<PAGE>

                                                                   EXHIBIT 10.25

                                                                       EXECTUION

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                             NOTE PURCHASE AGREEMENT

                                      among

                    NORDSTROM PRIVATE LABEL RECEIVABLES LLC,
                                 as Transferor,

                                 NORDSTROM FSB,
                                   as Servicer

                    FALCON ASSET SECURITIZATION CORPORATION,
                            as the Conduit Purchaser,

                       BANK ONE,NA (MAIN OFFICE CHICAGO),
                          as Agent for the Purchasers,

                                       and

                       BANK ONE,NA (MAIN OFFICE CHICAGO),
                            as a Committed Purchaser

                          dated as of December 4, 2001

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                                TABLE OF CONTENTS

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                                                                                                PAGE
<S>                                                                                             <C>
                                              ARTICLE I
                                             DEFINITIONS
SECTION 1.01      Certain Defined Terms ...................................................       1

                                             ARTICLE II
                                          PURCHASE AND SALE

SECTION 2.01      Purchase and Sale of the Class A Note ...................................      10
SECTION 2.02      Initial Purchase Price ..................................................      10
SECTION 2.03      Incremental Fundings ....................................................      10
SECTION 2.04      Extension of Purchase Expiration Date ...................................      11
SECTION 2.05      Reduction or Increase of the Class A Maximum Principal Balance ..........      12
SECTION 2.06      Calculation of Monthly Interest .........................................      12

                                             ARTICLE III
                                               CLOSING

SECTION 3.01      Closing .................................................................      13
SECTION 3.02      Transactions to be Effected at the Closing ..............................      13

                                             ARTICLE IV
                        CONDITIONS PRECEDENT TO PURCHASE ON THE CLOSING DATE

SECTION 4.01      Performance by the Transferor, Issuer, Nordstrom, Inc., NCI and
                  Servicer ................................................................      14
SECTION 4.02      Representations and Warranties ..........................................      14
SECTION 4.03      Corporate Documents .....................................................      14
SECTION 4.04      Opinions of Counsel to Nordstrom fsb, Nordstrom, Inc., NCI and
                  the Transferor ..........................................................      14
SECTION 4.05      Opinions of Counsel to the Owner Trustee ................................      14
SECTION 4.06      Opinions of Counsel to the Indenture Trustee ............................      14
SECTION 4.07      Financing Statements ....................................................      14
SECTION 4.08      Documents ...............................................................      15
SECTION 4.09      No Actions or Proceedings ...............................................      15
SECTION 4.10      Approvals and Consents ..................................................      15
SECTION 4.11      Officer's Certificates ..................................................      15
SECTION 4.12      Documents Relating to Credit Enhancement ................................      15
SECTION 4.13      Accounts ................................................................      15
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                                TABLE OF CONTENTS
                                   (continued)

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SECTION 4.14      Other Documents .........................................................      16
SECTION 4.15      Arrangement Fee .........................................................      16

                                              ARTICLE V
                       REPRESENTATIONS AND WARRANTIES OF THE NORDSTROM PARTIES

SECTION 5.01      Transfer and Servicing Agreement ........................................      16
SECTION 5.02      Corporate Existence and Power ...........................................      16
SECTION 5.03      Corporate and Governmental Authorization; Contravention .................      16
SECTION 5.04      Binding Effect ..........................................................      17
SECTION 5.05      No Conflict .............................................................      17
SECTION 5.06      No Proceedings ..........................................................      17
SECTION 5.07      Transferor Amount .......................................................      17
SECTION 5.08      No Pay Out Event ........................................................      17
SECTION 5.09      Accuracy of Information .................................................      18
SECTION 5.10      Taxes ...................................................................      18
SECTION 5.11      Use of Proceeds .........................................................      18
SECTION 5.12      Value ...................................................................      18
SECTION 5.13      ERISA ...................................................................      18
SECTION 5.14      Place of Business .......................................................      18
SECTION 5.15      Investment Company ......................................................      18
SECTION 5.16      No Liens ................................................................      18
SECTION 5.17      Authorization ...........................................................      18
SECTION 5.18      No Amendments ...........................................................      19
SECTION 5.19      No Claims ...............................................................      19
SECTION 5.20      Agreements Enforced .....................................................      19
SECTION 5.21      Class A Note ............................................................      19
SECTION 5.22      Issuer Existence and Authorization ......................................      19
SECTION 5.23      Financial Condition of Nordstrom Parties ................................      19

                                             ARTICLE VI
                     REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE CONDUIT
                                 PURCHASER AND COMMITTED PURCHASERS

SECTION 6.01      Organization ............................................................      19
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                                TABLE OF CONTENTS
                                   (continued)

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SECTION 6.02      Authority, etc ..........................................................      20
SECTION 6.03      Securities Act ..........................................................      20

                                             ARTICLE VII
                                              COVENANTS

SECTION 7.01      Affirmative Covenants of the Nordstrom Parties ..........................      21
SECTION 7.02      Covenants ...............................................................      24
SECTION 7.03      Negative Covenants of the Nordstrom Parties .............................      24

                                            ARTICLE VIII
                                        ADDITIONAL COVENANTS

SECTION 8.01      Legal Conditions to Closing .............................................      26
SECTION 8.02      Expenses ................................................................      26
SECTION 8.03      Mutual Obligations ......................................................      26
SECTION 8.04      Restrictions on Transfer ................................................      26
SECTION 8.05      Consents, etc ...........................................................      26

                                             ARTICLE IX
                                           INDEMNIFICATION

SECTION 9.01      Indemnities by the Nordstrom Parties ....................................      26
SECTION 9.02      Procedure ...............................................................      28
SECTION 9.03      Defense of Claims .......................................................      28
SECTION 9.04      Indemnity for Taxes, Reserves and Expenses ..............................      29
SECTION 9.05      Costs, Expenses, Taxes, Broken Funding Cost and Increased Costs
                  under Note Purchase Agreement and Program Facility ......................      31

                                              ARTICLE X
                                              THE AGENT

SECTION 10.01     Delegation of Duties ....................................................      31
SECTION 10.02     Exculpatory Provisions ..................................................      32
SECTION 10.03     Reliance by Agent .......................................................      32
SECTION 10.04     Non-Reliance on Agent and Other Purchasers ..............................      32
SECTION 10.05     Reimbursement and Indemnification .......................................      33
SECTION 10.06     Agent in its Individual Capacity ........................................      33
SECTION 10.07     Successor Agent .........................................................      33
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                                TABLE OF CONTENTS
                                   (CONTINUED)

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                                             ARTICLE XI
                                            MISCELLANEOUS

SECTION 11.01     Waivers and Amendments ..................................................      33
SECTION 11.02     Notices .................................................................      34
SECTION 11.03     Binding Effect; Assignability ...........................................      34
SECTION 11.04     Provision of Documents and Information ..................................      35
SECTION 11.05     GOVERNING LAW; JURISDICTION .............................................      36
SECTION 11.06     No Proceedings ..........................................................      37
SECTION 11.07     Execution in Counterparts ...............................................      37
SECTION 11.08     No Recourse .............................................................      37
SECTION 11.09     Limited Recourse ........................................................      37
SECTION 11.10     Survival ................................................................      37
SECTION 11.11     Tax Characterization ....................................................      37
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                                      -iv-

<PAGE>

         NOTE PURCHASE AGREEMENT ("Note Purchase Agreement") dated as of
December 4, 2001, among Nordstrom Private Label Receivables LLC (the
"Transferor"), Nordstrom, fsb ("Servicer"), the Conduit Purchaser, the Agent and
the Committed Purchaser named herein.

         The parties hereto agree as follows:

                                    ARTICLE I

                                   DEFINITIONS

                  SECTION 1.01 Certain Defined Terms. Capitalized terms used
herein without definition shall have the meanings set forth in the Transfer and
Servicing Agreement (as defined below) or the Indenture Supplement (as defined
below), as applicable. If a term used herein is defined both in the Transfer and
Servicing Agreement and the Indenture Supplement, it shall have the meaning set
forth in the Indenture Supplement. Additionally, the following terms shall have
the following meanings:

                  "Accrual Period" shall mean a period of time from and
including the first day of a calendar month and ending at the close of business
on the last day of such calendar month, provided that the initial Accrual Period
hereunder means the period from (and including) the Closing Date to (and
including) the last day of the calendar month thereafter.

                  "Act" means the Securities Act of 1933, AS amended.

                  "Administration Fee" is defined in Fee Letter.

                  "Administrative Agent" means Bank One in its capacity AS
administrative agent for the Conduit Purchaser or any other RIC.

                  "Agent" means Bank One in its capacity as agent for the
Purchasers, and any successor thereto appointed pursuant to Article X.

                  "Aggregate Reduction" means any reduction to the Class A
Maximum Principal Balance pursuant to Section 2.05.

                  "Alternate Rate" means, for any Tranche Period, with respect
to any Funding Tranche, an interest rate per annum equal to LIBOR; provided,
however, that in the case of

                           (i)      any Tranche Period on or prior to the first
         day of which the Agent shall have been notified by the Committed
         Purchaser or a Liquidity Purchaser that the introduction of or any
         change in or in the interpretation of any law or regulation makes it
         unlawful, or any central bank or other Governmental Authority asserts
         that it is unlawful, for the Committed Purchaser or such Liquidity
         Purchaser to fund any Funding Tranche (based on LIBOR) set forth above
         (and the Conduit Purchaser or such Liquidity Purchaser shall not have
         subsequently notified the Agent that such circumstances no longer
         exist),

                           (ii)     any Tranche Period of one to (and including)
         13 days,

<PAGE>

                           (iii)    any Tranche Period relating to a Funding
         Tranche which is less than $1,000,000, and

                           (iv)     any Tranche Period with respect to which the
         Alternate Rate, for any reason, becomes applicable on notice to the
         Agent of less than three Business Days,

the "Alternate Rate" for each such Tranche Period shall be an interest rate per
annum equal to the Prime Rate in effect on each day of such Tranche Period. The
"Alternate Rate" for any day on or after the occurrence of a Pay Out Event shall
be an interest rate equal to the Default Rate.

                  "Applicable Indemnifying Party" shall have the meaning set
forth in Section 9.02 hereof

                  "Arrangement Fee" is defined in the Fee Letter.

                  "Assignment and Acceptance" means an assignment and acceptance
agreement entered into by a Purchaser, a permitted assignee and the Agent for
such Purchaser, pursuant to which such assignee may become a party to this Note
Purchase Agreement.

                  "Bank One" means BANK One, NA (Main Office Chicago), a
national banking association.

                  "Broken Funding Cost" means for any Funding Tranche which: (i)
has its outstanding balance reduced without compliance by the Transferor with
the notice requirements hereunder or (ii) does not become subject to an
Aggregate Reduction following the delivery of any Reduction Notice or (iii) is
assigned to a Liquidity Purchaser or terminated prior to the date on which it
was originally scheduled to end; an amount equal to the excess, if any, of (A)
the CP Costs or Yield (as applicable) that would have accrued during the
remainder of the Tranche Periods or the tranche periods for Commercial Paper
determined by the Agent to relate to such Funding Tranche (as applicable)
subsequent to the date of such reduction, assignment or termination (or in
respect of clause (ii) above, the date such Aggregate Reduction was designated
to occur pursuant to the Reduction Notice) of the outstanding balance of such
Funding Tranche if such reduction, assignment or termination had not occurred or
such Reduction Notice had not been delivered, over (B) the sum of (x) the amount
of CP Costs or Yield actually accrued during the remainder of such period, to
the extent such Funding Tranche is allocated to another Tranche Period, and (y)
to the extent such Funding Tranche is not allocated to another Tranche Period,
the income, if any, actually received during the remainder of such period by the
holder of such Funding Tranche from investing the portion of such Funding
Tranche not so allocated. In the event that the amount referred to in clause (B)
exceeds the amount referred to in clause (A), the relevant Purchaser or
Purchasers agree to pay to Transferor the amount of such excess. The Agent will
use reasonable efforts TO allocate the Class A Invested Amount to tranche
periods for Commercial Paper in a manner that will minimize Broken Funding Costs
(provided that the selection of such tranche periods shall at all times remain
in the control of such Agent).

                  "Business Account Operating Agreement" means the operating
agreement, dated AS of February 1, 1997, between Nordstrom, Inc. and Nordstrom
Credit, Inc., as amended by the First Amendment to Business Account Operating
Agreement for Nordstrom Proprietary

                                        2

<PAGE>

Accounts and Receivables, dated as of October 1, 2001, in each case between
Nordstrom, Inc. and Nordstrom Credit, Inc., as amended and supplemented from
time to time.

                  "Class A Additional Amounts" means all amounts owed by a
Nordstrom Party pursuant to Article IX hereof plus any Broken Funding Cost owed
to the Purchasers pursuant to Section 4.03 of the Indenture Supplement plus any
other amounts due and owing to the Purchasers under the Series Documents.

                  "Class A Incremental Funded Amount" means the amount of the
increase in the Class A Invested Amount occurring as a result of any Incremental
Funding:

                  "Class A Initial Principal Balance" Means $0.

                  "Class A Initial Purchase Price" has the meaning specified in
Section 2.02 hereof

                  "Class A Invested Amount" means, at any time, the Class A Note
Principal Balance outstanding at such time; provided that any reduction of the
Class A Invested Amount shall be restored in the amount of any Collections or
other payments received and applied to the Class A Note if at any time the
distribution of such Collections or payments are rescinded, returned or refunded
for any reason.

                  "Class A Maximum Principal Balance" means $200,000,000, AS
such amount may be increased or decreased from time to time in accordance with
Section 2.05 hereof

                  "Class A Monthly Interest" means, for any Accrual Period, the
sum of (a) as to the Conduit Purchaser, the sum of all accrued CP Costs plus all
accrued fees specified in the Fee Letter as payable to the Conduit Purchaser or
the Agent as provided for herein and in the Fee Letter, respectively, and (b) as
to the Committed Purchaser or the Liquidity Purchaser (as the case may be) the
sum of all accrued Yield plus all accrued fees specified in the Fee Letter as
payable to the Committed Purchaser or the Liquidity Purchaser (as the case may
be) as provided for herein and in the Fee Letter, respectively; in each case,
accrued from the first day through the last day of such Accrual Period as
provided for in Section 2.06 herein.

