10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2006

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

COMMISSION FILE NUMBER 000-27677

CHARLOTTE RUSSE HOLDING, INC.

(Exact Name of Registrant as Specified in Its Charter)

DELAWARE	33-0724325
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
4645 MORENA BOULEVARD SAN DIEGO, CA	92117
(Address of Principal Executive Offices)	(Zip Code)

(858) 587-1500

(Registrant’s Telephone Number, Including Area Code)

SECURITIES REGISTERED PURSUANT TO SECTION 12 (b) OF THE ACT:

Common Stock, par value $0.01 per share	The NASDAQ Stock Market LLC
(Title of Each Class)	(Name of Each Exchange on Which Registered)

SECURITIES REGISTERED PURSUANT TO SECTION 12 (g) OF THE ACT: NONE

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ¨    No  x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes  ¨    No  x

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Act. (Check one):

Large accelerated filer  ¨                Accelerated filer  x                Non-accelerated filer  ¨

Indicate by check mark if the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):    Yes  ¨    No  x

As of March 25, 2006, the last business day of the registrant’s most recently completed second fiscal quarter, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was approximately $311.6 million. All outstanding shares of common stock, except for shares held by the registrant’s executive officers and members of its Board of Directors and their affiliates, are deemed to be held by non-affiliates.

As of December 7, 2006, the registrant had 25,174,391 shares of common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Part III incorporates information by reference from our definitive Proxy Statement for our 2007 Annual Meeting of Stockholders, to be filed with the Securities and Exchange Commission, or the SEC, within 120 days after the end of our fiscal year covered by this Form 10-K.

The stylized and non-stylized Charlotte Russe, Refuge and blu Chic trademarks referred to in this Form 10-K are federally registered in the United States. These trademarks are the property of Charlotte Russe Holding, Inc. or its subsidiaries. All other trademarks or trade names referred to in this Form 10-K are the property of their respective owners.

IMPORTANT FACTORS REGARDING FORWARD-LOOKING STATEMENTS

We have made statements under the captions, “Business,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Quantitative and Qualitative Disclosures About Market Risk” and “Risk Factors,” as well as in other sections of this annual report on Form 10-K, that are forward-looking statements. You can identify these statements by forward-looking words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “forecast,” “intend,” “may,” “possible,” “potential,” “predict,” “project,” and “will,” or other similar words, phrases or expressions. We have based these forward-looking statements on our current expectations and projections about future events. Statements and financial discussion and analysis contained in this annual report on Form 10-K that are not historical facts are forward-looking statements. These statements discuss goals, intentions and expectations as to future trends, plans, events, results of operations or financial condition, or state other information relating to us, based on our current beliefs as well as assumptions made by us and information currently available to us. Although we believe these forward-looking statements are reasonable, they are based upon a number of assumptions concerning future conditions, any or all of which may ultimately prove to be inaccurate.

Important factors that could cause actual results to differ materially from the forward-looking statements include, without limitation: the risks described under the heading “Risk Factors” of this annual report on Form 10-K; changes in consumer demand; changes in consumer fashion taste; and changes in business strategies and decisions. The factors identified above are believed to be important factors (but not necessarily all of the important factors) that could cause actual results to differ materially from those expressed in any forward-looking statement. Unpredictable or unknown factors could also have material adverse effects on us. Because these forward-looking statements involve risks and uncertainties, there are important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements, including shopping mall traffic and shopping patterns, timing of openings for new shopping malls or our stores, fashion trends, national or regional economic influences, and weather. All forward-looking statements included in this annual report on Form 10-K are expressly qualified in their entirety by the foregoing cautionary statements.

Except as required under the federal securities laws and rules and regulations of the SEC, we undertake no obligation to update, amend or clarify forward-looking statements, whether as a result of new information, future events or otherwise.

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PART I

ITEM 1. BUSINESS

General

We are a growing, mall-based specialty retailer of fashionable, value-priced apparel and accessories targeting young women in their teens and twenties. As of September 30, 2006, we operated a total of 387 Charlotte Russe stores throughout 43 states and Puerto Rico. Through our fashion content, merchandise mix, store layout and design, and merchandise presentation, we project fashion attitudes that appeal to customers across age and socioeconomic boundaries, with a core emphasis on the fashion and lifestyle needs of young women.

Our Charlotte Russe stores are located predominantly in well-positioned mall locations in spaces that average approximately 7,100 square feet. Our stores are designed to create an environment that accentuates the fashion, breadth and value of our merchandise selection.

Our broad assortment of merchandise is centered on styles that are affordable, feminine and reflect the latest fashion trends. Our breadth of merchandise enables our customers to assemble coordinated and complete outfits that satisfy many of their lifestyle needs. Our stores offer merchandise at value-oriented prices and we estimate that most of our merchandise is sold under our proprietary Charlotte Russe labels consisting of Charlotte Russe, Refuge and blu Chic. The remainder of our merchandise consists of nationally-recognized brands popular with our customers.

Since fiscal 1998, we operated a second concept targeting young women seeking contemporary fashion assortments under the name Rampage. A total of 64 stores were operated at the beginning of the fourth quarter of fiscal 2006. To focus on the growth of our core Charlotte Russe concept, we sold the lease rights, store fixtures and equipment associated with 43 Rampage store locations during the fourth quarter of fiscal 2006. Of the remaining 21 Rampage stores, we converted eight stores into Charlotte Russe locations and returned 13 properties back to the respective landlords prior to the end of fiscal 2006.

Our Stores

Based on historical results and assessment of future opportunity, we believe we are positioned for continued growth over the next several years. We plan to continue to open new Charlotte Russe stores at a measured rate, including at least 50 new Charlotte Russe locations in fiscal year 2007. We expect to open these new stores in existing markets as well as in markets in which we currently do not have a presence.

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The number of our stores located in each state is shown in the following map:

The following table provides the number of Charlotte Russe stores, by geographic region, for each of the last five fiscal years:

	California		Southeast	Northeast		Southwest	Midwest & Other	Total
Store count at September 29, 2001	35		30	28		27	26	146
Fiscal 2002
Stores opened	2		9	10		13	17	51
	37		39	38		40	43	197
Fiscal 2003
Stores opened	3		11	15		9	21	59
	40		50	53		49	64	256
Fiscal 2004
Stores opened	5		8	8		4	13	38
	45		58	61		53	77	294
Fiscal 2005
Stores opened	5		15	12		5	11	48
	50		73	73		58	88	342
Fiscal 2006
Stores opened	4		14	9		3	10	40
Rampage conversions	2		3	1		1	1	8
Stores closed	(2	)	—	(1	)	—	—	(3	)
Store count at September 30, 2006	54		90	82		62	99	387

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Our Strategy

The elements of our business strategy combine to create a merchandise assortment that appeals to consumers from a broad range of socioeconomic, demographic and cultural profiles and that differentiates us from our competitors. The principal elements of our business strategy include the following:

Value Priced Offering. We offer a broad assortment of fashionable, quality merchandise at prices that are competitive with other mall-based specialty retailers. Because of our affordable price points and quality of merchandise, we create a perception of value that we believe has enabled us to build a broad and loyal base of customers.

Distinct Brand Image. We have created a focused and differentiated brand image based on fashion attitude, value pricing and quality. This image is consistently communicated throughout our business, including merchandise assortments, in-store visual merchandising and marketing materials. We also enhance brand recognition by offering a majority of our merchandise under our proprietary Charlotte Russe labels (Charlotte Russe, Refuge and blu Chic).

Broad Merchandise Assortment. We offer a broad assortment of apparel and accessories that conveys a consistent fashion attitude. Our merchandise includes ready-to-wear apparel such as knit and woven tops, dresses, shorts, pants and skirts, as well as accessories such as shoes, handbags and jewelry that enable our customers to create ensembles complemented by color coordinated and fashion-forward accessory items. We frequently introduce new fashion merchandise into our stores and regularly update our merchandise displays.

Active Inventory Management. We deal primarily with domestic vendors, which, in our experience, has generally resulted in relatively shorter lead times permitting us to react to sell-through trends and fashion preferences. Our relatively quick inventory turnover rates, along with our approach to managing the merchandise mix, have helped contribute to our achievement of consistent merchandise gross margins.

Our Customers

We target young, fashion-conscious women. Our customer is a young woman who desires established trends at substantial value. She is a hip teenager seeking the current fashion trends, as well as the fashionable working woman looking for career dressing. Regardless of her age, our customer is feminine and body conscious.

Our Visual Merchandising

Our merchandising presentation communicates a clear fashion point-of-view to our customers and encourages the purchase of coordinated outfits. We rely on exciting in-store graphics and window displays to convey our fashion-forward orientation. We generally group our apparel merchandise by lifestyles and colors, and we feature a “trend zone” at the front of our stores that promotes our freshest fashion offerings.

Our Merchandise Planning, Allocation and Distribution

Our merchandise planning and allocation team works closely with our merchants and store personnel to meet the requirements of individual stores for appropriate merchandise in sufficient quantities. This team is also responsible for managing inventory levels, allocating merchandise to stores and replenishing inventory based upon information generated by our management information systems. Our merchandise is distributed through two distribution facilities: our 265,000 square foot distribution facility in Ontario, California, which we opened in April 2002, and our 125,000 square foot distribution facility (which includes our corporate offices) in San Diego, California, which we opened in April 1998. We estimate that we have the distribution capacity to service our current goal of operating at least 600 Charlotte Russe stores.

Our Locations in Regional Malls

Our Charlotte Russe stores, which average approximately 7,100 square feet, provide a comfortable and spacious shopping environment that accentuates the breadth of our merchandise offering. We believe that our store design features, including hardwood floors, bright store lighting systems and enhanced merchandise

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displays, help create a store environment that appeals to young women who shop in regional malls. We have historically been able to locate our stores in malls catering to different socioeconomic, demographic and cultural profiles. Accordingly, we seek to identify favorable store locations in existing or new markets with criteria that include:

• a careful assessment of mall traffic;

• the performance of other retailers within the mall and in particular those serving our target customers;

• the proposed location within the mall;

• population and demographic characteristics of the area; and

• projected profitability and cash return on investment.

Our Business Seasonality

We have historically experienced and expect to continue to experience seasonal and quarterly fluctuations in our net sales and operating income. As is the case with many retailers of apparel and related merchandise, our business is subject to seasonal influences, characterized by strong sales during the back-to-school, Easter and winter holiday seasons. The strength of each of these three seasons generally provides relatively balanced sales during our first, third and fourth fiscal quarters. We typically experience lower net sales and net income during the second quarter of each fiscal year.

Our Information Technology Systems

We are investing in and continually upgrading our information technology systems, as we believe those systems are critical to implementing our expansion strategy in an efficient manner. Our information technology systems address an array of operations information. We implemented a new inventory software system that became operational for our Charlotte Russe stores during fiscal 2005 and we are currently piloting a new point-of-sale register system with chain-wide rollout expected to begin in fiscal 2007.

Our Intellectual Property

We believe that our trademarks are important to our success. Our Charlotte Russe, Refuge and blu Chic trademarks are registered with the United States Patent and Trademark Office.

Our Employees

As of September 30, 2006, we employed 8,328 employees of which 6,229 were classified as part-time. The number of part-time employees fluctuates depending on our seasonal needs. None of our employees is represented by a labor union.

Our Corporate Information

We are subject to the information requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act; therefore, we file periodic reports, proxy statements and other information with the SEC. Such reports, proxy statements and other information may be obtained by visiting the Public Reference Room of the SEC at 100 F Street, NW, Washington, DC 20549 or by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains an Internet site at http://www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically.

Our Internet address is http://www.charlotte-russe.com. We make available through our Internet website our Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after such reports and amendments are electronically filed with or furnished to the SEC.

Our principal executive offices are located at 4645 Morena Boulevard, San Diego, California 92117. Our telephone number is (858) 587-1500. We were founded in 1975 and incorporated in 1996 under Delaware law.

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ITEM 1A. RISK FACTORS

You should consider carefully the following information about the risks described below, together with the other information contained in this annual report on Form 10-K and in our other filings with the SEC, before you decide to buy or maintain an investment in our common stock. We believe the risks described below are the risks that are material to us as of the date of this annual report. If any of the following risks actually occur, our business, financial condition, results of operations and future growth prospects would likely be materially and adversely affected. In these circumstances, the market price of our common stock could decline, and you may lose all or part of the money you paid to buy our common stock.

Our success depends on our ability to identify and rapidly respond to consumer fashion tastes.

The fashion retail industry is subject to rapidly evolving fashion trends and shifting consumer demands. Accordingly, our success is heavily dependent both on the priority our target customers place on fashion and on our ability to anticipate, identify and capitalize upon emerging fashion trends in a timely manner. Current fashion tastes place significant emphasis on a fashionable look. In the past this emphasis has increased and decreased through fashion cycles and decreased emphasis has adversely affected our results. If we do not anticipate, identify or react appropriately and timely to changes in styles, trends, desired images or brand preferences, it may lead to, among other things, excess inventories and higher markdowns, as well as decreased appeal of our Charlotte Russe brand.

We intend to continue to open new stores, which could strain our resources and cause us to operate our business less effectively.

Our growth will largely depend on successfully opening and operating new stores. During fiscal 2006, we opened 40 new Charlotte Russe stores, closed three stores and converted eight Rampage stores into Charlotte Russe locations. This represented a 13.2% net increase from the number of Charlotte Russe stores open at the end of fiscal 2005. We intend to continue to increase our number of Charlotte Russe stores for at least the next several years.

In order to support our planned expansion we will need to continually monitor and upgrade our management information and other systems. This expansion also will place increased demand on our managerial, operational, and administrative resources. These increased demands and operating complexities could cause us to operate our business less effectively, which in turn could cause deterioration in the financial performance of our individual stores and our company as a whole and slow our new store growth.

Our planned expansion involves a number of risks that could prevent or delay the successful opening of new stores as well as impact the performance of our existing stores.

Our ability to open and operate new stores successfully depends on many factors, including, among others, our ability to:

• identify suitable store locations, the availability of which is outside of our control;

• negotiate acceptable lease terms, including desired tenant improvement allowances;

• source sufficient levels of inventory to meet the needs of new stores;

• hire, train and retain store personnel;

• successfully integrate new stores into our existing operations; and

• identify and satisfy the fashion preferences of new geographic areas.

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In addition, some of our new stores will be opened in regions of the United States in which we currently have few or no stores. The expansion into new markets may present competitive, merchandising and distribution challenges that are different from those currently encountered in our existing markets. Any of these challenges could adversely affect our business and results of operations. In addition, to the extent our new store openings are in existing markets, we may experience reduced net sales volumes in existing stores in those markets.

A decline in general economic conditions may lead to reduced consumer demand for our apparel and accessories.

Consumer spending habits, including spending for the fashionable apparel and related accessories that we sell, are affected by, among other things, prevailing economic conditions, levels of employment, salaries and wage rates, consumer confidence and consumer perception of economic conditions. A general slowdown in the United States economy and an uncertain economic outlook could adversely affect consumer spending habits and mall traffic, which could result in lower net sales than expected and could cause us to slow our expansion plans.

Our stores are heavily dependent on the customer traffic generated by shopping malls.

Most of our store locations are not sufficiently concentrated to make significant marketing expenditures cost effective. As a result, we depend heavily on locating our stores in prominent locations within successful shopping malls in order to generate customer traffic. We cannot control the development of new shopping malls, the availability or cost of appropriate locations within existing or new shopping malls or the success of individual shopping malls.

Our market share may be adversely impacted at any time by a significant number of competitors.

We operate in a highly competitive environment characterized by low barriers to entry. We compete against a diverse group of retailers, including national and local specialty retail stores, regional retail chains, traditional department stores and, to a lesser extent, mass merchandisers. Our market share and results of operations may be adversely impacted by this significant number of competitors. Many of our competitors also are larger and have substantially greater resources than we do.

We rely on our good relationships with vendors to implement our business strategy successfully.

Our business is dependent on continued good relations with our vendors. In particular, we believe that we generally are able to obtain attractive pricing and other terms from vendors because we are perceived as a desirable customer. Our merchandise strategy also relies in large part on our ability to obtain much of our merchandise from our vendors within one to two months from the date of order. Our failure to maintain good relations with our vendors could increase our exposure to changing fashion cycles, which may in turn lead to increased inventory markdown rates.

If at any time our comparable store sales and quarterly results of operations decline or do not meet the expectations of research analysts, the price of our common stock could decline substantially.

Our quarterly results of operations for our individual stores have fluctuated in the past and can be expected to continue to fluctuate in the future. For instance, our quarterly comparable store sales percentages for the Charlotte Russe stores have ranged as high as positive 21.0% and as low as negative 6.6% over the last eight fiscal quarters and we expect low single-digit comparable store sales percentage increases during the first two quarters of fiscal 2007. Our net sales and operating results are typically lower in the second quarter of our fiscal year due to the traditional retail slowdown immediately following the winter holiday season. In addition, the calendar shift caused by having a 53^rd week in fiscal 2006 will have the effect of transferring the week between Christmas and New Year’s Day into the first quarter of fiscal 2007, which will likely increase our net sales in the first quarter of fiscal 2007, but decrease our net sales during the second quarter of fiscal 2007. Our comparable store sales and quarterly results of operations are affected by a variety of factors, including:

• the timing of new store openings and the relative proportion of new stores to mature stores;

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• fashion trends;

• calendar shifts of holiday or seasonal periods;

• our ability to maintain appropriate inventory levels;

• changes in our merchandise mix;

• timing of promotional events;

• general economic conditions and, in particular, the retail sales environment;

• actions by competitors or mall anchor tenants; and

• weather conditions.

We rely on our management team to implement our business strategy successfully.

Our success depends to a significant extent upon the continued services of our key personnel, including senior management, who are “at will” employees and have made a significant contribution to our business. If any of our key personnel were to leave us, such a loss could reduce future sales, increase costs or both. Our success in the future will also depend upon our ability to attract, train and retain talented and qualified personnel.

The failure to efficiently complete the planned replacement of certain of our technology and information systems could negatively impact our business.

The efficient operation of our business is heavily dependent on information systems. In particular, we rely upon technology and information systems for inventory control, point-of-sale processing and other critical information. We periodically review, improve and, under certain circumstances, replace information systems to provide enhanced support to all operating areas. If such upgrades and enhancements are not successfully implemented, then the current systems may not be able to continue to adequately support our information requirements.

The loss of, or disruption of operations in, either of our two distribution centers could negatively impact our business.

Our merchandise is distributed through two facilities that use automated systems for sorting apparel and shipping merchandise. We depend on the orderly operation of our facilities and distribution processes, as well as sufficient shipping resources. Disruptions in these operations due to fire, earthquake or other catastrophic events, employee matters, shipping problems or other events could result in delays in the delivery of merchandise to our stores.

The effects of war or acts of terrorism could adversely affect our business.

The continued threat of terrorism, heightened security measures and military action in response to acts of terrorism has disrupted commerce and has intensified concerns regarding the United States economy. Any further acts of terrorism, particularly directed at malls, or new or extended hostilities may disrupt commerce and undermine consumer confidence, which could negatively impact our sales by causing mall traffic or consumer spending to decline.

Failure of our suppliers to use acceptable ethical business practices could negatively impact our business.

We require our suppliers to operate in compliance with applicable laws, rules and regulations regarding working conditions, employment practices, environmental compliance and trademark and copyright licensing. However, we do not control their labor and other business practices. If one of our suppliers violate labor or other laws or implements labor or other business practices that are regarded as unethical, the shipment of finished products to us could be interrupted, orders could be canceled, relationships could be terminated and our reputation could be damaged. If one of our suppliers fails to procure necessary license rights to trademarks,

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copyrights or patents, legal action could be taken against us that could impact the salability of our inventory and expose us to financial obligations to a third party. Any of these events could have a material adverse effect on our sales and results of operations.

Our business could be adversely impacted by unfavorable international conditions.

We receive apparel and other merchandise from foreign sources, both purchased directly in foreign markets and indirectly through domestic vendors with foreign sources. To the extent that any of our vendors are located overseas or rely on overseas sources for a large portion of their products, any event causing a disruption of imports, including the imposition of import restrictions, could harm our ability to source product. This disruption could materially limit the merchandise that we would have available for sale and reduce our revenues and earnings. The flow of merchandise from our vendors could also be adversely affected by financial or political instability, or war, in or affecting any of the countries in which the goods we purchase are manufactured or through which they flow.

Trade restrictions in the form of tariffs or quotas, or both, that are applicable to the products that we sell also could affect the import of those products and could increase the cost and reduce the supply of products available to us. Any material increase in tariff levels, or any material decrease in quota levels or available quota allocation, could negatively impact our business. Further, changes in tariffs or quotas for merchandise imported from individual foreign countries could lead us to shift our sources of supply among various countries. Any shift we might undertake in the future could result in a disruption of our sources of supply and lead to a reduction in our revenues and earnings. Supply chain security initiatives undertaken by the United States government that impede the normal flow of product could also negatively impact our business.

We may be liable for any defaults with respect to the leases for our recently disposed Rampage stores.

We recently sold the lease rights, store fixtures and equipment for 43 Rampage store locations to Forever 21 Retail, Inc., and Forever 21, Inc., the parent company of Forever 21 Retail, guaranteed Forever 21 Retail’s obligations under the leases that it assumed in connection with the transaction. In the event Forever 21 Retail or Forever 21 defaults on their obligations under certain of these leases or the guarantee, we may be liable for any damages or costs associated with such a default, which could adversely impact our future results.

ITEM 1B. UNRESOLVED STAFF COMMENTS

Like other seasoned issuers, we from time to time receive written comments from the staff of the SEC regarding our periodic or current reports under the Exchange Act. There are no comments that remain unresolved that we received not less than 180 days before the end of our 2006 fiscal year to which this Form 10-K relates.

ITEM 2. PROPERTIES

We operated 387 stores throughout 43 states and Puerto Rico as of September 30, 2006. We currently lease all of our store locations. Most leases have an initial term of at least ten years and do not contain options to extend the lease. Our leases, however, often allow for termination by us generally after three years if sales at an affected store do not exceed specified levels, although in many instances we are required to pay back a portion of any landlord allowances received.

We lease approximately 125,000 square feet of space for our executive offices and distribution center in San Diego, California, under a lease that expires in August 2009. We also lease approximately 10,300 square feet of additional administrative office space near our main facility in San Diego under a lease that expires in December 2007. In addition, we lease approximately 265,000 square feet of space for our distribution center in Ontario, California, under a lease that expires in July 2012. We believe our distribution capacity at the San Diego facility and the Ontario facility should be sufficient to accommodate our expected store growth through the next several years.

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ITEM 3. LEGAL PROCEEDINGS

From time to time, we may be involved in litigation relating to claims arising out of our operations. As of the date of this annual report on Form 10-K, we are not engaged in any legal proceedings that are expected, individually or in the aggregate, to have a material adverse effect on our business, financial condition or results of operations.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable.

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PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information and Holders

Our common stock is traded on The Nasdaq Global Select Market under the symbol “CHIC.” The following table sets forth, for the periods indicated, the reported high and low sales prices per share of our common stock on The Nasdaq Global Select Market or its predecessor, the Nasdaq National Market:

	High		Low
Fiscal year ended September 25, 2004
First quarter	$	15.45	$	9.18
Second quarter		18.97		12.07
Third quarter		21.94		15.64
Fourth quarter		22.24		10.77
Fiscal year ended September 24, 2005
First quarter		14.35		8.84
Second quarter		12.87		9.13
Third quarter		13.49		10.23
Fourth quarter		15.21		12.08
Fiscal year ending September 30, 2006
First quarter		20.37		12.95
Second quarter		22.49		15.28
Third quarter		23.41		18.50
Fourth quarter		28.25		20.76

As of December 7, 2006, the number of holders of record of our common stock was 19; and, the closing price of our common stock on the Nasdaq Global Select Market was $31.23 per share.

Dividends

We have never declared nor paid dividends on our common stock and we do not intend to pay any dividends on our common stock in the foreseeable future. We currently intend to retain earnings to finance future operations and expansion. Moreover, under the terms of our credit facility, stock dividends and distributions are restricted.

Securities Authorized for Issuance Under Equity Compensation Plans

The shares disclosed in column “(c)” in the schedule below include 195,570 shares of common stock issuable under our 1999 Employee Stock Purchase Plan.

	Equity Compensation Plan Information
Plan category	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)	Weighted-average exercise price of outstanding options, warrants and rights (b)		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
Equity compensation plans approved by security holders	1,621,700	$	17.61	1,093,270
Equity compensation plans not approved by security holders	—		—	—
Total	1,621,700	$	17.61	1,093,270

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Please see Note 3 in the notes to the consolidated financial statements for more information regarding our equity compensation plans.

ITEM 6. SELECTED FINANCIAL DATA

The selected consolidated financial data set forth below is qualified in its entirety by, and should be read in conjunction with, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and notes thereto included elsewhere in this annual report on Form 10-K.

