (iii) the
aggregate amount of indemnification either party is obligated to provide under
this Agreement shall not exceed the Payment Amount (the “Ceiling”) unless the
claim arises from the willful misconduct of the
Indemnitor.  Notwithstanding the foregoing limits or any other
provision of this Section 7.4 to the contrary, (i) any claims arising from a
breach of Seller’s representations set forth in Sections 8.7, 8.11 or 8.12 shall
not be subject to the Floor or the Ceiling and Seller shall be responsible for
the full amount of any such claim. In addition, if as a result of a party’s
breach of a representation of this Agreement the Closing does not occur and this
Agreement is terminated, all of the non-breaching party’s direct costs incurred
as a direct result of breach of the representation and termination of the
Agreement shall be deemed direct damages of the non-breaching party not subject
to the Floor.

    

     

    7.5           Deadline
for Claims for Indemnification

     

    Neither
party shall have any obligation with respect to any indemnification payments
payable pursuant to this Article 7 hereof with respect to any Losses resulting
from any Action arising or asserted by any Indemnitee or any other person more
than three (3) years after the Closing Date (provided, that the foregoing three
(3) year limitation shall not apply to any Losses of any Indemnitee arising from
the failure of Seller or Purchaser to satisfy any of its respective obligations
under Sections 6.3, 6.7, 6.8 and hereof).   Seller shall have no
liability to Purchaser with respect to or resulting from Purchaser, Company or
their third party vendors’ conversion of the Assets to be Sold except for
Seller’s limited liability to Purchaser under this Agreement solely with respect
to Seller’s obligations to comply with its obligations under this Agreement
including, without limitation, its obligations set forth on the Conversion
Schedule.

    

    8.           Warranties and
Representations of Seller

    

               Seller
represents and warrants to Purchaser as follows:

    

    
      	
              8.1  

            	
              Organization

            

    

    

    Seller is
a national bank duly organized and validly existing under the laws of the United
States and is authorized to conduct its business under those
laws.  Seller’s “main office”, as that term is used in Comptroller of
the Currency Interpretive Letter #913 dated August 3, 2001, is located at 1103
Allen Drive, Milford, Ohio 45150.

    

    
      	
              8.2  

            	
              Authority

            

    

    

    Seller
has full corporate power and authority to enter into and perform this Agreement
and to effect the transactions contemplated hereby and to sell the Assets to be
Sold to Purchaser.  The execution, delivery and performance by Seller
of this Agreement (and all documents, agreements, and instruments contemplated
hereby) have been approved by all requisite corporate action on the part of
Seller.  This Agreement constitutes, (and each such document,
agreement, and instrument when executed and delivered will constitute) a valid
and binding obligation of Seller enforceable against it in accordance with their
respective terms, except as such enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium, receivership, conservatorship and other
laws relating to or affecting creditors’ rights generally and by general
principles of equity.  No consents are required for the execution and
performance of Seller’s obligations hereunder except such consents as have been
or will be obtained prior to the Closing Date.

    

    
      	
              8.3  

            	
              Financial
      Information

            

    

    

    Seller
has provided to Purchaser financial information relating to the Assets to be
Sold, computed with information as of June 30, 2008 (the “Financial Information
Computation Date”), which (i) includes as of the Financial Information
Computation Date the number of Accounts, together with the additional Account
information set forth on Schedule 8.3 hereof (collectively, the “Financial
Information”), (ii) is accurate in all material respects as of the respective
date thereof, (iii) does not, to Seller’s knowledge, as of such date, contain
any untrue statement of a material fact, and (iv) does not, as of such date,
omit to state any material fact relating to the Financial
Information.  The Preliminary Closing Statement will be accurate in
all material respects as of the date thereof.  All charge or credit
transactions (including payments) as to which the records thereof shall have
been received by Seller on or before the Transfer Date shall have been posted to
the appropriate Account as of the close of business on the Transfer
Date.  The Closing Tapes when delivered by Seller to Purchaser shall
set forth in all material respects the true, correct and complete list of the
Eligible Accounts and Account Balances as of the date of their
preparation.

    

    
      	
              8.4  

            	
              Legal
      Proceedings

            

    

    

    As of the
date of this Agreement there are no Actions (including without limitation
governmental or regulatory violations, proceedings or investigations) which are
pending or to the knowledge of Seller threatened against or affecting the Assets
to be Sold or Seller’s ability to consummate the transactions contemplated by
this Agreement.

    

    
      	
              8.5  

            	
              Finders
      or Brokers

            

    

    

    Seller
has not agreed to pay any fee or commission to any agent, broker, finder or
other person for or on account of services rendered as a broker or finder in
connection with this Agreement or the transactions contemplated which would give
rise to any valid claim against Purchaser for any brokerage commission or
finder’s fee or like payment.

    

    
      	
              8.6  

            	
              Compliance
      with Law and Other Instruments

            

    

    

    The
execution and delivery of this Agreement by Seller and the consummation of the
transactions contemplated hereby by Seller will not constitute a violation of or
be in conflict with any applicable law or regulation in any material
respect.  The Cardholder Agreements for the Eligible Accounts and the
monies collected under the Accounts comply in all material respects with all
applicable laws, rules and regulations.  Seller’s operation and
administration of the Assets to Sold (including without limitation all
origination procedures, credit approval procedures, finance charges, late fee
calculation methodologies, disclosures, collection practices and marketing
practices) has complied with (and during the Interim Period will comply with)
all applicable laws, rules, regulations and regulatory directives in all
material respects (including, without limitation, guidelines of the FFIEC) and
the Assets to be Sold are not subject to any claims arising from any violation
thereof.

    

    The
execution and delivery by Seller of, and performance by Seller of its
obligations pursuant to, this Agreement (and the documents, agreements, and
instruments contemplated hereby) will not violate or be in conflict with
Seller’s charter or by-laws or any contract or other instrument to which it is a
party or by which it is bound, except as would not have a material adverse
effect on the Assets to be Sold, or Seller’s ability to consummate the
transactions contemplated hereby; excluding, however, (i) any matter, condition
or event that (x) is within the sole control of Company or (y) affects the
credit card services, consumer credit or banking industry generally first
arising after the date of this Agreement, or (ii) any changes in laws, generally
accepted accounting principles or regulatory accounting principles first arising
after the date of this Agreement.  Seller’s fulfillment of all Account
Duties has been performed in all material respects in accordance with all
applicable laws, rules and regulations.

