Document:

<PAGE>
                                                                EXHIBIT 10.10(b)

                             Joint Venture Agreement

                                      dated

                                 June 6th, 1995

between

                    Eddie Bauer Inc.
                    15010 N.E. 36th Street
                    Redmond, WA 98052
                    U.S.A.

and

                    Handelsgesellschaft
                    Heinrich Heine GmbH
                    Windeckstra(Beta)e 15

                    D - 76135 Karlsruhe

and

                    Sport-Scheck GmbH
                    Sendlinger Stra(Beta)e 6

                    D - 80331 Munchen

<PAGE>

                             JOINT VENTURE AGREEMENT

This Agreement, made and entered into this 6th day of June 1995, between:

Eddie Bauer Inc., a corporation duly organized and existing under the laws of
U.S.A., and having its principal place of business at 15010 Northeast 36th
Street, Redmond, WA 98052, U.S.A. (hereinafter referred to as "EBI"),

Handelsgesellschaft Heinrich Heine GmbH, a corporation duly organized and
existing under the laws of Germany, and having its principal place of business
at Windeckstra(Beta)e 15, D - 76135 Karlsruhe (hereinafter referred to as
"HEINE"),

Sport-Scheck GmbH, a corporation duly organized and existing under the laws of
Germany, being a subsidiary of HEINE and having its principal place of business
at Sendlinger Stra(Beta)e 6, D - 80331 Munchen (hereinafter referred to as
"SPORT-SCHECK").

                                   WITNESSETH

Whereas, EBI is a well reputed seller of outdoor apparels and related goods and
sells its products through catalog and also more than 300 of its own retail
stores in the U.S.A. and Canada and has extensive market information regarding
the manufacture and sale or such apparels and related goods,

Whereas, EBI is interested in establishing its presence in Europe - except UK,
Ireland, France, Spain, Portugal and Italy (the Territory) and is seeking a
German corporation who is capable to expend mail-order business and to open
retail stores and operate them efficiently,

Whereas, HEINE and SPORT-SCHECK are well reputed mail order companies mainly
targeting apparels and have extensive market informations regarding such
apparels in Germany and have a strong intention to expand its business to retail
store operation for the aforesaid products,

Whereas, HEINE and SPORT-SCHECK desire and propose to collaborate with EBI to
establish EBI's brand presence by both catalog and retail store operation in the
Territory,

Whereas, EBI, HEINE and SPORT-SCHECK desire to form a joint venture company
(hereinafter referred to as "NEWCO") for the import, manufacture and sale of
EBI's products through retail stores (in Germany as a first step) and catalogs
in the Territory subject to the terms and conditions of this Agreement,

Now, therefore, in consideration of the above premises and the mutual covenants
set forth below, the parties hereby agree as follows:

                                                                               1

<PAGE>

ARTICLE I ESTABLISHMENT OF NEWCO

FORM AND CHARACTERISTICS OF NEWCO

Subject to the terms and conditions contained in this Article I, the parties
hereto shall cause NEWCO to be organized under the laws of Germany as soon as
practicable after this Agreement becomes effective pursuant to Section 5.02
hereof, which NEWCO shall be in the form and shall have the characteristics as
described below:

(1)  Form: GmbH & Co

(2)  Name: Eddie Bauer

(3)  Principal place of business: Munchen

(4)  Principal objects and purpose:

     The import and sale of products developed by EBI for its North American
     market; i.e. AKA, Eddie Bauer and Eddie Bauer Home through retail store
     operation in the Territory excluding Ford Eddie Bauer Edition vehicles, the
     Eddie Bauer Maxum Sport Runabout Boat and the Eddie Bauer Adventurer
     cosmetic fragrance and such additional products for other similar programs.

     NEWCO shall also reserve the rights to develop and manufacture products
     specifically for the European market under the license to be granted by EBI
     pursuant to the Distribution and Licence Agreement between NEWCO and EBI
     referred to in Section 4.03 hereof. The development, manufacture and sale
     of such products shall be subject to the prior written approval of EBI. EBI
     shall be the owner of all product designs, patents, trademarks and
     copyrights developed and/or used by NEWCO.

(5)  Authorized capital of GmbH & Co: DM 8,000,000.00
     Authorized capital of GmbH: DM 100,000.00

(6)  Partnership Agreement/Articles of Association:

     Substantially in the form attached hereto as Exhibit A (the translation of
     which is attached hereto as Exhibit B for GmbH & Co and Exhibits C + D for
     GmbH).

                                 GMBH & CO GMBH

<TABLE>
<CAPTION>
Shareholder    Amount Payable   Amount Payable   Shareholding Ratio
-----------    --------------   --------------   ------------------
<S>            <C>              <C>              <C>
EBI            DM3,200,000.00    DM 40,000.00            40%
HEINE          DM4,000,000.00    DM 50,000.00            50%
SPORT-SCHECK   DM  800,000.00    DM 10,000.00            10%
Total          DM8,000,000.00    DM100,000.00           100%
</TABLE>

                                                                               2

<PAGE>

Each party hereto shall at the incorporation of NEWCO subscribe to and fully pay
for in cash its shares by telegraphic transfer remittance to a bank account of
the GmbH & Co and GmbH in Munchen within fifteen (15) days after organization of
both companies.

All expenses incurred in connection with the incorporation of NEWCO, including
without limitation the legal fees for preparation of the Articles of
Incorporation, registration fees and stamp duties shall be borne by NEWCO.

All parties are bound to incorporate the above mentioned companies (GmbH and
GmbH & Co) and to decide upon the necessary resolutions.

HEINE, SPORT-SCHECK and EBI each may designate a Subsidiary company to become
the shareholder of NEWCO. "Subsidiary" or "Subsidiary Company" means any
corporation, partnership or other entity in which one of the parties owns a
majority vote. In case of any such designation, the original party remains to be
bound by this Agreement. If the other company ceases to be a Subsidiary, the
shares must be retransferred to the original owner.

ARTICLE II ORGANIZATION AND OPERATION

Section 2.01 Managing Directors ("Geschaftsfuhrer"). Managing directors will be
appointed upon mutual consent of the shareholders. The management consists of
two managing directors and one person being granted power of authorized Officer
("Prokura"). The initial managing directors are proposed by HEINE and approved
by the Advisory Board. The managing directors will be appointed and dismissed by
the shareholders meeting. The Advisory Board has the right to conclude, modify
and terminate the employment contracts of the managing directors.

Section 2.02 Advisory Board ("Beirat").

(1)  For the present the Advisory Board to be formed by the company will consist
     of 5 members to be delegated by the shareholders. HEINE and EBI may
     delegate each two members, SPORT-SCHECK may delegate one member.

(2)  The chairman of the Advisory Board will be appointed by HEINE, the
     vice-chairman by EBI. The chairman or the vice-chairman respectively in
     case of prevention will preside the meetings of the Advisory Board and will
     sign the minutes of the meeting.

(3)  Resolution upon following items can only be passed upon unanimous consent
     of the Advisory Board:

     -    any commitments for real estate,

     -    annual plan and 5 year plan,

     -    sales of merchandise by the company through companies (except for
          those companies which are included in the annual plan / 5 year plan),

     -    employment of managing directors.

     In case the contracting parties will not come to an agreement the decision
     on these points will be adjourned to the next meeting of the Advisory
     Board.

                                                                               3

<PAGE>

(4)  The Advisory Board will decide on the "Rules of Procedure for Managing
     Directors" (Geschaftsfuhrerordnung) including a list of transactions
     requiring consent and shall be in charge to give consent to the
     transactions as listed in clause 8 of the "Rules of Procedure for Managing
     Directors".

ARTICLE III ACCOUNTING

ACCOUNTING, INSPECTION OF RECORDS, ETC.

(1)  Books and Records:

     NEWCO shall keep true and accurate books of account and records in
     accordance with sound accounting practices and accounting principles
     generally accepted in Germany and the Group Accounting Guideline of OTTO
     VERSAND. It is understood that all possibilities regarding tax laws will be
     made use of.

(2)  Periodical Report, Etc.:

     The parties hereto shall cause NEWCO to submit to each of the parties
     quarterly unaudited financial reports and other periodical reports which
     may be reasonably requested by them and shall keep them well informed of
     the operations and financial condition of NEWCO.

(3)  Inspection of Books and Records:

     Each party hereto shall have the right to access and inspect the books of
     account and other records of NEWCO and make extracts and copies therefrom
     at any reasonable time during business hours of NEWCO.

(4)  Audit, Audit Report:

     The accounts and records of NEWCO shall be audited by independent public
     accountants to be appointed by the shareholders meeting. An audited
     financial report (including balance sheet, profit and loss statement and
     all notes thereto) shall be submitted to the parties, within 4 months after
     the end of each fiscal year.

ARTICLE IV COOPERATION OF PARTIES

Section 4.01 General. The parties hereto shall make all reasonable efforts to
support the supply and maximize the sales of the products by NEWCO.

Section 4.02 Grant of License.

(1)  Subject to Section 1.01 (4), for the sale of the products through retail
     store operation and catalogs by NEWCO, EBI agrees to grant NEWCO the
     exclusive license to use the trademarks and logos of EBI to identify and
     sell the products through Eddie Bauer retail

                                                                               4

<PAGE>

     stores and mail order in the Territory and such other countries as mutually
     agreed on by EBI and NEWCO as long as NEWCO exists and EBI is a shareholder
     of NEWCO.

(2)  EBI shall provide store operation and mail-order know-how to NEWCO
     including but not limited to the following matters, on request through the
     activities of EBI's employees in Germany, through the training of employees
     of NEWCO in both Germany and Redmond and through the supply of necessary
     documents:

     (i)  Store design including drawings, layout planning, display and
          furniture and fixtures, etc., to cause NEWCO to be able to express and
          realize EBI's total concepts in original features.

     (ii) Merchandise assortment know-how.

     (iii) Catalogs and promotional materials.

     (iv) Advice related to EDP systems including POS software.

(3)  EBI agrees to give its assurance to make reasonable efforts to supply all
     of NEWCO's requirements of the products upon such terms and conditions as
     shall be determined between EBI and NEWCO. In such supply EBI shall assist
     NEWCO to buy products on such terms or EBI shall grant NEWCO the "most
     favored customer terms" and the right to purchase the products at EBI's
     cost price on FOB basis without adding any markup of EBI.

Section 4.03 Distribution and Licence Agreement (as attached)

(1)  To implement EBI's cooperation contemplated in Section 4.02, EBI shall and
     all parties hereto shall cause NEWCO to enter into a Distribution and
     License Agreement (the "Distribution and License Agreement") as attached.

(2)  As consideration for this Agreement, HEINE shall pay to EBI, a start-up
     expense (and not as an advance) of $1,000,000.00 (US) which shall be paid
     within 30 days after the date of execution of this Agreement, earliest as
     per July 1, 1995.

(3)  In case this Joint Venture Agreement shall be terminated before July 1,
     2000, the start-up expense of $1,000,000.00 shall be refunded by EBI to
     HEINE pro rata temporis
     (e.g.: termination after 2 years - refund: $600,000.00
            termination after 3 years - refund: $400,000.00 etc.)

Section 4.04 Financing. At any time the net equity of NEWCO as stated in the
annual financial statements shall not fall short of the highest value of the
following:

     -    total non-current assets,

     -    20% of total assets,

     -    10% of annual net sales.

                                                                               5

<PAGE>

The parties are obliged to pass corresponding shareholders' resolutions and to
pay in corresponding amounts.

To ensure the liquidity of NEWCO in the period of start-up losses, HEINE,
SPORT-SCHECK and EBI will in addition provide NEWCO with liquid funds within the
business year, amounting up to the loss as planned in the official planning
agreed by the Advisory Board. After presentation of the audited annual financial
statements an end-of-year payment will be made, so that this payment together
with all payments made before will cover all losses incurred.

Section 4.05 Services of EBI or HEINE/SPORT-SCHECK Personnel / Other Services.
If NEWCO requests the services of one or more of EBI or HEINE/SPORT-SCHECK
personnel, on either an indefinite or temporary basis, EBI or HEINE/SPORT-SCHECK
so requested shall make its best efforts to provide such personnel upon such
terms and for such period as agreed with NEWCO. The compensation for such
personnel by NEWCO (or reimbursement of employment costs to EBI, HEINE,
SPORT-SCHECK if appropriate) shall be at cost price plus a margin as usual
within the OTTO group. Other services - such as handling, marketing etc. -
requested by NEWCO - shall be decided between the parties concerned at cost
price plus a margin as usual within the OTTO group.

Section 4.06 Non-competition. As long as either party is a shareholder of NEWCO
and for a period of two (2) years after it ceases to be a shareholder of NEWCO,
neither EBI nor HEINE nor SPORT-SCHECK shall directly or indirectly (including
through its Subsidiary Companies or Affiliated Companies) conduct or cooperate
with any third parties in the conduct of marketing of EBI's products or similar
products in the Territory and shall refrain from holding an interest in any
other entity engaged in similar activities in the Territory. As used in this
Agreement, "Affiliated Company" means any corporation, partnership or other
entity in which one of the parties owns a controlling interest.

Section 4.07 Extension of the Territory. The parties hereto agree to seriously
consider whether future stores/mail-order activities projects of EBI's products
in other countries within Europe are appropriate to be conducted through a joint
venture company formed by and among the parties hereto and the parties hereto
shall present those projects to each other for consideration. No obligations
hereunder shall arise unless a mutually acceptable joint venture agreement for
such additional projects is executed by the parties hereto.

ARTICLE V RESTRICTION ON TRANSFER

Section 5.01 General Restriction on Transfer. Except as expressly permitted in
Article I hereof, none of the parties hereto shall sell, transfer, assign,
pledge, encumber or otherwise dispose of the whole or any interest of NEWCO
owned by it, without prior written consent of the other parties. An approval of
the Advisory Board for any transfer of the shares by any party hereto will be
given when such transfer is consented to by the other parties.

Section 5.02 Effective Date.

(1)  This Agreement shall become effective with its signature through the
     parties and the resolution of the HEINE advisory board approving the
     contents of this Agreement.

                                                                               6

<PAGE>

(2)  This Agreement shall remain effective as long as the parties remain the
     shareholders of NEWCO.

(3)  The company will be dissolved upon unanimous resolution of the
     shareholders.

(4)  In case of change of the shareholders of any of the parties to this
     Agreement, such party shall be obligated to inform the other parties
     immediately after conclusion of the corresponding agreement. In this case
     the other parties shall be entitled to terminate its participation in the
     company. Both contracting parties shall be entitled to terminate the
     agreement in case of filing to institute composition proceedings or a
     bankruptcy petition over the other parties' assets.

(5)  The terminating shareholder shall be obligated to transfer its share to the
     limited partner remaining in the company or to a third person named by the
     limited partner. In case of transfer to a third party the terminating
     shareholder has to make sure that the third person will enter into the
     obligations under this Agreement.

(6)  The withdrawing shareholder has a claim for remuneration to be determined
     according to clause 6 par. 3 of this Agreement.

(7)  In case of dissolution of the company the available assets will be
     apportioned in proportion to the business shares taking into account the
     payment on the shares.

(8)  In case of dissolution of the company or in case of termination of the
     company the customer addresses and other customer data will proceed to the
     assets of HEINE and EDDIE BAUER and SPORT-SCHECK free of charge.

ARTICLE VI SALE OF BUSINESS SHARES, RIGHT TO PURCHASE AND RIGHT OF PRE-EMPTION

(1)  In any case of transfer of business shares or parts of them of the limited
     partnership and the general partner's private company limited the
     respective disposer has to offer the business shares to be transferred for
     sale in writing to the other contracting party at the purchase price as
     determined according to paragraph 3. The person entitled to purchase has to
     inform the disposer within 3 months after having received the notice
     whether it will accept the offer. In case of acceptance of the offer it
     will obtain the right to fix the date of transfer of the shares,
     notwithstanding the date to be within 12 months after receipt of the notice
     of purchase intention.

     tioned, he shall be free to dispose of the shares but on the understanding
     that the other contracting party has a right of pre-emption (purchase price
     as of clause 3). The other contracting party has to be informed in writing
     in case of disposal. This party has to state within a period of two weeks
     after receipt of the information whether it will exercise its pre-emption
     right. When transferring the shares the rights and obligations under these
     shares have to be transferred to the acquirer or to be taken over by the
     acquirer respectively.

                                                                               7

<PAGE>

(2)  This settlement shall not apply in case of sale to companies which majority
     of shares are held by shareholders of Otto-Versand (GmbH & Co) or by a
     company in which OTTO VERSAND or one of the companies as mentioned above
     are granted an interest in more than 50% of the capital or in the voting
     rights. The admission of further shareholders into the circle of the OTTO
     VERSAND shareholders shall also not be deemed to be a sale.

(3)  In case of taking over of shares of a limited partnership the share in the
     company will be valued originating with the cash value which amounts for
     the remaining term but at least for the assumed remaining term. As profit
     of each of these years the simple average profit of 2 years after deduction
     of trade tax before the year of exercising of the option and the prognosis
     profit of the year following shall be determined. The deduction of
     unaccrued interest on this average profit shall be caused by taking an
     interest as a basis, which follows from the interest for 10-years bearer
     bonds in the "Handel Banken (ISV)" as published in the "Handelsblatt" plus
     an assumed margin of 0.5%; this basic interest increases in a mark-up at
     risk of 100%.

     The value of the transferred share corresponds to its percentage part in
     the business value determined in this way, but at least to the book value
     of its nominal capital as of the balance sheet.

     The general partner's interest in the private company limited are to be
     assigned at the proportionate net assets (nominal capital minus accumulated
     profits).

ARTICLE VII GENERAL PROVISIONS

Section 7.01 Secrecy. The parties hereto agree to keep strictly confidential and
not to disclose to any third party any technical, financial or marketing
information acquired from the other parties or from NEWCO relating to the
transactions contemplated hereby. The parties further agree to exercise their
best efforts to compliance by their respective employees with the provisions of
this Section 7.01.

The contracting parties will mutually agree on the public relations work
especially at which date and by giving which informations this cooperation will
be published.

Section 7.02 Liability. Neither party shall be liable for delays in the
performance of their obligations hereunder due to causes beyond its reasonable
control, including but not limited to Acts of God, strikes, war or inability to
obtain labor or materials.

Section 7.03 Notice.

(1)  Any notice, request and other correspondence under and in connection with
     this Agreement shall be in the English language and be sent by cable, fax,
     telex, registered air mail or personal delivery from one party to the other
     party at their respective addresses as specified at the beginning of this
     Agreement or at the addresses notified pursuant to paragraph (3) of this
     Section 7.03. In the event of notice by cable or telex, the sending party
     shall confirm receipt of such notice by telephone.

                                                                               8

<PAGE>

(2)  The notice, request, and other correspondence pursuant to this Section 7.03
     shall be deemed validly received by the addressee upon expiration of
     forty-eight (48) hours after transmission, in the case of cable or telex,
     on the fifteenth (15th) day after mailing in the case of registered air
     mail, or, immediately upon delivery to the party in the case of personal
     delivery.

(3)  Any party shall, upon a change of its address, notify the other parties of
     such change in accordance with the procedures provided for in this Section
     7.03.

Section 7.04 Governing Law. This Agreement shall be construed in accordance with
and governed by the laws of Germany; court Hamburg.

Section 7.05 Assignment. Except as expressly provided for herein, none of the
parties shall assign or transfer all or any part of this Agreement or any of its
rights and/or obligations hereunder to any third party without the prior written
consent of all of the other parties.

Section 7.06 No Implied Waivers. The failure of any party at any time to require
performance by the other parties of any provision hereof shall in no way affect
the right to require such performance at any time thereafter. Nor shall the
waiver by any party of a breach of any provision hereof constitute a waiver of
any succeeding breach of the same of any other provision nor constitute a waiver
of the provision itself.

Section 7.07 Entire Agreement. This Agreement sets forth the entire agreement
and understanding of the parties hereto relating to the subject matter contained
herein and merges all prior discussions among the parties and none of the
parties hereto shall be bound by any previous agreement, negotiation, commitment
and writing other than as expressly stated in this Agreement.

This Agreement may not be amended or supplemented in any manner orally or
otherwise except by an instrument in writing signed by a duly authorized
representative of each of the parties hereto.

Section 7.08 Final Provision. In the event any phrase, sentence or paragraph of
this Agreement shall for any reason be held invalid or unenforceable, the
remaining provisions of this Agreement shall be valid and enforced to the
fullest extent permitted by law.

Section 7.09 Relation to the Partnership Agreement/Articles of Association. The
provisions of this Agreement shall overrule the Articles of Association (GmbH)
resp. Partnership Agreement (KG). The parties are obligated not to make use of
an eventually deviating provision of the Articles of Association resp.
Partnership Agreement for their own interests in relation to third parties.

Section 7.10 Term. The Joint Venture agreement shall be valid for the duration
of NEWCO. Its provisions shall apply mutatis mutandis and as far as possible, in
case of liquidation.

In witness whereof, the parties shall have caused this Agreement to be executed
by their duly authorized representatives on the day and year first above
written.

                                                                               9

<PAGE>

Section 7.11 This Agreement is in the English language only, which language
shall be controlling in all respects. No translation, if any, of this Agreement
into any language shall be of any force of effect in the interpretation of this
Agreement or in a determination of the intent of any of the parties.

                                     Witness

Eddie Bauer Inc.