	Fiscal Year Ended (1)
	Sept. 28, 2002 (52 weeks)			Sept. 27, 2003 (52 weeks)			Sept. 25, 2004 (52 weeks)			Sept. 24, 2005 (52 weeks)			Sept. 30, 2006 (53 weeks)
	(dollars in thousands, except per share and sales per foot data)
Statement of Income Data:
Net sales	$	316,736		$	371,669		$	449,035		$	511,259		$	681,504
Cost of goods sold		230,524			276,693			327,260			377,233			491,664
Gross profit		86,212			94,976			121,775			134,026			189,840
Selling, general and administrative expenses		62,576			81,528			93,513			107,656			130,803
Operating income		23,636			13,448			28,262			26,370			59,037
Interest income, net		164			119			303			868			2,858
Other charges, net		(290	)		(270	)		(275	)		(261	)		(269	)
Income from continuing operations before income taxes		23,510			13,297			28,290			26,977			61,626
Income taxes		9,169			5,186			11,033			10,170			24,465
Income from continuing operations		14,341			8,111			17,257			16,807			37,161
Income (loss) on discontinued operations		7,308			1,979			(2,173	)		(6,006	)		(12,023	)
Net income	$	21,649		$	10,090		$	15,084		$	10,801		$	25,138
Earnings per share—basic (2):
Continuing operations	$	0.68		$	0.38		$	0.80		$	0.76		$	1.65
Discontinued operations		0.35			0.10			(0.10	)		(0.27	)		(0.54	)
Net income	$	1.03		$	0.48		$	0.70		$	0.49		$	1.11
Earnings per share—diluted (2):
Continuing operations	$	0.61		$	0.35		$	0.72		$	0.70		$	1.50
Discontinued operations		0.30			0.08			(0.09	)		(0.25	)		(0.49	)
Net income	$	0.91		$	0.43		$	0.63		$	0.45		$	1.01
Weighted average shares outstanding (2):
Basic (000’s)		21,045			21,240			21,567			21,995			22,560
Diluted (000’s)		23,694			23,507			23,993			24,062			24,789
Selected Operating Data:
Number of stores open at end of period		197			256			294			342			387
Average square footage per store (3)		7,435			7,349			7,258			7,179			7,112
Comparable store sales increase (decrease) (4)		(6.9	)%		(7.7	)%		2.7	%		0.3	%		15.3	%
Average store sales (5)	$	1,820		$	1,622		$	1,647		$	1,649		$	1,898
Sales per square foot (6)	$	243		$	219		$	225		$	228		$	266
Balance Sheet Data:
Cash and cash equivalents	$	13,510		$	22,905		$	30,652		$	33,629		$	90,229
Working capital		12,917			26,055			43,091			51,669			97,344
Working capital (deficiency), exclusive of cash balances		(593	)		3,151			12,439			18,039			7,115
Total assets		227,070			261,444			301,680			329,136			359,519
Total long-term debt		—			—			—			—			—
Total stockholders’ equity		124,025			134,929			155,613			167,110			206,454

(1) Due to the discontinuance of the Rampage stores in fiscal 2006, the results of these stores have been segregated and reclassified as discontinued operations. Accordingly, they are excluded from amounts shown in this table unless otherwise noted.

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(2) See Notes 1 and 11 of the notes to the consolidated financial statements for the method used to calculate the earnings per share and weighted average shares outstanding.

(3) Our average square footage per store is based on all Charlotte Russe stores open at the end of the period.

(4) Our comparable store percentages are based on net sales for Charlotte Russe stores beginning on the first day of the month following the fourteenth full month of sales. In addition, stores with square footage expansion of greater than 20% upon remodeling are excluded for the 12 full months following completion of the remodel.

(5) Our average store sales are based on the time weighted average of all Charlotte Russe stores open in the period.

(6) Our sales per square foot consist of net sales divided by the time weighted average of gross square footage of all Charlotte Russe stores open in the period.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the financial statements and notes thereto included elsewhere in this annual report on Form 10-K. The following Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements that involve risks and uncertainties. See “Important Factors Regarding Forward-Looking Statements” in this annual report on Form 10-K. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth under “Risk Factors” in this annual report on Form 10-K.

OVERVIEW

In the five fiscal years ended September 30, 2006, we grew from 146 stores to 387 stores, representing a compound annual growth rate of 21.5%, and increased our annual revenues from $255.7 million in fiscal 2001 to $681.5 million in fiscal 2006, representing a compound annual growth rate of 21.7%. From fiscal 2001 to the middle of fiscal 2004, we experienced successive quarters of comparable store sales declines that reduced our average annual sales per store by over 20%. Most of our store level expenses, such as rent and occupancy costs, are generally fixed in nature and they rose as a percentage of sales for these periods as these costs were being spread over a smaller average sales base. In response, we began to initiate a series of management and operational changes in late fiscal 2004 intended to improve our merchandise assortments and increase our promotional pricing cadence. Our goal was to improve the average store volumes, releverage our store rent and occupancy expenses and improve our financial performance.

Our comparable store sales trends improved in late fiscal 2005 and during each quarter of fiscal 2006. We experienced improved selling of apparel merchandise, in particular our Refuge branded denim and fast fashion tops, and we achieved a comparable store sales increase of 15.3% during fiscal 2006, as compared to an increase of 0.3% during fiscal 2005. As expected, the increase in our average store volumes improved our expense ratios and we achieved improved financial results in fiscal 2006.

With respect to our Rampage stores, we acquired the Rampage chain in fiscal 1998 as an additional growth vehicle for our company that would target young women seeking contemporary fashion assortments. While this business was successful and profitable through fiscal 2003, the business trends turned negative and we experienced operating losses from these stores during fiscal 2004 and thereafter. Our effort to reposition these stores to more effectively compete with other aspirationally-branded retailers, despite some modest success in fiscal 2005, was not financially successful.

Based upon a review of the carrying value of the long-lived assets of the Rampage stores compared with the estimated future discounted and non-discounted cash flows from their operations, we recorded a non-cash impairment charge of $22.5 million in the second quarter of fiscal 2006. This charge represented a write down of substantially all of the carrying value of the Rampage long-lived assets. During the subsequent quarter, we completed an evaluation of the strategic alternatives for the Rampage stores. That review indicated that certain assets for a majority of the 64 Rampage stores could be sold, based upon specific interest shown by other

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retailers, while the remaining stores could either be closed or converted to the Charlotte Russe format. In the fourth quarter of fiscal 2006, we sold the lease rights, store fixtures and equipment associated with 43 Rampage store locations for approximately $13.6 million. Of the remaining 21 Rampage stores in operation at the beginning of the fourth quarter, we converted eight stores into Charlotte Russe locations and returned 13 properties back to their respective landlords prior to the end of fiscal 2006.

We use a number of key performance indicators of financial operating performance to evaluate our business, including the following:

	Fiscal Year
	2004 (52 weeks)			2005 (52 weeks)			2006 (53 weeks)
Store count		294			342			387
Net sales growth		20.8	%		13.9	%		33.3	%
Comparable store sales increase		2.7	%		0.3	%		15.3	%
Gross margin		27.1	%		26.2	%		27.9	%
Operating margin		6.3	%		5.2	%		8.7	%
Diluted earnings per share from continuing operations	$	0.72		$	0.70		$	1.50
Cash and cash equivalents (millions)	$	30.7		$	33.6		$	90.2

15

RESULTS OF OPERATIONS

The following table sets forth our operating results, expressed as a percentage of sales, and store information for the periods indicated.

	Fiscal Year
	2004 (52 weeks)		2005 (52 weeks)		2006 (53 weeks)
Net sales	100.0	%	100.0	%	100.0	%
Cost of goods sold	72.9		73.8		72.1
Gross profit	27.1		26.2		27.9
Selling, general and administrative expenses	20.8		21.0		19.2
Operating income	6.3		5.2		8.7
Interest income, net	0.1		0.2		0.4
Other charges, net	(0.1	)	(0.1	)	(0.1	)
Income from continuing operations before income taxes	6.3		5.3		9.0
Income taxes	2.5		2.0		3.5
Income from continuing operations	3.8		3.3		5.5
Loss on discontinued operations	0.4		1.2		1.8
Net income	3.4	%	2.1	%	3.7	%

Fiscal Year Ended September 30, 2006 (53 weeks) Compared to Fiscal Year Ended September 24, 2005 (52 weeks)

Net Sales. Our net sales increased to $681.5 million from $511.3 million, an increase of $170.2 million, or 33.3%, over the prior fiscal year. This increase reflects $86.6 million of additional net sales, on a 52-week basis, from the new stores opened during fiscal 2006 as well as other stores opened in prior fiscal years that did not qualify as comparable stores. This increase also benefited from a 15.3% increase in comparable store sales, which resulted in additional sales, on a 52-week basis, of $72.1 million compared to the prior fiscal year. Consistent with our fiscal year policy, fiscal 2006 included an extra week of business as the fiscal year end was reset at September 30, 2006. Our net sales include $11.5 million of sales generated during this additional week in fiscal 2006.

Gross Profit. Gross profit represents net sales less cost of goods sold, which includes buying, distribution and occupancy costs. Our gross profit increased to $189.8 million from $134.0 million, an increase of $55.8 million, or 41.6%, over the prior fiscal year. This increase in amount was primarily the result of higher net sales. As a percentage of net sales, gross profit increased to 27.9% from 26.2%, or 1.7 percentage points, from the prior fiscal year. The increase in gross profit as a percentage of net sales was principally due to leveraging of store rent and occupancy costs as these expenses were spread over a higher average store sales volume (2.6 percentage point impact) and improved distribution center expenses (0.5 percentage point impact). These favorable factors were partially offset by higher markdown expense (0.7 percentage point impact) and higher freight costs (0.5 percentage point impact).

Selling, General and Administrative Expenses. Our selling, general and administrative expenses increased to $130.8 million from $107.7 million, an increase of $23.1 million, or 21.5%, over the prior fiscal year. This increase in amount was attributable to new store expansion and increased corporate expenses, specifically higher store payroll and operating expenses and higher central office payroll and related expenses. As a percentage of net sales, selling, general and administrative expenses decreased to 19.2% from 21.0%, or 1.8 percentage points, from the prior fiscal year. The decrease in expenses as a percentage of net sales was principally due to a reduction in store payroll expenses (1.3 percentage point impact) and store operating expenses (0.4 percentage

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point impact), as many of these expenses were spread over a higher average store sales volume, lower home office payroll expenses (0.4 percentage point impact) and the costs for the settlement of two class action lawsuits in the prior fiscal year (0.2 percentage point impact). These favorable factors were partially offset by stock based compensation expense that was initiated in fiscal 2006 (0.3 percentage point impact) and achievement of the management bonus plan performance targets for which no similar amount was recorded in the prior year (0.3 percentage point impact).

Income Taxes. Our effective tax rate for fiscal 2006 of 39.7% approximates our statutory income tax rate. It is higher than the 37.7% rate utilized in the prior fiscal year as we adjusted our tax liabilities in fiscal 2005 to reflect the reassessment of tax contingency balances.

Income from Continuing Operations. Our income from continuing operations increased to $37.2 million from $16.8 million, an increase of $20.4 million, or 121%, over the prior fiscal year. The increase was primarily due to an increase in gross profit which was partially offset by an increase in selling, general and administrative expenses and income taxes.

Loss on Discontinued Operations. As a result of their disposition, our Rampage stores met the criteria to be classified as discontinued operations as defined by generally accepted accounting principles. Our net loss increased to $12.0 million from $6.0 million, an increase of $6.0 million, or 100%, over the prior fiscal year. The increase was primarily due to higher store operating losses as our efforts to reposition the Rampage stores proved unsuccessful. The fiscal 2006 results included a $22.5 million pre-tax impairment charge in the second quarter which was offset by a $21.4 million pre-tax gain on the asset dispositions in the fourth quarter.

Fiscal Year Ended September 24, 2005 (52 weeks) Compared to Fiscal Year Ended September 25, 2004 (52 weeks)

Net Sales. Our net sales increased to $511.3 million from $449.0 million, an increase of $62.3, or 13.9%, over the prior fiscal year. This increase reflects $60.9 million of additional net sales from the new stores opened during fiscal 2005 as well as other stores opened in prior fiscal years that did not qualify as comparable stores. This increase also benefited from a 0.3% increase in comparable store sales, which resulted in additional sales of $1.4 million compared to the prior fiscal year.

Gross Profit. Gross profit represents net sales less cost of goods sold, which includes buying, distribution and occupancy costs. Our gross profit increased to $134.0 million from $121.8 million, an increase of $12.2 million, or 10.1%, over the prior fiscal year. This increase in amount was primarily the result of higher net sales. As a percentage of net sales, gross profit decreased to 26.2% from 27.1%, or 0.9 percentage points, from the prior fiscal year. The decrease in gross profit as a percentage of net sales was principally due to higher markdown expense (0.8 percentage point impact), increased store occupancy costs (0.3 percentage point impact) and higher freight costs (0.3 percentage point impact). These unfavorable factors were partially offset by higher initial mark-up (0.5 percentage point impact).

Selling, General and Administrative Expenses. Our selling, general and administrative expenses increased to $107.7 million from $93.5 million, an increase of $14.2 million, or 15.1%, over the prior fiscal year. This increase in amount was attributable to new store expansion and increased corporate expenses, specifically higher store payroll and operating expenses and higher central office payroll and related expenses. As a percentage of net sales, selling, general and administrative expenses increased to 21.0% from 20.8%, or 0.2 percentage points, from the prior fiscal year. The increase in expenses as a percentage of net sales was principally due to an increase in store operating expenses (0.3 percentage point impact), costs for the settlement of two class action lawsuits in fiscal 2005 (0.2 percentage point impact) and increased professional fees associated with compliance with Section 404 of the Sarbanes-Oxley Act of 2002 (0.2 percentage point impact). These unfavorable factors were partially offset by a reduction in store payroll expenses (0.2 percentage point impact) and a reduction in management bonus plan expenses (0.2 percentage point impact).

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Income Taxes. Our effective tax rate for fiscal 2005 of 37.7% approximates our statutory income tax rate. It is lower than the 39.0% rate utilized in the prior fiscal year as we adjusted our tax liabilities in fiscal 2005 to reflect the reassessment of tax contingency balances.

Income from Continuing Operations. Our income from continuing operations decreased to $16.8 million from $17.3 million, a decrease of $0.5 million, or 2.6%, over the prior fiscal year. The decrease was primarily due to an increase in selling, general and administrative expenses which was partially offset by an increase in gross profit.

Loss on Discontinued Operations. As a result of their disposition, our Rampage stores met the criteria to be classified as discontinued operations as defined by generally accepted accounting principles. Our net loss increased to $6.0 million from $2.2 million, an increase of $3.8 million, or 176%, over the prior fiscal year. The increase was primarily due to higher store operating losses as our efforts to reposition the Rampage stores negatively impacted sales and operating performance.

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QUARTERLY RESULTS AND SEASONALITY

We have historically experienced and expect to continue to experience seasonal and quarterly fluctuations in our net sales and operating income. As is the case with many retailers of apparel and related merchandise, our business is subject to seasonal influences, characterized by strong sales during the back-to-school, Easter and winter holiday seasons. The strength of each of these three seasons generally provides relatively balanced sales during our first, third and fourth fiscal quarters. We typically experience lower net sales and net income during the second quarter of each fiscal year. Our quarterly results of operations may fluctuate significantly as a result of a variety of factors, including the timing of new store openings, fashion trends and shifts in timing of certain holidays, as well as other factors discussed in the section entitled “Risk Factors” in this annual report on Form 10-K.

The following table includes our unaudited quarterly results of operations data for each of the eight quarters during the two-year period ended September 30, 2006. This data has been derived from our unaudited consolidated financial statements. We believe that this information has been prepared on the same basis as our audited consolidated financial statements and that all necessary adjustments, consisting of normal recurring adjustments, have been included to present fairly the selected quarterly information when read in conjunction with our audited consolidated financial statements and the notes to those statements included elsewhere in this annual report on Form 10-K. In addition, the second quarter of fiscal 2006 reflects a $0.8 million reduction to gross profit to correct the calculation of our previously reported inventory shrinkage expense which was identified during the fourth quarter financial statement close process.

	Fiscal Year 2005												Fiscal Year 2006
	Three Months Ended												Three Months Ended
	Dec. 25, 2004 (13 weeks)			Mar. 26, 2005 (13 weeks)			Jun. 25, 2005 (13 weeks)			Sept. 24, 2005 (13 weeks)			Dec. 24, 2005 (13 weeks)			Mar. 25, 2006 (13 weeks)			Jun. 24, 2006 (13 weeks)			Sept. 30, 2006 (14 weeks)
	(dollars in thousands, except per share data)
Statement of Operations Data:
Net sales	$	128,408		$	107,038		$	121,099		$	154,714		$	178,495		$	153,709		$	160,746		$	188,554
Gross profit		34,030			25,665			31,242			43,089			48,990			39,560			46,036			55,254
Operating income		7,485			1,110			5,475			12,300			15,414			8,577			15,151			19,895
Income from continuing operations		4,602			777			3,644			7,784			9,470			5,490			9,519			12,682
Income (loss) on discontinued operations		(2,440	)		(1,539	)		(330	)		(1,697	)		(2,411	)		(17,543	)		(3,641	)		11,572
Net income (loss)		2,162			(762	)		3,314			6,087			7,059			(12,053	)		5,878			24,254
Earnings Per Share—Basic:
Continuing operations	$	0.21		$	0.04		$	0.17		$	0.35		$	0.43		$	0.24		$	0.42		$	0.55
Discontinued operations	$	(0.11	)	$	(0.07	)	$	(0.02	)	$	(0.07	)	$	(0.11	)	$	(0.78	)	$	(0.16	)	$	0.50
Net income (loss)	$	0.10		$	(0.03	)	$	0.15		$	0.28		$	0.32		$	(0.54	)	$	0.26		$	1.05
Earnings Per Share—Diluted:
Continuing operations	$	0.19		$	0.03		$	0.15		$	0.32		$	0.39		$	0.22		$	0.38		$	0.51
Discontinued operations	$	(0.10	)	$	(0.06	)	$	(0.01	)	$	(0.07	)	$	(0.10	)	$	(0.71	)	$	(0.14	)	$	0.46
Net income (loss)	$	0.09		$	(0.03	)	$	0.14		$	0.25		$	0.29		$	(0.49	)	$	0.24		$	0.97
As a Percentage of Net Sales:
Net sales		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%
Gross profit		26.5			24.0			25.8			27.9			27.4			25.7			28.6			29.3
Operating income		5.8			1.0			4.5			8.0			8.6			5.6			9.4			10.6
Income from continuing operations		3.6			0.7			3.0			5.0			5.3			3.6			5.9			6.7
Income (loss) on discontinued operations		(1.9	)		(1.4	)		(0.3	)		(1.1	)		(1.3	)		(11.4	)		(2.2	)		6.2
Net income (loss)		1.7			(0.7	)		2.7			3.9			4.0			(7.8	)		3.7			12.9
Operating Data:
Comparable store sales increase (decrease)		(6.6	)%		(0.3	)%		(2.5	)%		10.6	%		16.3	%		21.0	%		18.2	%		7.4	%
Stores open at end of period		301			305			321			342			356			354			360			387

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LIQUIDITY AND CAPITAL RESOURCES

Our working capital requirements vary consistent with the seasonality of our business. Our capital requirements result primarily from capital expenditures related to new store openings. We have historically satisfied our cash requirements principally through cash flow from operations. Due to the rapid turnover of our inventory, we generate trade payables and other accrued liabilities sufficient to offset most of our working capital requirements, and this allows us to generally operate with limited working capital investment. As of September 30, 2006, we had working capital of approximately $97.3 million which included cash and cash equivalents of $90.2 million.

The following chart provides a summary of our sources and uses of cash during the past three years:

	Fiscal Year
	2004 (52 weeks)			2005 (52 weeks)			2006 (53 weeks)
	(dollars in thousands)
Net cash provided by operating activities	$	48,095		$	48,063		$	90,769
Net cash used in investing activities		(42,558	)		(45,631	)		(46,418	)
Net cash provided by financing activities		2,210			546			12,249
Change in cash position	$	7,747		$	2,978		$	56,600

In fiscal year 2006, our net cash provided by operations increased $42.7 million over the prior year amount due to a $20.4 million increase in income from continuing operations, $9.5 million reduction to working capital accounts, $8.1 million improvement in cash provided from discontinued operations as a result of disposing of the Rampage assets, $3.5 million increase in depreciation net of construction allowance amortization, and $4.2 million of other factors including stock based compensation expense and deferred rent charges. Offsetting these factors was a $3.0 million decline in landlord construction allowances in fiscal 2006. Net cash used in investing activities primarily consists of capital expenditures. It increased $0.8 million during fiscal 2006 as a result of increased capital spending associated with the opening of 40 new stores, compared to 49 new stores in the prior year, and funding for 11 remodeled stores and increased investments in our information systems and other corporate projects. Net cash provided from financing activities primarily consists of cash and income tax benefits associated with stock option and warrant exercises offset by securities offering costs paid by us. It increased $11.7 million in fiscal 2006 due to a greater number of stock option exercises during the fiscal year and the exercise of warrants for 2.0 million shares of common stock for $2.0 million in conjunction with a securities offering in September 2006.

In fiscal year 2005, our net cash provided by operations was essentially the same as the prior year amount with a $0.5 million decrease in income from continuing operations, $2.0 million increase in working capital accounts, $3.1 million increase in cash used by discontinued operations and $3.4 million use by other factors including deferred rent charges and deferred income taxes. Offsetting these factors was a $6.4 million increase in landlord construction allowances and a $2.6 million increase in depreciation net of construction allowance amortization in fiscal 2005. Net cash used in investing activities primarily consists of capital expenditures. It increased $3.1 million during fiscal 2005 as a result of increased capital spending associated with the opening of 49 new stores, compared to 49 new stores in the prior year, and funding for 6 remodeled stores and increased investments in our information systems and other corporate projects. Net cash provided from financing activities primarily consists of cash associated with stock option exercises. It decreased $1.6 million in fiscal 2005 due to a fewer number of stock option exercises during the fiscal year.

We expect to continue to invest in capital expenditures to support our growth. After taking into account new store construction, existing store remodeling and other corporate capital projects, total capital expenditures for fiscal 2007 are projected to range from approximately $55.0 million to $65.0 million.

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We currently have a $40.0 million secured revolving credit facility, referred to as the Credit Facility, with Bank of America, N.A., which expires on June 30, 2010. Under the terms of the Credit Facility, we may borrow up to the maximum borrowing limit of $40.0 million less any outstanding letters of credit, and we have set the initial loan ceiling amount at $30.0 million. Interest on the Credit Facility is payable quarterly, at our option, at either (i) the Bank’s prime rate plus 0.50% to 1.00% or (ii) 1.00% to 1.50% over the average interest settlement rate for deposits in the London interbank market banks subject to certain adjustments. Our ability to receive loan advances under the Credit Facility is subject to our continued compliance with various covenants, representations and warranties, and conditions, including but not limited to negative covenants against the incurrence of debt or liens. The Credit Facility also contains events of default customary for facilities of this type and provides that, upon the occurrence of an event of default, payment of all outstanding loans may be accelerated and/or the lenders’ commitments may be terminated. Pursuant to this agreement, we and our wholly-owned subsidiaries have (i) provided an unconditional guarantee of the full and punctual payment of obligations under the Credit Facility, (ii) pledged certain of our securities to the collateral agent as security for the full payment and performance of our obligations under the Credit Facility and (iii) granted a security interest in essentially all of our personal property as security for the full payment and performance of our obligations under the Credit Facility. At September 30, 2006, there was no outstanding debt under the Credit Facility and we were in compliance with the terms of the bank credit agreement. As of September 30, 2006, we had $22.5 million of borrowing availability under the Credit Facility.

We believe that our cash flows from operations, our current cash balance and the funds available under our Credit Facility will be sufficient to meet our working capital needs and contemplated capital expenditure requirements through fiscal 2007. If our cash flow from operations should decline significantly, it may be necessary for us to seek additional sources of capital or to reduce planned new store openings.

CONTRACTUAL AND COMMERCIAL OBLIGATIONS

Our commitment to make future payments under long-term contractual obligations and commercial obligations as of September 30, 2006 was as follows:

Contractual Obligations	Total		Less Than 1 Year		1-3 Years		3-5 Years		After 5 Years
	(dollars in thousands)
Operating leases	$	456,809	$	67,551	$	133,604	$	117,569	$	138,085
Other obligations		26,760		26,760		—		—		—
	$	483,569	$	94,311	$	133,604	$	117,569	$	138,085
Commercial Obligations	Total		Less Than 1 Year		1-3 Years		3-5 Years		After 5 Years
	(dollars in thousands)
Documentary letters of credit	$	5,258	$	5,258	$	—	$	—	$	—
Standby letters of credit		2,222		2,222		—		—		—
	$	7,480	$	7,480	$	—	$	—	$	—

During fiscal 2006, we sold lease rights for 43 locations that were formerly operated as Rampage stores to Forever 21 Retail, Inc., and its parent company guaranteed its obligations under the leases it assumed. In the event of default, we could be liable for obligations associated with 39 real estate leases which have future lease payments (undiscounted) of approximately $50.8 million through the end of fiscal 2016 which are not reflected in the tables above. The scheduled future minimum rentals for these leases over the next five fiscal years and thereafter are $9.1 million, $8.5 million, $8.6 million, $8.2 million, $7.1 million and $9.3 million, respectively. We believe that the likelihood of material liability being triggered under these leases is remote, and no liability has been accrued for these contingent lease obligations as of September 30, 2006.

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CRITICAL ACCOUNTING POLICIES AND ESTIMATES

“Management’s Discussion and Analysis of Financial Condition and Results of Operations” discusses our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, as well as revenues and expenses during the reported periods.

As a retailer of women’s apparel and accessories, our financial statements are affected by several critical accounting policies, many of which affect management’s use of estimates and judgments, as described in the notes to the consolidated financial statements.

On an on-going basis, management evaluates its estimates and judgments regarding revenues, inventories, long lived assets, intangible assets, accrued liabilities, stock based compensation, self-insurance programs, income taxes and contingencies and litigation. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances. The results from this evaluation form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Under different assumptions or conditions, alternative estimates and judgments could be derived which would differ from the estimates being used by management. Actual results could differ from any or all of these estimates.

Revenue

We sell merchandise directly to retail customers and recognize revenue at the point of sale. Customers have the right to return merchandise to us, and we maintain a reserve for the financial impact of returns which occur subsequent to the current reporting period.

Our policy with respect to gift cards is to record revenue as the gift cards are redeemed for merchandise. Prior to their redemption, unredeemed gift cards are recorded as a liability and are included within other current liabilities. Beginning with the second quarter of fiscal 2006, we adjust the gift card liability balances on a quarterly basis to recognize estimated unredeemed amounts under the redemptive recognition method. This method records gift card breakage as additional sales on a proportional basis over the redemption period based on historical redemption trends. Such adjustments are included in net sales and operating income.

Inventory

Our merchandise is initially offered for sale at a regular price, but is often marked down prior to the ultimate sale of all units that were purchased. We utilize the retail method of accounting for our inventory valuation, which inherently reduces the inventories’ carrying value as permanent markdowns are initiated. In addition, we maintain a reserve for the financial impact of markdowns that we believe are likely to be encountered in the future. If actual demand or market conditions are more or less favorable than those projected by management, the level of the reserve for future markdowns would be subject to change in subsequent reporting periods.

We also provide for estimated inventory losses for damaged, lost or stolen inventory for the period from the last physical inventory to the financial statement date. These estimates are based on historical experience and other factors.

We receive certain allowances from our vendors primarily related to distribution center handling expenses or defective merchandise. These allowances are reflected as a reduction of merchandise inventory in the period they are received and allocated to cost of sales during the period in which the items were sold.