    

    
      	
              8.7.  

            	
              Condition
      of Assets to be Sold

            

    

    

    With
respect to all Eligible Accounts sold to Purchaser hereunder, the obligation of
the Cardholder to pay the unpaid Account Balance thereunder owing as of the
close of business on the Valuation Date, if any, as shown on the Preliminary
Closing Statement, is legal, valid and binding and enforceable except as such
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium, receivership, conservatorship and other laws relating to or
affecting creditors’ rights generally, by general principles of equity and
Cardholder Disputes (which are specifically addressed in Section 6.1 of this
Agreement) and is not subject to any offsets or other defenses existing as of
the Transfer Date.

    

    On the
Transfer Date, Seller will be the owner of all right, title and interest in and
to all of the Assets to be Sold, free and clear of all Liens (including, without
limitation, any Lien related to the Securitization Agreements); and immediately
after such sale, such ownership interest will be vested in Purchaser. Each
Account Balance is, or as of the Transfer Date will be, freely assignable and
transferable to Purchaser.  

     

                   
8.8  Seller
Agreements and Accounts

    

    The form
of Seller’s Cardholder Agreements in effect with respect to Eligible Accounts on
the date of this Agreement, and Seller’s related form of periodic statement
forms in effect on the date of this Agreement, are attached as Schedule 8.8.1
and Schedule 8.8.2 respectively.  There are no other Cardholder
Agreements or periodic statement forms in use by Seller or otherwise in effect,
with respect to any Eligible Account on the date of this Agreement. The form of
Cardholder Agreement and form of periodic statement comply in all material
respects with all applicable laws and accurately represent the agreements
between Seller and Cardholders and the methods of computing balances and finance
charges.  None of the Cardholder Agreements, periodic statement forms
or Accounts includes a provision for annual fees and there are no obligations to
Cardholders except as set forth in the Cardholder Agreements and those
agreements made in the ordinary course of Seller’s business (which agreements
taken as a whole would not have a materially adverse effect on the Assets to be
Sold) and as noted in the Books and Records and/or Closing Tape. There are no
leases, contracts or other agreements that are material to the Assets to be Sold
that would affect the purchase or operation thereof by the
Purchaser.  Seller is not in breach of any contract or agreement to be
sold or transferred to the Purchaser hereunder in any material
manner.

    

    
      	
              8.9  

            	
              Assets
      to be Sold

            

    

    

    Since the
Financial Information Computation Date, Seller has not, solely with respect to
the Eligible Accounts, (i) effected any material or significant change in the
accounting practices, procedures or methods employed in connection with the
Eligible Accounts, or (ii) effected any material or, significant change in its
business, credit or, collection policies, re-aging policies, practices or
procedures relating to the Eligible Accounts.  Since the Financial
Information Computation Date, there has not occurred any material adverse change
(financial or otherwise) in the condition of the Eligible Accounts or Seller’s
continued operation thereof and ability to operate the same in accordance with
past practices and the terms of the Existing Merchant Services Agreement
excluding, however, (i) any matter, condition or event that affects the credit
card services, consumer credit or banking industry generally first arising after
the date of this Agreement, (ii) any changes in laws, generally accepted
accounting principles or regulatory accounting principles first arising after
the date of this Agreement or (iii) any action, change, effect circumstance or
condition contemplated or required by this Agreement or attributable solely to
the announcement of this Agreement or the transactions contemplated hereby made
in accordance with the provisions of this Agreement.

    

    
      	
              8.10  

            	
              Accounts
      Not Business Accounts

            

    

    

    To
Seller’s knowledge, none of the Accounts sold to Purchaser hereunder are with
business entities or otherwise represent commercial receivables.

    

    
      	
              8.11  

            	
              Conveyance
      of Assets to be Sold

            

    

    

    Seller is
not insolvent at the time of the conveyance of title and the sale of the Assets
to be Sold by Seller hereunder is a conveyance for reasonably equivalent value
to Purchaser.  It is the intention of the Seller that the transfer of
the Assets to be Sold hereunder shall constitute a sale, which sale is absolute
and irrevocable and provides Purchaser with the full benefits of ownership of
the Accounts.  The transfer by Seller of the Assets to be Sold is not
made for or on account of an antecedent debt, and Seller will not be insolvent
on the date of (nor will it become insolvent as a result of) such
transfer.  No transfer by Seller of any Asset to be Sold hereunder is
voidable under any law dealing with bankruptcy, insolvency, creditors’ rights or
similar laws.  Seller is the originator of all Accounts included in
the Assets to be Sold.

    

    
      	
              8.12  

            	
              Securitization
      Agreements

            

    

    

    As of the
Transfer Date Seller will remove the Assets to be Sold from the Securitization
Agreements and cause the lien of all Securitization Agreements (and all UCC
financing statements filed in connection therewith), to the extent they affect
the Assets to be Sold, to be released and discharged, such that the Account
Balances will be sold to Purchaser free of the Liens of any Securitization
Agreements.  All transfers of receivables included in the Assets to Be
Sold out of the Seller’s securitization program pursuant to the Securitization
Agreements (i) will be made in full compliance with the Securitization
Agreements and (ii) will be made in full compliance with applicable law, and at
the time each entity involved in such securitization program conveyed title to
the Assets to be Sold to Seller, or another predecessor in interest of Seller
under such Securitization Agreements, such entity was not insolvent and such
conveyance was for reasonably equivalent value to such entity.

    

    8.13           Accuracy
of Statements

    

    No
statement contained in any document provided or delivered by Seller to Purchaser
in connection with the transaction contemplated hereby, as of the date of such
statement, contains any untrue statement of a material fact, or omits to state a
material fact necessary to make the statement contained therein not misleading
in any material respect.