                  "Class A Note" means the Class A Series 2001-2 Floating Rate
Asset Backed Note in the maximum aggregate principal amount of $200,000,000 to
be issued by the Trust pursuant to the Master Indenture and the Indenture
Supplement.

                  "Class A Note Rate" shall mean, with respect to the Due Period
related to any Distribution Date, AS to the Conduit Purchaser and the Committed
Purchaser or the Liquidity Purchaser (as the case may be), respectively, a per
annum interest rate which if multiplied by the average daily Class A Invested
Amount owing to the Purchasers (as applicable) for such Due Period, would
produce, on the basis of the actual number of days in such Due Period and a 360-
day year, an amount equal to the Class A Monthly Interest owed to the Conduit
Purchaser, or the Class A Monthly Interest owed to the Committed Purchaser or
the Liquidity Purchaser (as the case may be), respectively, for such Due Period.

                  "Class A Note Principal Balance" is defined in Section 1.01 of
the Indenture Supplement.

                                        3

<PAGE>

                  "Class B Note" means the Class B Series 2001-2 Floating Rate
Asset Backed Note in the maximum aggregate principal amount of $27,300,000 to be
issued by the Trust pursuant to the Master Indenture and the Indenture
Supplement, evidencing an undivided senior beneficial interest in certain assets
of the Trust.

                  "Closing" has the meaning specified in Section 3.01 hereof.

                  "Closing Date" has the meaning specified in Section 3.01.
hereof.

                  "Commercial Paper Notes" means short-term promissory notes
issued or to be issued by the Conduit Purchaser to fund its investments in
accounts receivable or other financial assets.

                  "Committed Purchaser" means Bank One and each of its assigns
(with respect to its commitment to make Incremental Fundings) that shall become
a party to this Note Purchase Agreement pursuant to Section 11.03 hereof.

                  "Conduit Information" means information provided by the Agent
in connection with the transactions described herein and which is confidential
or proprietary information, including, without limitation, information regarding
Agents' multi-seller commercial paper conduit and forms of transaction documents
together with the pricing, and other economic terms applicable under this
Agreement.

                  "Conduit Purchaser" means Falcon Asset Securitization
Corporation and any of its permitted assigns that is a RIC.

                  "CP Costs" means, for each day, the sum of (i) discount or
yield accrued on Pooled Commercial Paper on such day, plus (ii) any and all
accrued commissions in respect of placement agents and Commercial Paper dealers,
and issuing and paying agent fees incurred, in respect of such Pooled Commercial
Paper for such day, plus (iii) other costs associated with funding small or
odd-lot amounts with respect to all receivable purchase facilities which are
funded by Pooled Commercial Paper for such day, minus (iv) any accrual of income
net of expenses received on such day from investment of collections received
under all receivable purchase facilities funded substantially with Pooled
Commercial Paper, minus (v) any payment received on such day net of expenses in
respect of Broken Funding Costs related to the prepayment of any invested amount
of Conduit Purchaser pursuant to the terms of any receivable purchase facilities
funded substantially with Pooled Commercial Paper. In addition to the foregoing
costs, if Transferor shall request any Incremental Funding during any period of
time determined by the Agent in its sole discretion to result in incrementally
higher CP Costs applicable to such Incremental Funding, the increase to the
Class A Invested Amount associated with any such Incremental Funding shall,
during such period, be deemed to be funded by the Conduit Purchaser in a special
pool (which may include capital associated with other receivable purchase
facilities) for purposes of determining such additional CP Costs applicable only
to such special pool and charged each day during such period against such
incremental increase.

                  "Default Rate" shall mean a rate of interest per annum equal
to the sum of (i) the Prime Rate plus (ii) 2.00% per annum.

                                        4

<PAGE>

                  "Distribution Date" means January 15, 2002 and the fifteenth
day of each calendar month thereafter, or if such fifteenth day is not a
Business Day, the next succeeding Business Day.

                  "Due Period" shall mean, with respect to a Distribution Date
(i) as to the Conduit Purchaser, the Accrual Period immediately preceding such
Distribution Date and (ii) as to a Committed Purchaser or a Liquidity Purchaser,
the entire Tranche Period in which such Distribution Date occurs.

                  "ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time, and the regulations promulgated and the
rulings issued thereunder.

                  "ERISA Affiliate" shall mean, with respect to any Person, (i)
any corporation which is a member of the same controlled group of corporations
(within the meaning of Section 414(b) of the Code) as such Person; (ii) a trade
or business (whether or not incorporated) under common control (within the
meaning of Section 414(c) of the Code) with such Person; or (iii) a member of
the same affiliated service group (within the meaning of Section 414(n) of the
Code) as such Person, any corporation described in clause (i) above or any trade
or business described in clause (ii) above.

                  "Federal Bankruptcy Code" means the bankruptcy code of the
United States of America codified in Title 11 of the United States Code.

                  "Federal Reserve Board" means the Board of Governors of the
Federal Reserve System, or any entity succeeding to any of its principal
functions.

                  "Fee Letter" means the agreement dated as of November __, 2001
among the Transferor and the Agent setting forth certain fees payable by the
Transferor in connection with the purchase of the Class A Note by the Agent for
the benefit of the Purchasers.

                  "Funding Tranche" means all or a portion of the outstanding
principal balance of the Class A Note (i) designated by the Agent as a Funding
Tranche for finding purposes by the Committed Purchaser or the Liquidity
Purchaser (as the case may be) as provided for herein or in the Liquidity
Agreement or (ii) funded by the Conduit Purchaser with Pooled Commercial Paper.

                  "Governmental Actions" means any and all consents, approvals,
permits, orders, authorizations, waivers, exceptions, variances, exemptions or
licenses OF, or registrations, declarations or filings with, any Governmental
Authority required under any Governmental Rules.

                  "Governmental Authority" means the United States of America,
any state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government and having jurisdiction over the applicable Person.

                  "Governmental Rules" means any and all laws, statutes, codes,
rules, regulations, ordinances, orders, writs, decrees and injunctions, of any
Governmental Authority and any and

                                        5

<PAGE>

all legally binding conditions, standards, prohibitions, requirements and
judgments of any Governmental Authority.

                  "Increase Conditions" is defined in Section 1.01 of the
Indenture Supplement.

                  "Incremental Funding" means an increase in the Class A Note
Principal Balance in accordance with a Principal Balance Increase under Section
4.10 of the Indenture Supplement and the provisions of Section 2.03 hereof.

                  "Incremental Funding Date" means the date on which each
Incremental Funding occurs.

                  "Indemnified Amounts" is defined in Section 9.01.

                  "Indemnified Party" is defined in Section 9.01.

                  "Indenture" means the Master Indenture as supplemented by the
Indenture Supplement thereto.

                  "Indenture Supplement" means the Indenture Supplement dated as
of December 4, 2001 among the Issuer and Wells Fargo Bank Minnesota, National
Association, as Indenture Trustee, supplementing the Master Indenture and
relating to the Series 2001-2 Floating Rate Asset Backed Variable Funding Notes,
as the same may be amended, modified or supplemented.

                  "Investment Letter" means a letter in the form of Exhibit C to
the Indenture Supplement.

                  "LIBOR" means the rate per annum equal to the sum of (i) (a)
the applicable British Bankers' Association Interest Settlement Rate for
deposits in U.S. dollars appearing on Reuters Screen FRBD AS of 11:OO a.m.
(London time) two Business Days prior to the first day of the relevant Tranche
Period, and having a maturity equal to such Tranche Period, provided that, (i)
if Reuters Screen FRBD is not available to the Agent for any reason, the
applicable LIBOR for the relevant Tranche Period shall instead be the applicable
British Bankers' Association Interest Settlement Rate for deposits in U.S.
dollars as reported by any other generally recognized financial information
service as of 11 :00 a.m. (London time) two Business Days prior to the first day
of such Tranche Period, and having a maturity equal to such Tranche Period, and
(ii) if no such British Bankers' Association Interest Settlement Rate is
available to the Agent, the applicable LIBOR for the relevant Tranche Period
shall instead be the rate determined by the Agent to be the rate at which Bank
One offers to place deposits in U.S. dollars with first-class banks in the
London interbank market at approximately 11:00 a.m. (London time) two Business
Days prior to the first day of such Tranche Period, in the approximate amount to
be funded at LIBOR and having a maturity equal to such Tranche Period, divided
by (b) one minus the maximum aggregate reserve requirement (including all basic,
supplemental, marginal or other reserves) which is imposed against the Agent in
respect of Eurocurrency liabilities, as defined in Regulation D of the Board of
Governors of the Federal Reserve System as in effect from time to time
(expressed as A decimal), applicable to such Tranche Period plus (ii) 1.0% per
annum. LIBOR shall be rounded, if necessary, to the next higher 1/16 of 1%.

                                        6

<PAGE>

                  "Liquidity Agent" means Bank One in its capacity as "Agent"
pursuant to the Liquidity Purchase Agreement.

                  "Liquidity Purchase Agreement" means the liquidity purchase
agreement dated as of the date hereof among the Conduit Purchaser, the Agent and
each of the Purchasers signatory thereto, as the same may from time to time be
amended, restated, supplemented or otherwise modified.

                  "Liquidity Purchasers" means each of the purchasers party to
the Liquidity Purchase Agreement.

                  "Master Indenture" means the Master Indenture dated as of
October 1, 2001 among the Issuer and Wells Fargo Bank Minnesota, National
Association, as Indenture Trustee, as the same may be amended, modified or
supplemented.

                  "Material Adverse Effect" means a material adverse effect on
(i) the financial condition or operations of any of Nordstrom, Inc., Nordstrom
fsb, NCI or the Transferor, (ii) the ability of any Nordstrom Party to perform
its obligations under this Note Purchase Agreement or the Provider to perform
its obligations under the Performance Undertaking, (iii) the legality, validity
or enforceability of This Note Purchase Agreement or any other Series Document,
or (iv) the collectibility of the Receivables generally or of any material
portion of the Receivables.

                  "NCI" means Nordstrom Credit, Inc., a corporation, and its
successors and permitted assigns.

                  "Nordstrom Information" means information provided by any
Nordstrom Party to the Conduit Purchaser, the Committed Purchaser or Agent in
connection with the transactions described herein and which is non-public,
confidential or proprietary information that may include proprietary and
confidential information regarding credit card portfolios, cardholders,
customers, financial information, processes, strategies and business methods of
Nordstrom, Inc. and or any other subsidiary of Nordstrom, Inc.

                  "Nordstrom Parties" means Nordstrom fsb and the Transferor.

                  "Notice of Incremental Funding" means a written notice of an
Incremental Funding in the form of Exhibit D to the Indenture Supplement.

                  "Operating Agreement" means the operating agreement for
Nordstrom proprietary accounts and receivables, dated August 31, 1991, between
Nordstrom fsb and Nordstrom Credit, Inc., as amended by the First Amendment to
Operating Agreement for Nordstrom Proprietary Accounts and Receivables, dated as
of March 1, 2000, and the Second Amendment to Operating Agreement for Nordstrom
Proprietary Accounts and Receivables, dated as of October 1, 2001 (as amended,
the "Operating Agreement"), in each case between Nordstrom fsb and Nordstrom
Credit, Inc., as amended or supplemented from time to time.

                  "Participant" has the meaning specified in Section 1l.03(c)
hereof.

                                        7

<PAGE>

                  "Performance Undertaking" means that certain Performance
Undertaking, dated as of December 4, 2001, by Provider, as the same may be
amended, restated or otherwise modified from time to time.

                  "Potential Pay Out Event' shall mean an event which but for
the lapse of time or the giving of notice, or both, would constitute A Pay Out
Event.

                  "Pooled Commercial Paper" means Commercial Paper notes of the
Conduit Purchaser subject to any particular pooling arrangement by Conduit
Purchaser, but excluding Commercial Paper issued by the Conduit Purchaser for a
tenor and in-an amount specifically requested by any Person in connection with
any agreement effected by the Conduit Purchaser.

                  "Prime Rate" means a rate per annum equal to the prime rate of
interest announced from time to time by Bank One or its parent (which is not
necessarily the lowest rate charged to any customer), changing when and as said
prime rate changes.

                  "Program Fee" is defined in the FEE Letter.

                  "Provider" means Nordstrom, Inc.

                  "Purchase Expiration Date" means the earlier of (i) the date
which is 364 days from the date of this Note Purchase Agreement AS such date may
from time to time be extended in accordance with Section 2.04 hereof and (ii)
the date on which the Early Amortization Period commences.

                  "Purchaser Percentage" of any Committed Purchaser means (a)
with respect to Bank One, the percentage set forth on the signature page to this
Note Purchase Agreement as such Committed Purchaser's Purchaser Percentage, or
such percentage AS reduced by any Assignment and Acceptance entered into with an
assignee, or (b) with respect to a Committed Purchaser that has entered into an
Assignment and Acceptance, the percentage set forth therein as such Purchaser's
Purchaser Percentage, or such percentage as reduced by any Assignment and
Acceptance entered into between such Committed Purchaser and an assignee.

                  "Purchasers" means, the Conduit Purchaser, the Liquidity
Purchasers and the Committed Purchasers.

                  "Receivables Purchase Agreement" means the Receivables
Purchase Agreement, dated as of October 1,2001 by and between NCI and the
Transferor.

                  "Reduction Notice" means the written notice delivered by the
Transferor to the Agent under Section 2.05 with respect to an Aggregate
Reduction.

                  "Reference Bank" means Bank One.

                  "Requirements of Law" for any Person shall mean the charter,
certificate of incorporation or articles of association and by-laws or other
organizational or governing documents of such Person, and any law, treaty, rule
or regulation, or determination of AN arbitrator or Governmental Authority, in
each case applicable to or binding upon such Person or

                                        8

<PAGE>

to which such Person is subject, whether Federal, state or local (including,
without limitation, usury laws, the Federal Truth in Lending ACT and Regulation
Z and Regulation B of the Board of Governors of the Federal Reserve System).

                  "RIC' means a receivables investment company administered by
the Administrative Agent or an affiliate thereof which obtains funding from the
issuance of commercial paper or other notes.

