Document:

EXHIBIT 10.8

 

 

 

 

 

 

 

AMENDED AND RESTATED PRIVATE LABEL CREDIT CARD PROGRAM AGREEMENT

BETWEEN

WORLD FINANCIAL NETWORK NATIONAL BANK

AND

STAGE STORES, INC. AND SPECIALTY RETAILERS (TX) LP

DATED AS OF MARCH 5, 2004

 

 

 

 

 

 

 

 

 

 

 

 

 

TABLE OF CONTENTS

SECTION 1  DEFINITIONS

 1.1 Certain Definitions 1

 1.2 Other Definitions 8

SECTION 2  THE PLAN

 2.1 Establishment and Operation of the Plan 8

 2.2 Applications for Credit Under the Plan; Billing Statements
10

 2.3 Operating Procedures 11

 2.4 Plan Documents 11

 2.5 Marketing 12

 2.6 Administration of Accounts 14

 2.7 Credit Decision 14

 2.8 Ownership of Accounts and Mailing Lists 15

 2.9 Billing Statement Inserts; Strategic Protection

 Products and Enhancement Marketing Services
16

 2.10 Ownership of Stage Name 18

 2.11 Cardholder Loyalty Program 19

SECTION 3  OPERATION OF THE PLAN

 3.1 Honoring Credit Cards 19

 3.2 Additional Operating Procedures 20

 3.3 Cardholder Disputes Regarding Goods or Services 20

 3.4 No Special Agreements 21

 3.5 Cardholder Disputes Regarding Violations

 of Law or Regulation21

 3.6 Payment to Stage; Ownership of Accounts; Fees; Accounting
21

 3.7 Intentionally Omitted 23

 3.8 Payments 23

 3.9 Chargebacks 23

 3.10 Assignment of Title in Charged Back Purchases 24

 3.11 Promotion of Program and Card Plan; Non-Competition
24

 3.12 Postage 25

 3.13 Reports 25

 3.14 Operating Committee 25

SECTION 4  REPRESENTATIONS AND WARRANTIES OF STAGE

 4.1 Organization, Power and Qualification 25

 4.2 Authorization, Validity and Non-Contravention 26

 4.3 Accuracy of Information 26

 4.4 Validity of Charge Slips 26

 4.5 Compliance with Law 27

 4.6 Stage's Name, Trademarks and Service Marks 27

 4.7 Intellectual Property Rights 27

 4.8 Litigation 27

TABLE OF CONTENTS, Continued

SECTION 5  COVENANTS OF STAGE

 5.1 Notices of Changes 27

 5.2 Financial Statements 28

 5.3 Inspection 28

 5.4 Stage's Business 28

 5.5 Stage's Stores 28

 5.6 Insurance 28

SECTION 6  REPRESENTATIONS AND WARRANTIES OF BANK

 6.1 Organization, Power and Qualification 28

 6.2 Authorization, Validity and Non-Contravention 29

 6.3 Accuracy of Information 29

 6.4 Compliance with Law 29

 6.5 Intellectual Property Rights 29

 6.6 Litigation 30

SECTION 7  COVENANTS OF BANK

 7.1 Notices of Changes 30

 7.2 Financial Statement 30

 7.3 Inspection 30

 7.4 Bank's Business 31

 7.5 Insurance 31

 7.6 Collection 31

 7.7 Change in Control 31

 7.8 Continuation of Operations 32

SECTION 8  INDEMNIFICATION

 8.1 Indemnification Obligations 32

 8.2 Limitation on Liability 32

 8.3 No Warranties 33

 8.4 Notification of Indemnification; Conduct of Defense
33

SECTION 9  TERM AND TERMINATION

 9.1 Term 33

 9.2 Termination by Bank; Bank Termination Events 33

 9.3 Termination by Stage; Stage Termination Events 33

 9.4 Termination of Particular State 36

 9.5 Purchase of Accounts 36

 9.5.1  Termination By Stage at End of Term
36

 9.5.2  Termination By Bank at End of Term
37

 9.5.3  Termination By Bank Due to Stage Breach
37

 9.5.4  Termination By Stage Due to Bank Breach
38

 9.5.5  Termination By Bank in Particular State
39

 9.5.6  Definitions and Calculations
39

TABLE OF CONTENTS, Continued

SECTION 10  MISCELLANEOUS

 10.1 Entire Agreement 40

 10.2 Coordination of Public Statements 40

 10.3 Amendment 40

 10.4 Successors and Assigns 40

 10.5 Waiver 40

 10.6 Severability 40

 10.7 Notices 41

 10.8 Captions and Cross-References 41

 10.9 Governing Law 41

 10.10 Counterparts 41

 10.11 Force Majeure 41

 10.12 Relationship of Parties 42

 10.13 Survival 42

 10.14 Mutual Drafting 42

 10.15 Independent Contractor 42

 10.16 No Third Party Beneficiaries 42

 10.17 Confidentiality 42

 10.18 Taxes 44

 10.19 Business Continuity Plan 44

	Dispute Resolution 44

SECTION 11PEEBLES ACCOUNTS RECONCILIATION

	Peebles Accounts Reconciliation44

 

Schedules

 1.1 Discount Rate
47

 2.1(b) Service Standards 51

 2.5(a) Marketing Promotions 54
2.5(b)(1)Amounts Qualifying for Reimbursement from

Stage Marketing Fund and Peebles Marketing Fund55

 2.5(b)(2) Peebles Marketing Fund Contribution Percentage
56

 2.8 Weekly Master File Information
57

  3.13 Bank Reports 58

 

 

AMENDED AND RESTATED PRIVATE LABEL CREDIT CARD PROGRAM AGREEMENT

 

THIS AMENDED AND RESTATED PRIVATE LABEL CREDIT CARD PROGRAM AGREEMENT is made as of this 5th day of March, 2004 (the "Effective Date"), by and between STAGE STORES, INC., a Nevada corporation ("Stores"), with its principal office at 10201 Main Street, Houston, Texas 77025, SPECIALTY RETAILERS (TX) LP, a Texas limited partnership ("Specialty"), with its principal office at 10201 Main Street, Houston, Texas 77025 (with Stores hereinafter collectively referred to as "Stage"), and WORLD FINANCIAL NETWORK NATIONAL BANK, with its principal office at 800 Tech Center Drive, Gahanna, Ohio 43230 ("Bank").

WITNESSETH:

WHEREAS, Stage and Bank entered into that certain Private Label Credit Card Program Agreement dated May 21, 2003 (the "Program Agreement"), pursuant to which Stage 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 Services from Stage and Stage's Stores and to issue Credit Cards to such individuals under the names of Stage, Bealls and Palais Royal; and

WHEREAS, Bank and Stage now desire to amend and restate the Program Agreement to address those certain existing Peebles accounts and the receivables related thereto owned by Stage (the "Existing Peebles Accounts") to be purchased by Bank pursuant to that certain Credit Card Portfolio Purchase and Sale Agreement entered into among Bank and Stage on January 7, 2004 (the "Peebles Purchase Agreement") and to provide for Bank to issue new Credit Cards and Accounts under the name of Peebles.

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, Stage 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, including without limitation the Peebles Accounts unless otherwise specifically noted herein.

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

"Affiliate" shall mean with respect to Bank, Alliance Data or Stage any entity that is owned by, owns, or is under common control with such party.

"Agreement" shall mean this Amended and Restated Private Label Credit Card Program Agreement and any future amendments or supplements thereto.

"Alliance Data" shall mean Alliance Data Systems Corporation, a Delaware corporation and the parent company of Bank, and its successors and assigns.

"Applicable Law" shall mean any applicable federal, state or local law, rule, or regulation.

"Applicant" shall mean an individual who is a Customer of Stage and Stage's Stores, 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 not by means of a paper application being completed by an Applicant, but rather by keying the Applicant's information into the telephone.

"Average Balance" shall mean the total monthly balances billed by Bank for the prior twelve (12) months divided by the average number of Accounts billed by Bank for the prior twelve (12) months.

"Average Principal-Only Accounts Receivable" shall have the meaning set forth in Section A(2) of Schedule 1.1

"Bank" shall have the meaning given in the introductory paragraph of this Agreement.

"Bank Termination Event" shall have the meaning set forth in Section 9.2.

"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 catalog environment.

"Billing Statement" shall have the meaning set forth in Section 2.2(d).

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

"Cap" shall have the meaning set forth in Section 2.5(b)(2)(vi)

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

"Cardholder Copy" shall have the meaning set forth in Section 3.2(a).

"Change in Control" "shall have the meaning set forth in Section 7.7.

"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.

"Collected Amount" shall have the meaning set forth in Section 2.5(b)(2)(i).

"Collected Finance Charge Yield" shall have the meaning set forth in Section A(2) of Schedule 1.1

"Collected Late Fee Yield" shall have the meaning set forth in Section A(2) of Schedule 1.1

"Collected Portfolio Yield Per Statemented Account" shall mean: (i) the Collected Finance Charge Yield for the prior 12 months, (ii) plus the Collected Late Fee Yield [excluding the late fees included in the calculation of the Peebles Marketing Fund calculation in Section 2.5(b)(2)(i)] for the prior 12 months (iii) minus the Net Write Offs for the prior 12 months, (iv) minus the interest calculated using the Weighted Average Prime Rate multiplied by the Average Principal-Only Accounts Receivable during the prior twelve (12) months, and (v) divided by the average number of Peebles Statemented Accounts per month during the prior twelve (12) months.  

"Conversion Date" shall mean the date on which the Existing Peebles Accounts are converted from Stage's system to Bank's system.

"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 Stage and Stage's Stores.

"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 Stage or Stage's Stores for goodwill or for Services rendered or not rendered by Stage or Stage's Stores to a Cardholder.

"Customer" shall mean any individual consumer who is a customer or potential customer of Stage or Stage's Stores.

"Database" shall have the meaning set forth in Section 2.8(b).

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

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

"Effective Date" shall mean March 5, 2004.

"Electronic Bill Presentment and Payment" shall mean a procedure where Cardholders can elect to receive their Account Billing Statements (as defined in Section 2.2(d)) electronically and that also allows them an opportunity to remit their Account payment to Bank electronically.

"Enhancement Marketing Services" shall have the meaning set forth in Section 2.9(a).

"Exchange Act" shall have the meaning set forth in Section 7.7.

"Existing Peebles Accounts" shall have the meaning set forth in the second recital paragraph above.

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

"Goods and/or Services" shall mean those goods and/or services sold at retail by Stage and/or Stage's Stores 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.

"Insert" shall have the meaning set forth in Section 2.9(a).

"Instant Credit Application" shall mean an in store application procedure designed to open Accounts at point of sale whereby an application for credit is communicated to Bank according to Bank's Operating Procedures.

"Interim Period" shall have the meaning set forth in Section 2.1(b).

"Initial Reissuance" shall mean Bank's initial reissuance of Credit Cards bearing the Peebles tradename after the purchase of the Existing Peebles Accounts, which reissuance shall be at Bank's expense up to a maximum amount of $300,000 (any excess amount shall be paid from the Peebles Marketing Fund and in the event reissuance expenses are less than $300,000, the difference will be contributed to the Peebles Marketing Fund by Bank) and shall include all Existing Peebles Accounts purchased by Bank that are then active or in which a Purchase has been made within the twenty-four (24) month period prior to the Conversion Date, are in good standing, and the Account has utility.  

"Losses" shall have the meaning set forth in Section 8.1(c).

"Marketing Insert" shall have the meaning set forth in Section 2.9(a).

"Marketing Requirements" shall have the meaning set forth in Section 2.9(d).

"Material Change" shall have the meaning set forth in Section 2.7.

"Merchant Copy" shall have the meaning set forth in Section 3.2(b).

"Name Rights" shall have the meaning set forth in Section 2.10.

"Net Write-Offs" shall mean the principal balances written off by Bank related to the Plan, minus any recoveries received by Bank for prior written off balances.

"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 Stage and Stage's Stores for goodwill or for Services rendered or not rendered by Stage or Stage's Stores to a Cardholder, all as shown in the Transaction Records (as corrected by Bank in the event of any computational error), calculated each Business Day; (ii) payments from Cardholders received by Stage and Stage's Stores from Cardholders on Bank's behalf; (iii) any applicable Discount Fees in effect on the date of calculation due to Bank; and (iv) any other fees or charges imposed by Bank pursuant to this Agreement; plus any Discount Fees owed by Bank to Stage.

"Net Profit" shall have the meaning set forth in Section 2.9(g).

"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.

"OCC" shall mean the Office of the Comptroller of the Currency.

"Operating Committee" shall mean that certain committee comprised of three (3) representatives from Stage and three (3) representatives of Bank formed for the purpose of facilitating the Plan and this Agreement.

"Operating Procedures" shall mean Bank's written instructions and procedures including store and corporate as agreed to between Stage and Bank to be followed by Stage and Stage's Stores in connection with the Plan, as may be amended from time to time pursuant to Section 2.3 of this Agreement.

"Peebles Accounts" shall mean those certain Accounts bearing the Peebles tradenames, trademarks, logos and service marks and any successor tradenames, trademarks, logos and service marks, and the Existing Peebles Accounts.

"Peebles Marketing Fund" shall have the meaning set forth in Section 2.5(b)(2)(v).

"Peebles Plan Commencement Date" shall mean March 5, 2004.

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

"Peebles Purchase Agreement" shall have the meaning set forth in the second recital paragraph above.

"Per Unit Increase" shall have the meaning set forth in Section 3.12.

"Per Unit Benchmark Cost" shall have the meaning set forth in Section 3.12(a).

"Per Unit Current Cost" shall have the meaning set forth in Section 3.12(b).

"Plan" shall mean the private label credit card program established and administered by Bank, as of the Plan Commencement Date, for Customers of Stage and Stage's Stores by virtue of this Agreement.

"Plan Commencement Date" shall mean September 12, 2003.

"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.

"Prior Month" shall have the meaning given in the Section 3.12(b).

"Program Agreement" shall have the meaning set forth in the first recital above.

"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.

"Purchase" shall mean a purchase of Goods and/or Services, including without limitation all applicable taxes and shipping costs, with a specific extension of credit by Bank to a Cardholder using an Account as provided for under this Agreement.

"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 Stage's Store associate as specified in the Operating Procedures.  This data will be used by Bank to request a credit bureau report and make a decision whether to approve or decline the Applicant.

"Reconciliation Letter Agreement" shall mean that certain Reconciliation Letter Agreement entered into by and among Stage, Specialty and Bank as of the Effective Date.

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

"Remote Entry Credit Application" shall mean an in-store application procedure designed to open Accounts utilizing a full application.

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

"Specialty" shall have the meaning given in the introductory paragraph of this Agreement.

"Stage" shall have the meaning given in the introductory paragraph of this Agreement.

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

"Stage Marketing Fund" shall have the meaning set forth in Section 2.5(b)(1).

"Stage Portfolio" shall mean those Accounts under the names of Stage, Bealls and Palais Royal and the receivables related thereto purchased by Bank on September 12, 2003, pursuant to the Stage Purchase Agreement.

"Stage Purchase Agreement" shall mean that certain Credit Card Portfolio Purchase and Sale Agreement dated May 21, 2003, by and among Stores, Specialty, Granite National Bank and Stage Receivable Funding LP, as the Sellers, and ADS Alliance Data Systems, Inc., a Delaware corporation, and Bank, as the Buyers, as amended by that certain First Amendment to Credit Card Portfolio Purchase and Sale Agreement dated September 12, 2003.

"Stage Termination Event" shall have the meaning set forth in Section 9.3.

"Stage's Stores" shall mean those certain retail locations selling Goods and/or Services, which are owned and operated by Stage or its Affiliates, licensees or franchisees, if any.

"Statemented Account" shall mean each Account for which a Billing Statement is generated (whether or not actually sent to the Cardholder) within a particular billing cycle.

"Stores" shall have the meaning given in the introductory paragraph of this Agreement.

"Strategic Protection Products" shall have the meaning set forth in Section 2.9(a).

"Target Collected Portfolio Yield Per Account Billed" shall have the meaning as set forth in the Reconciliation Letter Agreement.

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

"Transaction Documents" shall have the meaning defined in the Stage Purchase Agreement and the Peebles Purchase Agreement.

"Transaction Record" shall mean, with respect to each Purchase of Goods or Services by a Cardholder from Stage and/or Stage's Stores, each credit or return applicable to a Purchase of Goods or Services, and each payment received by Stage and Stage'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 Stage'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 Stage or Stage's Store prior to completing the transaction; or (c) electronic record whereby Stage or Stage's Store electronically transmits the information described in subsection (b) hereof to a network provider (selected by Stage at its expense), which in turn transmits such information to Bank by a computer tape/cartridge or electronic tape or transmission.

"Trigger Date" shall have the meaning set forth in Section 7.7.

"Weighted Average Prime Rate" shall have the meaning set forth in Section A(2) of Schedule 1.1

1.2 Other Definitions.  As used herein, terms defined in the introductory paragraph of this Agreement 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 Services purchased from Stage and Stage's Stores.  Subject to Section 3.6(d) and Applicable Law, Bank shall determine the terms and conditions of the Account to be contained in a Credit Card Agreement.

(b) Commencing from the Plan Commencement Date and expiring ninety (90) days after conversion of the Stage Portfolio to Bank's system (the "Interim Period"), Bank shall operate the Plan in accordance with the Historical Stage Service Performance Criteria set forth in Schedule 2.1(b) to this Agreement.    After the Interim Period, Bank shall service the Accounts in a manner consistent with the Service Standards set forth in Schedule 2.1(b) to this Agreement.

(c) Effective after the expiration of the Interim Period, Bank and Stage shall receive service points based on Bank satisfying, or failing to satisfy, the Service Standards Performance Criteria during any calendar month, which Service Standards Performance Criteria are set forth in Schedule 2.1(b) to this Agreement.  During each calendar month, Bank shall receive a service point for a Service Standard if Bank exceeds the Service Standard Performance Criteria, and Stage shall receive a service point for a Service Standard if Bank fails to meet the Service Standard Performance Criteria; provided, that Bank shall not have the right to receive any service points during August and December.  In the event that Bank is acquired by or merges with a non-Affiliate, the service points to be received by Stage shall be doubled for a period of three (3)
 months following the consummation of the acquisition or merger.

(d) For each calendar month, Bank shall track its performance against the Service Standards Performance Criteria and the service points received by Stage or Bank, and Bank shall provide Stage with a report showing Bank's performance against the Service Standards Performance Criteria and the service points received by Stage or Bank for the applicable calendar month within fifteen (15) days after the end of each calendar month, together with any and all information necessary or reasonably requested by Stage to support Bank's performance against the Service Standards Performance Criteria and calculation of the service points.  Stage shall have the right to review with Bank all records and information as deemed reasonably necessary related to the tracking of Bank's performance against the Service Standards Performance Criteria and the calculation of service points.

(e) In the event the service points received by Stage are greater than the service points received by Bank in a calendar month, Stage shall, within fifteen (15) days of receiving the report from Bank under Section 2.1(d), notify Bank of its election to either: (i) declare Bank in breach of the Service Standards Performance Criteria for the applicable calendar month and apply the breach towards satisfying the termination conditions described in Section 9.3(d); or (ii) require Bank to increase the Stage Marketing Fund for the Plan Year of the applicable calendar month by an amount equal to $10,000.00 multiplied by the number of service points received by Stage in excess of the service points received by Bank for the applicable calendar month, which funds shall be immediately available to Stage in accordance with Section 2.5(b).  In the event the service points received by Stage are less than the service points received by Bank in a calendar month, Bank may carry over such excess service points to the calendar month immediately following the applicable calendar month; provided, that Bank shall not have the right to accumulate, consolidate or otherwise aggregate any such excess service points during consecutive months for carry over purposes.

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.  If the Applicant submits the application at a Stage's Store, Stage or Stage's Stores shall provide a copy of the Credit Card Agreement to the Applicant.  The application shall be submitted to Bank by the Applicant or submitted by Stage or Stage's Stores on behalf of the Applicant, as required in the Operating Procedures.  Applicants qualifying under the underwriting criteria shall be granted an Account by Bank.  If Bank grants the request for an 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 Stage, and Stage shall utilize (i) either Quick Credit or Remote Entry Credit Application procedures primarily, (ii) Automated Telephone Application procedures as secondary, and (iii) Instant Credit application procedures as tertiary.

(c) Stage agrees that it and Stage'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 Stage Internet application procedures and Charge Slip processing.  In the event Stage chooses to utilize this functionality, Stage shall be responsible for integrating and maintaining on its website, at its sole expense, a link to the Bank's Internet application processing website. Stage represents and warrants to integrate and maintain the link, to ensure access to the Internet application processing website, to reduce technical errors, and to ensure its software providing the link will function and will continue to function in a sound technical manner.  Stage 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, Stage will either update or modify the link as directed by Bank.  In providing the link, Stage shall make it clear and conspicuous that the Customer is leaving Stage's website and is being directed to Bank's website for the exclusive purpose of accessing Bank's Internet application processing website.  Stage 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, which link shall not unreasonably interfere with the display or presentation of Stage's website, 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, Stage 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.  If Stage does not use an Address Verification Service for Internet Applicants and Purchases, then Bank may impose a different Discount Rate for Internet Net Sales or other fees for Internet applications, provided that Bank shall notify Stage in advance from time to time of the amount of such Discount Rate or other fee, in writing, and Stage may elect not to utilize Internet application and/or Charge Slip processing.  Stage will promote (through methods to be determined by Stage) to its Customers the Bank's Electronic Bill Presentment and Payment.