    

    8.14           Service
Provider SAS 70 Review by Seller

    

    Seller
has reviewed the Type II SAS 70 report for its service provider TSYS dated
September 30, 2007 and a letter from TSYS dated January 22, 2008 with respect to
such SAS 70 report and, in Seller’s judgment, such SAS 70 report has not
indicated any material weaknesses in controls.

    

    9.           Warranties and
Representations of Purchaser

    

    Purchaser
hereby represents and warrants to Seller as follows:

    

    
      	
              9.1  

            	
              Organization

            

    

    

    Purchaser
is a national bank duly organized and validly existing under the laws of the
United States and is authorized to conduct its business under those
laws.

    

    
      	
              9.2  

            	
              Authority

            

    

    

    Purchaser
has full corporate power and authority to enter into and perform this Agreement
and to effect the transactions contemplated hereby.  The execution,
delivery and performance by Purchaser of this Agreement (and all documents,
agreements, and instruments contemplated hereby) have been approved by all
requisite corporate action on the part of Purchaser.  This Agreement
constitutes (and each such document, agreement and instrument when executed and
delivered will constitute) a valid and binding obligation of Purchaser,
enforceable against it in accordance with their respective terms, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium, receivership, conservatorship and other laws relating to or
affecting creditors’ rights generally and by general principles of equity. As of
the Execution Date, the Company has duly assigned to Purchaser all of the
Company’s rights to purchase the Assets to be Sold. No consents are required for
the execution and performance of Purchaser’s obligations hereunder except such
consents as have been or will be obtained prior to the Closing
Date.

    

    
      	
              9.3  

            	
              Legal
      Proceedings

            

    

    

    There are
no actions, suits or proceedings or governmental or regulatory violations or
investigations which are pending or, to the knowledge of Purchaser, threatened,
against or affecting Purchaser’s ability to consummate this Agreement or the
transactions contemplated hereby. Purchaser shall promptly notify Seller of any
actions, suits or proceedings commenced or, to Purchaser’s knowledge, threatened
against or affecting Purchaser’s ability to consummate the transactions
contemplated by this Agreement during the Interim Period.

    

    
      	
              9.4  

            	
              Finders
      or Brokers

            

    

    

    Purchaser
has not agreed to pay any fee or commission to any agent, broker, finder or
other person for or on account of services rendered as a broker or finder in
connection with this Agreement or the transactions contemplated hereby which
would give rise to any valid claim against Seller for any brokerage commission
or finder’s fee or like payment.

    

    
      	
              9.5  

            	
              Governmental
      Notices

            

    

    

    Purchaser
has not received notice from any federal or state governmental agency indicating
that it would oppose or not grant or issue its consent or approval, if required,
with respect to the transactions contemplated by this Agreement.

    

    
      	
              9.6  

            	
              Compliance
      with Law and Other Instruments

            

    

    

    The
execution and delivery of this Agreement by Purchaser and the consummation of
the transactions contemplated hereby by Purchaser will not constitute a
violation of or be in conflict with any applicable law or regulation. The
execution and delivery by Purchaser of, and the performance by Purchaser of its
obligations pursuant to, this Agreement (and the documents, instruments, and
agreements contemplated hereby) will not violate or be in conflict with
Purchaser’s charter or by-laws or any material contract or other instrument to
which it is a party or by which it is bound except as would not have a material
adverse effect on the Purchaser’s ability to consummate the transactions
contemplated hereby; excluding, however, (i) any matter, condition or event that
(x) is within the sole control of Seller or (y) affects the credit card
services, consumer credit or banking industry generally, or (ii) any changes in
laws, generally accepted accounting principles or regulatory accounting
principles.

    

    9.7           Adjusted
Closing Statement

    

    The
Adjusted Closing Statement delivered by Purchaser to Seller pursuant to Section
3.2(b) will to Purchaser’s knowledge be accurate in all material respects as of
the date thereof.

    

    9.8           Golden
Gate Merchant Services Agreement

    

    As of the
date of this Agreement, Purchaser has entered into a Merchant Services Agreement
with Golden Gate or its affiliate (the “New Merchant Services Agreement”) to
provide for the administration and servicing of the Eligible Accounts following
the Transfer Date, which New Merchant Services Agreement is in full force and
effect.

    

    10.           Conditions Precedent to
Purchaser’s Obligations

    

               The
obligations of Purchaser to consummate the purchase provided for herein are
subject to the fulfillment (except to the extent, if any, waived by Purchaser)
of the following conditions at or prior to the Transfer Date:

    

    
      	
              10.1  

            	
              Absence
      of Litigation

            

    

    

    There
shall not be pending on the Transfer Date any action or proceeding instituted by
any person, entity or governmental authority against Seller or Purchaser to
prevent the consummation of the sale of the Assets to be Sold and, on the
Transfer Date, there shall be no injunction, decree or similar legal restraint
preventing the consummation of such sale and there shall be no statute, rule or
regulation in effect which would prevent Seller from selling or Purchaser from
purchasing the Assets to be Sold as contemplated by this Agreement.

    

    
      	
              10.2  

            	
              Truth
      of Representations, Delivery of Lien
Releases

            

    

    

    The
representations and warranties of Seller set forth in Section 8 of this
Agreement shall be true in all material respects as though made again on and as
of the Transfer Date (except for those representations and warranties made as of
a particular date, which such representations and warranties shall be true in
all material respects as of such particular date), and Seller has caused to be
delivered on or before the Transfer Date all applicable Lien releases and
termination statements as required under this Agreement.

    

    
      	
              10.3  

            	
              Performance
      of Covenants

            

    

    

    The
covenants and agreements of Seller set forth in this Agreement and to be
performed on or before the Transfer Date shall have been performed in all
material respects.

    

    
      	
              10.4  

            	
              Items
      to be Delivered by Seller

            

    

    

    Seller
shall have delivered to Purchaser:

    

     

    (a)           The
Assignment and Bill of Sale together with the
Domain Name Assignment, UCC terminations or assignments, and such other
instruments and documents as are reasonably necessary for confirming the
transfer, assignment and conveyance of title to the Assets to be Sold to
Purchaser (together, the “Conveyance Documents”), duly issued or signed by a
duly authorized officer of Seller, as applicable.