-------------------------------------   ----------------------------------------

Handelsgesellschaft
Heinrich Heine GmbH

-------------------------------------   ----------------------------------------

Sport-Scheck GmbH

-------------------------------------   ----------------------------------------

EXHIBITS:

     -    A + B (Partnership Agreements)

     -    C + D (Articles of Association)

     -    Distribution and License Agreement

                                                                              10
<PAGE>

                            PARTNERSHIP AGREEMENT

                            EDDIE BAUER GMBH & CO.

Section 1 Firm-name, seat, business year

     1.   The firm-name of the partnership is Eddie Bauer GmbH & Co.

     2.   The seat of the partnership is in Munich.

     3.   The business year runs from 1 March until 28/29 of the following year.
          A part business year shall be constituted as from the establishment of
          the partnership until 29 February 1996.

Section 2 Object of the partnership

     The object of the partnership is the import, production of wholesale and
     retail trade (stationary and mail-order trade) in goods of all kinds
     (unless a special permit is required therefor), in particular under the
     Eddie Bauer brand names.

     The partnership may do all business which is directly or indirectly
     conducive to this object.

     In particular, it may set up branches at home and abroad, take an interest
     in other enterprises, acquire or take over the representation of such
     enterprises.

Section 3 Term of the partnership

     1.   The company is established for a five (5) year period. It may be
          terminated subject to one year's notice to the end of each business
          year.

     2.   The notice of termination shall be given by registered letter with
          return receipt.

     3.   The partnership will dissolve upon the withdrawal or transfer of
          ownership interest or termination of business of one of the limited
          partners.

Section 4 Partners, capital

     1.   The personally liable partner is Verwaltung Eddie Bauer GmbH.

     2.   The personally liable partner does not have a share in the capital and
          assets of the company.

     3.   The partnership capital amounts to

                                 DM 8,000,000.00

          (in words: eight million Deutsche Mark) and shall be paid in by cash
          contributions.

          The limited partners are

                                        1

<PAGE>

<TABLE>
<S>                                                               <C>
               -    Handelsgesellschaft Heinrich Heine GmbH
                    with a capital contribution to the nominal    DM4,000,000.00
                    value of

               -    Eddie Bauer Inc. with a capital
                    contribution to the nominal value of          DM3,200,000.00

               -    Sport-Scheck GmbH with a capital
                    contribution to the nominal value of          DM  800,000.00
</TABLE>

Section 5 Management and representation

     1.   The personally liable partner is exclusively entitled and obligated to
          manage the partnership and authorized to represent the partnership.

     2.   The personally liable partner may be released from the restrictions of
          Section 181 BGB (German Civil Code); it is bound by the instructions
          of the partners' meeting.

Section 6 Advisory board-duties

     1.   The partnership has an advisory board. The advisory board does not
          have the functions of a supervisory board of a stock corporation. It
          is not governed by the provisions of corporation law. If the setting
          up of a supervisory board is mandatory under statutory provisions,
          this shall be set up in addition to the advisory board and shall not
          affect the latters's competence and composition, unless this conflicts
          with mandatory provisions of the law. The liability of the members of
          the advisory board shall be restricted to the liability for care
          exercised by them in their own matters (Section 708 BGB)

     2.   The duties of the advisory board include the following in particular.

          a)   rendering of advice to and supervision of the management and, if
               necessary, mediation in case of differences of opinion between
               the managing directors. The advisory board is entitled to give
               instructions to the management in fundamental questions of
               business policy;

          b)   adoption of the rules of procedure for the management, granting
               and refusal of consent to transactions requiring the approval of
               the advisory board;

          c)   adoption of the one-year and five-year plans;

          d)   auditing of the annual financial statement and submission of
               proposals for the appropriation of profits;

          e)   presentation of documents to the partners' meeting.

                                        2

<PAGE>

     3.   The advisory board shall represent the partnership vis-a-vis the
          managing directors in and out of court. In all declarations having
          legal effect vis-a-vis managing directors and in case of contracts
          with managing directors the partnership shall be represented by the
          respective chairman of the advisory board.

Section 7 Advisory board-composition, convocation and adoption of resolutions

     1.   The advisory board consist of five members. It shall constitute a
          quorum if 3/5 of its members are present or represented.

     2.   The advisory board has a chairman and vice chairman. The Chairman will
          be appointed by Handelsgesellschaft Heinrich Heine GmbH, the Vice
          Chairman will be appointed by Eddie Bauer Inc.

     3.   The meetings of the advisory board shall be convened by the chairman
          and chaired by him; if the chairman is prevented, the vice chairman
          shall take his place.

     4.   Meetings of the advisory board shall be convened as often as this
          necessary in the interest of the partnership. The chairman or the vice
          chairman of the advisory board shall be obligated to convene a meeting
          of the advisory board even if only one member of the advisory board so
          requests. Meetings of the advisory board shall be convened subject to
          14 days' notice, the agenda to be stated.

     5.   Resolutions of the advisory board will be adopted with the majority of
          votes. Minutes shall be taken of meetings and resolutions. They shall
          be signed by the chairman and delivered to all members within four
          weeks.

     6.   In urgent cases, the chairman of the advisory board may have a vote
          taken in writing or over the telephone (with a subsequent
          confirmation) in writing or over the telephone, provided that the
          majority of all members consent to this procedure.

     7.   The advisory board may lay down rules of procedure for itself.

     8.   Notwithstanding anything herein to the contrary, Eddie Bauer Inc.
          shall have in its sole discretion the absolute right to veto any
          action or activity which in its opinion impinges or compromises the
          Eddie Bauer name, image or brand equity.

Section 8 Duties of the management towards the advisory board

     1.   The management is obligated to report to the advisory board regularly
          on the trend of business and on all events of special importance.

     2.   A report shall be given at least once a month on the sales trend and
          the fulfillment of the plans. Further, the nature and scope of the
          reporting shall be determined by a resolution of the advisory board.

                                        3

<PAGE>

     3.   The partners' meeting which adopts a resolution concerning the
          approval of the annual financial statement shall also adopt
          resolutions concerning the discharge of the management and the
          advisory board from their duties.

Section 9 Partners' meeting

     1.   The resolutions of the partners' meeting shall be adopted in principle
          in meetings. Written votes shall be admissible if all partners agree
          thereto in writing.

     2.   The partners' meeting shall take place in principle at the seat of the
          partnership at least once every business year to approve the annual
          financial statement. With the consent of all partners a different
          place at which the partners' meeting shall take place may be
          determined.

     3.   The partners' meeting shall be convened by the personally liable
          partner, the agenda to be stated, by registered letter with 14 days'
          notice, which shall begin on the date of receipt.

     4.   The limited partner may request at any time that a partner' meeting be
          convened.

     5.   Each partner may have himself represented by an agent. The agent shall
          prove his authority by a written power of attorney.

     6.   Resolutions of the partners shall be adopted in principle with the
          majority of votes in the partner's meeting.

     7.   The partners' meeting shall adopt resolutions in all matters going
          beyond the usual course of business of the partnership, in particular
          concerning:

          a)   Increases or decreases in the limited partnership capital
               contributions;

          b)   Amendment of the partnership agreement;

          c)   dissolution of the partnership;

          d)   approval of the annual financial statement;

          e)   discharge of the personally liable partner from its duties;

     8.   Minutes shall be taken of the partners' meeting and the resolutions
          adopted there. These shall be signed by the chairman and delivered to
          all partners within 14 days.

Section 10 Annual financial statement

     1.   The personally liable partner shall prepare the annual financial
          statement 3 months after the expiry of a business year at the latest
          and submit the same to the partners' meeting for approval.

                                        4

<PAGE>

          Beforehand, the annual financial statement shall be audited by an
          auditing company which has been appointed by the partners' meeting.

     2.   In the partners' meeting in which resolutions concerning the annual
          financial statement are adopted, resolutions shall also be adopted
          concerning the discharge of the personally liable partner from its
          duties and the appointment of the auditor for the new business year.

     3.   Any changes to the annual financial statements owing to an assessment
          or an investigation by the tax authorities shall not affect the
          validity of the annual financial statements under commercial law. Any
          changes are to be taken into account in the first annual financial
          statement which is submitted to the partners' meeting for approval
          after the carrying out of the assessment or the service of the report
          of the investigation by the tax authorities.

Section 11 Distribution of the profit and loss, withdrawals

     1.   In the relationship of the partners to each other, a distributable
          profit shall not be available until the personally liable partner has
          been reimbursed for the expenses incurred by it in the interest of the
          partnership, including the costs of the management, and until the
          partnership capital has been fully conserved.

     2.   The profit arising according to section 1 shall be distributed among
          the partners as follows:

          a)   To cover the liability risk and as compensation for the
               management, the personally liable partner shall receive 15% of
               its share capital provided that the profit is sufficient for
               this.

          b)   The limited partners shall receive the profit remaining after the
               distribution pursuant to a. above according to the amount of
               their capital contributions.

     3.   The personally liable partner shall not have a share in the loss.

     4.   The partners' meeting shall decide whether and what profit shares may
          be withdrawn and how interest is to be paid on profits not withdrawn.

     5.   The personally liable partner may withdraw appropriate part amounts to
          cover the expenses incurred by it in the interest of the partnership
          and costs of the management.

Section 12 Dissolution

     If it follows from the annual financial statement that the reserves and the
     capital contribution accounts have been used up by losses, the personally
     liable partner shall convene a partners' meeting without undue delay, which
     shall adopt a resolution concerning the dissolution or continuation of the
     partnership. The resolution concerning

                                        5

<PAGE>

     the dissolution or continuation of the partnership shall be recorded in
     minutes, which shall comply with the provisions of this Partnership
     Agreement concerning partners' meetings.

Section 13 Liquidation

     1.   In the event of liquidation, the personally liable partner shall be
          appointed as liquidator.

     2.   Should the personally liable partner not be available as liquidator,
          its managing directors who are in office at the time of the
          liquidation of the partnership shall become liquidators.

Section 14 Withdrawal of the general partner

     If it is to be expected that the general partner will withdraw from the
     partnershop for whatever reasons, the partners' meeting shall appoint
     another limited liability company as personally liable partner without
     undue delay. If this is not done and if the partnership is therefore
     threatened with dissolution owing to the withdrawal of the general partner,
     a majority, the capital interests of which together total at least one
     fourth of the limited partnership capital, shall be entitled to appoint a
     natural or legal person as personally liable partner in the place of the
     general partner which is lacking. The other partners shall be obligated in
     this case to consent to the appointment and to assist in the applications
     for registration in the Commercial Register.

Section 15 Concluding provisions

     1.   Should a provision of this Agreement conflict with imperative
          provisions of the law, it shall be deemed not to have been agreed,
          i.e. the invalidity of a provision of this Agreement shall not result
          in the invalidity of the Agreement as a whole. The invalid provision
          shall be replaced by a new provision which comes as close as possible
          to the aim and object of the inapplicable provision.

     2.   Amendments and supplements to this Agreement must be made in writing
          in order to be valid.

     3.   The courts of Munich shall have jurisdiction.

                                        6
<PAGE>

                             ARTICLES OF ASSOCIATION

                           VERWALTUNG EDDIE BAUER GMBH

SECTION 1. FIRM-NAME, SEAT

     1.   The firm-name of the company is

          VERWALTUNG EDDIE BAUER GMBH

     2.   The seat of the company is in Munich.

SECTION 2. OBJECT OF THE COMPANY

     The object of the company is participation in other enterprises, in
     particular the assumption of the function as general partner for the
     limited partnership Eddie Bauer GmbH & Co in Munich.

SECTION 3. DURATION OF THE COMPANY

     The company is of unlimited duration.

SECTION 4. BUSINESS YEAR

     The business year of the company runs from 1 March until 28/29 February of
     the following year. A part business year shall be constituted as from the
     establishment until 29 February 1996.

                                        1

<PAGE>

SECTION 5. SHARE CAPITAL

(1)  The share capital of the company amounts to

                                  DM100,000.00
                 (in words: one hundred thousand Deutsche Mark).

(2)  The shareholders are:

<TABLE>
<S>                                                                  <C>
     -    Eddie Bauer Inc. with                                      DM40,000.00

     -    Handelsgesellschaft Heinrich Heine mbH with                DM50,000.00

     -    Sport-Scheck GmbH with                                     DM10,000.00
</TABLE>

(3)  The share capital shall be paid fully before application of the company to
     the Commercial Register.

SECTION 6. MANAGEMENT AND REPRESENTATION.

     1.   The company has one or more managing directors (Geschaftsfuhrer). A
          sole managing director shall always represent the company alone. If
          there is more than one managing director, the company shall be
          represented by two managing directors jointly or by one managing
          director jointly with a "Prokurist" (authorized signatory).

     2.   Managing directors may be released from the restrictions of Section
          181 BGB (German Civil Code) by shareholder resolution.

     3.   The managing directors are bound by the instructions of the
          shareholder meeting.

                                        2

<PAGE>

SECTION 7. ASSIGNMENT OF SHARES

     The assignment of shares or parts of such requires the written consent of
     all shareholders in order to be valid.

SECTION 8. SHAREHOLDER MEETING, SHAREHOLDER RESOLUTIONS

     The resolutions of the shareholders are adopted with the majority of votes
     in the shareholder meeting. Adoptions may also be adopted in writing if all
     shareholders expressly agree thereto, unless this conflicts with imperative
     statutory provisions.

SECTION 9. APPROPRIATION OF THE PROFIT AND LOSS

     The provisions of Section 29 GmbH-Gesetz (Act on limited liability
     companies), new version, shall apply to the appropriation of the profit and
     loss.

SECTION 10. ANNOUNCEMENTS

     The announcements of the company shall be published in the Federal Gazette.

SECTION 11. COSTS OF FOUNDATION

     The costs of this agreement, it's legalization and it's enforcement are to
     be borne by the company up to DM4,000,--.

                                        3
<PAGE>

The following

             DISTRIBUTION AND LICENSE AGREEMENT (RETAIL/MAIL ORDER)

is concluded between

                    Eddie Bauer Inc.
                    15010 Northeast 36th Street
                    Redmond, WA 98052
                    USA

                                    - hereinafter referred to as "EDDIE BAUER" -

and

                    Eddie Bauer GmbH & Co
                    Wettersteinsweg 20
                    82024 Taufkirchen
                    Germany

                                          - hereinafter referred to as "NEWCO" -

1.   SUBJECT MATTER OF AGREEMENT

     EDDIE BAUER is a licensor of the Trade Marks EDDIE BAUER, AKA ("ALSO KNOWN
     AS") Eddie Bauer and EDDIE BAUER HOME and other Trade Marks, short
     particulars of which are set out in Schedule 1 (hereinafter referred to as
     "Trade Marks"). EDDIE BAUER offers a range of apparel, apparel accessories
     (muffler, ear mufflers, gloves, socks, handkerchiefs, etc.), shoes, bags,
     umbrellas, watches and other goods as may be offered from time to time
     under or by reference to the Trade Marks (hereinafter referred to as the
     "EDDIE BAUER Range") for sale in uniformly equipped shops (hereinafter
     referred to as "EDDIE BAUER shops"), in catalogs and other media
     (hereinafter referred to as catalogs).

     This Agreement is to regulate the basic cooperation taking place between
     EDDIE BAUER and NEWCO regarding the EDDIE BAUER Range.

2.   NEWCO OBLIGATIONS

          2.1.1 General Obligations

               The content and presentation of all advertising and mail order
               media shall be subject of the prior authorization of EDDIE BAUER.

                                       1

<PAGE>

          2.1.2 Items from the EDDIE BAUER Range may only be sold to ultimate
               consumers in Europe except UK, Ireland, France, Spain, Portugal
               and Italy (the "Territory") and may not be sold outside the
               Territory without the prior written consent of EDDIE BAUER.

          2.1.3 NEWCO is obliged to use the Trade Mark EDDIE BAUER logo in
               respect of the EDDIE BAUER Range in the Territory for the
               duration of this Agreement. NEWCO undertakes to use the Trade
               Marks upon and in connection with the EDDIE BAUER Range only in a
               manner approved (see guidelines) by EDDIE BAUER.

          2.1.4 EDDIE BAUER reserves the right to enter the shops and to inspect
               all suppliers and manufacturers of products to NEWCO at all times
               to inspect in particular whether the EDDIE BAUER marketing
               concept is being observed and to inspect merchandise manufactured
               and supplied for sale in the EDDIE BAUER shops and catalogues.
               NEWCO will ensure that EDDIE BAUER can at any time control
               merchandise at the respective supplier.

               NEWCO will ensure that all items of the EDDIE BAUER Range are
               manufactured by or for it in accordance with the agreed Eddie
               Bauer Quality Standards and specifications.

          2.1.5 NEWCO will inform EDDIE BAUER at regular intervals of all
               planning.

          2.1.6 NEWCO may appoint its supplier/manufacturer subject to Eddie
               Bauer's prior written approval EDDIE BAUER will assist NEWCO to
               purchase the products on EDDIE BAUER's first conditions from
               EDDIE BAUER supplier/-manufacturers.

               With the prior written consent of EDDIE BAUER, NEWCO may appoint
               a third party solely as an importer for EDDIE BAUER leather shoes
               on behalf of NEWCO.

               In case EDDIE BAUER, HEINE or SPORT-SCHECK gets refunds/discounts
               (especially volume discounts) from its suppliers for the produced
               goods EDDIE BAUER, HEINE or SPORT-SCHECK will pass on these net
               refund/discount on a pro rata basis to NEWCO.

          2.1.7 NEWCO may not substitute or provide alternatives for items of
               the EDDIE BAUER Range.

          2.1.8 Within thirty (30) days after issuance, NEWCO will send to EDDIE
               BAUER 20 copies of the catalogues and two (2) copies of all
               promotional materials it has issued in the Territory which
               include the EDDIE BAUER Range.

                                       2

<PAGE>

          2.1.9 Packaging and labeling costs will be solely borne by NEWCO.
               Labeling on all products will be to EDDIE BAUER specifications.
               Any additional labeling or changes in the standard (if not
               necessary due to law) EDDIE BAUER labels must be approved by
               EDDIE BAUER.

          2.1.10 NEWCO agrees that all items of the EDDIE BAUER Range or
               products sold with an EDDIE BAUER trademark or sold through the
               EDDIE BAUER shops and through mail order shall meet or exceed all
               legally applicable statutes, standards, regulations and
               guidelines, especially with respect to health and product safety
               (including environmental regulations relating to the production
               of all such items and other materials used to advertise, market
               and merchandise the items) throughout the Territory.

     2.2  NEWCO's Obligations (retail)

          2.2.1 NEWCO is entitled to open an unlimited number of EDDIE BAUER
               shops.

               NEWCO agrees that all of the EDDIE BAUER shops will bear the name
               "EDDIE BAUER", and be located in the Territory.

          2.2.2 NEWCO is obligated to sell the EDDIE BAUER Range exclusively in
               the EDDIE BAUER shops. No other products will be sold in the
               EDDIE BAUER shops unless specifically approved by EDDIE BAUER.
               The guidelines given by EDDIE BAUER for advertising and equipping
               of the shops are to be observed.

               NEWCO is obligated to resell the EDDIE BAUER Range established by
               EDDIE BAUER and is only entitled to reduce the EDDIE BAUER Range
               if EDDIE BAUER has given written consent.

     2.3  NEWCO Obligations/Presentation of Catalogs

          Final catalogue layouts will be submitted to EDDIE BAUER not later
          than thirty (30) days before the scheduled press date.

3.   EDDIE BAUER OBLIGATIONS

     3.1  General Obligations

          3.1.1 EDDIE BAUER will offer NEWCO complete collections of the EDDIE
               BAUER Range in accordance with NEWCO's annual business plan and
               on the time table as attached (Schedule 3). EDDIE BAUER agrees to
               make reasonable efforts to support NEWCO's requirements.

               The samples of the collections (i.e., an original plus colour
               swatches) will be made available by EDDIE BAUER free of charge.

                                       3

<PAGE>

          3.1.2 Any photography or other original materials (besides the normal
               materials of EDDIE BAUER) created specifically for and ordered by
               NEWCO (e.g. signage, graphics, fixtures, real estate build out
               materials, etc.) will be furnished by EDDIE BAUER at cost price
               plus a margin as usual within the Otto group.

               At the written request and reasonable notice of NEWCO, EDDIE
               BAUER shall send the qualified and experienced persons of EDDIE
               BAUER to the Territory and/or make such persons available to
               NEWCO at EDDIE BAUER's Redmond Office to assist and advise NEWCO
               and its personnel in manufacture, testing, inspecting, sales, and
               maintenance of the EDDIE BAUER Range. NEWCO shall reimburse EDDIE
               BAUER for all costs incurred in furnishing any individual to
               NEWCO (e.g. all compensation, travel expenses, etc.) plus a
               margin as usual within the Otto group. The terms and conditions
               on which such persons will be sent to the Territory will be
               decided later by mutual agreement.

          3.1.3 EDDIE BAUER shall provide NEWCO with technical advisory
               services, without any additional charge or royalty, which
               services will be made available by telephone conversation, by
               telex or facsimile or by other means of communications.

     3.2  EDDIE BAUER Obligation (mail order)

          3.2.1 NEWCO is to inform EDDIE BAUER of the number of catalogs pages
               as agreed to in the annual business plan. At no additional
               charge, EDDIE BAUER will provide art direction, concepts,
               available photography, and rough layouts, and copies to NEWCO for
               use in the production of the layouts for the EDDIE BAUER
               catalogs. EDDIE BAUER will also provide final photography.

          3.2.2 EDDIE BAUER will provide duplicated original transparencies for
               the catalogs and other mail order media at cost ex Redmond.