22

Goodwill and Long-lived Assets

We have recorded a goodwill asset of $32.9 million that arose from the acquisition of our business in September 1996. Subsequent amortization of $4.1 million reduced its carrying value to $28.8 million. This asset is tested for possible impairment on at least an annual basis in accordance with Statement of Financial Accounting Standards, or SFAS, No. 142, “Goodwill and Other Intangibles,” utilizing discounted cash flow valuation techniques and reference to the market value of our outstanding common stock. No impairment adjustments have been required to date. In accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-lived Assets,” we assess the impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors considered important that could trigger an impairment review include a significant underperformance relative to historical or projected future operating results, a significant change in the manner of the use of the asset or a significant negative industry or economic trend. Upon determining that the carrying value of long-lived assets may not be recoverable based upon the existence of one or more of the above indicators of impairment, we estimate the future cash flows expected to result from the use of the assets.

Based upon a review of the carrying value of the long-lived assets of the Rampage stores compared with the estimated future discounted and non-discounted cash flows from the operations of the Rampage stores, we recorded a non-cash impairment charge of $22.5 million in the second quarter of fiscal 2006. This resulted from our unsuccessful efforts to reposition the 64 Rampage stores and the significant deterioration in financial results during the second quarter of fiscal 2006. This charge represented a write down of substantially all of the carrying value of Rampage long-lived assets.

We sold the lease rights, store fixtures and equipment associated with 43 Rampage store locations during the fourth quarter of fiscal 2006. Of the remaining 21 Rampage stores in operation at the beginning of the fourth quarter, we converted eight stores into Charlotte Russe locations and returned 13 properties back to their respective landlords prior to the end of fiscal 2006.

Operating Leases

We record rent expense on noncancellable leases containing known future scheduled rent increases on a straight-line basis over the respective leases beginning when we receive possession of the leased property for construction purposes. The difference between rent expense and rent paid is accounted for as deferred rent. Landlord construction allowances and other such lease incentives are recorded as deferred lease credits, and are amortized on a straight-line basis over the life of the lease as a reduction to rent expense.

Stock Based Compensation

We estimate the fair value of stock options granted using the Black-Scholes option-pricing formula and a multiple option award approach. This fair value is then amortized over the requisite service periods of the awards. This option-pricing model requires the input of highly subjective assumptions, including the option’s expected life, price volatility of the underlying stock, risk free interest rate and expected dividend rate. As stock-based compensation expense is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures. SFAS No. 123(R), “Share-Based Payment,” requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Forfeitures were estimated based on historical experience.

Self-Insurance Liabilities

Based on our assessment of risk and cost efficiency, we self-insure and purchase insurance policies to provide for workers’ compensation, employee group medical benefits, general liability, property losses and director’s and officer’s liability. We estimate risks and record a liability based upon historical claim experience, insurance deductibles, severity factors and other actuarial assumptions. While we believe that our risk assessments are appropriate, to the extent that future occurrences and claims differ from our historical experience, additional charges for insurance may be recorded in future periods.

23

Income Taxes

We account for income taxes using the liability method as prescribed by SFAS No. 109, “Accounting for Income Taxes.” Deferred tax assets and liabilities are recognized based on the differences between the financial statement carrying value of existing assets and liabilities and their respective tax bases. Inherent in the measurement of these deferred balances are certain judgments and interpretations of existing tax law and other published guidance. No valuation allowance has been provided for deferred tax assets, since we anticipate that the full amount of these assets should be realized in the future. Our effective tax rate considers our judgment of expected tax liabilities in the various taxing jurisdictions within which we are subject to tax. The recorded amounts of income tax are subject to adjustment upon audit, changes in interpretation and changes in judgment utilized in determining estimates.

Off-Balance Sheet Arrangements

As of September 30, 2006, we did not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. In addition, we do not engage in trading activities involving non-exchange traded contracts. As such, we are not materially exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in these relationships.

RECENT ACCOUNTING PRONOUNCEMENTS

Information with respect to recent accounting pronouncements is incorporated by reference to Note 1 to our consolidated financial statements for the year ended September 30, 2006, on page F-10.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our market risks relate primarily to changes in interest rates. We bear this risk in two specific ways. First, the Credit Facility carries a variable interest rate that is tied to market indices and, therefore, our statement of income and our cash flows will be exposed to changes in interest rates. As of September 30, 2006, we had no borrowings against the Credit Facility. However, we may borrow funds under the Credit Facility as needed.

The second component of interest rate risk involves the short-term investment of excess cash in short-term, investment-grade interest-bearing securities. These investments are considered to be cash equivalents and are shown that way on our balance sheet. If there are changes in interest rates, those changes would affect the investment income we earn on these investments and, therefore, impact our cash flows and results of operations.

We believe our market risk exposure is minimal.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

Information with respect to this item is incorporated by reference to Item 15 of Part IV of this annual report on Form 10-K, “Exhibits and Financial Statement Schedules.”

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Not applicable.

24

ITEM 9A. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of our disclosure controls and procedures as such item is defined under Rule 13a-15(e) and 15d-15(e) under the Exchange Act. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of September 30, 2006 to provide reasonable assurance that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

During our fourth fiscal quarter ended September 30, 2006, there has been no change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). With the supervision and participation of our Chief Executive Officer and our Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework and the criteria established in Internal Control—Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, our management concluded that our internal control over financial reporting was effective as of September 30, 2006.

Our independent auditor, Ernst & Young LLP, an independent registered public accounting firm, has issued a report on our management’s assessment of our internal control over financial reporting.

Report of Independent Registered Public Accounting Firm

on Internal Control Over Financial Reporting

The Board of Directors and Stockholders of Charlotte Russe Holding, Inc.

We have audited management’s assessment, included in the accompanying Management’s Report on Internal Control Over Financial Reporting, that Charlotte Russe Holding, Inc. maintained effective internal control over financial reporting as of September 30, 2006, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Charlotte Russe Holding, Inc.’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on management’s assessment and an opinion on the effectiveness of the company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

25

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, management’s assessment that Charlotte Russe Holding, Inc. maintained effective internal control over financial reporting as of September 30, 2006, is fairly stated, in all material respects, based on the COSO criteria. Also, in our opinion, Charlotte Russe Holding, Inc. maintained, in all material respects, effective internal control over financial reporting as of September 30, 2006, based on the COSO criteria.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Charlotte Russe Holding, Inc. as of September 30, 2006 and September 24, 2005, and the related consolidated statements of income, stockholders’ equity, and cash flows for each of the three years in the period ended September 30, 2006 and our report dated December 5, 2006 expressed an unqualified opinion thereon.

/s/ ERNST & YOUNG LLP

San Diego, California

December 5, 2006

ITEM 9B. OTHER INFORMATION

Not applicable.

26

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information with respect to this item is incorporated by reference to our definitive Proxy Statement to be filed with the SEC not later than 120 days after the end of our fiscal year.

ITEM 11. EXECUTIVE COMPENSATION

Information with respect to this item is incorporated by reference to our definitive Proxy Statement to be filed with the SEC not later than 120 days after the end of our fiscal year.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Information with respect to this item is incorporated by reference to our definitive Proxy Statement to be filed with the SEC not later than 120 days after the end of our fiscal year.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Information with respect to this item is incorporated by reference to our definitive Proxy Statement to be filed with the SEC not later than 120 days after the end of our fiscal year.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Information with respect to this item is incorporated by reference to our definitive Proxy Statement to be filed with the SEC not later than 120 days after the end of our fiscal year.

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) (1) The financial statements listed in the “Index to Financial Statements” at page F-1 are filed as part of this report.

(a) (2) Schedule II—Valuation and Qualifying Accounts

All schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission other than the ones listed on page F-19 are not required under the related instructions or are not applicable, and therefore, have been omitted.

(a) (3) The exhibits are listed in the Exhibit Index, which is incorporated herein by reference.

(b) See Item 15(a)(3) above.

27

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this annual report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of San Diego, State of California, on the 13th day of December, 2006.

CHARLOTTE RUSSE HOLDING, INC.
By:	/s/    DANIEL T. CARTER
	Daniel T. Carter Executive Vice President, Chief Financial Officer

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints Mark A. Hoffman and Daniel T. Carter, and each of them acting individually, as his true and lawful attorneys-in-fact and agents, each with full power of substitution, for him in any and all capabilities, to sign any and all amendments to this annual report on Form 10-K and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, with full power of each to act alone, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully for all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or his or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this annual report on Form 10-K has been signed by the following persons in the capacities and on the dates indicated:

Signature	Title	Date
/s/    MARK A. HOFFMAN         Mark A. Hoffman	President, Chief Executive Officer and Director (Principal Executive Officer)	December 13, 2006
/s/    DANIEL T. CARTER         Daniel T. Carter	Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer and Principal Accounting Officer)	December 13, 2006
/s/    BERNARD ZEICHNER         Bernard Zeichner	Chairman of the Board	December 13, 2006
/s/    PAUL R. DEL ROSSI         Paul R. Del Rossi	Director	December 13, 2006
/s/    ALLAN W. KARP         Allan W. Karp	Director	December 13, 2006
/s/    LEONARD H. MOGIL         Leonard H. Mogil	Director	December 13, 2006
/s/    MARK J. RIVERS         Mark J. Rivers	Director	December 13, 2006
/s/    JENNIFER C. SALOPEK         Jennifer C. Salopek	Director	December 13, 2006

28

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	Page
Charlotte Russe Holding, Inc.
Report of Independent Registered Public Accounting Firm	F-2
Consolidated Balance Sheets as of September 30, 2006 and September 24, 2005	F-3
Consolidated Statements of Income for the fiscal years ended September 30, 2006, September 24, 2005 and September 25, 2004	F-4
Consolidated Statements of Stockholders’ Equity for the fiscal years ended September 30, 2006, September 24, 2005 and September 25, 2004	F-5
Consolidated Statements of Cash Flows for the fiscal years ended September 30, 2006, September 24, 2005 and September 25, 2004	F-6
Notes to Consolidated Financial Statements	F-7

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders of Charlotte Russe Holding, Inc.:

We have audited the accompanying consolidated balance sheets of Charlotte Russe Holding, Inc. as of September 30, 2006 and September 24, 2005, and the related consolidated statements of income, stockholders’ equity, and cash flows for each of the three years in the period ended September 30, 2006. Our audits also included the financial statement schedule listed in the Index at Item 15 (a)(2). These financial statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Charlotte Russe Holding, Inc. at September 30, 2006 and September 24, 2005, and the consolidated results of its operations and its cash flows for each of the three years in the period ended September 30, 2006, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of Charlotte Russe Holding, Inc.’s internal control over financial reporting as of September 30, 2006, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated December 5, 2006 expressed an unqualified opinion thereon.

As discussed in Note 3 to the Notes to Consolidated Financial Statements, under the heading Stock Based Compensation and Equity, in fiscal 2006 Charlotte Russe Holding, Inc. changed its method of accounting for stock based compensation.

/s/ ERNST & YOUNG LLP

San Diego, California

December 5, 2006

F-2

CHARLOTTE RUSSE HOLDING, INC.

CONSOLIDATED BALANCE SHEETS

	September 30, 2006		September 24, 2005
ASSETS
Current assets:
Cash and cash equivalents	$	90,229,040	$	33,629,488
Inventories		44,864,617		45,133,407
Landlord allowances receivable		8,183,959		6,372,650
Other current assets		3,196,891		4,718,321
Deferred tax assets		6,010,000		7,450,000
Current assets of discontinued operations		—		13,017,745
Total current assets		152,484,507		110,321,611
Fixed assets, net		177,577,999		164,624,905
Goodwill		28,790,000		28,790,000
Other assets		666,216		590,682
Non-current assets of discontinued operations		—		24,808,481
Total assets	$	359,518,722	$	329,135,679
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable, trade	$	24,418,975	$	27,424,360
Accounts payable, other		8,162,766		6,776,763
Accrued payroll and related expense		6,908,204		3,172,205
Income and sales taxes payable		5,648,541		3,095,810
Other current liabilities		10,002,442		9,787,015
Current liabilities of discontinued operations		—		8,396,847
Total current liabilities		55,140,928		58,653,000
Deferred rent		97,773,445		91,341,325
Other liabilities		—		43,894
Deferred tax liabilities		150,000		1,440,000
Non-current liabilities of discontinued operations		—		10,547,226
Total liabilities		153,064,373		162,025,445
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.01 par value, 3,000,000 shares authorized, none issued and outstanding		—		—
Common stock, $0.01 par value, 100,000,000 shares authorized; issued and outstanding shares 24,878,050 and 22,037,432 at September 30, 2006 and September 24, 2005, respectively		248,780		220,375
Additional paid-in capital		64,902,477		50,724,713
Retained earnings		141,303,092		116,165,146
Total stockholders’ equity		206,454,349		167,110,234
Total liabilities and stockholders’ equity	$	359,518,722	$	329,135,679

See accompanying notes.

F-3

CHARLOTTE RUSSE HOLDING, INC.

CONSOLIDATED STATEMENTS OF INCOME

	Years Ended
	September 30, 2006			September 24, 2005			September 25, 2004
Net sales	$	681,504,354		$	511,259,199		$	449,034,712
Cost of goods sold, including buying, distribution and occupancy costs		491,664,618			377,233,015			327,259,699
Gross profit		189,839,736			134,026,184			121,775,013
Selling, general and administrative expenses		130,802,240			107,656,316			93,512,907
Operating income		59,037,496			26,369,868			28,262,106
Other income (expense):
Interest income, net		2,857,852			868,440			303,067
Other charges, net		(269,293	)		(261,079	)		(274,901	)
Total other income		2,588,559			607,361			28,166
Income from continuing operations before income taxes		61,626,055			26,977,229			28,290,272
Income taxes		24,465,544			10,170,415			11,033,206
Income from continuing operations		37,160,511			16,806,814			17,257,066
Loss on discontinued operations, net of tax (Note 2)		12,022,565			6,005,485			2,173,406
Net income	$	25,137,946		$	10,801,329		$	15,083,660

Earnings per share—basic:
Continuing operations	$	1.65		$	0.76		$	0.80
Discontinued operations		(0.54	)		(0.27	)		(0.10	)
Basic	$	1.11		$	0.49		$	0.70
Earnings per share—diluted:
Continuing operations	$	1.50		$	0.70		$	0.72
Discontinued operations		(0.49	)		(0.25	)		(0.09	)
Diluted	$	1.01		$	0.45		$	0.63
Weighted average shares outstanding:
Basic		22,560,110			21,994,665			21,567,205
Diluted		24,789,094			24,062,215			23,993,019

See accompanying notes.

F-4

CHARLOTTE RUSSE HOLDING, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

	Common Stock			Additional Paid-in Capital			Deferred Compensation			Retained Earnings		Total Stockholders’ Equity
	Shares	Amount
Balance at September 27, 2003	21,290,182	$	212,902	$	44,498,540		$	(63,000	)	$	90,280,157	$	134,928,599
Stock option transactions, including tax benefits	641,100		6,411		5,630,549			—			—		5,636,960
Amortization of deferred compensation	—		—		—			63,000			—		63,000
Issuance of stock under employee stock purchase plan	19,645		196		200,705			—			—		200,901
Stock offering costs	—		—		(300,000	)		—			—		(300,000	)
Net income and comprehensive income	—		—		—			—			15,083,660		15,083,660
Balance at September 25, 2004	21,950,927		219,509		50,029,794			—			105,363,817		155,613,120
Stock option transactions, including tax benefits	64,500		646		506,596			—			—		507,242
Issuance of stock under employee stock purchase plan	22,005		220		188,323			—			—		188,543
Net income and comprehensive income	—		—		—			—			10,801,329		10,801,329
Balance at September 24, 2005	22,037,432		220,375		50,724,713			—			116,165,146		167,110,234
Stock option transactions, including tax benefits	858,070		8,580		10,444,010			—			—		10,452,590
Issuance of stock under employee stock purchase plan	17,108		171		232,110			—			—		232,281
Exercise of warrants	1,965,440		19,654		1,944,756			—			—		1,964,410
Stock offering costs	—		—		(400,000	)		—			—		(400,000	)
Stock based compensation expense	—		—		1,956,888			—			—		1,956,888
Net income and comprehensive income	—		—		—			—			25,137,946		25,137,946
Balance at September 30, 2006	24,878,050	$	248,780	$	64,902,477		$	—		$	141,303,092	$	206,454,349

See accompanying notes.

F-5

CHARLOTTE RUSSE HOLDING, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Years Ended
	September 30, 2006			September 24, 2005			September 25, 2004
Operating Activities
Net income	$	25,137,946		$	10,801,329		$	15,083,660
Adjustments to reconcile net income to net cash provided by operating activities of continuing operations:
Net loss on discontinued operations		12,022,565			6,005,485			2,173,406
Depreciation and amortization		33,177,265			28,001,259			23,086,168
Amortization of construction allowances		(11,376,892	)		(9,670,654	)		(7,359,386	)
Landlord construction allowances		16,138,537			19,108,088			12,715,664
Deferred rent		1,670,475			2,382,341			1,745,143
Stock based compensation		1,956,888			—			—
Amortization of deferred compensation		—			—			63,000
Loss on disposal of assets		42,110			593,577			581,685
Deferred income taxes		150,000			(3,410,000	)		600,000
Changes in operating assets and liabilities:
Inventories		268,790			(6,063,698	)		(12,502,305	)
Other current assets		(289,879	)		(3,560,559	)		(2,511,570	)
Accounts payable, trade		(3,005,385	)		5,708,702			5,352,414
Accounts payable, other		1,386,003			(1,973,019	)		2,292,650
Accrued payroll and related expense		3,735,999			(577,478	)		1,543,707
Income and sales taxes payable		2,552,731			1,274,562			2,968,080
Other current liabilities		215,427			556,257			535,036
Other liabilities		(43,894	)		—			(268,883	)
Net cash provided by operating activities of continuing operations		83,738,686			49,176,192			46,098,469
Net cash provided by (used in) operating activities of discontinued operations		7,030,087			(1,113,710	)		1,997,014
Net cash provided by operating activities		90,768,773			48,062,482			48,095,483
Investing Activities
Purchases of fixed assets		(46,126,801	)		(43,973,875	)		(34,495,986	)
Other assets		(121,202	)		(365,684	)		99,145
Net cash used in investing activities of continuing operations		(46,248,003	)		(44,339,559	)		(34,396,841	)
Net cash used in investing activities of discontinued operations		(170,499	)		(1,291,208	)		(8,161,370	)
Net cash used in investing activities		(46,418,502	)		(45,630,767	)		(42,558,211	)
Financing Activities
Proceeds from issuance of common stock		8,898,602			546,130			2,509,754
Excess tax benefit of stock option exercises		3,750,679			—			—
Stock offering costs		(400,000	)		—			(300,000	)
Net cash provided by financing activities		12,249,281			546,130			2,209,754
Net increase in cash and cash equivalents		56,599,552			2,977,845			7,747,026
Cash and cash equivalents at beginning of the year		33,629,488			30,651,643			22,904,617
Cash and cash equivalents at end of the year	$	90,229,040		$	33,629,488		$	30,651,643

See accompanying notes.

F-6

CHARLOTTE RUSSE HOLDING, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Organization and Summary of Significant Accounting Policies

Organization

Charlotte Russe Holding, Inc. (the “Company”) was incorporated in Delaware in July 1996. On September 27, 1996, the Company was capitalized through the issuance of Common Stock and long-term debt. Effective September 27, 1996, the Company acquired all of the stock of Lawrence Merchandising Corporation, a California corporation, and its affiliates, Lawrence Merchandising Corporation of Nevada and Lawrence Merchandising Corporation of Nevada II, both Nevada corporations, (collectively, the “Predecessor” companies) for approximately $35.0 million in cash. In addition, the Company repaid $5.0 million of the Predecessor’s short-term borrowings concurrent with the consummation of the purchase transaction. The acquisition was accounted for using the purchase method of accounting. The excess of the aggregate purchase price over the fair value of net assets acquired of approximately $32.9 million was recognized as goodwill.

Description of Business

The Company is comprised entirely of specialty retail operations. It distributes and sells apparel and accessories to young women through its mall-based retail concepts which are labeled as either Charlotte Russe and Rampage. As of September 30, 2006, the Company operated 387 Charlotte Russe retail stores in 43 states and Puerto Rico, and all previously operated Rampage stores had been sold, closed or converted into Charlotte Russe stores prior to the end of fiscal 2006.

The Company has evaluated the guidance provided by SFAS 131, “Disclosures about Segments of an Enterprise and Related Information,” and has aggregated its business into one reportable segment. Such disclosure was deemed appropriate given that these two concepts sold similar merchandise to similar customers, sourced and distributed merchandise under the same processes, operated in the same business and regulatory environments, and both operated in similar regional shopping malls. The merchandise planning and allocation processes, distribution center operations, central office support functions, and field management organization simultaneously supported both store concepts. The level of integration of management activities between the two store concepts is intertwined and seamless such that separation of activities between the two concepts can not be accurately discerned.

Principles of Consolidation

The accompanying consolidated financial statements, prepared in accordance with accounting principles generally accepted in the United States of America, include the assets, liabilities, revenues and expenses of all wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

Fiscal Year

The Company’s fiscal year is the 52/53 week period ending on the last Saturday in September. All years presented contained 52 weeks, except for fiscal 2006 which contained 53 weeks.

Use of Estimates

The preparation of the accompanying consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and disclosed in the accompanying notes. Actual results could differ from these estimates.

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Cash Equivalents

The Company considers all liquid investments with maturities of three months or less when purchased to be cash equivalents.

Inventories

Inventories consist primarily of apparel and accessories purchased for resale. Inventories are accounted for by the retail inventory method. The cost of inventory is determined at the lower of the first-in, first-out (FIFO) method or market.

Fixed Assets

Fixed assets are stated at cost. Depreciation of fixtures and equipment is computed using the straight-line method over the estimated useful lives of the assets, generally five to seven years. Leasehold improvements are amortized on a straight-line basis over the estimated useful lives of the respective assets or the term of the lease, whichever is shorter. Maintenance, repairs and minor renewals are charged to expense when incurred. Upon disposition of an asset, its accumulated depreciation is deducted from the original cost, and any gain or loss is reflected in current operations. Depreciation expense for the fiscal years ended September 30, 2006, September 24, 2005 and September 25, 2004 amounted to $34,113,057, $32,969,006, and $27,650,425, respectively.

Goodwill

Goodwill represents the excess of the cost over the fair value of net assets acquired. The Company adopted Statement of Financial Accounting Standards (“SFAS”) No. 142, “Goodwill and Other Intangible Assets,” at the beginning of fiscal 2002. SFAS No. 142 requires that goodwill be tested annually for impairment or more frequently if events and circumstances warrant, utilizing a test that begins with an estimate of the fair value of the reporting unit or intangible asset. The Company tests goodwill annually and whenever events or circumstances occur indicating that goodwill might be impaired.

Impairment of Long-lived Assets

In accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” whenever events or changes in circumstances indicate that the carrying amount of its assets might not be recoverable, the Company, using its best estimates based upon reasonable and supportable assumptions and projections, reviews the carrying value of long-lived assets for impairment.

Impairment for long-lived assets to be held is measured by comparing the carrying amount of the asset to its fair value. Impairment is reviewed at the lowest levels for which there are identifiable cash flows that are independent of the cash flows of other groups of assets. The Company performs such analysis on an individual store basis and estimates fair values based on sales prices for comparable assets. The Company measures impairment for long-lived assets to be disposed of at the lower of the carrying amount or net realizable value (fair market value less cost to dispose). See Note 2 for a discussion of the $22.5 million impairment charge taken in the second quarter of fiscal 2006 associated with the Rampage long-lived assets.

Deferred Rent

Rent expense on noncancellable leases containing known future scheduled rent increases are recorded on a straight-line basis over the term of the respective leases beginning when the Company receives possession of the leased property for construction purposes. The difference between rent expense and rent paid is accounted for as deferred rent. Landlord construction allowances and other such lease incentives are recorded as deferred lease credits and are amortized on a straight-line basis as a reduction to rent expense.

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Income Taxes

The Company accounts for income taxes using the liability method as prescribed by SFAS No. 109 “Accounting for Income Taxes.” Deferred tax assets and liabilities are recognized based on the differences between the financial statement carrying value of existing assets and liabilities and their respective tax bases. Inherent in the measurement of these deferred balances are certain judgments and interpretations of existing tax law and other published guidance. No valuation allowance has been provided for deferred tax assets, since management anticipates that the full amount of these assets should be realized in the future. The Company’s effective tax rate considers the judgment of expected tax liabilities in the various taxing jurisdictions within which it is subject to tax.

Revenue Recognition

Retail merchandise sales are recognized at the point of sale. A reserve is provided for the impact of anticipated returns based on historical experience. The Company’s policy with respect to gift cards is to record revenue as the gift cards are redeemed for merchandise. Prior to their redemption, unredeemed gift cards are recorded as a liability and are included within other current liabilities. Beginning with the second quarter of fiscal 2006, the gift card liability balances are adjusted on a quarterly basis to recognize estimated unredeemed amounts under the redemptive recognition method. This method records gift card breakage as additional sales on a proportional basis over the redemption period based on historical redemption trends. Such adjustments are included in net sales and operating income.

Advertising Costs

Advertising costs are expensed as incurred and amounted to $189,250, $422,410, $497,486 for the fiscal years ended September 30, 2006, September 24, 2005 and September 25, 2004, respectively.

Vendor Allowances

The Company receives certain allowances from its vendors primarily related to distribution center handling expenses or defective merchandise. These allowances are reflected as a reduction of merchandise inventory in the period they are received and allocated to cost of sales during the period in which the items are sold.

Store Pre-opening Costs

Costs incurred in connection with the opening of a new store are expensed as incurred.

Earnings Per Share

Basic earnings per share is calculated based on the weighted average outstanding common shares. Diluted earnings per share is calculated based on the weighted average outstanding shares and potentially dilutive stock options and warrants.

Comprehensive Income

The Company reports comprehensive income in accordance with the provisions of SFAS 130, “Reporting Comprehensive Income.” SFAS 130 established standards for the reporting and display of comprehensive income. Components of comprehensive income could include net income, foreign currency translation adjustments and gains or losses associated with investments available for sale. There was no difference between net income and comprehensive income for any of the periods presented.

Fair Value of Financial Instruments

Financial instruments, including cash equivalents, accounts payable, accrued expenses and income tax payable are carried at cost, which management believes approximates fair value because of the short-term maturity of these instruments. There was no long-term debt at September 30, 2006 or September 24, 2005.