     

     (b)           A
certificate signed by a duly authorized officer of Seller to the effect that (i)
the warranties and representations of Seller in Section 8 are true as of the
Closing Date (except for those representations and warranties made as of a
particular date, which such representations and warranties shall be true in all
material respects as of such particular date) as if made on the Closing Date or,
if any such warranties and representations are not then true, specifying the
deficiency in reasonable detail; and (ii) the covenants and agreements of Seller
to be performed hereunder on or before the Transfer Date have been performed in
all material respects, or, if any such covenants have not been so performed,
specifying the deficiency in reasonable detail.

    

               (c)           The
Preliminary Closing Statement; and

    

               (d)           The
Assumption Agreement.

    

    
      	
              10.5  

            	
              UCC
      Financing Statement

            

    

    

    Seller
hereby confirms that, for purposes of the UCC, it is “located” in the State of
Ohio, and hereby authorizes Purchaser to file in such location financing
statements in favor of Purchaser, as secured party, against Seller, as debtor,
reflecting the sale of the Assets to be Sold hereunder.

     

    
      	
              10.6  

            	
              Absence
      of Matters which Materially Adversely Affect the Assets to be
      Sold

            

    

     

    On the
Closing Date there shall not exist any matter, condition or event that
materially adversely affects the Assets to be Sold taken as a whole, excluding,
however, (i) any matter, condition or event that (x) is within the sole control
of Company or (y) affects the credit card services, consumer credit or banking
industry generally first arising after the Execution Date, (ii) any changes in
laws, generally accepted accounting principles or regulatory accounting
principles first arising after the Execution Date,  or (iii) any
action, change, effect circumstance or condition contemplated or required by
this Agreement or attributable solely to the announcement of this Agreement or
the transactions contemplated hereby.

     

    10.7           Expiration
or Termination of Existing Merchant Services Agreement

    

    The
Existing Merchant Services Agreement shall have expired or been terminated by
Seller and Company as of or prior to the Closing Date, except for such
obligations which pursuant to the terms of the Existing Merchant Services
Agreement survive expiration or termination.

    

    10.8           Closing
under the Company Purchase Agreement

    

    Closing
shall have occurred under the Company Purchase Agreement.

    

    
      	
              10.9  

            	
              New
      Merchant Services Agreement

            

    

    

    The New
Merchant Services Agreement shall be in full force and effect and Purchaser
shall not have taken any action or exercised any right to terminate such
agreement due to an event of default by Golden Gate or its affiliate; provided,
however, that this Section 10.9 shall be null and void if the New Merchant
Services Agreement is terminated or otherwise not in full force and effect as a
result of a default of Purchaser thereunder.

    

    11.           Conditions Precedent to the
Obligations of Seller

    

    The
obligation of Seller to consummate the sale provided for herein is subject to
the fulfillment (except to the extent, if any, waived by Seller) of the
following conditions at or prior to the Transfer Date, each of which, to the
extent within Seller’s control, Seller shall pursue satisfying in good
faith:

    

    
      	
              11.1  

            	
              Absence
      of Litigation

            

    

    

    There
shall not be pending on the Transfer Date any action or proceeding instituted by
any governmental authority against Seller or Purchaser to prevent the
consummation of the sale of the Assets to be Sold by Seller to Purchaser
pursuant hereto, and on the Transfer Date there shall be no injunction, decree
or similar legal restraint preventing the consummation of such
sale.

    

    
      	
              11.2  

            	
              Truth
      of Representations

            

    

    

    The
representations and warranties of Purchaser set forth in Section 9 shall be true
in all material respects as though made again on and as of the Transfer Date
(except for those representations and warranties made as of a particular date,
which representations and warranties shall be true in all material respects as
of such particular date).

    

    
      	
              11.3  

            	
              Performance
      of Covenants

            

    

    

    The
covenants and agreement of Purchaser set forth in this Agreement and to be
performed on or before the Transfer Date shall have been performed in all
material respects.

    

    
      	
              11.4  

            	
              Items
      to be Delivered by Purchaser

            

    

    

    Purchaser
shall have delivered to Seller:

    

    (a)           A
payment to Seller of the Payment Amount set forth in the Preliminary Closing
Statement by transfer of funds immediately available.

    

     

    (b)           The
Assignment and Bill of Sale signed by a duly authorized officer of
Purchaser.

     

    

    (c)           The
Assumption Agreement signed by a duly authorized officer of
Purchaser.

    

               (d)           A
certificate signed by a duly authorized officer of Purchaser to the effect that
(i) the warranties and representations of Purchaser in Section 9 are true as of
the Transfer Date (except for those representations and warranties made as of a
particular date, which such representations and warranties shall be true in all
material respects as of such particular date) or, if any such warranties and
representations are not then true, specifying the deficiency in reasonable
detail; and (ii) the covenants and agreements of Purchaser to be performed
hereunder on or before the Transfer Date have been performed in all material
respects, or, if any such covenants have not been so performed, specifying the
deficiency in reasonable detail.

    

    
      	
              11.5  

            	
              Expiration
      or Termination of Existing Merchant Services
  Agreement

            

    

    

    The
Existing Merchant Services Agreement shall have expired or been terminated by
Seller and Company as of or prior to the Closing Date, except for such
obligations which pursuant to the terms of the Existing Merchant Services
Agreement survive expiration or termination.

    

    11.6           Closing
under the Company Purchase Agreement

    

    Closing
shall have occurred under the Company Purchase Agreement.

    

    11.7           New
Merchant Services Agreement

    

    The New
Merchant Services Agreement shall be in full force and effect and Purchaser
shall not have taken any action or exercised any right to terminate such
agreement due to an event of default by Golden Gate or its
affiliate.