                  "Series Documents" means the Transfer and Servicing Agreement,
the Indenture Supplement, the Master Indenture, the Business Account Operating
Agreement, the Operating Agreement, the Receivables Purchase Agreement and this
Note Purchase Agreement.

                  "Servicer" means Nordstrom fsb, or any Successor Servicer
appointed in accordance with the terms of the Transfer and Servicing Agreement
and Indenture Supplement.

                  "Terminating Tranche" is defined in Section 2.06(b).

                  "Third Party Claim" has the meaning specified in Section 9.02
hereof.

                  "Tranche Period" means, with respect to any Funding Tranche
owing to a Liquidity Purchaser or a Committed Purchaser:

                  (a) if Yield for such Funding Tranche is calculated on the
basis of LIBOR, a period of one, two, three or six months, or such other period
as may be mutually agreeable to the Agent and Transferor, commencing on a
Business Day selected by Transferor or the Agent pursuant to this Agreement.
Such Tranche Period shall end on the day in the applicable succeeding calendar
month which corresponds numerically to the beginning day of such Tranche Period,
provided, however, that if there is no such numerically corresponding day in
such succeeding month, such Tranche Period shall end on the last Business Day of
such succeeding month; or

                  (b) if Yield for such Funding Tranche is calculated on the
basis of the Prime Rate, a period commencing on A Business Day selected by
Transferor and agreed to by the Agent, provided no such period shall exceed one
month.

                  If any Tranche Period would end on a day which is not a
Business Day, such Tranche Period shall end on the next succeeding Business Day,
provided, however, that in the case of Tranche Periods corresponding to LIBOR,
if such next succeeding Business Day falls in a new month, such Tranche Period
shall end on the immediately preceding Business Day. In the case of any Tranche
Period for any Funding Tranche which commences before the Series 2001-2 Final
Maturity Date and would otherwise end on a date occurring after the Series
2001-2 Final Maturity Date, such Tranche Period shall end on such Series 2001-2
Final Maturity Date and the duration of each Tranche Period which commences on
or after the Series 2001-2 Final Maturity Date shall be of such duration AS
shall be selected by the Agent.

                  "Transfer and Servicing Agreement" means the Transfer and
Servicing Agreement dated as of October 1, 2001 among the Transferor, the
Servicer, and Wells Fargo

                                        9

<PAGE>

Bank Minnesota, National Association, as Indenture Trustee, as the same may be
amended, modified or supplemented.

                  "Yield" means for each respective Tranche Period, an amount
equal to the product of the applicable Alternate Rate multiplied by the Class A
Invested Amount owing, if any, to the Committed Purchasers or the Liquidity
Purchasers (as the case may be) for each day elapsed during such Tranche Period,
annualized on a 360 day basis.

                  Other Definitional Provisions. (a) All terms defined in this
Note Purchase Agreement shall have the defined meanings when used in any
certificate or other document made or delivered pursuant hereto unless otherwise
defined therein.

                  (b)      As used herein and in any certificate or other
document made or delivered pursuant hereto or thereto, accounting terms not
defined in Section 1.01, and accounting terms partially defined in Section 1.01
to the extent not defined, shall have the respective meanings given to them
under generally accepted accounting principles. To the extent that the
definitions of accounting terms herein are inconsistent with the meanings of
such terms under generally accepted accounting principles, the definitions
contained herein shall control.

                  (c)      The words "hereof," "herein" and "hereunder" and
words of similar' import when used in this Note Purchase Agreement shall refer
to this Note Purchase Agreement as a whole and not to any particular provision
of this Note Purchase Agreement; and Section, subsection, Schedule and Exhibit
references contained in this Note Purchase Agreement are references to Sections,
subsections, the Schedules and Exhibits in or to this Note Purchase Agreement
unless otherwise specified.

                                   ARTICLE II

                                PURCHASE AND SALE

                  SECTION 2.01 Purchase and Sale of the Class A Note. On the
terms and subject to the conditions set forth in this Note Purchase Agreement,
and in reliance on the covenants, representations, warranties and agreements
herein set forth, the Transferor shall offer to sell to the Agent, on behalf of
the Purchasers, and the Agent, on behalf of the Purchasers, shall purchase at
the Closing, a Class A Note in an initial outstanding principal amount equal to
the Class A Initial Principal Balance.

                  SECTION 2.02 Initial Purchase Price. The Class A Note is to be
purchased at a price (the "Class A Initial Purchase Price") of 100% of its Class
A Initial Principal Balance.

                  SECTION 2.03 Incremental Fundings. (a) Subject to the terms
and conditions of this Note Purchase Agreement and the Indenture Supplement,
from time to time prior to the Purchase Expiration Date upon receipt by the
Agent of a Notice of Incremental Funding, (i) the Agent, on behalf of the
Conduit Purchaser, and in the sole and absolute discretion of the Conduit
Purchaser, may make Incremental Fundings and (ii) if, the Conduit Purchaser
elects not to make an Incremental Funding, the Committed Purchaser and its
permitted assigns severally agree to make their respective Purchaser Percentages
of such Incremental Funding; provided, that no Committed Purchaser shall be
required to make a portion of any Incremental Funding if, after

                                       10

<PAGE>

giving effect thereto, (A) its Purchaser Percentage of the Class A Invested
Amount would exceed its Purchaser Percentage of the Class A Maximum Principal
Balance, or (B) its Purchaser Percentage of the Class A Invested Amount
hereunder plus its Funded Amount (as defined in the Liquidity Purchase
Agreement) as a Liquidity Purchaser under the Liquidity Purchase Agreement would
exceed its Purchaser Percentage of the Class A Maximum Principal Balance.

                  (b)      Each Incremental Funding hereunder shall be subject
to the further conditions precedent that:

                           (i)      the Increase Conditions shall have been
         satisfied;

                           (ii)     The Agent will have received copies of all
         settlement statements and all reports required to be delivered by the
         Servicer to the Indenture Trustee pursuant to Section 3.04 of the
         Transfer and Servicing Agreement and Section 5.03 of the Indenture
         Supplement;

                           (iii)    The Transferor and the Servicer shall be in
         compliance in all material respects with all of their respective
         covenants contained in the Series Documents; and

                           (iv)     At least three Business Days prior to the
         Incremental Funding Date, the Agent shall have received a completed
         Notice of Incremental Funding.

                  (c)      Each Incremental Funding of the Class A Note, shall
be requested in an aggregate principal amount of $2,000,000 and integral
multiples of $500,000 in excess thereof; provided, that an Incremental Funding
may be requested in the entire remaining Class A Maximum Principal Balance.

                  (d)      The purchase price of each Incremental Funding shall
be equal to 100% of the allocation of the Class A Incremental Funded Amount and
shall be paid not later than 1:00 p.m. New York City time on the Incremental
Funding Date by wire transfer of immediately available funds to the Transferor's
account no. 0001038377, titled "Nordstrom Private Label Receivables LLC," ABA#
091000019, maintained at Wells Fargo Bank Minnesota, National Association (or
such other account as may from time to time be specified by the Transferor in a
notice to the Agent).

                  SECTION 2.04 Extension of Purchase Expiration Date. The
parties to this Note Purchase Agreement may mutually agree in writing to the
extension of the Purchase Expiration Date to a date no later than 364 days
following the date of such extension; provided, that no agreement to any such
extension shall be effective unless, the available commitments of the Liquidity
Purchasers under the Liquidity Purchase Agreement and the credit and/or
liquidity coverage committed under the program-wide credit and/or liquidity
facilities for the commercial paper program of the Conduit Purchaser will
continue to be in effect after such extension in the aggregate amounts, and for
the period of the time, necessary to maintain the then-current ratings of the
Conduit Purchaser's Commercial Paper Notes. The Transferor may request such an
extension no earlier than 90 days prior to the then applicable Purchase
Expiration Date and the Agent will respond to such request no later than the
later of thirty (30) days following such

                                       11

<PAGE>

request or the date which is thirty (30) days' prior to the then applicable
Purchase Expiration Date.

                  SECTION 2.05 Reduction or Increase of the Class A Maximum
Principal Balance. (a) The Transferor may reduce in whole or in part the Class A
Maximum Principal Balance (but not below the Class A Invested Amount) by giving
the Agent written notice thereof at least ten Business Days before such
reduction is to take place; provided, however, that any partial reduction shall
be in an aggregate amount of $2,000,000, or any integral multiples of $500,000
in excess thereof Any such reduction in the Class A Maximum Principal Balance
shall be permanent unless a subsequent increase in the Class A Maximum Principal
Balance is made in accordance with Section 2.05(b).

                  (b)      The Transferor may request an increase in the Class A
Maximum Principal Balance by written notice to the Agent at least 30 days before
the date on which such increase is requested to become effective. No such
increase will take effect with respect to any Note unless (i) the Conduit
Purchaser and Agent agree thereto and (ii) the available commitments of the
Purchasers (other than the Conduit Purchaser) hereunder or under the Liquidity
Purchase Agreement and the credit and/or liquidity coverage committed under the
program-wide credit and/or liquidity facilities for the commercial paper program
of the Conduit Purchaser are increased as necessary to maintain the then-current
ratings of the Conduit Purchaser's Commercial Paper Notes.

                  SECTION 2.06 Calculation of Monthly Interest. (a) Prior to the
occurrence of a Series 2001-2 Pay Out Event, the Class A Notes shall accrue CP
Costs with respect to the outstanding balance of the Class A Invested Amount of
the Conduit Purchaser for each day that such amount is outstanding. The Class A
Invested Amount funded with Pooled Commercial Paper will accrue CP Costs each
day on a pro rata basis, based upon the percentage share that such amount
represents in relation to all assets held by Conduit Purchaser and funded
substantially with related Pooled Commercial Paper. On the Determination Date,
the Conduit Purchaser shall calculate the aggregate amount of CP Costs allocated
to its Class A Invested Amount for the applicable Due Period and shall notify
the Servicer of such aggregate amount.

                                    (b) Prior to the occurrence of a Series
2001-2 Pay Out Event, the Class A Notes shall accrue Yield with respect to the
outstanding balance of the Class A Invested Amount of the Committed Purchasers
or the Liquidity Purchasers (as the case may be) for each day during the Tranche
Period at either LIBOR or the Prime Rate in accordance with the terms and
conditions hereof. Until the Transferor gives notice to the Funding Agent of
another Alternate Rate in accordance with Section 2.06(c), the initial Alternate
Rate for any Funding Tranche transferred to the Committed Purchaser or the
Liquidity Purchasers by the Conduit Purchaser as provided for herein or pursuant
to the Liquidity Agreement (as the case may be), shall be the Prime Rate. If the
Committed Purchaser or the Liquidity Purchasers acquire by assignment from the
Conduit Purchaser any Funding Tranche as provided for herein or pursuant to the
Liquidity Agreement (as the case may be), each Funding Tranche so assigned shall
each be deemed to have a new Tranche Period commencing on the date of any such
assignment. The Transferor or the Agent, upon notice to and consent by the other
received at least three (3) Business Days prior to the end of a Tranche Period
(the "Terminating Tranche") for any Funding Tranche, may, effective on the last
day of the Terminating Tranche: (i) divide any such Funding

                                       12

<PAGE>

Tranche into multiple Funding Tranches, (ii) combine any such Funding Tranche
with one or more other Funding Tranches that have a Terminating Tranche ending
on the same day as such Terminating Tranche or (iii) combine any such Funding
Tranche with a new Funding Tranche to be purchased on the day such Terminating
Tranche ends, provided, that in no event may the Class A Invested Amount of the
Conduit Purchaser be combined with a Funding Tranche of the Committed Purchaser
or the Liquidity Purchasers.

                                    (c) The Transferor may select LIBOR or the
Prime Rate for each Funding Tranche of the Committed Purchaser or the Liquidity
Purchaser (as the case may be). The Transferor shall by 1:00 p.m. (New York
time): (i) at least three (3) Business Days prior to the expiration of any
Terminating Tranche with respect to which LIBOR is being requested as a new
Alternate Rate and (ii) at least one (1) Business Day prior to the expiration of
any Terminating Tranche with respect to which the Prime Rate is being requested
as a new Alternate Rate, give the Funding Agent irrevocable notice of the new
Alternate Rate for the Funding Tranche associated with such Terminating Tranche.
Until the Transferor gives notice to the Funding Agent of another Alternate
Rate, the initial Alternate Rate for any Funding Tranche transferred to the
Committed Purchaser or the Liquidity Purchasers pursuant to the terms and
conditions hereof shall be the Prime Rate.

                                    (d) After the occurrence of a Series 2001-2
Pay Out Event, the Class A Notes held by the Purchasers shall accrue CP Costs at
the Default Rate.

                                    (e) The Transferor agrees to pay and to
instruct the Servicer and the Indenture Trustee to pay all amounts payable by
each with respect to the Class A Note to the account designated by the Agent in
the Fee Letter

                                   ARTICLE III

                                     CLOSING

                  SECTION 3.01 Closing. The closing (the "Closing") of the
purchase and sale of the Class A Note shall take place at 10:00 a.m. at the
offices of Sidley Austin Brown & Wood LLP, BANK One Plaza, 10 S. Dearborn
Street, 55th Floor, Chicago, Illinois 60603, on December 4, 2001, or if the
conditions to closing set forth in Article IV OF this Note Purchase Agreement
shall not have been satisfied or waived by such date, as soon as practicable
after such conditions shall have been satisfied or waived, or at such other
time, date and place as the parties shall agree upon (the date of the Closing
being referred to herein as the "Closing Date").

                  SECTION 3.02 Transactions to be Effected at the Closing. At
the Closing (a) the Class A Initial Purchase Price will be zero; and (b) the
Transferor shall deliver the Class A Note to the Agent in satisfaction of the
Transferor's obligation to the Agent hereunder.

                                   ARTICLE IV

                             CONDITIONS PRECEDENT TO
                          PURCHASE ON THE CLOSING DATE

                                       13

<PAGE>

                  The purchase by the Agent on behalf of the Purchasers of the
Class A Note is subject to the satisfaction at the time of the Closing of the
following conditions (any or all of which may be waived by the Agent in its sole
discretion):

                  SECTION 4.01 Performance by the Transferor, Issuer, Nordstrom,
Inc., NCI and Servicer. All the terms, covenants, agreements and conditions of
the Series Documents to be complied with and performed by the Transferor, the
Issuer, Nordstrom, Inc., NCI and the Servicer at or before the Closing shall
have been complied with and performed in all material respects.