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Recent Accounting Pronouncements

In June 2006, the FASB issued Interpretation No. 48 (“FIN 48”), “Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109”. FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with FASB Statement No. 109, Accounting for Income Taxes. FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. FIN 48 is effective for fiscal years beginning after December 15, 2006. The Company is in the process of determining the impact that the adoption of FIN 48 will have on its financial position and results of operations.

2. Discontinued Operations

The Company’s efforts to reposition the Rampage stores proved unsuccessful and management determined that sufficient indicators of impairment of the Rampage long-lived assets existed as of March 25, 2006. These assets principally consisted of the store leasehold improvements, store fixtures and store equipment. As a result, a $22.5 million non-cash impairment charge was recorded in the second quarter of fiscal 2006 to write down substantially all of the carrying value of the Rampage long-lived assets as of March 25, 2006.

During the third quarter of fiscal 2006, management completed an evaluation of the strategic alternatives for the Rampage stores. That review indicated that certain assets for a majority of the 64 Rampage stores could be sold, based upon specific interest shown by other retailers, while the remaining stores could either be closed or converted to the Charlotte Russe format. In the fourth quarter of fiscal 2006, the lease rights, store fixtures and equipment associated with 43 Rampage store locations were sold for approximately $13.6 million. Of the remaining 21 Rampage stores in operation at the beginning of the fourth quarter, the Company converted eight stores into Charlotte Russe locations and returned 13 properties back to their respective landlords prior to the end of fiscal 2006.

As a result, operating results for all Rampage stores have been segregated and shown as discontinued operations in the accompanying Consolidated Statements of Income. Details of those results were as follows:

	Years Ended
	September 30, 2006			September 24, 2005		September 25, 2004
Net sales	$	67,484,296		$	92,496,619	$	90,369,237
Loss from operations	$	18,790,301		$	9,639,622	$	3,562,960
Impairment charges		22,500,000			—		—
Gain on disposition of assets		(21,352,383	)		—		—
		19,937,918			9,639,622		3,562,960
Income tax benefit		7,915,353			3,634,137		1,389,554
Net loss on discontinued operations	$	12,022,565		$	6,005,485	$	2,173,406

In addition, the Company has segregated the assets and liabilities related to the Rampage stores and shown them as assets and liabilities of discontinued operations in the accompanying Consolidated Balance Sheets. As of September 30, 2006, there were no assets or liabilities that required segregation.

3. Stock Based Compensation and Equity

Stock Plan Activity

Under the 1999 Equity Incentive Plan (the “Plan”), the Company grants stock options to purchase common stock to some of its employees and non-employee directors at prices equal to the market value of the common

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stock on the date of grant. Although the Plan allows for issuance of incentive stock options, stock appreciation rights, restricted stock, unrestricted stock awards, deferred stock awards and performance awards, no such awards have been granted to date. Stock options generally vest ratably over five years and expire after 10 years. Outstanding awards that were previously granted under predecessor plans also remain in effect in accordance with their terms. Stock option activity for the past three fiscal years is as follows:

	Options		Weighted Average Exercise Price Per Share		Weighted Average Remaining Term	Aggregate Intrinsic Value
Outstanding at September 27, 2003	2,305,570		$	8.35	6.4	$	7,944,452
Granted	185,000			14.34			—
Cancelled	(159,300	)		11.29			—
Exercised	(641,100	)		3.60		$	9,244,741
Outstanding at September 25, 2004	1,690,170			10.54	6.4	$	4,904,726
Granted	589,500			12.18			—
Cancelled	(253,200	)		12.05			—
Exercised	(64,500	)		5.54		$	415,708
Outstanding at September 24, 2005	1,961,970			11.00	6.4	$	7,241,924
Granted	765,500			22.00
Cancelled	(247,700	)		12.77
Exercised	(858,070	)		7.81		$	11,399,839
Outstanding at September 30, 2006	1,621,700		$	17.61	8.0	$	16,110,603

Intrinsic value is defined as the difference between the relevant current market value of the common stock and the grant price for options with exercise prices less than the market values on such dates. Cash received from stock options exercised during fiscal 2006 was $6.7 million and the actual tax benefit realized from these exercises was $4.1 million.

Options outstanding and exercisable at September 30, 2006 were as follows:

	Options Outstanding						Options Exercisable
Exercise Prices	Outstanding	Weighted Average Remaining Term	Weighted Average Exercise Price Per Share		Aggregate Intrinsic Value		Outstanding	Weighted Average Exercise Price Per Share		Aggregate Intrinsic Value
$4.00—$12.00	451,200	6.7	$	10.65	$	7,618,963	182,500	$	10.54	$	3,103,413
$12.01—$16.00	411,500	8.5		14.17		5,502,990	78,700		13.75		1,085,509
$16.01—$20.00	71,000	9.1		18.31		655,614	2,500		18.90		21,600
$20.01—$24.00	205,500	5.3		20.23		1,501,589	194,100		20.19		1,427,411
$24.01—$27.00	482,500	9.9		25.82		831,447	7,400		26.68		6,339
	1,621,700	8.0	$	17.61	$	16,110,603	465,200	$	15.41	$	5,644,272

Subject to adjustments for stock splits and similar events, there were a total of 2,250,000 shares authorized under the Plan at September 24, 2005. On February 7, 2006, an additional 1,000,000 shares was authorized by the Company’s stockholders. Of the 3,250,000 shares authorized, 897,700 were available for future issuance at September 30, 2006. There were 195,570 shares available for future purchase under the Company’s Employee Stock Purchase Plan at September 30, 2006.

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Accounting for Stock Based Compensation Expense

Prior to the beginning of fiscal 2006, the Company did not record compensation expense for its stock based compensation plans, except for options granted just prior to the Company’s initial public offering for 120,000 shares, as such treatment was permitted under the provisions of Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees,” related interpretations, and SFAS 123, “Accounting for Stock-Based Compensation.” The Company provided the requisite pro forma disclosures and complied with provisions of SFAS 148, “Accounting for Stock-Based Compensation—Transition and Disclosures.”

Effective the beginning of fiscal 2006, the Company adopted the fair value recognition provisions of SFAS 123(R), “Share-Based Payment,” using the modified prospective transition method. Under this transition method, compensation expense includes options vesting for (1) share-based payments granted prior to, but not vested as of September 24, 2005, based on the grant date fair value estimated in accordance with the original provisions of SFAS 123; (2) share-based payments granted after September 24, 2005, based on the grant date fair value estimated in accordance with the provisions of SFAS 123(R); and (3) shares sold under the ESPP after September 24, 2005, based on calculations of fair value which are similar to how stock option valuations are made. Because this transition method was selected, results of prior periods have not been restated.

The Company recognized the following stock based compensation expense for its stock option and employee stock purchase plans during fiscal 2006:

	Year Ended September 30, 2006
Selling, general and administrative expenses	$	1,460,599
Cost of goods sold		496,289
Compensation expense		1,956,888
Income tax benefit		776,885
Reduction of net income	$	1,180,003
Reduction of earnings per share:
Basic	$	0.05
Diluted	$	0.05

As of September 30, 2006, there was $4.2 million (before any related tax benefit) of unrecognized compensation expense related to nonvested share based compensation that is expected to be recognized over a weighted average period of 2.3 years. The fair value of shares vested during fiscal 2006 was $2.7 million.

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The following table illustrates the effect on net income and net income per share if the Company had applied the fair value recognition provisions of SFAS 123(R) to share based compensation using the Black-Scholes valuation model with straight-line amortization of the expense over the respective vesting periods of the awards:

	Years Ended
	September 30, 2006	September 24, 2005		September 25, 2004
Net income, as reported		$10,801,329		$15,083,660
Less: Share based compensation expense determined under fair value method, net of income taxes		(858,800	)	(1,230,555	)
Net income, including share based compensation expense	$25,137,946	$  9,942,529		$13,853,105
Earnings per share:
Basic—as reported	$1.11	$0.49		$0.70
Basic—pro forma	$1.11	$0.45		$0.64
Diluted—as reported	$1.01	$0.45		$0.63
Diluted—pro forma	$1.01	$0.41		$0.58

Prior to the beginning of fiscal 2006, the Company presented the benefit of all tax deductions resulting from stock based compensation plans as operating cash flows in the Statements of Cash Flows. With the adoption of SFAS 123(R) the Company is required to reflect the benefit of tax deductions in excess of the compensation expense recognized in its financial statements for those options (“excess tax credits”) to be classified as a financing cash flow.

Stock Purchase Plan

On September 27, 1999, the Company approved the adoption of the 1999 Employee Stock Purchase Plan (“the ESPP”), which authorized up to 350,000 shares of Common Stock available for employee purchase through payroll deductions at 85% of fair market value. All eligible employees of the Company may participate. Eligibility is defined as those employees who have completed at least six months of employment and work at least 20 hours per week, except for employees who own Common Stock or options on such Common Stock that represents 5% or more of the Company total equity ownership. There were 17,108, 22,005 and 19,645 shares issued under the ESPP during the fiscal years ended September 30, 2006, September 24, 2005 and September 25, 2004, respectively.

Warrants

In conjunction with the issuance of two senior subordinated note agreements in September 1996 with affiliated investors that were paid off in June 1999, the Company issued warrants to purchase 1,964,410 shares of Common Stock at $1.00 per share. The number of shares of Common Stock issuable under these warrants was increased by an aggregate of 1,030 shares pursuant to certain anti-dilution provisions. The warrants were fully exercised during September 2006 with the issuance of 1,965,440 shares of common stock upon receipt of $1,964,410.

Shares Reserved for Future Issuance

	September 30, 2006	September 24, 2005
Warrants issued and outstanding	—	1,965,440
Stock options issued and outstanding	1,621,700	1,961,970
Common shares authorized for future stock option grants	897,700	415,500
Shares authorized for issuance under Employee Stock Purchase Plan	195,570	212,678
Shares reserved for future issuance	2,714,970	4,555,588

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Calculation of Fair Value of Stock Options

The Company estimates the fair value of stock options granted using the Black-Scholes option valuation model and a multiple option award approach. The expected life of options represents the period of time the options are expected to be outstanding and is based on historical trends and other subjective factors. The expected stock volatility is based on the average of historical volatility of the Company’s common stock and other subjective factors. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time awards are granted, and the expected dividend rate takes into account the absence of any historical payments and management’s intention to retain all earnings for future operations and expansion.

The following table presents the weighted average assumptions used in the pricing model for stock options granted during the following periods:

	Years Ended
Stock Options:	September 30, 2006			September 24, 2005			September 25, 2004
Expected life (years)		3.9			4.0			4.0
Expected volatility		48	%		47	%		55	%
Expected dividend yield		0	%		0	%		0	%
Risk-free interest rate		4.6	%		4.0	%		3.3	%
Fair value per option granted	$	9.03		$	7.02		$	6.09

4. Fixed Assets

A summary of fixed assets is as follows:

	September 30, 2006			September 24, 2005
Leasehold improvements	$	239,228,916		$	209,740,945
Furniture and fixtures		21,221,343			18,234,757
Equipment and other		56,722,306			46,102,611
		317,172,565			274,078,313
Less: Accumulated depreciation and amortization		(139,594,566	)		(109,453,408	)
	$	177,577,999		$	164,624,905

5. Credit Arrangement

On June 24, 2005, the Company entered into a new $40.0 million secured revolving credit facility (the “Credit Facility”) with Bank of America, N.A., which expires on June 30, 2010. Under the terms of the Credit Facility, the Company may borrow up to the maximum borrowing limit of $40 million less any outstanding letters of credit, and the Company has set the initial loan ceiling amount at $30 million. Interest on the Credit Facility is payable quarterly, at the Company’s option, at either (i) the Bank’s prime rate plus 0.50% to 1.00%, or (ii) 1.00% to 1.50% over the average interest settlement rate for deposits in the London interbank market banks (“Eurodollar Rate”) subject to certain adjustments. The Company’s ability to receive loan advances under the Credit Facility is subject to the continued compliance with various covenants, representations, warranties, and conditions, including but not limited to negative covenants against the incurrence of debt or liens. The Credit Facility also contains events of default customary for facilities of this type and provides that, upon the occurrence of an event of default, payment of all outstanding loans may be accelerated and/or the lenders’ commitments may be terminated. Pursuant to this agreement, the Company and the Company’s wholly-owned subsidiaries have (i) provided an unconditional guarantee of the full and punctual payment of obligations under the Credit Facility, (ii) pledged certain of the securities of the Company’s subsidiaries to the collateral agent as security for the full payment and performance of the Company’s obligations

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under the Credit Facility and (iii) granted a security interest in essentially all of the Company’s personal property as security for the full payment and performance of the obligations under the Credit Facility. At September 30, 2006, there was no outstanding debt under the Credit Facility and the Company was in compliance with the terms of the bank credit agreement. As of September 30, 2006, the Company had $22.5 million of borrowing availability under the Credit Facility.

Pursuant to the terms of the new secured credit facility, the Company can issue up to $20.0 million of documentary or standby letters of credit. The Company is charged a fee equal to the Bank’s Eurodollar Rate for the average daily face amount of outstanding letters of credit and customary issuance and amendment charges. Fees are paid quarterly in arrears and charges are paid as incurred. At September 30, 2006, there were outstanding letters of credit in the amount of $7.5 million.

6. Commitments and Contingencies

Leases

The Company leases its retail stores, distribution centers, and office facilities under various non-cancelable operating leases that expire between 2006 and 2016. Under certain retail store leases, the Company is required to pay the greater of a minimum lease payment or 5% to 11% of annual sales volume. Rent expense, including reimbursement of the Company’s proportional share of common area maintenance expenses, for the years ended September 30, 2006, September 24, 2005 and September 25, 2004 amounted to $121,609,201, $110,374,420 and $90,258,119, respectively, including $6,521,367, $4,973,267, $4,839,557, respectively, of contingent rentals.

As of September 30, 2006, aggregate future minimum rentals are as follows:

	Operating Leases
Fiscal Year Ending September:
2006	$	67,500,827
2007		67,476,239
2008		66,128,183
2009		62,375,962
2010		55,192,974
Thereafter		138,084,508
Total future minimum lease payments	$	456,808,694

During fiscal 2006, the Company sold lease rights for 43 locations that were formerly operated as Rampage stores to Forever 21 Retail, Inc., and its parent company guaranteed its obligations under the leases that it assumed. In the event of default, the Company could be liable for obligations associated with 39 real estate leases which have future lease payments (undiscounted) of approximately $50.8 million through the end of fiscal 2016 which are not reflected in the table above. The scheduled future minimum rentals for these leases over the next five fiscal years and thereafter are $9.1 million, $8.5 million, $8.6 million, $8.2 million, $7.1 million and $9.3 million, respectively. Management believes that the likelihood of material liability being triggered under these leases is remote, and no liability has been accrued for these contingent lease obligations as of September 30, 2006.

License Agreement

In conjunction with the acquisition of Rampage assets on September 30, 1997, the Company entered into a license agreement enabling the Company to operate stores under the Rampage name. The license fee is calculated as the greater of an annual fee (ranging between $600,000 to $750,000) or a percent of sales at stores operating under the Rampage name (ranging between 0.5% and 1.0%).

The license agreement had an initial term that expires in 2012. Consistent with the Company’s decision to dispose of the Rampage stores, a termination of this agreement was negotiated which required the Company to pay an early termination fee of $1.4 million. The accrual for this charge is included within other current liabilities

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in the accompanying balance sheet at September 30, 2006. License fees incurred during the fiscal years ended September 30, 2006, September 24, 2005 and September 25, 2004 were $2,176,661, $924,689, $902,781, respectively, and are included in selling, general and administrative expenses in the accompanying consolidated statements of income.

Litigation

From time to time, the Company may be involved in litigation relating to claims arising out of our operations. As of the date of this filing, the Company is not engaged in any legal proceedings that are expected, individually or in the aggregate, to have a material adverse effect on our business, financial condition or results of operations.

7. Income Taxes

Income taxes consist of the following:

	Years Ended
	September 30, 2006			September 24, 2005			September 25, 2004
Current:
Federal	$	20,368,998		$	11,388,083		$	8,553,161
State		4,135,957			2,185,032			1,958,945
		24,504,955			13,573,115			10,512,106
Deferred:
Federal		45,789			(2,993,800	)		335,700
State		(85,200	)		(408,900	)		185,400
		(39,411	)		(3,402,700	)		521,100
	$	24,465,544		$	10,170,415		$	11,033,206

A reconciliation of the calculated income tax provision based on statutory tax rates in effect and the effective tax rate follows:

	Years Ended
	September 30, 2006		September 24, 2005			September 25, 2004
Tax at U.S. statutory rates	$	21,569,119	$	9,442,030		$	9,901,595
State income taxes, net of federal tax benefit		2,703,843		1,052,112			1,351,567
Non-deductible expenses		23,723		23,788			50,782
Other, net		168,859		(347,516	)		(270,737	)
	$	24,465,544	$	10,170,415		$	11,033,206

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The Company has not recorded a valuation allowance for all periods presented as the utilization of the deferred tax assets is deemed to be more likely than not.

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Significant components of the Company’s deferred tax liabilities and assets are as follows:

	September 30, 2006			September 24, 2005
Deferred tax assets:
Inventory	$	2,946,602		$	3,583,838
Deferred rent		38,876,584			39,622,971
Employee benefit programs		1,366,343			1,299,142
Stock based compensation		305,046			—
State income taxes		389,013			152,969
Other accrued expenses		1,392,009			2,414,050
		45,275,597			47,072,970
Deferred tax liabilities:
Tax over book depreciation		(37,152,985	)		(39,053,432	)
Intangibles		(2,262,612	)		(2,009,538	)
		(39,415,597	)		(42,062,970	)
Net deferred tax assets	$	5,860,000		$	6,010,000

8. Supplemental Cash Flows Disclosures

	Years Ended
	September 30, 2006		September 24, 2005		September 25, 2004
Income tax benefit of stock option transactions	$	4,103,942	$	149,655	$	3,328,107
Cash paid during the year for:
Interest	$	76,817	$	61,378	$	50,607
Income taxes	$	8,460,553	$	10,145,081	$	7,418,618

9. Related Party Transactions

The Company, its Chairman of the Board and two funds managed by Apax Partners, L.P. (“Apax”), entered into a stockholders’ agreement in 1999. This agreement provides that, among other things: (1) as long as Apax owns more than 25% of the Company’s outstanding shares, it will have the right to nominate three directors, and (2) as long as Apax owns at least 1,820,735 shares of Common Stock, including shares of Common Stock issuable upon exercise of outstanding warrants, it will have the right to nominate two directors. The stockholders agreement also grants, subject to limitations and exceptions and only so long as Apax owns at least 1,820,735 shares, demand registration rights to Apax. The Company is responsible for certain costs of these registered offerings. Lastly, as long as Apax owns at least 1,820,735 shares, the Company is required to pay an annual fee of $250,000 in exchange for certain financial advisory services.

In conjunction with a securities offering in fiscal 2006, Apax’s holdings of the Company’s common stock were reduced below 1,820,735 shares, as a result of which provisions of the agreement with Apax discussed above are no longer in effect.

Pursuant to this agreement, the Company incurred financial advisory service fees of $250,000 in each of the past three fiscal years. In addition, the Company incurred certain costs of registered offerings in which shares were sold by Apax of $400,000 and $300,000 during the fiscal years ended September 30, 2006, and September 25, 2004, respectively. Given the historical nature of this obligation, these costs are treated as reductions to stockholders’ equity as an offset to proceeds received from shares sold by the Company, if any.

F-17

For the fiscal year ended September 25, 2004, the Company purchased approximately $235,000 of merchandise from a company primarily owned by family members of the Company’s Chairman of the Board. No purchases were made in any subsequent fiscal years. There were no related party accounts payable balances at September 30, 2006, or September 24, 2005.

10. Employee Savings Plan

The Company has an Internal Revenue Code Section 401(k) profit-sharing plan (the “Plan”) for eligible employees. The Plan is funded by employee contributions and provides for the Company to make discretionary contributions. The Company matches 25% of participants’ contributions up to 4% of eligible compensation. Amounts contributed and expensed under this plan were approximately $128,147, $126,954 and $113,300 for the fiscal years ended September 30, 2006, September 24, 2005 and September 25, 2004, respectively.

11. Earnings Per Share

	Years Ended
	September 30, 2006		September 24, 2005		September 25, 2004
Income from continuing operations	$37,160,511		$16,806,814		$17,257,066
Loss on discontinuing operations	(12,022,565	)	(6,005,485	)	(2,173,406	)
Net income	$25,137,946		$10,801,329		$15,083,660
Net income from continuing operations per share:
Basic	$ 1.65		$ 0.76		$ 0.80
Effect of dilutive warrants	(0.12	)	(0.05	)	(0.06	)
Effect of dilutive stock options	(0.03	)	(0.01	)	(0.02	)
Diluted	$ 1.50		$ 0.70		$ 0.72
Weighted average number of shares:
Basic	22,560,110		21,994,665		21,567,205
Effect of dilutive warrants	1,819,375		1,804,541		1,840,567
Effect of dilutive stock options	409,609		263,009		585,247
Diluted	24,789,094		24,062,215		23,993,019

The calculation of dilutive shares excludes the effect of the following options and warrants that are considered anti-dilutive:

	Years Ended
	September 30, 2006	September 24, 2005	September 25, 2004
Anti-dilutive options and warrants	117,229	544,795	217,908

F-18

SCHEDULE II

CHARLOTTE RUSSE HOLDING, INC.

VALUATION AND QUALIFYING ACCOUNTS

Three fiscal years ended September 30, 2006

(amounts in thousands)

	Balance at Beginning of Year		Additions Charged to Income		Adjustments and Deductions		Balance at End of Year
Fiscal year ended September 25, 2004:
Reserve for markdown of inventory	$	3,500	$	3,800	$	3,500	$	3,800
Allowance for effect of sales returns		750		700		600		850
Reserve for inventory shrinkage		174		6,167		6,128		213
Fiscal year ended September 24, 2005:
Reserve for markdown of inventory	$	3,800	$	2,583	$	1,383	$	5,000
Allowance for effect of sales returns		850		650		400		1,100
Reserve for inventory shrinkage		213		5,647		5,493		367
Fiscal year ended September 30, 2006:
Reserve for markdown of inventory	$	5,000	$	3,600	$	4,500	$	4,100
Allowance for effect of sales returns		1,100		634		824		910
Reserve for inventory shrinkage		367		8,675		8,696		346

F-19

EXHIBIT INDEX

(a) Exhibits marked with an asterisk are filed herewith. The remainder of the exhibits have heretofore been filed with the SEC and are incorporated herein by reference.

Exhibit	Description
2.1	Stock Purchase Agreement dated as of August 26, 1996 by and among Charlotte Russe Holding, Inc., Daniel Lawrence, Frank Lawrence and Larry Lawrence (Exhibit 2.1 to Registration Statement 333-84297 filed October 19, 1999)
3.1	Certificate of Incorporation of Charlotte Russe Holding, Inc., as amended (Exhibit 3.1 to Registration Statement 333-84297 filed October 19, 1999)
3.2	Certificate of Amendment to the Certificate of Incorporation of Charlotte Russe Holding, Inc. (Exhibit 3.2 to Registration Statement 333-84297 filed October 19, 1999)
3.3	Amended and Restated By-laws of Charlotte Russe Holding, Inc. (Exhibit 3.3 to Registration Statement 333-84297 filed October 19, 1999)
4.1	Form of Common Stock Certificate (Exhibit 4.1 to Registration Statement 333-84297 filed October 19, 1999)
10.1	Trade Secret and Confidentiality Agreement dated as of October 1, 1996 by and between Charlotte Russe Holding, Inc. and Bernard Zeichner (Exhibit 10.11 to Registration Statement 333-84297 filed October 19, 1999)
10.2	Charlotte Russe Holding, Inc. 1999 Long-Term Incentive Plan (Exhibit 10.12 to Registration Statement 333-84297 filed October 19, 1999)
10.3	Charlotte Russe Holding, Inc. 1996 Long-Term Incentive Plan (Exhibit 10.13 to Registration Statement 333-84297 filed October 19, 1999)
10.4	Lease Agreement for San Diego Distribution Center dated July 24, 1997 by and between Price Enterprises, Inc. and Charlotte Russe, Inc. (Exhibit 10.14 to Registration Statement 333-84297 filed October 19, 1999)
10.5	Charlotte Russe Holding, Inc. 1999 Equity Incentive Plan (Exhibit 10.15 to Registration Statement 333-84297 filed October 19, 1999)
10.6	Charlotte Russe Holding, Inc. 1999 Employee Stock Purchase Plan (Exhibit 10.17 to Registration Statement 333-84297 filed October 19, 1999)
10.7	Form of Indemnification Agreement for Directors and Officers of Charlotte Russe Holding, Inc. (Exhibit 10.24 to Registration Statement 333-84297 filed October 19, 1999)
10.8	Employment Agreement by and between Charlotte Russe Holding, Inc. and Mark A. Hoffman dated July 9, 2003 (Exhibit 10.30 to our Form 10-K filed December 19, 2003)
10.9	Employment Agreement by and between Charlotte Russe, Inc. and Bernard Zeichner dated August 31, 2003 (Exhibit 10.31 to our Form 10-K filed December 19, 2003)
10.10	Loan and Security Agreement by and among Charlotte Russe, Inc., as Borrower, direct and indirect domestic subsidiaries of Borrower and Bank of America, N.A., as Agent, dated as of June 24, 2005 (Exhibit 10.33 to our Form 10-Q filed July 22, 2005)
10.11	First Amendment by and between Charlotte Russe Holding, Inc. and Mark A. Hoffman dated August 31, 2005 (Exhibit 99.1 to our Form 8-K filed September 6, 2005)
10.12	Offer Letter by and between Charlotte Russe Holding, Inc. and Daniel T. Carter dated August 10, 2005 (Exhibit 10.1 to our Form 8-K filed September 14, 2006)

Exhibit	Description
10.13	Purchase Agreement by and among Charlotte Russe, Inc. and Forever 21 Retail, Inc. dated June 29, 2006*
10.14	Offer Letter by and between Charlotte Russe Holding, Inc. and Edward Wong dated August 10, 2005*
10.15	Offer Letter by and between Charlotte Russe Holding, Inc. and Patricia A. Shields dated August 11, 2006*
21	Subsidiaries (Exhibit 21 to Registration Statement 333-84297 filed October 19, 1999)
23.1	Consent of Independent Registered Public Accounting Firm*
24	Power of Attorney (See signature page)
31.1	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*
31.2	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*
32.1	Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*
32.2	Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

(b) Financial Statement Schedules

All financial statement schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission have been omitted because they are not required under the related instructions or are inapplicable as the information has been provided in the consolidated financial statements or related notes thereto.