    

    12.           Survival of Representations
and Warranties

    

               Notwithstanding
any investigation made by or on behalf of either party at any time, all
covenants, agreements, representations, indemnifications and warranties made
herein and in any certificate delivered pursuant hereto shall survive the
execution and delivery of this Agreement and Closing hereunder until the third
anniversary of the Transfer Date; provided that the representations and
warranties contained in Section 8.7 (and the indemnifications related thereto)
will survive indefinitely and the representations and warranties contained in
Sections 8.6, 8.8 and 8.10 (and the indemnifications related thereto) will
survive for the period of the applicable statute of
limitations.  Notwithstanding the foregoing, any representation or
warranty that would otherwise terminate shall survive with respect to losses
asserted in any claim for indemnification hereunder of which notice is given
pursuant to this Agreement prior to the end of the applicable survival period,
until such claim is finally resolved and any related losses are
paid.

    

    
      	
              13.  

            	
              Default/Termination of
      Agreement

            

    

    

    13.1  A
“Default” shall occur hereunder upon the occurrence of the
following:

    

               (i)           The
expiration of thirty (30) days from the date one party shall have given notice
to the other party (the “Defaulting Party”) of a breach or default by the
Defaulting Party in the performance of any covenant, agreement, representation
or warranty hereunder which is not cured within such thirty (30) day period;
or

    

    (ii)           Seller
or Purchaser (as applicable in this clause (ii), the “Bankrupt Party”) becomes
insolvent or generally fails to pay, or admits in writing its inability to pay,
its debts as they become due; or the Bankrupt Party applies for, consents to, or
acquiesces in the appointment of, a trustee, receiver or other custodian for the
Bankrupt Party or any property thereof, or makes a general assignment for the
benefit of creditors; or in the absence of such application, consent of
acquiescence, a trustee, receiver or other custodian is appointed for the
Bankrupt Party or for a substantial part of its property and is not discharged
within thirty (30) days; or any bankruptcy, reorganization, debt arrangement, or
other case or proceeding under any bankruptcy or insolvency law, or any
dissolution or liquidation proceeding, is commenced in respect to the Bankrupt
Party, and if such case or proceeding is not commenced by the Bankrupt Party or
remains for thirty (30) days undismissed; or the Bankrupt Party takes any
corporate action to authorize, or in furtherance of, any of the
foregoing.

    

    13.2           Upon
the occurrence of a Default, the non-defaulting party, in addition to all other
rights and remedies available at law or in equity, shall have the right to
terminate this Agreement upon notice to the defaulting party.

    

    13.3  In
addition to the termination rights set forth in Section 13.2, Purchaser shall
have the right to terminate this Agreement in the event that as of the Transfer
Date there shall have been a material adverse change (financial or otherwise) in
the Assets to be Sold, taken as a whole, since the Financial Information
Computation Date excluding, however any matter, condition or event that is
within the sole control of Company or any action, change, effect circumstance or
condition expressly contemplated or required by this Agreement or attributable
solely to the announcement of this Agreement or the transactions contemplated
hereby made in accordance with the provisions of this Agreement.

    

    13.4  This
Agreement may be terminated (i) upon mutual agreement of Purchaser and Seller or
(ii) by either Purchaser or Seller if the Closing has not occurred by the later
to occur of (1) the date forty-five (45) days following the date Purchaser and
Seller mutually agreed would be the Transfer Date (or any mutually agreed
extension of the Transfer Date) or (2) January 31, 2009; provided that the party
seeking to terminate this Agreement under clause (ii) hereof has not caused such
failure to close.

    

    13.5  No
termination of this Agreement pursuant to this Section or otherwise shall
release, or be construed as releasing, either party hereto from any liability
for damages to the other party hereto arising out of, in connection with or
otherwise relating to, directly or indirectly, such party’s breach or default of
any of its representations, warranties, covenants, agreements, duties or
obligations arising under this Agreement or the Existing Merchant Services
Agreement.

    

    14.           Delayed Payment After
Closing

    

    
      	
              14.1  

            	
              Final
      Settlement and Disputes

            

    

    

    In the
event that Purchaser and Seller disagree after the Closing Date as to any item
or amount (or the computation or determination in accordance with the terms of
this Agreement of any item or amount) reflected, set forth in or relating to the
Preliminary Closing Statement or any Adjusted Closing Statement, the Payment
Amount, the Adjustment Amount or any other amounts due either party under this
Agreement, then any payment required to be made under this Agreement shall be
made when due on the basis of such items or amounts as to which the parties do
not disagree and any party hereto shall thereupon be entitled to request Ernst
and Young L.L.P. (or, if said firm shall be unwilling to act hereunder, such
other firm of nationally recognized independent accounts as Purchaser and Seller
may jointly designate which does not have a material relationship with either
Purchaser or Seller) to determine, in accordance with the provisions of this
Agreement, such disputed item or amount (or the computation or determination
thereof).  Any such request shall be in writing and shall specify with
particularity the disputed items, amounts and computations being submitted for
determination, and the requesting party shall furnish the other parties hereto
with a copy of such request at the same time it is submitted to the independent
accountants.  The firm of independent accountants to which any dispute
is referred hereunder shall as promptly as practicable determine, in accordance
with the provisions of this Agreement, the proper amount of any disputed item or
other amount, or the computation thereof, and such determination shall be final,
conclusive and binding on all parties hereto.  In acting pursuant to
this Agreement, such firm of independent accountants shall constitute, and be
entitled to the privileges and immunities of, arbitrators.  Seller and
Purchaser shall cooperate fully in assisting such firm in making any
determination requested hereunder, including giving such firm full access to all
files, books and records relevant thereto and providing such other information
as such firm may reasonably request in connection with the determination to be
made by it hereunder.  The fees and disbursements in connection with
such firm’s determination shall be borne equally by Purchaser and
Seller.  In the event that a determination by independent accountants
pursuant to this Section 14.1 requires any previously suspended payment to be
made by any party, such payment shall be made promptly (and in any event within
ten (10) days) after receipt by such party from such independent accountants of
written notice of such determination.  Such firm of accountants shall
promptly and substantially simultaneously notify Purchaser and Seller in writing
of any determination by it hereunder.  In the event of any litigation
between the parties regarding this Agreement, the prevailing party shall be
entitled to seek recovery of all costs and expenses (including attorney’s fees)
incurred by the prevailing party in such litigation (which costs may be included
as part of the damages awarded in any such litigation).

