Exhibit 10.25

AÉROPOSTALE, INC.

LONG-TERM INCENTIVE DEFERRED COMPENSATION PLAN

(Effective as of January 1, 2004)

 

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CERTIFICATE

     I,                     , the                      of Aéropostale, Inc., do
hereby certify that the attached is a true and correct copy of the Aéropostale,
Inc. Long-Term Incentive Deferred Compensation Plan as in effect as of
January 1, 2004.

By: 

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Title: 

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Dated this ____ day of _____________, 2004

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AÉROPOSTALE, INC. LONG-TERM INCENTIVE
DEFERRED COMPENSATION PLAN

     This Aéropostale, Inc. Long-Term Incentive Deferred Compensation Plan shall
constitute an unfunded, nonqualified deferred compensation plan established for
the purpose of providing deferred compensation to a select group of management
or highly compensated employees of the Company. The Plan is intended to be a
“top-hat” plan as described in Sections 201(2), 301(a)(3) and 401(a)(1) of
ERISA.

Definitions

     As used in the Plan, the following terms shall have the meanings indicated
below unless it is clear from the context that another meaning is intended:

     Section 1.01. “Account” means the bookkeeping entry established by the
Committee on behalf of a Participant as described in Section 4.01.

     Section 1.02. “Beneficiary” means the person designated by a Participant in
accordance with Section 4.04 to receive payment of his Account in the event of
the Participant’s death.

     Section 1.03. “Board” means the board of directors of Aéropostale, Inc.

     Section 1.04. “Cause” means any one or more than one of the following: (a)
gross negligence or willful misconduct of a Participant in the performance of
his duties for the Company; (b) the Participant’s conviction of a fraud, felony
or crime of moral turpitude; (c) the Participant’s willful failure to follow
instructions of the Board or the senior executive to whom the Participant
reports, which instructions are material, legal and not inconsistent with the
duties assigned to the Participant and which failure is not cured within 5
business days after written notice of such is delivered to the Participant by
the Board with respect to failures that are curable; or (d) any breach of any of
the material terms of the Participant’s employment agreement (if any) that is
not cured within 5 business days after written notice of the breach is delivered
to the Participant by the Board with respect to breaches that are curable.

     Section 1.05. “Change in Control” means: (a) the acquisition by any person
or entity of, directly or indirectly, “beneficial ownership” (as defined in
Rule 13d-3 of the Securities Exchange Act of 1934, as amended) of securities of
the Company representing 33-1/3% (or more) of the total voting power of all of
the Company’s then outstanding voting securities; (b) a merger or consolidation
of the Company in which the Company’s voting securities immediately prior to the
merger or consolidation do not represent, or are not converted into securities
(owned by stockholders in substantially the same proportions as their ownership
immediately prior to such merger or consolidation) that represent, a majority of
the voting power of all of the voting securities of the surviving entity
immediately after the merger or consolidation; (c) a sale of substantially all
of the assets of the Company or a liquidation or dissolution of the Company; or
(d) individuals, who, as of the Effective Date, constitute the Board (the
“Incumbent Board”) cease for any reason to constitute at least a majority of
such Board, provided that any individual who becomes a director of the Company
subsequent to the Effective Date whose election or nomination for election by
the Company’s stockholders was approved by the vote of at least a majority of
the directors then in office shall be deemed a member of the Incumbent Board.

 

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     Section 1.06. “Code” means the Internal Revenue Code of 1986, as amended,
and any rulings or regulations issued thereunder.

     Section 1.07. “Committee” means the person or Committee designated by the
Board to administer the Plan as described in Article VIII.

     Section 1.08. “Company” refers to Aéropostale, Inc., a Delaware
corporation, and any subsidiary or affiliate thereof designated by the Board as
a participating employer in the Plan.

     Section 1.09. “Compensation” means the total current cash remuneration paid
to a Participant as regular or base salary on account of such Participant’s
service for the Company during that portion of the Plan Year in which such
person is a Participant, including any compensation deferrals made under this
Plan, any Code Section 401(k) plan or any Code Section 125 “cafeteria” plan
maintained by the Company. Notwithstanding the foregoing, “Compensation” shall
not include any bonus payments or bonus awards, car allowances or stock option
compensation paid or payable to or on behalf of a Participant.