EX-10.13

Exhibit 10.13

PURCHASE AGREEMENT

BY AND AMONG

CHARLOTTE RUSSE, INC.,

AND

FOREVER 21 RETAIL, INC.

DATED

June 29, 2006

TABLE OF CONTENTS

1.	PURCHASE OF ASSETS	2
	1.1 Assets Purchased	2
	1.2 Purchase Price	3
	1.3 Excluded Assets	3
	1.4 Assumption of Liabilities	3
	1.5 Retained Liabilities	4
	1.6 Apportionments	4
	1.7 Payment of Apportionments	5
	1.8 Sales and Transfer Taxes	6
	1.9 Guarantee	6
	1.10 Escrow Agreement	6
	1.11 Certifications	6
2.	Effective Dates	6
	2.1 Effective Dates	6
	2.2 Effective Date Deliveries by the Company	7
	2.3 Effective Date Deliveries by Purchaser	9
3.	REPRESENTATIONS AND WARRANTIES OF THE COMPANY	10
	3.1 Organization	10
	3.2 Authority	10
	3.3 No Conflict	10
	3.4 Contracts and Commitments	10
	3.5 Title	10
	3.6 Compliance with Laws and Court Orders	11
	3.7 Required Consents, Licenses and Permits and Orders	11

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	3.8 Employee Matters	11
	3.9 Labor Matters	11
	3.10 Property	11
	3.11 Obligations due under the Leases	12
	3.12 Absence of Litigation	12
	3.13 FF&E	13
	3.14 Brokers	13
4.	REPRESENTATIONS AND WARRANTIES OF PURCHASER	13
	4.1 Organization	13
	4.2 Authority	13
	4.3 No Conflict	13
	4.4 Absence of Litigation	14
	4.5 No Brokers	14
5.	COVENANTS	14
	5.1 Rampage Store Employees	14
	5.2 Confidentiality	14
	5.3 Press Release; Other Disclosure	15
	5.4 Further Action	15
6.	[INTENTIONALLY OMITTED]	15
7.	INDEMNIFICATION	15
	7.1 Survival Of Representations And Covenants	15
	7.2 Indemnification	17
	7.3 Defense Of Third Party Claims	19
	7.4 Exercise Of Remedies By Indemnitees Other Than Parties To This Agreement	21
8.	GENERAL PROVISIONS	21

ii

8.1 Notices	21
8.2 Arbitration	21
8.3 Assignment; Binding Effect	22
8.4 Entire Agreement	22
8.5 Expenses	22
8.6 Amendment	22
8.7 Governing Law	22
8.8 Counterparts	22
8.9 Specific Performance	23
8.10 Headings	23
8.11 Interpretations	23
8.12 Waivers	23
8.13 Severability	24
8.14 WAIVER OF JURY TRIAL	24
8.15 Remedies Not Cumulative; No Strict Construction	24
8.16 Attorneys’ Fees	24

iii

PURCHASE AGREEMENT

This PURCHASE AGREEMENT (this “Agreement”) is dated June 29, 2006, (the “Execution Date”) by and among Charlotte Russe, Inc., a California corporation (the “Company”) and Forever 21 Retail, Inc., a California corporation (“Purchaser”) which is a wholly-owned subsidiary of Forever 21, Inc., a Delaware corporation (the “Parent”). Capitalized terms used but not defined elsewhere in the text of this Agreement are defined in Exhibit A attached hereto.

WHEREAS, Purchaser desires to purchase from the Company, and the Company desires to sell to Purchaser, the Acquired Assets, as hereinafter defined, including the following assets of the Company: up to forty-four (44) leases relating to stores currently being operated by the Company as “Rampage” stores (the “Rampage Stores”), as scheduled in Exhibit B attached hereto and made a part hereof, and all of the tangible assets used by the Company exclusively in the operation of the Rampage Stores, including, without limitation, furniture, fixtures, telephones and other equipment (excluding point of sale systems and registers, supplies marked with the “Rampage” name and signage), furnishings, office supplies, mannequins, rolling racks, sign holdings, leasehold improvements and all other fixed assets and tangible personal property located at the Rampage Stores, but excluding all inventory (collectively, the “FF&E”), in exchange for the payment to the Company of the Individual Store Purchase Price for each Rampage Store and all the FF&E relating thereto acquired by Purchaser and the assumption by Purchaser of the “Assumed Liabilities,” as hereinafter defined, with respect to each Rampage Store so acquired.

WHEREAS, subject to the terms and conditions of this Agreement, the Company has agreed to assign and Purchaser has agreed to assume, effective as of July 5, 2006, the leases with respect to twenty-four (24) Rampage Stores as scheduled in Schedule 1.1 attached hereto and made a part hereof (collectively, the “Initial Leased Facilities” and individually, an “Initial Leased Facility”) and all the FF&E relating thereto, in exchange for the payment to the Company of the Individual Store Purchase Price for each Initial Leased Facility and all the FF&E relating thereto acquired by Purchaser as of July 5, 2006. Subject to the terms and conditions of this Agreement, Purchaser shall also assume the Assumed Liabilities with respect to each Initial Leased Facility so acquired as of July 5, 2006.

WHEREAS, subject to the terms and conditions of this Agreement, the Company has agreed to assign and Purchaser has agreed to assume, effective as of July 31, 2006, the leases with respect to the remaining twenty (20) Rampage Stores as scheduled in Schedule 1.2 attached hereto and made a part hereof (collectively, the “Additional Leased Facilities” and individually, an “Additional Leased Facility”) and all the FF&E relating thereto, in exchange for the payment to the Company of the Individual Store Purchase Price for each Additional Leased Facility and all the FF&E relating thereto acquired by Purchaser as of July 31, 2006. Purchaser shall also assume the Assumed Liabilities with respect to each Additional Leased Facility so acquired as of July 31, 2006. The Initial Leased Facilities and the Additional Leased Facilities are hereinafter referred to collectively as the “Leased Facilities and individually as a “Leased Facility.”

1

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

1. PURCHASE OF ASSETS.

1.1 Assets Purchased. On the terms and subject to the conditions set forth in this Agreement, the Company shall assign, transfer, convey and deliver to Purchaser, and Purchaser shall acquire and accept from the Company, free and clear of any Liens and Retained Liabilities, all of the Company’s right, title and interest in and to those assets listed or described below, as the same shall exist on the applicable Effective Date, as hereinafter defined (the properties, assets and rights assigned pursuant to this Section 1.1 are collectively referred to herein as the “Acquired Assets”):

1.1.1 all rights and incidents of interest of the Company in and to the leases relating to the Leased Facilities (collectively, the “Leases”) as well as all right, title and interest of the Company in the FF&E for each of the Leased Facilities;

1.1.2 all rights and incidents of interest of the Company in and to such other agreements, contracts, purchase orders and licenses entered into, accepted or made by the Company which Purchaser has expressly agreed to assume and that are set forth in Exhibit C attached hereto (collectively, the “Assumed Contracts”). With respect to each Leased Facility, the Company agrees to make commercially reasonable efforts to transfer existing communications services (local voice, long-distance voice, and DSL broadband data) to Purchaser with existing telephone numbers listed in Schedule 1.1.2 attached hereto remaining intact;

1.1.3 all rights of the Company under all warranties, representations and guarantees made by suppliers, manufacturers and contractors in connection with any Acquired Asset;

1.1.4 to the extent transferable through commercially reasonable efforts all Licenses (which for clarification purposes excludes that certain Rampage License Agreement between the Company and Rampage Licensing, LLC dated September 30, 1997, as amended) and Permits held by the Company with respect to the Rampage Stores operated at the Leased Facilities or the Acquired Assets located therein;

1.1.5 all of the Company’s books, records, legal pleadings and correspondence, insofar as they relate exclusively to the Leases, the Assumed Contracts or the other Acquired Assets whether in hard copy or electronic format (the “Transferred Books and Records”); provided that the Company may retain one copy of all such Transferred Books and Records; in addition, Purchaser shall receive and be entitled to the use of a copy of all of the Company’s books, records, legal pleadings and correspondence, insofar as they relate principally to the Leases, the Assumed Contracts or the other Acquired Assets whether in hard copy or electronic format; provided that the Company retain the original copies of all such documents; and

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1.1.6 all of the Company’s rights, claims, credits, causes of action or rights of set-off against Third Parties relating to the Acquired Assets.

Except for the representations and warranties set forth in Section 3 below and the agreements contained in this Section 1, Purchaser agrees to acquire the physical spaces occupied by the Leased Facilities and the other Acquired Assets on an “as is” basis.

1.2 Purchase Price. The purchase price for the Acquired Assets shall be an amount equal to the Individual Store Purchase Price multiplied by the number of Leased Facilities for which the Company has satisfied the Company Transfer Obligations MINUS the Individual Store Purchase Price (the “Purchase Price”).

1.2.1 The Purchase Price shall only be paid out of Escrowed Funds, as hereinafter defined, in accordance with the terms of the Escrow Agreement, as hereinafter defined;

1.2.2 At the Initial Effective Date, as hereinafter defined, or as soon thereafter as Purchaser has received all of the applicable Company Transfer Deliveries, as hereinafter defined, with respect to any Initial Leased Facility, including the applicable Landlord’s Assignment and Consent, as hereinafter defined, (“Company Transfer Obligations”), the Escrow Agent, as hereinafter defined, shall release out of the Escrowed Funds the Individual Store Purchase Price multiplied by the number of any Initial Leased Facilities for which the Company Transfer Obligations have been satisfied; provided, however, that Purchaser shall be entitled to a credit equal to the Good Faith Deposit which shall be deducted from the Individual Store Purchase Price for the first Leased Facility for which the Company satisfies the Company Transfer Obligations; provided further, however, that the Individual Store Purchase Price shall not be payable with respect to the Rampage Store located at La Cumbre Plaza; and

1.2.3 At the Second Effective Date, as hereinafter defined, provided the applicable Company Transfer Obligations have been satisfied with respect to any Additional Leased Facility, the Escrow Agent shall release out of the Escrowed Funds the Individual Store Purchase Price multiplied by the number of such Additional Leased Facilities.

1.3 Excluded Assets. The Company shall retain and shall not transfer, and Purchaser shall not accept or acquire, any other properties, assets or rights of the Company other than the Acquired Assets (the “Excluded Assets”).

1.4 Assumption of Liabilities. On the terms and subject to the conditions set forth in this Agreement, as of the Initial Effective Date or the Second Effective Date, as the case may be, Purchaser shall assume, and thereafter shall discharge and perform when due only those Liabilities under the Leases, the Assumed Contracts or relating to the other Acquired Assets which arise, accrue or are incurred after the applicable Effective Date for which the Acquired Assets were transferred (except for obligations or Liabilities which arise as a result of Company Contract Breaches) (collectively, the “Assumed Liabilities”).

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1.5 Retained Liabilities. Notwithstanding Section 1.4 or any other provision in this Agreement or any other writing to the contrary, Purchaser is assuming only the Assumed Liabilities and is not assuming any other Liability of the Company (or of any predecessor of the Company or of any prior owner of all or part of the Company’s business and assets) of whatever nature, whether presently in existence or arising hereafter. All such other Liabilities shall be retained liabilities which Purchaser shall not be assuming and shall remain Liabilities of the Company (all such Liabilities not being assumed being herein referred to as the “Retained Liabilities”). Notwithstanding any provision in this Agreement or any other writing to the contrary, Retained Liabilities include, but are not limited to:

1.5.1 any Liability of the Company, including those relating to the Acquired Assets, which arises, accrues or is incurred prior to the applicable Effective Date on which the Acquired Assets were transferred;

1.5.2 Any Liability arising out of or relating to a Company Contract Breach;

1.5.3 any indebtedness or obligation for borrowed money of the Company and its Affiliates;

1.5.4 any Employee Obligation and any other Liability of the Company relating to the Company’s employees during the term of their employment with the Company;

1.5.5 any Liabilities for Taxes (including sales, transfer and all other Taxes resulting from the consummation of the transactions contemplated by this Agreement);

1.5.6 any Liability arising out of or relating to any violation of any law, rule, regulation, judgment, injunction, order or decree occurring or arising out of or relating to any event or condition occurring or existing at or prior to the applicable Effective Date on which the Acquired Assets were transferred whether or not such Liability relates to an Acquired Asset; and

1.5.7 any Liability for all Approval Costs and other costs and expenses of the Company incurred in connection with the negotiation, execution and consummation of the transactions contemplated under this Agreement.

1.6 Apportionments.

1.6.1 Rent occupancy and all other costs, expenses, fees or charges or other Apportioned Items, as hereinafter defined, relating to each of the Initial Leased Facilities and Assumed Contracts relating thereto for any period that begins before the Initial Effective Date and ends after the Initial Effective Date are to be apportioned between the Company, on the one hand, and Purchaser, on the other hand, as of midnight on the Initial Effective Date, with the Company being fully responsible for the payment or satisfaction of all Apportioned Items through the Initial Effective Date and Purchaser being responsible for the payment or satisfaction of all Apportioned Items thereafter.

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1.6.2 Rent occupancy and all other costs, expenses, fees or charges or other Apportioned Items relating to each of the Additional Leased Facilities and Assumed Contracts relating thereto for any period that begins before the Second Effective Date and ends after the Second Effective Date are to be apportioned between the Company, on the one hand, and Purchaser, on the other hand, as of midnight on the Second Effective Date, with the Company being fully responsible for the payment or satisfaction of all Apportioned Items through the Second Effective Date and Purchaser being responsible for the payment or satisfaction of all Apportioned Items thereafter.

1.6.3 In the event that the amount of any Apportioned Item cannot be calculated as between amounts thereof incurred pre and post the applicable Effective Date, and thereby allocated between the Company and Purchaser, the allocation of such Apportioned Item shall be made on a pro-rata basis between the parties with the Company’s portion of such Apportioned Item equaling the result obtained by multiplying the total amount of such Apportioned Item by a fraction having a numerator equal to the number of days in the applicable period which occurred on or prior to the applicable Effective Date and a denominator equal to the total number of days in the applicable period. Purchaser’s portion of such Apportioned Item shall be equal to the result obtained by multiplying the total amount of such Apportioned Item by a fraction having a numerator equal to the number of days in the applicable period which occurred after the applicable Effective Date and a denominator equal to the total number of days in the applicable period.

1.6.4 Apportioned Items shall include base rent, percentage rent, common area maintenance costs, and other landlord, vendor or licensor billed and direct-billed costs (e.g., property taxes, insurance, utilities, mall marketing programs, etc.) (“Apportioned Items”).

1.7 Payment of Apportionments. The Apportioned Items set forth in Section 1.6 shall be payable in the manner set forth below:

1.7.1 Payments made by the Company before or after the applicable Effective Date which are apportioned to Purchaser shall be billed to Purchaser and paid to the Company within fifteen (15) Business Days.

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1.7.2 Payments made by Purchaser before or after the applicable Effective Date which are apportioned to the Company shall be billed to the Company and paid to Purchaser within fifteen (15) Business Days.

1.8 Sales and Transfer Taxes. The Company shall be responsible for any sales or transfer Taxes or fees payable as a result of the transactions contemplated by this Agreement.

1.9 Guarantee. On the Execution Date, Purchaser shall cause to be delivered to the Company the Guarantee of the Parent, dated as of the date hereof, executed by the Parent for the benefit of the Company, in form and substance acceptable to the Company (the “Guarantee”).

1.10 Escrow Agreement. On the Execution Date, the parties shall have received a fully executed Escrow Agreement, dated as of the date hereof, by and among Wells Fargo Bank, National Association, as Escrow Agent (the “Escrow Agent”), Purchaser and the Company (the “Escrow Agreement”). No later than two (2) Business Days after the date hereof, Purchaser or the Parent shall deliver to the Escrow Agent Thirteen Million Seven Hundred Twenty Five Thousand Dollars and no Cents ($13,725,000.00) (such amount plus any interest earned thereon shall hereinafter be known as the “Escrowed Funds”). The disposition of the Escrowed Funds shall be as provided for in the Escrow Agreement; provided, however, the parties agree and the Escrow Agreement shall provide that: (i) the fees and expenses of the Escrow Agent shall be borne equally by the Company and Purchaser and (ii) the amount of the Individual Store Purchase Price plus any interest thereon with respect to any Additional Leased Facilities for which Purchaser has not received the Second Effective Date Company Transfer Deliveries, as hereinafter defined, on July 31, 2006 shall be disbursed by the Escrow Agent to Purchaser on August 10, 2006.

1.11 Certifications. On the Execution Date, the Company shall have delivered to Purchaser (i) resolutions by the board of directors of the Company approving this Agreement and the transactions contemplated herein certified by a duly authorized officer of the Company and (ii) a certificate, in accordance with Section 1.1445-2(b) of the Treasury Regulations, stating that the Company is not a foreign person. On the Execution Date, Purchaser shall have delivered to the Company resolutions by the board of directors of Purchaser approving this Agreement and the transactions contemplated herein certified by a duly authorized officer of Purchaser.

2. EFFECTIVE DATES.

2.1 Effective Dates. All deliveries on the applicable Effective Date shall take place at the offices of Jeffer, Mangels, Butler & Marmaro, LLP, 1900 Avenue of the Stars, Los Angeles, CA or at such other place as the parties may mutually agree upon. The parties agree that the effectiveness of the transfer of the Acquired Assets on the Initial Effective Date or the Second Effective Dates, as applicable, shall occur at 10:00 pm local time on the such dates.

2.1.1 The effective date of the sale and transfer of the Initial Leased Facilities and the Acquired Assets relating thereto will take place on July 5, 2006 (the “Initial Effective Date”).

6

2.1.2 The effective date of the sale and transfer of the Additional Leased Facilities and the Acquired Assets relating thereto will take place on July 31, 2006 (the “Second Effective Date”).

2.1.3 The Company and Purchaser agree that Purchaser shall: (i) on the Initial Effective Date, take physical possession of the Initial Leased Facilities and all other Acquired Assets relating thereto, subject to Purchaser’s receipt of all applicable Company Transfer Deliveries (excluding the Landlord’s Assignment and Consent) and (ii) on the Second Effective Date, take physical possession of those Additional Lease Facilities and all other Acquired Assets relating thereto, subject to Purchaser’s receipt of all applicable Company Transfer Deliveries.

2.1.4 The parties acknowledge and agree that, subject to Purchaser’s receipt of all applicable Company Transfer Obligations, the sale and transfer of the Initial Leased Facilities and the Additional Leased Facilities and the Acquired Assets relating thereto, as well as the assumption by Purchaser of the Assumed Liabilities relating to such Acquired Assets, shall occur on the applicable Effective Date with respect to such Acquired Assets; notwithstanding the foregoing, prior to the execution and delivery to Purchaser of the applicable Landlord’s Assignment and Consent, the Company and Purchaser agree that: (i) the Company shall remain responsible for the Assumed Liabilities; and (ii) Purchaser shall solely be responsible for any and all liabilities of any nature incurred by it, based upon or related to its use and occupancy of any Leased Facilities transferred to it pursuant to Section 2.1.3 above.

2.1.5 The Initial Effective Date or the Second Effective Date may hereinafter be referred to both individually or collectively as the “Effective Date.”

2.2 Effective Date Deliveries by the Company.

2.2.1 On the Initial Effective Date the Company shall deliver the following documents to Purchaser (the “Initial Effective Date Company Transfer Deliveries”):

(i) the Transferred Books and Records with respect to the Initial Leased Facilities;

(ii) a duly executed bill of sale transferring the Acquired Assets to Purchaser with respect to the Initial Leased Facilities for which a Landlord’s Assignment and Consent has been delivered;

(iii) a duly executed assignment and assumption agreement assigning the Assumed Contracts relating to the Initial Leased Facilities;

(iv) a duly executed assignment of each Initial Leased Facility (“Landlord’s Assignment and Consent”), if available;

7

(v) the Required Consents, as hereinafter defined, with respect to each Initial Leased Facility (excluding any Landlord’s Assignment and Consent that is not available on the Initial Effective Date);

(vi) a certificate executed by the Senior Executive Vice President and Chief Operating Officer of the Company certifying that: (i) each and every representation of the Company set forth in Section 3 was true and correct in all material respects as of the Execution Date and at all times between the Execution Date and the Initial Effective Date (except for representations qualified by materiality, which were true and correct in all respects as of the Execution Date and at all times between the Execution Date and the Initial Effective Date, and except for representations made as of a specified date, which were true and correct only as of the specified date) and (ii) the Company is not currently and has not at any time from the Execution Date to the Initial Effective Date been in material breach or default in its obligations under this Agreement, nor has any action or event occurred prior to the Initial Effective Date which but for the passage of time would constitute a material breach or default under the terms of this Agreement; and

(vii) such other documents reasonably requested by Purchaser.

2.2.2 On the Second Effective Date the Company shall deliver the following documents to Purchaser (collectively, the “Second Effective Date Company Transfer Deliveries”):

(i) the Transferred Books and Records with respect to the Additional Leased Facilities being transferred on the Second Effective Date;

(ii) a duly executed bill of sale transferring the Acquired Assets to Purchaser with respect to the Additional Leased Facilities being transferred on the Second Effective Date;

(iii) a duly executed assignment and assumption agreement assigning the Assumed Contracts with respect to the Additional Leased Facilities being transferred on the Second Effective Date;

(iv) a duly executed Landlord’s Assignment and Consent with respect to the Additional Leased Facilities being transferred on the Second Effective Date;

(v) the Required Consents with respect to the Additional Leased Facilities being transferred on the Second Effective Date;

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(vi) a certificate executed by the Senior Executive Vice President and Chief Operating Officer of the Company certifying that: (i) each and every representation of the Company set forth in Section 3 was true and correct in all material respects as of the Execution Date and at all times between the Execution Date and the Second Effective Date (except for representations qualified by materiality, which were true and correct in all respects as of the Execution Date and at all times between the Execution Date and the Second Effective Date, and except for representations made as of a specified date, which were true and correct only as of the specified date) and (ii) the Company is not currently and has not at any time from the Execution Date to the Second Effective Date been in material breach or default in its obligations under this Agreement, nor has any action or event occurred prior to the Second Effective Date which but for the passage of time would constitute a material breach or default under the terms of this Agreement; and

(vii) such other documents reasonably requested by Purchaser.

The Initial Effective Date Company Transfer Deliveries and the Second Effective Date Company Transfer Deliveries shall from time to time individually and collectively be referred to as the “Company Transfer Deliveries.”

2.2.3 With respect to any Initial Leased Facility for which a Landlord’s Assignment and Consent has not been obtained on the Initial Effective Date, the Company shall deliver such Landlord’s Assignment and Consent and a duly executed bill of sale transferring the Acquired Assets to Purchaser with respect to such Initial Leased Facility(ies) as soon as practicable after receipt of such Landlord’s Assignment and Consent for such Initial Leased Facility(ies).

2.3 Effective Date Deliveries by Purchaser. On the applicable Effective Date Purchaser shall deliver to the Company a certificate executed by the President or the Chief Financial Officer of Purchaser certifying that: (i) each and every representation of Purchaser set forth in Section 4 was true and correct in all material respects as of the Execution Date and at all times between the Execution Date and the Initial Effective Date or the Second Effective Date, as the case may be, (except for representations qualified by materiality, which were true and correct in all respects as of the Execution Date and at all times between the Execution Date and the Initial Effective Date or the Second Effective Date, as the case may be, and except for representations made as of a specified date, which were true and correct only as of the specified date) and (ii) Purchaser is not currently and has not at any time from the Execution Date to the Initial Effective Date or the Second Effective Date, as the case may be, been in material breach or default in its obligations under this Agreement nor has any action or event occurred prior to the Initial Effective Date or the Second Effective Date, as the case may be, which but for the passage of time would constitute a material breach or default by Purchaser under the terms of this Agreement.

The Company’s right to receive out of the Escrowed Funds the Individual Store Purchase Price for any of the Leased Facilities at the Initial Effective Date or the Second Effective Date, as the case may be, shall be as set forth in Section 1.2.2 or 1.2.3, as applicable.

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3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents and warrants to Purchaser as follows:

3.1 Organization. The Company is a corporation validly existing, and in good standing under the Laws of the State of California.

3.2 Authority. The Company has full corporate power and authority to enter into this Agreement and to perform its obligations under this Agreement and to consummate the transactions contemplated hereby. The execution, delivery, and performance of this Agreement, and all agreements, instruments and documents contemplated hereby, by the Company and the consummation by the Company of the transactions contemplated hereby have been duly and validly authorized by the board of directors of the Company and no other action on the part of the Company or any of its stockholders is necessary to authorize the execution, delivery and performance of this Agreement and the consummation by the Company of the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by the Company and will constitute a legal, valid, and binding obligation of the Company, enforceable against it in accordance with its terms, except that (a) such enforceability may be subject to applicable bankruptcy, insolvency or other similar Laws now or hereafter in effect affecting creditors’ rights generally and (b) the availability of the remedy of specific performance or injunctive or other forms of equitable relief may be subject to equitable defenses and would be subject to the discretion of the court before which any proceeding therefor may be brought.

3.3 No Conflict. The execution, delivery and performance by the Company of this Agreement and the other agreements and documents related hereto and the consummation by the Company of the transactions contemplated hereby, with or without the giving of notice or the lapse of time or both, (i) will not require any consent by, approval of, filing with or notice to any Person or governmental or regulatory authority under any agreement or provision of law applicable to the Company or the Acquired Assets, other than the Required Consents, (ii) will not conflict with or violate any provision of law or result in the breach of, or constitute a default under, or result in the termination of, any Lease or Assumed Contract or material default under any other material agreement or instrument to which the Company is a party or by which the Acquired Assets are bound or violate any judgment or order binding upon the Company, and (iii) will not result in the creation of any lien, security interest, charge or encumbrance upon any of the Acquired Assets.

3.4 Contracts and Commitments. Neither the Company nor any other party to any Lease or Assumed Contract is in default in any material respect under any Lease or Assumed Contract and no condition or state of facts exists which, with notice or the passage of time, or both, would constitute such a default by the Company or, to the Knowledge of the Company, such a default by another party to any Lease or Assumed Contract. Each Assumed Contract is a legal, valid and binding obligation of the Company and, to the Knowledge of the Company, each other party to the Assumed Contracts.