     3.3  EDDIE BAUER Obligation (retail)

          3.3.1 Within sixty (60) days after execution of this Agreement, EDDIE
               BAUER will provide to NEWCO for its non-exclusive use a complete
               set of documents (however, prior to termination of this
               Agreement, the use of such documents within the Territory shall
               be exclusive to NEWCO) including prototype store designs, working
               drawing and a concept manual laying out in detail the standards
               and method for operating an EDDIE BAUER shop.

          3.3.2 EDDIE BAUER will provide NEWCO with detailed store layouts
               (i.e., best-sellers by the door), plan-o-grams, store graphics
               and advertising information for each collection of the EDDIE
               BAUER Range.

                                       4

<PAGE>

          3.3.3 EDDIE BAUER shall provide store operation know-how to NEWCO
               including but not limited to the following matters:

               (a)  Merchandise assortment know-how.

               (b)  Promotional materials.

               (c)  Advice related to EDDIE BAUER systems including POS
                    software.

4.   TRADE MARK / LICENSE / COMPETITION

     4.1  EDDIE BAUER is the owner of all EDDIE BAUER trade marks. EDDIE BAUER
          grants NEWCO an exclusive license to use the trade mark "EDDIE BAUER"
          in association with the EDDIE BAUER Range for the duration of this
          Agreement in the Territory.

     4.2  For the duration of this Agreement NEWCO shall be the exclusive
          distributor in the Territory of EDDIE BAUER merchandise, excluding
          Ford Eddie Bauer edition vehicles and the Eddie Bauer Maxum Sport
          Runabout Boat and the EDDIE BAUER Adventurer cosmetic fragrance
          ("Excluded Products"). Furthermore NEWCO may sell EDDIE BAUER
          merchandise through OTTO VERSAND group companies (cross selling) via
          catalogue, outlet stores as specifically approved in advance by Eddie
          Bauer.

     4.3  Except for Excluded Products, EDDIE BAUER shall not manufacture,
          distribute, or supply during the duration of this Agreement the EDDIE
          BAUER Range in the Territory to any other third party.

     4.4  EDDIE BAUER is the proprietor of the designs, drawings, patterns,
          originals and samples of the EDDIE BAUER Range. The sale of or the use
          of copying of the said designs, drawings, patterns, originals, and
          samples by NEWCO for any purpose is strictly prohibited. EDDIE BAUER
          warrants that the supply of goods does not violate any copyright of a
          third party and will indemnify NEWCO for any copyright infringement
          action. EDDIE BAUER will also indemnify NEWCO for any damages and
          costs awarded against NEWCO, including attorneys' fees, in any
          infringement action related to the use of EDDIE BAUER trade marks.
          EDDIE BAUER will take all reasonable steps to obtain in all necessary
          copyrights licenses and trademarks.

          EDDIE BAUER will be promptly notified by NEWCO of any suit or threat
          of suit as to which EDDIE BAUER may have obligations under the above
          provisions and be given reasonable opportunity to defend the same.

     4.5  Inasmuch as NEWCO when selling the EDDIE BAUER Range makes statement
          which are inconsistent with product descriptions of EDDIE BAUER, NEWCO
          will bear the risk of claims which may be asserted by third parties.

                                       5

<PAGE>

5.   REMUNERATION / MODE OF PAYMENT

     5.1  Mail order

          As payment for all obligations stipulated by this contract, EDDIE
          BAUER shall receive remuneration from NEWCO for mail order merchandise
          of 5% of NEWCO's net sale (as defined in the 5 years plan) and
          exclusive value added taxes.

     5.2  Retail

          As payment for all obligations stipulated by this contract, EDDIE
          BAUER shall receive remuneration from NEWCO for retail merchandise of
          2.5% of NEWCO's in-store net sales for the first three years of
          business. After the first year business this percentage shall be
          negotiated between the parties by mutual consent based on the
          principals as discussed between the parties before (see former drafts
          of this agreement).

          To 5.1 and 5.2

          No royalties are due on overstock sales and inventories that are
          transferred to the division within the OTTO VERSAND group which
          particularly deals with the liquidation of products or inventories
          through disposal catalogues, outlet stores, jobbers and other third
          parties, provided that such inventories may only be transferred to
          such division after NEWCO has made best efforts to sell as much as
          possible through proper sales activities by retail stores or
          catalogues.

     5.3  NEWCO shall render account of the net-sales in the Territory on a
          monthly basis and make estimated royalty payments semi-annually on or
          before the tenth (10th) working day of the month following the last
          month of each season and will make final seasonal accounting and
          payment within thirty (30) days thereafter. Any goods still remaining
          after the final seasonal accounting date shall be considered with the
          next season's goods.

          For the purpose of this Agreement, the parties hereto agree that the
          seasons shall end on June 30 and December 31.

          EDDIE BAUER reserves the right to seek verification of all sales.

          The payment will be effected in U.S. currency.

               5.4.a Any tax at source (withholding tax) to be withheld by NEWCO
                    for the account of EDDIE BAUER under the law on tax on
                    income will be deductible from the royalty payments provided
                    EDDIE BAUER receives satisfactory documentations of such
                    payments.

                    However, insofar as it is possible under double taxation
                    convention for EDDIE BAUER to grant an exemption from the
                    withholding of

                                       6

<PAGE>

                    tax at source, EDDIE BAUER will apply to the competent Tax
                    Office in the country of NEWCO for a certificate of
                    exemption that is required for this.

                    NEWCO will assist EDDIE BAUER in applying for the exemption.

               5.4.b If the remuneration in the country of NEWCO is subject to
                    turnover taxes, and if in this case EDDIE BAUER is debtor of
                    turnover taxes, VAT is to be added to the remuneration.

                    If it is provided for by turnover laws in the country of
                    NEWCO that the added VAT is not to be paid out to EDDIE
                    BAUER, added VAT is to be paid over to the inland revenue
                    office by NEWCO in favour of EDDIE BAUER.

               5.5  Newco will provide information on results and experience to
                    EDDIE BAUER on or before the tenth (10th) business day of
                    the month for the prior calendar month in addition to a
                    summary quarterly, seasonal and annual results and
                    experience. The parties hereto will provide each other with
                    information as to new market trends in the fashion sector.

6.   DELIVERY DATES

     EDDIE BAUER will use its best endeavours to adhere to delivery dates as
     specified in Schedule 3. EDDIE BAUER shall notify NEWCO immediately of the
     extent and duration on any actual or anticipated delays and shall take all
     reasonable and appropriate measures to maintain any loss at a minimum and
     ensure that delivery is made as soon as possible.

7.   INDEMNIFICATION

     Each party agrees to indemnify, defend, and hold the other party harmless
     from its own negligent or willful acts, and those of its agents and
     employees.

8.   ASSIGNMENT

     Neither party may assign or subcontract any of its rights or obligations
     under this Agreement without the approval of the other party.

9.   TERMS OF AGREEMENT

     9.1  This Agreement shall become effective with it's signature through the
          parties and the resolution of the HEINE advisory board approving the
          contents of this Agreement. It shall be binding until termination of
          the joint venture Agreement between Handelsgesellschaft Heinrich Heine
          GmbH, Sport-Scheck GmbH and EDDIE BAUER Inc.

                                       7

<PAGE>

     9.2  Termination of this Agreement shall not relieve any of the parties of
          its then outstanding and unfulfilled obligations or liabilities under
          this Agreement. Furthermore, NEWCO has the right to sell overstocks
          for the time of six (6) months after termination.

     9.3  Except as set forth in clause 9.2 on the termination date, all rights
          of NEWCO under this Agreement shall terminate, and NEWCO shall cease
          to use any of the trade marks, trade names, and symbols which may have
          accrued by Agreement, operation of law, or otherwise.

10.  GENERAL PROVISIONS

     10.1 The place of jurisdiction is Hamburg. German law shall apply.

     10.2 No waiver of any breach of this Agreement shall constitute a waiver of
          any other breach of the same or other provisions of this Agreement,
          and no waiver shall be effective unless made in writing. In the event
          that any provisions herein shall be illegal or unenforceable, such
          provisions shall be severed and the entire Agreement shall not fail,
          but the balance of the Agreement shall continue in full force and
          effect.

     10.3 EDDIE BAUER and NEWCO shall not be liable for delays in the
          performance of their obligations hereunder due to causes beyond its
          reasonable control, including but not limited to Acts of God, strikes,
          war, or inability to obtain labour or materials.

     10.4 This Agreement constitutes the entire Agreement between the parties
          and regarding the subject matter hereof and supersedes and replaces
          any prior agreements between the Parties.

          The schedules are an integral part of this Agreement.

For and on behalf of NEWCO              For and on behalf of Eddie Bauer Inc.

By:                                     By:
    ---------------------------------       ------------------------------------
Name:                                   Name:
      -------------------------------         ----------------------------------
Title:                                  Title:
       ------------------------------          ---------------------------------

Date: June 6th 1995                     Date: June 6th 1995

                                       8

<PAGE>

SCHEDULES:

Schedule 1: Trademark status report
Schedule 2: Trademark
Schedule 3: time table - to be agreed upon separately by mutual consent

                                       9

<PAGE>

                                   SCHEDULE 1

                                       10

<PAGE>

                                TRADEMARK STATUS

<TABLE>
<CAPTION>
COUNTRY       TRADEMARK                    STATUS       DATE       NUMBER    INTERNATIONAL CLASS
-------       ---------                    ------       ----       ------    -------------------
<S>           <C>                          <C>          <C>        <C>       <C>
Austria       EDDIE BAUER                  pending      08/31/94             16, 18, 20, 24, 25, 35
Austria       EDDIE BAUER GOOSE LOGO       pending      08/31/94             25
Austria       EDDIE BAUER SIGNATURE LOGO   registered   10/31/94   155,082   25
Germany       EDDIE BAUER                  registered   08/05/94   2074047   16, 20, 24, 25
Switzerland   EDDIE BAUER                  registered   04/01/93   409,690   16, 20, 24, 25, 42
</TABLE>

                                       11

<PAGE>

                                   SCHEDULE 2

                                       12

<PAGE>

                              EDDIE BAUER SIGNATURE

                                       13<PAGE>

                                                                   EXHIBIT 10.13

                   PRIVATE LABEL CREDIT CARD PROGRAM AGREEMENT

                                     BETWEEN

                      WORLD FINANCIAL NETWORK NATIONAL BANK

                                       AND

                                  SPIEGEL, INC.
                                       AND
                                EDDIE BAUER, INC.

                             DATED AS OF MAY 2, 2003

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<S>                                                                          <C>
SECTION 1 DEFINITIONS
   1.1   Certain Definitions
   1.2   Other Definitions

SECTION 2 THE PLAN
   2.1   Establishment and Operation of the Plan
   2.2   Applications for Credit Under the Plan; Billing Statements
   2.3   Operating Procedures
   2.4   Plan Documents
   2.5   Marketing
   2.6   Administration of Accounts
   2.7   Credit Decision
   2.8   Ownership of Accounts and Mailing Lists
   2.9   Debt Cancellation and Enhancement Marketing Services
   2.10  Ownership of Spiegel Group Name

SECTION 3 OPERATION OF THE PLAN
   3.1   Honoring Credit Cards
   3.2   Additional Operating Procedures
   3.3   Cardholder Disputes Regarding Goods or Services
   3.4   No Special Agreements
   3.5   Cardholder Disputes Regarding Violations of Law or Regulation
   3.6   Payment to Spiegel Group; Ownership of Accounts; Fees; Accounting
   3.7   Insertion of Spiegel Group's Promotional Materials
   3.8   Payments
   3.9   Chargebacks
   3.10  Assignment of Title in Charged Back Purchases
   3.11  Promotion of Program and Card Plan; Non-Competition
   3.12  Postage
   3.13  Reports

SECTION 4 REPRESENTATIONS AND WARRANTIES OF SPIEGEL GROUP
   4.1   Organization, Power and Qualification
   4.2   Authorization, Validity and Non-Contravention
   4.3   Accuracy of Information
   4.4   Validity of Charge Slips
   4.5   Intentionally Left Blank
   4.6   Spiegel Group's Name, Trademarks and Service Marks
   4.7   Intellectual Property Rights
</TABLE>

<PAGE>

TABLE OF CONTENTS, CONTINUED

<TABLE>
<S>                                                                          <C>
SECTION 5 COVENANTS OF SPIEGEL GROUP
   5.1   Notices of Changes
   5.2   Financial Statements
   5.3   Inspection
   5.4   Spiegel Group's Business
   5.5   Spiegel Group's Stores
   5.6   Insurance
   5.7   Spiegel Group's Tracking Reports.
   5.8   Compliance with Law

SECTION 6 REPRESENTATIONS AND WARRANTIES OF BANK
   6.1   Organization, Power and Qualification
   6.2   Authorization, Validity and Non-Contravention
   6.3   Accuracy of Information
   6.4   Intentionally Left Blank
   6.5   Intellectual Property Rights
   6.6   Litigation & Solvency.

SECTION 7 COVENANTS OF BANK
   7.1   Notices of Changes
   7.2   Financial Statement
   7.3   Inspection
   7.4   Bank's Business
   7.5   Insurance
   7.6   Bank's Funding Facility
   7.7   Compliance with Law

SECTION 8 INDEMNIFICATION
   8.1   Indemnification Obligations
   8.2   Limitation on Liability
   8.3   No Warranties
   8.4   Notification of Indemnification; Conduct of Defense

SECTION 9 TERM AND TERMINATION
   9.1   Term
   9.2   Termination with Cause by Bank; Bank Termination Events
   9.3   Termination with Cause by Spiegel Group; Spiegel Group Termination Events
   9.4   Termination of Particular State
   9.5   Purchase of Accounts
   9.6   Termination of Plan Participation
</TABLE>

<PAGE>

TABLE OF CONTENTS, CONTINUED

<TABLE>
<S>                                                                          <C>
SECTION 10 MISCELLANEOUS
   10.1  Entire Agreement
   10.2  Coordination of Public Statements
   10.3  Amendment
   10.4  Successors and Assigns
   10.5  Waiver
   10.6  Severability
   10.7  Notices
   10.8  Captions and Cross-References
   10.9  Governing Law
   10.10 Counterparts
   10.11 Force Majeure
   10.12 Relationship of Parties
   10.13 Survival
   10.14 Mutual Drafting
   10.15 Independent Contractor
   10.16 No Third Party Beneficiaries
   10.17 Confidentiality
   10.18 Taxes

SECTION 11 CONTINGENT HOLDBACK
   11.1  Holdback
   11.2  Monthly Reconciliation
   11.3  Retention of Holdback
   11.4  Bank's Rights to Charge Against the Holdback
   11.5  Reduction in Holdback
   11.6  Release and Termination of Holdback After Bankruptcy Emergence
   11.7  Release and Termination of Holdback After Sale

SCHEDULES
   1     Implementation Phases Plan
   1.1   Discount Rate
   2.1   Service Standards
   2.5   Marketing Promotions
   2.8   Monthly Master File Information
   3.13  Bank Reports
</TABLE>
<PAGE>

                   PRIVATE LABEL CREDIT CARD PROGRAM AGREEMENT

     THIS PRIVATE LABEL CREDIT CARD PROGRAM AGREEMENT is made as of this 2nd day
of May 2003 (the "Effective Date") by and between SPIEGEL, INC. ("Spiegel") with
its principal office at 3500 Lacey Road, Downers Grove, Illinois 60515, and
EDDIE BAUER, INC. ("Eddie Bauer") with its principal office at 15010 N.E. 36th
Street, Redmond, Washington 98052, (Spiegel and Eddie Bauer shall be
collectively referred to herein as "Spiegel Group"), and WORLD FINANCIAL NETWORK
NATIONAL BANK, with its principal office at 800 Tech Center Drive, Gahanna, Ohio
43230, (hereinafter referred to as "Bank").

                                   WITNESSETH:

     WHEREAS, Spiegel Group has requested Bank to extend credit, to qualifying
individuals in the form of private label open-ended credit card accounts for the
purchase of Goods and/or for Services from its Businesses and to issue Credit
Cards to such individuals; and

     WHEREAS, Bank shall own all such Credit Card Accounts, and Cardholder
payments will be sent to such location as Bank shall from time to time direct;
and

     WHEREAS, Bank has agreed to extend credit under Credit Card Accounts
subject to the terms and conditions as more fully set forth herein;

     NOW THEREFORE, in consideration of the terms and conditions hereof, and for
other good and valuable consideration, the receipt of which is hereby mutually
acknowledged by the parties, Spiegel Group and Bank agree as follows.

                             SECTION 1. DEFINITIONS

     1.1 Certain Definitions. As used herein and unless otherwise required by
the context, the following terms shall have the following respective meanings.

     "Account" shall mean an individual open-end revolving line of credit
     established by Bank for a Customer pursuant to the terms of a Credit Card
     Agreement.

     "Address Verification Service" shall mean an adjunct process to the credit
     authorization process where the Cardholder's reported billing address is
     verified against the Bank's address on file for such Cardholder.

     "Affiliate" shall mean with respect to either Bank or Spiegel Group any
     entity that is owned by, owns, or is under common control with such party.

     "Agreement" shall mean this Private Label Credit Card Program Agreement and
     any future amendments, extensions, waivers, schedules, exhibits or
     supplements thereto.

                                      1

<PAGE>

     "Applicable Law" shall mean any applicable federal, state or local law,
     rule, or regulation, including but not limited to the provisions of the
     Gramm-Leach-Bliley Act and the Fair Credit Reporting Act.

     "Applicant" shall mean an individual who is a Customer who applies for an
     Account under the Plan.

     "Automated Telephone Application" shall mean an application procedure
     designed to open Accounts at the point of sale or order entry, in which an
     application for credit is processed without a paper application being
     completed by an Applicant; instead, the Applicant's information is keyed
     into the telephone.

     "Batch Prescreen Application" shall mean a process where Bank's offer of
     credit is made to certain Customers prequalified by Bank, in a batch mode
     typically within a direct mail environment.

     "Business" shall mean Eddie Bauer's retail stores, catalogs, and/or
     Internet businesses and any other New Businesses developed or acquired by
     any Spiegel Group entity after the Effective Date of this Agreement and
     added to this Agreement pursuant to Section 2.1(c), and shall include the
     successors (by name change or otherwise) to such businesses that are owned
     by Spiegel Group.

     "Business Day" shall mean any day, except Saturday, Sunday or a day on
     which banks in Ohio are required to be closed.

     "Cardholder" shall mean any natural person to whom an Account has been
     issued by Bank and/or any authorized user of the Account.

     "Catalog" shall mean Spiegel Catalog, Inc.

     "Charge Slip" shall mean a sales receipt, register receipt tape, invoice or
     other documentation, whether in hard copy or electronic form, in each case
     evidencing a Purchase that is to be charged to a Cardholder's Account.

     "Credit Card" shall mean the plastic credit card issued by Bank to
     Cardholders for purchasing Goods and Services pursuant to the Plan.

     "Credit Card Agreement" shall mean the open-end revolving credit agreement
     between a Cardholder and Bank governing the Account and Cardholder's use of
     the Credit Card, together with any modifications or amendments which may be
     made to such agreement.

     "Credit Sales Day" shall mean any day, whether or not a Business Day, on
     which Goods and/or Services are sold by Spiegel Group and Spiegel Group's
     Stores.

                                       2

<PAGE>

     "Credit Slip" shall mean a sales credit receipt or other documentation,
     whether in hard copy or electronic form, evidencing a return or exchange of
     Goods or a credit on an Account as an adjustment by Spiegel Group or
     Spiegel Group's Stores for goodwill or for Services rendered or not
     rendered by Spiegel Group or Spiegel Group's Stores to a Cardholder.

     "Customer" shall mean any individual consumer who is a customer or
     potential customer of a Business.

     "Discount Fee" shall mean an amount to be charged by Bank equal to Net
     Sales multiplied by the Discount Rate.

     "Discount Rate" shall have the meaning set forth in Schedule 1.1.

     "Eddie Bauer" shall mean Eddie Bauer, Inc.

     "Effective Date" shall mean the date set forth in the first paragraph on
     page one of this Agreement.

     "Electronic Bill Presentment and Payment" shall mean a procedure where
     Cardholders can elect to receive their Account billing statements
     electronically and that also allows them an opportunity to remit their
     Account payment to Bank electronically.

     "Forms" shall have the meaning set forth in Section 2.4.

     "Full Implementation" shall mean all phases of implementation set forth in
     Schedule 1 attached hereto have been fully completed.

     "Goods and/or Services" shall mean those goods and/or services sold at
     retail by a Business through stores, catalog, or Internet to the general
     public for individual, personal, family or household use.

     "Initial Term" shall have the meaning set forth in Section 9.1.

     "Instant Credit Application" shall mean an in store or catalog application
     procedure designed to open Accounts at point of sale or order entry whereby
     an application for credit is communicated to Bank either verbally at point
     of sale or systemically during the catalog order entry process according to
     Bank's Operating Procedures.

     "Marketing Fund" shall have the meaning set forth in Section 2.5(b).

     "Net Proceeds" shall mean Purchases less: (i) credits to Accounts for the
     return or exchange of Goods or a credit on an Account as an adjustment by
     Spiegel Group and Spiegel Group's Stores for goodwill or for Services
     rendered or not rendered by Spiegel Group or Spiegel Group's Stores to a
     Cardholder, all as shown in the Transaction Records (as corrected by Bank
     in the event of any

                                       3

<PAGE>

     computational error), calculated each Business Day; (ii) payments from
     Cardholders received by Spiegel Group and Spiegel Group's Stores from
     Cardholders on Bank's behalf; (iii) any applicable Discount Fees in effect
     on the date of calculation; (iv) the amounts pursuant to Section 11.1(a);
     and (v) any other fees or charges imposed by Bank pursuant to this
     Agreement if not paid when due.

