Summary of CHARMING SHOPPES INC

Entry into a Material Definitive Agreement, Other Events, Financial Statemen

Item 1.01. Entry into a Material Definitive Agreement.

On August 12, 2009 Charming Shoppes, Inc. ("CSI") and certain of its direct or indirect subsidiaries (collectively, "Charming") entered into a series of transactions with Alliance Data Systems Corporation ("ADS") and certain of its subsidiaries related to the credit card business and credit card operations of Charming. The CSI subsidiaries involved in these transactions include Spirit of America National Bank ("SOANB"), Charming Shoppes Receivables Corp. ("CSRC"), Spirit of America Inc. ("SOAI"), Lane Bryant, Inc., Fashion Bug Retail Companies, Inc., Catherines Stores Corporation, Petite Sophisticate, Inc., Outlet Division Management Co., Inc., and Sierra Nevada Factoring, Inc. The ADS Subsidiaries involved in these transactions include World Financial Network National Bank ("WFNNB") and ADS Alliance Data Systems, Inc. ("ADSI"). The transactions have been approved by CSI, ADS, and their respective affiliates and are expected to close before the end of 2009, subject to required regulatory review and customary closing conditions.

The Asset Purchase Agreements

In connection with the transactions SOANB and CSRC, as sellers, SOAI, as servicer, and WFNNB, as purchaser, entered into a Purchase Agreement (the "Accounts Purchase Agreement"). Pursuant to the Accounts Purchase Agreement (i) SOANB agreed to sell, assign, and transfer and WFNNB agreed to purchase from SOANB all rights, titles, and interests of SOANB in its credit card accounts, including related credit cards and cardholder agreements, debt cancellation contracts and, (to the extent not previously sold to CSRC) receivables attributable to such credit card accounts, books, and records; and (ii) CSRC agreed to sell, assign, and transfer to WFNNB (or an affiliate of WFNNB designated by WFNNB) and WFNNB agreed to purchase or cause an affiliate to purchase from CSRC, all rights, title, and interest of CSRC in the Charming Shoppes Master Trust ("CSMT"), the ,securitization facilities related to the receivables arising under the foregoing accounts, and certain related assets. WFNNB or its designated affiliate will assume obligations of SOANB, CSRC, and SOAI arising after the closing of the transactions under the foregoing accounts and securitization facilities.

The parties have made customary representations, warranties, and covenants in the Accounts Purchase Agreement. Consummation of the transactions is subject to various customary conditions, including receipt of bank and antitrust regulatory approvals (if required) and satisfaction of conditions relating to the transfer of rights and obligations under the existing securitization facilities. The closing of the transaction under the Accounts Purchase Agreement is also subject to consummation of the transactions contemplated by the Milford Purchase Agreement, the Plan Agreements, the Parent Agreement, the TSYS Agreement, and the Amendment (each as described below). The Accounts Purchase Agreement also contains customary termination rights, including the right of any party to terminate in the event the transactions have not been consummated by January 30, 2010.

The Accounts Purchase Agreement also contains customary obligations of the parties, including an obligation of SOANB and CSRC to indemnify WFNNB for certain losses, costs, and expenses that may arise from operation of the credit card accounts and the securitization facilities by CSRC and SOAI prior to the closing of the transactions.

In connection with the transactions, SOAI as seller, and ADSI as purchaser, entered into a Milford Purchase Agreement (the "Milford Purchase Agreement"). Pursuant to the terms of the Milford Purchase Agreement SOAI agreed to sell, assign, and transfer to ADSI and ADSI agreed to purchase from SOAI, all rights, title, and interest of SOAI in certain specified equipment, the lease agreement relating to the Milford, Ohio facility of SOAI, and certain contracts to which SOAI is a party that relate to the credit card account servicing and administration operations conducted at the Milford, Ohio facility of SOAI. ADSI will assume liabilities arising from the ownership of the transferred assets, including, without limitation, obligations with respect to certain employees of SOAI employed exclusively at the Milford, Ohio facility of SOAI.