3.5 Title. The Company is in possession of and has good title to, or a valid leasehold interest in or valid rights to use, all of the Acquired Assets, free and clear of all Liens.

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3.6 Compliance with Laws and Court Orders. The Company is not in material violation of, or has in the past three years materially violated, or to the Knowledge of the Company, is under investigation with respect to, or has been threatened to be charged with or given notice of any material violation of, any law, rule, regulation, judgment, injunction, writ, judgment, order or decree applicable to the Acquired Assets. There is no action, suit, charge or proceeding pending, or, to the Knowledge of the Company, threatened, against the Company, any of its properties, assets or rights before any Governmental Entity or arbitration tribunal which, individually or in the aggregate would reasonably be expected to have a material adverse effect upon any of the Acquired Assets or a material adverse effect upon the Company taken as a whole.

3.7 Required Consents, Licenses and Permits and Orders. Schedule 3.7 attached hereto sets forth a list of all consents, Licenses and Permits and Orders which are required in connection with: (i) the transfer and assignment of the Acquired Assets to Purchaser pursuant to this Agreement (the “Required Consents”); and (ii) the execution and delivery of this Agreement and the other related agreements and documents and the consummation of the transactions contemplated hereby. All Required Consents have been obtained by the Company and are in full force and effect.

3.8 Employee Matters. There are no accrued and unpaid Employee Obligations. To the Knowledge of the Company, there are no controversies or disputes pending between the Company and any Rampage Store Employee which would have a material adverse effect on the Acquired Assets.

3.9 Labor Matters. With respect to the Rampage Store Employees: (i) the Company is not party to or bound by any collective bargaining or similar agreement with any labor organization; (ii) no Rampage Store Employees are represented by any labor organization; and (iii) the Company has no Knowledge of any union organizing activities among the Rampage Store Employees.

3.10 Property. Exhibit B sets forth the address, landlord and mall location of each Leased Facility. The Company has delivered or made available to Purchaser a true and complete copy of each Lease, along with all amendments and modifications thereto for all of the Leased Facilities and such Leases have not been amended since the date of delivery of such Leases to Purchaser. The Company has notified Purchaser as to the existence of any pending or threatened negotiations with landlords of which the Company has Knowledge regarding any of the Leases.

3.10.1 Except as set forth in Schedule 3.10.1, with respect to each Lease: (i) such Lease is legal, valid, binding, enforceable against the Company and in full force and effect; (ii) there are no material disputes with respect to such Lease; (iii) the Company does not owe, nor will it owe in the future, any brokerage commissions or finder’s fees with respect to such Lease; (iv) the other party to such Lease is not an Affiliate of, and otherwise does not have any economic interest in, the Company; and (v) there are no Liens on the estate or interest created by such Lease created or suffered to exist by the Company.

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3.10.2 The present use of the Leased Facilities is in conformity in all material respects with all applicable laws, rules, regulations and ordinances and there exists no conflict or dispute with any Governmental Entity or other Person relating to any Leased Facility or the activities thereon.

3.10.3 To the Knowledge of the Company, all requisite certificates of occupancy and other permits or approvals required with respect to the buildings, structures and improvements on any of the Leased Facilities and the occupancy and use thereof have been obtained and are currently in effect.

3.10.4 To the Knowledge of the Company, the Company has not received any notice from any insurance company of any material defects or inadequacies in the Leased Facilities or any part thereof, which would materially adversely affect the insurability of the same or of any termination or threatened termination of any policy of insurance.

3.10.5 To the Knowledge of the Company, the Company has not received any written notification from any Governmental Entity that any work is required to be done upon or in connection with the Leased Facilities or the mall location where any Leased Facility is located, where such work remains outstanding and, if unaddressed, would have a material adverse effect on the use of the Leased Facilities as currently operated.

3.10.6 In connection with the Leased Facilities, the Company has never and does not currently utilize, store, dispose of, treat, generate, process, transport, release, or own any Hazardous Substance in violation of any Law. The operations of the Company have not resulted in the discharge, release, spillage, uncontrolled loss, seepage, or filtration of any Hazardous Substance or any fuel, gasoline, or other petroleum product or by-product at, upon, or under any of Leased Facilities, in an amount that violates any Law.

3.11 Obligations due under the Leases. The Company has paid in full: (i) the rent under all Leases through the Initial Effective Date and, with respect to any Additional Leased Facility, the Second Effective Date, as the case may be; and (ii) any other amounts which are due and payable to the landlords as of the Initial Effective Date and, with respect to any Additional Leased Facility, the Second Effective Date, as the case may be.

3.12 Absence of Litigation. There are no Actions pending or, to the Company’s Knowledge, investigation threatened or contemplated against or affecting the Company or the Acquired Assets, at law or in equity, or through arbitration, before or by any federal, state, municipal or other Governmental Entity or non-governmental department, commission, board, bureau, agency, court or other instrumentality, or by any private person or entity other than Actions which do not relate to any Acquired Asset and which if adversely determined, would not, or could not, individually or in the aggregate, have an adverse effect upon the Acquired Assets. There are no Actions pending or, to the Company’s Knowledge, investigation pending or contemplated that that if adversely determined, would, or could, individually or in the aggregate: (i) have an adverse, affect upon the Company’s ability to consummate the transactions contemplated hereby or (ii) relate to or impair the implementation of this Agreement. There are no existing or threatened Orders or judgments or decrees of any court or Governmental Entity that specifically prevent the Company’s execution and delivery of this Agreement and the consummations of the transactions contemplated thereby.

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3.13 FF&E. The FF&E located at the Initial Leased Facilities as of the Initial Effective Date represents all of the FF&E (including, without limitation, all mannequins, rolling racks and sign holders) utilized by the Company in its operation of the Initial Leased Facilities from March 31, 2006 though the Initial Effective Date, excluding any FF&E which has been discarded due to ordinary wear and tear. The FF&E located at the Additional Leased Facilities as of the Second Effective Date represents all of the FF&E (including, without limitation, all mannequins, rolling racks and sign holders) utilized by the Company in its operation of the Additional Leased Facilities from March 31, 2006 though the Second Effective Date, excluding any FF&E which has been discarded due to ordinary wear and tear.

3.14 Brokers. The Company has no obligation to pay any fees, commissions or other similar compensation to any broker, finder, investment banker, financial advisor or other similar Person in connection with the transactions contemplated hereby.

4. REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser represents and warrants to the Company as follows:

4.1 Organization. Purchaser is a corporation validly existing, and in good standing under the Laws of the State of California.

4.2 Authority. Purchaser has full corporate power and authority to enter into this Agreement and to perform its obligations under this Agreement and to consummate the transactions contemplated hereby. The execution, delivery, and performance of this Agreement, and all agreements, instruments and documents contemplated hereby, by Purchaser and the consummation by Purchaser of the transactions contemplated hereby have been duly and validly authorized by the board of directors of Purchaser and no other action on the part of Purchaser or any of its stockholders is necessary to authorize the execution, delivery and performance of this Agreement and the consummation by Purchaser of the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by Purchaser and will constitute a legal, valid, and binding obligation of Purchaser, enforceable against it in accordance with its terms, except that (a) such enforceability may be subject to applicable bankruptcy, insolvency or other similar Laws now or hereafter in effect affecting creditors’ rights generally and (b) the availability of the remedy of specific performance or injunctive or other forms of equitable relief may be subject to equitable defenses and would be subject to the discretion of the court before which any proceeding therefor may be brought.

4.3 No Conflict. The execution, delivery and performance by Purchaser of this Agreement and the other agreements and documents related hereto and the consummation by Purchaser of the transactions contemplated hereby, with or without the giving of notice or the lapse of time or both, (i) will not require any consent by, approval of, filing with or notice to any Person or governmental or regulatory authority under any agreement or provision of law and (ii) will not conflict with or violate any provision of law or violate any judgment or order binding upon Purchaser, except in both cases, for any such conflicts, violations, breaches or defaults that, individually or in the aggregate, would not have a material adverse affect on the Company.

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4.4 Absence of Litigation. There are no Actions pending or, to Purchaser’s Knowledge, investigation pending or contemplated that that if adversely determined, would, or could, individually or in the aggregate: (i) have an adverse, affect upon Purchaser’s ability to consummate the transactions contemplated hereby or (ii) relate to or impair the implementation of this Agreement. There are no existing or threatened orders or judgments or decrees of any court or governmental agency that specifically prevent Purchaser’s execution and delivery of this Agreement and the consummations of the transactions contemplated thereby.

4.5 No Brokers. Purchaser has no obligation to pay any fees, commissions or other similar compensation to any broker, finder, investment banker, financial advisor or other similar Person in connection with the transactions contemplated hereby.

5. COVENANTS

5.1 Rampage Store Employees.

5.1.1 All Rampage Store Employees employed at any Leased Facility shall be terminated by the Company effective on the Initial Effective Date or the Second Effective Date on which the applicable Leased Facility is transferred to Purchaser. Purchaser may thereafter hire any or all of the Rampage Store Employees, excluding those Rampage Store Employees set forth on Schedule 5.1.1 attached hereto. Purchaser intends to offer employment to substantially all of the Rampage Store Employees employed as of the applicable Effective Date that it deems necessary to operate the Leased Facilities after the applicable Effective Date at such salaries and with such other compensation, benefits and upon such terms and conditions to be determined by Purchaser in its sole discretion.

5.1.2 The Company shall be responsible for all Employee Obligations and all obligations and Liabilities arising therefrom, whenever arising or accruing and Purchaser shall have no obligations whatsoever in connection with any Employee Obligations.

5.2 Confidentiality. Except as and to the extent required by law, neither the Company nor Purchaser will disclose or use, and will direct its representatives not to disclose or use to the detriment of the other party, any Confidential Information (as defined below) with respect to such party furnished, or to be furnished, by either party or its representatives to the other party or its representatives at any time or in any manner other than in connection with the transactions contemplated by this Agreement. “Confidential Information” means any information about either party provided to the other party or its representatives, unless (a) such information is already known to the receiving party or its representatives or to others not bound by a duty of confidentiality or such information becomes publicly available through no fault of the receiving party or its representatives; (b) the use of such information is necessary or appropriate in making any public filing; or (c) the furnishing or use of such information is required by or necessary or appropriate in connection with legal proceedings. Confidential Information may upon the consent of the delivering party be disclosed to third parties in order to obtain consents or approvals in connection with the transactions contemplated by this Agreement. Upon the written request of the delivering party, the receiving party will promptly return to the delivering party or destroy any Confidential Information in its possession and certify in writing to the delivering party that it has done so.

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5.3 Press Release; Other Disclosure. The Company and Purchaser shall mutually agree upon the language of one or more joint press releases regarding the transaction to be issued after the Execution Date. Except as and to the extent required by law or otherwise publicly disclosed, without the prior written consent of the other party, neither the Company nor Purchaser will, and each will direct its representatives not to make, directly or indirectly, any public comment, statement or communication with respect to, or otherwise to disclose or to permit the disclosure of any of the terms, conditions or other aspects of this Agreement or the transactions contemplated hereby. If a party is required by law to make any such disclosure, it must first provide to the other party a copy of such disclosure in advance of its disclosure.

5.4 Further Action. Each party hereto agrees to execute, acknowledge, deliver, file and record such further certificates, amendments, instruments and documents and to do all such other acts and things as may be required by law or as may be necessary or advisable to carry out the intent and purposes of this Agreement.

6. [INTENTIONALLY OMITTED]

7. INDEMNIFICATION

7.1 Survival Of Representations And Covenants.

7.1.1 The covenants and obligations of the parties contained in this Agreement shall survive (i) until fully performed or fulfilled, unless non-compliance with such covenants or obligations is waived in writing by the party or parties entitled to such performance or (ii) if not fully performed or fulfilled, until the expiration of the relevant statute of limitations.

7.1.2 Subject to Section 7.1.4 and except for the representations and warranties contained in Sections 3.5 and 3.10.6 (the “Excluded Representations”), (i) the representations and warranties set forth in Sections 3 and 4 shall expire twelve (12) months after the Execution Date if there is no Initial Effective Date, or twelve (12) months after Initial Effective Date or the applicable Second Effective Date, as the case may be, and (ii) the Excluded Representations shall survive until thirty (30) days after the expiration of the applicable statute of limitations relating thereto (in any case, as applicable, the “Expiration Date”); provided, however, that if a Claim Notice relating to any representation or warranty set forth in any of the provisions of Sections 3 or 4 is given to the Company or Purchaser, as the case may be, on or prior to the time and date of expiration for such representation or warranty, then, notwithstanding anything to the contrary contained in this Section 7.1 or any applicable statute of limitations (which the parties hereby waive), the expiration of such representation or warranty shall not effect the validity of any Claim expressly stated in any Claim Notice nor the asserting party’s rights to indemnification with respect to such Claim in accordance with this Section 7 until such Claim is finally resolved by the parties hereunder or by a court of competent jurisdiction and any amount payable hereunder are finally determined and paid. The representations, warranties, covenants and obligations of each party, and the rights and remedies that may be exercised by an Indemnitee, shall not be limited or otherwise affected by or as a result of any information furnished to, or any investigation made by or Knowledge of, the Indemnitee or any of their representatives. The parties recognize and agree that the representations and warranties also operate as bargained for promises and risk allocation devices and that, accordingly, any party’s Knowledge, shall not affect the right to indemnification or payment of Damages pursuant to this Section 7, or other remedy based on such representations, warranties, covenants, and obligations.

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7.1.3 The representations, warranties, covenants and obligations of each party, and the rights and remedies that may be exercised by an Indemnitee, shall not be limited or otherwise affected by or as a result of any information furnished to, or any investigation made by or Knowledge of, the Indemnitee or any of their representatives. The parties recognize and agree that the representations and warranties also operate as bargained for promises and risk allocation devices and that, accordingly, any party’s Knowledge shall not affect the right to indemnification or payment of Damages pursuant to this Section 7, or other remedy based on such representations, warranties, covenants, and obligations.

7.1.4 Notwithstanding anything to the contrary contained in Section 7.1, if either the Company or Purchaser commit any intentional misrepresentation or fraud related to any representation or warranty of the Company or Purchaser set forth in Sections 3 or 4, as applicable, then such representation or warranty shall not expire, but rather shall remain in full force and effect for an unlimited period of time (regardless of whether any Claim Notice relating to such representation or warranty is given prior to such time).

7.1.5 For purposes of this Agreement, a “Claim Notice” relating to a particular representation or warranty shall be deemed to have been given if any Indemnitee, acting in good faith, delivers to the Company or Purchaser, as the case may be, a written notice stating that such Indemnitee believes that there is or has been a possible breach of such representation or warranty and containing (i) a brief description of the circumstances supporting such Indemnitee’s belief that there is or has been such a possible breach (the “Claim”) and (ii) a non-binding, reasonable preliminary estimate of the aggregate dollar amount of the actual and potential Damages that have arisen and may reasonably be expected to arise as a direct or indirect result of such possible breach.

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7.1.6 For purposes of this Section 7, each statement or other item of information produced and created by the Company pertaining to the Company, the Acquired Assets or the Leased Facilities contained in the Exhibits or Schedules shall be deemed to be a representation and warranty made by the Company.

7.2 Indemnification.

7.2.1 From and after the Execution Date, the Company shall hold harmless and indemnify Purchaser from and against, and shall compensate and reimburse Purchaser for, any Damages that are directly or indirectly suffered or incurred by Purchaser or to which Purchaser may otherwise become subject at any time (regardless of whether or not such Damages relate to any third-party claim) and that arise from or as a result of, or are connected with:

(i) any breach of any representation or warranty on or before the applicable Expiration Date made by the Company in any Transaction Document;

(ii) any breach of any covenant or obligation of the Company contained in any Transaction Document;

(iii) any Excluded Asset or Retained Liability;

(iv) any Employee Obligation, including but not limited to any Liability arising under the WARN Act or comparable state statute as a result of any termination of Rampage Store Employees prior to, on or after the applicable Effective Date; or

(v) any Proceeding relating to any breach, alleged breach, Liability or matter of the type referred to in clauses (i) through (iv) above (including any Proceeding commenced by Purchaser for the purpose of enforcing any of its rights under this Section 7, to the extent Purchaser prevails in such Proceeding ).

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7.2.2 From and after the Execution Date, solely with respect to (i) and (ii) below, and (iv) below to the extent that the indemnification under (iv) relates to (i) or (ii) below, and from and after the applicable Effective Date, solely with respect to (iii) below, and (iv) below to the extent that the indemnification under (iv) relates to (iii) below, Purchaser shall hold harmless and indemnify the Company from and against, and shall compensate and reimburse the Company for, any Damages that are directly or indirectly suffered or incurred by the Company or to which the Company may otherwise become subject at any time (regardless of whether or not such Damages relate to any third-party claim) and that arise from or as a result of, or are connected with:

(i) any breach of any representation or warranty on or before the applicable Expiration Date made by Purchaser in any Transaction Document;

(ii) any breach of any covenant or obligation of Purchaser contained in any Transaction Document;

(iii) any Assumed Liability; or

(iv) any proceeding relating to any breach, alleged breach, Liability or matter of the type referred to in clauses (i) through (iii) above (including any Proceeding commenced by the Company for the purpose of enforcing any of its rights under this Section 7, to the extent the Company prevails in such Proceeding).

7.2.3 Notwithstanding anything in this Agreement to the contrary, but subject to Section 7.2.4, (i) the Indemnitor shall have no liability for any indemnification payments pursuant to this Section 7 solely for any breach of the representations and warranties contained in Sections 3 or 4 hereof, as applicable, unless and until the aggregate amount of all Damages of the applicable Indemnitee for all such breaches exceeds $100,000, and then only to the extent that such Damages exceed $100,000 and (ii) the aggregate collective liability of the Indemnitor for any indemnification payments for breach of representations and warranties contained in Sections 3 or 4 hereof, as applicable, will be limited to, and shall not exceed, the Purchase Price. No other claims under this Agreement for indemnification or otherwise, including claims for failure to discharge any Retained Liabilities, shall be subject to any limitation. In determining the foregoing thresholds or ceilings and in otherwise determining the amount of any Damages for which the applicable Indemnitee is entitled to assert a claim for indemnification, the amount of any such Damages shall be determined after deducting there from the amount of any insurance proceeds or other third party recoveries actually received by the applicable Indemnitee in respect of such Damages (the “Third Party Recoveries”). In the event Third Party Recoveries are actually received by such Indemnitee after such indemnification claim has been fully and finally resolved, the applicable Indemnitee shall pay such Third Party Recoveries to the Indemnitor promptly after such receipt but only to the extent that such Third Party Recoveries pertain to Damages actually received by such Indemnitee as indemnification payments pursuant to such indemnification claim.

7.2.4 The limitations on the indemnification obligations of the Company that are set forth in Section 7.2.3 shall not apply to any Damages resulting from intentional misrepresentation or fraud by the Company or any of their Affiliates. The limitations on the indemnification obligations of Purchaser that are set forth in Section 7.2.3 shall not apply to any intentional misrepresentation or fraud by Purchaser or any of its Affiliates.

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7.3 Defense Of Third Party Claims.

7.3.1 In the event of the assertion or commencement by any Person of any claim or Proceeding (whether against Purchaser, the Company or any other Person) with respect to which the Company or Purchaser may become obligated to indemnify, hold harmless, compensate or reimburse any Indemnitee pursuant to this Section 7, except as provided in Section 7.3.3 below, the Indemnitee shall designate, if such Indemnitee is Purchaser, the Company (or its representative), or, if such Indemnitee is the Company, Purchaser (or its representative) (in either case, the “Designated Party”), to assume the defense of such claim or Proceeding at the sole expense of the Designated Party. If the Designated Party agrees to assume the defense of any such claim or Proceeding :

(i) the Designated Party shall proceed to defend such claim or Proceeding in a reasonably diligent manner with counsel reasonably satisfactory to the Indemnitee;

(ii) the Indemnitee shall make available to the Designated Party any non-privileged documents and materials in the possession of the Indemnitee or its Affiliates that may be necessary to the defense of such claim or Proceeding;

(iii) the Designated Party shall keep the Indemnitee informed of all material developments and events relating to such claim or Proceeding;

(iv) the Indemnitee shall have the right to participate in the defense of such claim or Proceeding at its sole cost and expense; and

(v) the Designated Party shall not settle, adjust or compromise such claim or Proceeding without the prior written consent of the Indemnitee; provided, however, that the Indemnitee shall not unreasonably withhold such consent if it satisfies each of the following conditions: (i) provides for a full release of the Indemnitee and its Affiliates with respect to the subject matter of such Claim or Proceeding; (ii) the Indemnitee is not obligated to take any action or refrain from taking any action pursuant to the terms of such settlement, or (iii) if the Indemnitee is Purchaser, the settlement or compromise does not adversely effect Purchaser’s ongoing business or operations at the Leased Facilities, Purchaser’s rights under any Assumed Contract or Purchaser’s use of any Acquired Assets.

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7.3.2 If the Designated Party does not agree to assume the defense of any such claim or Proceeding (or if, after initially designating the Designated Party to assume such defense, the Indemnitee elects to assume such defense pursuant to Section 7.3.3 below), the Indemnitee may proceed with the defense of such claim or Proceeding on its own. If the Indemnitee so proceeds with the defense of any such claim or Proceeding on its own:

(i) Indemnitee shall defend the claim or proceeding in a reasonably diligent manner;

(ii) all expenses relating to the defense of such claim or Proceeding (whether or not incurred by the Indemnitee) shall be borne and paid exclusively by the Indemnitor;

(iii) the Indemnitor shall make available to the Indemnitee any documents and materials in the possession or control of the Indemnitor or its representatives that may be necessary to the defense of such claim or Proceeding;

(iv) the Indemnitee shall keep the Indemnitor informed of all material developments and events relating to such claim or Proceeding; and

(v) the Indemnitee shall have the right to settle, adjust or compromise such claim or Proceeding with the consent of the Indemnitor; provided, however, that the Indemnitor shall not unreasonably withhold such consent if it satisfies each of the following conditions: (i) provides for a full release of the Indemnitor and its Affiliates with respect to the subject matter of such Claim or Proceeding ; (ii) the Indemnitor is not obligated to take any action or refrain from taking any action pursuant to the terms of such settlement; or (iii) if the Indemnitor is Purchaser, the settlement or compromise does not adversely effect Purchaser’s ongoing business or operations at the Leased Facility, Purchaser’s rights under any Assumed Contract or Purchaser’s use of any Acquired Assets.

7.3.3 Notwithstanding anything in this Agreement to the contrary, if Purchaser reasonably determines in good faith that it is likely that a claim or Proceeding may materially adversely affect its ongoing use of any Leased Facility or the Acquired Assets, Purchaser may, regardless of whether or not the Company had previously assumed the defense of the Proceedings pursuant to Section 7.3.1 above, at any time by notice to the Company assume the exclusive right to defend, compromise or settle such Proceeding at the Company’s sole cost and expense and without the consent of the Company.

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7.4 Exercise Of Remedies By Indemnitees Other Than Parties To This Agreement. No Indemnitee (other than the parties to this Agreement or any successor thereto or assign thereof) shall be permitted to assert any indemnification claim or exercise any other remedy under this Agreement unless the respective party to this Agreement entitled to indemnification (or any successor thereto or assign thereof) shall have consented to the assertion of such indemnification claim or the exercise of such other remedies. Notwithstanding the foregoing, nothing in this Agreement shall release either party of any Liability for fraud.

8. GENERAL PROVISIONS.

8.1 Notices. Any notice or other communication permitted or required to be given hereunder will be in writing, and sent by reputable courier service (with proof of delivery), by hand delivery or by facsimile (followed by delivery by courier service (with proof of delivery) or by hand delivery), addressed as follows:

If to Purchaser:	Forever 21 Retail, Inc. 2001 Alameda Street Los Angeles, California 90058 Attention: Do Won Chang Fax No.: (213) 741-8860
With copies to (which copy shall not constitute notice):	Jeffer, Mangels, Butler & Marmaro LLP 1900 Avenue of the Stars, 7th Floor Los Angeles, California 90067 Attention: Barry L. Burten, Esq. Fax No.: (310) 712-3359
If to the Company:	Charlotte Russe, Inc. 4645 Morena Boulevard San Diego, CA 92117 Attention: Mark A. Hoffman Fax No.: (858) 875-0345
With copies to (which copy shall not constitute notice):	Cooley Godward LLP 4401 Eastgate Mall San Diego, California 92121 Attention: Frederick T. Muto Fax No.: (858) 550-6420

or to such other address as any party will specify by written notice so given, and such notice will be deemed to have been delivered as of the date so telecommunicated or delivered by hand or courier service.

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8.2 Arbitration. The parties agree that any dispute, controversy or claim arising out of, relating to, or in connection with this Agreement including, without limitation, the provisions regarding indemnification under Section 7 shall be settled by arbitration administered by the American Arbitration Association under its Commercial Arbitration Rules for binding arbitration in Los Angeles, California by a single arbitrator. The arbitrator may grant injunctions or other relief in such dispute or controversy. All awards of the arbitrator shall be binding and non-appealable. Judgment upon the award of the arbitrator may be entered in any court having jurisdiction. The arbitrator shall apply California law to the merits of any dispute or claims, without reference to the rules of conflicts of law applicable therein. Suits to compel or enjoin arbitration or to determine the applicability or legality of arbitration shall be brought in Superior Court for the State of California located in Los Angeles County. Notwithstanding the foregoing, no party to this Agreement shall be precluded from applying to a proper court for injunctive relief by reason of the prior or subsequent commencement of an arbitration proceeding as herein provided. The prevailing party in any arbitration shall be entitled to receive its reasonable attorneys’ fees and costs from the other party as awarded by the arbitrator.

8.3 Assignment; Binding Effect. Neither this Agreement nor any of the rights, interests or obligations hereunder will be assigned to a third party by the Company or Purchaser (whether by operation of Law or otherwise) without the prior written consent of the other party hereto; provided, however, Purchaser may assign this Agreement or its rights or obligations hereunder to an Affiliate of Purchaser without the consent of the Company if Purchaser and the Parent remain liable for their obligations under this Agreement and the Guarantee, respectively. Any assignment not made in accordance with the foregoing shall be null and void. Subject to this Section 8.3, this Agreement will be binding upon and will inure to the benefit of the parties hereto and their respective successors and assigns. Notwithstanding anything contained in this Agreement to the contrary, nothing in this Agreement, expressed or implied, is intended to confer on any Person other than the parties hereto or their respective heirs, successors, executors, administrators and assigns any rights, remedies, obligations or Liabilities under or by reason of this Agreement.