    

    
      	
              14.2  

            	
              Interest

            

    

    

    Any
amount payable by any party to another party pursuant to Section 14.1 shall bear
interest from the date such amount would originally have been required to be
paid hereunder had no dispute over such amount existed to the date of payment at
the federal funds rate (at weighted average daily rates reported by Federal
Reserve System) during the period(s) involved.

    

    
      	
              14.3  

            	
              Records
      and Financial Information

            

    

    

    The party
having control of the relevant records and financial information used in
connection with any adjustment provided for in this Section 14 shall certify the
accuracy of such records and financial information if so requested by the other
party.

    

    
      	
              15.  

            	
              Miscellaneous

            

    

    

    
      	
              15.1  

            	
              Expenses

            

    

    

    Except as
is otherwise specifically provided in this Agreement, each party shall pay its
own costs and expenses in connection with this Agreement and the transactions
contemplated hereby, including, but not by way of limitation, all regulatory
fees, attorneys’ fees, accounting fees and other expenses.

    

    
      	
              15.2  

            	
              Notices

            

    

    

    All
notices, demands and other communications hereunder shall be in writing and
shall be deemed to have been duly given if delivered in person or by United
States mail, certified or registered, with return receipt requested, or
otherwise actually delivered, as follows:

    

    
      	
              (i)  

            	
              If
      to Seller, to:

            

    

    

    Spirit of
America National Bank

    450 Winks
Lane

    Bensalem,
PA  19020

    Attention:  President

    

    With a
copy (which shall not constitute notice) to:

    

    Spirit of
America National Bank

    450 Winks
Lane

    Bensalem,
PA  19020

    Attention:  Legal
Dept.

    

    
      	
              (ii)  

            	
              If
      to Purchaser, to:

            

    

    

    World
Financial Network National Bank

    3100
Easton Square Place

    Columbus,
OH  43219

    Attention:
President

    

    With a
copy (which shall not constitute notice) to:

    
 

    World
Financial Network National Bank

    3100
Easton Square Place

    Columbus,
OH  43219

    Attention:
General Counsel

    

               The
persons or addresses to which mailings or deliveries shall be made may be
changed from time to time by notice given pursuant to the provisions of this
Section 15.2.  Any notice, demand or other communication given
pursuant to the provisions of this Section 15.2 shall be deemed to have been
given on the date actually delivered or three (3) days following the date
deposited in the United States mail, properly addressed, postage prepaid, as the
case may be.

    

    
      	
              15.3  

            	
              Successors
      and Assigns

            

    

    

    All terms
and provisions of this Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and
assigns.  This Agreement and all rights, privileges, duties and
liabilities, and obligations of the parties hereto, may be assigned or delegated
by any party without the consent of the other party.  In order for any
such assignment to be effective, the assigning party and the assignee must first
execute a written agreement (and deliver a copy thereof to the other party
hereto) by which the assigning party assigns the particular rights or privileges
to the assignee.  In order for any such delegation to be effective,
the delegating party and the delegatee must first execute a written agreement
(and deliver a copy thereof to the other party hereto) by which the delegating
party delegates the particular duties, liability or obligations to the delegatee
and such delegatee expressly assumes the performance and discharge thereof when
due.  No such assignment or delegation shall relieve Purchaser or
Seller of any of their respective duties, obligations, or liabilities to the
other hereunder which are not performed or discharged in full by such assignee
or delegatee.  For clarification, Purchaser may assign its rights
under this Agreement with respect to the receivables included in the Assets to
Be Sold in connection with Purchaser’s securitization of such receivables
without also assigning any obligations with respect thereto provided Purchaser
shall remain liable for all obligations hereunder.

    

    
      	
              15.4  

            	
              Counterparts

            

    

    

    This
Agreement may be executed in one or more counterparts, all of which taken
together shall constitute one instrument.

    

    
      	
              15.5  

            	
              Governing
      Law

            

    

    

    The laws
of the State of Ohio applicable to contracts executed and wholly performed
therein shall govern the validity and interpretation hereof and the performance
of the parties hereto of their respective duties and obligations
hereunder.

    

    
      	
              15.6  

            	
              Captions

            

    

    

    The
captions contained in this Agreement are for convenience of reference only and
no not form a part of this Agreement.

    

      
15.7  No Waiver

    

    The
failure or delay on the part of any party to exercise any right provided for
herein shall not act as a waiver thereof, nor shall any single or partial
exercise of any right by and party hereto preclude the exercise of any other
right or the further exercise of such right thereof.  In no event
shall a term or provision of this Agreement be deemed to have been waived,
modified or amended unless said waiver, modification or amendment is in writing
and signed by Purchaser and Seller.

     

      
15.8  No Joint Venture

     

     

    Nothing
in this Agreement shall be deemed to create a partnership or joint venture
between any of the parties hereto.  Except as expressly set forth
herein, no party shall have any authority to bind or commit any other
party.

     

     

      
15.9  Severability

     

     

    Any term
or provision of this Agreement which is invalid or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without rendering invalid or unenforceable
the remaining terms and provisions of this Agreement in such jurisdiction or any
other jurisdiction.

     

     

      
15.10  No Third Party Beneficiaries

     

    This
Agreement is not for the benefit of any third party and nothing in this
Agreement, express or implied, is intended to confer upon any person other than
the parties hereto and their respective successors and assigns any rights or
remedies under or by reason of this Agreement.

    

      
15.11   Waiver of Jury Trial

    

    THE
PARTIES HERETO WAIVE ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO
ENFORCE OR DEFEND ANY RIGHTS PURSUANT HERETO.

    

      
15.12   Entire Agreement

    

    The
making, execution and delivery of this Agreement by the parties hereto have been
induced by no representations, statements, warranties or agreements other than
those herein expressed.  This Agreement and other written agreements
specifically referred to herein (including without limitation the
Confidentiality Agreement and the Exhibits attached hereto) embody the entire
understanding of the parties and there are no further or other agreements or
understandings, written or oral, in effect between the parties relating to the
subject matter hereof.  This instrument and the agreements contained
herein may be amended or modified only by a written instrument signed by both
parties or their duly authorized agents.