     "Net Sales" shall mean Purchases, less credits or refunds for Goods and/or
     Services, all as shown in the Transaction Records (as corrected by Bank in
     the event of any computational error), calculated each Business Day.

     "New Business" shall have the meaning set forth in Section 2.1(c).

     "On-Line Prescreen" shall mean a process where a pre-screened offer of
     credit is made to Customers meeting Bank's credit criteria in a real-time
     pre-approved process according to Bank's Operating Procedures. The process
     utilizes traditional order entry data elements to build Customer records.
     The Customer records are pre-screened by a credit bureau using Bank's
     established criteria to determine if an offer of credit is appropriate.
     Customer records passing the Bank's pre-screening credit criteria are
     returned to the point of order entry where the pre-approved offer to open
     an Account is made. Records not passing the credit criteria are not
     returned and no offer is made.

     "Newport" shall mean Newport News, Inc.

     "Operating Procedures" shall mean Bank's instructions and procedures as
     written by Bank and provided to Spiegel Group to be followed by Spiegel
     Group and Spiegel Group's Stores in connection with the Plan.

     "Plan" shall mean the private label credit card program established and
     administered by Bank for Customers of Spiegel Group and Spiegel Group's
     Stores by virtue of this Agreement.

     "Plan Commencement Date" shall mean the date on which Bank commences
     operation of the Plan. Bank shall be deemed to have commenced operation of
     the Plan on the earlier of the date on which Bank begins to issue new
     Accounts or the date on which Bank notifies Spiegel Group in writing that
     Bank has commenced operation of the Plan.

     "Plan Year" shall mean each consecutive twelve (12) month period commencing
     on the Plan Commencement Date or the first day of the first full calendar
     month following the Plan Commencement Date if the Plan Commencement Date is
     not the first day of a calendar month and each anniversary thereof.

     "Prescreen Acceptance" shall mean a point of sale procedure designed to
     recognize and activate Bank's pre-approved offers for Accounts for
     Customers.

                                       4

<PAGE>

     "Principal Accounts Receivable Balance" shall mean the month-end
     principal-only accounts receivable. The principal portion of the accounts
     receivable relate to Purchases, Third Party Program Charges and Enhancement
     Marketing Services charges, and other charges not related to interest and
     fees.

     "Promotional Programs" shall mean any special Cardholder payment terms
     approved by Bank for certain Purchases, including without limitation
     deferred finance charges and deferred payments and subject to any terms and
     conditions set forth in writing by Bank. The initial Promotional Programs
     approved by Bank, if any, are set forth in Schedule 1.1. Third Party
     Program Purchases shall not be eligible for Promotional Programs.

     "Purchase" shall mean a purchase of Goods and/or Services and Third Party
     Program vendors' goods and services, including without limitation all
     applicable taxes and shipping costs, with a specific extension of credit by
     Bank to a Cardholder using an Account or to another Bank cardholder using
     another credit card account owned by Bank and honored by Spiegel Group
     pursuant to Section 3.1.

     "Quick Credit" shall mean an in-store application procedure designed to
     open Accounts as expeditiously as possible at point of sale, whereby an
     application for an Account is processed without a paper application being
     completed by an Applicant. An Applicant's credit card (Visa, MasterCard,
     American Express, Discover or other Bank approved private label card) is
     electronically read by a terminal that captures the Applicant's name and
     credit card account number. Other data shall be entered into that same
     terminal by the Spiegel Group's Store associate as specified in the
     Operating Procedures. This data is used by Bank to request a credit bureau
     report and make a decision whether to approve or decline the Applicant.

     "Regular Revolving Purchases" shall mean Purchases which are not subject to
     any Promotional Programs.

     "Renewal Term" shall have the meaning set forth in Section 9.1.

     "Spiegel" shall mean Spiegel, Inc.

     "Spiegel Group Deposit Account" shall mean a deposit account maintained by
     Spiegel Group as set forth in Section 3.6 (a).

     "Spiegel Group's Stores" shall mean those certain retail locations selling
     Goods and/or Services, which are owned and operated by Spiegel Group or
     which are licensees or franchisees of Spiegel Group.

     "Standard Implementation" shall mean Spiegel Group shall solely work with
     its Third Party Program vendor to certify the vendor's interface with Bank
     and Bank will not be required to provide any significant technical support
     with respect to

                                       5

<PAGE>

     establishing the vendor interface and the vendor will comply with Bank's
     procedures for the interface and settlement process without any
     customization for such vendor.

     "Term" shall mean the Initial Term and any Renewal Terms.

     "Third Party Programs" shall have the meaning set forth in Section 2.9(d).

     "Transaction Record" shall mean, with respect to each Purchase of Goods or
     Services by a Cardholder from Spiegel Group and/or Spiegel Group's Stores,
     each credit or return applicable to a Purchase of Goods or Services, and
     each payment received by Spiegel Group and Spiegel Group's Stores from a
     Cardholder on Bank's behalf: (a) the Charge Slip or Credit Slip
     corresponding to the Purchase, credit or return; or (b) a computer readable
     tape/cartridge or electronic transmission containing the following
     information: the Account number of the Cardholder, the Spiegel Group's
     Store number at which the Purchase, credit or return was made, the total of
     (i) the Purchase price of Goods or Services purchased or amount of the
     credit, as applicable, plus (ii) the date of the transaction, a description
     of the Goods or Services purchased, credited or returned and the
     authorization code, if any, obtained by Spiegel Group or Spiegel Group's
     Store prior to completing the transaction; or (c) electronic record whereby
     Spiegel Group or Spiegel Group's Store electronically transmits the
     information described in subsection (b) hereof to a network provider
     (selected by Spiegel Group at its expense), which in turn transmits such
     information to Bank by a computer tape/cartridge or electronic tape or
     transmission.

     1.2 Other Definitions. As used herein, terms defined in the introductory
paragraph hereof and in other sections of this Agreement shall have such
respective defined meanings. Defined terms stated in the singular shall include
reference to the plural and vice versa.

                               SECTION 2. THE PLAN

     2.1 Establishment and Operation of the Plan. (a) The Plan is established
for the primary purpose of providing Customer financing for Goods and/or
Services purchased from Businesses. Spiegel Group and Bank shall use reasonable
efforts to commence the Plan on or before May 1, 2003, or such other date as the
parties mutually agree upon in writing. Spiegel Group shall use its best efforts
to meet all of its obligations under the Phase 1 implementation requirements set
forth in Schedule 1 on or before May 31, 2003. In the event Spiegel Group
completes, and Bank certifies the performance of, all implementation
requirements set forth in Schedule 1 on or before September 30, 2003, Bank will
contribute to the Marketing Funds during the months of October, November and
December, 2003, an amount equal to .0010 multiplied by the Net Sales for the
prior fiscal month. Qualified Applicants desiring to use the Plan shall be
granted an Account by Bank with a credit line in an amount to be determined by
Bank in its discretion for each individual Applicant. Subject to Section 3.6 (d)
and Applicable

                                       6

<PAGE>

Law, Bank shall determine the terms and conditions of the Account to be
contained in a Credit Card Agreement.

     (b) Commencing sixty (60) days after the Full Implementation, Bank shall
operate the Plan in accordance with the Service Standards set forth in Schedule
2.1 (the "Service Standards"). Prior thereto, Bank shall use reasonable efforts
to meet the Service Standards set forth in Schedule 2.1, however, failure to do
so, shall not constitute a breach of this Agreement. Bank will provide Spiegel
Group with a monthly summary of Bank's performance regarding the Service
Standards.

     (c) When Spiegel Group internally develops or acquires a new business
(including but not limited to new divisions, stores, catalogs, Internet sites
and other entities) for the sale of consumer goods and/or services after the
Effective Date (referred to as a "New Business"), Spiegel Group shall notify
Bank of such New Business. With respect to an internally developed New Business,
if such New Business has substantially the same customer base as that in
existence for the then current Businesses and cross-shopping exists with respect
to such customer base (i.e., the Credit Card may be used in more than one
Business), then the parties (including Spiegel Group and Bank in cases where the
New Business is an operating division of Spiegel Group; but including Spiegel
Group, Bank, and the New Business in cases where the New Business is a separate
entity from Spiegel Group) shall execute an addendum to this Agreement
incorporating the New Business into this Agreement, subject to the same terms
and conditions as set forth in this Agreement. With respect to an internally
developed New Business that does not meet the standards set forth in the
immediately preceding sentence, or the acquisition by Spiegel Group of a New
Business, Bank shall have a right of first refusal to add such New Business to
the Plan and if Bank desires to do so, then Spiegel Group and Bank shall
negotiate in good faith the pricing and other terms that shall apply to Bank
issuing Accounts to customers of the New Business, and the parties (including
Spiegel Group and Bank in cases where the New Business is an operating division
of Spiegel Group; but including Spiegel Group, Bank, and the New Business in
cases where the New Business is a separate entity from Spiegel Group) shall
execute an addendum to this Agreement defining the terms and conditions that
will apply to the New Business, which addendum shall be incorporated into this
Agreement. Each time an addendum is executed by the parties, the New Business
shall become a party to this Agreement, and all of the terms of this Agreement
shall be deemed to cover the New Business, unless otherwise specifically agreed
to by the parties in the addendum adding the New Business to this Agreement, and
the term "Spiegel Group" shall be deemed to include the New Business.

     2.2 Applications for Credit Under the Plan; Billing Statements. (a)
Applicants who wish to apply for an Account under the Plan must submit a
completed application on a form or in an electronic format approved by Bank, and
Bank shall grant or deny the request for credit based solely upon Bank's credit
criteria. Spiegel Group or Spiegel Group's Stores shall provide a copy of the
Credit Card Agreement to the Applicant to be retained for the Applicant's
records. The application shall be submitted to Bank by the Applicant or
submitted by Spiegel Group or Spiegel Group's Stores on behalf of the Applicant,
as required in the Operating Procedures. If Bank grants the request for an

                                       7

<PAGE>

Account, Bank will issue a Credit Card to the Applicant which accesses an
individual line of credit in an amount determined by Bank.

     (b) Bank shall make available to Spiegel Group and Spiegel Group shall
utilize a Quick Credit application procedure, as well as Batch Prescreen and
catalog On-Line Prescreen application procedures. Bank will bear the credit
bureau expense for Quick Credit, Internet applications, Instant Credit
Applications and take-one applications. Concerning catalog On-Line Prescreen,
Bank will bear 100% of the On-Line Prescreen credit bureau expense during Plan
Year 1 and thereafter Bank shall bear such expense provided the Eddie Bauer
Business' annual aggregate telephone acceptance rate is at least equal to the
"Target Acceptance Rate". The Target Acceptance Rate shall be (Redacted)% for
Plan Year 2; (Redacted) % for Plan Year 3 and (Redacted)% for Plan Year 4;
(Redacted) % for Plan Year 5 and thereafter. If the aggregate acceptance rate of
the Eddie Bauer Business is less than the Target Acceptance Rate for any given
Plan Year, Spiegel Group will compensate Bank for the shortfall in performance
according to this formula:

(Redacted)

This formula applies regardless of the approval rate. Bank may offset such
amount against the Net Proceeds owed to Spiegel Group.

If the aggregate acceptance rate of the Eddie Bauer Business is less than
(Redacted)% at the end of Plan Year 2, then Bank shall have the right to
terminate catalog On-Line Prescreen and in such event Bank will consider making
additional contributions to the Marketing Fund.

     (c) Spiegel Group agrees that it and Spiegel Group's Stores will keep
confidential the information on such applications and shall not disclose the
information to anyone other than authorized representatives of Bank.

     (d) All Cardholders will receive from Bank a periodic statement (the
"Billing Statement") listing the amounts of Purchases made and credits received
and other information, as required by Applicable Law or deemed desirable by
Bank.

     (e) Bank shall make available to Spiegel Group Internet application
procedures and Charge Slip processing. In such event, Spiegel Group shall be
responsible for integrating and maintaining on its website at its sole expense a
link to the Bank's Internet application processing website. Spiegel Group
represents and warrants that, to integrate and maintain the link, and to ensure
access to the Internet application processing website and reduce technical
errors, its software providing the link will (to the extent within Spiegel
Group's reasonable control) function, and continue to function, in a sound
technical manner. Spiegel Group shall appropriately monitor the link to ensure
it is functioning properly. In the event Bank changes or otherwise modifies the
website address for Internet application processing, Spiegel Group will either
update or modify the link as directed by Bank. In providing the link, Spiegel
Group shall make it clear and conspicuous that the Customer is leaving Spiegel
Group's website and is being directed

                                       8

<PAGE>

to Bank's website for the exclusive purpose of accessing Bank's Internet
application processing website. Spiegel Group agrees that, in connection with
the link, it will only use Bank's name, or any logo, statements, or any other
information that is related to Bank, only as directed by Bank, or as approved in
advance and in writing by Bank. Without limiting the generality of the scope of
required approvals, but by way of example, Spiegel Group shall seek Bank's
approval not only with respect to content, but also with respect to any
typestyle, color, or abbreviations used in connection with the link. Spiegel
Group agrees that, in the event the Internet Account approval rate is at least
(Redacted) % less than the approval rate for Accounts originated through other
sources, then Bank may impose a fee for Internet applications, provided that
Bank shall notify Spiegel Group in advance from time to time of the amount of
such fee, in writing, and Spiegel Group may elect not to utilize Internet
application and/or Charge Slip processing. Spiegel Group will promote to its
Customers the Bank's Electronic Bill Presentment and Payment.

     2.3 Operating Procedures. Spiegel Group, Spiegel Group's Stores and their
Third Party Program vendors shall observe and comply with the Operating
Procedures and such other reasonable procedures as Bank may prescribe on not
less than ninety (90) days' prior written notice to Spiegel Group or otherwise
required by Applicable Law. Spiegel Group shall ensure that Spiegel Group's
Stores are trained regarding the Operating Procedures and shall exercise
commercially reasonable efforts to ensure their compliance with them. Bank will
observe and comply with its obligations under the Operating Procedures. The
Operating Procedures may be amended or modified by Bank from time to time in its
reasonable discretion; provided, however, unless such changes are required by
Applicable Law, a copy of any such amendment or modification shall be provided
to Spiegel Group at least ninety (90) Business Days before its effective date,
and for those changes required by Applicable Law, notice shall be given as soon
as practicable.

     2.4 Plan Documents. Bank shall design, with Spiegel Group's review, the
Credit Card Agreement, application, Credit Card, card mailer and billing
statement to be used under the Plan, subject to and in compliance with the
requirements of Applicable Law. The degree to which Spiegel Group's tradenames,
trademarks, servicemarks or logos appear on applications, card mailers, Credit
Cards, billing statements, letters, and other documents and forms (collectively,
"Forms") is a matter to be determined by Bank after consultation and
coordination with Spiegel Group and subject to Spiegel Group's right to reject
any Form as provided in Section 2.10, and in accordance with Applicable Law.
Bank and Spiegel Group shall mutually agree upon the marketing creative aspects
of the Forms. Bank shall provide at Bank's expense appropriate quantities of the
Credit Card Agreements, applications, Credit Card plastics, card mailer and
billing statements. Spiegel Group shall pay the costs of all Credit Card
plastics, including embossing and encoding, card carriers, envelopes, Credit
Card Agreements and postage related to any reissuances requested by Spiegel
Group for any reissuance of Credit Cards to Cardholders (other than replacements
made by Bank from time to time at a Cardholder's request on an individual
basis). In the event any Forms become obsolete as a result of changes requested
by Spiegel Group, Spiegel Group shall reimburse Bank for its itemized and
documented costs associated with any unused obsolete Forms. Only one

                                       9

<PAGE>

design shall be used for each form. In the event Spiegel Group's catalog service
center cannot support Bank's required real-time Cardholder notification
requirements, Spiegel Group shall pay the costs incurred in connection with any
required inactive Cardholder mailings.

     2.5 Marketing. (a) Spiegel Group agrees to prominently advertise and
actively promote the Plan wherever Customers can purchase Goods and Services,
including, without limitation, those marketing promotions set forth in Schedule
2.5 and such other methods mutually agreed upon by Spiegel Group and Bank.
Spiegel Group and Bank will jointly agree upon programs to market the Plan
involving the use of the Marketing Funds, both initially and on a continuing
basis. Spiegel Group shall solely determine any advertising conducted by Spiegel
Group without the use of Marketing Funds, subject to Bank's review and approval
of references to the Plan for compliance with Applicable Law. Once Spiegel Group
and Bank agree upon standards for the use of Bank's and Spiegel Group's names or
any trademark, service mark or trade name of Bank and Spiegel Group, neither
party will deviate from such standards without express prior approval of the
other party.

     (b) Commencing with the second Plan Year, Bank shall contribute, to apply
to marketing and promotion expenses associated with the Plan in each Plan Year,
an amount equal to (Redacted). In addition, in the event the aggregate Net Sales
during any Plan Year reaches or exceeds $(Redacted) for Eddie Bauer, then Bank
shall contribute an additional amount equal to Redacted), in excess of such
amount, for the remainder of the Plan Year and if such additional amounts are
not used in that Plan Year they will roll over to the next Plan Year, but shall
not have any cash value upon termination. All of such funds shall be referred to
herein as the "Marketing Funds." Immediately upon the elimination of the
Holdback as set forth in Section 11.1(f), the above rate shall be increased to
(Redacted). Bank shall determine a separate Marketing Fund for each individual
Business, based on such Business' Net Sales. If the Marketing Funds are not used
in the Plan Year they will not roll over to the next Plan Year and shall not
have any cash value. Spiegel Group shall, to the extent applicable, pay all
marketing and promotion expenses directly as they are incurred, and shall send
Bank an invoice for the aggregate amount of the expenditures mutually agreed
upon by the parties together with copies of paid invoices or other supporting
documentation reasonably satisfactory to Bank for such expenses and Bank shall
reimburse Spiegel Group within thirty (30) days of invoice date until Bank's
maximum contribution amount for the applicable Plan Year has been met. If Bank
is notified of the termination of this Agreement by Spiegel Group pursuant to
Section 9, then Bank shall have the right to cease the availability of the
Marketing Funds contributed by Bank for any future marketing or promotions,
however, if the Term is renewed by Spiegel Group prior to the end of the Term,
then Bank shall continue to contribute any unused Marketing Funds for such Plan
Year on a retroactive basis.

     (c) Bank has entered into separate private label credit card program
agreements with Spiegel and each of Catalog, Newport and Eddie Bauer. Bank
agrees that during the Term, Bank will pay for the prescreening expenses for up
to an aggregate total of (Redacted) names (that pass Bank's prescreening
criteria) of Customers and/or

                                       10

<PAGE>

customers or potential customers of the Businesses of Catalog, Newport and Eddie
Bauer, for a prequalified offer for an Account and/or for an account issued by
Bank for customers of Eddie Bauer, provided that Bank shall not incur any
expenses in mailing the offer. Spiegel shall determine how to apportion the
total number among Catalog, Newport and Eddie Bauer and shall advise Bank in
writing. Spiegel Group shall provide Bank with the names to be prescreened.
Spiegel Group will consult with Bank regarding the selection criteria used by
Spiegel and the parties will subsequently review the results from such lists.

     2.6 Administration of Accounts. Bank shall perform, in compliance with
Applicable Law, all functions necessary to administer and service the Accounts,
including but not limited to: processing of applications; Credit Card production
and issuance; making all necessary credit investigations; notifying Applicants
in writing of acceptance or rejection of credit under the Plan; preparing and
mailing billing statements; billing error investigation; adjusting credit
limits; making collections; handling Cardholder inquiries; and processing
payments.

     2.7 Credit Decision. The decision to extend credit to any Applicant under
the Plan shall be Bank's decision. Bank's credit underwriting policy shall be in
compliance with any requirements of Bank's funding for the Plan and the
requirements of Applicable Law. Bank will work in good faith with Spiegel Group
to develop business strategies with respect to the issuance of Credit Cards
which are intended to maximize the potential of the Plan, and which are mutually
beneficial to Spiegel Group and Bank. Spiegel Group may from time to time
request Bank to consider offering certain types of special credit programs. Bank
shall reasonably consider Spiegel Group's requests and negotiate with Spiegel
Group in good faith. However, Bank shall, in its sole discretion, subject to
Applicable Laws and safety and soundness considerations, determine whether or
not to offer any of such programs. In the event Bank agrees to any special
credit program, Spiegel Group and Bank shall mutually agree upon any special
terms and fees associated with the program. (Redacted)

     2.8 Ownership of Accounts and Mailing Lists. The Customer's names and
addresses and other Customer information collected by Spiegel Group and Eddie
Bauer independent of Bank and set forth in Eddie Bauer's records, shall be the
exclusive property of Eddie Bauer, but Spiegel Group shall during the Term of
this Agreement as requested by Bank make the names and addresses of Customers
available to Bank, as permitted by Applicable Law to be used only for purposes
of solicitation, as provided hereunder, of such Customers to become Cardholders
of Bank and in connection with the administration of the Plan in accordance with
the terms of this Agreement. Bank shall provide to Spiegel Group monthly one (1)
master file extract initially containing the information set forth on Schedule
2.8 to the extent such information is available to Bank, but subject to change
by Bank at any time, and any other information agreed to by Spiegel Group and
Bank, to the extent permitted by Applicable Law, which Spiegel Group may use
solely in connection with maintaining and servicing the Accounts and for the
purpose of marketing its Goods and Services to the Cardholders, as permitted by
Applicable Law. Spiegel Group shall keep such Cardholder information
confidential and shall not sell, lease, transfer or disclose such information to
any third party without

                                       11

<PAGE>

Bank's prior written consent. The Accounts and all information related thereto,
including without limitation the receivables, names, addresses, credit and
transaction information of Cardholders, as set forth in Bank's records shall be
the exclusive property of Bank during and after the Term of this Agreement
unless the Accounts are purchased by Spiegel Group pursuant to Section 9. Bank
shall have the right to take a security interest in the Goods purchased with an
Account, and is solely liable for any action taken with respect to such security
interest or lien as to such Goods. Bank will promptly assign any such interest
to the Spiegel Group in the event of purchase of Accounts pursuant to Section
9.5 or a chargeback pursuant to Section 3.10.