8.4 Entire Agreement. This Agreement and the exhibits and schedules hereto, and any documents delivered by the parties in connection herewith or therewith, constitute the entire agreement between the parties with respect to the subject matter hereof and supersede all prior agreements and understandings (both written and oral) between the parties with respect thereto.

8.5 Expenses. Each party to this Agreement shall pay its own costs and expenses (including attorneys’ and accountants’ fees) incurred in connection with the negotiation, execution and performance of this Agreement.

8.6 Amendment. This Agreement may only be amended by an instrument in writing signed by each of the Company and Purchaser.

8.7 Governing Law. This Agreement will be governed by and construed in accordance with the laws of the State of California, without regard to its conflict of laws principles.

8.8 Counterparts. This Agreement may be executed by the parties hereto in any number of counterparts, each of which when so executed and delivered will be an original, with the same effect as if the signature thereto were upon the same instrument. Each counterpart may consist of a number of copies hereof each signed by one, but together signed by both of the parties hereto. A facsimile copy of a signature page shall be deemed to be an original signature page.

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8.9 Specific Performance. The Company and Purchaser acknowledge and agree that in the event of any breach of this Agreement, each non-breaching party would be irreparably and immediately harmed and could not be made whole by monetary damages. Therefore, each party agrees to the granting of specific performance of this Agreement and injunctive or other equitable relief in favor of the other party as a remedy for any such breach without proof of actual damages. The Company and Purchaser (a) hereby waive, in any action for specific performance, the defense of adequacy of a remedy at law and any requirement for the securing or posting of any bond in connection with any such remedy and (b) shall be entitled, in addition to any other remedy to which they may be entitled at law or in equity, to compel specific performance of this Agreement in any action instituted in accordance with this Section 8.9. The remedy provided for in this Section 8.9 shall not be deemed to be the exclusive remedy for a party’s breach of this Agreement, but shall be in addition to all other remedies available at law or equity to the other parties.

8.10 Headings. Headings of the Sections of this Agreement are for the convenience of the parties only, and will be given no substantive or interpretive effect whatsoever.

8.11 Interpretations. When a reference is made in this Agreement to a Section, Exhibit or Schedule such reference will be to a Section of, or an Exhibit or Schedule to, this Agreement unless otherwise indicated. Whenever the words “include,” “includes” or “including” are used in this Agreement, they will be deemed to be followed by the words “without limitation.” The words “hereof,” “herein,” “hereto” and “hereunder” and words of similar import when used in this Agreement will refer to this Agreement as a whole and not to any particular provision of this Agreement. All terms used herein with initial capital letters have the meanings ascribed to them herein and all terms defined in this Agreement will have such defined meanings when used in any certificate or other document made or delivered pursuant hereto unless otherwise defined therein. The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such term. Any agreement, instrument or statute defined or referred to herein or in any agreement or instrument that is referred to herein means such agreement, instrument or statute as from time to time amended, modified or supplemented, including (in the case of agreements or instruments) by waiver or consent and (in the case of statutes) by succession of comparable successor statutes and references to all attachments thereto and instruments incorporated therein. References to a Person include such Person’s permitted successors and assigns.

8.12 Waivers. Except as provided in this Agreement, no action taken pursuant to this Agreement, including any investigation by or on behalf of either party, will be deemed to constitute a waiver by the party taking such action of compliance with any representations, warranties, covenants or agreements contained in this Agreement. The waiver by either party hereto of a breach of any provision hereunder will not operate or be construed as a waiver of any prior or subsequent breach of the same or any other provision hereunder.

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8.13 Severability. Any term or provision of this Agreement that is invalid or unenforceable in any jurisdiction will, as to that jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement or affecting the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction. If any provision of this Agreement is so broad as to be unenforceable, the provision will be interpreted to be only so broad as is enforceable.

8.14 WAIVER OF JURY TRIAL. SUBJECT TO THE LIMITATIONS ON COURT PROCEEDINGS OR ACTIONS SET FORTH IN SECTION 8.2 ABOVE AND TO THE EXTENT ALLOWABLE UNDER APPLICABLE LAW, EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM, WHETHER IN CONTRACT OR TORT, AT LAW OR IN EQUITY, ARISING OUT OF OR IN ANY WAY RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

8.15 Remedies Not Cumulative; No Strict Construction. No remedy or election under this Agreement is exclusive, but rather, to the extent permitted by applicable law, each such remedy and election is cumulative with all other remedies at law or in equity. The parties hereto have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties hereto, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement.

8.16 Attorneys’ Fees. The prevailing party(ies) in any Proceeding relating to the enforcement or interpretation of this Agreement may recover from the unsuccessful party(ies) all costs, and actual attorneys’ fees (including expert witness and other consultants’ fees and costs) relating to or arising out of (a) the Proceeding (whether or not the Proceeding proceeds to judgment), and (b) any post-judgment or post-award proceeding including one to enforce or collect any judgment or award resulting from the Proceeding. All such judgments and awards will contain a specific provision for the recovery of all such subsequently incurred costs, expenses, and actual attorney’s fees.

***

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IN WITNESS WHEREOF, the parties have caused their duly authorized representatives to execute this Agreement and caused the same to duly deliver this Agreement on their behalf on the day and year first written above.

THE COMPANY CHARLOTTE RUSSE, INC.
By:	/s/ Mark A. Hoffman
	Name: Mark A. Hoffman Title: Senior Executive Vice President and Chief Operating Officer
PURCHASER FOREVER 21 RETAIL, INC.
By:	/s/ Do Won Chang
	Name: Do Won Chang Title: President and Chief Executive Officer

[SIGNATURE PAGE TO PURCHASE AGREEMENT]

SCHEDULE 1.1

INITIAL LEASED FACILITIES

LOCATION	LANDLORD	STREET ADDRESS	CITY	STATE	ZIP
Sherman Oaks	Westfield	14006 Riverside Drive, Space #35	Sherman Oaks	CA	91423
Garden State Plaza	Westfield	1 Garden State Plaza, Space # C-7	Paramus	NJ	07652
Arizona Mills	Mills	5000 Arizona Mills Circle, Space #620	Tempe	AZ	85282
Mill Creek/Mall of Georgia	Simon	3333 Buford Drive, Space #1092	Buford	GA	30519
Water Tower Place	General Growth	845 North Michigan Avenue, Space #410	Chicago	IL	60611
Stonebriar Centre	General Growth	2601 Preston Road, Space #1046	Frisco	TX	75034
Danbury Fair	Macerich	7 Backus Avenue, Space #F110-111	Danbury	CT	06810
Town Ctr. @ Boca Raton	Simon	6000 West Glades Road, Space #1031A	Boca Raton	FL	33431
Valley Fair	Westfield	2855 Stevens Creek Blvd., Suite #2529	San Jose	CA	95050
Freehold Raceway Mall	Macerich	3710 Route 9, Space #G-100	Freehold	NJ	07728
La Cumbre Plaza	Macerich	120 South Hope Avenue, Space #F-118	Santa Barbara	CA	93105
Orland Square	Simon	436 Orland Square, Space #D08	Orland Park	IL	60462
Miami International	Simon	1455 NW 107 Avenue, Space #244	Miami	FL	33172
Chandler Fashion Center	Macerich	3111 West Chandler Blvd., Space #1032	Chandler	AZ	85226
Robinson Town Centre	Forest City	100 Robinson Centre Dr., Space #1230	Pittsburgh	PA	15205
Brandon Town Center	Westfield	459 Brandon Town Center, Space #446	Brandon	FL	33511
Mayfair Mall	General Growth	2500 North Mayfair Road, Space # 624	Wauwatosa	WI	53226
Tri-County Mall	Thor	11700 Princeton Pike, Space D203	Cincinnati	OH	45246-2519
Monmouth Mall	Vornado Realty Trust	1230 Monmouth Mall, Route 35, Space 2142/2144	Monmouth	NJ	07724
Colorado Mills	Mills	1500 W. Colfax Avenue, Space 263	Lakewood	CO	80401
Fox Valley	Westfield	195 Fox Valley Center Space B9A	Aurora	IL	60504
Dallas Galleria	General Growth	13350 Dallas Parkway, Space 2530	Dallas	TX	75240
Discover Mills	Mills	5900 Sugarloaf Parkway, Space 242	Lawrenceville	GA	30043
Mall at Rockingham	Simon	99 Rockingham Park Boulevard, Space E-127A	Salem	NH	03079

Schedule 1.1

SCHEDULE 1.2

ADDITIONAL LEASED FACILITIES

LOCATION	LANDLORD	STREET ADDRESS	CITY	STATE	ZIP
Beverly Center	Taubman	121 North La Cienega, Space #684	Los Angeles	CA	90048
Palisades Center	Pyramid	1532 Palisades Center Drive	West Nyack	NY	10994
Boulevard Mall	General Growth	3570 South Maryland Parkway	Las Vegas	NV	89109
Mission Viejo	Simon	624A The Shops at Mission Viejo	Mission Viejo	CA	92691
Florida Mall	Simon	8001 South Orange Blossom Trail, Space #1214	Orlando	FL	32809
Crossgates Mall	Pyramid	1 Crossgates Mall Road, Space #D107	Albany	NY	12203
Emerald Square Mall	Simon	999 South Washington, Space #W-149	North Attleboro	MA	02760
Mall of America	Simon	60 East Broadway, Space #N120	Bloomington	MN	55425
Woodbridge Mall	General Growth	393 Woodbridge Center Drive	Woodbridge	NJ	07095
King of Prussia	Simon	160 N. Gulph Road, Suite 2322	King of Prussia	PA	19406
West County Mall	Westfield	26 West County Center, Space #1080	Des Peres	MO	63131
Fashion Show	General Growth	3200 Las Vegas Blvd. So., Space # 1000	Las Vegas	NV	89109-2692
Woodfield Mall	Taubman	5 Woodfield Mall, Space #102	Schaumburg	IL	60173
Pembroke Lakes	General Growth	11401 Pines Blvd, Space 552	Pembroke Pines	FL	33026
Montgomery Mall	Westfield	7101 Democracy Blvd, Space 2036	Bethesda	MD	20817
Parks Arlington	General Growth	3811 South Cooper Street, Space 1150	Arlington	TX	76015
Twelve Oaks	Taubman	27500 Novi Road, Space D265	Novi	MI	48377
Town Center at Cobb	Simon	400 Ernest W. Barrett Parkway, Sp#M-12A	Kennesaw	GA	30144
Fair Oaks	Taubman	11750 Fair Oaks, Sp# 127	Fairfax	VA	22033
Jordan Creek Town Center	General Growth	101 Jordan Creek Parkway, Sp# 1050	West Des Moines	IA	50266

Schedule 1.2

SCHEDULE 1.1.2

TELEPHONE NUMBERS

Provider	LOCATION	PHONE	FAX
AT&T	Sherman Oaks	818-995-7688	818-995-0447
AT&T	Beverly Center	310-657-2072	310-657-2257
AT&T	Garden State Plaza	201-843-0477	201-843-8396
AT&T	Arizona Mills	480-456-8838	480-456-8970
AT&T	Palisades Center	845-348-9801	845-348-0826
AT&T	Boulevard Mall	702-650-6521	702-650-6567
AT&T	Mill Creek/Mall of Georgia	678-482-7114	678-482-7117
AT&T	Water Tower Place	312-867-0220	312-867-0232
AT&T	Mission Viejo	949-364-2001	949-364-2005
AT&T	Florida Mall	407-854-9969	407-854-9975
Aubeta	Crossgates Mall	518-452-7054	518-464-9534
Aubeta	Stonebriar Centre	972-668-0375	972-668-0377
AT&T	Emerald Square Mall	508-695-7744	508-695-9735
AT&T	Danbury Fair	203-207-9999	203-798-9278
Aubeta	Town Ctr. @ Boca Raton	561-394-0281	561-394-3078
Aubeta	Valley Fair	408-416-0005	408-416-0034
AT&T	Freehold Raceway Mall	732-625-8201	732-625-8203
Aubeta	La Cumbre Plaza	805-569-5799	805-569-5539
Aubeta	Mall of America	952-883-0200	952-883-0272
AT&T	Orland Square	708-349-9840	708-349-9825
AT&T	Miami International	305-594-4441	305-594-4460
AT&T	Chandler Fashion Center	480-786-4924	480-786-4874
AT&T	Robinson Town Centre	412-787-0211	412-787-0616
AT&T	Woodbridge Mall	732-726-8700	732-726-1913
AT&T	King of Prussia	610-992-9676	610-992-9351
Aubeta	Brandon Town Center	813-643-4276	813-643-6128
AT&T	West County Mall	314-966-6166	314-966-5005
AT&T	Fashion Show	702-732-0478	702-732-2149
AT&T	Mayfair Mall	414-302-0109	414-302-0120
Aubeta	Woodfield Mall	847-619-5879	847-619-3497
Aubeta	Tri-County Mall	513-671-1972	513-671-2691
AT&T	Monmouth Mall	732-542-8324	732-542-8326
Aubeta	Pembroke Lakes	954-431-1232	954-431-2517
AT&T	Colorado Mills	303-271-1220	303-271-1167
AT&T	Fox Valley	630-375-0776	630-375-5891
AT&T	Montgomery Mall	301-767-8928	301-767-0655
AT&T	Parks Arlington	817-557-3317	817-557-6852
Aubeta	Dallas Galleria	972-980-6556	972-980-8246
Aubeta	Discover Mills	678-847-6480	678-847-6482
AT&T	Twelve Oaks	248-348-4648	248-348-4665
AT&T	Town Center at Cobb	678-331-1615	678-331-1617
Aubeta	Fair Oaks	703-591-7822	703-591-7824
AT&T	Jordan Creek Town Center	515-221-9173	515-221-9175
AT&T	Mall at Rockingham	603-893-5891	603-893-3278

Schedule 1.2.1

SCHEDULE 3.7

REQUIRED CONSENTS

LOCATION	LANDLORD CONSENT
Sherman Oaks	Westfield
Beverly Center	Taubman
Garden State Plaza	Westfield
Arizona Mills	Mills
Palisades Center	Pyramid
Boulevard Mall	General Growth
Mill Creek/Mall of Georgia	Simon
Water Tower Place	General Growth
Mission Viejo	Simon
Florida Mall	Simon
Crossgates Mall	Pyramid
Stonebriar Centre	General Growth
Emerald Square Mall	Simon
Danbury Fair	Macerich
Town Ctr. @ Boca Raton	Simon
Valley Fair	Westfield
Freehold Raceway Mall	Macerich
La Cumbre Plaza	Macerich
Mall of America	Simon
Orland Square	Simon
Miami International	Simon
Chandler Fashion Center	Macerich
Robinson Town Centre	Forest City
Woodbridge Mall	General Growth
King of Prussia	Simon
Brandon Town Center	Westfield
West County Mall	Westfield
Fashion Show	General Growth
Mayfair Mall	General Growth
Woodfield Mall	Taubman
Tri-County Mall	Thor
Monmouth Mall	Vornado Realty Trust
Pembroke Lakes	General Growth
Colorado Mills	Mills
Fox Valley	Westfield
Montgomery Mall	Westfield
Parks Arlington	General Growth
Dallas Galleria	General Growth
Discover Mills	Mills
Twelve Oaks	Taubman
Town Center at Cobb	Simon
Fair Oaks	Taubman
Jordan Creek Town Center	General Growth
Mall at Rockingham	Simon

Schedule 3.7

SCHEDULE 3.10.1

LEASE EXCEPTIONS

None.

Schedule 3.10.1

SCHEDULE 5.1.1

EXCLUDED RAMPAGE STORE EMPLOYEES

State	Name – Full	Job Code Description
CA	PADUA, CHEVETTE B.	SENIOR ASSOCIATE
CA	COPPOLINO, LAUREN J.	ASSOCIATE STORE
NJ	CARVALHO, TERESA G.	ASSOCIATE STORE
AZ	COLADONATO, NICOLE	STORE MANAGER
AZ	DE FENZA, CHRISTINA E.	ASST STORE MANAGER
AZ	VALLEJO, KELLY	STORE MANAGER
AZ	HAWKINS, MELISSA S.	STORE MANAGER
IL	BECK, AMANDA C.	ASSOCIATE STORE
IL	CORTESE, JESSICA J.	ASSOCIATE STORE
TX	KOMINIAK, CRYSTAL M.	STORE MANAGER
CT	ASHLEY, NICOLE M.	STORE MANAGER
CT	SALAS, EVELYN	SENIOR ASSOCIATE
FL	DAMICO, SHANNONROSE	ASSOCIATE STORE
CA	SIERRA, ELIZABETH	STORE MANAGER
CA	DIEP, MY T.	ASSOCIATE STORE
CA	AMES, AMY N.	ASSOCIATE STORE
NJ	JACKSON, ROSA	STORE MANAGER
IL	VELASCO, MELISSA A.	SENIOR ASSOCIATE
FL	ROMERO, DAVID P.	SENIOR ASSOCIATE
AZ	DE CARVALHO, CARLA A.	STORE MANAGER
AZ	RIOS, EVA E.	STORE MANAGER
AZ	MOLCZAN, LINDA	ASSOCIATE STORE
PA	EDWARDS, KRISTY A.	ASSOCIATE STORE
PA	HENDRIX, JENNIFER M.	ASSOCIATE STORE
PA	TOTH, TRACY E.	ASSOCIATE STORE
PA	REYES, SHANNON K.	ASSOCIATE STORE
OH	SWENSON, LINDSAY M.	STORE MANAGER
OH	CRUZ, ANNA M.	SENIOR ASSOCIATE
OH	MC ELROY, HEATHER L.	ASSOCIATE STORE
NJ	VITUCCI, ANGELA M.	STORE MANAGER
NJ	CANO, MICHELLE Y.	STORE MANAGER
NJ	BURTON, JULIENNE D.	STORE MANAGER
NJ	LARA, VANESSA	ASSOCIATE STORE
NY	MILES, LINDSEY A.	SENIOR ASSOCIATE
CO	BOWENS, RACQUEL C.	STORE MANAGER
CO	MARTIN, AMY D.	SENIOR ASSOCIATE
IL	BARTKUTE, EVELINA	ASSOCIATE STORE
IL	FULTON, KELLEIGH	ASSOCIATE STORE
GA	MARSH, JESSICA D.	ASSOCIATE STORE
NH	SCROCCA, JODI S.	STORE MANAGER
NH	HUDSON, ASHLEY M.	ASSOCIATE STORE
NH	WESTMORE, JENNIFER M.	ASSOCIATE STORE

Schedule 5.1.1

EXHIBIT A

DEFINITIONS

“Actions” means any claim, action, suit, litigation, arbitration, proceeding (including any civil, criminal, administrative, investigative or appellate proceeding and any informal proceeding), prosecution, contest, hearing, inquiry, inquest, audit, examination or investigation commenced, brought, conducted or heard by or before, or otherwise involving, any Governmental Entity or any arbitrator or arbitration panel.

“Acquired Assets” has the meaning set forth in Section 1.1 of this Agreement.

“Additional Leased Facilities” or “Additional Leased Facility” has the meaning set forth in the third “Whereas” clause to this Agreement.

“Affiliate” of any Person means any other Person that, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such first Person; and, for the purposes of this definition only, “control” (including the terms “controlling”, “controlled by” and “under common control with”) means the possession, direct or indirect, of the power to direct or cause the direction of the management, policies or activities of a Person whether through the ownership of securities, by contract or agency or otherwise.

“Agreement” has the meaning set forth in the introduction to this Agreement.

“Apportioned Items” has the meaning set forth in Section 1.6.4.

“Approval Costs” means any fees, costs, penalties, expenses or other consideration required by landlords or any other party to any Assumed Contract in connection with such party’s execution and delivery of a Required Consent with respect to such Assumed Contract.

“Assumed Contracts” has the meaning set forth in Section 1.1.2.

“Assumed Liabilities” has the meaning set forth in Section 1.4.

“Business Day” means any day, other than a Saturday, Sunday or legal holiday (as defined in Rule 9006(a) of the Federal Rules of Bankruptcy Procedure).

“Claim” has the meaning set forth in Section 7.1.5.

“Claim Notice” has the meaning set forth in Section 7.1.5.

“COBRA” means Consolidated Omnibus Budget Reconciliation Act of 1986, as amended.

“Company” has the meaning set forth in the introduction to this Agreement.

Exhibit A

“Company Contract Breach” means any breach or default of a Lease which may occur before or after the Initial Effective Date or the Second Effective Date, as the case may be; provided that the breach or default arises out of or relates to any action or failure to act by the Company which initially occurred on or before such Effective Date, even though the actions or failure to act may continue after such Effective Date.

“Company Transfer Deliveries” has the meaning set forth in Section 2.2.2.

“Company Transfer Obligations” has the meaning set forth in Section 1.2.2.

“Damages” means demands, claims, actions or causes of action, assessments, losses, damages, liabilities, obligations, costs and expenses (including without limitation reasonable fees and expenses of counsel).

“Designated Party” has the meaning set forth in Section 7.3.1.

“Effective Date” has the meaning set forth in Section 2.1.5.

“Employee Obligations” means any Liabilities to Rampage Store Employees arising or accruing on or prior to the Initial Effective Date or the Second Effective Date, as the case may be, including wages, payment for accrued but unused vacations (regardless of whether the applicable Company policy provides for such payment), workers’ compensation, employee benefits, Liabilities under any collective bargaining agreement, Liabilities under any Plan, Liabilities under the WARN Act, workers’ compensation Liabilities, Liabilities arising under the COBRA, severance, retention and bonus payments, withholding and reporting obligations, all Laws relating to the employment of labor and the employer’s share of payroll or other employment taxes and all other obligations arising under applicable Law.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

“Escrow Agent” has the meaning set forth in Section 1.9.

“Escrow Agreement” has the meaning set forth in Section 1.9.

“Escrowed Funds” has the meaning set forth in Section 1.9.

“Excluded Assets” has the meaning set forth in Section 1.3.

“Excluded Representations” has the meaning set forth in Section 7.1.2.

“Execution Date” has the meaning set forth in the introduction to this Agreement.

“Expiration Date” has the meaning set forth in Section 7.1.2.

“FF&E” has the meaning set forth in the first “Whereas” clause to this Agreement.

“Good Faith Deposit” means the amount of Two Hundred and Fifty Thousand Dollars ($250,000) deposited with the Company by Purchaser on or about May 4, 2006 pursuant to the terms of that certain Letter of Intent dated April 28, 2006 between the Company and Purchaser.

Exhibit A

“Governmental Entity” shall mean any (a) nation, principality, state, commonwealth, province, territory, county, municipality, district or other jurisdiction of any nature, (b) federal, state, local, municipal, foreign or other government, (c) governmental or quasi-governmental authority of any nature (including any governmental division, subdivision, department, agency, bureau, branch, office, commission, council, board, instrumentality, officer, official, representative, organization, unit, body or Entity and any court or other tribunal), (d) multi-national organization or body or (e) individual, Entity or body exercising, or entitled to exercise, any executive, legislative, judicial, administrative, regulatory, police, military or taxing authority or power of any nature.

“Guarantee” has the meaning set forth in Section 1.9.

“Hazardous Substance” means any material presently listed, defined, designated or classified as hazardous, toxic or radioactive, under any federal, state or local law, statute, ordinance, rule, regulation or code, and any license, permit, authorization or court order, judgment, decree or injunction to which the Company or the Acquired Assets is subject related to the use, storage, recycling, treatment, generation, transportation, processing, handling, labeling, production, release or disposal of pollutants or toxic or hazardous substances, including without limitation the Comprehensive Environmental Response, Compensation and Liability Act, as amended, 42 U.S.C. Section 9601, et seq.; the Resource Conservation and Recovery Act, as amended, 42 U.S.C. Section 6901, et seq.; the Clean Air Act, as amended, 42 U.S.C. Section 7401, et seq.; the Federal Water Pollution Control Act, as amended, 33 U.S.C. Section 1251, et seq.; the Toxic Substances Control Act, as amended, 125 U.S.C. Section 1251, et seq.; the Emergency Planning and Community Right to Know Act, 42 U.S.C. Section 11001, et seq.; and the Safe Drinking Water Act, 42 U.S.C. Section 300f, et seq., whether by type or by quantity, and petroleum or any derivative or by-product thereof.

“Indemnitee” means the party seeking indemnification pursuant to Section 7.

“Indemnitor” means the party against whom indemnification is sought pursuant to Section 7.

“Individual Store Purchase Price” means the purchase price in the amount of Three Hundred and Twenty Five Thousand Dollars and no Cents ($325,000.00) for each Rampage Store and related FF&E acquired by Purchaser pursuant to this Agreement.

“Initial Effective Date” has the meaning set forth in Section 2.1.1.

“Initial Effective Date Company Transfer Deliveries” has the meaning set forth in Section 2.2.1.

“Initial Leased Facilities” or “Initial Leased Facility” has the meaning set forth in the second “Whereas” clause to this Agreement.

“Knowledge” means (a) as to Purchaser, the knowledge of the officers of Purchaser and (b) as to the Company, the knowledge of the officers of the Company.

“Landlord’s Assignment and Consent” has the meaning set forth in Section 2.2.1(iv).

“Law” means any domestic or foreign statute, rule, regulation or other legal requirement.

Exhibit A

“Leased Facilities” or “Leased Facility” has the meaning set forth in the third “Whereas” clause to this Agreement.

“Leases” has the meaning set forth in Section 1.1.1.

“Liability” shall mean any debt, commitment, obligation, duty or liability of any nature (including any unknown, undisclosed, unmatured, unaccrued, unasserted, contingent, indirect, conditional, potential, implied, vicarious, derivative, joint, several or secondary liability), regardless of whether such debt, obligation, duty or liability would be required to be disclosed on a balance sheet prepared in accordance with generally accepted accounting principles and regardless of whether such debt, obligation, duty or liability is immediately due and payable; including without limitation those arising under common law, statute, contract or otherwise.

“Licenses and Permits” means all (a) permits, licenses, certificates, franchises, concessions, approvals, consents, ratifications, permissions, clearances, confirmations, endorsements, waivers, certifications, designations, ratings, registrations, qualifications or authorizations issued, granted, given or otherwise made available by or under the authority of any Governmental Entity or pursuant to any Law or legal requirement or (b) right under any contract with any Governmental Entity which relate to, or are necessary to conduct Company’s business at the Leased Facilities or to own the Acquired Assets.