The aggregate purchase price paid to SOANB, SOAI, and CSRC for the assets transferred by them under the Accounts Purchase Agreement and the Milford Purchase Agreement (the "Purchase Agreements") will be calculated by reference to the value of these assets maintained as of the closing date on the consolidated books of CSI plus an additional payment used to pay certain costs and expenses associated with the transactions (the "Additional Payment"). The value will be determined primarily in accordance with GAAP and CSI's historical practices and will include the value attributable to (i) CSRC's right to receive excess finance charge collections from CSMT, (ii) the seller interest held by CSRC in CSMT, (iii) securities issued by CSMT and held by CSRC, and (iv) cash held in accounts maintained by the trustee for CSMT, net of associated accruals and liabilities, (v) equipment at the Milford, Ohio facility, and (vi) certain other assets. A portion of the purchase price will be used by CSI and its subsidiaries to pay costs and expenses related to the transactions, including
(i) a payment to Total Systems Services, Inc. ("TSYS") for the early termination of agreements between SOAI and TSYS relating to the servicing of receivables in CSMT, (ii) payment to ADSI for the assumption of certain obligations of SOAI, including obligations to pay TSYS for costs of converting data and functions related to CSMT and receivables held therein to ADSI's systems, and certain obligations of SOAI to employees, and (iii) other costs and expenses. The amount of the aggregate purchase price remaining after payment of such costs and expenses is expected to be approximately $110,000,000.00.

Private Label Credit Card Plan Agreements

In connection with the Purchase Agreement WFNNB entered into a Private Label Credit Card Plan Agreement (collectively, the "Plan Agreements") with each of the following sets of subsidiaries (each set, a "Brand") of CSI: (i) Lane Bryant, Inc., Petite Sophisticate, Inc, Outlet Division Management Co., Inc., and Sierra Nevada Factoring, Inc. (collectively, "Lane Bryant"), (ii) Catherines Stores Corporation and Sierra Nevada Factoring, Inc. (collectively "Catherines") and (iii) Fashion Bug Retail Companies, Inc. and Sierra Nevada Factoring, Inc. (collectively, "Fashion Bug"). Each Plan Agreement has an initial term of ten years and is renewable for eighteen-month terms thereafter, subject to termination provisions described below. Under each Plan Agreement WFNNB will offer private label credit cards to customers of stores operated by the Brand and the Brand and WFNNB will cooperate on marketing and promotion of such credit cards and related products and services (such activities, the "Plan"). An operating committee consisting of eight members (four designated by WFNNB and four designated by the applicable Brand) will be established to oversee the Plan under each Plan Agreement.

Subject to certain limitations WFNNB will have the right to set underwriting standards for the extension of credit to cardholders, and to set the terms and conditions of the cardholder agreements. While these standards, terms, and conditions for each Brand are expected to be discussed by the related operating committee, they may vary from those maintained by SOANB prior to the transactions. Recent legislation regarding consumer lending and the current economic climate, among other things, may prompt WFNNB to modify such standards, terms, and conditions. There can be no assurance that modifications will not affect sales by the Brands.

Each of the Brands has agreed that, other than through the Plans or subject to certain limited exceptions in the applicable Plan Agreement, it will not offer or market a private label or co-branded revolving credit card, debit card branded with a mark related to or for the promotion of the company, or other financial product. Each of the Brands has further agreed to honor credit cards from the other Brands and has also agreed to limitations, as further described in the applicable Plan Agreement, on its ability to accept credit cards other than the Plan credit cards and general purpose credit cards in certain of its retail store lines.

Under each Plan Agreement WFNNB has the exclusive right (but not the obligation) to offer to the Brand's cardholders credit protection programs (including debt cancellation) and enhancement marketing services and to market these programs through credit card billing statements and other channels. WFNNB is obligated to pay the Brand 50% of the net profit generated from such products and services. The Brand may offer third-party vendor products that do not compete with WFNNB's products and services as described in this paragraph subject to certain limitations and fees.

Under each Plan Agreement, WFNNB will make payments to the applicable Brand based on sales generated by the Brand's program.

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