    

    

    [SIGNATURE
PAGE FOLLOWS]

    
      
        
          

           

        

         

      

      
         

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement
as of the day and year first above written.

    

    
      	
              WORLD
      FINANCIAL NETWORK NATIONAL BANK

            
	 
      
	 
      
	
              By:_________________________________

            
	 
      
	
              Name:_______________________________

            
	 
      
	
              Title:________________________________

            
	 
      
	 
      
	
              SPIRIT
      OF AMERICA NATIONAL BANK

            
	 
      
	 
      
	
              By:_________________________________

            
	 
      
	
              Name:_______________________________

            
	 
      
	
              Title:________________________________

            

    

    

    

    

    

    

    

     

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    
      

      
        
          
             

             

          

           

        

        
           

          
            

          

        

        
           

        

      

    EXHIBITS
AND SCHEDULES

    

    EXHIBITS:

    

    1           -           Form
of Preliminary Closing Statement

    

    2           -           Form
of Assignment and Bill of Sale

    

    3.           -           Form
of Assumption Agreement

    

    

    SCHEDULES:

    

    
      	
              Schedule
      5.2 -

            	
              Customer
      Communications and Communications
Schedule

            

    

    

    Schedule
8.3
-              Additional
Account Information

    

    Schedule
8.8(a)  -         Form(s)
of Seller’s Cardholder Agreement

    

    Schedule
8.8(b) -          Form of Seller’s
Periodic Statement

    

    
      
        
           

           

        

         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
1

    FORM
OF PRELIMINARY CLOSING STATEMENT

    

    Preliminary
Closing Statement

    As of
_______________, 200__

    

    

    VALUATION
DATE:

    

    CLOSING
DATE:

    

    
      	
              TOTAL ELIGIBLE ACCOUNTS

            	
              #######

            
	 
      	 
      
	
              FOR
      INFORMATIONAL PURPOSES ONLY THE FOLLOWING

            	 
      
	
              INELIGIBLE
      ACCOUNT NUMBERS:

            	 
      
	 
      	 
      
	
              Subsection
      (a) bankrupts

            	
              #######

            
	 
      	 
      
	
              Subsection
      (b) charged-offs

            	
              #######

            
	 
      	 
      
	
              Subsection
      (c) fraud loss or lost or stolen Credit Card

            	
              #######

            
	 
      	 
      
	
              Subsection
      (d) pending litigation

            	
              #######

            
	 
      	 
      
	
              Subsection
      (e) deceased

            	
              #######

            
	 
      	 
      
	
              Subsection
      (f) not within the United States, District of Columbia,

            	 
      
	
              Puerto
      Rico or another United States territory, Mexico or Canada

            	 
      
	
              or
      is not a U.S. APO or U.S. F.P.O. account

            	
              #######

            
	 
      	 
      
	
              Subsection
      (g) under age of eighteen

            	
              #######

            
	 
      	 
      
	
              Subsection
      (h) business/commercial receivables

            	
              #######

            
	 
      	 
      
	
              Subsection
      (i) $0 balance, DLP >18 mos from Transfer Date &
      inactive

            	
              #######

            

    

    
      

    

    

    
      	
              TOTAL
      DOLLARS:

            	 
      
	 
      	 
      
	
              TOTAL
      ACCOUNT BALANCES OF ALL ELIGIBLE ACCOUNTS

            	 
      
	
              EXCLUDING
      UNBILLED FINANCE CHARGES FOR

            	 
      
	
              ELIGIBLE
      ACCOUNTS:

            	
              $$$$$$$$$

            
	 
      	 
      
	
              PLUS
      UNBILLED FINANCE CHARGES

            	 
      
	
              FOR
      ELIGIBLE ACCOUNTS:

            	
              $$$$$$$$$

            
	 
      	 
      
	
              LESS
      INELIGIBLE ACCOUNT DOLLARS

            	
              $$$$$$$$$

            
	 
      	 
      
	
              EQUALS:
      TOTAL DOLLARS DUE SELLER:

            	
               

            

    

    
      
        
          

           

           

        

         

      

      
         

        
          

        

      

      
         

        
          EXHIBIT
10.2

        

      

    

    EXHIBIT
2

    FORM
OFASSIGNMENT AND BILL OF SALE

    

    THIS ASSIGNMENT AND BILL OF SALE
(this "Assignment") is made and entered into as of the ___ day of
__________, 200__ by and between., SPIRIT OF AMERICA NATIONAL BANK,
a national bank (the "Assignor"), andWORLD FINANCIAL NETWORK NATIONAL
BANK, a national bank (the "Assignee"),

    

    

                                       W_I_T_N_E_S_S_E_T_H:

    

    

                          WHEREAS, the Assignor (or its
Predecessor in Interest) has heretofore entered into certain Cardholder
Agreements and established certain Eligible Accounts for Cardholders in
connection with Credit Cards bearing the Trade Names; and

    

                          WHEREAS, pursuant to the terms
and provisions of that certain Purchase Agreement dated as of August __, 2008
(the "Purchase Agreement") among the Assignor and the Assignee, the Assignor has
agreed to transfer and assign to the Assignee, and the Assignee has agreed to
accept the assignment of the Assets to be Sold (capitalized terms used in this
Assignment and not otherwise defined herein shall have the meaning ascribed to
such terms in the Purchase Agreement);

    

                          NOW, THEREFORE, in
consideration of the terms, agreements, covenants and conditions set forth
herein and in the Purchase Agreement, together with the sum of Ten Dollars
($10.00) and other good and valuable consideration, the receipt and sufficiency
of all of which are hereby acknowledged, the Assignor and the Assignee,
intending to be legally bound, agree as follows:

    

    

                          1.           The
Assignor hereby assigns, assigns, sells, transfers, conveys and forever remises
to Assignee and its successors and assigns, all of the right, title and interest
of the Assignor in and to the Assets to be Sold and all of the rights, benefits
and privileges of the Assignor thereunder, free and clear of any and all liens,
encumbrances or other interests of third parties,  TO HAVE AND TO
HOLD, the Assets to be Sold unto the Assignee, its successors and assigns, to
and for its own proper use and benefit forever.