     2.9 Debt Cancellation and Enhancement Marketing Services. (a) Spiegel Group
and Bank agree that Bank will exclusively make available to Cardholders various
types of insurance and/or debt cancellation programs (collectively referred to
herein as "Debt Cancellation Products") offered by Bank and/or its vendors or
Affiliates. Such products shall include, but not be limited to, credit life
insurance, accidental death and disability insurance and debt cancellation
programs. Bank shall, prior to offering any Debt Cancellation Products to
Cardholders, review the proposed solicitations and offerings with Spiegel Group.
Bank may make up to six (6) offers (call transfer and call to confirm programs
shall not constitute offers) per Plan Year, up to two (2) of which may be
statement inserts as long as the weight of each monthly insert does not exceed
0.085 ounces and up to two (2) of which may be outbound telemarketing contact
offers. The charges for Debt Cancellation Products shall be charged to the
applicable Cardholder's Account. Spiegel Group will assist Bank's effort to
offer Debt Cancellation Products so long as such assistance will not require
Spiegel Group to incur any direct expense or cost. Bank shall not make more than
two (2) outbound telemarketing contact offers per Cardholder per Plan Year and
Spiegel Group shall have the right to approve the script, which approval shall
not be unreasonably withheld.

     (b) Spiegel Group and Bank agree that Bank will make available to
Cardholders various types of other products and services (collectively referred
to herein as "Enhancement Marketing Services") through solicitations made in
connection with their Accounts. Such Enhancement Marketing Services may include
but are not limited to travel clubs, legal services, card registration programs
and merchandise products. Such Enhancement Marketing Services will be offered
through various direct marketing channels including but not limited to direct
mail, telemarketing, call transfer, call to confirm, statement inserts,
statement messaging and IVR. Bank shall have the right to utilize up to 2
statement inserts and 1 statement envelope (bangtail) each month during four
months per Plan Year, up to a total combined weight equal to 0.310 ounces, for
Enhancement Marketing Services. Bank will notify Spiegel Group of the proposed
offer prior to its execution and obtain Spiegel Group's prior written consent,
which shall not be unreasonably withheld. The charges for the products and
services will be billed to the applicable Cardholder's Account when appropriate.

     (c) Spiegel Group shall receive from Bank (Redacted) % of the net profit
(Bank's revenues, commissions and other incentives minus Bank's total direct
expenses) generated by Debt Cancellation Products (to the extent permitted by
Applicable Law and Bank's insurer) and Enhancement Marketing Services, payment
to be made on a

                                       12

<PAGE>

monthly basis, together with a statement setting forth the revenues, expenses
and profits in reasonable detail.

     (d) Spiegel Group may with Bank's prior written approval and subject to
Bank's ability to support the programs enter into its own third party marketing
efforts ("Third Party Programs") to make available to Cardholders various types
of other products and services, and Bank shall process and settle such Purchases
for such Third Party Programs, subject to the terms and conditions set forth in
this Agreement. In consideration for such processing by Bank, Spiegel Group's
Third Party Program vendor shall pay to Bank a one time start-up and
administrative expense equal to $ Redacted for a Standard Implementation and $
Redacted for a non-Standard Implementation, and for all marketing done outside
of Bank's statements an on-going processing fee equal to at least (Redacted)% of
the Net Sales related to such Third Party Program charges, in lieu of all
applicable Discount Fees related to such charges, which fees shall be offset by
Bank against the settlement amounts to be paid to the vendor. In the event such
Third Party Program vendor fails to pay such amounts to Bank, Spiegel Group
shall reimburse Bank for all amounts owed by its Third Party Program vendors
with respect to returns, cancellations or other credits to the Credit Card. For
all Third Party Programs where the marketing efforts utilize Bank's statements,
in lieu of the (Redacted)% fee set forth above, Spiegel Group shall pay to Bank
(Redacted)%) of the net profit (Spiegel Group's revenues, commissions and other
incentives minus Spiegel Group's total expenses) generated by such Third Party
Programs, payment to be made on a monthly basis, together with a statement
setting forth the revenues, expenses and profits in reasonable detail. Bank and
Spiegel Group shall enter into written agreements with such Third Party Program
vendors setting forth the conditions herein and any other terms and conditions
that are mutually satisfactory to the parties.

     2.10 Ownership of Spiegel Group Name. Anything in this Agreement to the
contrary notwithstanding, Spiegel Group shall retain all rights in and to
Spiegel Group's name and the name selected by Spiegel Group for use on the
Credit Card and all trademarks, service marks and other rights pertaining to
such names (collectively, the "Name Rights") and all goodwill associated with
the use of the Name Rights whether under this Agreement or otherwise shall inure
to the benefit of the Spiegel Group. Spiegel Group shall have the right, in its
sole and absolute discretion, to prohibit the use of any of its Name Rights in
any Forms, advertisements or other materials proposed to be used by Bank which
Spiegel Group in its reasonable business judgment deems objectionable or
improper. Bank shall cease all use of the Name Rights upon the termination of
this Agreement for any reason unless Bank retains the Accounts after termination
of the Agreement, in which case Bank may use the Name Rights solely in
connection with the administration and collection of the balance due on the
Accounts. Spiegel Group grants Bank the limited right during the Term to use
Spiegel Group's Name Rights, as specified by Spiegel Group, in connection with
Bank and its Affiliates' marketing and promotion materials and literature in
written and electronic form regarding advertising of Bank's private label
program and their business client lists.

                        SECTION 3. OPERATION OF THE PLAN

                                       13

<PAGE>

     3.1 Honoring Credit Cards. Spiegel Group agrees that Spiegel Group and
Spiegel Group's Stores will honor any Credit Card properly issued and currently
authorized by Bank pursuant to the Plan, Bank's Eddie Bauer credit cards and to
the extent agreed to by Spiegel Group and Bank on a case-by-case basis, any
other credit cards owned by Bank that Bank has designated. Spiegel Group shall
deliver to Bank all Transaction Records evidencing transactions made under the
Plan, in accordance with the provisions of this Agreement and the Operating
Procedures.

     3.2 Additional Operating Procedures. In addition to the procedures,
instructions and practices contained in the Operating Procedures, Spiegel Group
agrees that Spiegel Group and Spiegel Group's Stores will comply with the
following procedures:

     (a) In each Credit Card transaction Spiegel Group and Spiegel Group's
Stores must obtain all the information contained in clause (b) of the definition
of Transaction Record. The date which appears on the Charge Slip or Credit Slip
will be prima facie evidence of the transaction date, and Spiegel Group shall be
required to transmit all Transaction Records relating to such Charge Slip and/or
Credit Slip so that Bank receives such Transaction Records no later than the
second Business Day after the transaction date (excluding any unforeseen systems
malfunctions). The "Cardholder Copy" of each Charge Slip shall be delivered to
the Cardholder at the time of the transaction if the Cardholder is in the store.

     (b) All Charge Slips will evidence the total price of the sale minus any
cash down payment. Spiegel Group shall retain the "Merchant Copy" (in a hard
copy, or scanned or other digital or electronic image form) of all Spiegel Group
and Spiegel Group's Store generated Charge and Credit Slips for each transaction
for a period of twelve (12) months from the date of presentation to Bank or in
the case of Promotional Programs, twelve (12) months from the end of the
applicable Promotional Program, as applicable.

     (c) Spiegel Group and Spiegel Group's Stores will maintain a fair policy
for the exchange and return of Goods and adjustment for Services rendered and
for that purpose will give credit to Accounts upon such exchange, return or
adjustment. Spiegel Group and Spiegel Group's Stores will not make cash refunds
to Cardholders on Credit Card Purchases. If any Goods are returned, price
adjustment is allowed, or debt for Services is adjusted, Spiegel Group and
Spiegel Group's Stores will notify the Bank and provide appropriate
documentation thereof to the Cardholder. Upon receipt of Transaction Records
reflecting a credit to which there has been a corresponding debit, Bank will net
against amounts payable by Bank to Spiegel Group the total shown on the Credit
Slip, and credit the Cardholder's Account in the amount of such Credit Slip. If
the Spiegel Group Deposit Account contains insufficient funds, Spiegel Group
shall remit the amount of such Credit Slips, or any unpaid portion thereof, to
Bank immediately upon written demand.

     (d) Spiegel Group's Stores shall not, when the Cardholder or authorized
user is present in the store, accept a transaction to be charged to an Account
without

                                       14

<PAGE>

presentation of a Credit Card or proper identification as outlined in the
Operating Procedures.

     3.3 Cardholder Disputes Regarding Goods or Services. Spiegel Group and
Spiegel Group's Stores shall act promptly to investigate and work to resolve
disputes with Cardholders regarding Goods or Services obtained through Spiegel
Group and Spiegel Group's Stores pursuant to the Plan. Spiegel Group and Spiegel
Group's Stores shall timely process credits or refunds for Cardholders utilizing
the Plan.

     3.4 No Special Agreements. Neither Spiegel Group nor Spiegel Group's Stores
will extract any special agreement, condition or security from Cardholders in
connection with their use of a Credit Card, unless approved in advance by Bank
in writing.

     3.5 Cardholder Disputes Regarding Violations of Law or Regulation. Spiegel
Group and Bank shall use reasonable efforts to assist the other to investigate
and help resolve any Applicant or Cardholder claim, dispute, or defense which
may be asserted under Applicable Law or other Cardholder complaint.

     3.6 Payment to Spiegel Group; Ownership of Accounts; Fees; Accounting. (a)
Spiegel Group shall electronically transmit all Transaction Records from Spiegel
Group and Spiegel Group's Stores to Bank in a format acceptable to Bank. Upon
receipt, Bank shall use commercially reasonable efforts to promptly verify and
process such Transaction Records, and in the time frames specified herein, Bank
will remit to Spiegel Group an amount equal to the Net Proceeds indicated by
such Transaction Records for the Credit Sales Day(s) for which such remittance
is made. In the event Bank discovers any discrepancies in the amount of
Transaction Records submitted by Spiegel Group or paid by Bank to Spiegel Group,
Bank shall promptly notify Spiegel Group in writing in detail of the
discrepancy, and credit Spiegel Group, or net against amounts owed to Spiegel
Group, as the case may be, in a subsequent daily settlement. Bank will transfer
funds via Automated Clearing House ("ACH") to an account designated in writing
by Spiegel Group to Bank (the "Spiegel Group Deposit Account"). If Transaction
Records are received by Bank's processing center before 12 noon Eastern time on
a Business Day, Bank will initiate such ACH transfer by 12 noon Eastern time on
the next Business Day thereafter. In the event that the Transaction Records are
received after 12 noon Eastern time on a Business Day, then Bank will initiate
such transfer no later than 12 noon Eastern time on the second Business Day
thereafter. Bank shall remit funds to one Spiegel Group designated account and
shall not remit funds to individual Businesses or Spiegel Group's Stores. The
term "initiate" shall mean that Bank shall transmit an ACH file to Bank's
financial institution for settlement on the next Business Day.

     (b) Bank shall own all the Accounts under the Plan from the time of
establishment, and except as otherwise provided herein, neither Spiegel Group
nor Spiegel Group's Stores shall have any right to any indebtedness on an
Account or to any Account payment from a Cardholder arising out of or in
connection with any Purchases under the Plan. Effective upon the delivery of
each Charge Slip by Spiegel Group and Spiegel Group's Stores to Bank and payment
to Spiegel Group by Bank pursuant to

                                       15

<PAGE>

Section 3.6(a), Spiegel Group and Spiegel Group's Stores shall be deemed to have
transferred, conveyed, assigned and surrendered to Bank all right, title or
interest in all such Charge Slips and in all other rights and writings
evidencing such Purchases, if any.

     (c) All Transaction Records are subject to review and acceptance by Bank in
accordance with its usual and customary practices for reviewing and accepting
Transaction Records. In the event of a computational or similar error of an
accounting or record keeping nature with respect to such Transaction Records,
Bank may credit to the Spiegel Group's Deposit Account or net against the Net
Proceeds (as the case may be) the proper amount as corrected. If the Net
Proceeds are insufficient, Spiegel Group shall remit the proper amount to Bank
immediately upon written demand. Upon any such correction Bank shall give same
day notice thereof to Spiegel Group.

     (d) Subject to Applicable Law and the terms and conditions set forth in the
Credit Card Agreement, Bank shall initially charge each Cardholder a finance
charge on the unpaid balance in their Account at a variable annual percentage
rate equal to the Prime Rate plus 16.5% with a minimum of 22.8% and a default
rate equal to the maximum amount permitted by law (currently (24.8%), but not
greater than 29.9 %; a $1 minimum finance charge; late fees equal to $25; and
returned check fees equal to $25. Bank may make any changes in these terms of
the Credit Card Agreement at any time as required by Applicable Law or on an
individual Account by Account basis in connection with its servicing of the
Accounts. With respect to any other changes in terms affecting the APR and/or
fees charged by Bank as set forth above Bank will, prior to making any changes,
review and discuss such changes with Spiegel Group in order to maximize the
potential of the Plan and mutually benefit Spiegel Group and the Bank.

     (e) Spiegel Group and Spiegel Group's Stores shall obtain and maintain at
their own expense such point of sale terminals, cash registers, network
(electronic communication interchange system), telephone or other communication
lines, software, hardware and other items of equipment as are necessary for it
to request and receive authorizations, transmit Charge Slip and Credit Slip
information, process Credit Card Applications and perform its obligations under
this Agreement. The computer programs and telecommunications protocols necessary
to facilitate communications between Bank and Spiegel Group and Spiegel Group's
Stores shall be determined by Bank from time to time subject to reasonable prior
notice of any change in such programs, equipment or protocols. Such changes as
determined by Bank shall be required of all similar Bank clients, and if the
actual annual (per Plan Year) costs of such changes for Spiegel Group and any
Spiegel Group Affiliates that also have private label credit card program
agreements with Bank similar to this Agreement, in the aggregate exceed $
(Redacted), Bank shall split the excess costs with Spiegel Group above such
amount.

     (f) Spiegel Group may from time to time offer Promotional Programs to
Cardholders. Spiegel Group shall be responsible for ensuring that all Purchases
subject to any Promotional Programs are properly designated as such on the
Transaction Record in accordance with Bank's instructions.

                                       16
<PAGE>

     (g) Bank may, if Spiegel Group fails to pay Bank any amounts due to Bank
pursuant to this Agreement for more than thirty (30) days after the due date,
offset such amounts against the Net Proceeds or any other amounts owed by Bank
to Spiegel Group under this Agreement and will provide written detail in the
daily settlement report.

     3.7 Insertion of Spiegel Group's Promotional Materials. Bank shall from
time to time insert Spiegel Group's promotional materials for Spiegel Group's
Goods and Services, which are provided by Spiegel Group at Spiegel Group's
expense or from the Marketing Fund, into the Account billing statements and new
Credit Card mailers, so long as the materials: (a) are provided to Bank at least
fifteen (15) Business Days prior to the scheduled mailing date of such
statements or notices; (b) if they reference Bank or the Plan in any manner, are
approved by Bank as to content, in Bank's reasonable discretion; (c) meet all
size, weight, or other specifications for such inserts as shall be reasonably
set by Bank from time to time with at least 30 days prior written notice to
Spiegel Group of such standards; (d) there is sufficient space in Bank's
standard envelope for the insert in addition to any legally required material,
Cardholder notices and other materials which Bank is including in the mailing,
including Enhancement Marketing Services in accordance with Section 2.9(b), and
where notification of any inclusion of any such insert, the weights, etc. has
been provided by Bank to Spiegel Group as soon as possible; and (e) Spiegel
Group pays any and all additional postage costs caused by Bank's insertion of
materials provided by Spiegel Group, if instructed by Spiegel Group to insert
regardless of the additional postage costs.

     3.8 Payments. All payments to be made by Cardholders with respect to any
amounts outstanding on the Accounts shall be made in accordance with the
instructions of Bank and at the location or address specified by Bank. Spiegel
Group hereby authorizes Bank, or any of its employees or agents, to endorse
"World Financial Network National Bank" upon all or any checks, drafts, money
orders or other evidence of payment, made payable to Eddie Bauer and intended as
payment on an Account, that may come into Bank's possession from Cardholders and
to credit said payment against the appropriate Cardholder's Account. Spiegel
Group shall not accept any payments made with respect to the Plan. Bank has the
sole right to receive and retain all payments made with respect to all Accounts
and to pursue collection of all amounts outstanding, unless an Account or
Purchase is charged back to Spiegel Group pursuant to the provisions of Sections
3.9 and 3.10 hereof. Upon emergence from bankruptcy and upon at least ninety
(90) days prior written request from Spiegel Group, payment may be accepted at
Spiegel Group's Stores. Spiegel Group further agrees that if Spiegel Group is
permitted by Bank to receive any payment made with respect to an Account,
Spiegel Group and Spiegel Group's Stores will on Bank's behalf hold such payment
in trust for Bank and will within one (1) Business Day after receipt include the
amount of such payment in the Transaction Records sent to Bank pursuant to this
Agreement. Bank will charge the amount of such payment against the Spiegel Group
Deposit Account, or, if the Spiegel Group Deposit Account contains insufficient
funds, Spiegel Group shall remit the amount of such payment, or any unpaid
portion thereof, to Bank immediately upon written demand. Payments made by
Cardholders at Spiegel Group's Stores shall not be deemed received by Bank until
Bank receives and accepts the Transaction Records. Spiegel Group shall promptly
comply with any written instruction

                                       17

<PAGE>

by Bank or any successor to Bank to cease accepting Account payments and
thereafter inform Cardholders who wish to make payments that payments should be
made to Bank.

     3.9 Chargebacks. Bank shall have the right to demand immediate purchase by
Spiegel Group of any Purchase and charge back to Spiegel Group the unpaid
balance (including principal, accrued and billed finance charges, fees, charges
and any of such amounts written off by Bank), if and whenever:

     (a) Any unresolved Cardholder claim, defense or dispute is asserted against
Bank with respect to such Purchase or the Account as a result of an action or
inaction by Spiegel Group and/or Spiegel Group's Stores pursuant to and within
the time limits under Applicable Law; or

     (b) Bank determines that with respect to such Purchase or the Account: (i)
there is a breach of any warranty or representation made by or with respect to
Spiegel Group under this Agreement relating to such Purchase or Account; (ii)
there is a failure by Spiegel Group to comply with any term or condition of this
Agreement relating to such Purchase or Account, which failure shall not have
been cured within fifteen (15) days after receipt of written notice thereof from
Bank; or (iii) after receipt of a fraud affidavit from the Cardholder, Bank
determines that the signature on any Charge Slip has been forged or is
counterfeit; or

     (c) After reasonable notice to Spiegel Group, any Purchase amount is not
paid when due, and the Cardholder has stated in writing that the Cardholder's
reason for such nonpayment is an alleged breach of warranty or representation by
Spiegel Group or Spiegel Group's Stores or the result of a dispute by a
Cardholder in connection with the sale of Goods, or the furnishing of Services
by Spiegel Group or Spiegel Group's Stores to such Cardholder; or

     (d) Any Cardholder claim, defense, dispute or fraud is asserted against
Bank with respect to such Purchase and the Transaction Record from Spiegel Group
did not contain the appropriate Bank authorization code for such Purchase
(excluding, through June 30, 2003, those certain Transactions identified by
Spiegel Group with transaction code 331 with the descriptor "catalog debit
adjustment"); or

     (e) For any chargeback reason as set forth in the Operating Procedures.

     3.10 Assignment of Title in Charged Back Purchases. With respect to any
amount of a Purchase to be charged back to and to be purchased by Spiegel Group,
Spiegel Group shall either pay such amount directly to Bank in immediately
available funds or Bank will offset such amount as part of the Net Proceeds to
be paid to Spiegel Group, to the extent the balance thereof is sufficient. Upon
payment of such amount by Spiegel Group to Bank, or off-setting, as the case may
be, Bank shall assign and transfer to Spiegel Group, without recourse, all of
Bank's right, title and interest in and to such Purchase and deliver all
documentation (or copies) in Bank's possession with respect thereto. Spiegel
Group further consents to all extensions or compromises given any Cardholder
with respect to any such Purchase, and agrees that such shall not affect

                                       18

<PAGE>

any liability of Spiegel Group hereunder or right of Bank to charge back any
Purchase as provided in this Agreement; provided, however, that Bank shall not
have the right to charge back for any Purchase the amount of any reductions, or
compromises of amounts owed by a Cardholder to Bank. Spiegel Group shall not
resubmit or re-transmit any charged back Purchases to Bank, without Bank's prior
written consent.