  2.3 Operating Procedures.  Stage and Stage's Stores shall observe and comply with the Operating Procedures and such other reasonable procedures as Bank may prescribe on not less than sixty (60) days' prior written notice to Stage or otherwise required by Applicable Law; provided, that in the event the terms of this Agreement and the Operating Procedures shall conflict, the terms of this Agreement shall govern and control any such conflict.  Stage shall ensure that Stage's Stores employees are trained regarding the Operating Procedures and shall ensure their compliance with them.  The Operating Procedures may be amended or modified by Bank from time to time in its reasonable discretion; provided, however, that unless such changes are required by Applicable Law, a copy of any such amendment or modification shall be provided to Stage in writing at least sixty (60) 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 Stage's review, the Credit Card Agreement, Account application, Credit Card, Credit 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 Stage's tradenames, trademarks, servicemarks or logos appear on Account applications, Credit Card mailers, Credit Cards, Billing Statements, letters, and other documents and forms (collectively, "Forms") is a matter to be determined in accordance with this Agreement and Applicable Law.  Bank shall provide at Bank's expense appropriate quantities of the Credit Card Agreements, Account applications, Credit Cards, Credit Card mailers, Billing Statements and Cardholder letters.  Stage shall pay the costs of all Credit Cards, including embossing and encoding, Credit Card carriers, envelopes, Credit Card Agreements and postage related to any reissuances requested by Stage for any reissuance of Credit Cards to Cardholders (other than (i) replacements made by Bank from time to time at a Cardholder's request on an individual basis, and (ii) the Initial Reissuance).  The cost for Credit Card issuance to individual Cardholders who qualify for upgraded Credit Cards (i.e., bronze, silver, gold or otherwise) as a result of Stage's loyalty program may be funded through the Stage Marketing Fund or the Peebles Marketing Fund, as applicable.  In the event any Forms become obsolete as a result of changes requested by Stage, Stage shall reimburse Bank for the costs associated with any unused obsolete Forms.  In the event any Forms become obsolete as a result of changes in Applicable Law or made by Bank, Bank shall be obligated for the costs associated with any unused obsolete Forms.  Four (4) separate designs shall be used for each form (Stage, Bealls, Palais Royal and Peebles) and up to 27 marketing graphics shall be supported by Bank without additional cost.  Bank shall use its commercially reasonable best efforts to complete the Initial Reissuance within sixty (60) days after the Conversion Date; provided, that Bank shall not be in breach of its obligations hereunder in the event the Initial Reissuance is not completed by such date.  

2.5 Marketing.

(a) Stage agrees to advertise and actively promote the Plan wherever Customers can purchase Goods and Services, including, without limitation, across the range of marketing promotions set forth in Schedule 2.5(a) to this Agreement.  Once Stage and Bank agree upon standards for the use of Bank's name or any trademark, service mark or trade name of Bank or Stage's Name Rights (as defined in Section 2.10), neither party will deviate from such standards without the express prior written approval of the other party or as provided for in Section 2.10.

(b) (1) With respect to all Accounts other than Peebles Accounts, Bank shall provide up to $2,500,000 to reimburse Stage for any marketing and promotion expenses incurred by Stage in connection with promoting or otherwise encouraging the use of the Accounts excluding Peebles Accounts in the first Plan Year, which amount may be increased under Section 2.1(e).  In each Plan Year during the Term thereafter, Bank shall provide an amount equal to six-tenths of one percent (0.60%) multiplied by the Net Sales (excluding from such Net Sales Purchases, credit or refunds related to Peebles Accounts) for the prior Plan Year, which amount may be increased under Section 2.1(e).  All of such funds shall be referred to herein as the "Stage Marketing Fund", and any and all marketing and promotion expenses incurred by Stage in connection with promoting or otherwise encouraging the use of the Accounts other than the Peebles Accounts including, but not limited to, the "Eligible Expenses" described in Schedule 2.5(b)(1) to this Agreement shall be eligible for reimbursement under the Stage Marketing Fund.  Stage agrees that all reimbursable expenses shall be for actual expenses incurred by Stage and shall be at market rates for the applicable expense.  If the Stage Marketing Fund is not used in a Plan Year, then such funds will not roll over to the next Plan Year and shall not have any cash value.  Stage shall pay the expenses directly as incurred.  On a monthly basis, Stage shall send Bank an invoice for the aggregate amount of reimbursable expenses, together with copies of supporting documentation reasonably satisfactory to Bank, and Bank shall reimburse Stage within thirty (30) days of receipt of the invoice until Bank's maximum contribution amount for the applicable Plan Year has been met.

(2) With respect to all Peebles Accounts, Bank shall contribute to the marketing and promotion expenses associated with the Peebles Accounts amounts calculated as follows:

(i)Commencing on the Effective Date, Bank agrees that with respect to all late fees assessed by Bank at the rate of $20 or greater for all Peebles Accounts with balances under $250, Bank will apply 25% of the amount actually collected by Bank from such late fees (the "Collected Amount"), to the extent applicable, toward Bank's contribution to the Peebles Marketing Fund and applied as follows:

	50% of the Collected Amount to reimburse Bank for any Initial Reissuance costs in excess of $300,000; and

	50% of the Collected Amount toward Bank's contribution to the Peebles Marketing Fund under (ii) and (iii) below. 

When the excess Initial Reissuance costs have been fully paid, or if there are no excess Initial Reissuance costs, then Bank shall apply the entire Collected Amount toward Bank's contribution to the Peebles Marketing Fund, subject to the limitations set forth in Section 2.5(b)(2)(vi).  

Bank will determine the aggregate amount of collected $20 or greater late fees based on the ratio of billed to collected late fees for the entire Peebles Accounts and applying such ratio to Bank's calculated incremental late fees assessed for the entire Peebles Accounts. 

(ii)The amount to be contributed by Bank for the period from March 1, 2005, through September 30, 2005, shall be an amount equal to the Net Sales (including, solely in such Net Sales, the Purchases, credits or refunds related to Peebles Accounts) for the period from March 1, 2004, through September 30, 2004, multiplied by the Peebles Marketing Fund Contribution Percentage (as determined in accordance with Schedule 2.5(b)(2)), plus any additional contributions calculated pursuant to Section 2.5(b)(2)(i) above for late fees collected by Bank.  

(iii)The amount to be contributed by Bank commencing on October 1, 2005 (the commencement of the third Plan Year) and each Plan Year thereafter, shall be an amount equal to the Net Sales (including, solely in such Net Sales, the Purchases, credits or refunds related to Peebles Accounts) from the prior Plan Year multiplied by the Peebles Marketing Fund Contribution Percentage (as determined in accordance with Schedule 2.5(b(2)) plus any additional contributions calculated pursuant to Section 2.5(b)(2)(i) above for late fees collected by Bank.  

(iv) Stage shall also contribute an amount equal to the amounts contributed by Bank (except for any additional contributions by Bank calculated pursuant to Section (i) above for late fees collected by Bank) to apply to marketing and promotion expenses in the same period for those certain Peebles Accounts marketing promotions outlined in the table set forth in Schedule 2.5(b)(1) and agreed upon by Stage and Bank.  

(v) All of such funds contributed by both Bank and Stage pursuant to Sections (i), (ii) and (iii) above shall be referred to herein as the "Peebles Marketing Fund", and any and all marketing and promotion expenses incurred by Stage in connection with promoting or otherwise encouraging the use of the Peebles Accounts including, but not limited to, the "Eligible Expenses" described in Schedule 2.5(b) to this Agreement shall be eligible for reimbursement under the Peebles Marketing Fund.  Stage agrees that all reimbursable expenses shall be for actual expenses incurred by Stage and shall be at market rates for the applicable expense. If the Peebles Marketing Fund is not used in an applicable Plan Year, then such funds will not roll over to the next Plan Year and shall not have any cash value.  Stage shall pay the expenses directly as incurred.  On a monthly basis, Stage shall send Bank an invoice for the aggregate amount of reimbursable expenses, together with copies of supporting documentation reasonably satisfactory to Bank, and Bank shall reimburse Stage within thirty (30) days of receipt of the invoice for one-half of such expenses until Bank's maximum contribution amount for the applicable Plan Year has been met.

(vi) In no event shall Bank's contributions to the Peebles Marketing Fund pursuant to Sections (i), (ii), and (iii) above in any applicable Plan Year exceed an amount equal to the Net Sales (including, solely in such Net Sales, the Purchases, credits or refunds related to Peebles Accounts) for such Plan Year multiplied by sixty (60) basis points (the "Cap").  However, if during any of the first three (3) Plan Years, the Cap is reached during such Plan Year, then Bank shall not contribute any additional funds to the Peebles Marketing Fund based on the collected late fees calculation pursuant to Section 2.5(b)(2)(i) above, however, Bank shall apply the amount of collected late fees in excess of the Cap in its calculation of the Collected Portfolio Yield Per Statemented Account in the reconciliation in Section 11.2.  However, if after the first three (3) Plan Years, the Cap is reached during such Plan Year, then Bank shall not contribute any additional funds to the Peebles Marketing Fund based on the collected late fees pursuant to Section 2.5(b)(2)(i) above, but shall do one of the following: if the Average Balance during such Plan Year is greater than $330, Bank shall apply the amount of such collected late fees in excess of the Cap to the calculation of the Net Portfolio Yield to determine the Discount Rate pursuant to Section A(2) of Schedule 1.1;  or if the Average Balance is $330 or less, Bank shall pay to Stage one-half of the excess collected late fee amounts calculated in excess of the Cap. 

(c) In the last Plan Year of the Initial or any Renewal Term, Bank's Marketing Fund contributions (for both the Peebles Marketing Fund and the Stage Marketing Fund) for such Plan Year shall be limited as follows: the Stage Marketing Fund and the Peebles Marketing Fund must be utilized in the first six (6) months of the last Plan Year, may not be used for promotion of new Accounts and Stage must also contribute toward marketing of the Plan (however Stage's contributions shall not be required to exclude promotion of new Accounts) an amount equal to the amount of the Stage Marketing Fund and the Peebles Marketing Fund contributed by Bank during the same six (6) month period; provided, however, that in the event the parties agree at any time during the last Plan Year to renew the Term for more than one year, then, unless otherwise agreed by the parties in writing, at such time the restrictions set forth in this Section 2.5(c) shall be lifted, and the Stage Marketing Fund and the Peebles Marketing Fund shall be determined pursuant to Section 2.5(b). 

(d) Bank will not initiate any marketing incentive programs directed at Stage's employees without Stage's prior written approval, which approval may be withheld, conditioned or delayed at Stage's sole discretion.

2.6 Administration of Accounts.  Bank shall perform, in compliance with Applicable Law, all functions necessary to administer, service and collect the Accounts, including but not limited to: application processing, making all necessary credit investigations; notifying Applicants in writing of acceptance or rejection of credit under the Plan; preparing and mailing Billing Statements; making collections; handling Cardholder inquiries; and processing payments.  Bank's re-aging, bankruptcy and deceased Cardholder policies and procedures shall be maintained in compliance with Applicable Law.

2.7 Credit Decision.  The decision to extend credit to any Applicant under the Plan shall be Bank's decision.  Bank will work in good faith with Stage to develop business strategies with respect to the issuance of Accounts which are intended to maximize the potential of the Plan, and which are mutually beneficial to Stage and Bank.  Based on Bank's discussions with Stage and due diligence regarding the Stage Portfolio, Bank states that it is Bank's reasonable belief and intent to generate approval rates similar to those experienced by Stage in its operation of its Stage Portfolio (assuming similar application and Stage Portfolio populations) during the first eighteen (18) months of the Term.  (For purpose of clarification, Bank will at the Conversion Date use underwriting criteria for the Peebles Accounts which is similar to that used for the Stage Accounts and approval rates for the Peebles Accounts may be impacted as a result.)  Any Material Change (as defined below) to underwriting criteria with respect to new Accounts (except for the initial change made by Bank with respect to Peebles Accounts as noted above) and credit line assignments shall be discussed in the Operating Committee before implementation.  However, Bank shall determine all credit underwriting policies and procedures, as subject to Applicable Law and safety and soundness considerations. With respect to the Existing Peebles Accounts, Bank shall transfer at the Conversion Date the then existing credit lines for such Existing Peebles Accounts, and thereafter Bank shall use its proprietary Account management system to make periodic adjustments to credit lines of Accounts. Bank shall consider mailed-in written applications received from Mexican residents subject to Bank's underwriting criteria and Applicable Law, however, Bank shall not make any offers or solicitations for credit into or within Mexico. Stage shall not be permitted to send any Credit Card solicitations or applications into Mexico.  Stage may from time to time request Bank to consider offering certain types of special credit programs. Bank shall reasonably consider Stage's requests and negotiate with Stage 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, Stage and Bank shall mutually agree upon any special terms and fees associated with the program.  For purposes of this Agreement, "Material Change" shall mean (i) with respect to new Accounts, Bank reasonably believes such change will result in a decrease of the approval rates of new Accounts by more than one percent (1.00%) during the six (6) months after implementing the change; and (ii) with respect to credit line assignments, Bank reasonably believes that such change will result in a decrease equal to or greater than ten percent (10%) of the existing credit line assignments.

2.8 Ownership of Accounts and Mailing Lists.

(a) The Customer's names and addresses and other Customer information obtained, collected, captured or otherwise acquired by Stage, except for information obtained by Stage from Bank and Bank's Affiliates or obtained by Stage on Bank's behalf in connection with the Plan including without limitation through the new Account application process or acceptance of Account payments, shall be the sole and exclusive property of Stage.  During the Term of this Agreement, Stage, in its discretion, may provide Bank with the names and addresses of Customers reasonably requested by Bank, subject to Applicable Law, and Bank shall only use such information for purposes of solicitation 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.

(b) Bank shall provide to Stage (i) weekly one (1) master file extract in FTP form containing the information set forth on Schedule 2.8 to this Agreement to the extent such information is available to Bank and (ii) subject to Applicable Law, any other information reasonably agreed to by Stage and Bank.  Bank will maintain a Cardholder database ("Database") comprised of information necessary to support private label credit marketing programs and analysis related thereto, such as purchase tracking and credit program promotional response, segmentation, selection and list generation for cardholder statement messaging, incentives, insertions and credit-related direct mail, new Cardholder messaging via welcome kits, card reissue programs, and zero balance statements.  Bank will provide to Stage various Database elements as mutually agreed and one general data refresh per week of added, changed, or deleted Database elements made available to Bank after the prior weekly refresh.  Bank shall also provide Stage's Stores with the ability to look up, through Stage's Stores point of sale or other equipment, an Account number by Cardholder telephone number, as permitted by and in accordance with Bank's security policies and Applicable Law.  Stage and Stage's Stores may use the Account and Cardholder information provided by Bank solely in connection with maintaining and administering the Accounts and for the purpose of marketing the Goods and/or Services to the Cardholders, as permitted by and in accordance with Applicable Law.  Stage shall keep such Cardholder information confidential and shall not sell, lease, transfer or disclose such information to any third party without the disclosing party's prior written consent.

(c) The Accounts and all information related thereto, including without limitation the receivables, names, addresses, credit and transaction information of Cardholders, shall be the sole and exclusive property of Bank during and after the Term of this Agreement unless the Accounts are purchased by Stage pursuant to Section 9; provided, that during the Term of this Agreement Bank shall use such Cardholder information only in connection with the Plan and for internal purposes such as portfolio analyses, setting policies and procedures, collections, sale of charged off Accounts and benchmarking and in accordance with this Agreement and Applicable Law.  Stage and Bank acknowledge that the Customer information owned by Stage under Section 2.8(a) and the Cardholder information owned by Bank under Section 2.9(c) may be the same or duplicative.

2.9 Billing Statement Inserts, Strategic Protection Products and Enhancement Marketing Services.  Commencing as of the Conversion Date and thereafter, Stage and Bank agree to the following:

(a) Stage and Bank agree to make available to Cardholders through the use of monthly Billing Statement package inserts (each, an "Insert"): (i) various types of insurance and/or debt cancellation programs including, but not limited to, credit life insurance, accidental death and disability insurance and debt cancellation programs (collectively, "Strategic Protection Products") exclusively offered by Bank and/or its vendors or Affiliates, and Stage shall not offer any Strategic Protection Products; (ii) various types of other products and services including, but not limited to, travel clubs, legal services, card registration programs and merchandise products ("Enhancement Marketing Services"); and (iii) Stage's marketing and promotional materials for Goods and Services (each, a "Marketing Insert"), which materials shall be subject to the Marketing Insert Requirements (as hereafter defined).  Any materials used by Stage in a Marketing Insert shall be at Stage's cost and expense or may be reimbursed by Bank from the Stage Marketing Fund or the Peebles Marketing Fund, as applicable, if funds are available.

(b) As to the allocation of the Inserts, Stage and Bank agree that:
(i) no more than twelve (12) Inserts will be utilized to fill a monthly Billing Statement package, and all packages are assumed to be filled to weight;

(ii) for any Billing Statement package, Bank shall have the right to use : (1) the Billing Statement remittance envelope (bangtail); (2) up to two (2) other Inserts for Strategic Protection Products and Enhancement Marketing Services, subject to the bumping rights of Stage described in Section 2.9(b)(v); and (3) no more than two (2) inserts for legal notices and then only to the extent required to comply with Applicable Law;

(iii) Stage shall have the right to use all remaining Inserts for Marketing Inserts;

(iv) Bank's insert materials for the Strategic Protection Products and Enhancement Marketing Services shall be limited to a total weight of .085 ounces per Insert and 0.14 ounces for the envelope bangtail; and

(v) Stage shall have the right to bump one (1) of Bank's Inserts (excluding the bangtail) not more than two (2) times during each Plan Year, upon ninety (90) days prior notice to Bank, and in the event that Stage bumps a Bank Insert, Bank shall have the right to include an Insert in place of Stage in January or February, as applicable and subject to Bank's choice, in exchange for Bank's lost Insert.

(c) In the event that Stage or Bank does not intend to use any of its allocated Inserts for any monthly Billing Statement package, such party shall notify the other party at least ten (10) Business Days prior to the mailing of the monthly Billing Statement package, and the other party shall have the right to use the Insert space not being used.  In the event that Stage uses more than nine (9) Inserts in any monthly Billing Statement package, such use shall not affect Stage's guaranteed minimum payment under Section 2.9(g).

(d) For purposes of this Section 2.9, the "Marketing Requirements" shall collectively be: (i) Bank receiving the Marketing Insert from Stage at least five (5) Business Days prior to the scheduled mailing date of the monthly Billing Statement package; (ii) Stage receiving prior approval of Bank at least ten (10) Business Days prior to the scheduled mailing date of the monthly Billing Statement package if the Marketing Insert references Bank or the Plan in any manner, which approval shall not be unreasonably withheld, conditioned or delayed; (iii) each Marketing Insert meeting all size, weight, or other specifications for Inserts as shall be reasonably set by Bank and provided to Stage from time to time; and (iv) Stage paying any and all additional postage costs for a monthly Billing Statement package caused by Bank's insertion of Marketing Inserts provided by Stage, if instructed by Stage to insert regardless of the additional postage costs.

(e) Prior to offering any Strategic Protection Products or Enhancement Marketing Services, Bank shall review the applicable Strategic Protection Products or Enhancement Marketing Service and related offering with Stage and shall obtain Stage's prior written consent to such product and offering, which consent shall not be unreasonably withheld, conditioned or delayed and shall not prevent Bank from making at least six (6) offers for Strategic Protection Products per Plan Year, and Stage will assist Bank in the offering of the applicable Strategic Protection Products or Enhancement Marketing Service so long as such support will not require Stage to incur any direct expense or cost with respect to the offering or sale of the applicable Strategic Protection Products or Enhancement Marketing Service.  Any charges or premiums for the applicable Strategic Protection Products or Enhancement Marketing Service shall be charged to the applicable Cardholder's Account.

(f) In addition to Inserts, Bank may solicit and offer Strategic Protection Products and Enhancement Marketing Services through various direct marketing channels including, but not limited to, direct mail (except in VIP upgrade packages without Stage's prior written approval, which approval shall not be unreasonably withheld, conditioned or delayed), telemarketing, statement messaging, e-mail, IVR, welcome kits, call to confirm and Bank's customer service agents.  As to telemarketing, Bank shall obtain Stage's prior approval of the timing, manner of calling and scripts of the campaign, which approval shall not be unreasonably withheld, conditioned or delayed, and Bank shall provide Stage with the campaign results.

  (g) The Net Profit (as hereafter defined) from the Strategic Protection Products and Enhancement Marketing Services shall be divided equally between Stage and Bank; provided, that Bank agrees to pay Stage a guaranteed minimum payment of $400,000.00 related to the Strategic Protection Products and Enhancement Marketing Services per Plan Year, except for the first Plan Year which shall be prorated to exclude the time period between the Plan Commencement Date and Conversion Date.  If at the end of an applicable Plan Year the then current number of Stage's Stores open has decreased when compared to the number of Stage's Stores open as of the Plan Commencement Date, then Bank shall have the right to reduce the guaranteed minimum payment by ten percent (10%) for each five percent (5%) reduction in the number of Stage's Stores.  Payments of the Net Profit shall be made by Bank to Stage on a monthly basis and will be accompanied by a statement setting forth the revenues, expenses and profits in reasonable detail.  In the event that the aggregate payments made by Bank to Stage under this Section 2.9(g) during any Plan Year do not equal or exceed such guaranteed minimum payment, Bank shall pay to Stage an amount equal to $400,000.00 minus the aggregate payments made by Bank to Stage during the applicable Plan Year within thirty (30) days after the end of the applicable Plan Year.  For purposes of this Agreement, "Net Profit" shall mean all of the revenues generated or realized from the Strategic Protection Products and Enhancement Marketing Services minus the reasonable expenses and costs incurred by Bank or Stage related to the solicitation and offering of such products and services including, but not limited to, any commissions and incentives paid to third parties in connection with such products or services.