     Section 1.10. “Disability” means that the Participant suffers from a
physical or mental condition that renders the Participant eligible for and in
actual receipt of a disability benefit under either the Company’s long-term
disability plan or the federal Social Security Act.

     Section 1.11. “Early Retirement” means retirement from the Company after
attaining age 55 and completing 5 Years of Service with the Company.

     Section 1.12. “Effective Date” means the date on which this Plan first
became effective, which is January 1, 2004.

     Section 1.13. “ERISA” means the Employee Retirement Income Security Act of
1974, as amended, and any rulings or regulations issued thereunder.

     Section 1.14. “Incentive Credit” means the credit to a Participant’s
Account described in Section 3.01.

     Section 1.15. “Participant” means an employee of the Company who
participates in the Plan as described in Article II.

     Section 1.16. “Plan” means this Aéropostale, Inc. Long-Term Incentive
Deferred Compensation Plan as it may be amended from time to time.

     Section 1.17. “Plan Year” means each calendar year commencing on and after
January 1, 2004.

     Section 1.18. “Retirement” means retirement from the Company at or after
attaining age 65.

     Section 1.19. “Year of Service” shall mean the 12-consecutive-month period
commencing on the later of:

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          (a) the date on which an employee’s designation as a Vice President
(or other higher-ranking employee) is effective; or

          (b) the Effective Date if an employee was designated as a Vice
President (or other higher-ranking employee) on or prior to the Effective Date,

and the 12-consecutive-month period commencing on each anniversary thereof, in
each case throughout which the employee is a full-time Vice President (or
higher-ranking employee) of the Company.

ARTICLE II

Eligibility and Participation

     Section 2.01. Eligible Employees. Each management or highly compensated
employee designated by the Company as a Vice President or other higher ranking
position in the Company shall be eligible to participate in the Plan, provided
that such employee does not also participate in the Supplementary Executive
Retirement Plan of Aéropostale, Inc. (formerly known as the Supplementary
Executive Retirement Plan of MSS-Delaware, Inc.).

     Section 2.02. Participation. Each employee who meets the eligibility
requirements described in Section 2.01 shall become a Participant on the later
of the date on which he first meets such eligibility requirements or the
Effective Date.

     Section 2.03. Duration of Participation. Each Participant in the Plan shall
continue to be a Participant until the entire amount of his benefit, if any,
under the Plan has been paid by the Company. Notwithstanding the foregoing, a
Participant is no longer eligible to be an active Participant under the Plan as
of (a) the first day of the Plan Year that coincides with or next follows the
date on which the Participant no longer meets the eligibility requirements of
Section 2.01, or (b) the first day of the Plan Year that coincides with or next
follows the date on which the Committee determines that a Participant is no
longer eligible to be an active Participant under the Plan.

ARTICLE III

Incentive Credits

     Section 3.01. Amount of Credit. A Participant shall receive an annual
incentive credit to his Account in an amount equal to the following:

          (a) 5% of such Participant’s Compensation if the Participant has less
than 6 Years of Service; or

          (b) 10% of such Participant’s Compensation if the Participant has 6 or
more Years of Service.

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     Section 3.02. Time of Credit. Amounts credited to a Participant’s Account
for any Plan Year pursuant to this Article III shall be credited as of the first
day of the next following Plan Year, provided however that the Participant has
satisfactory performance (as determined in the Committee’s sole discretion) at
the time the credit is made. The Participant must be an active employee of the
Company on the last day of a Plan Year in order to receive a credit under this
Article III for that Plan Year.

     Section 3.03. Special 2003 Compensation Credit. The Committee shall make a
special one-time credit to each Participant’s Account if such Participant is a
Participant in the Plan during the 2004 Plan Year. The amount of such credit for
each Participant shall be determined in accordance with Section 3.01(a) on
account of the Participant’s 2003 Compensation and shall be credited to the
Participant’s Account during the 2004 Plan Year at such time as is determined by
the Committee in its sole discretion.

ARTICLE IV

Establishment and Maintenance of Accounts

     Section 4.01. Establishment of Accounts. The Committee shall cause a
bookkeeping entry, or Account, to be kept in the name of each Participant, which
Account shall reflect the value of the credits made by the Committee pursuant to
Article III on behalf of such Participant, as well as interest credits made
pursuant to Section 4.03.