                  SECTION 4.02 Representations and Warranties. Each of the
representations and warranties of the Transferor, the Issuer, Nordstrom, Inc.,
NCI and the Servicer made in the Series Documents shall be true and correct in
all material respects as of the time of the Closing (except to the extent they
expressly relate to an earlier or later time).

                  SECTION 4.03 Corporate Documents. The Agent shall have
received copies of (a) the (i) Charter documents and By-Laws of Nordstrom fsb,
(ii) Board of Directors resolutions of Nordstrom fsb with respect to the Series
Documents, and (iii) incumbency certificate of Nordstrom fsb, each certified by
appropriate corporate authorities, (b) the (i) Certificate of formation and good
standing certificate of the Transferor (ii) a copy of the operating agreement of
the Transferor, (iii) Board of Directors resolutions of the Transferor with
respect to the Series Documents and (iv) incumbency of the Transferor, each
certified by appropriate authorities, (c) (i) Charter documents and By-Laws of
Nordstrom, Inc., (ii) Board of Directors resolutions of Nordstrom, Inc. with
respect to the Series Documents, and (iii) incumbency certificate of Nordstrom,
Inc., each certified by appropriate corporate authorities, (d) the (i) Charter
documents and By-Laws of NCI, (ii) Board of Directors resolutions of NCI with
respect to the Series Documents, and (iii) incumbency certificate of NCI, each
certified by appropriate corporate authorities.

                  SECTION 4.04 Opinions of Counsel to Nordstrom fsb, Nordstrom,
Inc., NCI and the Transferor. Counsel to Nordstrom fsb, Nordstrom, Inc., NCI and
the Transferor shall have delivered to the Agent favorable opinions, dated as of
the Closing Date and reasonably satisfactory in form and substance to the Agent
and its counsel and addressed to the Agent.

                  SECTION 4.05 Opinions of Counsel to the Owner Trustee. Counsel
to the Owner Trustee shall have delivered to the Agent a favorable opinion,
dated as of the Closing Date and reasonably satisfactory in form and substance
to the Agent and its counsel and addressed to the Agent.

                  SECTION 4.06 Opinions of Counsel to the Indenture Trustee.
Counsel to the Indenture Trustee shall have delivered to the Agent a favorable
opinion, dated as of the Closing Date and reasonably satisfactory in form and
substance to the Agent and its counsel and addressed to the Agent.

                  SECTION 4.07 Financing Statements. The Agent shall have
received evidence satisfactory to it of the completion of all recordings,
registrations, and filings as may be necessary or, in the opinion of the Agent,
desirable to perfect or evidence (i) the assignments by

                                       14

<PAGE>

Nordstrom fsb to NCI, by NCI to the Transferor and by the Transferor to the
Issuer of their respective ownership interests in the Receivables and the
proceeds thereof and (ii) the security interest granted by the Issuer to the
Indenture Trustee in the Receivables and the proceeds thereof, including:

                  (a)      Acknowledgment copies of all UCC financing statements
and assignments that have been filed in the offices of the Secretary of State of
the applicable states and in the appropriate office or offices of such other
locations as may be specified in the opinions of counsel delivered pursuant to
Section 4.04 hereof; and

                  (b)      Certified copies of requests for information (Form
UCC-11) (or a similar search report certified by parties acceptable to the Agent
and its counsel) dated a date reasonably near the Closing Date and listing all
effective financing statements which name Nordstrom, Inc., Nordstrom fsb, NCI,
the Transferor or the Issuer, as seller, assignor or debtor and which are filed
in all jurisdictions in which the filings were or will be made, together with
copies of such financing statements.

                  SECTION 4.08 Documents. The Agent shall have received a duly
executed counterpart of each of the Series Documents and each and every document
or certification delivered by any party in connection with any of such
agreements, and each such document shall be in full force and effect.

                  SECTION 4.09 No Actions or Proceedings. No action, suit,
proceeding or investigation by or before any Governmental Authority shall have
been instituted to restrain or prohibit the consummation of, or to invalidate,
the transactions contemplated by the Series Documents and the documents related
thereto in any material respect.

                  SECTION 4.10 Approvals and Consents. All Governmental Actions
of all Governmental Authorities required with respect to the transactions
contemplated by the Series Documents and the other documents related thereto
shall have been obtained or made.

                  SECTION 4.11 Officer's Certificates. The Agent shall have
received Officer's Certificates from the Transferor, the Issuer and the Servicer
in form and substance reasonably satisfactory to the Agent and its counsel,
dated as of the Closing Date, certifying as to the satisfaction of the
conditions set forth in Sections 4.01 and 4.02 hereof with respect to the
Transferor, the Issuer and the Servicer, respectively.

                  SECTION 4.12 Documents Relating to Credit Enhancement. (a) The
Agent shall have received evidence that the Class B Invested Amount is at least
equal to the Required Class B Invested Amount.

                  (b)      The Agent shall have received a specimen Class B
Note.

                  SECTION 4.13 Accounts. The Agent shall have received evidence
that the Collection Account and Special Funding Account have been established in
accordance with the terms of the Indenture.

                                       15

<PAGE>


                  SECTION 4.14 Other Documents. The Transferor shall have
furnished to the Agent such other information, certificates and documents as the
Agent may reasonably request.

                  SECTION 4.15 Arrangement Fee. The Arrangement Fee due on the
Closing Date specified in the Fee Letter shall have been paid.

                                    ARTICLE V

             REPRESENTATIONS AND WARRANTIES OF THE NORDSTROM PARTIES

                  Each Nordstrom Party hereby makes the following
representations and warranties to the Purchasers and the Agent, as to itself, as
of the Closing Date and as of each Incremental Funding Date, and the Purchasers
and the Agent shall be deemed to have relied on such representations and
warranties in purchasing the Class A Note on the Closing Date and in making (or
committing to make) each Incremental Funding on each Incremental Funding Date.

                  SECTION 5.01 Transfer and Servicing Agreement. The Transferor
repeats and reaffirms to the Purchasers and the Agent the representations and
warranties of the Transferor set forth in Sections 2.03 and 2.04 of the Transfer
and Servicing Agreement and represents and warrants that such representations
and warranties are true and correct. Nordstrom fsb repeats and reaffirms to the
Purchasers and the Agent the representations, warranties and covenants of the
Servicer set forth in Section 3.03 of the Transfer and Servicing Agreement and
represents and warrants that all such representations and warranties are true
and correct.

                  SECTION 5.02 Corporate Existence and Power. The Transferor is
a limited liability company duly organized, validly existing and in good
standing under the laws of the State of Delaware. Nordstrom fsb is a federal
savings bank duly organized, validly existing and in good standing under the
laws of the United States. Each Nordstrom Party has all power, authority and
legal right and all material governmental licenses, authorizations, consents and
approvals required to own its properties and conduct its business as such
properties are presently owned and such business is presently conducted in each
jurisdiction in which it presently owns properties and presently conducts its
business, and to execute and deliver this Note Purchase Agreement, the Indenture
Supplement and the Fee Letter and perform its obligations under this Note
Purchase Agreement, the Indenture Supplement, the Fee Letter and the other
Series Documents. Each Nordstrom Party is duly qualified to do business and is
in good standing (or is exempt from such requirements) in any jurisdiction in
which the nature of its business requires it to be so qualified.

                  SECTION 5.03 Corporate and Governmental Authorization;
Contravention. The execution and delivery by each Nordstrom Party of this Note
Purchase Agreement, the Indenture Supplement, the Fee Letter and the other
Series Documents to which such Nordstrom Party is a party and the performance by
each Nordstrom Party thereof are within its corporate powers, have been duly
authorized by all necessary corporate or limited liability company action,
require no action by or in respect of, or filing with, any Governmental
Authority or official thereof, and do not contravene, or constitute a default
under, any provision of applicable law, rule or regulation or of the Charter or
Bylaws of Nordstrom fsb, limited liability agreement of the Transferor or of any
agreement, judgment, injunction, order, writ, decree or other instrument

                                       16

<PAGE>

binding upon such Nordstrom Party or result in the creation or imposition of any
Lien on the assets of such Nordstrom Party, other than pursuant to the Series
Documents.

                  SECTION 5.04 Binding Effect. Each of this Note Purchase
Agreement, the Indenture Supplement, the Fee Letter and the other Series
Documents to which each Nordstrom Party is a party constitutes the legal, valid
and binding obligation of such Nordstrom Party, enforceable against it in
accordance with its terms, subject to applicable bankruptcy, insolvency,
moratorium or other similar laws affecting the rights of creditors generally.

                  SECTION 5.05 No Conflict. The execution and delivery of this
Note Purchase Agreement, the Indenture Supplement, the Fee Letter and the other
Series Documents to which each Nordstrom Party is a party, the performance of
the transactions contemplated by this Note Purchase Agreement, the Indenture
Supplement, the Fee Letter and the other Series Documents to which such
Nordstrom Party is a party and the fulfillment of the terms hereof and thereof
will not conflict with, result in any breach of any of the terms and provisions
of, or constitute (with or without notice or lapse of time or both) a default
under, any Requirement of Law applicable to such Nordstrom Party or any
indenture, contract, agreement, mortgage, deed of trust, or other material
instrument to which Nordstrom fsb is a party or by which it or any of its
properties are bound.

                  SECTION 5.06 No Proceedings. There are no actions, suits,
proceedings or investigations pending or, to the best knowledge of each
Nordstrom Party, threatened, against or affecting such Nordstrom Party or any
Affiliate of such Nordstrom Party or their respective properties, in or before
any court, regulatory body, administrative agency, arbitrator or other tribunal
or governmental instrumentality (i) asserting the invalidity of this Note
Purchase Agreement, the Indenture Supplement, the Fee Letter, or any other
Series Document to which such Nordstrom Party is a party, (ii) seeking to
prevent the issuance of the Notes or the consummation of any of the transactions
contemplated by this Note Purchase Agreement, the Indenture Supplement, the Fee
Letter, the Notes or any other Series Document to which such Nordstrom Party is
a party, (iii) seeking any determination or ruling that, individually or in the
aggregate, in the reasonable judgment of such Nordstrom Party, would materially
and adversely affect the performance by such Nordstrom Party of its obligations
under this Note Purchase Agreement, the Indenture Supplement, the Fee Letter,
the Class A Note or any other Series Document to which such Nordstrom Party is a
party or (iv) seeking any determination or ruling that would materially and
adversely affect the validity or enforceability of this Note Purchase Agreement,
the Indenture Supplement, the Fee Letter, the Note or any other Series Document
to which such Nordstrom Party is a party.

                  SECTION 5.07 Transferor Amount. As of the Closing Date and
each Incremental Funding Date, the Transferor Interest is not less than the
Minimum Transferor Interest and the aggregate amount of Principal Receivables is
not less than the Required Minimum Principal Balance.

                  SECTION 5.08 No Pay Out Event. After giving effect to the
issuance of, and the acquisition by the Agent, on behalf of the Class A
Noteholder and of any occurrence of any Incremental Funding pursuant to Section
2.03, no event shall have occurred and not been waived

                                       17

<PAGE>

or be continuing and no condition shall exist which would constitute a Pay Out
Event or Potential Pay Out Event.

                  SECTION 5.09 Accuracy of Information. Each document, book,
record, report, exhibit, schedule or other information furnished or to be
furnished at any time by each Nordstrom Party to the Purchasers or the Agent for
purposes of or in connection with this Note Purchase Agreement, the Indenture
Supplement or any transaction contemplated hereby or thereby is or will be true
and accurate in all material respects on the date such information is stated or
certified.

                  SECTION 5.10 Taxes. Each Nordstrom Party has filed all tax
returns (Federal, state and local) required to be filed and has paid or made
adequate provision for the payment of all its taxes, assessments and other
governmental charges.

                  SECTION 5.11 Use of Proceeds. No proceeds of the acquisition
of the Class A Note or any Incremental Funding will be used by the Transferor to
acquire any security in any transaction which is subject to Section 13 or 14 of
the Securities Exchange Act of 1934, as amended.

                  SECTION 5.12 Value. Nordstrom fsb has received or will receive
reasonably equivalent value in return for the transfer of the Receivables and
the other property transferred to NCI. The Transferor has received or will
receive reasonably equivalent value in return for the transfer of the
Receivables and other property transferred to the Trust.

                  SECTION 5.13 ERISA. Each Nordstrom Party and its ERISA
Affiliates is in compliance in all material respects with ERISA and no lien
exists in favor of the PBGC on any of the Receivables.

                  SECTION 5.14 Place of Business. The principal executive
offices of Nordstrom fsb are in Scottsdale, Arizona. Electronic records
concerning the Receivables and related contracts are maintained by Nordstrom
fsb's service provider located in Columbus, Georgia. The principal executive
offices of the Transferor are in Englewood, Colorado.

                  SECTION 5.15 Investment Company. Neither the Transferor nor
the Trust is an "investment company" or is controlled by an "investment company"
within the meaning of the Investment Company Act, or is exempt from all
provisions of such Act.

                  SECTION 5.16 No Liens. The sale, assignment and conveyance of
the Class A Note and the consummation of the transactions herein contemplated
will not result in the creation or imposition of any Lien, charge or encumbrance
upon any of the property or assets of any Nordstrom Party or any of its
Affiliates pursuant to the terms of any indenture, mortgage, deed of trust, loan
agreement or other agreement (including this Note Purchase Agreement) or
instrument to which it or any of its Affiliates is bound or to which any of its
property or assets is subject.

                  SECTION 5.17 Authorization. The Transferor has authorized the
Trust to issue and sell the Class A Note.

                                       18

<PAGE>

                  SECTION 5.18 No Amendments. Since October 1, 2001, there have
been no amendments (other than the amendments listed in the recitals hereto),
modifications or waivers of the terms of the Master Indenture or Transfer and
Servicing Agreement.

                  SECTION 5.19 No Claims. No Person party to the Master
Indenture or Transfer and Servicing Agreement has any defenses, counterclaims or
right of set-off with respect to either agreement.