“Liens” shall mean any mortgage, pledge, hypothecation, claim, security interest, encumbrance, lease, sublease, license, occupancy agreement, adverse claim or interest, easement, covenant, encroachment, title defect, title retention agreement, voting trust agreement, equity, option, lien, right of first refusal, charge or other restrictions or limitations of any nature whatsoever.

“Order” shall mean any (a) order, judgment, injunction, edict, decree, ruling, pronouncement, determination, decision, opinion, verdict, sentence, subpoena, writ or award issued, made, entered, rendered or otherwise put into effect by or under the authority of any court, administrative agency or other Governmental Entity or any arbitrator or arbitration panel in connection with any Proceeding or (b) contract with any Governmental Entity entered into in connection with any Proceeding.

“Parent” shall have the mean set forth in the introduction to this Agreement.

“Person” means a natural person, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture, Governmental Entity or other entity or organization.

“Plan” means each deferred compensation and each bonus or other incentive compensation, stock purchase, stock option and other equity compensation plan, program, agreement or arrangement; each severance or termination pay, medical; surgical, hospitalization, life insurance and other “welfare” plan, fund or program (within the meaning of Section 3(1) of ERISA); each profit-sharing, stock bonus or other “pension” plan, fund or program (within the meaning of Section 3(2) of ERISA); each employment, termination, retention or severance plan, agreement or arrangement; and each other employee benefit plan, fund, program, agreement or arrangement, in each case, that is sponsored, maintained or contributed to or required to be contributed to by the Company or an ERISA Affiliate, that together with the Company would be deemed a “single employer” within the meaning of Section 4001(b) of ERISA, or to which the Company or an ERISA Affiliate is party, whether written or oral, for the benefit of any employee or former employee of the Company or any former Subsidiary of the Company.

Exhibit A

“Proceeding” means any litigation, arbitration, bankruptcy, insolvency or other proceeding.

“Purchase Price” has the meaning set forth in Section 1.2.

“Purchaser” has the meaning set forth in the introduction to this Agreement.

“Rampage Stores” has the meaning set forth in the first “Whereas” clause to this Agreement.

“Rampage Store Employees” means any past or current employee of the Company employed at the Leased Facilities on or prior to the Initial Effective Date or the Second Effective Date, as the case may be.

“Required Consents” has the meaning set forth in Section 3.7.

“Retained Liabilities” has the meaning set forth in Section 1.5.

“Second Effective Date” has the meaning set forth in Section 2.1.2.

“Second Effective Date Company Transfer Deliveries” has the meaning set forth in Section 2.2.2.

“Tax” or “Taxes” means any taxes, including all Federal, state, local, foreign and other income, gross receipts, franchise, capital stock, royalty, withholding, payroll, social security, unemployment, disability, real property, personal property, sales, use, ad valorem, excise, transfer, profits, license, customs, estimated, severance, stamp, occupation and any other taxes, including any interest, penalties or additions on or to the foregoing.

“Third Parties” means any Person other than the Company, Purchaser or any of their respective Affiliates.

“Third Party Recoveries” has the meaning set forth in Section 7.2.3.

“Transaction Documents” means this Agreement, the Exhibits attached hereto, the Schedules delivered pursuant hereto, the items delivered on the applicable Effective Date pursuant to Sections 2.2.1(ii) through 2.2.1(vi) or 2.2.2(ii) through 2.2.2(vi), as applicable.

“Transferred Books and Records” has the meaning set forth in Section 1.1.5.

“WARN Act” means the Worker Adjustment and Retraining Notification Act of 1988, as amended, and any similar Law relating to plant closings and layoffs.

Exhibit A

EXHIBIT B

RAMPAGE STORES

LOCATION	LANDLORD	STREET ADDRESS	CITY	STATE	ZIP
Sherman Oaks	Westfield	14006 Riverside Drive, Space #35	Sherman Oaks	CA	91423
Beverly Center	Taubman	121 North La Cienega, Space #684	Los Angeles	CA	90048
Garden State Plaza	Westfield	1 Garden State Plaza, Space # C-7	Paramus	NJ	07652
Arizona Mills	Mills	5000 Arizona Mills Circle, Space #620	Tempe	AZ	85282
Palisades Center	Pyramid	1532 Palisades Center Drive	West Nyack	NY	10994
Boulevard Mall	General Growth	3570 South Maryland Parkway	Las Vegas	NV	89109
Mill Creek/Mall of Georgia	Simon	3333 Buford Drive, Space #1092	Buford	GA	30519
Water Tower Place	General Growth	845 North Michigan Avenue, Space #410	Chicago	IL	60611
Mission Viejo	Simon	624A The Shops at Mission Viejo	Mission Viejo	CA	92691
Florida Mall	Simon	8001 South Orange Blossom Trail, Space #1214	Orlando	FL	32809
Crossgates Mall	Pyramid	1 Crossgates Mall Road, Space #D107	Albany	NY	12203
Stonebriar Centre	General Growth	2601 Preston Road, Space #1046	Frisco	TX	75034
Emerald Square Mall	Simon	999 South Washington, Space #W-149	North Attleboro	MA	02760
Danbury Fair	Macerich	7 Backus Avenue, Space #F110-111	Danbury	CT	06810
Town Ctr. @ Boca Raton	Simon	6000 West Glades Road, Space #1031A	Boca Raton	FL	33431
Valley Fair	Westfield	2855 Stevens Creek Blvd., Suite #2529	San Jose	CA	95050
Freehold Raceway Mall	Macerich	3710 Route 9, Space #G-100	Freehold	NJ	07728
La Cumbre Plaza	Macerich	120 South Hope Avenue, Space #F-118	Santa Barbara	CA	93105
Mall of America	Simon	60 East Broadway, Space #N120	Bloomington	MN	55425
Orland Square	Simon	436 Orland Square, Space #D08	Orland Park	IL	60462
Miami International	Simon	1455 NW 107 Avenue, Space #244	Miami	FL	33172
Chandler Fashion Center	Macerich	3111 West Chandler Blvd., Space #1032	Chandler	AZ	85226
Robinson Town Centre	Forest City	100 Robinson Centre Dr., Space #1230	Pittsburgh	PA	15205
Woodbridge Mall	General Growth	393 Woodbridge Center Drive	Woodbridge	NJ	07095
King of Prussia	Simon	160 N. Gulph Road, Suite 2322	King of Prussia	PA	19406
Brandon Town Center	Westfield	459 Brandon Town Center, Space #446	Brandon	FL	33511
West County Mall	Westfield	26 West County Center, Space #1080	Des Peres	MO	63131
Fashion Show	General Growth	3200 Las Vegas Blvd. So., Space # 1000	Las Vegas	NV	89109-2692
Mayfair Mall	General Growth	2500 North Mayfair Road, Space # 624	Wauwatosa	WI	53226
Woodfield Mall	Taubman	5 Woodfield Mall, Space #102	Schaumburg	IL	60173
Tri-County Mall	Thor	11700 Princeton Pike, Space D203	Cincinnati	OH	45246-2519
Monmouth Mall	Vornado Realty Trust	1230 Monmouth Mall, Route 35, Space 2142/2144	Monmouth	NJ	07724
Pembroke Lakes	General Growth	11401 Pines Blvd, Space 552	Pembroke Pines	FL	33026

Exhibit B

LOCATION	LANDLORD	STREET ADDRESS	CITY	STATE	ZIP
Colorado Mills	Mills	1500 W. Colfax Avenue, Space 263	Lakewood	CO	80401
Fox Valley	Westfield	195 Fox Valley Center Space B9A	Aurora	IL	60504
Montgomery Mall	Westfield	7101 Democracy Blvd, Space 2036	Bethesda	MD	20817
Parks Arlington	General Growth	3811 South Cooper Street, Space 1150	Arlington	TX	76015
Dallas Galleria	General Growth	13350 Dallas Parkway, Space 2530	Dallas	TX	75240
Discover Mills	Mills	5900 Sugarloaf Parkway, Space 242	Lawrenceville	GA	30043
Twelve Oaks	Taubman	27500 Novi Road, Space D265	Novi	MI	48377
Town Center at Cobb	Simon	400 Ernest W. Barrett Parkway, Sp#M-12A	Kennesaw	GA	30144
Fair Oaks	Taubman	11750 Fair Oaks, Sp# 127	Fairfax	VA	22033
Jordan Creek Town Center	General Growth	101 Jordan Creek Parkway, Sp# 1050	West Des Moines	IA	50266
Mall at Rockingham	Simon	99 Rockingham Park Boulevard, Space E-127A	Salem	NH	03079

Exhibit B

EXHIBIT C

ASSUMED CONTRACTS

None.

Exhibit C

EX-10.14

Exhibit 10.14

August 10, 2005

Dear Ed:

In recognition of the important contributions you have made, and we expect you will continue to make to the success of Charlotte Russe Holding, Inc. and its subsidiaries (the “Company”), I am pleased to formalize in writing our commitment to you concerning the terms of your employment as the Senior Vice President Supply Chain and Systems. When signed by you, this agreement shall supersede and be in place of any prior agreements or understandings between us and shall be the sole and exclusive agreement between us pertaining to your employment with the Company.

Duties. You will perform and discharge your duties and responsibilities faithfully, diligently and to the best of your ability. You will devote substantially all of your working time and efforts to the business and affairs of the Company.

Base Salary. Your base salary will continue to be paid at the rate of $268,000.00 gross per year; paid on a bi-weekly basis. Annually throughout your employment, your performance and salary will be reviewed. All payments under this paragraph or any other paragraph of this agreement will be made in accordance with the regular payroll practices of the Company, reduced by applicable federal and state withholdings.

Performance Bonus. You will be eligible for an annual bonus, as determined by the Board of Directors in its sole discretion, based upon your achievement and the Company’s achievement of annual performance goals established by the Board of Directors. All decisions by the Board of Directors pertaining to bonus eligibility and/or achievement are final.

Benefits. You will receive a paid vacation per year (according to the Company’s stated vacation policy), to be taken at such times as you and Company mutually agree upon. You will be eligible to participate in all benefit and welfare plans made generally available to senior management executives of the Company, as in effect from time to time, subject to Company’s right to modify or terminate such plans or benefits at any time with respect to employees of similar rank and title.

Termination of Employment and Severance. You understand and agree that this agreement is not meant to constitute a contract of employment for a specific term, and consequently your employment will be “at-will”. What this means is that either you or the Company may terminate your employment at any time, without notice and with or without “Cause” (as defined herein). If the Company terminates your employment for Cause, or you terminate your employment, the Company’s only obligation to you under this Agreement will be to continue to pay your base salary through the date of termination and pay to you any unused earned vacation as of the last date of your employment. If, however, the Company terminates your employment for any reason other than for Cause, including your death, disability, or “Change of Control”, the Company will continue to pay your base salary for a period of 12 months following such termination (and will make these payments to your beneficiary in the event of death). There are certain conditions that must be met in order for you to receive any severance payment under this agreement. First, you must sign a general release agreement in favor of the Company. Second, you must abide by all terms of this agreement. The Company shall have the right to cease making any severance payment under this agreement in the event you breach any provision of it. Third, any severance payment(s) made to you under this Agreement shall be offset by the amount of any interim earnings you may have and, will cease altogether when you obtain a new position which pays you compensation equal to or higher than your rate of compensation as of the last date of your employment with the Company.

Ed Wong Employment Agreement pg. 1

You will not be entitled to any fringe benefits following termination of employment, except as specifically provided in writing in the applicable benefit plan or policy.

For purposes of this agreement, “Cause” means (i) willful breach of duty, gross neglect of duty, gross carelessness or gross misconduct in the performance of your duties; (ii) commission of a felony or other crime involving moral turpitude; (iii) commission of any act of dishonesty involving the Company; (iv) the unauthorized disclosure of material privileged or confidential information related to the Company or its employees, except as may be compelled by legal process or court order; (v) the commission of a willful act or omission which violates material Company policy, procedures, or otherwise constitutes unethical or detrimental business conduct; (vi) alcohol or controlled substance abuse that materially impacts the performance of your duties; or (vii) any other willful act or omission which, in the opinion of the Board of Directors of the Company has, or is reasonably likely to have, a material adverse impact upon the Company or its reputation; provided, however, that with respect to the first occurrence of any of the acts specified in clauses (i), (v), (vi) and (vii) above, you will have an opportunity to cure such act, violation or condition after receiving written notice from the Company. The amount of time to cure such act, violation or condition shall be in the sole discretion of the Company.

For purposes of this agreement, “Change of Control” means the merger or consolidation of the Company with or into, or the sale of all or substantially all the assets of the Company to, another entity or group of entities where at least 50% of the combined voting power of the continuing, surviving or acquiring entity’s outstanding securities immediately after such merger, consolidation, or acquisition is owned by persons who were not shareholders of the Company immediately prior to such merger, consolidation or other reorganization, or (ii) the acquisition, directly or indirectly, of capital stock representing more than 50% of the voting power of the then outstanding shares of the Company’s capital stock by any person or persons acting as a group; provided, however, that a Change of Control shall not include any merger or consolidation with or into, any sale of assets to, or any acquisition of capital stock by funds advised by Saunders Karp & Megrue, L.P., its successors, or any entity controlled by such funds.

Restricted Activities. During the term of your employment with the Company, you will not, directly or indirectly, be connected as an officer, employee, Board member, consultant, advisor, owner or otherwise (whether or not for compensation) with any business which competes with any business of the Company or its subsidiaries in any area where such business is then being conducted or actively planned by the Company or a subsidiary. During the term of your employment with the Company, and for a period of two years thereafter, you will not, and you will not assist any other person or entity to, hire or solicit the employment of any employees of the Company or any of its subsidiaries (or any person who in the prior six months was such an employee) or otherwise seek to induce any such employee to terminate his or her employment with the Company or any of its subsidiaries. Other than in connection with the performance of your duties for the Company, you will not disclose to any person or entity any information obtained by you while in the employ of the Company, the disclosure of which may be adverse to the interests of the Company, or use any such information to the detriment of the Company. You understand that your commitments in this paragraph are in exchange for the Company’s commitments to you in this letter, and that the restrictions contained in the preceding two sentences apply after your employment terminates, regardless of the reason for such termination.

Miscellaneous. The headings in this agreement are for convenience only and do not affect the meaning hereof. This letter constitutes the entire agreement between the Company and you, and supersedes any prior communications, agreements and understandings, whether written or oral, with respect to your employment and compensation and all matters pertaining thereto. This agreement shall be governed by and construed in accordance with the law of the State of California. Should any action or proceeding be brought to construe or enforce the terms and conditions of this agreement, the losing party will pay to the prevailing party all court costs and reasonable attorneys’ fees and costs incurred in such action or proceeding.

Disputes. Any dispute between the Company and you concerning the meaning or interpretation of this Agreement, or any alleged breach thereof, shall be resolved in a binding arbitration to be conducted in San Diego, California, before a single neutral arbitrator to be selected by the parties from a list of arbitrators on the Employment Dispute Panel of the Judicial Arbitration and Mediation Service (“JAMS”). Arbitration shall be initiated by the party desiring arbitration by serving written notice to the other. Said arbitration shall be conducted no later than 120 days following the date of said written notice, absent the written agreement of the parties otherwise. The prevailing party in such an arbitration shall be entitled to costs of suit and attorneys’ fees, in addition to any award by the arbitrator.

Ed Wong Employment Agreement pg. 2

Partial Invalidity. If the application of any provision of this agreement is held invalid or unenforceable, the remaining provisions shall not be affected, but will continue to be given full force and in effect as if the part held invalid or unenforceable had not been included.

Acceptance. In accepting the terms and conditions reflected in this letter, you represent that you have not relied on any agreement or representation, oral or written, express or implied, that is not set forth expressly in this letter. If this letter reflects your understanding, please sign and return a copy to me, whereupon it shall become a binding agreement between the Company and you.

Very truly yours,

Charlotte Russe Holding, Inc., and its subsidiaries (the “Company”)

By:	/S/    MARK HOFFMAN
	Mark Hoffman, President Chief Executive Officer

Accepted and Agreed To:

/S/    ED WONG	Date:	August 12, 2005
Mr. Ed Wong

Ed Wong Employment Agreement pg. 3

EX-10.15

Exhibit 10.15

August 11, 2006

Dear Patti:

In recognition of the important contributions you have made, and we expect you will continue to make to the success of Charlotte Russe Holding, Inc. and its subsidiaries (the “Company”), I am pleased to formalize in writing our commitment to you concerning the terms of your employment as the Executive Vice President, General Merchandise Manager for our Charlotte Russe division. When signed by you, this agreement shall supersede and be in place of any prior agreements or understandings between us and shall be the sole and exclusive agreement between us pertaining to your employment with the Company.

Duties. You will perform and discharge your duties and responsibilities faithfully, diligently and to the best of your ability. You will devote substantially all of your working time and efforts to the business and affairs of the Company.

Base Salary. Your base salary will continue to be paid at the rate of $325,000.00 gross per year; paid on a bi-weekly basis. Annually throughout your employment, your performance and salary will be reviewed. All payments under this paragraph or any other paragraph of this agreement will be made in accordance with the regular payroll practices of the Company, reduced by applicable federal and state withholdings.

Performance Bonus. You will be eligible for an annual bonus, as determined by the Board of Directors in its sole discretion, based upon your achievement and the Company’s achievement of annual performance goals established by the Board of Directors. All decisions by the Board of Directors pertaining to bonus eligibility and/or achievement are final.

Benefits. You will receive a paid vacation per year (according to the Company’s stated vacation policy), to be taken at such times as you and Company mutually agree upon. You will be eligible to participate in all benefit and welfare plans made generally available to senior management executives of the Company, as in effect from time to time, subject to Company’s right to modify or terminate such plans or benefits at any time with respect to employees of similar rank and title.

Termination of Employment and Severance. You understand and agree that this agreement is not meant to constitute a contract of employment for a specific term, and consequently your employment will be “at-will”. What this means is that either you or the Company may terminate your employment at any time, without notice and with or without “Cause” (as defined herein). If the Company terminates your employment for Cause, or you terminate your employment, the Company’s only obligation to you under this Agreement will be to continue to pay your base salary through the date of termination and pay to you any unused earned vacation as of the last date of your employment. If, however, the Company terminates your employment for any reason other than for Cause, including your death, disability, or “Change of Control”, the Company will continue to pay your base salary for a period of 12 months following such termination (and will make these payments to your beneficiary in the event of death). There are certain conditions that must be met in order for you to receive any severance payment under this agreement. First, you must sign a general release agreement in favor of the Company. Second, you must abide by all terms of this agreement. The Company shall have the right to cease making any severance payment under this agreement in the event you breach any provision of it. Third, any severance payment(s) made to you under this Agreement shall be offset by the amount of any interim earnings you may have and, will cease altogether when you obtain a new position which pays you compensation equal to or higher than your rate of compensation as of the last date of your employment with the Company.

Patti Shields Employment Agreement pg. 1

You will not be entitled to any fringe benefits following termination of employment, except as specifically provided in writing in the applicable benefit plan or policy.

For purposes of this agreement, “Cause” means (i) willful breach of duty, gross neglect of duty, gross carelessness or gross misconduct in the performance of your duties; (ii) commission of a felony or other crime involving moral turpitude; (iii) commission of any act of dishonesty involving the Company; (iv) the unauthorized disclosure of material privileged or confidential information related to the Company or its employees, except as may be compelled by legal process or court order; (v) the commission of a willful act or omission which violates material Company policy, procedures, or otherwise constitutes unethical or detrimental business conduct; (vi) alcohol or controlled substance abuse that materially impacts the performance of your duties; or (vii) any other willful act or omission which, in the opinion of the Board of Directors of the Company has, or is reasonably likely to have, a material adverse impact upon the Company or its reputation; provided, however, that with respect to the first occurrence of any of the acts specified in clauses (i), (v), (vi) and (vii) above, you will have an opportunity to cure such act, violation or condition after receiving written notice from the Company. The amount of time to cure such act, violation or condition shall be in the sole discretion of the Company.

For purposes of this agreement, “Change of Control” means the merger or consolidation of the Company with or into, or the sale of all or substantially all the assets of the Company to, another entity or group of entities where at least 50% of the combined voting power of the continuing, surviving or acquiring entity’s outstanding securities immediately after such merger, consolidation, or acquisition is owned by persons who were not shareholders of the Company immediately prior to such merger, consolidation or other reorganization, or (ii) the acquisition, directly or indirectly, of capital stock representing more than 50% of the voting power of the then outstanding shares of the Company’s capital stock by any person or persons acting as a group; provided, however, that a Change of Control shall not include any merger or consolidation with or into, any sale of assets to, or any acquisition of capital stock by funds advised by Saunders Karp & Megrue, L.P., its successors, or any entity controlled by such funds.

Restricted Activities. During the term of your employment with the Company, you will not, directly or indirectly, be connected as an officer, employee, Board member, consultant, advisor, owner or otherwise (whether or not for compensation) with any business which competes with any business of the Company or its subsidiaries in any area where such business is then being conducted or actively planned by the Company or a subsidiary. During the term of your employment with the Company, and for a period of two years thereafter, you will not, and you will not assist any other person or entity to, hire or solicit the employment of any employees of the Company or any of its subsidiaries (or any person who in the prior six months was such an employee) or otherwise seek to induce any such employee to terminate his or her employment with the Company or any of its subsidiaries. Other than in connection with the performance of your duties for the Company, you will not disclose to any person or entity any information obtained by you while in the employ of the Company, the disclosure of which may be adverse to the interests of the Company, or use any such information to the detriment of the Company. You understand that your commitments in this paragraph are in exchange for the Company’s commitments to you in this letter, and that the restrictions contained in the preceding two sentences apply after your employment terminates, regardless of the reason for such termination.

Miscellaneous. The headings in this agreement are for convenience only and do not affect the meaning hereof. This letter constitutes the entire agreement between the Company and you, and supersedes any prior communications, agreements and understandings, whether written or oral, with respect to your employment and compensation and all matters pertaining thereto. This agreement shall be governed by and construed in accordance with the law of the State of California. Should any action or proceeding be brought to construe or enforce the terms and conditions of this agreement, the losing party will pay to the prevailing party all court costs and reasonable attorneys’ fees and costs incurred in such action or proceeding.

Disputes. Any dispute between the Company and you concerning the meaning or interpretation of this Agreement, or any alleged breach thereof, shall be resolved in a binding arbitration to be conducted in San Diego, California, before a single neutral arbitrator to be selected by the parties from a list of arbitrators on the Employment Dispute Panel of the Judicial Arbitration and Mediation Service (“JAMS”). Arbitration shall be initiated by the party desiring arbitration by serving written notice to the other. Said arbitration shall be conducted no later than 120 days following the date of said written notice, absent the written agreement of the parties otherwise. The prevailing party in such an arbitration shall be entitled to costs of suit and attorneys’ fees, in addition to any award by the arbitrator.

Patti Shields Employment Agreement pg. 2

Partial Invalidity. If the application of any provision of this agreement is held invalid or unenforceable, the remaining provisions shall not be affected, but will continue to be given full force and in effect as if the part held invalid or unenforceable had not been included.

Acceptance. In accepting the terms and conditions reflected in this letter, you represent that you have not relied on any agreement or representation, oral or written, express or implied, that is not set forth expressly in this letter. If this letter reflects your understanding, please sign and return a copy to me, whereupon it shall become a binding agreement between the Company and you.

Very truly yours,

Charlotte Russe Holding, Inc., and its subsidiaries (the “Company”)

By:	/S/    MARK HOFFMAN
	Mark Hoffman, President Chief Executive Officer

Accepted and Agreed To:

/S/    PATTI SHIELDS	Date:	September 12, 2006
Ms. Patti Shields

Patti Shields Employment Agreement pg. 3

EX-23.1

EXHIBIT 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the Registration Statements on Form S-8 pertaining to the 1996 Long-Term Incentive Plan, the 1999 Long-Term Incentive Plan, the 1999 Equity Incentive Plan, the 1999 Employee Stock Purchase Plan and Form S-3 (No. 333-118241) of Charlotte Russe Holding, Inc., and the related Prospectus of our reports dated December 5, 2006, with respect to the consolidated financial statements and schedule of Charlotte Russe Holding, Inc., Charlotte Russe Holding, Inc. management’s assessment of the effectiveness of internal control over financial reporting, and the effectiveness of internal control over financial reporting of Charlotte Russe Holding, Inc., included in the Annual Report (Form 10-K) for the year ended September 30, 2006.

/s/ ERNST & YOUNG LLP

San Diego, California

December 12, 2006

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Mark A. Hoffman, certify that:

1. I have reviewed this annual report on Form 10-K of Charlotte Russe Holding, Inc.;

2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this annual report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: December 13, 2006

/s/    MARK A. HOFFMAN        

Mark A. Hoffman

Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Daniel T. Carter, certify that:

1. I have reviewed this annual report on Form 10-K of Charlotte Russe Holding, Inc.;

2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this annual report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: December 13, 2006

/s/    DANIEL T. CARTER        

Daniel T. Carter

Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

SECTION 1350, CHAPTER 63 OF TITLE 18, UNITED STATES CODE,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned, as chief executive officer of Charlotte Russe Holding, Inc. (the “Company”), does hereby certify that to the undersigned’s knowledge:

1) the Company’s annual report on Form 10-K for the year ended September 30, 2006 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2) the information contained in the Company’s annual report on Form 10-K for the year ended September 30, 2006 fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/    MARK A. HOFFMAN        

Mark A. Hoffman

Chief Executive Officer

(Principal Executive Officer)

Date: December 13, 2006

A signed original of this written statement required by Section 906 has been provided to Charlotte Russe Holding, Inc. and will be retained by Charlotte Russe Holding, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

SECTION 1350, CHAPTER 63 OF TITLE 18, UNITED STATES CODE,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned, as chief financial officer of Charlotte Russe Holding, Inc. (the “Company”), does hereby certify that to the undersigned’s knowledge:

1) the Company’s annual report on Form 10-K for the year ended September 30, 2006 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2) the information contained in the Company’s annual report on Form 10-K for the year ended September 30, 2006 fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/    DANIEL T. CARTER        

Daniel T. Carter

Executive Vice President, Chief Financial Officer

(Principal Financial Officer and

Principal Accounting Officer)

Date: December 13, 2006

A signed original of this written statement required by Section 906 has been provided to Charlotte Russe Holding, Inc. and will be retained by Charlotte Russe Holding, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.