2.10 Ownership of Stage Name.  Anything in this Agreement to the contrary notwithstanding, Stage shall retain all rights in and to the Stage names, and any name selected by Stage, in its sole reasonable discretion, 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 Stage.  Stage 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 Stage 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.  Provided, however, that Stage grants Bank the right to use Stage's Name Rights in connection with Bank and its Affiliates' product marketing and promotional materials and literature in written and electronic form and their business client lists.  Bank agrees and covenants not to: (i) claim any right, title or interest in or to the Name Rights or any right to use the Name Rights except as permitted by this Agreement; (ii) assert that any failure of Stage to set standards for, or police Bank's use of, the Name Rights results in an abandonment of Stage's rights, title or interest in or to the Name Rights; (iii) directly or indirectly, question, attack, contest or challenge the validity of the Name Rights, any other trademark, service mark, logo or other intellectual property of Stage, or Stage's right, title or interest therein; and (v) willingly become a party adverse to Stage in any litigation or proceedings in which a third party is questioning, attacking, contesting or challenging the validity of the Name Rights, any other trademark, service mark, logo or other intellectual property of Stage, or Stage's right, title or interest therein.

2.11 Cardholder Loyalty Program.  At Stage's request, Bank will provide Stage with system functionality tied to the Accounts to support Stage's Cardholder loyalty program, at no additional charge, to the extent Stage's loyalty program is consistent with Bank's existing or future functionality offered to other Bank clients and is facilitated using monthly Billing Statements to active Accounts and does not include stand-alone mailings.  Provided, however, that Bank will support stand-alone Cardholder mailings and zero-balance statements in conjunction with a Cardholder loyalty program at Stage's expense which may be paid from the Stage Marketing Fund or the Peebles Marketing Fund, as applicable.  Bank will, at Stage's request, upon the terms, conditions and fees mutually agreed upon in writing by the parties, provide back office servicing and administration support for Stage's Cardholder loyalty program.  The Cardholder loyalty program will provide for loyalty point accumulation, tracking, lookup/reporting, and redemption where coupon is part of the Billing Statement, at no additional charge to Stage, consistent with Bank's existing or future functionality offered to other Bank clients.  Stage will be the owner of the loyalty program and will be responsible for determining and funding the reward related to the loyalty program and for ensuring that the loyalty program complies with all Applicable Laws.

SECTION 3.  OPERATION OF THE PLAN

3.1 Honoring Credit Cards.  Stage agrees that Stage and Stage's Stores will honor any Credit Card properly issued and currently authorized by Bank pursuant to the Plan, and 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, Stage and Bank agree that Stage, Stage's Stores and Bank will comply with the following procedures:

(a) In each Credit Card transaction, Stage and Stage'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 Stage shall use its reasonable best efforts 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.  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 (or check) down payment.  Stage shall retain the "Merchant Copy" of all Stage and Stage'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.

(c) Stage and Stage'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.  Stage and Stage'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, Stage and Stage'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 Stage the total shown on the Credit Slip, and credit the Cardholder's Account in the amount of such Credit Slip.  If the Net Proceeds are insufficient, Stage shall remit the amount of such Credit Slips, or any unpaid portion thereof, to Bank immediately upon written demand.

(d) Stage'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 presentation of a Credit Card or proper identification as outlined in the Operating Procedures.

(e) To the extent allowed under Applicable Laws and as required for Bank's safety and soundness, Bank shall authorize a $100.00 floor limit in the event that access to the Bank's authorization systems are interrupted or not operational, which limit may be increased during other selling periods of Stage by written mutual agreement of Stage and Bank.  Bank shall have the right to prohibit individual Stage's Stores from utilizing floor limits in the event Bank reasonably determines that floor limit authorizations are being abused, and Bank shall notify Stage of any prohibition.

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

3.4 No Special Agreements.  Neither Stage nor Stage'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.  Stage and Bank shall reasonably assist the other party in further investigating and using their reasonable efforts to help resolve any Applicant or Cardholder claim, dispute, or defense which may be asserted under Applicable Law.

3.6 Payment to Stage; Ownership of Accounts; Fees; Accounting.

(a) Stage shall electronically transmit all Transaction Records from Stage and Stage's Stores to Bank in the format previously agreed upon by Bank and Stage.  Upon receipt, Bank shall use commercially reasonable efforts to promptly verify and process such Transaction Records and shall post such transactions to the appropriate Accounts as of the transaction date.  In the time frames specified herein, Bank will remit to Stage 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 Stage or paid by Bank to Stage, Bank shall notify Stage in detail of the discrepancy, and credit Stage, or net against amounts owed to Stage, as the case may be, in a subsequent daily settlement.  Bank will transfer funds via wire transfer of immediately available funds to an account designated in writing by Stage to Bank (the "Stage Deposit Account").  If Transaction Records are received by Bank's processing center before 1:00 p.m. Eastern time on a Business Day, Bank will initiate such wire transfer by 1:00 p.m. Eastern time on the next Business Day thereafter.  In the event that the Transaction Records are received after 1:00 p.m. Eastern time on a Business Day, then Bank will initiate such wire transfer no later than 1:00 p.m. Eastern time on the second Business Day thereafter.  Bank shall remit funds to one Stage designated account and shall not remit funds to individual Stage's Stores.

(b) Bank shall own all the Accounts under the Plan from the time of establishment, and except as otherwise provided herein, neither Stage nor any Stage'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 Stage and Stage's Stores to Bank and payment to Stage by Bank pursuant to Section 3.6(a), Stage and Stage'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 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 Stage'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, Stage shall remit the proper amount to Bank immediately upon written demand.  Upon any such correction, Bank shall give prompt notice thereof to Stage.

(d) Subject to Applicable Law and the terms and conditions set forth in the Credit Card Agreement, Bank shall initially (after conversion of the Stage Portfolio to Bank's system and for twenty-four (24) months thereafter) charge each Cardholder a finance charge on the unpaid balance in their Account at an annual percentage rate equal to a variable rate of the Prime Rate plus 17.3% with a minimum rate of 21.6% and a variable delinquency rate of the Prime Rate plus 20.6% with a minimum of 24.9% for Accounts sixty (60) or more days past due; a $1 minimum finance charge; late fees equal to $15 for balances under $250 (for Peebles Accounts, $20 for balances under $250) and $25 for balances equal to or greater than $250; and returned check fees equal to $30.  Bank will not impose an over limit fee.  The minimum payment shall be the greater of 1/15th of the balance or $10, plus any late fee.  Bank will not impose finance charges on Regular Revolving Purchases in any billing period in which payments received and credits issued by the payment due date, which will be twenty-five (25) days after the statement closing date, equals or exceeds the previous balance.  Bank will not assess late fees unless a required payment is not received by Bank by the Bank's billing date.  Bank may make any changes in the terms of the Credit Card Agreement at any time as required by Applicable Law or safety and soundness considerations 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, imposition of finance charges, and/or fees charged by Bank as set forth above Bank will, prior to making any changes, review and discuss such changes with Stage in order to maximize the potential of the Plan and mutually benefit Stage and Bank, and will not make such changes without Stage's prior written consent unless required by Applicable Law or for Bank's safety and soundness.  Bank shall determine the fees associated with Bank's provision of services to the Cardholders in connection with the Accounts in accordance with industry practices, including electronic payments, payments by phone, requests for excessive research (i.e. multiple statement copies), copies of payments and Charge Slips.

(e) Stage and Stage'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 Stage and Stage'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.

(f) Stage may from time to time offer Promotional Programs to Cardholders.  Stage 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.

(g) If Stage fails to pay Bank any amounts due to Bank and not subject to a good faith dispute pursuant to this Agreement for more than thirty (30) days after the due date, Bank may offset such amounts against the Net Proceeds or any other amounts owed by Bank to Stage under this Agreement.

3.7 INTENTIONALLY OMITTED

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. All payments must be made in U.S. dollars. Stage 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 Stage 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.  Stage further agrees that for any payment that Stage receives with respect to the Plan, Stage and Stage's Stores will hold such payment for the benefit of Bank and will may every reasonable best effort to 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 deduct the amount of such payments from funds being transferred to the Stage Deposit Account.  If such transfer contains insufficient funds, Bank may deduct from the next Business Day's transfer or demand that Stage remit the amount of such payment, or any unpaid portion thereof, to Bank immediately upon written demand.  Payments made by Cardholders at Stage's Stores shall not be deemed received by Bank until Bank receives and accepts the Transaction Records.  For purposes of calculating Cardholder open to buy, credit for payments will be given when the real time notification of the payment is received subject to review by Bank for fraud (such notification is separate from the Transaction Record).  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 Stage pursuant to the provisions of Sections 3.9 and 3.10 hereof.  Stage shall promptly comply with any written instruction 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 Stage of any Purchase and charge back to Stage the unpaid principal balance and
 any Discount Fee paid by Bank to Stage, relating to any such Purchase, if and whenever:

(a) Any Applicant or 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 Stage and/or Stage's Stores pursuant to and within the time limits under Applicable Law;

(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 Stage under this Agreement; (ii) there is a failure by Stage to comply with any term or condition of this Agreement, 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 Stage, 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 Stage or Stage's Stores or the result of a dispute by a Cardholder in connection with the sale of Goods, or the furnishing of Services by Stage or Stage's Stores to such Cardholder; or

(d) 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 Stage, Stage 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 Stage, to the extent the balance thereof is sufficient.  Upon payment of such amount by Stage to Bank, or off-setting, as the case may be, Bank shall assign and transfer to Stage, 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.  Stage further consents to all extensions or compromises given any Cardholder with respect to any such Purchase, and agrees that such extension or compromise shall not affect any liability of Stage 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.  Stage 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, Stage shall actively and consistently market, promote, participate in and support the Plan as set forth in this Agreement.  Stage agrees that in consideration and as an inducement for Bank to make the Plan available to Stage as outlined in this Agreement and the Operating Procedures, from the Plan Commencement Date and for as long as this Agreement is in existence, neither Stage nor its Affiliates will, 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 Stage terminates under Section 9.3, Stage may enter into a contract with another credit card processor/provider effective on or after termination of this Agreement.  Notwithstanding the foregoing, nothing contained in this Agreement will be construed to prohibit or prevent Stage from: (i) accepting any major general purpose credit card (including without limitation, Discover, American Express Card, MasterCard, Visa, or NOVUS), 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 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) acquiring or merging with other retailers from time to time that have a private label credit card program or processing arrangement similar to the Plan; provided, that the credit card for such program is not honored or promoted by Stage in its Bealls, Palais Royal or Stage stores or any other stores, catalogs or the Internet operated by Stage after the Plan Commencement Date which have been included in the Plan.  Bank shall not, during the Term of the Agreement, solicit the Cardholders for a bank card product.

  3.12 Postage.  From and after the fourth month following the Conversion Date, Bank and Stores shall share equally the incremental per unit cost increase (the "Per Unit Increase") resulting from any increase in postage rates.  Bank shall invoice Stores on a monthly basis for Stores share of any Per Unit Increase.  The Per Unit Increase shall be determined as follows:

  (a) At the end of the third month following the Conversion Date, a benchmark per unit cost (the "Per Unit Benchmark Cost") shall be calculated by dividing the total postage cost for all mailed items by the total number of mailed items, in each case for the three (3) month period following the Conversion Date.

  (b) In the event of an increase in postage, for each month following the month in which the increase becomes effective, the then current per unit cost (the "Per Unit Current Cost") shall be (A) the total postage cost in the month immediately preceding the then current month (the "Prior Month") divided by (B) the total number of items mailed plus the number of Electronic Bill Presentment and Payment Account statements (which have a suppressed paper statement) during the Prior Month.  Notwithstanding the foregoing, any mailed item as to which the Bank, in its discretion, causes to exceed one ounce in weight shall not be included in the calculation of the Per Unit Current Cost.

  (c) The Per Unit Increase for the relevant month shall be equal to (i) the difference between the Per Unit Benchmark Cost and the Per Unit Current Cost times (ii) the number of items mailed.

3.13 Reports.  After the Conversion Date, Bank will deliver to Stage the reports set forth in Schedule 3.13 to this Agreement as specified therein.  Bank may provide any additional reports requested by Stage upon such terms and at the costs mutually agreed to by the parties.

3.14 Operating Committee.  The Operating Committee shall initially meet on a monthly basis and thereafter as deemed desirable by the committee members.  The Operating Committee shall be primarily responsible for providing oversight and guidance with respect to the Plan, including without limitation approval of new Credit Card products, Enhancement Marketing Services, review of accounting documentation related to Transaction Records, dispute resolution, and creation of Plan documents.  All matters in this Agreement requiring review or approval by either party shall be referred to the Operating Committee for such consideration.

SECTION 4.  REPRESENTATIONS AND WARRANTIES OF STAGE

Stores and Specialty hereby represent and warrant to Bank as follows:

4.1 Organization, Power and Qualification.  Stores and Specialty are duly organized and validly existing entities and are in good standing and have full power and authority to enter into this Agreement and to carry out the provisions of this Agreement.  Stores and Specialty are duly qualified and in good standing to do business in all jurisdictions where such qualification is necessary for Stores and Specialty to carry out their respective obligations under this Agreement.

4.2 Authorization, Validity and Non-Contravention.

(a) This Agreement has been duly authorized by all necessary proceedings, has been duly executed and delivered by Stores and Specialty and is a valid and legally binding agreement of Stores and Specialty 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) Except as set forth in the Stage Purchase Agreement and the Peebles Purchase Agreement, no consent, approval, authorization, order, registration or qualification of or with any court or regulatory authority or other governmental body having jurisdiction over Stores or Specialty 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.

(c) The execution and delivery of this Agreement by Stores and Specialty and the compliance by Stage 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 Stores or Specialty is an obligor or by which its property is bound where such conflict, breach or default would have a material adverse effect on Stores or Specialty, nor will such execution, delivery or compliance violate or result in the violation of its respective organizational documents.

4.3 Accuracy of Information.  All factual information furnished by Stores or Specialty 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 Stores or Specialty to Bank will be, to Stores' or Specialty'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, Stores or Specialty will have 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 Compliance with Law.  Any action or inaction taken by Stores or Specialty and Stage's Stores (where Stores or Specialty or Stage's Stores have a duty to act) in connection with the Plan and the sales of Goods and Services shall be in compliance with all Applicable Law except where the failure to comply does not or will not have an adverse effect on Stores, Specialty, the Bank or the Plan.

4.6 Stage's Name, Trademarks and Service Marks.  Stores or Specialty has the legal right to use and to permit the Bank to use, to the extent set forth in this Agreement, the various tradenames, trademarks, logos and service marks utilized by Stores or Specialty in the conduct of its business.

4.7 Intellectual Property Rights.  In the event Stores or Specialty provides any software or hardware to Bank, Stores or Specialty has the legal right to use 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 Stores, Specialty 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 Stores, Specialty and/or its Affiliates.  Nothing in this Agreement shall be deemed to convey a 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 Stores, Specialty and/or its Affiliates.

  4.8 Litigation.  There are no claims, demands, filings, hearings, notices of violation, proceedings, notices or demand letters, investigations, administrative proceedings, civil, criminal or other actions, litigation, suits or other legal proceedings pending or, to the best of Stores' or Specialty's knowledge, threatened against Stores or Specialty that would materially impair the ability of Stores or Specialty to perform their respective duties or obligations under this Agreement or that would constitute a Bank Termination Event.

SECTION 5.  COVENANTS OF STAGE

Stage hereby covenants and agrees as follows:

5.1 Notices of Changes.  Specialty will as soon as reasonably possible notify Bank of any of the following:  (a) change in the name or form of business organization of Specialty, 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 Specialty 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 Specialty; (c) material adverse change in its financial condition or operations or the commencement of any litigation which would have a material adverse effect on Specialty; or (d) the planned opening or closing of any Stage's Store.  Specialty will furnish such additional information with respect to any of the foregoing as Bank may reasonably request for the purpose of evaluating the effect of such change on the financial condition and operations of Specialty and on the Plan.

5.2 Financial Statements.  Stage shall furnish to Bank upon request by Bank and as soon as available the following information pertaining to Stage: (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 Stage's independent certified public accountants in connection with such of the financial statements as have been audited.

5.3 Inspection.  Stage 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 Stages and Stage's Stores, books and records pertaining to Transaction Records 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 Stage's Business.  Stage shall do or cause to be done all things necessary to preserve and keep in full force and effect its existence and to comply with all Applicable Laws in connection with its business and the sale of Goods and Services.  Upon the request of Bank, Stage shall provide to Bank annually a forecast of Stage's total sales and the forecasted number of stores, for the next fiscal year.

  5.5 Stage's Stores.  Stage shall cause all of Stage's 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.  Stage 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 Stage's industry engaged in similar businesses as Stage.

SECTION 6.  REPRESENTATIONS AND WARRANTIES OF BANK

Bank hereby represents and warrants to Stage 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) Except as set forth in the Stage Purchase Agreement and the Peebles Purchase Agreement, 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 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 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 furnished by Bank to Stage in writing at any time pursuant to any requirement of, or furnished in response to any written request of Stage under this Agreement or any transaction contemplated hereby has been, and all such factual information hereafter furnished by Bank to Stage 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 Compliance with Law.  Any action or inaction taken by Bank (where Bank has a duty to act) in connection with the Plan 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, Stage or the Plan.

6.5 Intellectual Property Rights.  In the event Bank provides any software or hardware to Stage, Bank has the legal right to such software or hardware and the right to permit Stage 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 Program, including but not limited to, software and software modifications developed in response to Stage's request or to accommodate Stage'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 Stage 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.

  6.6 Litigation.  There are no claims, demands, filings, hearings, notices of violation, proceedings, notices or demand letters, investigations, administrative proceedings, civil, criminal or other actions, litigation, suits or other legal proceedings pending or threatened against Bank that would materially impair the ability of Bank to perform its duties or obligations under this Agreement or that would constitute a Stage Termination Event.

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 Stage 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 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 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 Stage 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 Stage upon request by Stage and as soon as available the following information pertaining to Bank and Alliance Data: (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 and Alliance Data'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 Stage has reasonable cause to do so, authorized representatives designated by Stage, at Stage's expense, to visit and inspect, to the extent permitted by Applicable Law, any of Bank's books and records at the corporate level pertaining to the Discount Fees, the Strategic Protection Products, the postage increase reimbursement pursuant to Section 3.12, Enhancement Marketing Services commission 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, twice per Plan Year unless Stage has reasonable cause to do so, authorized representatives of Stage, at Stage's expense, to visit, inspect, audit and monitor the activities of Bank and its subcontractors at the offices at which services relating to the Plan are being provided during normal business hours and upon reasonable notice and in a manner which does not disrupt the operations.  Bank shall provide Stage with a copy of Bank's auditors' report on internal control for each fiscal year during the Term.

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 Collection.  Bank shall collect the Accounts in the same manner as Bank collects private label credit card portfolios of other clients with portfolios similar to Stage's.

7.7 Change in Control.  In the event a Change in Control (as hereafter defined) occurs related to Bank or Alliance Data, Bank or Alliance Data shall require that the person or entity obtaining such control shall continue to perform all of the duties, obligations and responsibilities: (i) of Bank under this Agreement including, but not limited to, the Service Standards, Operating Procedures, the Stage Marketing Fund and the Peebles Marketing Fund; or (ii) of Bank, Alliance Data or their Affiliate under the Stage Purchase Agreement, the Peebles Purchase Agreement and any of the Transaction Documents to which Bank, Alliance Data or the Affiliate is a party or is otherwise bound.  For purposes of this Agreement, a "Change in Control" shall be deemed to have occurred as of the date (i) any "person" or "group" (as such terms are used in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) (other than Welsh Carson Anderson & Stowe partnerships and partners of Limited Brands, Inc. and its affiliates) is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of the equity interests of Bank or Alliance Data representing twenty-five percent (25%) or more of the combined voting power of Bank's or Alliance Data's then outstanding equity interests, and within one (1) year after the "person" or "group" becomes the beneficial owner of twenty-five percent (25%) or more of the combined voting power of Bank or Alliance Data (the "Trigger Date"), the managers or members of the Board of Bank or Alliance Data immediately prior to the Trigger Date cease to constitute a majority of such Board, (ii) the consummation of a consolidation or merger of Bank or Alliance Data in which Bank or Alliance Data is not the surviving or continuing entity, or pursuant to which the equity interests of Bank or Alliance Data would be converted into cash, equity interests of any other entity (except a direct or indirect wholly owned subsidiary of Alliance Data)
 or other property, other than a merger of Bank or Alliance Data in which the holders of Bank's or Alliance Data's equity interests immediately prior to the merger have (directly or indirectly) at least a fifty one percent (51%) ownership interest in the outstanding equity interests of the surviving entity immediately after the merger, or (iii) the sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all, or substantially all, of the assets of Bank or Alliance Data to any other entity (except a direct or indirect wholly owned subsidiary of Alliance Data), except for any sale, lease exchange or transfer resulting from any action taken by any creditor of Bank or Alliance Data in enforcing its rights or remedies against any assets of Bank or Alliance Data in which such creditor holds a security interest; or (iv) any enforcement action being taken by any federal regulator naming a receiver for, or otherwise taking control, of Bank or Alliance Data.