                  SECTION 5.20 Agreements Enforced. Except as otherwise agreed
by the parties thereto, each of the Master Indenture and the Transfer and
Servicing Agreement have been strictly enforced in accordance with their terms
by each party thereto.

                  The representations and warranties set forth in this Section
shall survive the sale of the Class A Note to the Agent on behalf of the
Purchasers. Upon discovery by either Nordstrom Party or the Agent, on behalf of
the Purchasers, of a breach of any of the foregoing representations and
warranties, the party discovering such breach shall give prompt written notice
to the other. Any document, instrument, certificate or notice delivered to the
Conduit Purchaser, the Agent or any Purchaser hereunder shall be deemed to be a
representation and warranty by such Nordstrom Party.

                  SECTION 5.21 Class A Note. The Class A Note has been duly and
validly authorized, and, when executed and authenticated in accordance with the
terms of the Indenture and the Indenture Supplement, and delivered to and paid
for in accordance with this Note Purchase Agreement, will be duly and validly
issued and outstanding and will be entitled to the benefits of the Transfer and
Servicing Agreement, the Master Indenture and the Indenture Supplement.

                  SECTION 5.22 Issuer Existence and Authorization. The Issuer
has been duly created and is validly existing under the laws of the State of
Delaware.

                  SECTION 5.23 Financial Condition of Nordstrom Parties. On the
date hereof and on each Incremental Funding Date, neither Nordstrom Party is
insolvent nor the subject of any insolvency proceeding.

                                   ARTICLE VI

                         REPRESENTATIONS AND WARRANTIES
         WITH RESPECT TO THE CONDUIT PURCHASER AND COMMITTED PURCHASERS

                  The Agent, on behalf of the Conduit Purchaser and Committed
Purchasers, hereby makes the following representations and warranties to the
Transferor and Nordstrom fsb on which the Transferor and Nordstrom fsb shall
rely in entering into this Note Purchase Agreement.

                  SECTION 6.01 Organization. Each of the Conduit Purchaser and
the Committed Purchasers has been duly organized and is validly existing and in
good standing as a corporation or national banking association under the laws of
the jurisdiction of its organization, with power and authority to own its
properties and to transact the business in which it is now

                                       19

<PAGE>

engaged and each of the Conduit Purchaser and the Committed Purchasers is duly
qualified to do business and is in good standing (or is exempt from such
requirements) in each State of the United States where the nature of its
business requires it to be so qualified and the failure to be so qualified and
in good standing would have a material adverse effect on the interests of the
Transferor.

                  SECTION 6.02 Authority. etc. Each of the Conduit Purchaser and
the Committed Purchasers has all requisite power and authority to enter into and
perform its obligations under this Note Purchase Agreement and to consummate the
transactions contemplated hereby and thereby. The execution and delivery by each
of the Conduit Purchaser and the Committed Purchasers of this Note Purchase
Agreement and the consummation by each of the Conduit Purchaser and each
Committed Purchaser of the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action on the part of each of the
Conduit Purchaser and the Committed Purchasers. This Note Purchase Agreement has
been duly and validly executed and delivered by each of the Conduit Purchaser
and the Committed Purchasers and constitutes a legal, valid and binding
obligation of such party, enforceable against such party in accordance with its
terms, subject as to enforcement to bankruptcy, reorganization, insolvency,
moratorium and other similar laws of general applicability relating to or
affecting creditors' rights and to general principles of equity. Neither the
execution and delivery by any of the Conduit Purchaser or the Committed
Purchasers of this Note Purchase Agreement nor the consummation by any such
party of any of the transactions contemplated hereby, nor the fulfillment by
such party of the terms hereof, will conflict with, or violate, result in a
breach of or constitute a default under any term or provision of the Articles of
Incorporation or By-laws of such party or any Governmental Rule applicable to
such party.

                  SECTION 6.03 Securities Act. The Class A Note purchased by the
Agent on behalf of the Purchasers pursuant to this Note Purchase Agreement will
be acquired for investment only and not with a view to any public distribution
thereof, and no Purchaser will offer to sell or otherwise dispose of its
interest in the Class A Note so acquired by it (or any interest therein) in
violation of any of the registration requirements of the Act or any applicable
state or other securities laws. The Agent and each Purchaser acknowledges that
it has no right to require the Transferor to register under the Act or any other
securities law any Note to be acquired by the Agent on behalf of such Purchaser
pursuant to this Note Purchase Agreement.

                  The Conduit Purchaser, Committed Purchaser and Agent have such
knowledge and experience in financial and business matters as to be capable of
evaluating the merits and risks of an investment in the Class A Note and the
Conduit Purchaser and Committed Purchaser are able to bear the economic risk of
such investment. The Conduit Purchaser, Committed Purchaser and Agent have
reviewed the Transfer and Servicing Agreement, the Indenture and the Indenture
Supplement (including the schedule and exhibits thereto) and have had the
opportunity to perform due diligence with respect thereto and to ask questions
of and receive answers from the Transferor and its representatives concerning
the Transferor, the Trust and the Class A Note. Each of the Conduit Purchaser,
the Committed Purchaser and Agent is an "accredited investor" as defined in Rule
501, promulgated by the Securities and Exchange Commission (the "Commission")
under the Securities Act of 1933, as amended.

                                       20

<PAGE>

                                   ARTICLE VII

                                    COVENANTS

                  SECTION 7.01 Affirmative Covenants of the Nordstrom Parties.
So long as the Class A Note remains outstanding, each Nordstrom Party hereby
covenants, as to itself, as set forth below:

                  (a)      Financial Reporting. Such Nordstrom Party will
maintain a system of accounting established and administered in accordance with
GAAP, and furnish to the Agent:

                           (i)      Annual Reporting. Within one hundred twenty
         (120) days after the close of each fiscal year of (x) Nordstrom fsb,
         the most recent annual thrift financial report of Nordstrom fsb,
         certified by its president or any vice president, and (y) Nordstrom,
         Inc., audited financial statements, prepared in accordance with GAAP on
         a consolidated basis for Nordstrom, Inc., including balance sheets as
         of the end of such period, related statements of operations,
         shareholder's equity and cash flows, accompanied by an unqualified
         audit report certified by independent certified public accountants,
         acceptable to the Agent, prepared in accordance with generally accepted
         auditing standards and by a certificate of said accountants that, in
         the course of performing such audit, they found no material weaknesses
         in the systems of internal control of Nordstrom, Inc. and its
         Subsidiaries.

                           (ii)     Quarterly Reporting. Within sixty (60) days
         after the close of the first three quarterly periods of each fiscal
         year of (x) Nordstrom fsb, the most recent quarterly call report of
         Nordstrom fsb, certified by its president or any vice president, and
         (y) Nordstrom, Inc., consolidated unaudited balance sheets for
         Nordstrom, Inc. and its Subsidiaries as at the close of each such
         period and consolidated related statements of operations, shareholder's
         equity and cash flows for the period from the beginning of such fiscal
         year to the end of such quarter, all certified by its chief financial
         officer.

                           (iii)    Compliance Certificate. Together with the
         financial statements required hereunder, a compliance certificate
         signed by the chief financial officer of Nordstrom, Inc. stating that
         (x) the attached financial statements have been prepared in accordance
         with GAAP and accurately reflect the financial condition of Nordstrom
         fsb and the Transferor and (y) to the best of such Person's knowledge,
         no Pay Out Event or Potential Pay Out Event exists, or if any Pay Out
         Event or Potential Pay Out Event exists, stating the nature and status
         thereof.

                           (iv)     Shareholders Statements and Reports.
         Promptly upon the furnishing thereof to the shareholders of Nordstrom,
         Inc., copies of all financial statements, reports and proxy statements
         so furnished.

                           (v)      S.E.C. Filings. Promptly upon the filing
         thereof, copies of all registration statements and annual, quarterly,
         monthly or other regular reports which Nordstrom, Inc. files with the
         Securities and Exchange Commission.

                                       21

<PAGE>

                           (vi)     Notice of Pay Out Events or Potential Pay
         Out Events. As soon as possible and in any event within two (2) days
         after the occurrence of each Pay Out Event or each Potential Pay Out
         Event, a statement of the president or any vice president of such
         Nordstrom Party setting forth details of such Pay Out Event or
         Potential Pay Out Event and the action which such Nordstrom Party
         proposes to take with respect thereto.

                           (vii)    Change in Credit Card Guidelines and Debt
         Ratings. Within ten (10) days after the date any material change in or
         material amendment to the Credit Card Guidelines occurs, a copy of the
         Credit Card Guidelines then in effect indicating such change or
         amendment; provided; however, if such change or amendment would be
         reasonably likely to materially and adversely affect the collectibility
         of the Receivables or generally decrease the credit quality of the
         Receivables overall, such change or amendment will be provided to the
         Agent at least thirty (30) days in advance of such change or amendment
         and require the Agent's prior written consent thereto.

                           (viii)   Credit Card Guidelines. Within ninety (90)
         days after the close of such Nordstrom Party's fiscal year, a complete
         copy of the Credit Card Guidelines then in effect.

                           (ix)     ERISA. Promptly after the filing or
         receiving thereof, copies of all reports and notices with respect to
         any Reportable Event (as defined in Article IV of ERISA) which such
         Nordstrom Party or any ERISA Affiliate of such Nordstrom Party files
         under ERISA with the Internal Revenue Service, the PBGC or the U.S.
         Department of Labor or which such Nordstrom Party or any ERISA
         Affiliate of such Nordstrom Party receives from the Internal Revenue
         Service, the PBGC or the U.S. Department of Labor.

                           (x)      Other Information. Such other information
         (including non- financial information) as the Agent or the Agent may
         from time to time reasonably request with respect to the Transferor or
         any of its Subsidiaries.

                  (b)      Corporate Existence; Conduct of Business. The
Transferor will preserve and maintain its existence as a limited liability
company duly organized and existing under the laws of the State of Delaware.
Nordstrom fsb will preserve and maintain its existence as a federal savings bank
duly organized and existing under the laws of the United States. Each Nordstrom
Party will carry on and conduct its business in substantially the same manner
and in substantially the same fields of enterprise as it is presently conducted
and do all things necessary to remain duly organized, validly existing and in
good standing under its jurisdiction of formation or organization, as
applicable, and maintain all requisite authority to conduct its business in each
jurisdiction in which its business is conducted.

                  (c)      Compliance with Laws. Each Nordstrom Party will
comply with all laws, rules, regulations, orders, writs, judgments, injunctions,
decrees or awards applicable to it, its properties, the Accounts or any part
thereof, except where the failure to so comply could not reasonably be expected
to have a Material Adverse Effect.

                  (d)      Furnishing of Information and Inspection of Records.
Each Nordstrom Party will furnish to the Agent, from time to time, such
information with respect to the

                                       22

<PAGE>

Receivables as the Agent may reasonably request, including, without limitation,
listings identifying the Obligor and the outstanding balance for each
Receivable. Each Nordstrom Party will, at any time and from time to time during
regular business hours, permit the Agent, or its agents or representatives, (i)
to examine and make copies of and abstracts from all Records and (ii) to visit
the offices and properties of such Person for the purpose of examining such
Records, and to discuss matters relating to Receivables or such Person's
performance hereunder and under the other Series Documents to which such Person
is a party with any of the officers, directors, employees or independent public
accountants of such Nordstrom Party having knowledge of such matters.

                  (e)      Keeping of Records and Books of Account. The Servicer
will (and will cause Nordstrom, Inc. with respect to Receivables originated by
it) to maintain and implement administrative and operating procedures
(including, without limitation, an ability to recreate records evidencing
Receivables in the event of the destruction of the originals thereof), and keep
and maintain, all documents, books, records and other information reasonably
necessary or advisable for the collection of all Receivables (including, without
limitation, records adequate to permit the daily identification of each new
Receivable and all Collections of and adjustments to each existing Receivable).
The Servicer will (and will cause Nordstrom, Inc. with respect to Receivables
originated by it) give the Agent notice of any material change in the
administrative and operating procedures of the Servicer or Nordstrom, Inc.
referred to in the previous sentence.

                  (f)      Transfer and Servicing Agreement. The Transferor will
comply with the covenants set forth in Sections 2.07 and 2.08 of the Transfer
and Servicing Agreement. The Servicer will comply with the covenants set forth
in Section 3.03 of the Transfer and Servicing Agreement.

                  (g)      Notice of Adverse Claims. Each Nordstrom Party will
advise the Agent promptly, in reasonable detail, (i) of any Lien asserted or a
claim by a Person that is not an Obligor made against any of the Receivables,
(ii) of the occurrence of any breach by such Nordstrom Party of any of its
representations, warranties and covenants contained herein or in the Series
Documents and (iii) of the occurrence of any other event which would have a
material adverse effect on the Indenture Trustee's interest in the Receivables
or the collectability thereof.

                  (h)      Protection of Interest in Receivables. Each Nordstrom
Party shall execute (if applicable) and file such continuation statements and
any other documents reasonably requested by the Indenture Trustee or the Agent
or which may be required by law to fully preserve and protect the interest of
the Indenture Trustee in and to the Receivables. The Transferor shall deliver to
the Agent a copy of any legal opinion delivered pursuant to Section 3.06 of the
Transfer and Servicing Agreement concurrently with the delivery thereof to any
party as required by said Section.

                  (i)      Each Nordstrom Party will notify the Agent in writing
of any of the following promptly upon learning of the occurrence thereof,
describing the same, and if applicable, the steps being taken with respect
thereto:

                           (i)      (A)(1) The entry of any judgment or decree
         against the Servicer if such judgment or decree exceeds $10,000,000 or
         the aggregate amount of all judgments

                                       23

<PAGE>

         and decrees then outstanding against the Servicer exceeds $50,000,000
         and (2) the institution of any litigation, arbitration proceeding or
         governmental proceeding against the Servicer which, individually or in
         the aggregate, could reasonably be expected to have a Material Adverse
         Effect; and (B) the entry of any judgment or decree of the institution
         of any litigation, arbitration proceeding or governmental proceeding
         against Transferor or any of its Affiliates.

                           (ii)     The occurrence of any event or condition
         that has had, or could reasonably be expected to have, a Material
         Adverse Effect.

                           (iii)    The occurrence of a default or an event of
         default under any other financing arrangement to which such Nordstrom
         Party is a debtor or an obligor.