     3.11 Promotion of Program and Card Plan; Non-Competition. Throughout the
Term of this Agreement, Spiegel Group shall actively and consistently market,
promote, participate in and support the Plan as set forth in this Agreement.
Spiegel Group shall not accept or honor any other private label credit cards for
the purchase of Goods and/or Services. Spiegel Group agrees that in
consideration and as an inducement for Bank to make the Plan available to
Spiegel Group as outlined in this Agreement and the Operating Procedures, from
the Effective Date and for as long as this Agreement is in existence, Spiegel
Group will not, without the prior written consent of Bank, contract or establish
with any other credit card processor/provider or provide or process on its own
behalf any "private label" or "co-brand" revolving credit or other credit card
issuance or processing arrangement or programs similar in purpose to the Plan or
to the services and transactions contemplated under this Agreement, except that
if either party provides notice of termination pursuant to Section 9.1 of this
Agreement or if Spiegel Group terminates under Section 9.3, Spiegel Group may
enter into a contract with another credit card processor/provider effective on
or after termination of this Agreement. Spiegel Groups' Affiliates shall not
issue or establish a credit card program for financing the purchase of Goods
and/or Services. Notwithstanding the foregoing, nothing contained in this
Agreement will be construed to prohibit or prevent Spiegel Group from: (i)
accepting any major general purpose credit card (including without limitation,
American Express Card, MasterCard, Visa, or NOVUS), or any stored value card or
gift card, or any form of general purpose debit card or fixed payment
(installment) credit programs for Applicants declined by Bank, as a means of
payment by Cardholders and Customers for purchase of Goods and Services; or (ii)
entering into a contract with another credit card provider for a particular
state after Bank has terminated the operation of the Plan in such state pursuant
to Section 9.4; or (iii) accepting any private label credit cards issued by
Eddie Bauer to a Customer prior to the Effective Date.

     3.12 Postage. Any increase(s), in Bank's cost of mailing Account billing
statements, form letters or new Credit Cards due to increase(s) in the first
class pre-sort cost of postage from the United States Postal Service occurring
on or after the Effective Date, which increase(s) in the aggregate exceed the
increases in the national Consumer Price Index for Urban Consumers (CPI-U) for
the same time period shall be borne by Spiegel Group. Adjustments will be made
for any subsequent decreases in the cost of postage. Bank will use commercially
reasonable efforts to obtain the best bulk rate discount.

     3.13 Reports. Bank will deliver to Spiegel Group the reports set forth in
Schedule 3.13 attached hereto as specified therein. Bank may provide any
additional reports requested by Spiegel Group upon such terms and at the costs
mutually agreed to by the parties.

                                       19

<PAGE>

     3.14 Security and Fraud Prevention. The Operating Procedures provide for
general guidelines regarding security efforts of Bank and the Spiegel Group to
limit and prevent the fraudulent opening of Accounts and the fraudulent
compromising of Accounts. Bank shall be responsible for all damages related to
any and all Purchases placed upon an Account that was fraudulently opened,
provided that Spiegel Group has followed all Operating Procedures. Spiegel Group
shall be responsible for any Chargeback arising out of a Purchase by a
non-cardholder who has compromised an Account where Spiegel Group has failed to
follow all Operating Procedures regarding the acceptance of the Credit Card. The
parties will exercise best efforts in developing and/or utilizing commercially
reasonable and appropriate industry best practices and preventative measures, as
such change from time to time during the Term, to prevent and lower fraudulent
Account openings and Purchases, and to protect information exchanged hereunder,
including but not limited to, any information referenced in Section 10.17 or
otherwise delivered to the other pursuant to this Agreement or for system
testing and reconciliation.

           SECTION 4. REPRESENTATIONS AND WARRANTIES OF SPIEGEL GROUP

     Spiegel Group hereby represents and warrants to Bank during the Term as
follows:

     4.1 Organization, Power and Qualification. Spiegel and Eddie Bauer are
corporations duly organized, validly existing and in good standing under the
laws of the state of Delaware and have full corporate power and authority to
enter into this Agreement and to carry out the provisions of this Agreement.
Each entity is duly qualified and in good standing to do business in all
jurisdictions where they are located, except where the failure to so qualify
would not have a material adverse effect on their business, or where the failure
to so qualify would not have a material adverse effect on Spiegel Group's or
Bank's ability to continue operation of the Plan.

     4.2 Authorization, Validity and Non-Contravention. (a) This Agreement has
been duly authorized by all necessary corporate proceedings, has been duly
executed and delivered by Spiegel Group and, subject to and upon the approval of
the United States Bankruptcy Court for the Southern District of New York, is a
valid and legally binding agreement of Spiegel Group duly enforceable in
accordance with its terms (except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium and other laws relating to or
affecting creditors' rights generally and by general equity principles).

     (b) Other than the approval of the United States Bankruptcy Court for the
Southern District of New York, no consent, approval, authorization, order,
registration or qualification of or with any court or regulatory authority or
other governmental body having jurisdiction over Spiegel Group is required for,
and the absence of which would adversely affect, the legal and valid execution
and delivery of this Agreement, and the performance of the transactions
contemplated by this Agreement.

                                       20

<PAGE>

     (c) The execution and delivery of this Agreement by Spiegel Group hereunder
and the compliance by Spiegel Group with all provisions of this Agreement: (i)
will not conflict with or violate any Applicable Law; and (ii) will not conflict
with or result in a breach of or default under any of the terms or provisions of
any indenture, loan agreement or other contract or agreement under which Spiegel
Group is an obligor or by which its property is bound where such conflict,
breach or default would have a material adverse effect on Spiegel Group, nor
will such execution, delivery or compliance violate or result in the violation
of the respective Articles of Incorporation or By-Laws of Spiegel and Eddie
Bauer.

     4.3 Accuracy of Information. All factual information furnished by Spiegel
Group to Bank in writing at any time pursuant to any requirement of, or
furnished in response to any written request of Bank under this Agreement or any
transaction contemplated hereby has been, and all such factual information
hereafter furnished by Spiegel Group to Bank will be, to Spiegel Group's best
knowledge and belief, true and accurate in every respect material to the
transactions contemplated hereby on the date as of which such information was or
will be stated or certified.

     4.4 Validity of Charge Slips. (a) As of the date any Transaction Records
are presented to Bank in accordance with the provisions of this Agreement, each
Charge Slip relating to such Transaction Records shall represent the obligation
of a Cardholder in the respective amount set forth therein for Goods sold or
Services rendered, together with applicable taxes, if any, and shall not involve
any element of credit for any other purpose.

     (b) As of the date any Transaction Records are presented to Bank in
accordance with the provisions of this Agreement, Spiegel Group has no knowledge
or notice of any fact or matter which would immediately or ultimately impair the
validity of any Charge Slip relating to such Transaction Records, the
transaction evidenced thereby, or its collectibility.

     4.5 [Intentionally Left Blank]

     4.6 Spiegel Group's Name, Trademarks and Service Marks. Spiegel Group has
the legal right to use and to permit the Bank to use, to the extent set forth
herein, the various tradenames, trademarks, logos and service marks specified by
Spiegel Group for use in connection with the Plan.

     4.7 Intellectual Property Rights. In the event Spiegel Group provides any
software or hardware to Bank, Spiegel Group has the legal right to such software
or hardware and the right to permit Bank to use such software or hardware, and
such use shall not violate any intellectual property rights of any third party.
Any software or other technology developed by or for Spiegel Group or its
Affiliates, to facilitate the Plan, including but not limited to, software and
software modifications developed in response to Bank's request or to accommodate
Bank's special requirements and all derivative works, regardless of the
developer thereof, will remain the exclusive property of Spiegel Group and/or
its Affiliates. Nothing in this Agreement shall be deemed to convey a

                                       21

<PAGE>

proprietary interest to Bank or any third party in any of the software,
hardware, technology or any of the derivative works thereof which are owned or
licensed by Spiegel Group and/or its Affiliates. Any software, hardware or
technology provided by Spiegel Group is without warranty of merchantability or
warranty of fitness for a particular use, and is provided "AS IS".

                      SECTION 5. COVENANTS OF SPIEGEL GROUP

     Spiegel Group hereby covenants and agrees as follows:

     5.1 Notices of Changes. Spiegel Group will as soon as reasonably possible
notify Bank of any: (a) change in the name or form of business organization of
Spiegel Group, change in the location of its chief executive office or the
location of the office where its records concerning the Plan are kept; (b)
merger or consolidation of Spiegel Group or the sale of a significant portion of
its stock or of any substantial amount of its assets not in the ordinary course
of business or any change in the control of Spiegel Group; (c) material adverse
change in its financial condition or operations or the commencement of any
litigation which would have a material adverse effect on Spiegel Group in its
ability to perform hereunder; or (d) the planned opening or closing of any
Spiegel Group Store. Spiegel Group will furnish such additional information with
respect to any of the foregoing as Bank may request for the purpose of
evaluating the effect of such change on the financial condition and operations
of Spiegel Group and on the Plan.

     5.2 Financial Statements. Spiegel Group shall furnish to Bank upon request
the following information pertaining to Spiegel Group: (a) a consolidated
balance sheet as of the close of each fiscal year; (b) a consolidated statement
of income, retained earnings and paid-in capital to the close of each fiscal
year; (c) a consolidated statement of cash flow to the close of each such
period; and (d) a copy of the opinion submitted by Spiegel Group's independent
certified public accountants in connection with such of the financial statements
as have been audited.

     5.3 Inspection. Spiegel Group will permit, once per Plan Year, unless Bank
has reasonable cause to do so, authorized representatives designated by Bank, at
Bank's expense, to visit and inspect, to the extent permitted by Applicable Law,
any of the Spiegel Groups' and Spiegel Group's Stores, books and records
pertaining to Transaction Records, Third Party Programs and the Plan and to make
copies and take extracts therefrom, and to discuss the same with its officers
and independent public accountants, all at reasonable times during normal
business hours.

     5.4 Spiegel Group's Business. Spiegel Group shall do or cause to be done
all things necessary to preserve and keep in full force and effect its corporate
existence and to comply with all Applicable Laws in connection with its business
and the sale of Goods and Services. Spiegel Group shall provide to Bank upon
request not more than once per quarter a forecast of Spiegel Group's total sales
and the forecasted number of stores and a weekly unaudited report of the actual
total sales by sales channel.

     5.5 Spiegel Group's Stores. Spiegel Group shall cause all of Spiegel
Group's

                                       22

<PAGE>

Stores to comply with the obligations, restrictions and limitations of this
Agreement as such are applicable at the point of sale of the Goods and Services.

     5.6 Insurance. Spiegel Group shall maintain insurance policies with
insurers and in such amounts and against such types of loss and damage as are
customarily maintained by other companies within Spiegel Group's industry
engaged in similar businesses as Spiegel Group.

     5.7 Spiegel Group's Tracking Reports. Spiegel Group shall use its best
efforts to commence within eighteen (18) months after the Effective Date,
providing Bank with weekly On-Line Prescreen acceptance and activation results
by telemarketing associate, supervisor and call center facility.

     5.8 Compliance with Law. Any action or inaction taken by Spiegel Group and
Spiegel Group's Stores (where Spiegel Group or Spiegel Group's Stores have a
duty to act) in connection with the Plan and the sales of Goods and/or Services
and any Third Party Programs shall be in compliance with all Applicable Law
except where the failure to comply does not or will not have an adverse effect
on Spiegel Group, the Bank or the Plan.

                SECTION 6. REPRESENTATIONS AND WARRANTIES OF BANK

     Bank hereby represents and warrants to Spiegel Group during the Term as
follows:

     6.1 Organization, Power and Qualification. Bank is a national banking
association duly organized, validly existing and in good standing under the laws
of the United States of America and has full corporate power and authority to
enter into this Agreement and to carry out the provisions of this Agreement.
Bank is duly qualified and in good standing to do business in all jurisdictions
where such qualification is necessary for Bank to carry out its obligations
under this Agreement.

     6.2 Authorization, Validity and Non-Contravention. (a) This Agreement has
been duly authorized by all necessary corporate proceedings, has been duly
executed and delivered by Bank and is a valid and legally binding agreement of
Bank duly enforceable in accordance with its terms (except as such enforcement
may be limited by bankruptcy, insolvency, reorganization, moratorium and other
laws relating to or affecting creditors' rights generally and by general equity
principles).

     (b) No consent, approval, authorization, order, registration or
qualification of or with any court or regulatory authority or other governmental
body having jurisdiction over Bank is required for, and the absence of which
would materially adversely affect, the legal and valid execution and delivery of
this Agreement, and the performance of the transactions contemplated by this
Agreement.

     (c) The execution and delivery of this Agreement by Bank hereunder and the
compliance by Bank with all provisions of this Agreement: (i) will not conflict
with or violate any Applicable Law; (ii) will not conflict with or result in a
breach of the terms or

                                       23

<PAGE>

provisions of any indenture, loan agreement or other contract or agreement under
which Bank is an obligor or by which its property is bound where such conflict,
breach or default would have a material adverse effect on Bank, nor will such
execution, delivery or compliance violate or result in the violation of the
Charter or By-Laws of Bank.

     6.3 Accuracy of Information. All factual information (including all
information concerning the Bank's funding facility) furnished by Bank to Spiegel
Group in writing at any time pursuant to any requirement of, or furnished in
response to any written request of Spiegel Group under this Agreement or any
transaction contemplated hereby has been, and all such factual information
hereafter furnished by Bank to Spiegel Group will be, to Bank's best knowledge
and belief, true and accurate in every respect material to the transactions
contemplated hereby on the date as of which such information has or will be
stated or certified.

     6.4 [Intentionally Left Blank]

     6.5 Intellectual Property Rights. In the event Bank provides any software
or hardware to Spiegel Group, Bank has the legal right to such software or
hardware and the right to permit Spiegel Group to use such software or hardware,
and such use shall not violate any intellectual property rights of any third
party. Any software or other technology developed by or for Bank or its
Affiliates, to facilitate the Plan, including but not limited to, software and
software modifications developed in response to Spiegel Group's request or to
accommodate Spiegel Group's special requirements and all derivative works,
regardless of the developer thereof, will remain the exclusive property of Bank
and/or its Affiliates. Nothing in this Agreement shall be deemed to convey a
proprietary interest to Spiegel Group or any third party in any of the software,
hardware, technology or any of the derivative works thereof which are owned or
licensed by Bank and/or its Affiliates. Any software, hardware or technology
provided by Bank is without warranty of merchantability or warranty of fitness
for a particular use, and is provided "AS IS".

     6.6 Litigation & Solvency. As of the Effective Date, there is no
outstanding litigation, arbitrated matter or other dispute to which Bank is a
party, which, if decided unfavorably to Bank, would reasonably be expected to
have a material adverse effect on Bank's ability to fulfill its obligations
under this Agreement. As of the Effective Date Bank is solvent, has not had a
receiver or trustee appointed, and has not executed any assignment for the
benefit of its creditors.

                          SECTION 7. COVENANTS OF BANK

Bank hereby covenants and agrees as follows:

     7.1 Notices of Changes. Bank will as soon as reasonably possible notify
Spiegel Group of any: (a) change in the name or form of business organization of
Bank, change in the location of its chief executive office or the location of
the office where its records concerning the Plan are kept; (b) merger or
consolidation of Bank or the sale of

                                       24

<PAGE>

a significant portion of its stock or of any substantial amount of its assets
not in the ordinary course of business or any change in the control of Bank; (c)
material adverse change in its financial condition or operations or the
commencement of any litigation which would have a material adverse effect on the
Plan. Bank will furnish such additional information with respect to any of the
foregoing as Spiegel Group may request for the purpose of evaluating the effect
of such transaction on the financial condition and operations of Bank and on the
Plan.

     7.2 Financial Statement. Bank shall furnish to Spiegel Group upon request
by Spiegel Group and as soon as available the following information pertaining
to Bank: (a) a consolidated balance sheet as of the close of each fiscal year;
(b) a consolidated statement of income, retained earnings and paid-in capital to
the close of each fiscal year; (c) a consolidated statement of cash flow to the
close of each such period; and (d) a copy of the opinion submitted by Bank's
independent certified public accountants in connection with such of the
financial statements as have been audited.

     7.3 Inspection. Bank will permit, once per Plan Year unless Spiegel Group
has reasonable cause to do so, authorized representatives designated by Spiegel
Group, at Spiegel Group's expense, to visit and inspect, to the extent permitted
by Applicable Law, any of Bank's books and records pertaining to the Discount
Fees, credit bureau costs reimbursement pursuant to Section 2.2(b) to the extent
permitted by Bank's third party contracts (if not permitted, Bank will provide
an officer's certification of the costs), the Holdback, the Debt Cancellation
Products and Enhancement Marketing Services Programs' commissions, revenues and
expenses set forth in Section 2.9, and Purchases and to make copies and take
extracts therefrom, and to discuss the same with its officers and independent
public accountants, all at reasonable times during normal business hours. Bank
shall permit Spiegel Group, once per Plan Year, during normal business hours and
upon reasonable notice, and in a manner which does not disrupt the operations,
to visit the offices at which services relating to the Plan are provided, to
monitor the activities of Bank and its subcontractors.

     7.4 Bank's Business. Bank shall do or cause to be done all things necessary
to preserve and keep in full force and effect its corporate existence and to
comply with all Applicable Laws in connection with its business and the issuance
of credit by Bank.

     7.5 Insurance. Bank shall maintain insurance policies with insurers and in
such amounts and against such types of loss and damage as are customarily
maintained by other banks engaged in similar businesses as Bank.

     7.6 Bank's Funding Facility. Bank will during the pending Spiegel Group
bankruptcy proceedings use reasonable efforts to obtain and maintain its funding
facility for the Plan. Bank will during the pending Spiegel Group bankruptcy
proceedings provide Spiegel Group with the conditions that trigger termination
of Bank's funding facility and any changes thereto and will provide monthly
reporting to Spiegel Group of Bank's performance with respect to the conditions
that trigger termination of the funding facility.

                                       25

<PAGE>

     7.7 Compliance with Law. The Plan, the Credit Card Agreements and the
Enhancement Marketing Services and any action or inaction taken by Bank (where
Bank has a duty to act) in connection with same shall be in compliance with all
Applicable Law except where the failure to so comply does not or will not have
an adverse effect on the Bank, Spiegel Group or the Plan.

                           SECTION 8. INDEMNIFICATION

     8.1 Indemnification Obligations. (a) Spiegel Group shall be liable to and
shall indemnify and hold Bank and its Affiliates and their respective officers,
directors, employees, subcontractors and their successors and assigns, harmless
from any and all Losses (as hereinafter defined) incurred by reason of: (i)
Spiegel Group's breach of any representation, warranty or covenant hereunder;
(ii) Spiegel Group's failure to perform its obligations as required hereunder;
(iii) any property damage or personal injury caused by or related to Goods
and/or Services charged to an Account; and/or (iv) any action or failure to act
by Spiegel Group, Spiegel Group's Stores and/or Third Party Program vendors
(where Spiegel Group, Spiegel Group's Stores or the Third Party Program vendors
have a duty to act) and their respective officers, directors and employees which
results in a claim against Bank, its officers, employees, Affiliates, unless the
proximate cause of any such claim is an act or failure to act by Bank, its
Affiliates or any subcontractor, or their respective officers, directors or
employees.

     (b) Bank shall be liable to and shall indemnify and hold Spiegel Group and
its Affiliates and their respective officers, directors, employees,
sub-contractors and their successors and assigns, harmless from any and all
Losses (as hereinafter defined) incurred by reason of: (i) Bank's breach of any
representation, warranty or covenant hereunder; (ii) Bank's failure to perform
its obligations as required hereunder; (iii) any action or failure to act by
Bank (where Bank has a duty to act) and its officers, directors, and employees
which results in a claim against Spiegel Group, its officers, employees,
Affiliates, unless the proximate cause of any such claim is an act or failure to
act by Spiegel Group, its Affiliates or any subcontractor, or their respective
officers, directors or employees; and/or (iv) the rejection for credit of any
Applicant by Bank under the Plan except to the extent it results from any action
or omission of Spiegel Group.

     (c) For purposes of this Section 8.1 the term "Losses" shall mean any
liability, damage, costs, fees, losses, judgments, penalties, fines, and
expenses, including without limitation, any reasonable attorneys' fees,
disbursements, settlements (which require the other party's consent which shall
not be unreasonably withheld), and court costs, reasonably incurred by Bank or
Spiegel Group, as the case may be, without regard to whether or not such Losses
would be deemed material under this Agreement except that Losses may not include
any overhead costs that either party would normally incur in conducting its
everyday business.

     8.2 LIMITATION ON LIABILITY. (a) IN NO EVENT SHALL EITHER PARTY BE LIABLE
TO THE OTHER PARTY FOR ANY INCIDENTAL, INDIRECT, SPECIAL OR CONSEQUENTIAL
DAMAGES ARISING OUT OF THIS AGREEMENT, PROVIDED,

                                       26

<PAGE>

HOWEVER, THAT THIS LIMITATION SHALL NOT APPLY WITH RESPECT TO A PARTY'S
INTENTIONAL BREACH OF THIS AGREEMENT.

     (b) BANK'S TOTAL ANNUAL LIABILITY TO SPIEGEL GROUP FOR ALL DAMAGES FOR ANY
CAUSE WHATSOEVER OCCURRING DURING ANY YEAR OF THE TERM OF THIS AGREEMENT, SHALL
NOT EXCEED (Redacted). BANK'S TOTAL CUMULATIVE LIABILITY TO SPIEGEL GROUP FOR
ALL DAMAGES FOR ANY CAUSE WHATSOEVER, SHALL NOT EXCEED (Redacted)PROVIDED,
HOWEVER, THAT THIS LIMITATION SHALL NOT APPLY WITH RESPECT TO BANK'S INTENTIONAL
BREACH OF THIS AGREEMENT.