7.8 Continuation of Operations.  In the event Bank receives a termination notice from Stage in accordance with Section 9.1, Bank shall operate the Plan in accordance with the same philosophy, procedures and diligence with respect to credit
 as Bank operated the Plan before receiving the termination notice and in accordance with the terms and conditions described in this Agreement and required by Applicable Law and to ensure Bank's safety and soundness, through the termination date.

SECTION 8.  INDEMNIFICATION

8.1 Indemnification Obligations.

(a) Stage 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) Stage's breach of any representation, warranty or covenant hereunder; (ii) Stage's failure to perform its obligations hereunder; (iii) any damage caused by or related to Goods and/or Services or Purchases charged to an Account; and (iv) any action or failure to act by Stage and/or Stage's Stores (where Stage or Stage's Store has a duty to act) or Stage's vendors and their respective officers, directors, employees and agents, which results in a claim against Bank, its officers, employees and Affiliates, unless the proximate cause of any such claim is gross negligence or an act or failure to act by Bank, its officers, directors or employees.

(b) Bank shall be liable to and shall indemnify and hold Stage and their Affiliates and their respective shareholders, partners, members, managers, officers, directors, employees, sub-contractors and their successors and assigns, harmless from any and all Losses incurred by reason of: (i) Bank's breach of any representation, warranty or covenant hereunder; (ii) Bank's failure to perform its obligations hereunder; and (iii) any action or failure to act by Bank (where Bank has a duty to act) and its officers, directors, employees and agents which results in a claim against Stage, their partners, managers, officers, directors, employees and Affiliates, unless the proximate cause of any such claim is gross negligence or an act or failure to act by Stage and their respective officers, directors or employees.

(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 Stage, 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 a party would normally incur in conducting its everyday business.

8.2 LIMITATION ON LIABILITY.  IN NO EVENT SHALL A PARTY BE LIABLE TO ANOTHER PARTY FOR ANY INCIDENTAL, INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF THIS AGREEMENT, PROVIDED, HOWEVER, THAT THIS LIMITATION SHALL NOT APPLY WITH RESPECT TO A PARTY'S INTENTIONAL BREACH OF THIS AGREEMENT, FRAUD, WILLFUL MISCONDUCT OR INTENTIONAL FAILURE TO ACT.

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

9.1 Term.  This Agreement shall become effective as of the Effective Date when executed by authorized officers of the parties and shall remain in effect for ten (10) 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 one (1) year terms (each a "Renewal Term") thereafter unless a party provides the other parties 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 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 if such Bank Termination Event occurs:

 (a) If Stage shall: (i) fail to 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 Stage 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 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, which breach or failure, if left uncured could result in a default of such agreement; or

(b) If a court or government authority of competent jurisdiction shall enter an order appointing, without consent by Stage, 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 Stage, or if any petition for any such relief shall be filed against Stage and such petition shall not be dismissed within sixty (60) days; or

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

(d) If at anytime the type of Goods and/or Services sold by Stage materially changes from the type of Goods and/or Services sold by Stage on the date of execution of this Agreement.

9.3 Termination by Stage; Stage Termination Events.  Any of the following conditions or events shall constitute a "Stage Termination Event" hereunder, and Stage may terminate this Agreement immediately without further action if such Stage Termination Event occurs:

(a) If Bank shall: (i) fail to 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 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, which breach or failure, if left uncured could result in a default of such agreement; or

(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 pursuant to Section 2.1(b) and 2.1(c)) or violates any of the 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 Stage pursuant to Section 3.6(a)) after written notice thereof shall have been received by Bank, as the case may be, from Stage; or

(d) Effective as of the expiration of the Interim Period:

(i) if Bank: (A) fails to perform the same Service Standard in accordance with the Service Standards Performance Criteria for a period of three (3) consecutive months, which failures are not the result of an act of Stage or Stage's Stores or a result of a force majeure event specified in Section 10.11, and (B) Stage has notified Bank in writing pursuant to Section 2.1(e)
 that Stage is applying each such consecutive monthly failure towards satisfying the termination conditions under this Section 9.3(d), and (C) Bank fails to perform the same applicable Service Standard for a fourth (4th) consecutive month, then Stage may terminate this Agreement; or

 

(ii) if Bank: (A) fails to perform any combination of twelve (12) of the Service Standards in accordance with the Service Standards Performance Criteria during any rolling three (3) consecutive
 month period (the "Performance Failure Period"), which failures are not the result of an act of Stage or Stage's Stores or a result of a force majeure event specified in Section 10.11, and (B) Stage has notified Bank in writing pursuant to Section 2.1(e)
 that Stage is applying each such consecutive monthly
 failure in the Performance Failure Period towards satisfying the termination conditions under this Section 9.3(d), and (C) Bank fails to perform any combination of twelve (12) of the Service Standards in accordance with the Service Standards Performance Criteria during the three (3) month period immediately following the applicable Performance Failure Period, which failures are not the result of an act of Stage or Stage's Stores or a result of a force majeure event specified in Section 10.11, then Stage may terminate this Agreement.

(e) In the event Bank either (i) terminates the operation of the Plan in particular state(s) and/or jurisdiction(s) under Section 9.4, or (ii) determines, in its sole discretion, it
 is unable to operate the Plan for any reason in any state(s) or jurisdiction(s), and notifies Stage in writing of its determination, and, in either case, such state(s) and/or jurisdiction(s) in the aggregate represent twenty percent (20%) or more of Net Sales for Stage's fiscal year immediately preceding the termination, Stage may terminate this Agreement upon thirty (30) days prior written notice to Bank; or

(f)
In the event: (i) a Change in Control of Bank or Alliance Data occurs under Section 7.7; and (ii) within twelve (12) months after the Change in Control, the person or entity acquiring or obtaining control of Bank or Alliance Data proposes to the Operating Committee to materially change any of the underwriting standards from the standards in effect as of the Change in Control; and (iii) Stage objects in writing to such change and such change is subsequently implemented within the twelve (12) month period and results in a Material Change (even if the results are incurred in
the twelve (12) month period after such change is implemented); and (iv) the person or entity acquiring or obtaining control of Bank or Alliance Data fails to revise, amend or correct the changes in such a manner that the changed underwriting standard no longer results in a Material Change within thirty (30) days after receiving written notice from Stage of such Material Change, Stage shall have the right to terminate this Agreement upon thirty (30) days written notice to Bank.

9.4 Termination of Particular State.  In addition, upon thirty (30) days prior written notice, 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 by a court of competent jurisdiction or in good faith by Bank in such a manner so as to render all or any part of the Plan illegal or unenforceable (in whole or in part), and in such event Bank will, if requested, assist Stage with finding a new credit provider for such state or jurisdiction.

9.5 Purchase of Accounts.    Upon the termination of this Agreement, Stage and Bank hereby agree as follows:

9.5.1 Termination By Stage at End of Term.  In the event Stage terminates this Agreement in accordance with Section 9.1, Stage or its designee shall have the right, but not the obligation, to purchase from Bank all unpaid and outstanding Accounts (including any Account falling within the categories described in definition of "Ineligible Accounts" in the Stage Purchase Agreement but which will not be included in the calculation of the purchase price), at the par value of the Accounts as of the termination date.  In the event Stage exercises its right to purchase the Accounts from Bank upon termination, Stage shall purchase the Accounts on the same terms and conditions as described in the Stage Purchase Agreement.  In the event Stage does not exercise its right to purchase the Accounts upon termination, Stage and its Affiliates, licensees or franchisees shall not have the right to enter into any private label credit card program with a third party or start their own private label credit card program for a period of twenty four (24) months following the termination date.  In the event that during such twenty four (24) month period Stage or its Affiliates, licensees or franchisees enters into a private label credit card program with a third party or starts its own private label credit card program, Stage or the third party shall purchase from Bank all unpaid and outstanding Accounts (including any Account falling within the categories described in definition of "Ineligible Accounts" in the Stage Purchase Agreement but which will not be included in the calculation of the purchase price) on the terms set forth above as of the effective date of such program.

9.5.2 Termination By Bank at End of Term.  In the event Bank terminates this Agreement in accordance with Section 9.1, Stage or its designee shall have the right, but not the obligation, to purchase from Bank all unpaid and outstanding Accounts (including any Account falling within the categories described in definition of "Ineligible Accounts" in the Stage Purchase Agreement but which will not be included in the calculation of the purchase price), at the par value of the Accounts as of the termination date.  In the event Stage exercises its right to purchase the Accounts from Bank upon termination, Stage shall purchase the Accounts on the same terms and conditions as described in the Stage Purchase Agreement.  In the event Stage does not exercise its right to purchase the Accounts upon termination, Stage and its Affiliates, licensees or franchisees shall not have the right to enter into any private label credit card program with a third party or start their own private label credit card program for a period of twenty four (24) months following the termination date.  In the event that during such twenty four (24) month period Stage or its Affiliates, licensees or franchisees enters into a private label credit card program with a third party or starts its own private label credit card program, Stage or the third party shall purchase from Bank all unpaid and outstanding Accounts (except for any Account falling within the categories described in definition of "Ineligible Accounts" in the Stage Purchase Agreement) on the terms set forth above as of the effective date of such program.

9.5.3 Termination By Bank Due to Stage Breach.

 

(a) In the event Bank terminates this Agreement under Section 9.2 and the Net Portfolio Yield (as hereafter defined) as of the termination date is equal to or greater than nine and one-half percent (9.50%), then Stage or its designee shall be obligated to immediately purchase from Bank all unpaid and outstanding Accounts (including any Account falling within the categories described in definition of "Ineligible Accounts" in the Stage Purchase Agreement but which will not be included in the calculation of the purchase price), at an amount equal to the sum of (i) the par value of the Accounts as of the termination date plus (ii) the Unamortized Prepaid Marketing Funds (as hereafter defined) as of the termination date.  Stage or its designee shall purchase the Accounts on the same terms and conditions as described in the Stage Purchase Agreement.

(b) In the event Bank terminates this Agreement under Section 9.2, and the Net Portfolio Yield as of the termination date is less than nine and one-half percent (9.50%), then Stage or its designee shall have the right, but not the obligation, to purchase from Bank all unpaid and outstanding Accounts (including any Account falling within the categories described in definition of "Ineligible Accounts" in the Stage Purchase Agreement but which will not be included in the calculation of the purchase price), at an amount equal to the sum of (i) the par value of the Accounts as of the termination date plus (ii) the Unamortized Prepaid Marketing Funds as of the termination date.  In the event Stage does not exercise its right to purchase the Accounts, Stage shall pay to Bank on the termination date the Unamortized Prepaid Marketing Funds.  In the event Stage exercises its right to purchase the Accounts from Bank upon termination, Stage shall purchase the Accounts on the same terms and conditions as described in the Stage Purchase Agreement.  In the event Stage does not exercise its right to purchase the Accounts upon termination, Stage and its Affiliates, licensees or franchisees shall not have the right to enter into any private label credit card program with a third party or start their own private label credit card program for a period of twenty four (24) months following the termination date.  In the event that during such twenty four (24) month period Stage or its Affiliates, licensees or franchisees enters into a private label credit card program with a third party or starts its own private label credit card program, Stage or the third party shall purchase from Bank all unpaid and outstanding Accounts (including any Account falling within the categories described in definition of "Ineligible Accounts" in the Stage Purchase Agreement but which will not be included in the calculation of the purchase price) on the terms set forth above as of the effective date of such program.

9.5.4 Termination By Stage Due to Bank Breach.  In the event Stage terminates this Agreement under Section 9.3, Stage or its designee shall have the right, but not the obligation, to purchase from Bank all unpaid and outstanding Accounts (including any Account falling within the categories described in definition of "Ineligible Accounts" in the Stage Purchase Agreement but which will not be included in the calculation of the purchase price), at an amount equal to the sum of (i) the par value of the Accounts as of the termination date plus (ii) the Unamortized Prepaid Marketing Funds as of the termination date.  In the event Stage exercises its right to purchase the Accounts from Bank upon termination, Stage shall purchase the Accounts on the same terms and conditions as described in the Stage Purchase Agreement.  In the event Stage does not exercise its right to purchase the Accounts upon termination and the Net Portfolio Yield as of the termination date is equal to or greater than nine and one-half percent (9.50%), Stage and its Affiliates, licensees or franchisees shall not have the right to enter into any private label credit card program with a third party or start their own private label credit card program for a period of twenty-four (24) months following the termination date.  In the event that during such twenty-four (24) month period Stage or its Affiliates, licensees or franchisees enters into a private label credit card program with a third party or starts its own private label credit card program, Stage or the third party shall purchase from Bank all unpaid and outstanding Accounts (including any Account falling within the categories described in definition of "Ineligible Accounts" in the Stage Purchase Agreement but which will not be included in the calculation of the purchase price) on the terms set forth above as of the effective date of such program.  In the event Stage does not exercise its right to purchase the Accounts upon termination and the Net Portfolio Yield as of the termination date is less than nine and one-half percent (9.50%), Stage and its Affiliates, licensees or franchisees shall have the right to enter into any private label credit card program with a third party or start their own private label credit card program at any time after the termination date without any obligations to Bank or any other restriction or limitation by Bank.

9.5.5 Termination By Bank in Particular State.  In the event Bank: (i) terminates the operation of the Plan; or (ii) determines, in its sole discretion, it is unable to operate the Plan for any reason, in any particular state or jurisdiction under Section 9.4 and Stage does not terminate this Agreement in accordance with Section 9.3(e), then Stage or its designee shall have the right, but not the obligation, to purchase from Bank all unpaid and outstanding Accounts for Cardholders residing in such terminated state or jurisdiction (including any Account in such state or jurisdiction falling within the categories described in definition of "Ineligible Accounts" in the Stage Purchase Agreement but which will not be included in the calculation of the purchase price), at the par value of the Accounts as of the termination date.  In the event Stage exercises its right to purchase such Accounts from Bank upon termination, Stage shall purchase the Accounts on the same terms and conditions as described in the Stage Purchase Agreement.  In the event Stage does not exercise its right to purchase such Accounts upon termination, Stage and its Affiliates, licensees or franchisees shall have the right to enter into any private label credit card program with a third party or start their own private label credit card program solely for issuing credit cards to Customers located in such terminated state or jurisdiction at any time after the termination date without any obligations to Bank or any other restriction or limitation by Bank except that such other credit cards cannot be offered by Stage to Customers in those states and jurisdictions where Bank operates the Plan.

9.5.6 Definitions and Calculations.  For purposes of this Agreement, the following terms shall have the following meaning and calculation methods:

(i) Unamortized Prepaid Marketing Funds.  "Unamortized Prepaid Marketing Funds" shall mean the amount of the Prepaid Marketing Funds (as defined in the Reconciliation Letter Agreement) multiplied by the Remaining Term Percentage (as hereafter defined).

(ii) Remaining Term Percentage.  "Remaining Term Percentage" shall mean the percentage of the Initial Term remaining after the termination of this Agreement and shall be calculated by dividing (i) the numbers of days of the Initial Term remaining after the termination date of this Agreement by (ii) the total number of days in the Initial Term.

(iii) Net Portfolio Yield.  Shall have the meaning set forth in Schedule 1.1 of this Agreement.

SECTION 10.  MISCELLANEOUS

10.1 Entire Agreement.  Except for the Reconciliation Letter Agreement, the Stage Purchase Agreement, the Peebles Purchase Agreement, the exhibits and schedules attached to the Stage Purchase Agreement, and the exhibits and schedules attached to the Peebles Purchase Agreement, this Agreement constitutes the entire Agreement and supersedes all prior agreements, including without limitation the Program Agreement, and understandings, whether oral or written, among the parties with respect to the subject matter hereof and merges all prior discussions between them.

10.2 Coordination of Public Statements.  Alliance Data, as a public company, will issue a news release disclosing this Agreement, and such news release must be approved by all parties prior to its issuance.  Stores, as a public company, will issue a news release disclosing this Agreement, and such news release must be approved by all parties prior to its issuance.  In addition, Stores, as a public company, may file this Agreement with the Securities and Exchange Commission.  In all other cases, except as required by Applicable Law, neither Stage nor Bank 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 parties, which approval will not be unreasonably withheld.  Neither Stage nor Bank 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 parties.  Upon Bank's reasonable request from time to time, Stage 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 and their respective successors, transferees and assigns.  No party may assign its rights and obligations under this Agreement.

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 a 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 this 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 this 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, the other parties, in which case this Agreement may be terminated by the affected party, without penalty.

10.7 Notices.  All communications and notices pursuant hereto to a 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 parties, 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:

If to Bank: If to Stage or to Specialty:

800 TechCenter Drive 10201 Main Street

Gahanna, OH  43230 Houston, TX  77025

Attn.:  Daniel T. Groomes, Attn.:  Michael E. McCreery,

 President Chief Financial Officer

With a Copy to: With a Copy to:

Karen Morauski, VP & Counsel Scott Woods, VP and 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.

10.9GOVERNING 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.

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.  No 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 parties promptly of its inability so to perform, and if the inability continues for at least sixty (60) consecutive days (thirty (30) days in the cases of credit authorizations and processing of new Accounts), the parties so notified may then terminate this Agreement forthwith.  This 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 no 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 and Section 10.18. 

10.14 Mutual Drafting.  This Agreement is the joint product of Stage and Bank and each provision hereof has been subject to mutual consultation, negotiation and agreement of Stage 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 a 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 Stage; 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 Stage, whether regulatory or contractual, or to assume any responsibility for Stage's business or operations.

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

10.17 Confidentiality.

(a) A party, nor its respective Affiliates, shall disclose any information not of a public nature concerning the business or properties of the other parties which it learns as a result of negotiating or implementing this Agreement, including, without limitation, the 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 the parties 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 parties; provided that: (i) prior to disclosing any confidential information to any third party, the party making the disclosure shall give notice to the other parties 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 parties with respect to such filing and shall redact such portions of this Agreement which the other parties 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 parties), the filing party concludes that such request is inconsistent with the filing party's obligations under applicable laws.  No 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.  No party shall use the other parties' name for advertising or promotional purposes without such other parties' 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 parties, without breach of this Agreement or any other obligation of confidentiality or secrecy owed to such other parties 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 executes a confidentiality agreement provided by the non-disclosing party.  Each party covenants that at all times it shall have in place 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 parties 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.

10.18 Taxes.  Stage will be responsible for, and agrees to pay, all sales, use, excise, and value-added taxes, or taxes of a similar nature (excluding personal property taxes and taxes based on Bank's income which shall be borne by Bank), imposed by the United States, any state or local government, or other taxing authority after the Plan Commencement Date, on all services provided by Bank under this Agreement.  Bank will invoice Stage for any such taxes due. 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.

10.19 Business Continuity Plan.  Bank shall maintain a business continuity plan in accordance with the requirements of Applicable Law.

10.20 Dispute Resolution.  The parties agree that if during the Term of this Agreement any dispute should arise between them regarding the Plan or this Agreement, the parties will follow the dispute resolution procedures set forth in this subsection.  In the event of a dispute, each party shall identify and forward to the other parties in writing its understanding of the underlying issues and/or concerns to be resolved.  The Operating Committee shall address such issues or concerns, but if the Operating Committee cannot unanimously agree upon a resolution, then the Chief Financial Officer for Stage and the Chief Executive Officer for Bank shall discuss the issues in good faith in order to reach a mutually agreeable resolution.  In the event a mutually agreeable resolution is not reached, each party shall be free to take such legal action as it deems appropriate to enforce this Agreement.  The prevailing party in any action to enforce this Agreement shall be entitled to recover from the non-prevailing party its costs and expenses related to the action including, but not limited to, attorney's fees.

SECTION 11.  PEEBLES ACCOUNTS RECONCILIATION 

11.1Peebles Accounts Reconciliation by Bank.  Bank shall within thirty (30) days after the end of the first three (3) Peebles Plan Years (each year the "Reconciliation Period") perform the following reconciliation with respect to the Peebles Accounts and Purchases and Net Sales related to Peebles Accounts: 

(a) Bank shall (i) calculate the difference between the Collected Portfolio Yield Per Statemented Account, reduced by the amount of the Peebles Marketing Fund contributions made by Bank pursuant to Section 2.5(b)(2)(ii) and (iii), but excluding additional contributions calculated pursuant to Section 2.5(b)(2)(i) for late fees collected by Bank, divided by the average number of Peebles Statemented Accounts during the applicable Reconciliation Period, and the Target Collected Portfolio Yield Per Account Billed during the applicable Reconciliation Period, and (ii) the difference shall then be multiplied by the average number of Peebles Statemented Accounts per month during the applicable Reconciliation Period.  The result of the amount calculated pursuant to this Section 11.1(a) shall be referred to as the "Reconciliation Amount."

(b) If the Reconciliation Amount determined by Bank for the applicable Reconciliation Period is a negative number, then (i) if the cumulative of the Reconciliation Amounts calculated in 11.1(a) for all prior Reconciliation Periods is less than zero dollars ($0), the negative Reconciliation Amount for the current period shall be invoiced by Bank to Stage and Stage shall pay such amount to Bank within thirty (30) days after the date of receipt of such invoice, provided, however that the maximum aggregate amount that Stage shall be required pay to Bank pursuant to this Section 11 shall be three million five hundred thousand dollars ($3,500,000), or (ii) if the net cumulative total of the Reconciliation Amounts calculated in 11.1(a) for all prior Reconciliation Periods is greater than zero dollars ($0), the negative Reconciliation Amount for the current period shall have deducted from it fifty percent (50%) of the cumulative positive net Reconciliation Amount from the prior periods, and the result shall be invoiced by Bank to Stage and Stage shall pay such amount to Bank within thirty (30) days after the date of receipt of such invoice, provided, however that the maximum aggregate amount that Stage shall be required pay to Bank pursuant to this Section 11 shall be three million five hundred thousand dollars ($3,500,000).   