                  (j)      Compliance with Credit Card Agreements and Credit
Card Guidelines. Such Nordstrom Party will and cause any Account Originator to
timely and fully (i) perform and comply with all provisions, covenants and other
promises required to be observed by it under the Credit Card Agreements related
to the Receivables, and (ii) comply in all respects with the Credit Card
Guidelines in regard to each Receivable and the related Credit Card Agreement,
except where the failure to so comply could not reasonably be expected to have a
Material Adverse Effect.

                  (k)      Transfers of Receivables. With respect to the
transfer of the Receivables, (1) from Nordstrom, Inc. to NCI under the Business
Account Operating Agreement, (2) from Nordstrom fsb to NCI under the Operating
Agreement and (3) from NCI to the Transferor under the Transfer and Servicing
Agreement, each such transfer shall be effected under, and in strict compliance
with the terms of the applicable transfer agreement, including, without
limitation, the terms relating to the amount and timing of payments to be made
with respect to the purchase price for the related Receivables.

                  SECTION 7.02 Covenants. Each Nordstrom Party will duly observe
and perform each of its covenants set forth in the other Series Documents.

                  SECTION 7.03 Negative Covenants of the Nordstrom Parties. So
long as the Class A Note remains outstanding, each Nordstrom Party hereby
covenants as to itself, as set forth below:

                  (a)      Amendments. No Nordstrom Party will make, nor will it
permit any Person to make, any amendment, modification or change to, or provide
any waiver under any Series Document without the prior written consent of the
Agent.

                  (b)      No Sales, Liens, Etc. Except as otherwise provided
herein and in the Series Documents, such Nordstrom Party will not sell, assign
(by operation of law or otherwise) or otherwise dispose of, or create or suffer
to exist any Lien upon (or the filing of any financing statement) or with
respect to any of the Receivables.

                  (c)      No Extension or Amendment of Receivables. Except as
otherwise permitted by the Series Documents, the Servicer will not extend, amend
or otherwise modify the terms of any Receivable.

                                       24

<PAGE>


                  (d)      No Change in Business or Account Guidelines. Neither
Nordstrom Party will make any change in the character of its business or in the
Credit Card Guidelines, which change would, in either case, delay the timing of
recognition of the charge-off or write-off of any delinquent or fraudulent
Receivable or any Receivable with respect to which the related Obligor has
declared bankruptcy, impair the collectability of any Receivable or otherwise
have a material adverse effect on the Indenture Trustee's interest in the
Receivables, including any change which would have the effect of diminishing the
creditworthiness of Obligors with respect to Additional Accounts or Supplemental
Accounts.

                  (e)      Change of Name, Etc. Neither Nordstrom Party will
without providing 30 days' notice to the Conduit Purchaser and the Agent and
without filing such amendments to any previously filed financing statements as
the Conduit Purchaser and the Agent may require, (A) change the location of its
principal executive office or the location of the offices where the records
relating to the accounts are kept or the jurisdiction of its organization, or
(B) change its name, identity or corporate structure in any manner which would,
could or might make any financing statement or continuation statement filed by
such Nordstrom Party in accordance with the Series Documents seriously
misleading within the meaning of Sections 9-506 and 9-507 of the UCC as in
effect in the relevant UCC States or any applicable enactment of the UCC.

                  (f)      ERISA Matters. Such Nordstrom Party will not (i)
engage or permit any of its respective ERISA Affiliates to engage in any
prohibited transaction (as defined in Section 4975 of the Code and Section 406
of ERISA) for which an exemption is not available or has not previously been
obtained from the U.S. Department of Labor; (ii) permit to exist any accumulated
funding deficiency (as defined in Section 302(a) of ERISA and Section 412(a) of
the Code) or funding deficiency with respect to any Benefit Plan other than a
Multiemployer Plan; (iii) fail to make any payments to any Multiemployer Plan
that such Nordstrom Party or any ERISA Affiliate of such Nordstrom Party is
required to make under the agreement relating to such Multiemployer Plan or any
law pertaining thereto; (iv) terminate any Benefit Plan so as to result in any
liability; or (v) permit to exist any occurrence of any reportable event
described in Title IV of ERISA which represents a material risk of a liability
to the Transferor, or any ERISA affiliate of such Nordstrom Party under ERISA or
the Code, if such prohibited transactions, accumulated funding deficiencies,
payments, terminations and reportable events occurring within any fiscal year of
such Nordstrom Party, in the aggregate, involve a payment of money or an
incurrence of liability by such Nordstrom Party or any ERISA Affiliate of such
Nordstrom Party in an amount in excess of $100,000.

                  (g)      Transfer of Transferor Interest. Except as permitted
by the Series Documents, the Transferor shall not assign, transfer or otherwise
convey to any Person other than Nordstrom Credit, Inc. any interest in the
Transferor Interest.

                  (h)      Business Accounts. The Transferor will not transfer
any Business Accounts to the Trust until such time that it has: (i) obtained the
prior written consent of the Agent with respect to including Business Accounts
in the Trust Assets and (ii) delivered an opinion of counsel in form and
substance satisfactory to the Agent with respect to certain matters relating to:
(x) the first priority perfected security of NCI in the Business Accounts (as
assigned to the Indenture Trustee) and (y) Nordstrom, Inc. and the Business
Account Operating Agreement.

                                       25

<PAGE>

                                  ARTICLE VIII

                              ADDITIONAL COVENANTS

                  SECTION 8.01 Legal Conditions to Closing. The parties hereto
will take all reasonable action necessary to obtain (and will cooperate with one
another in obtaining) any consent, authorization, permit, license, franchise,
order or approval of, or any exemption by, any Governmental Authority or any
other Person, required to be obtained or made by it in connection with any of
the transactions contemplated by this Note Purchase Agreement.

                  SECTION 8.02 Expenses. Whether or not the Closing takes place,
except as otherwise expressly provided herein or in the Fee Letter, all costs
and expenses incurred in connection with this Note Purchase Agreement and the
transactions contemplated hereby shall (as between the Transferor and the
Conduit Purchaser) be paid by the Transferor.

                  SECTION 8.03 Mutual Obligations. On and after the Closing,
each party hereto will do, execute and perform all such other acts, deeds and
documents as the other party may from time to time reasonably require in order
to carry out the intent of this Note Purchase Agreement.

                  SECTION 8.04 Restrictions on Transfer. The Agent agrees that
it will comply with the restrictions on transfer of the Class A Note set forth
in the Indenture and the Indenture Supplement and that it will resell the Class
A Note only in compliance with such restrictions; provided, however, that the
Transferor acknowledges that in the event of the purchase of the Class A Note by
any Purchaser no such Purchaser will be required to execute and deliver the
Investment Letter.

                  SECTION 8.05 Consents, etc. The Agent and each Purchaser
agrees not to unreasonably withhold or delay its consent to any amendment or
other matter requiring consent of the Series 2001-2 Noteholders under a
provision of any Series Document to the extent that such provision specifies
that such consent is not to be unreasonably withheld or delayed.

                                   ARTICLE IX

                                INDEMNIFICATION

                  SECTION 9.01 Indemnities by the Nordstrom Parties. Without
limiting any other rights which the Agent or the Purchasers may have hereunder
or under applicable law, (A) the Transferor hereby agrees to indemnify the
Agent, the Purchasers and the Liquidity Providers and any successors and
permitted assigns and any of their respective officers, directors and employees
(collectively, "Indemnified Parties") from and against any and all damages,
losses, claims, liabilities, costs and expenses, including, without limitation,
reasonable attorneys' fees (which such attorneys may be employees of the Agent
or the Purchasers or Liquidity Providers, as applicable) and disbursements (all
of the foregoing being collectively referred to as "Indemnified Amounts")
awarded against or incurred by any of them in any action or proceeding between
the Transferor and any of the Indemnified Parties or between any of the
Indemnified Parties and any third party or otherwise arising out of or as a
result of this Note Purchase

                                       26

<PAGE>

Agreement, the other Series Documents, the ownership or maintenance, either
directly or indirectly, by the Agent or the Purchasers of the Class A Note or
any of the other transactions contemplated hereby or thereby, and (B)
Nordstrom fsb hereby agrees to indemnify each Indemnified Party for Indemnified
Amounts awarded against or incurred by any of them in any action or proceeding
(including in its capacity as Servicer) between Nordstrom fsb and any of the
Indemnified Parties or between any of the Indemnified Parties and any third
party or otherwise arising out of or as a result of this Note Purchase
Agreement, the other Series Documents, the ownership or maintenance, either
directly or indirectly, of the Class A Note or any of the other transactions
contemplated hereby or thereby, excluding, in all of the foregoing instances
under the preceding clauses (A) and (B): (i) Indemnified Amounts to the extent a
final judgment of a court of competent jurisdiction holds that such Indemnified
Amounts result from gross negligence or willful misconduct on the part of an
Indemnified Party seeking indemnification or (ii) Indemnified Amounts to the
extent the same include losses in respect of Receivables that are uncollectible
on account of the insolvency, bankruptcy or lack of creditworthiness of the
related Obligor. Without limiting the generality of the foregoing, each
Nordstrom Party shall indemnify each Indemnified Party for Indemnified Amounts
relating to or resulting from:

                           (i)      any representation or warranty made by any
         Nordstrom Party or any officers of such Person under or in connection
         with this Note Purchase Agreement, any of the other Series Documents or
         any other information or report delivered by such Person pursuant
         hereto or thereto, which shall have been false or incorrect in any
         material respect when made or deemed made;

                           (ii)     the failure by the Account Originator, NCI,
         Nordstrom fsb (including in its capacity as Servicer) or the Transferor
         to comply with any applicable law, rule or regulation with respect to
         any Receivable, or the nonconformity of any Receivable with any such
         applicable law, rule or regulation;

                           (iii)    the failure to vest and maintain vested in
         the Indenture Trustee, on behalf of the Trust, first priority,
         perfected security interest, in the Collateral free and clear of any
         Lien;

                           (iv)     any failure of the Account Originator, NCI,
         Nordstrom fsb (including in its capacity as Servicer) or the Transferor
         to perform its duties, covenants or other obligations in accordance
         with the provisions of this Note Purchase Agreement or any other Series
         Document;

                           (v)      any products liability, personal injury or
         damage suit, or other similar claim arising out of or in connection
         with merchandise, insurance or services that are the subject of any
         Receivable;

                           (vi)     any dispute, claim, offset or defense (other
         than discharge in bankruptcy) of the Obligor to the payment of any
         Receivable (including, without limitation, a defense based on such
         Receivable not being a legal, valid and binding obligation of such
         Obligor enforceable against it in accordance with its terms), or any
         other claim resulting from the sale of merchandise or services related
         to such Receivable or the furnishing or failure to furnish such
         merchandise or services;

                                       27

<PAGE>

                           (vii)    the commingling of Collections of
         Receivables at any time with other funds;

                           (viii)   any investigation, litigation or proceeding
         related to or arising from this Note Purchase Agreement or any other
         Series Document, the transactions contemplated hereby, the use of the
         proceeds of an Incremental Funding, the ownership of the Class A Note
         or any other investigation, litigation or proceeding relating to the
         Account Originator, NCI, Nordstrom fsb (including in its capacity as
         Servicer) or the Transferor in which any Indemnified Party becomes
         involved as a result of any of the transactions contemplated hereby;

                           (ix)     any inability to litigate any claim against
         any Obligor in respect of any Receivable as a result of such Obligor
         being immune from civil and commercial law and suit on the grounds of
         sovereignty or otherwise from any legal action, suit or proceeding;

                           (x)      any failure of Trust to acquire and maintain
         legal and equitable title to, and ownership of any Receivable free and
         clear of any (other than as created under the Series Documents); or any
         failure of the Transferor to give reasonably equivalent value to NCI
         under the Receivables Purchase Agreement in consideration of the
         transfer by NCI of any Receivable, or any attempt by any Person to void
         such transfer under statutory provisions or common law or equitable
         action;

                           (xi)     the failure to have filed, or any delay in
         filing, financing statements or other similar instruments or documents
         under the UCC of any applicable jurisdiction or other applicable laws
         with respect to any Receivable with respect thereto, and the proceeds
         of any thereof; and

                           (xii)    any action or omission by the Account
         Originator, NCI, Nordstrom fsb (including in its capacity as Servicer)
         or the Transferor which reduces or impairs the rights of the Conduit
         Purchaser, the Agent or the Purchasers with respect to any Receivable
         or the value of any such Receivable.

                 SECTION 9.02 Procedure. In order for an Indemnified Party to be
entitled to any indemnification provided for under this Note Purchase Agreement
in respect of, arising out of, or involving a claim made by any Person against
the Indemnified Party (a "Third Party Claim"), such Indemnified Party must
notify Nordstrom fsb or the Transferor, as applicable (the "Applicable
Indemnifying Party") in writing of the Third Party Claim within a reasonable
time after receipt by such Indemnified Party of written notice of the Third
Party Claim unless the Applicable Indemnifying Party shall have previously
obtained actual knowledge thereof. Thereafter, the Indemnified Party shall
deliver to the Applicable Indemnifying Party, within a reasonable time after the
Indemnified Party's receipt thereof, copies of all notices and documents
(including court papers) received by the Indemnified Party relating to the Third
Party Claim.