     (c) SPIEGEL GROUP'S TOTAL ANNUAL LIABILITY TO BANK FOR ALL DAMAGES FOR ANY
CAUSE WHATSOEVER OCCURRING DURING ANY YEAR OF THE TERM OF THIS AGREEMENT, SHALL
NOT EXCEED (Redacted). SPIEGEL GROUP'S TOTAL CUMULATIVE LIABILITY TO BANK FOR
ALL DAMAGES FOR ANY CAUSE WHATSOEVER, SHALL NOT EXCEED (Redacted) PROVIDED,
HOWEVER, THAT THIS LIMITATION SHALL NOT APPLY WITH RESPECT TO SPIEGEL GROUP'S
INTENTIONAL BREACH OF THIS AGREEMENT.

     8.3 NO WARRANTIES. EXCEPT AS PROVIDED HEREIN, THERE ARE NO EXPRESS OR
IMPLIED WARRANTIES, INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE, RESPECTING THE SERVICES AND/OR OTHER PRODUCTS
SOLD OR PROVIDED BY BANK PURSUANT TO THIS AGREEMENT.

     8.4 Notification of Indemnification; Conduct of Defense. (a) In no case
shall the indemnifying party be liable under Section 8.1 of this Agreement with
respect to any claim or claims made against the indemnified party or any other
person so indemnified unless it shall be notified in writing of the nature of
the claim within a reasonable time after the assertion thereof, but failure to
so notify the indemnifying party shall not relieve it from any liability which
it may have under other provisions of this Agreement.

     (b) The indemnifying party shall be entitled to participate, at its own
expense, in the defense, or, if it so elects, within a reasonable time after
receipt of such notice, to assume the defense of any suit brought against the
indemnified party which gives rise to a claim against the indemnifying party,
but, if the indemnifying party so elects to assume the defense, such defense
shall be conducted by counsel chosen by it and approved by the indemnified party
or the person or persons so indemnified, who are the defendant or defendants in
any suit so brought, which approval shall not be unreasonably withheld. If the
indemnifying party elects to assume the conduct of the defense of any suit
brought to enforce any such claim and retains counsel to do so, the indemnified
party or the person or persons so indemnified who are the defendant or
defendants in the suit, shall bear the fees and expenses of any additional
counsel thereafter retained by the indemnified party or such other person or
persons.

                         SECTION 9. TERM AND TERMINATION

                                       27

<PAGE>

     9.1 Term. This Agreement shall become effective as of the Effective Date
when executed by authorized officers of each of the parties and shall remain in
effect for (Redacted) years from the Plan Commencement Date plus any additional
calendar days needed to end the Term on the last day of a calendar month (the
"Initial Term") and shall automatically renew for successive (Redacted)-year
terms (each a "Renewal Term") thereafter unless either party provides the other
with at least twelve (12) month's written notice of its intention to terminate
the Agreement prior to the expiration of the Initial or then current Renewal
Term, or unless otherwise terminated as provided herein.

     9.2 Termination with Cause by Bank; Bank Termination Events. Any of the
following conditions or events shall constitute a "Bank Termination Event"
hereunder, and Bank may terminate this Agreement immediately without further
action by delivering written notice to Spiegel Group setting for the Bank's
reason for termination and the effective date of termination, if such Bank
Termination Event occurs:

     (a) If the Spiegel Group's pending bankruptcy proceeding shall be converted
from a Chapter 11 proceeding to a Chapter 7 proceeding; or

     (b) If after emergence from bankruptcy, Spiegel Group shall: (i) generally
not pay its debts as they become due; (ii) file, or consent by answer or
otherwise to the filing against it, of a petition for relief, reorganization or
arrangement or any other petition in bankruptcy, for liquidation or to take
advantage of any bankruptcy or insolvency law of any jurisdiction; (iii) make an
assignment for the benefit of its creditors; (iv) consent to the appointment of
a custodian, receiver, trustee or other officer with similar powers of itself or
of any substantial part of its property; (v) be adjudicated insolvent or be
liquidated; (vi) take corporate action for the purpose of any of the foregoing
and such event shall materially adversely affect the ability of Spiegel Group to
perform under this Agreement or the Plan; (vii) have a materially adverse change
in its financial condition, including, but not limited to receiving a bond
downgrade or being downgraded by a rating agency to a rating below of BB-
according to Standard and Poor's index or an equivalent rating from a comparable
source; or (viii) receive an adverse opinion by its auditors or accountants as
to its viability as a going concern; or (ix) breach or fail to perform or
observe any covenant or other term contained in any creditor loan agreement,
debt instrument or any other material agreement to which it is bound, and shall
not have remedied such breach or failure within any applicable cure period; or

     (c) If after emergence from bankruptcy, a court or government authority of
competent jurisdiction shall enter an order appointing, without consent by
Spiegel Group, a custodian, receiver, trustee or other officer with similar
powers with respect to it or with respect to any substantial part of its
property, or if an order for relief shall be entered in any case or proceeding
for liquidation or reorganization or otherwise to take advantage of any
bankruptcy or insolvency law of any jurisdiction, or ordering the dissolution,
winding up or liquidation of Spiegel Group, or if any petition for any such
relief shall be filed against Spiegel Group and such petition shall not be
dismissed within sixty (60) days; or

                                       28

<PAGE>

     (d) If Spiegel Group shall default in the performance of or compliance with
any term or violates any of the material covenants, representations, warranties
or agreements contained in this Agreement and Spiegel Group shall not have
remedied such default within thirty (30) days after written notice thereof shall
have been received by Spiegel Group from Bank; or

     (e) If at anytime the type of Goods and/or Services sold by all Businesses
of Spiegel Group materially changes from the type of Goods and/or Services sold
by Spiegel Group on the date of execution of this Agreement; or

     (f) If while Spiegel Group remains in bankruptcy, Bank's funding for the
Plan is terminated (other than as a result of a default by Bank under the terms
of such funding facility) and Bank is unable to obtain funding on substantially
similar terms and Bank has provided Spiegel Group with at least ninety (90) days
prior written notice of such termination; or

     (g) If Spiegel Group does not obtain permanent DIP financing on or before
July 31, 2003; or

     (h) If Spiegel Group does not obtain approval of this Agreement from the
United States Bankruptcy Court for the Southern District of New York on or
before July 31, 2003.

     9.3 Termination with Cause by Spiegel Group; Spiegel Group Termination
Events. Any of the following conditions or events shall constitute a "Spiegel
Group Termination Event" hereunder, and Spiegel Group may terminate this
Agreement immediately without further action by delivering written notice to
Bank setting for the reason for termination and the effective date of
termination if such Spiegel Group Termination Event occurs:

     (a) If Bank shall: (i) generally not be paying its debts as they become
due; (ii) file or consent by answer or otherwise to the filing against it, of a
petition for relief, reorganization or arrangement or any other petition in
bankruptcy, for liquidation or to take advantage of any bankruptcy or insolvency
law of any jurisdiction; (iii) make an assignment for the benefit of its
creditors; (iv) consent to the appointment of a custodian, receiver, trustee or
other officer with similar powers for itself or of any substantial part of its
property; (v) be adjudicated insolvent or be liquidated; or (vi) take corporate
action for the purpose of any of the foregoing and such event shall materially
adversely affect the ability of Bank to perform under this Agreement or the
operation of the Plan and such event shall materially adversely affect the
ability of Bank to perform under this Agreement or the Plan; or (vii) have a
materially adverse change in its financial condition, including, but not limited
to being downgraded by a rating agency to a rating below an investment grade
rating; or (viii) receive an adverse opinion by its auditors or accountants as
to its viability as a going concern; or (ix) breach or fail to perform or
observe any covenant or other term contained in any creditor loan agreement,
debt instrument or any other material agreement to which it is bound, and shall
not have remedied such breach or failure within any applicable cure period; or

                                       29

<PAGE>

     (b) If a court or government authority of competent jurisdiction shall
enter an order appointing, without consent by Bank, a custodian, receiver,
trustee or other officer with similar powers with respect to it or with respect
to any substantial part of its property, or if an order for relief shall be
entered in any case or proceeding for liquidation or reorganization or otherwise
to take advantage of any bankruptcy or insolvency law of any jurisdiction, or
ordering the dissolution, winding up or liquidation of Bank, or if any petition
for any such relief shall be filed against Bank and such petition shall not be
dismissed within sixty (60) days; or

     (c) If Bank shall default in the performance of or compliance with any term
(other than the Service Standards) or violates any of the material covenants,
representations, warranties or agreements contained in this Agreement and Bank
shall not have remedied such default within thirty (30) days (ten (10) days in
the case of failure to pay Spiegel Group pursuant to Section 3.6(a)) after
written notice thereof shall have been received by Bank from Spiegel Group; or

     (d) If Bank fails for three (3) consecutive months to perform any one of
the same Service Standards in a Service Factor Category, as set forth in
Schedule 2.1, and such failure is not the result of an act of Spiegel Group,
Spiegel Group's Stores, or as a result of a force majeure event specified in
Section 10.11, and Bank fails to remedy such failure within thirty (30) days
after receipt of written notice from Spiegel Group.

     9.4 Termination of Particular State. In addition, Bank may terminate the
operation of the Plan in a particular state or jurisdiction if the Applicable
Law of the state or jurisdiction is amended or interpreted in such a manner so
as to render all or any part of the Plan illegal or unenforceable, and in such
event Bank will provide as much advance notice as possible of such proposed
amendment or such interpretation and, if requested, assist Spiegel Group with
finding a new credit provider for such state or jurisdiction.

     9.5 Purchase of Accounts. Upon the termination of this Agreement by either
party, Spiegel Group or its designee shall purchase from Bank all unpaid and
outstanding Accounts, excluding Accounts that are 181 or more days contractually
past due (in the case of termination in a particular state, for the purposes of
this Section 9.5, the term "Accounts" shall refer to Accounts belonging to
Cardholders with billing addresses in such state) and the listing of names and
addresses of such Cardholders at a purchase price to be determined by Bank which
shall be equal to the book value of such Accounts and the receivables related
thereto, including without limitation all accrued finance charges and fees,
whether or not billed or posted to the Accounts. Provided, however, that (i) in
the event of termination of the Agreement by Spiegel Group for a Spiegel Group
Termination Event, or (ii) if at the time of termination Spiegel Group has not
emerged from its pending bankruptcy proceeding; or (iii) if this Agreement is
terminated pursuant to Section 10.11; or (iv) termination of the Plan in a
particular state by Bank (in the case of termination in a particular state, for
the purposes of this Section 9.5, the term "Accounts" shall refer to Accounts
belonging to Cardholders with

                                       30

<PAGE>

billing addresses in such state), Spiegel Group shall not be required, but may
elect to do so with prior written notice to Bank, to purchase the Accounts as
set forth above unless Spiegel Group shall establish (itself or through an
Affiliate or third party) another private label or co-branded private label
credit card program for its Businesses within 24 months after the termination
date of this Agreement. Bank agrees that upon receipt of notice of termination
from Spiegel Group, Bank will not from the date of receipt of such notice until
the termination date, unless required by Applicable Law or safety and soundness
considerations, make any material changes in Bank's collections or new Accounts
underwriting procedures.

          In the case of either termination of the Agreement or termination of
the Plan in a particular state and upon payment of the purchase price to Bank,
Bank shall assign to Spiegel Group or its designee, without recourse, all of its
right, title and interest in and to the Accounts and receivables related thereto
being transferred and will deliver all related documentation.

                            SECTION 10. MISCELLANEOUS

     10.1 Entire Agreement. This Agreement constitutes the entire Agreement and
supersedes all prior agreements and understandings, whether oral or written,
among the parties hereto with respect to the subject matter hereof and merges
all prior discussions between them.

     10.2 Coordination of Public Statements. Bank's parent company, Alliance
Data Systems Corporation, as a public company, will issue a news release
disclosing this Agreement between Spiegel Group and Bank, such news release must
be approved by both parties prior to its issuance. In all other cases, except as
required by Applicable Law, neither party will make any public announcement of
the Plan or provide any information concerning the Plan to any representative of
any news, trade or other media without the prior approval of the other party,
which approval will not be unreasonably withheld. Neither party will respond to
any inquiry from any public or governmental authority, except as required by
law, concerning the Plan without prior consultation and coordination with the
other party. Upon Bank's reasonable request from time to time, Spiegel Group
shall provide references or participate in marketing campaigns or testimonial
initiatives for Bank regarding the services provided by Bank in connection with
the Plan.

     10.3 Amendment. Except as otherwise provided for in this Agreement, the
provisions herein may be modified only upon the mutual agreement of the parties,
however, no such modification shall be effective until reduced to writing and
executed by both parties.

     10.4 Successors and Assigns. This Agreement and all obligations and rights
arising hereunder shall be binding upon and inure to the benefit of the parties
hereto and their respective successors, transferees and assigns. In the event
Spiegel Group sells or otherwise transfers its ownership interests in or
transfers all or substantially all of the assets of or relating to any Business
to any other entity, Spiegel Group shall require that

                                       31

<PAGE>

the party acquiring such ownership interests or assets will be bound by this
Agreement, except that upon 90 days advance prior written notice to Bank
whenever possible, but not less than 60 days advance prior written notice, there
shall be no obligation for the Spiegel Group to continue to honor any former
Spiegel Group Affiliate's credit card that is issued and serviced by the Bank,
(i.e. no more "cross-shopping").

     10.5 Waiver. No waiver of the provisions hereto shall be effective unless
in writing and signed by the party to be charged with such waiver. No waiver
shall be deemed to be a continuing waiver in respect of any subsequent breach or
default either of similar or different nature unless expressly so stated in
writing. No failure or delay on the part of either party in exercising any power
or right under this Agreement shall be deemed to be a waiver, nor does any
single or partial exercise of any power or right preclude any other or further
exercise, or the exercise of any other power or right.

     10.6 Severability. If any of the provisions or parts of the Agreement are
determined to be illegal, invalid or unenforceable in any respect under any
applicable statute or rule of law, such provisions or parts shall be deemed
omitted without affecting any other provisions or parts of the Agreement which
shall remain in full force and effect, unless the declaration of the illegality,
invalidity or unenforceability of such provision or provisions substantially
frustrates the continued performance by, or entitlement to benefits of, either
party, in which case this Agreement may be terminated by the affected party,
without penalty.

     10.7 Notices. All communications and notices pursuant hereto to either
party shall be in writing and addressed or delivered to it at its address shown
below, or at such other address as may be designated by it by notice to the
other party, and shall be deemed given when delivered by hand, or two (2)
Business Days after being mailed (with postage prepaid) or when received by
receipted courier service:

                                       32
<PAGE>

If to Bank:                             If to Spiegel Group:
800 TechCenter Drive                    Eddie Bauer, Inc.
Gahanna, OH 43230                       15010 N. E. 36th Street
Attn.: Daniel T. Groomes, President     Redmond, WA 98052
                                        Attn: Vice President Marketing

With a Copy to:
Karen Morauski, VP & Counsel

                                        With Copies to:
                                        Spiegel, Inc.
                                        3500 Lacey Road
                                        Downers Grove, IL 50515-5432
                                        Attn: Chief Financial Officer
                                              And Copy to: __________
                                              Attn: General Counsel

     10.8 Captions and Cross-References. The table of contents and various
captions in this Agreement are included for convenience only and shall not
affect the meaning or interpretation of any provision of this Agreement.
References in this Agreement to any Section are to such Section of this
Agreement.

     10.9 GOVERNING LAW. THIS AGREEMENT SHALL BE A CONTRACT MADE UNDER AND
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF OHIO, REGARDLESS OF THE DICTATES
OF OHIO CONFLICTS OF LAW, AND THE PARTIES HEREBY SUBMIT TO EXCLUSIVE
JURISDICTION AND VENUE IN THE UNITED STATES FEDERAL DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF OHIO OR ANY OF THE STATE COURTS LOCATED IN FRANKLIN COUNTY,
OHIO.

     10.10 Counterparts. This Agreement may be signed in one or more
counterparts, all of which shall be taken together as one agreement.

     10.11 Force Majeure. Neither party will be responsible for any failure or
delay in performance of its obligations under this Agreement because of
circumstances beyond its reasonable control, and not due to the fault or
negligence of such party, including, but not limited to, acts of God, flood,
criminal acts, fire, riot, computer viruses or hackers where such party has
utilized commercially reasonable means to prevent the same, accident, strikes or
work stoppage, embargo, sabotage, inability to obtain material, equipment or
phone lines, government action (including any laws, ordinances, regulations or
the like which restrict or prohibit the providing of the services contemplated
by this Agreement), and other causes whether or not of the same class or kind as
specifically named above. In the event a party is unable to perform
substantially for any of the reasons described in this Section, it will notify
the other party promptly of its inability so to perform, and if the inability
continues for at least one-hundred eighty (180) consecutive days (thirty (30)
days in the cases of credit authorizations and processing of new Accounts), the
party so notified may then terminate this Agreement forthwith. This

                                       33

<PAGE>

provision shall not, however, release the party unable to perform from using its
best efforts to avoid or remove such circumstance and such party unable to
perform shall continue performance hereunder with the utmost dispatch whenever
such causes are removed.

     10.12 Relationship of Parties. This Agreement does not constitute the
parties as partners or joint venturers and neither party will so represent
itself.

     10.13 Survival. No termination of this Agreement shall in any way affect or
impair the powers, obligations, duties, rights, indemnities, liabilities,
covenants or warranties and/or representations of the parties with respect to
times and/or events occurring prior to such termination. No powers, obligations,
duties, rights, indemnities, liabilities, covenants or warranties and/or
representations of the parties with respect to times and/or events occurring
after termination shall survive termination except for the following Sections:
Section 2.10, Section 3.3, Section 3.5, Section 3.6, Section 3.8, Section 3.9,
Section 3.10, Section 8, Section 9.5, Section 10.7, Section 10.9, Section 10.11,
Section 10.17, Section 10.18 and Section 11.

     10.14 Mutual Drafting. This Agreement is the joint product of Spiegel Group
and Bank and each provision hereof has been subject to mutual consultation,
negotiation and agreement of Spiegel Group and Bank; therefore to the extent any
language in this Agreement is determined to be ambiguous, it shall not be
construed for or against any party based on the fact that either party
controlled the drafting of the document.

     10.15 Independent Contractor. The parties hereby declare and agree that
Bank is engaged in an independent business, and shall perform its obligations
under this Agreement as an independent contractor; that any of Bank's personnel
performing the services hereunder are agents, employees, Affiliates, or
subcontractors of Bank and are not agents, employees, Affiliates, or
subcontractors of Spiegel Group; that Bank has and hereby retains the right to
exercise full control of and supervision over the performance of Bank's
obligations hereunder and full control over the employment, direction,
compensation and discharge of any and all of the Bank's agents, employees,
Affiliates, or subcontractors, including compliance with workers' compensation,
unemployment, disability insurance, social security, withholding and all other
federal, state and local laws, rules and regulations governing such matters;
that Bank shall be responsible for Bank's own acts and those of Bank's agents,
employees, Affiliates, and subcontractors; and that except as expressly set
forth in this Agreement, Bank does not undertake by this Agreement or otherwise
to perform any obligation of Spiegel Group, whether regulatory or contractual,
or to assume any responsibility for Spiegel Group's business or operations.

     10.16 No Third Party Beneficiaries. The provisions of this Agreement are
for the benefit of the parties hereto and not for any other person or entity.

     10.17 Confidentiality. (a) Neither party shall disclose any information not
of a public nature concerning the business or properties of the other party
which it learns as a result of negotiating or implementing this Agreement,
including, without limitation, the

                                       34

<PAGE>

terms and conditions of this Agreement, Customer names, Cardholder personal or
Account information, sales volumes, test results, and results of marketing
programs, Plan reports generated by Bank, trade secrets, business and financial
information, source codes, business methods, procedures, know-how and other
information of every kind that relates to the business of either party except to
the extent disclosure is required by applicable law, is necessary for the
performance of the disclosing party's obligation under this Agreement, or is
agreed to in writing by the other party; provided that: (i) prior to disclosing
any confidential information to any third party, the party making the disclosure
shall give notice to the other party of the nature of such disclosure and of the
fact that such disclosure will be made; and (ii) prior to filing a copy of this
Agreement with any governmental authority or agency, the filing party will
consult with the other party with respect to such filing and shall redact such
portions of this Agreement which the other party requests be Redacted, unless,
in the filing party's reasonable judgment based on the advice of its counsel
(which advice shall have been discussed with counsel to the other party), the
filing party concludes that such request is inconsistent with the filing party's
obligations under applicable laws. Neither party shall acquire any property or
other right, claim or interest, including any patent right or copyright
interest, in any of the systems, procedures, processes, equipment, computer
programs and/or information of the other by virtue of this Agreement. Neither
party shall use the other party's name for advertising or promotional purposes
without such other party's written consent.

     (b) The obligations of this Section, shall not apply to any information,
other than consumer personal information:

          (i)  which is generally known to the trade or to the public at the
               time of such disclosure; or

          (ii) which becomes generally known to the trade or the public
               subsequent to the time of such disclosure; provided, however,
               that such general knowledge is not the result of a disclosure in
               violation of this Section; or

          (iii) which is obtained by a party from a source other than the other
               party, without breach of this Agreement or any other obligation
               of confidentiality or secrecy owed to such other party or any
               other person or organization; or

          (iv) which is independently conceived and developed by the disclosing
               party and proven by the disclosing party through tangible
               evidence not to have been developed as a result of a disclosure
               of information to the disclosing party, or any other person or
               organization which has entered into a confidential arrangement
               with the non-disclosing party.