(c) If the Reconciliation Amount determined by Bank in 11.1(a) for the applicable  Reconciliation Period is a positive number, then (i) if the cumulative of the Reconciliation Amount calculated in 11.1(a) for all prior Reconciliation Periods is greater than zero dollars ($0), Bank shall pay to Stage fifty percent (50%) of the positive Reconciliation Amounts for the current period; or (ii) if the cumulative of the Reconciliation Amounts calculated in 11.1(a) for all prior Reconciliation Periods is less than zero dollars ($0) but not more than negative three and one-half million dollars  (-$3,500,000), Bank shall pay to Stage all of the positive Reconciliation Amount calculated for the applicable period until the cumulative prior period Reconciliation Amount is reduced to zero dollars at which time Bank shall pay Stage fifty percent (50%) of any remaining positive Reconciliation Amounts from the current period; or (iii) if the cumulative of the Reconciliation Amounts calculated in 11.1(a) for all prior Reconciliation Periods is greater than negative three and one-half million dollars (-$3,500,000), Bank shall retain all of the positive Reconciliation Amount calculated for the period until the cumulative prior period Reconciliation Amount is reduced to negative three and one-half million dollars (-$3,500,000), at which time Bank shall pay to Stage any remaining positive Reconciliation Amounts from the current period, until the cumulative prior period reconciliation is reduced to zero dollars at which time Bank shall pay Stage fifty percent (50%) of any remaining positive Reconciliation Amounts from the current period.

 

(Signature block on following 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

 "STORES"                                                            
STAGES STORES, INC.,

                                  
a Nevada corporation

  
    
      
        
          
            
              
                 By:  /s/ Richard E. Stasyszen

                

              

            

          

        

      

    

  

                                    
Name: Richard E. Stasyszen

                                                                                       
Title: Senior Vice President-Finance

                                                                                       
and Controller

"SPECIALTY"                                                               
SPECIALTY RETAILERS (TX) LP,

                                 
a Texas limited partnership

                                   
By:
SRI General Partner LLC,

                                                                                     
a Nevada limited liability company,

                                   
General Partner

                                   
By:  /s/ Richard E. Stasyszen

                                   
Name:
Richard E. Stasyszen

                                                                                         
Title: Manager

"BANK"                                                                            
WORLD FINANCIAL NETWORK NATIONAL

                                    
BANK, a national banking association

                                                                                            
By:  /s/ Daniel T. Groomes

                                                                                            
Name: Daniel T. Groomes

                                                                                            
Title: PresidentEXECUTION COPY

EXHIBIT 4.14

 

 

 

 

 

$150,000,000

 

PHILLIPS-VAN HEUSEN CORPORATION

as Issuer

7 1/4% Senior Notes Due February 15, 2011

 

____________________

INDENTURE

Dated as of February 18, 2004

____________________

 

 

SUNTRUST BANK

as Trustee

 

CROSS-REFERENCE TABLE

	
TIA

Section
	 	
Indenture Section

	 	 	 
	
310(a)(1)
	

	
8.10

	
(a)(2)
	

	
8.10

	
(a)(3)
	

	
N.A.

	
(a)(4)
	

	
N.A.

	
(a)(5)
	

	
N.A.

	
(b)
	

	
8.08; 8.10

	
(c)
	

	
N.A.

	
311(a)
	

	
8.11

	
(b)
	

	
8.11

	
(c)
	

	
N.A.

	
312(a)
	

	
2.05

	
(b)
	

	
11.03

	
(c)
	

	
11.03

	
313(a)
	

	
8.06

	
(b)(1)
	

	
N.A.

	
(b)(2)
	

	
8.06

	
(c)
	

	
8.06; 11.02

	
(d)
	

	
8.06

	
314(a)
	

	
5.02; 11.02; 5.12

	
(b)
	

	
N.A.

	
(c)(1)
	

	
11.04

	
(c)(2)
	

	
11.04

	
(c)(3)
	

	
N.A.

	
(d)
	

	
N.A.

	
(e)
	

	
11.05

	
(f)
	

	
N.A.

	
315(a)
	

	
8.01

	
(b)
	

	
8.05; 11.02

	
(c)
	

	
8.01

	
(d)
	

	
8.01

	
(e)
	

	
7.11

	
316(a)(last sentence)
	

	
11.06

	
(a)(1)(A)
	

	
7.05

	
(a)(1)(B)
	

	
7.04

	
(a)(2)
	

	
N.A.

	
(b)
	

	
7.07

	
(c)
	

	
7.10

	
317(a)(1)
	

	
7.08

	
(a)(2)
	

	
7.09

	
(b)
	

	
2.04

	
318(a)
	

	
11.01

	
(b)
	

	
11.01

	
(c)
	

	
11.01

	 	 	 
	 	
N.A. means Not Applicable.
	 

 

Note:  This Cross-Reference Table shall not, for any purpose, be deemed to be part of this Indenture.

 

	
TABLE OF CONTENTS

	 	 	
Page

	
ARTICLE 1

	 
	
DEFINITIONS AND INCORPORATION BY REFERENCE

	 	 	 
	
SECTION 1.01.
	
Definitions
	
1

	
SECTION 1.01.
	
Other Definitions
	
28

	
SECTION 1.02.
	
Incorporation by Reference of Trust Indenture Act
	
28

	
SECTION 1.03.
	
Rules of Construction
	
28

	 	 	 
	
ARTICLE 2

	 	 	 
	
THE SECURITIES

	 	 	 
	
SECTION 2.01.
	
Form and Dating
	
29

	
SECTION 2.02.
	
Execution and Authentication
	
29

	
SECTION 2.03.
	
Registrar and Paying Agent
	
30

	
SECTION 2.04.
	
Paying Agent To Hold Money in Trust
	
31

	
SECTION 2.05.
	
Holder Lists
	
31

	
SECTION 2.06.
	
Transfer and Exchange
	
31

	
SECTION 2.07.
	
Replacement Securities
	
31

	
SECTION 2.08.
	
Outstanding Securities
	
32

	
SECTION 2.09.
	
Temporary Securities
	
32

	
SECTION 2.10.
	
Cancellation
	
32

	
SECTION 2.11.
	
Defaulted Interest
	
32

	
SECTION 2.12.
	
CUSIP Numbers
	
33

	
SECTION 2.13.
	
Issuance of Additional Securities
	
33

	 	 	 
	
ARTICLE 3

	 	 	 
	
REDEMPTION

	 	 	 
	
SECTION 3.01.
	
Notices to Trustee
	
34

	
SECTION 3.02.
	
Selection of Securities To Be Redeemed
	
34

	
SECTION 3.03.
	
Notice of Redemption
	
34

	
SECTION 3.04.
	
Effect of Notice of Redemption
	
35

	
SECTION 3.05.
	
Deposit of Redemption Price
	
35

	
SECTION 3.06.
	
Securities Redeemed in Part
	
35

i

 

	 	 	 
	
ARTICLE 4

	 	 	 
	
CHANGE OF CONTROL

	 	 	 
	
SECTION 4.01.
	
Repurchase Right
	
35

	
SECTION 4.02.
	
Notices; Method of Exercising Repurchase Rights, Etc
	
36

	 	 	 
	
ARTICLE 5

	 	 	 
	
COVENANTS

	 	 	 
	
SECTION 5.01.
	
Payment of Securities
	
37

	
SECTION 5.02.
	
SEC Reports
	
37

	
SECTION 5.03.
	
Limitation on Indebtedness
	
37

	
SECTION 5.04.
	
Limitation on Restricted Payments
	
40

	
SECTION 5.05.
	
Limitation on Restrictions on Distributions from Restricted Subsidiaries
	

43

	
SECTION 5.06.
	
Limitation on Sales of Assets and Subsidiary Stock
	
44

	
SECTION 5.07.
	
Limitation on Affiliate Transactions
	
46

	
SECTION 5.08.
	
Limitation on the Sale or Issuance of Capital Stock of Restricted Subsidiaries
	

48

	
SECTION 5.09.
	
Limitation on Liens
	
49

	
SECTION 5.10.
	
Limitation on Sale/Leaseback Transactions
	
51

	
SECTION 5.11.
	
Future Subsidiary Guarantees
	
51

	
SECTION 5.12.
	
Compliance Certificate
	
51

	
SECTION 5.13.
	
Further Instruments and Acts
	
52

	
SECTION 5.14.
	
Covenant Removal
	
52

	 	 	 
	
ARTICLE 6

	 	 	 
	
MERGER AND CONSOLIDATION

	 	 	 
	
SECTION 6.01.
	
When Company May Merge or Transfer Assets
	
52

	
SECTION 6.02.
	
When a Subsidiary Guarantor May Merge or Transfer Assets
	
53

	 	 	 
	
ARTICLE 7

	 	 	 
	
DEFAULTS AND REMEDIES

	 	 	 
	
SECTION 7.01.
	
Events of Default
	
54

	
SECTION 7.02.
	
Acceleration
	
56

	
SECTION 7.03.
	
Other Remedies
	
56

	
SECTION 7.04.
	
Waiver of Past Defaults
	
56

	
SECTION 7.05.
	
Control by Majority
	
56

	
SECTION 7.06.
	
Limitation on Suits
	
57

	
SECTION 7.07.
	
Rights of Holders to Receive Payment
	
57

ii

 

	
SECTION 7.08.
	
Collection Suit by Trustee
	
57

	
SECTION 7.09.
	
Trustee May File Proofs of Claim
	
57

	
SECTION 7.10.
	
Priorities
	
58

	
SECTION 7.11.
	
Undertaking for Costs
	
58

	
SECTION 7.12.
	
Waiver of Stay or Extension Laws
	
58

	 	 	 
	
ARTICLE 8

	 	 	 
	
TRUSTEE

	 	 	 
	
SECTION 8.01.
	
Duties of Trustee
	
59

	
SECTION 8.02.
	
Rights of Trustee
	
60

	
SECTION 8.03.
	
Individual Rights of Trustee
	
60

	
SECTION 8.04.
	
Trustee's Disclaimer
	
60

	
SECTION 8.05.
	
Notice of Defaults
	
60

	
SECTION 8.06.
	
Reports by Trustee to Holders
	
61

	
SECTION 8.07.
	
Compensation and Indemnity
	
61

	
SECTION 8.08.
	
Replacement of Trustee
	
62

	
SECTION 8.09.
	
Successor Trustee by Merger
	
63

	
SECTION 8.10.
	
Eligibility; Disqualification
	
63

	
SECTION 8.11.
	
Preferential Collection of Claims Against Company
	
63

	 	 	 
	
ARTICLE 9

	 	 	 
	
DISCHARGE OF INDENTURE; DEFEASANCE

	 	 	 
	
SECTION 9.01.
	
Discharge of Liability on Securities; Defeasance
	
63

	
SECTION 9.02.
	
Conditions to Defeasance
	
64

	
SECTION 9.03.
	
Conditions to Defeasance
	
65

	
SECTION 9.04.
	
Repayment to Company
	
66

	
SECTION 9.05.
	
Indemnity for Government Obligations
	
66

	
SECTION 9.06.
	
Reinstatement
	
66

	 	 	 
	
ARTICLE 10

	 	 	 
	
AMENDMENTS

	 	 	 
	
SECTION 10.01.
	
Without Consent of Holders
	
66

	
SECTION 10.02.
	
With Consent of Holders
	
67

	
SECTION 10.03.
	
Compliance with Trust Indenture Act
	
68

	
SECTION 10.04.
	
Revocation and Effect of Consents and Waivers
	
68

	
SECTION 10.05.
	
Notation on or Exchange of Securities
	
68

	
SECTION 10.06.
	
Trustee To Sign Amendments
	
69

	
SECTION 10.07.
	
Payment for Consent
	
69

iii

 

	 	 	 
	
ARTICLE 11

	 	 	 
	
MISCELLANEOUS

	 	 	 
	
SECTION 11.01.
	
Trust Indenture Act Controls
	
69

	
SECTION 11.02.
	
Notices
	
69

	
SECTION 11.03.
	
Communication by Holders with Other Holders
	
70

	
SECTION 11.04.
	
Certificate and Opinion as to Conditions Precedent
	
70

	
SECTION 11.05.
	
Statements Required in Certificate or Opinion
	
70

	
SECTION 11.06.
	
When Securities Disregarded
	
71

	
SECTION 11.07
	
Rules by Trustee, Paying Agent and Registrar
	
71

	
SECTION 11.08.
	
Legal Holidays
	
71

	
SECTION 11.09.
	
Governing Law
	
71

	
SECTION 11.10.
	
No Recourse Against Others
	
71

	
SECTION 11.11.
	
Successors
	
72

	
SECTION 11.12.
	
Multiple Originals
	
72

	
SECTION 11.13.
	
Table of Contents; Headings
	
72

 

Rule 144A/Regulation S Appendix

Exhibit 1-Form of Initial Security

Exhibit A-Form of Exchange Security or Private Exchange Security

 

 

 

iv
INDENTURE, dated as of February 18, 2004, among Phillips-Van Heusen Corporation, a Delaware corporation (the "Company"), the
Subsidiary Guarantors, if any, from time to time party hereto and SunTrust Bank, a state banking corporation, as Trustee (the
"Trustee").

Each party agrees as follows for the benefit of the other parties and for the equal and ratable benefit of the Holders of the Company's
Initial Securities, Exchange Securities and Private Exchange Securities (collectively, the "Securities" or "Notes"):

ARTICLE 1

Definitions and Incorporation by Reference

SECTION 1.01.  Definitions.

"Additional Assets" means: 
(1)any property, plant or equipment used in a Related Business; 

(2)the Capital Stock of a Person that becomes a Restricted Subsidiary as a result of the acquisition of such Capital Stock by the
Company or another Restricted Subsidiary; or

(3)Capital Stock constituting a minority interest in any Person that at such time is a Restricted Subsidiary;

provided, however, that any such Restricted Subsidiary described in clause (2) or (3) above is primarily engaged in a Related
Business.  

"Additional Securities" means, subject to the Company's compliance with Section 5.03, any additional 7 1/4% Senior Notes due February
15, 2011 issued from time to time after the Issue Date under the terms of this Indenture (other than pursuant to Section 2.06, 2.07, 2.09, 3.06
or 10.05 of this Indenture or Section 2.3 of the Appendix and other than Exchange Securities or Private Exchange Securities issued pursuant to
an exchange offer for other Securities outstanding under this Indenture).

"Affiliate" of any specified Person means any other Person, directly or indirectly, controlling or controlled by or under direct or
indirect common control with such specified Person.  For the purposes of this definition, "control" when used with respect to any Person means
the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing.  For purposes of Section 5.04,
Section 5.06 and Section 5.07 only, "Affiliate" shall also mean any beneficial owner of Capital Stock representing 10% or more of the total
voting power of the Voting Stock (on a fully diluted basis) of the Company or of rights or warrants to purchase such Capital Stock (whether or
not currently exercisable).  

"Asset Disposition" means (a) an Asset Swap or (b) any sale, lease, transfer or other disposition (or series of related sales,
leases, transfers or dispositions) by the Company or any Restricted Subsidiary, including any disposition by means of a merger, consolidation
or similar transaction (each referred to for the purposes of this definition as a "disposition"), of: 
(1)any shares of Capital Stock of a Restricted Subsidiary (other than directors' qualifying shares or shares required by applicable law
to be held by a Person other than the Company or a Restricted Subsidiary); 

(2)all or substantially all the assets of any division or line of business of the Company or any Restricted Subsidiary; or 

(3)any other assets of the Company or any Restricted Subsidiary outside of the ordinary course of business of the Company or such
Restricted Subsidiary 

(other than, in the case of clauses (1), (2) and (3) above,
(A)a disposition by a Restricted Subsidiary to the Company or by the Company or a Restricted Subsidiary to a Restricted Subsidiary
(other than a Securitization Subsidiary);

(B)for purposes of Section 5.06 only, (x) a disposition that constitutes a Restricted Payment permitted by Section 5.04 or a Permitted
Investment and (y) a disposition of all or substantially all the assets of the Company in accordance with Article 6; 

(C)a disposition of assets with a fair market value of less than $2.0 million;

 

(D)disposals of obsolete, damaged or worn out equipment or property or property that is no longer useful in the conduct of the Company's
business and that, in either case, is disposed of in the ordinary course of business; and 

(E)any disposition of accounts receivable, licensing royalties and related assets to or of a Securitization Subsidiary pursuant to a
Qualified Securitization Transaction.

"Asset Swap" means any exchange of property or assets of the Company or any Restricted Subsidiary (including shares of Capital Stock
of a Restricted Subsidiary) for property or assets of another Person (including shares of Capital Stock of a Person whose primary business is a
Related Business) that are intended to be used by the Company or any Restricted Subsidiary in a Related Business, including, to the extent 

2

necessary to equalize the value of the assets being exchanged, cash of any party to such asset swap.

"Attributable Debt" in respect of a Sale/Leaseback Transaction means, as at the time of determination, the present value (discounted
at the interest rate borne by the Notes, compounded annually) of the total obligations of the lessee for rental payments during the remaining
term of the lease included in such Sale/Leaseback Transaction (including any period for which such lease has been extended).  

"Average Life" means, as of the date of determination, with respect to any Indebtedness, the quotient obtained by dividing:
(1)the sum of the products of the numbers of years from the date of determination to the dates of each successive scheduled principal
payment of or redemption or similar payment with respect to such Indebtedness multiplied by the amount of such payment by 

(2)the sum of all such payments.  

"Board of Directors" means the Board of Directors of the Company or any committee thereof duly authorized to act on behalf of such
Board.  

"Borrowing Base" means, as of any date of determination, an amount equal to (x) the sum without duplication of (1) 80% of the book
value of the accounts receivable of the Company and its Restricted Subsidiaries on a consolidated basis and (2) 65% of the book value of the
inventory of the Company and its Restricted Subsidiaries on a consolidated basis, in each case as of the most recently ended fiscal quarter of
the Company preceding the date on which the Indebtedness is Incurred, less (y) the Foreign Borrowing Base of any Foreign Restricted
Subsidiary to the extent that Indebtedness of such Foreign Restricted Subsidiary Incurred under Section 5.03(b)(14)(A) is then outstanding.

"Business Day" means each day which is not a Legal Holiday.  

"Capital Lease Obligation" means an obligation that is required to be classified and accounted for as a capital lease for financial
reporting purposes in accordance with GAAP, and the amount of Indebtedness represented by such obligation shall be the capitalized amount of
such obligation determined in accordance with GAAP; and the Stated Maturity thereof shall be the date of the last payment of rent or any other
amount due under such lease prior to the first date upon which such lease may be terminated by the lessee without payment of a penalty.  For
purposes of Section 5.09, a Capital Lease Obligation will be deemed to be secured by a Lien on the property being leased.  

"Capital Stock" of any Person means any and all shares, interests, rights to purchase, warrants, options, participations or other
equivalents of or interests in (however designated) equity of such Person, including any Preferred Stock, but excluding any debt securities
convertible into such equity.  

3

"CK Amount" for any period means the Design Services Purchase Payments (as defined in the CK Purchase Agreement) paid or payable by
the Company or any of its Subsidiaries to Mr. Calvin Klein or the Klein Heirs (as defined in the CK Purchase Agreement) for such period
pursuant to the CK Purchase Agreement.

"CK Purchase Agreement" means the Stock Purchase Agreement, dated as of December 17, 2002, among the Company, Calvin Klein, Inc.,
Calvin Klein (Europe), Inc., Calvin Klein (Europe II) Corp., Calvin Klein Europe S.R.L., CK Service Corp., Calvin Klein, Barry Schwartz, Trust
for the Benefit of the Issue of Calvin Klein, Trust for the Benefit of the Issue of Barry Schwartz, Stephanie Schwartz-Ferdman and Jonathan
Schwartz, as the same may be amended from time to time.

"Change of Control" means:
(1)any "person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act), other than one or more Permitted Holders, is or
becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that for purposes of this clause (1) such
person shall be deemed to have "beneficial ownership" of all shares that any such person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time), directly or indirectly, of more than 50% of the total voting power of the Voting
Stock of the Company; (for the purposes of this clause (1), such person shall be deemed to beneficially own any Voting Stock of a Person (the
"specified person") held by any other Person (the "parent entity"), if such person is the beneficial owner (as defined above in this clause
(1)), directly or indirectly, of more than 50% of the voting power of the Voting Stock of the parent entity and the Permitted Holders
beneficially own (as defined in this proviso), directly or indirectly, in the aggregate a lesser percentage of the voting power of the Voting
Stock of such parent entity and do not have the right or ability by voting power, contract or otherwise to elect or designate for election a
majority of the board of directors of the parent entity); 

(2)individuals who on the Issue Date constituted the Board of Directors (together with any new directors whose election by the Board of
Directors or whose nomination for election by the stockholders of the Company was approved by a vote of a majority of the directors of the
Company then still in office who were either directors on the Issue Date or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Board of Directors then in office; 

4

 
(3)the adoption of a plan relating to the liquidation or dissolution of the Company; or

(4)any merger, consolidation, reorganization, sale or other similar transaction in connection with which any holder of the Series B
Preferred Stock exercises the right to deem such transaction a liquidation event pursuant to the terms of the Series B Preferred Stock. 

"Code" means the Internal Revenue Code of 1986, as amended.  

"Commodity Agreement" means any commodity or raw materials futures contract, commodity or raw materials option, or any other
agreement designed to protect against or manage exposure to fluctuations in commodity or raw materials pricing.