                  SECTION 9.03 Defense of Claims. If a Third Party Claim is made
against an Indemnified Party, (a) the Applicable Indemnifying Party will be
entitled to participate in the defense thereof and, (b) if it so chooses, to
assume the defense thereof with counsel selected by

                                       28

<PAGE>

the Applicable Indemnifying Party, provided that in connection with such
assumption (i) such counsel is not reasonably objected to by the Indemnified
Party and (ii) the Applicable Indemnifying Party first admits in writing their
joint and several liability to indemnify the Indemnified Party with respect to
all elements of such claim in full. Should the Applicable Indemnifying Party so
elect to assume the defense of a Third Party Claim, the Applicable Indemnifying
Party will not be liable to the Indemnified Party for any legal expenses
subsequently incurred by the Indemnified Party in connection with the defense
thereof. If the Applicable Indemnifying Party elects to assume the defense of a
Third Party Claim, the Indemnified Party will (i) cooperate in all reasonable
respects with the Applicable Indemnifying Party in connection with such defense
and (ii) not admit any liability with respect to, or settle, compromise or
discharge, such Third Party Claim without the Applicable Indemnifying Party's
prior Written consent, as the case may be. If the Applicable Indemnifying Party
shall assume the defense of any Third Party Claim, the Indemnified Party shall
be entitled to participate in (but not control) such defense with its own
counsel at its own expense. If the Applicable Indemnifying Party does not assume
the defense of any such Third Party Claim, the Indemnified Party may defend the
same in such manner as it may deem appropriate, including settling such claim or
litigation after giving notice to the Applicable Indemnifying Party of such
terms and the Applicable Indemnifying Party promptly reimburse the Indemnified
Party upon written request. Anything contained in this Note Purchase Agreement
to the contrary notwithstanding, neither the Applicable Indemnifying Party shall
be entitled to assume the defense of any part of a Third Party Claim that seeks
an order, injunction or other equitable relief or relief for other than money
damages against the Indemnified Party.

                  SECTION 9.04 Indemnity for Taxes, Reserves and Expenses. If
after the date hereof, the adoption of any Governmental Rule or bank regulatory
guideline or any amendment or change in the interpretation of any existing or
future Governmental Rule or bank regulatory guideline by any Governmental
Authority charged with the administration, interpretation or application
thereof, or the compliance with any directive of any Governmental Authority (in
the case of any bank regulatory guideline, whether or not having the force of
Governmental Rule):

                           (i)      shall subject any Indemnified Party to any
         tax, duty, deduction or other charge with respect to the Receivables,
         the Class A Note, this Note Purchase Agreement or the other Series
         Documents, or payments of amounts due thereunder, or shall change the
         basis of taxation of payments to any Indemnified Party of amounts
         payable in respect thereof (except for changes in the rate of general
         corporate, franchise, net income or other income tax (including by
         means of withholding) imposed on such Indemnified Party by the United
         States of America, the jurisdiction in which such Indemnified Party's
         principal executive office is located or any other jurisdiction in
         which the Indemnified Party would be subject to such tax even if the
         transactions contemplated by this Note Purchase Agreement had not
         occurred); or

                           (ii)     shall impose, modify or deem applicable any
         reserve, capital, special deposit or similar requirement (including,
         without limitation, any such requirement imposed by the Board of
         Governors of the Federal Reserve System) against assets of, deposits
         with or for the account of, or credit extended by, any Indemnified
         Party or shall impose on any Indemnified Party or on the United States
         market for certificates of deposit or the London interbank market any
         other condition affecting the

                                       29

<PAGE>

         Receivables, the Class A Note, this Note Purchase Agreement, the other
         Series Documents or payments of amounts due thereunder (including with
         respect to Eurocurrency liability reserves); or

                           (iii)    imposes upon any Indemnified Party any other
         cost or expense (including, without limitation, reasonable attorneys'
         fees and expenses, and expenses of litigation or preparation therefore
         in contesting any of the foregoing if such a contest is requested by
         the Applicable Indemnifying Party) with respect to the Receivables, the
         Class A Note, any Series Document or payments of amounts due hereunder
         or thereunder;

and the result of any of the foregoing is to increase the cost or reduce the
payments to such Indemnified Party with respect to the Receivables, the Class A
Note, this Note Purchase Agreement, the Series Documents or payments of amounts
due thereunder or the obligations thereunder or the funding of any purchases
(including Incremental Fundings) with respect thereto by any Purchaser, by an
amount deemed by such Indemnified Party to be material, then the Transferor
agrees to pay such Indemnified Party, within 10 days after demand by such
Indemnified Party, such additional amount or amounts as will compensate such
Indemnified Party for such increased cost or reduced payments.

                  (b)      If any Indemnified Party shall have determined that,
after the date hereof, the adoption of any applicable Law or bank regulatory
guideline regarding capital adequacy, or any change therein, or any change in
the interpretation thereof by any Governmental Authority, or any directive
regarding capital adequacy (in the case of any bank regulatory guideline,
whether or not having the force of law) of any such Governmental Authority, has
or would have the effect of reducing the rate of return on capital of such
Indemnified Party (or its parent) as a consequence of such Indemnified Party's
obligations hereunder or with respect hereto to a level below that which such
Indemnified Party (or its parent) could have achieved but for such adoption,
change, request or directive (taking into consideration its policies with
respect to capital adequacy) by an amount deemed by such Indemnified Party to be
material, then from time to time the Transferor agrees to pay such Indemnified
Party, within 10 days after demand by any such Indemnified Party, such
additional amount or amounts as will compensate such Indemnified Party (or its
parent) for such reduction.

                  (c)      Any Indemnified Party who makes a demand for payment
of increased costs or capital pursuant to Section 9.04(a) or (b) shall promptly
deliver to the Transferor a certificate setting forth in reasonable detail the
computation of such increased costs or capital and specifying the basis
therefore. In the absence of manifest error, such Note shall be conclusive and
binding for all purposes. Each Indemnified Party shall use reasonable efforts to
mitigate the effect upon the Transferor of any such increased costs or capital
requirements; provided, it shall not be obligated to take any action that it
determines would be disadvantageous to it or inconsistent with its policies.

                  No Indemnified Party shall be permitted to recover any
additional or increased cost or reduction described in this Section 9.04 on a
retroactive basis for a period of time that is more than ninety (90) days prior
to the delivery of a notice to the Transferor that such additional or increased
cost or reduction has commenced accruing or been incurred.

                                       30

<PAGE>

                  SECTION 9.05 Costs, Expenses, Taxes, Broken Funding Cost and
Increased Costs under Note Purchase Agreement and Program Facility. (a) The
Transferor shall be obligated to pay on demand to each Purchaser and its Agent
(i) all reasonable costs and expenses in connection with the preparation,
execution and delivery of this Note Purchase Agreement, the other documents to
be delivered hereunder or in connection herewith and any requested amendments,
waivers or consents or examination or visit by the Conduit Purchaser or Agent
pursuant to Section 7.01(d) hereof including, without limitation, the reasonable
fees and out-of-pocket expenses of counsel for the Purchasers and the Agent,
with respect thereto and with respect to advising the Purchasers and the Agent
as to its respective rights and remedies under this Note Purchase Agreement and
the other documents delivered hereunder or in connection herewith and (ii) all
costs and expenses, if any, in connection with the enforcement of this Note
Purchase Agreement and the other documents delivered hereunder or in connection
herewith.

                  (b)      In addition, the Transferor shall be obligated to pay
on demand any and all stamp and other taxes and fees payable in connection with
the execution, delivery, filing and recording of this Note Purchase Agreement,
the Class A Note or the other documents and agreements to be delivered
hereunder, and agrees to hold each Purchaser and its Agent harmless from and
against any liabilities with respect to or resulting from any delay in paying or
omission to pay such taxes and fees.

                  (c)      The Transferor shall be obligated to pay to the
Purchasers promptly on request by the Agent, the amount of any Broken Funding
Cost or other Class A Additional Amounts and to the extent not paid when
required pursuant to Section 4.05 of the Indenture Supplement.

                  (d)      If a Conduit Purchaser becomes obligated to
compensate any financial institution under its commercial paper program as a
result of any events or circumstances similar to those described in Sections
9.04 or 9.05(c), such Conduit Purchaser shall promptly deliver to the Transferor
a certificate setting forth in reasonable detail the computation of such
amounts. In the absence of manifest error, such certificate shall be conclusive
and binding for all purposes. The Transferor shall be obligated to pay to the
Conduit Purchaser, promptly after receipt of such certificate, such additional
amounts as may be necessary to reimburse the Conduit Purchaser for any amounts
so paid by the Conduit Purchaser. With respect to amounts to be paid pursuant to
this Section 9.05(d) as a result of any events or circumstances similar to those
described in Section 9.04 or 9.05(c) hereof, the Conduit Purchaser shall request
the party to be compensated to use its reasonable efforts to mitigate the effect
upon the Transferor of any such increased costs or capital requirements;
provided, such party shall not be obligated to take any action that it
determines would be disadvantageous to it or inconsistent with its policies.

                                    ARTICLE X

                                    THE AGENT

                  SECTION 10.01 Delegation of Duties. The Agent may delegate any
of its duties under this Note Purchase Agreement and each other Series Document
by or through agents or attorneys-in-fact and shall be entitled to advice of
counsel concerning all matters pertaining to

                                       31

<PAGE>

such duties. The Agent shall not be responsible for the negligence or misconduct
of any agents or attorneys-in-fact selected by it with reasonable care.

                  SECTION 10.02 Exculpatory Provisions. Neither the Agent nor
any of its directors, officers, agents or employees shall be (i) liable for any
action lawfully taken or omitted to be taken by it or them under or in
connection with this Note Purchase Agreement or any other Series Document
(except for its, their or such Person's own gross negligence or willful
misconduct), or (ii) responsible in any manner to any of the Purchasers for any
recitals, statements, representations or warranties made by any Nordstrom Party
contained in this Note Purchase Agreement, any other Series Document or any
certificate, report, statement or other document referred to or provided for in,
or received under or in connection with, this Note Purchase Agreement, or any
other Series Document or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Note Purchase Agreement, or any other
Series Document or any other document furnished in connection herewith or
therewith, or for any failure of any Nordstrom Party to perform its obligations
hereunder or thereunder, or for the satisfaction of any condition specified in
Article II or IV, or for the perfection, priority, condition, value or
sufficiency of any collateral pledged in connection herewith. The Agent shall
not be under any obligation to any Purchaser to ascertain or to inquire as to
the observance or performance of any of the agreements or covenants contained
in, or conditions of, this Note Purchase Agreement or any other Series Document,
or to inspect the properties, books or records of the Nordstrom Parties. The
Agent shall not be deemed to have knowledge of any Pay Out Event or Potential
Pay Out Event unless the Agent has received notice from a Nordstrom Party or a
Purchaser.

                  SECTION 10.03 Reliance by Agent. The Agent shall in all cases
be entitled to rely, and shall be fully protected in relying, upon any document
or conversation believed by it to be genuine and correct and to have been
signed, sent or made by the proper Person or Persons and upon advice and
statements of legal counsel (including, without limitation, counsel to the
Nordstrom Parties), independent accountants and other experts selected by the
Agent. The Agent shall in all cases be fully justified in failing or refusing to
take any action under this Note Purchase Agreement or any other Series Document
unless it shall first receive such advice or concurrence of the Conduit
Purchaser or all of the Purchasers, as applicable, as it deems appropriate and
it shall first be indemnified to its satisfaction by the Purchasers, provided
that unless and until the Agent shall have received such advice, the Agent may
take or refrain from taking any action, as the Agent shall deem advisable and in
the best interests of the Purchasers. The Agent shall in all cases be fully
protected in acting, or in refraining from acting, in accordance with a request
of the Conduit Purchaser or all of the Purchasers, as applicable, and such
request and any action taken or failure to act pursuant thereto shall be binding
upon all the Purchasers.

                  SECTION 10.04 Non-Reliance on Agent and Other Purchasers. Each
Purchaser expressly acknowledges that neither the Agent, nor any of its
officers, directors, employees, Agents, attorneys-in-fact or affiliates has made
any representations or warranties to it and that no act by the Agent hereafter
taken, including, without limitation, any review of the affairs of any Nordstrom
Party, shall be deemed to constitute any representation or warranty by the
Agent. Each Purchaser represents and warrants to the Agent that it has and will,
independently and without reliance upon the Agent or any other Purchaser and
based on such documents and

                                       32

<PAGE>

information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, prospects, financial and
other conditions and creditworthiness of each Nordstrom Party and made its own
decision to enter into this Note Purchase Agreement, the other Series Documents
and all other documents related hereto or thereto.

                  SECTION 10.05 Reimbursement and indemnification. Each
Purchaser agrees to reimburse and indemnify the Agent and its officers,
directors, employees, representatives and agents ratably according to their
Purchaser Percentages, to the extent not paid or reimbursed by the Nordstrom
Parties (i) for any amounts for which the Agent, acting in its capacity as
Agent, is entitled to reimbursement by the Nordstrom Parties hereunder and (ii)
for any other expenses incurred by the Agent, in its capacity as Agent and
acting on behalf of the Purchasers, in connection with the administration and
enforcement of this Note Purchase Agreement and the other Series Documents.

                  SECTION 10.06 Agent in its Individual Capacity. The Agent and
its Affiliates may make loans to, accept deposits from and generally engage in
any kind of business with Transferor or any Affiliate of Transferor as though
the Agent were not the Agent hereunder. With respect to the acquisition of the
Class A Note pursuant to this Note Purchase Agreement, the Agent shall have the
same rights and powers under this Note Purchase Agreement in its individual
capacity as any Purchaser and may exercise the same as though it were not the
Agent, and the terms "Purchaser," and "Purchasers" shall include the Agent in
its individual capacity.

                  SECTION 10.07 Successor Agent. The Agent may, upon five days'
notice to the Transferor and the Purchasers, and the Agent will, upon the
direction of all of the Purchasers (other than the Agent, in its individual
capacity) resign as Agent. If the Agent shall resign, then the Purchasers during
such five-day period shall appoint from among the Purchasers a successor Agent.
If for any reason no successor Agent is appointed by the Purchasers during such
five-day period, then effective upon the termination of such five day period,
the Purchasers shall perform all of the duties of the Agent hereunder and under
the other Series Documents and Nordstrom Parties (as applicable) shall make all
payments in respect of the Class A Note directly to the applicable Purchasers
and for all purposes shall deal directly with the Purchasers. After the
effectiveness of any retiring Agent's resignation hereunder as Agent, the
retiring Agent shall be discharged from its duties and obligations hereunder and
under the other Series Documents and the provisions of this Article X shall
continue in effect for its benefit with respect to any actions taken or omitted
to be taken by it while it was Agent under this Note Purchase Agreement and
under the other Series Documents.

                                   ARTICLE XI

                                  MISCELLANEOUS

                  SECTION 11.01 Waivers and Amendments. No failure or delay on
the part of the Conduit Purchaser, the Agent or any Purchaser in exercising any
power, right or remedy under this Note Purchase Agreement shall operate as a
waiver thereof, nor shall any single or partial exercise of any such power,
right or remedy preclude any other further exercise thereof or the exercise of
any other power, right or remedy. The rights and remedies herein provided shall
be cumulative and nonexclusive of any rights or remedies provided by law. Any
provision of

                                       33

<PAGE>

this Note Purchase Agreement may be amended if, but only if, such amendment is
in writing and signed by the parties hereto.