     (c) If any disclosure is made pursuant to the provisions of this Section,
to any Affiliate or third party, the disclosing party shall be responsible for
ensuring that such Affiliate or third party keeps all such information in
confidence and that any third party

                                       35

<PAGE>

executes a confidentiality agreement provided by the non-disclosing party. Each
party covenants that at all times it shall have in place practices and
procedures designed to assure that each of its employees who is given access to
the other party's confidential information shall protect the privacy of such
information. Each party acknowledges that any breach of the confidentiality
provisions of this Agreement by it will result in irreparable damage to the
other party and therefore in addition to any other remedy that may be afforded
by law any breach or threatened breach of the confidentiality provisions of this
Agreement may be prohibited by restraining order, injunction or other equitable
remedies of any court. The provisions of this Section will survive termination
or expiration of this Agreement.

     (d) Bank acknowledges that it is aware, and agrees that it will advise any
persons with access to or who receive material, non-public information
concerning Spiegel and any of its subsidiaries and/or affiliates and the matters
that are the subject of this Agreement, including, without limitation, Spiegel
Group confidential information, sales forecasts, store closings, etc., that
applicable securities laws prohibit any entity or person from purchasing or
selling securities of Spiegel on the basis of such material, non-public
information. In addition, applicable federal and state securities laws restrict
such persons from communicating such material, non-public information to any
other person under circumstances in which it is reasonably foreseeable that such
entity or person is likely to purchase or sell securities of Spiegel based upon
that information, and/or otherwise prohibit such persons from violating
applicable securities laws.

     10.18 Taxes. Spiegel Group will be responsible for, and agrees to pay, all
sales, use, excise, and value-added taxes, or taxes of a similar nature
(excluding franchise taxes, personal property taxes and taxes based on Bank's
income or those assessed on the net worth of Bank, which shall be borne by
Bank), imposed by the United States, any state or local government, or other
taxing authority, on all goods and/or services provided by Bank under this
Agreement. The parties agree to cooperate with each other to minimize any
applicable sales, use, or similar tax and, in connection therewith, the parties
shall provide each other with any relevant tax information as reasonably
requested (including without limitation, resale or exemption certificates,
multi-state exemption certificates, information concerning the use of assets,
materials and notices of assessments). All amounts set forth in this Agreement
are expressed and shall be paid in lawful U.S. dollars.

                         SECTION 11. CONTINGENT HOLDBACK

     11.1 Holdback. Bank will withhold from the Net Proceeds paid to Spiegel
Group an amount initially equal to twenty percent (20%) of the Net Sales, but
subject to adjustment by Bank as set forth below (such withheld amounts being
referred to as the "Holdback"). The Holdback shall not be held by Bank in a
separate account.

     11.2 Monthly Reconciliation. (a) Bank shall on a monthly basis, within ten
(10) Business Days after the end of each month, compare the actual amount of the
Holdback at month end to an amount equal to twenty percent (20%) of the
Principal Accounts Receivable Balance at month end (such 20% amount being
referred to herein

                                       36

<PAGE>

as the "Reconciliation Amount"). If the actual amount of the Holdback plus any
amount charged to the Holdback by Bank in accordance with subsection 11.4 is
greater than the Reconciliation Amount, then Bank will pay such excess amount to
Spiegel Group within three (3) Business Days. If the actual amount of the
Holdback plus any amount charged to the Holdback by Bank in accordance with
subsection 11.4 is less than the Reconciliation Amount, then Bank shall have the
right to offset the amount of the deficit against the Net Proceeds until such
deficit is obtained by Bank.

     (b) Provided, however, that if (i) the Trigger Event in subsection
11.4(a)(i) has occurred; or (ii) the Trigger Event in subsection 11.4(a)(ii) has
occurred and was not caused solely as a result of Bank's default under the terms
of such funding facility (but not including Bank's inability to secure funding
at the end of the term of its initial Plan funding if Spiegel Group has not
emerged from its pending bankruptcy); or (iii) the Trigger Event in subsection
11.4(a)(iii) has occurred, then Bank shall, for purposes of future monthly
comparisons pursuant to subsection 11.2(a) above freeze the Reconciliation
Amount at the dollar amount equal to twenty percent (20%) of the Principal
Accounts Receivable Balance on the month end date preceding the date on which
the condition was met. In the event the Trigger Event causing such freeze is
pursuant to subsection 11.4(a)(iii), then Bank will freeze the Reconciliation
Amount for a period of eighteen (18) months after the date such Trigger Event
occurred, and thereafter will resume utilizing the Reconciliation Amount
determined pursuant to subsection 11.2(a)

     (c) In addition Bank will adjust the amount of the Holdback to account for
receivables generated from Debt Cancellation Products and Enhancement Marketing
Services, by reducing the Principal Accounts Receivable Balance by a percentage
equal to the total charges for Debt Cancellation Products and Enhancement
Marketing Services divided by the total Net Sales for the month being reviewed.

     11.3 Retention of Holdback. Subject to Bank's right to charge against the
Holdback as set forth herein, the Holdback shall be held by Bank during the Term
of this Agreement and thereafter until (i) all of the outstanding receivables of
the Accounts have been fully paid, in which case Bank shall pay to Spiegel Group
any then remaining Holdback; or (ii) Spiegel Group or its designee purchases the
Accounts from Bank pursuant to Section 9.5, in which case Bank shall offset the
then current amount of the Holdback against the purchase price due from Spiegel
Group to Bank; or (iii) the condition for partial release under Sections 11.5 is
met in which case Bank shall pay to Spiegel Group a portion of the Holdback as
set forth in such Section 11.5; or (iv) the conditions for release under either
of Sections 11.6 or 11.7 are met in which case Bank shall transfer to Spiegel
Group any then remaining Holdback.

     11.4 Bank's Rights to Charge Against the Holdback. (a) Bank shall have the
right at any time, on a monthly basis, to charge against the Holdback if any one
of the following "Trigger Events" has occurred, and in such event, Bank shall be
entitled to charge amounts to reimburse Bank for Bank's monthly gross principal
balance write-offs for Accounts that exceed 9% of the average principal accounts
receivable for the Accounts, and for Bank's operating costs equal to $1.00 per
statement generated by

                                       37

<PAGE>

Bank; provided, however, that if the Trigger Event shall be due to subsection
(iii)(1) below Bank's operating costs shall be limited to statements generated
in states exited by Spiegel Group; and if the Trigger Event shall be solely due
to subsections (iii)(2) or (iii)(3) below Bank shall not be entitled to charge
any of Bank's operating costs of $1.00 per statement.

           Each of the following is referred to as a "Trigger Event":

     (i)  If any Business ceases its business operations; or

     (ii) Bank's Plan funding terminates prior to Spiegel Group's emergence from
          bankruptcy and Bank is unable to obtain equivalent funding (in such
          case Bank would provide Spiegel Group with ninety (90) days' advance
          written notice of such event); or

     (iii) The operations of the Businesses, at the end of each Plan Year, are
          significantly changed from the operations in place at the end of the
          twelfth (12th) month after the Plan Commencement Date such that:

          1)   More than twenty percent (20%) of the retail markets are exited;
               or

          2)   More than twenty percent (20%) of Spiegel Group's Stores are
               closed; or

          3)   The quantity of pages circulated to existing Cardholders and to
               preapproved potential Cardholders is reduced by twenty percent
               (20%) or more; or

     (iv) If the Agreement is terminated at anytime while Spiegel Group's
          bankruptcy proceeding is pending, unless such termination is for a
          Spiegel Group Termination Event.

     (b) Provided, however, that Bank shall not have the right to charge against
the Holdback if:

(1)  The sole cause of such Trigger Event was the result of Bank's exiting a
     state pursuant to Section 9.4 and the Business was profitable in such state
     prior to such exit by Bank, and the Plan market share (Net Sales divided by
     Spiegel Group's total sales from all funding sources) was equal to or
     greater than 20% prior to such exit by Bank; or

(2)  If Bank's Plan funding terminates prior to Spiegel Group's emergence from
     bankruptcy as a result of Bank's default under the terms of such funding
     facility, but not including Bank's inability to secure funding at the end
     of the term of its initial Plan funding if Spiegel Group has not emerged
     from its pending bankruptcy; or

                                       38

<PAGE>

(3)  In the case of the Trigger Event under subsection 11.4(a)(iii)(1) above, if
     the sole cause of such triggering event was Bank's change in its new
     Account underwriting FICO score requirement by twenty points or more and
     the Business was profitable prior to such change by Bank and the Plan
     market share (Net Sales divided by Spiegel Group's total sales from all
     funding sources) was equal to or greater than 20% prior to such exit by
     Bank.

Bank shall not charge against the Holdback except as otherwise expressly
permitted in this Agreement.

     11.5 Reduction in Holdback. Notwithstanding the provisions of Section
11.2(b), upon Spiegel Group's emergence from bankruptcy, Bank will reduce the
future amounts withheld by Bank from Net Sales, pursuant to subsection 11.1
above to ten percent (10%) of the Net Sales and will reduce the twenty percent
(20%) monthly reconciliation amount in subsection 11.2 to ten percent (10%) of
the Principal Accounts Receivable Balance.

     11.6 Release and Termination of Holdback After Bankruptcy Emergence.
Commencing when Spiegel Group emerges from bankruptcy, upon receipt of the first
annual audited financial statements thereafter and each year thereafter, Bank
will review Spiegel's financial condition and when the following conditions have
been met with respect to Spiegel, Bank will pay to Spiegel Group the amount of
any remaining Holdback and will discontinue withholding any future Holdback
pursuant to subsection 11.1 above when Spiegel has obtained all of the
following:

(i)  An Interest Coverage (earnings before interest and taxes divided by
     interest charges) equal to or greater than 1.5; and

(ii) Net Equity (total tangible assets less total liabilities) equal to or
     greater than $200,000,000; and

(iii) Earnings before taxes, depreciation, amortization and non-recurring
     charges (in accordance with GAAP) equal to three percent (3%) or greater of
     net sales.

     11.7 Release and Termination of Holdback After Sale. (a) In the event Eddie
Bauer or substantially all of its assets are sold by Spiegel and the acquired or
successor entity is not in bankruptcy and is part of an operating group of the
acquirer, then when the following conditions have been met, Bank will pay to
such entity the amount of any remaining Holdback and will discontinue
withholding any future Holdback pursuant to subsection 11.1 above:

(i)  The acquirer's Interest Coverage (earnings before interest and taxes
     divided by interest charges) is equal to or greater than 1.5 times, as
     shown on its most recently audited financial statements; and

                                       39

<PAGE>

(ii) The successor or new entity's Net Equity (total tangible assets less total
     liabilities) is equal to or greater than 16.7% of the total of the
     acquirer's net sales before the acquisition, as shown on its most recently
     audited financial statements; and

(iii) The acquirer's Earnings before taxes, depreciation, amortization and
     non-recurring charges (in accordance with GAAP) is equal to three percent
     (3%) or greater of revenue, as shown on its most recently audited financial
     statements.

     (b) In the event Eddie Bauer or substantially all of its assets are sold by
Spiegel and the successor entity is not in bankruptcy and is a separate stand
alone entity (and not part of an operating group), then commencing one year
after such transfer and annually thereafter, Bank will review such new entity's
financial condition as shown on its most recently audited financial statements
and when the following conditions have been met with respect to such entity,
Bank will pay to such entity the amount of any remaining Holdback and will
discontinue withholding any future Holdback pursuant to subsection (a) above:

(i)  An Interest Coverage (Earnings before interest and taxes divided by
     interest charges) equal to or greater than 1.5 times; and

(ii) Net Equity for the new entity is equal to or greater than an amount
     calculated by multiplying $200,000,000 times a percentage determined by
     dividing the acquired entity's total net sales for the 12 months prior to
     the acquisition by Spiegel's total sales for the same 12 months period; and

(iii) The acquirer's earnings before taxes, depreciation, amortization and
     non-recurring charges (in accordance with GAAP) is equal to three percent
     (3%) or greater of net sales.

                                       40

<PAGE>

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement in
manner and form sufficient to bind them as of the date first above written.

SPIEGEL, INC.                           WORLD FINANCIAL NETWORK NATIONAL BANK

By:                                     By:
    ---------------------------------       ------------------------------------
Title:                                  Title:
       ------------------------------          ---------------------------------
Date:                                   Date:
      -------------------------------         ----------------------------------

EDDIE BAUER, INC.

By:
    ---------------------------------
Title:
       ------------------------------
Date:
      -------------------------------

                                       41

<PAGE>

                                   SCHEDULE 1

                           IMPLEMENTATION PHASES PLAN

                        System Implementation Phases Plan

Phase 1

     Scope Overview:

     -    Enable Take-one credit application processing for the 3 merchants.

     -    Support Order Authorization via batch and online for catalog and
          internet.

     -    Support Settlement processing for orders, returns and adjustments.

     -    Ability to issue plastics and customer statements.

     Estimated Completion: May 1, 2003.

Phase 2:

     Scope Overview:

     -    Acceptance of credit applications during Order Entry from customers
          pre-approved via batch.

     -    Prompting during Order Entry to encourage customers preapproved via
          batch to open an account.

     Estimated Completion: May 16, 2003

     -    Full support of accepting credit via Eddie Bauer retail

     Estimated Completion: May 23, 2003

Phase 3:

     Scope Overview:

     -    Support Special Credit Promotions (Delayed Billing / Deferred Billing)

          Estimated Completion: June 30, 2003

Phase 4:

     Scope Overview:

     -    Adding Authorization Code to all settlement transactions.

     -    Maintaining necessary customer information on Marketing system
          pursuant to requirements and specifications to be mutually agreed upon
          by Bank and Spiegel Group.

     -    Supporting Quick Credit via Eddie Bauer retail.

     Estimated Completion: June 30, 2003

     -    Supporting Online Instant Prescreen during Order Entry

     Estimated Completion:July 31, 2003

                                       42

<PAGE>

                                  SCHEDULE 1.1

                                  DISCOUNT RATE

DISCOUNT RATE FOR REGULAR REVOLVING PURCHASES

The Discount Rate will be Redacted% for all Regular Revolving Purchases.

                                       43
<PAGE>

                                  SCHEDULE 2.1

                                SERVICE STANDARDS

<TABLE>
<CAPTION>
SERVICE FACTOR CATEGORY           SERVICE STANDARDS                  NOTES/COMMENTS
-------------------------         -----------------                  --------------
<S>                         <C>                              <C>
TELEPHONE SERVICE FACTOR:

Abandon Rate for New        Redacted% or less.
Accounts, Authorizations,
Customer Service

NEW ACCOUNT SERVICE FACTORS:

Quick Credit and            Redacted% processed within       -    ONLY THOSE THAT DO NOT
Telephone Credit            5 minutes.                            REQUIRE MANUAL
Application Referrals -                                           INTERVENTION OR A SECOND
Response Time                                                     ELECTRONIC RESOURCE SUCH
                                                                  AS METRO MAIL OR A
                                                                  SECOND CREDIT BUREAU

Processing mail-in          Redacted Business Days or
applications including      less.
prescreens

CUSTOMER SERVICE FACTORS:

Response to written         Redacted% within Redacted
Cardholder inquiries        Business Days

                            Redacted% within Redacted
                            Business Days.

ON-LINE PRESCREEN SERVICE FACTOR:

Systemic On-Line            No more than Redacted second     -    EXCLUDING PROCESSING
Prescreen and               response time from receipt by         TIME AT CREDIT BUREAUS
Authorizations response     Bank's host                           AND TRANSPORTATION TIME
time                                                              TO AND FROM CREDIT
                                                                  BUREAUS.

CREDIT CARD ISSUANCE FACTOR:

Credit Cards prepared by    Redacted% within Redacted        -    EXCLUDING MANUAL
Bank and mailed to the      Business Days after the date          REQUESTS
Cardholder                  Bank approves the Account.

                            Redacted% within Redacted
                            Business Days after the date
                            Bank approves the Account.
</TABLE>

ASSUMPTIONS:

-    All Standards are expressed as simple monthly averages and are measured on
     a monthly calendar basis.

                                       44

<PAGE>

-    Telephone Service Factors are reported and tracked based on the servicer's
     department averages.

-    Response time for credit application inquiries means those Applicants which
     Bank has approved or declined. Applicants which Bank is reviewing under
     special circumstances such as a suspected fraudulent application, shall not
     be included in the measurement of the Standard.

                                       45

<PAGE>

                                  SCHEDULE 2.5

                              MARKETING PROMOTIONS

Spiegel Group will promote and advertise the Plan as set forth below:

-Provide Applicant incentives at Spiegel Group's Stores with a minimum incentive
equivalent value equal to Redacted% of the Purchase (ie. Point of sale
incentives to apply, inclusion in the welcome kit, etc.) for at least Redacted%
of the approved Applicants.

-Provide meaningful Applicant incentives for catalog Customers (ie. Point of
sale incentives to apply, inclusion in the welcome kit, etc.) for at least
Redacted% of the approved Applicants.

-Acquire Cardholders via use of all available channels (e.g. retail instant
credit, batch prescreen, call center online prescreen, take-ones)

-Promote credit usage, Cardholder retention and reactivation through special
Cardholder offers (e.g. statement inserts, promotional billing offers,
merchandise offers, credit line increases)

-Train sales associates to offer credit to Customers and promote the use of
credit to Cardholders

-Include credit goals in associate performance plans, as applicable

-Provide motivational tools to sales associates to support the promotion of
credit (e.g. application goals, application results tracking, spiffs, contests,
ribbons, video)

-Ensure immediate call to Bank on all credit application and authorization
referrals

-Hold weekly marketing and operational conference calls

-Hold quarterly marketing and operational review/planning meetings

-Mutually agree on annual marketing plans

-Review status of plans and programs on a regular basis

                                       46

<PAGE>

                                  SCHEDULE 2.8

                         MONTHLY MASTER FILE INFORMATION

                                 Account Number
                              Month Account Opened
                               Year Account Opened
                              Store Account Opened
                                 Cardholder Name
                           Cardholder's Street Address
                                Cardholder's City
                               Cardholder's State
                              Cardholder's Zip Code
                         Cardholder's Home Phone Number
                              Date of Last Purchase
                            Cardholder's Open to Buy
                           Number of Purchases Monthly
                        Amount of Purchases Monthly, YTD
                            Number of Returns Monthly
                            Amount of Returns Monthly
                                  Date of Birth
                                 Items Purchased
                    Credit Utilization Bands, when available
                   Account Origination Channel, when available
                         Cardholder Income, if available
                     Cardholder email address, if available
                            Marketing promotion flag

                                       47

<PAGE>

                                  SCHEDULE 3.13

                                  BANK REPORTS

CATALOG STANDARD REPORTS

<TABLE>
<CAPTION>
FREQUENCY               NAME                            DESCRIPTION
---------               ----                            -----------
<S>         <C>                           <C>
Daily and   OLPS                          On-line prescreen report activity,
Weekly                                    number sent to bureau, number opened.

Weekly      APPROVED FILE / WEEKLY ADDS   Accounts opened in the previous week.
</TABLE>

OTHER STANDARD REPORTS

<TABLE>
<CAPTION>
FREQUENCY               NAME                            DESCRIPTION
---------               ----                            -----------
<S>          <C>                          <C>
Weekly       APPLICATION TRACKING         New account processing: number
                                          submitted, duped, pending, declined,
                                          activated and percentages.

                                          Six sorts available:

                                          1. Region, District, Store - D
                                          Version;

                                          2. Region, District, Store, App Type -
                                          E Version;

                                          3. Division, App Type - F Version;

                                          4. Region, District, Store, Associate
                                          - G Version;

                                          5. Region, District, Store, Associate,
                                          App Type - H Version;

                                          6. Prescreen, list ID, origin - I
                                          Version.

Daily        DAILY DISBURSEMENT           Sales, Returns, Discount and Net
                                          funding released to Spiegel Group.

Monthly      MONTHLY DISBURSEMENT         Sales, Returns, Discount and Net
                                          funding released to Spiegel Group.

Monthly      STATISTICAL SUMMARY          Portfolio statistics.

Quarterly    BEST CUSTOMER QUARTERLY      Quarterly Top 100 highest spend
             REPORT                       Cardholders for each store for the
                                          quarter.

Monthly      MONTHLY EXTRACT FILE         Month end tape containing data
                                          elements for all portfolio
                                          Cardholders. Can be used for direct
                                          mailings.

If           INVENTORY REPORT             Current order and inventory status on
applicable                                collateral.
</TABLE>

                                       48

<PAGE>

<TABLE>
<CAPTION>
FREQUENCY               NAME                            DESCRIPTION
---------               ----                            -----------
<S>          <C>                          <C>
Monthly      ACTIVE ACCOUNT               Reconciles month beginning and month
             RECONCILIATION               ending number of active accounts.

Monthly      KEY MEASURES REPORT          High level executive overview of
                                          program key measures (market share,
                                          average transaction, applications, new
                                          Accounts)

Monthly      BILLING AND ACTIVATION       Monthly summary of Instant Credit and
             TREND REPORT                 Quick Credit by number of
                                          transactions. Rolling twelve-month
                                          history on Accounts opened during a
                                          given month.

Monthly      CROSS AFFILIATION            Provides Net Sales activity by
                                          Cardholder by Spiegel Group Affiliate
                                          brand. Account number, name, address
                                          and total Purchase amount. Timing on
                                          beginning to provide & content for
                                          reports will be agreed to by Bank &
                                          Spiegel Group.

Monthly      THIRD PARTY PROGRAMS         Provides Account number, name, address
Data Feed                                 and total Purchase amount. Timing on
                                          beginning to provide & content for
                                          reports will be agreed to by Bank &
                                          Spiegel Group.
</TABLE>

                                       49

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