"Company" means the party named as such in this Indenture until a successor replaces it and, thereafter, means the successor and, for
purposes of any provision contained herein and required by the TIA, each other obligor on the indenture securities.

"Consolidated Coverage Ratio" as of any date of determination means the ratio of (x) the aggregate amount of EBITDA for the period of
the most recent four consecutive fiscal quarters for which financial statements are available on or prior to the date of such determination to
(y) Consolidated Interest Expense for such four fiscal quarters; provided, however, that: 
(1)if the Company or any Restricted Subsidiary has Incurred any Indebtedness since the beginning of such period that remains outstanding
or if the transaction giving rise to the need to calculate the Consolidated Coverage Ratio is an Incurrence of Indebtedness, or both, EBITDA
and Consolidated Interest Expense for such period shall be calculated after giving effect on a pro forma basis to such Indebtedness as
if such Indebtedness had been Incurred on the first day of such period; 

(2)if the Company or any Restricted Subsidiary has repaid, repurchased, defeased or otherwise discharged any Indebtedness since the
beginning of such period or if any Indebtedness is to be repaid, repurchased, defeased or otherwise discharged (in each case other than
Indebtedness Incurred under any revolving credit facility unless such Indebtedness has been permanently repaid and has not been replaced) on
the date of the transaction giving rise to the need to calculate the Consolidated Coverage Ratio, EBITDA and Consolidated Interest Expense for
such period shall be calculated on a pro forma basis as if such discharge had occurred on the first day of such period and as if the
Company or such Restricted Subsidiary has not earned the interest income actually 

5

earned during such period in respect of cash or Temporary Cash Investments used to repay, repurchase, defease or otherwise discharge such
Indebtedness; 

(3)if since the beginning of such period the Company or any Restricted Subsidiary shall have made any Asset Disposition, EBITDA for such
period shall be reduced by an amount equal to EBITDA (if positive) directly attributable to the assets which are the subject of such Asset
Disposition for such period, or increased by an amount equal to EBITDA (if negative), directly attributable thereto for such period and
Consolidated Interest Expense for such period shall be reduced by an amount equal to the Consolidated Interest Expense directly attributable to
any Indebtedness of the Company or any Restricted Subsidiary repaid, repurchased, defeased or otherwise discharged with respect to the Company
and its continuing Restricted Subsidiaries in connection with such Asset Disposition for such period (or, if the Capital Stock of any
Restricted Subsidiary is sold, the Consolidated Interest Expense for such period directly attributable to the Indebtedness of such Restricted
Subsidiary to the extent the Company and its continuing Restricted Subsidiaries are no longer liable for such Indebtedness after such sale);

(4)if since the beginning of such period the Company or any Restricted Subsidiary (by merger or otherwise) shall have made an Investment
in any Restricted Subsidiary (or any Person which becomes a Restricted Subsidiary) or an acquisition of assets, including any acquisition of
assets occurring in connection with a transaction requiring a calculation to be made hereunder, which constitutes all or substantially all of
an operating unit of a business, EBITDA and Consolidated Interest Expense for such period shall be calculated after giving pro forma
effect thereto (including the Incurrence of any Indebtedness) as if such Investment or acquisition occurred on the first day of such
period; and 

(5)if since the beginning of such period any Person (that subsequently became a Restricted Subsidiary or was merged with or into the
Company or any Restricted Subsidiary since the beginning of such period) shall have made any Asset Disposition, any Investment or acquisition
of assets that would have required an adjustment pursuant to clause (3) or (4) above if made by the Company or a Restricted Subsidiary during
such period, EBITDA and Consolidated Interest Expense for such period shall be calculated after giving pro forma effect thereto as if
such Asset Disposition, Investment or acquisition occurred on the first day of such period.  

6

For purposes of this definition, whenever pro forma effect is to be given to an acquisition of assets (including Capital Stock), the
amount of income or earnings relating thereto and the amount of Consolidated Interest Expense associated with any Indebtedness Incurred in
connection therewith, the pro forma calculations shall be determined in good faith by a responsible financial or accounting Officer of
the Company in accordance with GAAP.  If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the
interest on such Indebtedness shall be calculated as if the rate in effect on the date of determination had been the applicable rate for the
entire period (taking into account any Interest Rate Agreement applicable to such Indebtedness if such Interest Rate Agreement has a remaining
term in excess of 12 months).

"Consolidated Current Liabilities" as of the date of determination means the aggregate amount of liabilities of the Company and its
consolidated Restricted Subsidiaries which may properly be classified as current liabilities (including taxes accrued as estimated), on a
consolidated basis, after eliminating:
(1)all intercompany items between the Company and any Restricted Subsidiary; and 

(2)all current maturities of long-term Indebtedness, all as determined in accordance with GAAP consistently applied.  

"Consolidated Interest Expense" means, for any period, the total interest expense of the Company and its consolidated Restricted
Subsidiaries, plus, to the extent not included in such total interest expense, and to the extent incurred by the Company or its Restricted
Subsidiaries, without duplication: 
(1)interest expense attributable to capital leases and the interest expense attributable to leases constituting part of a Sale/Leaseback
Transaction; 

(2)amortization of debt discount and debt issuance cost; 

(3)capitalized interest; 

(4)non-cash interest expense; 

(5)commissions, discounts and other fees and charges owed with respect to letters of credit and bankers' acceptance financing; 

(6)net payments pursuant to Hedging Obligations;

(7)dividends declared and paid or payable in cash or Disqualified Stock in respect of (A) all Disqualified Stock of the Company and (B)
all Preferred Stock of Restricted Subsidiaries, in each case held by Persons other than the Company or a Wholly Owned Subsidiary;
provided, however, that such dividends will be multiplied by a fraction, the numerator of which is one and the 

7

denominator of which is one minus the effective combined tax rate of the issuer of such stock (expressed as a decimal) for such period (as
estimated by the Chief Financial Officer of the Company in good faith); 

(8)interest incurred in connection with Investments in discontinued operations; 

(9)interest accruing on any Indebtedness of any other Person to the extent such Indebtedness is Guaranteed by (or secured by the assets
of) the Company or any Restricted Subsidiary; and 

(10)the cash contributions to any employee stock ownership plan or similar trust to the extent such contributions are used by such plan
or trust to pay interest or fees to any Person (other than the Company) in connection with Indebtedness Incurred by such plan or trust.

"Consolidated Net Income" means, for any period, the net income of the Company and its consolidated Subsidiaries; provided,
however, that there shall not be included in such Consolidated Net Income:
(1)any net income of any Person (other than the Company) if such Person is not a Restricted Subsidiary, except that: 

(A)subject to the exclusion contained in clause (4) below, the Company's equity in the net income of any such Person for such period
shall be included in such Consolidated Net Income up to the aggregate amount of cash actually distributed by such Person during such period to
the Company or a Restricted Subsidiary as a dividend or other distribution (subject, in the case of a dividend or other distribution paid to a
Restricted Subsidiary, to the limitations contained in clause (3) below); and 

(B)the Company's equity in a net loss of any such Person for such period shall be included in determining such Consolidated Net Income
to the extent of any cash actually contributed by the Company or a Restricted Subsidiary to such Person during such period; 

(2)any net income (or loss) of any Person acquired by the Company or a Subsidiary in a pooling of interests transaction for any period
prior to the date of such acquisition;

(3)any net income of any Restricted Subsidiary if such Restricted Subsidiary is subject to restrictions, directly or indirectly, on the
payment of dividends or the making of distributions by such 

8

Restricted Subsidiary, directly or indirectly, to the Company, except that:

(A)subject to the exclusion contained in clause (4) below, the Company's equity in the net income of any such Restricted Subsidiary for
such period shall be included in such Consolidated Net Income up to the aggregate amount of cash that could have been distributed by such
Restricted Subsidiary during such period to the Company or another Restricted Subsidiary as a dividend or other distribution (subject, in the
case of a dividend or other distribution paid to another Restricted Subsidiary, to the limitation contained in this clause); and 

(B)the Company's equity in a net loss of any such Restricted Subsidiary for such period shall be included in determining such
Consolidated Net Income; 

(4)any gain (or loss) realized upon the sale or other disposition of any assets of the Company, its consolidated Subsidiaries or any
other Person (including pursuant to any Sale/Leaseback Transaction) which is not sold or otherwise disposed of in the ordinary course of
business and any gain (or loss) realized upon the sale or other disposition of any Capital Stock of any Person; 

(5)extraordinary gains or losses; and 

(6)the cumulative effect of a change in accounting principles.  

Notwithstanding the foregoing, for the purposes of Section 5.04 only, there shall be excluded from Consolidated Net Income any repurchases,
repayments or redemptions of Investments, proceeds realized on the sale of Investments or return of capital to the Company or a Restricted
Subsidiary to the extent such repurchases, repayments, redemptions, proceeds or returns increase the amount of Restricted Payments permitted
under Section 5.04 pursuant to clause (a)(3)(D) thereof.  

"Consolidated Net Tangible Assets" as of any date of determination, means the total amount of assets (less accumulated depreciation
and amortization, allowances for doubtful receivables, other applicable reserves and other properly deductible items) which would appear on a
consolidated balance sheet of the Company and its consolidated Restricted Subsidiaries, determined on a consolidated basis in accordance with
GAAP, and after giving effect to purchase accounting and after deducting therefrom Consolidated Current Liabilities and, to the extent
otherwise included, the amounts of: 
(1)minority interests in consolidated Subsidiaries held by Persons other than the Company or a Restricted Subsidiary; 

9

(2)excess of cost over fair value of assets of businesses acquired, as determined in good faith by the Board of Directors; 

(3)any revaluation or other write-up in book value of assets subsequent to the Issue Date as a result of a change in the method of
valuation in accordance with GAAP consistently applied; 

(4)unamortized debt discount and expenses and other unamortized deferred charges, goodwill, patents, trademarks, service marks, trade
names, copyrights, licenses, organization or developmental expenses and other intangible items; 

(5)cash set apart and held in a sinking or other analogous fund established for the purpose of redemption or other retirement of Capital
Stock to the extent such obligation is not reflected in Consolidated Current Liabilities; and 

(6)Investments in and assets of Unrestricted Subsidiaries.  

"Credit Agreement" means the Revolving Credit Agreement dated as of October 17, 2002, by and among the Company, the Subsidiaries of
the Company referred to therein, the lenders referred to therein, JPMorgan Chase Bank, as Administrative Agent and Collateral Agent, Lead
Arranger and Sole Bookrunner, Fleet Retail Finance Inc., as Co-Arranger and Co-Syndication Agent, Sun Trust Bank, as Co-Syndication Agent, and
the CIT Group/Commercial Services, Inc. and Bank of America, N.A., as Co-Documentation Agents, together with the related documents thereto
(including any guarantees and security documents, whether in effect on the Issue Date or entered into thereafter), as amended, extended,
renewed, restated, replaced, restructured, supplemented or otherwise modified (in whole or in part, and without limitation as to amount of
Indebtedness which may be Incurred thereunder, terms, conditions, covenants and other provisions) from time to time, and any agreement (and
related document) governing Indebtedness incurred to Refinance, in whole or in part, the borrowings and commitments then outstanding or
permitted to be outstanding under such Credit Agreement or a successor Credit Agreement, whether by the same or any other lender or group of
lenders.

"Currency Agreement" means in respect of a Person any foreign exchange contract, currency swap agreement or other similar agreement
designed to protect such Person against fluctuations in currency values.  

"Default" means any event which is, or after notice or passage of time or both would be, an Event of Default.  

"Disqualified Stock" means, with respect to any Person, any Capital Stock which by its terms (or by the terms of any security into
which it is convertible or for which it is exchangeable at the option of the holder) or upon the happening of any event: 

10

 
(1)matures or is mandatorily redeemable (other than redeemable only for Capital Stock of such Person which is not itself Disqualified
Stock) pursuant to a sinking fund obligation or otherwise; 

(2)is convertible or exchangeable at the option of the holder for Indebtedness or Disqualified Stock; or 

(3)is mandatorily redeemable or must be purchased upon the occurrence of certain events or otherwise, in whole or in part; 

in each case on or prior to the date that is 91 days after the Stated Maturity of the Notes; provided, however, that any
Capital Stock that would not constitute Disqualified Stock but for provisions thereof giving holders thereof the right to require such Person
to purchase or redeem such Capital Stock upon the occurrence of an "asset sale" or "change of control" occurring prior to the first anniversary
of the Stated Maturity of the Notes shall not constitute Disqualified Stock if: 
(1)the "asset sale" or "change of control" provisions applicable to such Capital Stock are not more favorable to the holders of such
Capital Stock than the terms applicable to the Notes pursuant to Section 5.06 and Article 4; and 

(2)any such requirement only becomes operative after compliance with such terms applicable to the Notes, including the purchase of any
Notes tendered pursuant thereto.  

The amount of any Disqualified Stock that does not have a fixed redemption, repayment or repurchase price will be calculated in accordance
with the terms of such Disqualified Stock as if such Disqualified Stock were redeemed, repaid or repurchased on any date on which the amount of
such Disqualified Stock is to be determined pursuant to this Indenture; provided, however, that if such Disqualified Stock could
not be required to be redeemed, repaid or repurchased at the time of such determination, the redemption, repayment or repurchase price will be
the book value of such Disqualified Stock as reflected in the most recent financial statements of such Person.  For avoidance of doubt, the
Series B Preferred Stock on the terms thereof in effect on the Issue Date is deemed not to constitute Disqualified Stock.

"EBITDA" for any period means Consolidated Net Income less the CK Amount, plus the following to the extent deducted in calculating
such Consolidated Net Income: 
(1)all income tax expense of the Company and its consolidated Restricted Subsidiaries; 

(2)Consolidated Interest Expense; 

11

(3)depreciation and amortization expense of the Company and its consolidated Restricted Subsidiaries (excluding amortization expense
attributable to a prepaid operating expense that was paid in cash in a prior period); 

(4)all other non-cash charges of the Company and its consolidated Restricted Subsidiaries (excluding any such non-cash charge to the
extent that it represents an accrual of or reserve for cash expenditures in any future period); 

(5)transition costs of up to $24.0 million in connection with the acquisition of Calvin Klein, Inc. incurred no later than the fourth
quarter of the Company's 2003 fiscal year; and

(6)the amount of any deduction in Consolidated Net Income for such period from a write-off of goodwill attributable to the payment of
the CK Amount; provided, that such amount shall in no event be greater than the CK Amount deducted in calculating EBITDA;

in each case for such period.  Notwithstanding the foregoing, the provision for taxes based on the income or profits of, and the
depreciation and amortization and noncash charges of, a Restricted Subsidiary shall be added to Consolidated Net Income to compute EBITDA only
to the extent (and in the same proportion, including by reason of minority interest) that the net income of such Restricted Subsidiary was
included in calculating Consolidated Net Income and only if a corresponding amount could have been distributed by such Restricted Subsidiary
during such period to the Company or another Restricted Subsidiary as a dividend or other distribution (which other Restricted Subsidiary could
also have made such dividend or other distribution).

"Equity Offering" means a primary public or private offering of common stock of the Company.  

"Exchange Act" means the U.S.  Securities Exchange Act of 1934, as amended.  

"Existing Notes" means the Company's 9 1/2% Senior Subordinated Notes due 2008 issued under an Indenture dated as of April 22, 1998
between the Company and Union Bank of California, N.A., as trustee, the Company's 7 3/4% Debentures due 2023 issued
under an Indenture dated as of November 1, 1993 between the Company and the Bank of New York, as trustee, as amended, and the Company's 8 1/8%
Senior Notes due 2013 issued under an Indenture dated May 5, 2003 between the Company and SunTrust Bank, as trustee.

"Foreign Borrowing Base" means, as of any date of determination and with respect to any Foreign Restricted Subsidiary, an amount
equal to (x) the sum without duplication of (1) 80% of the book value of the accounts receivable of such 

12

Foreign Restricted Subsidiary and (2) 65% of the book value of the inventory of such Foreign Restricted Subsidiary, in each case as of the
most recently ended fiscal quarter of the Company preceding the date on which the Indebtedness is Incurred, less (y) any portion of such amount
included in the Borrowing Base, but only to the extent such portion is used to determine the amount of Indebtedness which could be Incurred and
is then outstanding under Section 5.03(b)(1)(B).

"Foreign Restricted Subsidiary" means any Restricted Subsidiary not incorporated or organized under the laws of the United States,
any State thereof or the District of Columbia.  

"GAAP" means generally accepted accounting principles in the United States as in effect as of the Issue Date, including those set
forth in: 
(1)the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants;

(2)statements and pronouncements of the Financial Accounting Standards Board; 

(3)such other statements by such other entity as approved by a significant segment of the accounting profession; and 

(4)the rules and regulations of the SEC governing the inclusion of financial statements (including pro forma financial
statements) in periodic reports required to be filed pursuant to Section 13 of the Exchange Act, including opinions and pronouncements in staff
accounting bulletins and similar written statements from the accounting staff of the SEC.  

"Guarantee" means any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any Indebtedness of any
Person and any obligation, direct or indirect, contingent or otherwise, of such Person: 
(1)to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness of such Person (whether arising by
virtue of partnership arrangements, or by agreements to keep-well, to purchase assets, goods, securities or services, to take-or-pay or to
maintain financial statement conditions or otherwise); or 

(2)entered into for the purpose of assuring in any other manner the obligee of such Indebtedness of the payment thereof or to protect
such obligee against loss in respect thereof (in whole or in part); 

provided, however, that the term "Guarantee" shall not include endorsements for collection or deposit in the ordinary course of
business.  The term "Guarantee" used as a verb has a corresponding meaning.  

13

"Guaranty Agreement" means a supplemental indenture, in a form satisfactory to the Trustee, pursuant to which a Subsidiary Guarantor
guarantees the Company's obligations with respect to the Notes on the terms provided for in this Indenture.  

"Hedging Obligations" of any Person means the obligations of such Person pursuant to any Interest Rate Agreement, Currency Agreement
or Commodity Agreement entered into in the ordinary course of business.  

"Holder" or "Noteholder" means the Person in whose name a Note is registered on the Registrar's books.  

"Incur" means issue, assume, Guarantee, incur or otherwise become liable for; provided, however, that any Indebtedness
or Capital Stock of a Person existing at the time such Person becomes a Restricted Subsidiary (whether by merger, consolidation, acquisition or
otherwise) shall be deemed to be Incurred by such Person at the time it becomes a Restricted Subsidiary.  The term "Incurrence" when used as a
noun shall have a correlative meaning.  

"Indebtedness" means, with respect to any Person on any date of determination (without duplication): 
(1)the principal in respect of (A) indebtedness of such Person for money borrowed and (B) indebtedness evidenced by notes, debentures,
bonds or other similar instruments for the payment of which such Person is responsible or liable, including, in each case, any premium on such
indebtedness to the extent such premium has become due and payable; 

(2)all Capital Lease Obligations of such Person and all Attributable Debt in respect of Sale/Leaseback Transactions entered into by such
Person; 

(3)all obligations of such Person issued or assumed as the deferred purchase price of property, all conditional sale obligations of such
Person and all obligations of such Person under any title retention agreement (but excluding trade accounts payable or accrued liabilities
arising in the ordinary course of business which are not overdue or which are being contested in good faith); 

(4)all obligations of such Person for the reimbursement of any obligor on any letter of credit, banker's acceptance or similar credit
transaction;

(5)the amount of all obligations of such Person with respect to the redemption, repayment or other repurchase of any Disqualified Stock
of such Person or, with respect to any Preferred Stock of 

14

any Subsidiary of such Person, the principal amount of such Preferred Stock to be determined in accordance with this Indenture; 

(6)all obligations of the type referred to in clauses (1) through (5) of other Persons and all dividends of other Persons for the
payment of which, in either case, such Person is responsible or liable, directly or indirectly, as obligor, guarantor or otherwise, including
by means of any Guarantee; 

(7)all obligations of the type referred to in clauses (1) through (6) of other Persons secured by any Lien on any property or asset of
such Person (whether or not such obligation is assumed by such Person), the amount of such obligation being deemed to be the lesser of the
value of such property or assets and the amount of the obligation so secured; and

(8)to the extent not otherwise included in this definition, Hedging Obligations of such Person.

The amount of Indebtedness of any Person at any date shall be the outstanding balance at such date of all unconditional obligations as
described above and the maximum liability, upon the occurrence of the contingency giving rise to the obligation, of any contingent obligations
at such date; provided, however, that in the case of Indebtedness sold at a discount, the amount of such Indebtedness at any time
will be the accreted value thereof at such time.

"Independent Qualified Party" means an investment banking firm, accounting firm or appraisal firm of national standing;
provided, however, that such firm is not an Affiliate of the Company.  

"Interest Rate Agreement" means in respect of a Person any interest rate swap agreement, interest rate cap agreement, interest rate
collar agreement or other financial agreement or arrangement including, without limitation, any such arrangement whereby, directly or
indirectly, such Person is entitled to receive from time to time periodic payments calculated by applying either a fixed or floating rate of
interest on a stated notional amount in exchange for periodic payments made by such Person calculated by applying a fixed or floating rate of
interest on the same notional amount.  

"Investment" in any Person means any direct or indirect advance, loan (other than advances to customers in the ordinary course of
business that are recorded as accounts receivable on the balance sheet of the lender) or other extensions of credit (including by way of
Guarantee or similar arrangement) or capital contribution to (by means of any transfer of cash or other property to others or any payment for
property or services for the account or use of others), or any purchase or acquisition of Capital Stock, Indebtedness or other similar
instruments issued by such Person.  Except as otherwise 

15

provided for herein, the amount of an Investment shall be its fair value at the time the Investment is made and without giving effect to
subsequent changes in value.  