     Section 4.02. No Right to Account. The interest of each Participant or
Beneficiary in his Account is contingent only and is subject to forfeiture as
provided in Article V. No Participant or Beneficiary shall have a right to
receive amounts credited to his Account prior to the time set forth in Section
6.02.

     Section 4.03. Interest Credits. In addition to the amounts described in
Article III, the Committee shall credit to each Account, as of the last day of
each Plan Year, an amount of deemed interest on the balance of the Account. The
interest rate used to determine the amount of such deemed interest shall be the
annual rate on 10-year Treasury Constant Maturities determined as of the
November 30th preceding the last day of the Plan Year for which the interest
credit is payable.

     Section 4.04. Designation of Beneficiaries. Each Participant shall have the
right to designate, in the form and in a manner specified by the Committee, a
Beneficiary who is to succeed to the Participant’s contingent right to receive
future payments hereunder in the event of the Participant’s death. No
designation of a Beneficiary shall be valid unless it is in writing and signed
by the Participant, dated and filed with the Committee. A Beneficiary may be
changed by the Participant without the consent of any prior Beneficiary. Each
designation of a Beneficiary by a Participant will revoke all prior designations
by the same Participant. In determining the existence or identity of a
Beneficiary, the Committee may rely conclusively upon information supplied by
the Participant, his personal representative, executor or administrator. If a
question arises as to the existence or identity of a Beneficiary, or if a
dispute arises with respect to a benefit payable under the Plan to a
Beneficiary, then, notwithstanding the foregoing, the Company, in its sole
discretion, may make payment of the benefit to the Participant’s estate

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without liability for any tax or other consequences which might flow therefrom,
or may take such other actions as the Committee deems appropriate. In case of a
failure of designation or the death of a Beneficiary without a designated
successor, distribution shall be made to the Participant’s estate.

     Section 4.05. Benefits Not Assignable. To the extent permitted by law, the
right of any Participant or any Beneficiary in any benefit or to any payment
under the Plan shall not be subject in any manner to attachment or other legal
process for the debts of such Participant or Beneficiary. Any benefit or payment
under the Plan shall not be subject to anticipation, alienation, sale, transfer,
assignment, pledge or encumbrance. The withholding of taxes from Plan benefit
payments, the recovery by the Plan or the Company of overpayments of benefits
made to a Participant or Beneficiary, the transfer of benefit rights from the
Plan to another plan, or the direct deposit of benefit payments to an account at
a banking institution on behalf of a Participant or Beneficiary shall not be
construed as an assignment or alienation.

ARTICLE V

Vesting

     Section 5.01. Retirement. A Participant shall be 100% vested in his Account
at his Retirement or Early Retirement.

     Section 5.02. Death, Disability, Involuntary Termination, Change in
Control. In the event of a Participant’s death, Disability, involuntary
termination of employment other than for Cause, or upon a Change in Control, a
Participant shall be 100% vested in his Account.

     Section 5.03. Termination of Employment. In the event of any other
voluntary termination of employment, the vested percentage of each Participant’s
Account shall be determined based upon his Years of Service as described below
and shall be payable in accordance with Article VI.

          Each Participant’s Account shall reflect the amount of each Incentive
Credit made to such Account under Article III (and any interest credited thereon
pursuant to Section 4.03), and a Participant shall become 100% vested in each
such Incentive Credit (and any interest credited thereon pursuant to
Section 4.03) separately on the January 1st following the Participant’s
completion of 3 Years of Service during the time period commencing on the date
such Incentive Credit is made. A Participant shall not be vested in any portion
of such Incentive Credit prior to completing the 3 Years of Service described in
this Section 5.03.

     Section 5.04. Other Forfeitures. Notwithstanding any other provision of the
Plan, the contingent right of a Participant to receive credits to his Account or
future payments of any portion of his Account balance hereunder shall be
completely forfeited upon the occurrence of any one or more of the following
events:

          (a) the Participant’s employment is terminated by the Company for
Cause; or

          (b) the Participant violates any confidentiality, non-competition or
non-solicitation provision of his employment agreement or otherwise enters into
a business or

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employment that the Committee or the Board determines to be (i) detrimentally
competitive to the business of the Company, and (ii) substantially injurious to
the Company’s financial interests.