                  SECTION 11.02 Notices. All notices and other communications
provided for hereunder shall, unless otherwise stated herein, be in writing
(including telecopies, telegraphic, telex or cable communication) and mailed,
telecopied, telegraphed, cabled or delivered, as to each party hereto, at its
address set forth in Schedule I hereto or at such other address as shall be
designated by such party in a written notice to the other party hereto. All such
notices and communications shall, when mailed, telecopied, telegraphed or
cabled, be effective when deposited in the mails, confirmed by telephone,
delivered to the telegraph company or delivered to the cable company,
respectively.

                  SECTION 11.03 Binding Effect; Assignability. (a) This Note
Purchase Agreement shall be binding upon and inure to the benefit of the
Transferor, Nordstrom fsb, the Agent and the Purchasers party this Note Purchase
Agreement and their respective successors and assigns (including any subsequent
holders of the Class A Note); provided, however, that the Transferor shall not
have the right to assign its rights hereunder or any interest herein (by
operation of law or otherwise) without the prior written consent of all of the
Agent. The Agent agrees that it shall not transfer a Note without the
Transferor's consent, unless such transfer (x) is to a Committed Purchaser or
Liquidity Purchaser, (y) is to a RIC or (z) occurs after the commencement of the
Early Amortization Period.

                  (b)      Without the consent of the Transferor, each Committed
Purchaser party to this Note Purchase Agreement may assign all or a portion of
its rights and obligations under this Note Purchase Agreement to any financial
or other institution acceptable to the Agent. The parties to each such
assignment shall execute and deliver an Assignment and Acceptance to the Agent,
and the Agent shall promptly notify the Transferor of such assignment. From and
after the effective date of such Assignment and Acceptance, the assigning
Liquidity Purchaser shall be relieved of its obligations hereunder to the extent
so assigned.

                  (c)      Any Purchaser may, in the ordinary course of its
business and in accordance with applicable law, at any time sell to one or more
Persons (each, a "Participant") participating interests in all or a portion of
its rights and obligations under this Note Purchase Agreement. Notwithstanding
any such sale by a Purchaser of participating interests to a Participant, such
Purchaser's rights and obligations under this Note Purchase Agreement shall
remain unchanged, such Purchaser shall remain solely responsible for the
performance thereof, and the Transferor and the Agent shall continue to deal
solely and directly with such Purchaser in connection with such Purchaser's
rights and obligations under this Note Purchase Agreement. The Transferor also
agrees that each Participant shall be entitled to the benefits of Article IX
hereof; provided, however, that all amounts payable by the Transferor to any
such Participant shall be limited to the amounts which would have been payable
to the Purchaser selling such participating interest had such interest not been
sold.

                  (d)      This Note Purchase Agreement shall create and
constitute the continuing obligation of the parties hereto in accordance with
its terms, and shall remain in full force and effect until such time as all
amounts payable with respect to the Class A Note shall have been paid in full.

                                       34

<PAGE>

                  SECTION 11.04 Provision of Documents and Information. (a) Each
of the Conduit Purchaser, the Committed Purchaser and the Agent agrees that it
will keep the Nordstrom Information secure and not disclose without the prior
consent of the Transferor any Nordstrom Information which is furnished by the
Transferor or Nordstrom fsb to the Conduit Purchaser, the Committed Purchaser or
the Agent. Each of the Conduit Purchaser, the Committed Purchaser and the Agent
acknowledges that the Transferor has informed the Agent that part of the reason
for the foregoing obligations is to allow Nordstrom, Inc. to fulfill its
obligations under Regulation FD promulgated under the Securities Exchange Act of
1934, as amended. Notwithstanding the foregoing, each of the Conduit Purchaser,
the Committed Purchaser and the Agent may disclose any Nordstrom Information:

                           (i)      to its affiliates, and to directors,
         employees, auditors or counsel of each of the Conduit Purchaser, the
         Committed Purchaser and the Agent or its affiliates to whom it is
         necessary to show the Nordstrom Information in connection with this
         Agreement and the transactions contemplated herein, each of which shall
         be informed by such party of the confidential nature of the Nordstrom
         Information, and, with respect to any such auditor, each of which has
         entered into an agreement with such party or its affiliates under which
         such auditor has agreed to maintain the confidentiality of information
         provided to it or its affiliates; provided, however, that none of the
         Conduit Purchaser, the Committed Purchaser or the Agent shall disclose
         any Nordstrom Information that identifies individual credit card
         holders or customers to counsel of such party or its affiliates;

                           (ii)     in any statement or testimony pursuant to a
         subpoena or order by any court, governmental body or other agency
         asserting jurisdiction over any of the Conduit Purchaser, the Committed
         Purchaser or the Agent, or as may otherwise be required by law
         (provided that the Conduit Purchaser, the Committed Purchaser or the
         Agent, as applicable, shall give Nordstrom, Inc. prior notice of the
         disclosure permitted by this clause (ii) unless such notice is
         prohibited by the subpoena, order or law);

                           (iii)    upon the request or demand of any regulatory
         agency or authority having jurisdiction over any of the Conduit
         Purchaser, the Committed Purchaser or the Agent or its affiliates;

                           (iv)     to any rating agency, and to any directors,
         employees, auditors or counsel of any of the foregoing, each of which
         shall be informed by the Conduit Purchaser, the Committed Purchaser or
         the Agent, as applicable of the confidential nature of the Nordstrom
         Information; provided, however, that the Conduit Purchaser, the
         Committed Purchaser or the Agent, as applicable, shall not disclose any
         Nordstrom Information that identifies individual credit card holders or
         customers to any of the foregoing; and

                           (v)      to commercial paper dealer or provider of a
         surety, guaranty or credit or liquidity enhancement to any entity
         organized for the purpose of purchasing, or making loans secured by,
         financial assets for which the Agent acts as the administrative agent,
         and to any directors, employees, auditors or counsel of any of the
         foregoing, each of which shall be informed by the Agent of the
         confidential nature of the Nordstrom

                                       35

<PAGE>

         Information, and, with respect to any such commercial paper dealer or
         provider of a surety, guaranty or credit of liquidity enhancement, each
         of which has entered into an agreement with the Agent or its affiliates
         under which such entity has agreed to maintain the confidentiality of
         information provided to it by the Agent or its affiliates.

                  (b)      Each of the Transferor and Nordstrom fsb agrees that
it will keep the Conduit Information secure and not disclose without the prior
consent of Agent any Conduit Information which is furnished by Agent to the
Transferor of Nordstrom fsb. Notwithstanding the foregoing, each of the
Transferor and Nordstrom fsb may disclose any Conduit Information:

                           (i)      to its affiliates, and to directors,
         employees, auditors or counsel of or its affiliates to whom it is
         necessary to show the Conduit Information in connection with the
         transactions contemplated under this Agreement, each of which shall be
         informed of the confidential nature of the Conduit Information;

                           (ii)     in any statement or testimony pursuant to a
         subpoena or order by any court, governmental body or other agency
         asserting jurisdiction over either of the Transferor or Nordstrom fsb,
         or as may otherwise by required by law (provided that the Transferor or
         Nordstrom fsb, as applicable, shall give the Agent prior notice of the
         disclosure permitted by this clause (ii) unless such notice is
         prohibited by the subpoena, order or law); or

                           (iii)    upon the request or demand of any regulatory
         agency or authority having jurisdiction over the Transferor, Nordstrom
         fsb or its affiliates.

                  (c)      The restrictions contained in this Agreement shall
not apply to Nordstrom Information or Conduit Information which (a) is or
becomes generally available to the public other than as a result of a disclosure
by recipient of such information or such recipient's representatives; or (b)
becomes available to the recipient of such information on a non-confidential
basis from a source other than the disclosing party or one of its agents or (c)
was known to the recipient of such information on a non-confidential basis prior
to its disclosure to such recipient by the disclosing party or one of its
agents.

                  SECTION 11.05 GOVERNING LAW: JURISDICTION. THIS NOTE PURCHASE
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS. EACH
OF THE PARTIES TO THIS NOTE PURCHASE AGREEMENT HEREBY AGREES TO THE JURISDICTION
OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND
ANY APPELLATE COURT HAVING JURISDICTION TO REVIEW THE JUDGMENTS THEREOF. EACH OF
THE PARTIES HEREBY WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS AND ANY
OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER IN ANY OF THE
AFOREMENTIONED COURTS AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE
RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT.

                                       36

<PAGE>

                  SECTION 11.06 No Proceedings. (a) The Transferor agrees that
so long as any senior indebtedness of the Conduit Purchaser shall be outstanding
or there shall not have elapsed one year plus one day since the last day on
which any senior indebtedness of the Conduit Purchaser shall have been
outstanding, it shall not file, or join in the filing of, a petition against
such Conduit Purchaser or the Trust under the Federal Bankruptcy Code, or join
in the commencement of any bankruptcy, reorganization, arrangement, insolvency,
liquidation or other similar proceeding against the Conduit Purchaser or the
Trust.

                  (b)      Each Purchaser severally agrees that it shall not at
any time file, or join in the filing of, a petition against the Trust under the
Federal Bankruptcy Code, or join in the commencement of any bankruptcy,
reorganization, arrangement, insolvency, liquidation or other similar proceeding
against the Trust.

                  SECTION 11.07 Execution in Counterparts. This Note Purchase
Agreement may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed shall be deemed
to be an original and all of which when taken together shall constitute one and
the same agreement.

                  SECTION 11.08 No Recourse. The obligations of any Purchaser
under this Note Purchase Agreement, or any other agreement, instrument, document
or certificate executed and delivered by or issued by such Purchaser or any
officer thereof are solely the corporate or partnership obligations of such
Purchaser. No recourse shall be had for payment of any fee or other obligation
or claim arising out of or relating to this Note Purchase Agreement or any other
agreement, instrument, document or Note executed and delivered or issued by such
Purchaser or any officer thereof in connection therewith, against any
stockholder, limited partner, employee, officer, director or incorporator of
such Purchaser.

                  SECTION 11.09 Limited Recourse. The obligations of the
Transferor and Nordstrom fsb under this Note Purchase Agreement are solely the
corporate obligations of each of the Transferor and Nordstrom fsb. No recourse
shall be had for the payment of any fee or other obligation or claim arising out
of or relating to this Note Purchase Agreement or any other agreement,
instrument, document or certificate executed and delivered or issued by the
Transferor, Nordstrom fsb or any officer thereof in connection therewith,
against any stockholder, employee, officer or director of the Transferor.

                  SECTION 11.10 Survival. All representations, warranties,
covenants, guaranties and indemnifications contained in this Note Purchase
Agreement, including, without limitation, Article IX and Sections 11.06, 11.08
and 11.09, and in any document, Note or statement delivered pursuant hereto or
in connection herewith shall survive the sale, transfer or repayment of the
Class A Note.

                  SECTION 11.11 Tax Characterization. Each party to this Note
Purchase Agreement (a) acknowledges and agrees that it is the intent of the
parties to this Note Purchase Agreement that, for federal, state and local
income and franchise tax purposes only, the Class A Note will be treated as
evidence of indebtedness secured by the Receivables and proceeds thereof and the
Trust will not be characterized as an association (or publicly traded
partnership) taxable as a corporation, (b) agrees to treat the Class A Note for
federal, state and local income and

                                       37

<PAGE>

franchise tax purposes as indebtedness and (c) agrees that the provisions of
this Note Purchase Agreement and all related Series Documents shall be construed
to further these intentions of the parties.

                                       38

<PAGE>

                  IN WITNESS WHEREOF, the parties have caused this Note Purchase
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first above written.

                                    NORDSTROM PRIVATE LABEL
                                    RECEIVABLES LLC.,
                                    as Transferor

                                    By:  /s/ Carol S. Powell
                                       -------------------------------
                                       Name: Carol S. Powell
                                       Title: Treasurer

                                    NORDSTROM fsb,
                                    as Servicer

                                    By:   /s/ Denny D. Dumler
                                       -------------------------------
                                       Name: Denny D. Dumler
                                       Title: President

                                       S-1

<PAGE>

                                    FALCON ASSET SECURITIZATION
                                    CORPORATION,
                                    as Conduit Purchaser

                                    By: /s/ Andrew Leszczynski
                                       --------------------------------
                                       Name: Andrew Leszczynski
                                       Title: Authorized Signatory

                                    BANK ONE, NA (MAIN OFFICE CHICAGO),
                                    as Agent

                                    By: /s/ Andrew Leszczynski
                                       --------------------------------
                                       Name: Andrew Leszczynski
                                       Title: Authorized Officer

                                    BANK ONE, NA (MAIN OFFICE CHICAGO),
                                    as a Committed Purchaser

                                    By: /s/ Andrew Leszczynski
                                       -------------------------------
                                       Name: Andrew Leszczynski
                                       Title: Authorized Officer
                                       Purchaser Percentage: 100%

                                       S-2

<PAGE>

                                   SCHEDULE I

                              Addresses for Notices

If to:

      Transferor:     Nordstrom Private Label Receivables LLC
                      13531 E. Caley Avenue
                      Englewood, Colorado 80111
                      Attention: Legal Department
                      Facsimile No.:(303) 397-4767

      Servicer:       Nordstrom fsb
                      13531 E.Caley Avenue
                      Englewood, Colorado 80111
                      Attention: Legal Department
                      Facsimile No.:(303) 397-4767
      Conduit
      Purchaser:      Falcon Asset Securitization Corporation
                      Bank One, NA (Main Office Chicago)
                      1 Bank One Plaza
                      Chicago, Illinois 60670
                      Attention: Asset Backed Portfolio Management, 19th Floor
                      Facsimile No.:(312) 732-1995
      Administrative
      Agent:          Bank One, NA (Main Office Chicago)
                      1 Bank One Plaza
                      Chicago, Illinois 60670
                      Attention: Asset Backed Portfolio Management, 19th Floor
                      Facsimile No.:(312) 732-1995

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