For purposes of the definition of "Unrestricted Subsidiary", the definition of "Restricted Payment" and Section 5.04: 
(1)"Investment" shall include the portion (proportionate to the Company's equity interest in such Subsidiary) of the fair market
value of the net assets of any Subsidiary of the Company at the time that such Subsidiary is designated an Unrestricted Subsidiary;
provided, however, that upon a redesignation of such Subsidiary as a Restricted Subsidiary, the Company shall be deemed to
continue to have a permanent "Investment" in an Unrestricted Subsidiary equal to an amount (if positive) equal to (A) the Company's
"Investment" in such Subsidiary at the time of such redesignation less (B) the portion (proportionate to the Company's equity interest in such
Subsidiary) of the fair market value of the net assets of such Subsidiary at the time of such redesignation; and 

(2)any property transferred to or from an Unrestricted Subsidiary shall be valued at its fair market value at the time of such transfer,
in each case as determined in good faith by the Board of Directors.  

"Issue Date" means the date on which the Notes (other than any Additional Notes) are originally issued.

"Investment Grade" means (1) with respect to Standard & Poor's Ratings Group, any of the ratings categories from and including
AAA to and including BBB- and (2) with respect to Moody's Investor Service, Inc., any of the ratings categories from and including Aaa to and
including Baa3.  

"Legal Holiday" means a Saturday, a Sunday or a day on which banking institutions are not required to be open in the State of New
York.  

"Lien" means any mortgage, pledge, security interest, encumbrance, lien or charge of any kind (including any conditional sale or
other title retention agreement or lease in the nature thereof).  

"Limited Originator Recourse" means a reimbursement obligation of the Company in connection with a drawing on a letter of credit,
revolving loan commitment, cash collateral account or other such credit enhancement issued to support Indebtedness of a Securitization
Subsidiary that the Board of Directors determines is necessary to effectuate a Qualified Securitization Transaction; provided, that the
available amount of any such form of credit enhancement at any time shall not exceed 10% of the principal amount of such Indebtedness at such
time and provided, further, that such reimbursement obligation is permitted to be Incurred by the Company pursuant to Section
5.03 and that any such Lien securing such reimbursement obligation is permitted pursuant to Section 5.09.

16

"Net Available Cash" from an Asset Disposition means cash payments received therefrom (including any cash payments received by way of
deferred payment of principal pursuant to a note or installment receivable or otherwise and proceeds from the sale or other disposition of any
securities received as consideration, but only as and when received, but excluding any other consideration received in the form of assumption
by the acquiring Person of Indebtedness or other obligations relating to such properties or assets or received in any other noncash form), in
each case net of: 

(1)all legal, accounting, financial advisory, title and recording tax expenses, commissions and other fees and expenses incurred, and
all Federal, state, provincial, foreign and local taxes required to be accrued as a liability under GAAP, as a consequence of such Asset
Disposition; 

(2)all payments made on any Indebtedness which is secured by any assets subject to such Asset Disposition, in accordance with the terms
of any Lien upon or other security agreement of any kind with respect to such assets, or which must by its terms, or in order to obtain a
necessary consent to such Asset Disposition, or by applicable law, be repaid out of the proceeds of such Asset Disposition; 

(3)all distributions and other payments required to be made to minority interest holders in Restricted Subsidiaries as a result of such
Asset Disposition; and 

(4)the deduction of appropriate amounts provided by the seller as a reserve, in accordance with GAAP, against any liabilities associated
with the property or other assets disposed in such Asset Disposition and retained by the Company or any Restricted Subsidiary after such Asset
Disposition; provided, however, that any reduction in such reserve after consummation of the Asset Disposition will be deemed a
new Asset Disposition with Net Available Cash equal to the amount of such reduction.  

"Net Cash Proceeds", with respect to any issuance or sale of Capital Stock or Indebtedness, means (A) the cash proceeds of such
issuance or sale net of attorneys' fees, accountants' fees, underwriters' or placement agents' fees, discounts or commissions and brokerage,
consultant and other fees actually incurred in connection with such issuance or sale and net of taxes paid or payable as a result thereof and
(B) solely for purposes of Section 5.04(a)(3)(B), the fair market value (as of the date of the transaction and as determined in good faith by
the Board of Directors) of the Capital Stock (other than Disqualified Stock) of a Person (whose primary business is a Related Business) that
thereupon becomes a Restricted Subsidiary (other than a Securitization Subsidiary), which Capital Stock constitutes the proceeds received by
the Company from an issuance or sale of its Capital Stock, net of the fees and taxes described in clause (A) above.

17

"Notes" means the Notes to be issued pursuant to this Indenture.

"Obligations" means with respect to any Indebtedness all obligations for principal, premium, interest, penalties, fees,
indemnifications, reimbursements and other amounts payable pursuant to the documentation governing such indebtedness.

"Offering Circular" means the offering circular, together with any documents incorporated therein by reference, prepared by the
Company and relating to the Notes, dated as of February 12, 2004.

"Officer" means the Chairman of the Board, the President, any Vice President, the Treasurer or the Secretary of the Company.

"Officers' Certificate" means a certificate signed by two Officers.  

"Opinion of Counsel" means a written opinion from legal counsel who is reasonably acceptable to the Trustee.  The counsel may be an
employee of or counsel to the Company or the Trustee.  

"Permitted Guarantees" means any guarantee by a Restricted Subsidiary (i) outstanding on the Issue Date after giving effect to the
use of the net proceeds of the sale of the Notes as described in the Offering Circular, (ii) of Indebtedness of the Company Incurred under
Section 5.03(b)(1)  and (iii) of Indebtedness of the Company Incurred under a bank credit facility that is Incurred in compliance with Section
5.03 and secured in compliance with Section 5.09.

"Permitted Holders" means Apax Managers, Inc. and Apax Partners Europe Managers Limited and their Affiliates.

"Permitted Investment" means an Investment by the Company or any Restricted Subsidiary in: 

(1)the Company, a Restricted Subsidiary (other than a Securitization Subsidiary) or a Person that will, upon the making of such
Investment, become a Restricted Subsidiary (other than a Securitization Subsidiary); provided, however, that the primary business
of such Restricted Subsidiary is a Related Business; 

(2)another Person if as a result of such Investment such other Person is merged or consolidated with or into, or transfers or conveys
all or substantially all its assets to, the Company or a Restricted Subsidiary; provided, however, that such Person's primary
business is a Related Business; 

(3)cash and Temporary Cash Investments; 

(4)receivables owing to the Company or any Restricted Subsidiary if created or acquired in the ordinary course of business and 

18

payable or dischargeable in accordance with customary trade terms; provided, however, that such trade terms may include such
concessionary trade terms as the Company or any such Restricted Subsidiary deems reasonable under the circumstances; 

(5)payroll, travel and similar advances to cover matters that are expected at the time of such advances ultimately to be treated as
expenses for accounting purposes and that are made in the ordinary course of business; 

(6)loans or advances to employees made in the ordinary course of business consistent with past practices of the Company or such
Restricted Subsidiary but in any event not to exceed $2.0 million in the aggregate outstanding at any one time;

(7)stock, obligations or securities received in settlement of debts created in the ordinary course of business and owing to the Company
or any Restricted Subsidiary or in satisfaction of judgments or pursuant to any plan of reorganization or similar arrangement upon the
bankruptcy or insolvency of a debtor; 

(8)any Person to the extent such Investment represents the non-cash portion of the consideration received for an Asset Disposition as
permitted pursuant to Section 5.06; 

(9)Hedging Obligations in compliance with Section 5.03;

(10)any Person to the extent such Investment is in existence on the Issue Date (after giving effect to the use of the net proceeds of
the sale of the Notes as described in the Offering Circular); 

(11)a Securitization Subsidiary in connection with a Qualified Securitization Transaction which Investments are customary for such
transaction; and

(12)any Person engaged principally in a Related Business prior to such Investment if (i) at the time of such Investment and after giving
pro forma effect thereto, the Company is entitled to Incur an additional $1.00 of Indebtedness pursuant to Section 5.03(a)  and
(ii) the aggregate amount of all Investments made pursuant to this clause (12) does not exceed $15.0 million at any one time outstanding;
provided that Investments of up to $5.0 million in the aggregate at any one time outstanding shall be permitted under this clause (12)
without regard to the requirements of clause (i) of this clause (12).

"Person" means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company,
trust, unincorporated 

19

organization, government or any agency or political subdivision thereof or any other entity.  

"Preferred Stock", as applied to the Capital Stock of any Person, means Capital Stock of any class or classes (however designated)
which is preferred as to the payment of dividends or distributions, or as to the distribution of assets upon any voluntary or involuntary
liquidation or dissolution of such Person, over shares of Capital Stock of any other class of such Person.  

"principal" of a Note means the principal of the Note plus the premium, if any, payable on the Note which is due or overdue or is to
become due at the relevant time.  

"Purchase Money Indebtedness" means any Indebtedness of a Person to any seller or other Person incurred to finance the acquisition or
construction of any property or assets and which is incurred substantially concurrently therewith, is secured only by the assets so financed
and the principal amount of which does not exceed the cost of the assets acquired or constructed.

"Qualified Securitization Transaction" means any accounts receivable or licensing royalty financing facility or arrangement pursuant
to which a Securitization Subsidiary purchases or otherwise acquires accounts receivable or licensing royalties and related assets from the
Company or any Restricted Subsidiary and enters into a third party financing thereof on customary market terms that the Board of Directors has
concluded are fair to the Company and its Restricted Subsidiaries.

"Refinance" means, in respect of any Indebtedness, to refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or
to issue other Indebtedness in exchange or replacement for, such Indebtedness.  

"Refinanced" and "Refinancing" shall have correlative meanings.  

"Refinancing Indebtedness" means Indebtedness that Refinances any Indebtedness of the Company or any Restricted Subsidiary existing
on the Issue Date (after giving effect to the use of the net proceeds of the sale of the Notes as described in the Offering Circular) or
Incurred in compliance with this Indenture, including Indebtedness that Refinances Refinancing Indebtedness; provided, however,
that: 

(1)such Refinancing Indebtedness has a Stated Maturity no earlier than the Stated Maturity of the Indebtedness being Refinanced; 

(2)such Refinancing Indebtedness has an Average Life at the time such Refinancing Indebtedness is Incurred that is equal to or greater
than the Average Life of the Indebtedness being Refinanced; and 

(3)unless otherwise permitted to be Incurred pursuant to Section 5.03, such Refinancing Indebtedness has an aggregate principal 

20

amount (or if Incurred with original issue discount, an aggregate issue price) that is equal to or less than the aggregate principal amount
(or if Incurred with original issue discount, the aggregate accreted value) then outstanding or committed (plus fees and expenses, including
any premium and defeasance costs) under the Indebtedness being Refinanced; 

provided, further, however, that Refinancing Indebtedness shall not include (A) Indebtedness of a Subsidiary that
Refinances Indebtedness of the Company or (B) Indebtedness of the Company or a Restricted Subsidiary that Refinances Indebtedness of an
Unrestricted Subsidiary.  

"Related Business" means any business in which the Company or any Restricted Subsidiary was engaged on the Issue Date and any
business related, ancillary or complementary to any business of the Company or any Restricted Subsidiary in which the Company or any Restricted
Subsidiary was engaged on the Issue Date.  

"Restricted Payment" with respect to any Person means: 

(1)the declaration or payment of any dividends or any other distributions of any sort in respect of its Capital Stock (including any
payment in connection with any merger or consolidation involving such Person) or similar payment to the direct or indirect holders of its
Capital Stock (other than dividends or distributions payable solely in its Capital Stock (other than Disqualified Stock) and dividends or
distributions payable solely to the Company or a Restricted Subsidiary, and other than pro rata dividends or other distributions made by
a Subsidiary that is not a Wholly Owned Subsidiary to minority stockholders (or owners of an equivalent interest in the case of a Subsidiary
that is an entity other than a corporation)); 

(2)the purchase, redemption or other acquisition or retirement for value of any Capital Stock of the Company held by any Person or of
any Capital Stock of a Restricted Subsidiary held by any Affiliate of the Company (other than a Restricted Subsidiary), including in connection
with any merger or consolidation and including the exercise of any option to exchange any Capital Stock (other than into Capital Stock of the
Company that is not Disqualified Stock); 

(3)the purchase, repurchase, redemption, defeasance or other acquisition or retirement for value, prior to scheduled maturity, scheduled
repayment or scheduled sinking fund payment of any Subordinated Obligations of such Person (other than the purchase, repurchase or other
acquisition of Subordinated Obligations purchased in anticipation of satisfying a sinking fund 

21

obligation, principal installment or final maturity, in each case due within one year of the date of such purchase, repurchase or other
acquisition); or 

(4)the making of any Investment (other than a Permitted Investment) in any Person.

"Restricted Subsidiary" means any Subsidiary of the Company that is not an Unrestricted Subsidiary.  

"Sale/Leaseback Transaction" means any arrangement with any Person providing for the leasing by the Company or any Restricted
Subsidiary of the Company, for a period of more than three years, of any real or tangible personal property, which property has been or is to
be sold or transferred by the Company or such Restricted Subsidiary to such Person in contemplation of such leasing.  

"SEC" means the U.S. Securities and Exchange Commission.  

"Securities Act" means the U.S. Securities Act of 1933, as amended.  

"Securitization Subsidiary" means a Wholly Owned Subsidiary of the Company
(1)that is designated a "Securitization Subsidiary" by the Board of Directors;

(2)that does not engage in any activities other than Qualified Securitization Transactions and any activity necessary or incidental
thereto;

(3)no portion of the Indebtedness or any other obligation, contingent or otherwise, of which

(A)is Guaranteed by the Company or any Restricted Subsidiary other than pursuant to Standard Securitization Undertakings or Limited
Originator Recourse,

(B)is recourse to or obligates the Company or any other Restricted Subsidiary in any way other than pursuant to Standard Securitization
Undertakings or Limited Originator Recourse, or

(C)subjects any property or asset of the Company or any other Restricted Subsidiary, directly or indirectly, contingently or otherwise,
to the satisfaction thereof other than pursuant to Standard Securitization Undertakings or Limited Originator Recourse; and

22

 

(4)with respect to which neither the Company nor any Restricted Subsidiary has any obligation to maintain or preserve its financial
condition or cause it to achieve certain levels of operating results.

"Senior Indebtedness" means with respect to any Person: 
(1)Indebtedness of such Person, whether outstanding on the Issue Date (after giving effect to the use of the net proceeds of the sale of
the Notes as described in the Offering Circular) or thereafter Incurred; and 

(2)all other Obligations of such Person (including interest accruing on or after the filing of any petition in bankruptcy or for
reorganization relating to such Person whether or not post-filing interest is allowed in such proceeding) in respect of Indebtedness described
in clause (1) above;

unless, in the case of clauses (1) and (2), in the instrument creating or evidencing the same or pursuant to which the same is outstanding,
it is provided that such Indebtedness or other Obligations are subordinate in right of payment to the Notes or the Subsidiary Guaranty of such
Person, as the case may be; provided, however, that Senior Indebtedness shall not include: 
(1)any obligation of such Person to any Subsidiary; 

(2)any liability for Federal, state, local or other taxes owed or owing by such Person; 

(3)any accounts payable or other liability to trade creditors arising in the ordinary course of business (including guarantees thereof
or instruments evidencing such liabilities); 

(4)any Indebtedness or other Obligation of such Person which is subordinate or junior in any respect to any other Indebtedness or other
Obligation of such Person; 

(5)that portion of any Indebtedness which at the time of Incurrence is Incurred in violation of this Indenture; or

(6)any Capital Stock.

"Series B Preferred Stock" means the Company's Series B Convertible Preferred Stock outstanding on the Issue Date and any additional
shares thereof issued in payment of dividends thereon.

23

"Significant Subsidiary" means any Restricted Subsidiary that would be a "Significant Subsidiary" of the Company within the meaning
of Rule 1-02 under Regulation S-X promulgated by the SEC.  

"Standard Securitization Undertakings" means representations, warranties, covenants and indemnities entered into by the Company or
any Restricted Subsidiary that are reasonably customary in accounts receivable or licensing royalty securitization transactions, as the case
may be.

"Stated Maturity" means, with respect to any security, the date specified in such security as the fixed date on which the final
payment of principal of such security is due and payable, including pursuant to any mandatory redemption provision (but excluding any provision
providing for the repurchase of such security at the option of the holder thereof upon the happening of any contingency unless such contingency
has occurred).  

"Subordinated Obligation" means, with respect to a Person, any Indebtedness of such Person (whether outstanding on the Issue Date
(after giving effect to the use of the net proceeds of the sale of the Notes as described in the Offering Circular) or thereafter Incurred)
which is subordinate or junior in right of payment to the Notes or a Subsidiary Guaranty of such Person, as the case may be, pursuant to a
written agreement to that effect.  

"Subsidiary" means, with respect to any Person, any corporation, association, partnership or other business entity of which more than
50% of the total voting power of shares of Voting Stock is at the time owned or controlled, directly or indirectly, by:
(1)such Person; 

(2)such Person and one or more Subsidiaries of such Person; or 

(3)one or more Subsidiaries of such Person.  

"Subsidiary Guarantor" means each Restricted Subsidiary of the Company that delivers a Guaranty Agreement pursuant to Section
5.11.

"Subsidiary Guaranty" means a Guarantee by a Subsidiary Guarantor of the Company's obligations with respect to the Notes.  

"Temporary Cash Investments" means any of the following: 
(1)any investment in direct obligations of the United States or any agency thereof or obligations guaranteed by the United States or any
agency thereof; 

(2)investments in time deposit accounts, certificates of deposit and money market deposits maturing within 365 days of the date of 

24

 
acquisition thereof issued by a bank or trust company which is organized under the laws of the United States, any State thereof or any
foreign country recognized by the United States, and which bank or trust company has capital, surplus and undivided profits aggregating in
excess of $50.0 million (or the foreign currency equivalent thereof) and has outstanding debt which is rated "A" (or such similar equivalent
rating) or higher by at least one nationally recognized statistical rating organization (as defined in Rule 436 under the Securities Act) or
any money-market fund sponsored by a registered broker dealer or mutual fund distributor;

(3)repurchase obligations with a term of not more than 30 days for underlying securities of the types described in clause (1) above
entered into with a bank meeting the qualifications described in clause (2) above;

(4)investments in commercial paper, maturing not more than 270 days after the date of acquisition, issued by a corporation (other than
an Affiliate of the Company) organized and in existence under the laws of the United States of or any foreign country recognized by the United
States with a rating at the time as of which any investment therein is made of "P-1" (or higher) according to Moody's Investors Service, Inc.
or "A-1" (or higher) according to Standard and Poor's Ratings Group; and 

(5)investments in securities with maturities of 270 days or less from the date of acquisition issued or fully guaranteed by any state,
commonwealth or territory of the United States, or by any political subdivision or taxing authority thereof, and rated at least "A" by Standard
& Poor's Ratings Group or "A" by Moody's Investors Service, Inc.  

"Trustee" means SunTrust Bank, a state banking corporation, until a successor replaces it and, thereafter, means the successor.  

"Trust Indenture Act" means the Trust Indenture Act of 1939 (15 U.S.C.  Sections 77aaa-77bbbb) as in effect on the Issue Date.  

"Trust Officer" means the Chairman of the Board, the President or any other officer or assistant officer of the Trustee assigned by
the Trustee to administer its corporate trust matters.  

"U.S. Government Obligations" means direct obligations (or certificates representing an ownership interest in such obligations) of
the United States (including any agency or instrumentality thereof) for the payment of which the full faith and credit of the United States is
pledged and which are not callable at the issuer's option.  

25

"Unrestricted Subsidiary" means: 
(1)any Subsidiary of an Unrestricted Subsidiary; and

(2)any Subsidiary of the Company which is designated after the Issue Date as an Unrestricted Subsidiary by a resolution of the Board of
Directors of the Company;

provided that a Subsidiary may be so designated as an Unrestricted Subsidiary only if
(A)such designation is in compliance with Section 5.04;

(B)such Subsidiary does not own any Capital Stock or Indebtedness of, or hold any Lien on any property of, the Company or any Restricted
Subsidiary;

(C)no Default or Event of Default has occurred and is continuing or results therefrom; and

(D)neither the Company nor any Restricted Subsidiary will at any time

(i)provide a guarantee of, or similar credit support to, any Indebtedness of such Subsidiary (including any undertaking, agreement or
instrument evidencing such Indebtedness),

(ii)be directly or indirectly liable for any Indebtedness of such Subsidiary, or

(iii)be directly or indirectly liable for any other Indebtedness which provides that the holder thereof may (upon notice, lapse of time
or both) declare a default thereon (or cause the payment thereof to be accelerated or payable prior to its final scheduled maturity) upon the
occurrence of a default with respect to any other Indebtedness that is Indebtedness of such Subsidiary (including any corresponding right to
take enforcement action against such Subsidiary),

except in the case of clause (i) or (ii) above to the extent
(i)that the Company or such Restricted Subsidiary could otherwise provide such a guarantee or incur such Indebtedness pursuant to
Section 5.03(a); and

26

 
(ii)the provision of such guarantee and the incurrence of such Indebtedness otherwise would be permitted under Section 5.04.

The Board of Directors may designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided, however, that
immediately after giving effect to such designation (A) the Company could Incur $1.00 of additional Indebtedness under Section 5.03(a) and (B)
no Default or Event of Default shall have occurred and be continuing.  