     Section 5.05. No Reallocation. Any amount forfeited under Section 5.03 or
Section 5.04 shall remain the property of the Company. There will be no
reallocation to other Participants.

     Section 5.06. Discretion to Vest. The Committee or the Board may in its
sole discretion at any time and from time to time order all or any part of a
Participant’s Account to be vested and no longer subject to forfeiture, and may
order payment of the amounts so vested on dates specified in such orders.

ARTICLE VI

Payment of Benefits

     Section 6.01. Amount and Form of Payment. In the event of the Participant’s
Retirement, Early Retirement, death, Disability or termination of employment
(other than for Cause), an amount equal to the value of his vested Account
determined as of the date of such event shall be determined. The Committee shall
pay such amount to the Participant or, in the event of the Participant’s death,
to his Beneficiary, in one lump sum. Notwithstanding the foregoing, if a
Participant (a) is terminated in connection with a Change in Control and
receives an offer of comparable employment from a purchaser or (b) will continue
his employment with the Company after a Change in Control, then no amount shall
be payable under the Plan until the Participant’s termination of employment from
such purchaser or from the Company following the Change in Control.

     Section 6.02. Time of Payment. Benefits under the Plan shall be paid no
later than the date that is 60 days after the date of the Participant’s
Retirement, Early Retirement, death, Disability or termination of employment, as
applicable.

     Section 6.03. Hardship Distributions. In the event of financial hardship of
the Participant, as hereinafter defined, the Participant may apply to the
Committee for the distribution of all or any part of his vested Account. The
Committee shall consider the circumstances of each such case and the best
interests of the Participant and his family and shall have the right, in its
sole discretion, to allow such distribution or, if applicable, to direct a
distribution of part of the amount requested or to refuse to allow any
distribution. Upon a finding of financial hardship, the Committee shall make the
appropriate distribution to the Participant from his vested Account. In no event
shall the aggregate amount of such distribution exceed either the full value of
the Participant’s vested Account or the amount determined by the Committee to be
necessary to alleviate the Participant’s financial hardship (which financial
hardship may be considered to include any taxes due because of the distribution
occurring on account of hardship), and which is not reasonably available from
other resources of the Participant. For purposes of this Section 6.03, the value
of the Participant’s vested Account shall be determined as of the date of the
distribution. “Financial hardship” means (a) a severe financial hardship to the
Participant resulting from a sudden and unexpected illness or accident

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of the Participant or of a dependent (as defined in Section 152(a) of the Code),
(b) loss of the Participant’s property due to casualty, or (c) other similar
extraordinary and unforeseeable circumstances arising as a result of events
beyond the control of the Participant, each as determined to exist by the
Committee. A distribution may be made under this Section 6.03 only with the
consent of the Committee.

     Section 6.04. Information to be Furnished by Participants and
Beneficiaries; Inability to Locate Participants or Beneficiaries. Any
communication, statement or notice addressed to a Participant or to a
Beneficiary at his last post office address as shown on the Company’s records
shall be binding on the Participant or Beneficiary for all purposes of the Plan.
The Company shall not be obliged to search for any Participant or Beneficiary
beyond the sending of a registered letter to such last known address. If the
Company notifies any Participant or Beneficiary that he is entitled to an amount
under the Plan and the Participant or Beneficiary fails to claim such amount or
make his location known to the Company within 3 years thereafter, then, except
as otherwise required by law, if the location of one or more of the next of kin
of the Participant is known to the Company, the Company may direct distribution
of such amount to any one or more or all of such next of kin, and in such
proportions as the Company determines. If the location of none of the foregoing
persons can be determined, the Company shall have the right to direct that the
amount payable shall be deemed to be a forfeiture, except that the dollar amount
of the forfeiture, unadjusted for Interest Credits in the interim, shall be paid
by the Company if a claim for the benefit subsequently is made by the
Participant or the Beneficiary to whom it was payable. If a benefit payable to a
Participant or Beneficiary who has not been located is subject to escheat
pursuant to applicable state law, the Company shall not be liable to any person
for any payment made in accordance with such law.