    

                          2.           The
Assignor’s obligations and the Assignee’s rights, relating to causes of action
arising from a breach of, or any event relating to, the Cardholder Agreements,
including without limitation the Account Duties thereunder occurring prior to
the date hereof shall be as set forth in the Purchase Agreement, the terms of
which are incorporated herein by reference.

    

                          3.           All
of the terms, agreements, covenants and conditions set forth herein shall be
binding upon and shall inure to the benefit of the parties and their respective
successors and assigns.  No person or entity other than the Assignor
and the Assignee and their respective successors and assigns shall have any
rights hereunder.

    

    4.           Nothing
contained in this Assignment shall be deemed to limit or supersede any of the
provisions of the Purchase Agreement.

    

                          5.           Whenever
possible, each provision of this Assignment shall be interpreted in such manner
as to be effective and valid under applicable law, but if any provision of this
Assignment shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this Assignment.  The Assignor shall execute such other documents
and instruments as the Assignee may reasonably request to effectuate the
assignment and transfer set forth herein.

    

                          6.           The
laws of the State of Ohio applicable to contracts executed and wholly performed
therein shall govern the validity and interpretation hereof and the performance
of the parties hereto of their respective duties and obligations
hereunder.

    

                          7.           This
Assignment has been executed in a number of counterparts, each of which shall be
considered an original and no other counterpart need be produced.

    

               IN
WITNESS WHEREOF, the parties hereto have executed this Assignment and Bill of
Sale as of the day and year first set forth above.

     

    

    

    
      	
              WORLD
      FINANCIAL NETWORK NATIONAL BANK

            
	 
      
	 
      
	
              By:_________________________________

            
	 
      
	
              Name:_______________________________

            
	 
      
	
              Title:________________________________

            
	 
      
	 
      
	
              SPIRIT
      OF AMERICA NATIONAL BANK

            
	 
      
	 
      
	
              By:_________________________________

            
	 
      
	
              Name:_______________________________

            
	 
      
	
              Title:________________________________

            

    

    

    [NOTARY
PAGE FOLLOWS]

    
      
        
          

           

        

         

      

      
         

        
          

        

      

      
         

      

    

    

    STATE  OF
______________________)

                                                              )
SS.:

    COUNTY
OF ____________________ )

    

    

               On
this _____ day of _____________, 200__, before me, the undersigned Notary
Public, personally appeared __________________________________________ and
___________________, personally known to me, who acknowledged themselves to be
the ____________ and ______________ of World Financial Network
National  Bank, a  national bank, and who acknowledged that
they, being duly authorized to do so, executed the foregoing instrument as such
officers for the purposes therein set forth.

    

               WITNESS my hand and official
seal.

    

    

    

    
      	
              ______________________________

            
	
              Notary
      Public

            

    

    

    

    STATE  OF
______________________)

                                                              )
SS.:

    COUNTY
OF ____________________ )

    

    

               On
this _____ day of _______________, 200__, before me, the undersigned Notary
Public, personally appeared __________________________________________ and
___________________, personally known to me, who acknowledged themselves to be
the ____________ and ______________ of Spirit of America National Bank, a
national bank, and who acknowledged that they, being duly authorized to do so,
executed the foregoing instrument as such officers for the purposes therein set
forth.

    

               WITNESS my hand and official
seal.

    

    

    

    
      	
              ______________________________

            
	
              Notary
      Public

            

    

    

    
      
        
           

           

        

         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
3

    FORM
OF ASSUMPTION AGREEMENT

    

    This
Assumption Agreement (this “Assumption Agreement”) is made as of this ______ day
of ____________, 200_ by, WORLD FINANCIAL NETWORK NATIONAL BANK, a national bank
(“Purchaser”) in favor of SPIRIT OF AMERICA NATIONAL BANK, a national bank
(“Seller”),

    

    
      	
              W I
      T N E S S E T H:

            

    

    

               WHEREAS,
under Section 2.2 of that certain Purchase Agreement between Seller and
Purchaser dated as of _____________, 200__ (the “Purchase Agreement”) by and
between Seller and Purchaser, Purchaser agreed to assume, pay and discharge or
perform certain liabilities and obligations of Seller that relate to the Assets
to be Sold,

    

               NOW,
THEREFORE, in consideration of the foregoing, it is agreed as
follows:

    

               1.           Capitalized
terms used in this Assumption Agreement and not otherwise defined herein shall
have the meaning ascribed to such terms in the Purchase Agreement.

    

               2.           Purchaser
hereby agrees that it has assumed and does hereby assume from Seller, and has
agreed and does hereby agree to pay and discharge or perform for Seller, as of
the Transfer Date, the Assumed Liabilities, including without limitation the
Account Duties in existence on or arising after the Transfer Date; provided,
however, that Purchaser does not assume any liabilities arising from Seller’s
failure to perform Account Duties prior to the Transfer Date and Seller’s
liability with respect thereto shall be governed by the Purchase
Agreement.

    

               3.           Nothing
contained in this Assumption Agreement shall be deemed to limit or supersede any
of the provisions of the Purchase Agreement.

    

               4.           Whenever
possible, each provision of this Assumption Agreement shall be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Assumption Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Assumption Agreement.

    

               5.           The
laws of the State of Ohio applicable to contracts executed and wholly performed
therein shall govern the validity and interpretation hereof and the performance
of the parties hereto of their respective duties and obligations
hereunder.

    
      
        
           

           

        

         

      

      
         

        
          

        

      

      
         

      

    

               6.           No
person or entity other than Purchaser and Seller and their respective successors
and assigns shall have any rights hereunder.  This Agreement may be
executed in counterparts.

    

               IN
WITNESS WHEREOF, parties hereto have caused this Assumption Agreement to be
executed by a corporate officer thereunto duly authorized, all as of the day and
year first above written.

    

    

    PURCHASER:

    

    WORLD
FINANCIAL NETWORK NATIONAL BANK

    

    By:___________________________

    Name:_________________________

    Title:__________________________

    

    

    SELLER

    SPIRIT OF
AMERICA NATIONAL BANK

    

    

    By:___________________________

    Name:_________________________

    Title:__________________________

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