ARTICLE VII

Source of Benefits

     All benefits payable under this Plan shall be paid exclusively from the
Company’s general assets. To the extent that any person acquires a right to
receive payments from the Company under the Plan, such right shall be no greater
than the right of any unsecured general creditor of the Company. Nothing
contained herein shall be deemed to create a trust of any kind or create any
fiduciary relationship.

ARTICLE VIII

Administration

     Section 8.01. Committee. The Plan shall be administered by a person or
committee designated from time to time by the Board for this purpose. The
members of the Committee shall serve without compensation for services as such.

     Section 8.02. Powers of Committee. The Committee is authorized to make such
rules and regulations as it may deem necessary to carry out the provisions of
the Plan and, subject to the scope of its powers as assigned by the Board, is
given sole and complete discretionary authority to determine any person’s
eligibility for and amount of benefits under the Plan, to construe the terms of
the Plan, and to decide any other matters pertaining to the Plan’s

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administration. The Committee shall, subject to the scope of its powers assigned
by the Board, determine any question arising in the administration,
interpretation and application of the Plan, which determination shall be binding
and conclusive on all persons. In administering the Plan, the Committee may
employ or permit any agents to carry out any of its responsibilities hereunder.

     Section 8.03. Actions of the Committee. For purposes of this Article VIII,
the Committee shall act by majority vote of its members, and any such actions
may be taken by a vote at a meeting or in writing without a meeting. The
Committee may by such majority action appoint subcommittees and may authorize
any one or more of its members or any agent of it to execute any document or
documents or to take any other action, including the exercise of discretion, on
behalf of such Committee. The Committee may provide for the allocation of
responsibilities for the operation and administration of the Plan.

     Section 8.04. Plan Records. The books and records to be maintained for the
purpose of the Plan shall be maintained by the officers and employees of the
Company at its expense and subject to the supervision and control of the
Committee. All expenses of administering the Plan shall be paid by the Company.

     Section 8.05. Limits on Liability. No member of the Board or of the
Committee and no officer or employee of the Company shall be liable to any
person for any action taken or omitted in connection with the administration of
this Plan unless attributable to his own fraud or willful misconduct. The
Company shall not be liable to any person for any such action unless
attributable to fraud or willful misconduct on the part of a director, officer
or employee of the Company.

     Section 8.06. Claims Procedure. If a Participant, a Beneficiary or any
other person claiming through a Participant has a dispute as to the failure of
the Plan to pay or provide a benefit, as to the amount of any benefit paid, or
as to any other matter involving the Plan, the person may file a claim for the
benefit or relief believed by the person to be due. Such claim must be provided
by written notice to the Committee (or its agent designated by it for this
purpose). The Committee (or its agent) will decide any claims made pursuant to
this Section 8.06.

          If a claim made pursuant to this Section 8.06 above is denied, in
whole or in part, notice of the denial in writing will be furnished by the
Committee (or its agent designated by it for this purpose) to the claimant
within 90 days after receipt of the claim by the Committee (or such agent);
except that if special circumstances require an extension of time for processing
the claim, the period in which the Committee (or such agent) is to furnish the
claimant written notice of the denial will be extended for up to an additional
90 days (and the Committee or its agent will provide the claimant within the
initial 90-day period a written notice indicating the reasons for the extension
and the date by which the Committee or its agent expects to render the final
decision). The final notice of denial will be written in a manner designed to be
understood by the claimant and set forth (1) the specific reasons for the
denial, (2) specific reference to pertinent Plan provisions on which the denial
is based, (3) a description of any additional material or information necessary
for the claimant to perfect the claim and an explanation of why such material or
information is necessary, and (4) an explanation of the claims review appeal

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procedures including the name and address of the person or committee to whom any
appeal should be directed, the time limits applicable to such procedures, and a
statement that the claimant has a right to bring a civil action pursuant to
Section 502(a) of ERISA following an adverse determination on review.

          Any claimant who has a claim denied as described above may appeal the
denied claim to the Committee (or its agent designated by it for this purpose).
Such an appeal must, in order to be considered, be filed by written notice to
the Committee (or such agent) within 60 days of the receipt by the claimant of a
written notice of the denial of his initial claim (unless it was not reasonably
possible for the claimant to make such appeal within such 60-day period, in
which case the claimant must file his appeal within 60 days after the time it
becomes reasonable for him so to file an appeal). Such request shall include any
and all documents, materials or other evidence which the claimant believes
supports his claim for benefits. If any appeal is filed in accordance with such
rules, the claimant and any duly authorized representative of the claimant will
be given the opportunity to review pertinent documents and submit issues and
comments in writing. A formal hearing may be allowed in its discretion by the
Committee (or its agent designated by it for this purpose) but is not required.
The Committee (or its agent designated by it for this purpose) will consider all
documents, materials or other evidence submitted by the claimant, regardless of
whether such evidence was considered during the claimant’s initial benefits
determination. The claimant may request, free of charge, copies of all
documents, records and other information relevant to his claim for benefits.

          Upon any appeal of a denied claim, the Committee (or its agent
designated by it for this purpose) will provide a full and fair review of the
subject claim and decide the appeal within 60 days after the filing of the
appeal; except that if special circumstances require an extension of time for
processing the appeal, the period in which the appeal is to be decided will be
extended for up to an additional 60 days, and the party deciding the appeal will
provide the claimant written notice of the extension prior to the end of the
initial 60-day period. Such notice shall include an explanation of the special
circumstances requiring the extension and the date by which the Committee (or
its agent designated by it for this purpose) expects to render the benefits
determination. The decision on appeal will be set forth in a writing designed to
be understood by the claimant, specify the reasons for the decision and
references to pertinent Plan provisions on which the decision is based, and be
furnished to the claimant by the Committee (or its agent) within the 60-day
period or 120-day period, as is applicable, described above.

     The Committee may prescribe additional rules that are consistent with the
other provisions of this Section 8.06, and the scope of the duties assigned to
it by the Board, in order to carry out the Plan’s claims procedures.

ARTICLE IX

Amendment or Termination

     Section 9.01. Amendment or Termination. The Plan may be amended in whole or
in part at any time and in any respect by the Board. The Board may also
terminate the Plan at any time. No amendment shall decrease the benefits
credited to the Account of a Participant as of the later of the effective date
of such amendment or the date the amendment is adopted. The Plan

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may also be amended by the Board at any time (and retroactively if required) if
found necessary, in the opinion of the Committee or the Board, to ensure that
the Plan is characterized as “top-hat” plan of deferred compensation maintained
for a select group of management or highly, compensated employees as described
under Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA, and to conform the Plan
to the provisions and requirements of any applicable law. No such amendment
shall be considered prejudicial to any interest of a Participant or a
Beneficiary hereunder.

ARTICLE X

Miscellaneous

     Section 10.01. Plan Not a Contract of Employment. The Plan is not a
contract of employment, and the terms of employment of any Participant shall not
be affected in any way by the Plan except as specifically provided in the Plan.
The establishment of the Plan shall not be construed as conferring any legal
rights upon any Participant for a continuation of employment, nor shall it
interfere with the right of the Company to discharge any employee and to treat
him without regard to the effect that such treatment might have upon him as a
Participant in this Plan. Each Participant (and any Beneficiary of or other
person claiming through the Participant) who may have a claim or right under the
Plan shall be bound by the terms of the Plan.

     Section 10.02. Construction. The Plan is intended to be a plan that is
unfunded and maintained primarily for the purpose of providing deferred
compensation for a select group of management or highly compensated employees
and its terms shall be interpreted accordingly. Further, the provisions of the
Plan shall be administered and enforced according to applicable federal law and,
only to the extent not preempted by ERISA, the laws of the State of New York. If
any provision of the Plan, or the application of any such provision to any
person or circumstances, shall be invalid under any applicable law, neither the
application of such provision to persons or circumstances other than those as to
which such provision is invalid nor any other provisions of the Plan shall be
affected thereby. The headings and subheadings in the Plan have been inserted
for convenience of reference only and are to be ignored in any construction of
the provisions hereof. In the construction of the Plan, the singular shall
include the plural, and the plural shall include the singular, in all cases
where such meanings would be appropriate. Pronouns of a masculine gender shall
include the feminine.

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          IN WITNESS WHEREOF, this Plan has been executed by the Company on the
    day of                     , 2004.

            AÉROPOSTALE, INC.
      By:                      

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