Any such designation by the Board of Directors shall be evidenced to the Trustee by promptly filing with the Trustee a copy of the
resolution of the Board of Directors giving effect to such designation and an Officers' Certificate certifying that such designation complied
with the foregoing provisions.  

"Voting Stock" of a Person means all classes of Capital Stock or other interests (including partnership interests) of such Person
then outstanding and normally entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or
trustees thereof.  

"Wholly Owned Subsidiary" means a Restricted Subsidiary all the Capital Stock of which (other than directors' qualifying shares) is
owned by the Company or one or more Wholly Owned Subsidiaries.

27

SECTION 1.01.  Other Definitions.

	
Term
	
Defined

in Section

	 	 
	
"Affiliate Transaction"
	
5.07

	
"Appendix"
	
2.01

	
"Bankruptcy Law"
	
7.01

	
"covenant defeasance option"
	
9.01(b)

	
"Custodian"
	
7.01

	
"Event of Default"
	
7.01

	
"Exchange Securities"
	
Appendix

	
"Initial Securities"
	
Appendix

	
"legal defeasance option"
	
9.01(b)

	
"Paying Agent"
	
2.03

	
"Private Exchange Securities"
	
Appendix

	
"Registrar"
	
2.03

	
"Registration Rights Agreement"
	
Appendix

	
"Successor Company"
	
6.01(1)

SECTION 1.02.  Incorporation by Reference of Trust Indenture Act.  This Indenture is subject to the
mandatory provisions of the TIA, which are incorporated by reference in and made a part of this Indenture.  The following TIA terms have the
following meanings:
"Commission" means the SEC;

"indenture securities" means the Securities and each Subsidiary Guaranty;

"indenture security holder" means a Holder;

"indenture to be qualified" means this Indenture;

"indenture trustee" or "institutional trustee" means the Trustee; and

"obligor" on the indenture securities means the Company, each Subsidiary Guarantor and any other obligor on the indenture
securities.

All other TIA terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule
have the meanings assigned to them by such definitions.

SECTION 1.03.  Rules of Construction.  Unless the context otherwise requires:
(1)a term has the meaning assigned to it;

28

(2)an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP;

(3)"or" is not exclusive;

(4)"including" means including without limitation;

(5)words in the singular include the plural and words in the plural include the singular;

(6)unsecured Indebtedness shall not be deemed to be subordinate or junior to secured Indebtedness merely by virtue of its nature as
unsecured Indebtedness;

(7)the principal amount of any non-interest bearing or other discount security at any date shall be the principal amount thereof that
would be shown on a balance sheet of the issuer dated such date prepared in accordance with GAAP;

(8)the principal amount of any Preferred Stock shall be (i) the maximum liquidation value of such Preferred Stock or (ii) the maximum
mandatory redemption or mandatory repurchase price with respect to such Preferred Stock, whichever is greater; and

(9)all references to the date the Securities were originally issued shall refer to the Issue Date.

ARTICLE 2

The Securities

SECTION 2.01.  Form and Dating.  Provisions relating to the Initial Securities, the Private Exchange
Securities and the Exchange Securities are set forth in the Rule 144A/Regulation S Appendix attached hereto (the "Appendix") which is
hereby incorporated in and expressly made part of this Indenture.  The Initial Securities and the Trustee's certificate of authentication shall
be substantially in the form of Exhibit 1 to the Appendix which is hereby incorporated in and expressly made a part of this Indenture.  The
Exchange Securities, the Private Exchange Securities and the Trustee's certificate of authentication shall be substantially in the form of
Exhibit A, which is hereby incorporated in and expressly made a part of this Indenture.  The Securities may have notations, legends or
endorsements required by law, stock exchange rule, agreements to which the Company is subject, if any, or usage (provided that any such
notation, legend or endorsement is in a form acceptable to the Company).  Each Security shall be dated the date of its authentication.  The
terms of the Securities set forth in the Appendix and Exhibit A are part of the terms of this Indenture.

SECTION 2.02.  Execution and Authentication.  Two Officers shall sign the Securities for the Company by
manual or facsimile signature.  The Company's seal 

29

shall be impressed, affixed, imprinted or reproduced on the Securities and may be in facsimile form.

If an Officer, whose signature is on a Security no longer holds that office at the time the Trustee authenticates the Security, the Security
shall be valid nevertheless.

A Security shall not be valid until an authorized signatory of the Trustee manually signs the certificate of authentication on the Security.
The signature shall be conclusive evidence that the Security has been authenticated under this Indenture.

On the Issue Date, the Trustee shall authenticate and deliver $150 million of 7 1/4% Senior Notes due February 15, 2011, and, at any time
and from time to time thereafter, the Trustee shall authenticate and deliver Securities for original issue in an aggregate principal amount
specified in such order, in each case upon a written order of the Company signed by two Officers or by an Officer and either an Assistant
Treasurer or an Assistant Secretary of the Company.  Such order shall specify the amount of the Securities to be authenticated and the date on
which the original issue of Securities is to be authenticated and, in the case of an issuance of Additional Securities pursuant to Section 2.13
after the Issue Date, shall certify that such issuance is in compliance with Section 5.03.

The Trustee may appoint an authenticating agent reasonably acceptable to the Company to authenticate the Securities.  Unless limited by the
terms of such appointment, an authenticating agent may authenticate Securities whenever the Trustee may do so.  Each reference in this
Indenture to authentication by the Trustee includes authentication by such agent.  An authenticating agent has the same rights as any
Registrar, Paying Agent or agent for service of notices and demands.

SECTION 2.03.  Registrar and Paying Agent.  The Company shall maintain an office or agency where
Securities may be presented for registration of transfer or for exchange (the "Registrar") and an office or agency where Securities may
be presented for payment (the "Paying Agent").  The Registrar shall keep a register of the Securities and of their transfer and
exchange.  The Company may have one or more co-registrars and one or more additional paying agents.  The term "Paying Agent" includes any
additional paying agent.

The Company shall enter into an appropriate agency agreement with any Registrar, Paying Agent or co-registrar not a party to this Indenture,
which shall incorporate the terms of the TIA.  The agreement shall implement the provisions of this Indenture that relate to such agent.  The
Company shall notify the Trustee in writing of the name and address of any such agent.  If the Company fails to maintain a Registrar or Paying
Agent, the Trustee shall act as such and shall be entitled to appropriate compensation and indemnity therefor pursuant to Section 8.07.  The
Company or any Wholly Owned Subsidiary incorporated or organized within the United States may act as Paying Agent, Registrar, co-registrar or
transfer agent.

30

The Company initially appoints the Trustee as Registrar and Paying Agent in connection with the Securities.

SECTION 2.04.  Paying Agent To Hold Money in Trust.  No later than 10:00 a.m. New York City time on each
due date of the principal and interest on any Security, the Company shall deposit with the Paying Agent a sum sufficient to pay such principal
and interest when so becoming due.  The Company shall require each Paying Agent (other than the Trustee) to agree in writing that the Paying
Agent shall hold in trust for the benefit of Holders or the Trustee all money held by the Paying Agent for the payment of principal of or
interest on the Securities and shall notify the Trustee in writing of any default by the Company in making any such payment.  If the Company or
a Wholly Owned Subsidiary acts as Paying Agent, it shall segregate the money held by it as Paying Agent and hold it as a separate trust fund.
The Company at any time may require a Paying Agent to pay all money held by it to the Trustee and to account for any funds disbursed by the
Paying Agent.  Upon complying with this Section 2.04, the Paying Agent shall have no further liability for the money delivered to the
Trustee.

SECTION 2.05.  Holder Lists.  The Trustee shall preserve in as current a form as is reasonably practicable
the most recent list available to it of the names and addresses of Holders.  If the Trustee is not the Registrar, the Company shall furnish to
the Trustee, in writing at least five Business Days before each interest payment date and at such other times as the Trustee may request in
writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of Holders.

SECTION 2.06.  Transfer and Exchange.  The Securities shall be issued in registered form and shall be transferable only upon
the surrender of a Security for registration of transfer.  When a Security is presented to the Registrar or a co-registrar with a request to
register a transfer, the Registrar shall register the transfer as requested if the requirements of this Indenture and Section 8-401(1) of the
Uniform Commercial Code are met.  When Securities are presented to the Registrar or a co-registrar with a request to exchange them for an equal
principal amount of Securities of other denominations, the Registrar shall make the exchange as requested if the same requirements are met.  No
service charge shall be made for any registration of transfer or exchange or redemption of the Notes, but the Company may require payment of a
sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or
other similar governmental charge payable upon exchanges pursuant to Article 4 or Section 2.09, 3.06, 5.06 or 10.05).

SECTION 207.  Replacement Securities.  If a mutilated Security is surrendered to the Registrar or if the
Holder of a Security claims that the Security has been lost, destroyed or wrongfully taken, the Company shall issue and the Trustee shall
authenticate a replacement Security if the requirements of Section 8-405 of the Uniform Commercial Code are met and the Holder satisfies any
other reasonable requirements of the Trustee.  If required by the Trustee or the Company, such Holder shall furnish an affidavit of lost
certificate and indemnity bond or other indemnity sufficient in the judgment of the Company and the Trustee to protect the Company, the
Trustee, the Paying Agent, the Registrar and any co-registrar from any loss which any of them may 

31

suffer if a Security is replaced.  The Company and the Trustee may charge the Holder for their expenses in replacing a Security, including
reasonable fees and expenses of counsel, and for any tax imposed in replacing such Security.

Every replacement Security is an additional obligation of the Company.

SECTION 2.08.  Outstanding Securities.  Securities outstanding at any time are all Securities
authenticated by the Trustee except for those canceled by it, those delivered to it for cancellation and those described in this Section 2.08
as not outstanding.  A Security does not cease to be outstanding because the Company or an Affiliate of the Company holds the Security.

If a Security is replaced pursuant to Section 2.07, it ceases to be outstanding unless the Trustee and the Company receive proof
satisfactory to them that the replaced Security is held by a bona fide purchaser.

If the Paying Agent segregates and holds in trust, in accordance with this Indenture, on a redemption date or maturity date money sufficient
to pay all principal and interest payable on that date with respect to the Securities (or portions thereof) to be redeemed or maturing, as the
case may be, then on and after that date such Securities (or portions thereof) cease to be outstanding and interest on them ceases to
accrue.

SECTION 2.09.  Temporary Securities.  Until definitive Securities are ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary Securities.  Temporary Securities shall be substantially in the form of definitive
Securities but may have variations that the Company considers appropriate for temporary Securities.  Without unreasonable delay, the Company
shall prepare and the Trustee shall authenticate definitive Securities and deliver them in exchange for temporary Securities.

SECTION 2.10.  Cancellation.  The Company at any time may deliver Securities to the Trustee for
cancellation.  The Registrar and the Paying Agent shall forward to the Trustee any Securities surrendered to them for registration of transfer,
exchange or payment.  The Trustee and no one else shall cancel and destroy (subject to the record retention requirements of the Exchange Act)
all Securities surrendered for registration of transfer, exchange, payment or cancellation in accordance with the Trustee's customary
procedures.  The Company may not issue new Securities to replace Securities it has redeemed, paid or delivered to the Trustee for
cancellation.

SECTION 2.11.  Defaulted Interest.  If the Company defaults in a payment of interest on the Securities,
the Company shall pay defaulted interest as provided in the Securities (plus interest on such defaulted interest to the extent lawful) in any
lawful manner.  The Company may pay the defaulted interest to the Persons who are Holders on a subsequent special record date.  The Company
shall fix or cause to be fixed any such special record date and payment date to the reasonable satisfaction of the Trustee and shall promptly
mail to each Holder a notice that states the special record date, the payment date and the amount of defaulted interest to be paid.

32

 

SECTION 2.12.  CUSIP Numbers.  The Company in issuing the Securities may use "CUSIP" numbers (if then
generally in use) and, if so, the Trustee shall use CUSIP numbers in notices of redemption or exchange as a convenience to Holders;
provided, however, that any such notice may state that no representation is made as to the correctness of such CUSIP numbers
either as printed on the Securities or as contained in any notice of a redemption and that reliance may be placed only on the other
identification numbers printed on the Securities, and any such redemption shall not be affected by any defect in or omission of such numbers.
The Company will notify the Trustee in writing of any change in a CUSIP number.  The Temporary Regulation S Global Security (as defined in
Section 2.1(a) of the Appendix hereto) and the Rule 144A Global Security (as defined in Section 2.1(a) of the Appendix hereto) shall be
assigned separate CUSIP numbers.

SECTION 2.13.  Issuance of Additional Securities.  The Company shall be entitled, subject to its
compliance with Section 5.03, to issue Additional Securities under this Indenture, which shall have identical terms as the Initial Securities
issued on the Issue Date, other than with respect to the date of issuance, the date from which interest will accrue thereon, the issue price
and the amount of interest payable upon a registration default as provided under a registration rights agreement related thereto (and if such
Additional Securities shall be issued in the form of Exchange Securities, other than with respect to transfer restrictions).  The Initial
Securities issued on the Issue Date, any Additional Securities and all Exchange Securities or Private Exchange Securities issued in exchange
therefor shall be treated as a single class for all purposes under this Indenture.

With respect to any Additional Securities, the Company shall set forth in a resolution of the Board of Directors and an Officers'
Certificate, a copy of each of which shall be delivered to the Trustee, the following information:
(1)the aggregate principal amount of such Additional Securities to be authenticated and delivered pursuant to this Indenture;

(2)the issue price, the issue date and the CUSIP numbers of such Additional Securities; provided, however, that no
Additional Securities may be issued at a price that would cause such Additional Securities to have "original issue discount" within the meaning
of Section 1273 of the Code; and

(3)whether such Additional Securities shall be Transfer Restricted Securities (as defined in the Appendix hereto) and issued in the form
of Initial Securities as set forth in the Appendix to this Indenture or shall be issued in the form of Exchange Securities as set forth in
Exhibit A.

33

ARTICLE 3

Redemption

SECTION 3.01.  Notices to Trustee.  If the Company elects to redeem Securities pursuant to paragraph 5 of the Securities, it
shall notify the Trustee in writing of the redemption date, the principal amount of Securities to be redeemed and the paragraph of the
Securities pursuant to which the redemption will occur.

The Company shall give notice to the Trustee provided for in this Section 3.01 at least 30 but not more than 60 days before the redemption
date unless the Trustee consents in writing to a shorter period.  Such notice shall be accompanied by an Officers' Certificate from the Company
to the effect that such redemption will comply with the conditions herein.

SECTION 3.02.  Selection of Securities To Be Redeemed.  If fewer than all of the Securities are to be
redeemed, the Trustee shall select the Securities to be redeemed on a pro rata basis or by lot or by a method that complies with
applicable legal and securities exchange requirements, if any, and that the Trustee in its sole discretion shall deem to be fair and
appropriate and in accordance with methods generally used at the time of selection by fiduciaries in similar circumstances.  The Trustee shall
make the selection from outstanding Securities not previously called for redemption.  The Trustee may select for redemption portions of the
principal of Securities that have denominations larger than $1,000.  Securities and portions of them the Trustee selects shall be in principal
amounts of $1,000 or a whole multiple of $1,000.  Provisions of this Indenture that apply to Securities called for redemption also apply to
portions of Securities called for redemption.  The Trustee shall notify the Company promptly of the Securities or portions of Securities to be
redeemed.

SECTION 3.03.  Notice of Redemption.  At least 30 days but not more than 60 days before a date for
redemption of Securities, the Company shall mail a notice of redemption by first-class mail to each Holder of Securities to be redeemed at such
Holder's registered address.

The notice shall identify the Securities to be redeemed and shall state:
(1)the redemption date;

(2)the redemption price;

(3)the name and address of the Paying Agent;

(4)that Securities called for redemption must be surrendered to the Paying Agent to collect the redemption price;

(5)if fewer than all of the outstanding Securities are to be redeemed, the identification and principal amounts of the particular
Securities to be redeemed;

34

(6)that, unless the Company defaults in making such redemption payment, interest on Securities (or a portion thereof) called for
redemption ceases to accrue on and after the redemption date; and

(7)that no representation is made as to the correctness or accuracy of the CUSIP numbers, if any, listed in such notice or printed on
the Securities.

At the Company's written request, the Trustee shall give the notice of redemption in the Company's name and at the Company's expense.  In
such event, the Company shall provide the Trustee with the information required by this Section 3.03.

SECTION 3.04.  Effect of Notice of Redemption.  Once notice of redemption is mailed, Securities called for
redemption become due and payable on the redemption date and at the redemption price stated in the notice.  Upon surrender to the Paying Agent,
such Securities shall be paid at the redemption price stated in the notice, plus accrued interest to the redemption date (subject to the right
of Holders of record on the relevant record date to receive interest due on the related interest payment date).  Failure to give notice or any
defect in the notice to any Holder shall not affect the validity of the notice to any other Holder.

SECTION 3.05.  Deposit of Redemption Price.  No later than 10:00 a.m. New York City time on the redemption
date, the Company shall deposit with the Paying Agent (or, if the Company or a Subsidiary is the Paying Agent, shall segregate and hold in
trust) money sufficient to pay the redemption price of and accrued interest on all Securities to be redeemed on that date other than Securities
or portions of Securities called for redemption which have been delivered by the Company to the Trustee for cancellation.

SECTION 3.06.  Securities Redeemed in Part.  Upon surrender of a Security that is redeemed in part, the
Company shall execute and the Trustee shall authenticate for the Holder (at the Company's expense) a new Security equal in principal amount to
the unredeemed portion of the Security surrendered.

ARTICLE 4

Change of Control

SECTION 4.01.  Repurchase Right.  Upon the occurrence of a Change of Control, each Holder
shall have the right to require that the Company repurchase such Holder's Notes at a purchase price in cash equal to 101% of the principal
amount thereof on the date of purchase plus accrued and unpaid interest, if any, to the date of purchase (subject to the right of Holders of
record on the relevant record date to receive interest due on the relevant interest payment date).

35

 

SECTION 4.02.  Notices; Method of Exercising Repurchase Rights, Etc.  (a)  Within 30 days
following any Change of Control, the Company will mail a notice to each Holder with a copy to the Trustee (the "Change of Control
Offer") stating:
(1)that a Change of Control has occurred and that such Holder has the right to require the Company to purchase such Holder's Notes at a
purchase price in cash equal to 101% of the principal amount thereof on the date of purchase, plus accrued and unpaid interest, if any, to the
date of purchase (subject to the right of Holders of record on the relevant record date to receive interest on the relevant interest payment
date); 

(2)the circumstances and relevant facts regarding such Change of Control; 

(3)the purchase date (which shall be no earlier than 30 days nor later than 60 days from the date such notice is mailed); and 

(4)the instructions, as determined by the Company, consistent with the Section described hereunder, that a Holder must follow in order
to have its Notes purchased.  

(b)  Holders electing to have a Note purchased will be required to surrender the Note, with an appropriate form duly completed, to the
Company at the address specified in the notice at least three Business Days prior to the purchase date.  Holders will be entitled to withdraw
their election if the Trustee or the Company receives, not later than one Business Day prior to the purchase date, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal amount of the Security which was delivered for purchase by the
Holder and a statement that such Holder is withdrawing his election to have such Note purchased.

(c)  On the purchase date, all Notes purchased by the Company under this Section 4.02 shall be delivered by the Company to the Trustee for
cancellation, and the Company shall pay the purchase price plus accrued and unpaid interest, if any, to the Holders entitled thereto.

(d)  Notwithstanding the foregoing provisions of this Section 4.02, the Company will not be required to make a Change of Control
Offer following a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance
with the requirements set forth in this Indenture applicable to a Change of Control Offer made by the Company and purchases all Notes validly
tendered and not withdrawn under such Change of Control Offer.  

(e)  The Company will comply, to the extent applicable, with the requirements of Section 14(e) of the Exchange Act and any other
securities laws or regulations in connection with the repurchase of Notes as a result of a Change of Control.  To the extent that the
provisions of any securities laws or regulations conflict with the provisions of the covenant described hereunder, the Company will comply with
the 

36

applicable securities laws and regulations and shall not be deemed to have breached the Company's obligations under the covenant described
hereunder by virtue of the Company's compliance with such securities laws or regulations.

ARTICLE 5

Covenants

SECTION 5.01.  Payment of Securities.  The Company shall promptly pay in lawful currency of the United
States the principal of and interest on the Securities on the dates and in the manner provided in the Securities and in this Indenture.
Principal and interest shall be considered paid on the date due if no later than 10:00 a.m. New York City time on such date the Trustee or the
Paying Agent holds in accordance with this Indenture money sufficient to pay all principal and interest then due.

The Company shall pay interest on overdue principal at the rate specified therefor in the Securities, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.

SECTION 5.02.  SEC Reports.  Notwithstanding that the Company may not be subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act, the Company will file with the SEC (to the extent that the SEC will accept such
filing) and provide the Trustee (and, only if the Company is no longer subject to such reporting requirements, the Holders) with such annual
reports and such information, documents and other reports as are specified in Sections 13 and 15(d) of the Exchange Act and applicable to a
U.S. corporation subject to such Sections, such information, documents and other reports to be so filed and provided at the times specified for
the filings of such information, documents and reports under such Sections.  

In addition, the Company will furnish to the Holders and to prospective investors, upon the requests of such Holders, any information
required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act so long as the Notes are not freely transferable under the
Securities Act.

SECTION 5.03.  Limitation on Indebtedness.  (a)  The Company will not, and will not permit any
Restricted Subsidiary to, Incur, directly or indirectly, any Indebtedness; provided, however, that the Company and any future
Subsidiary Guarantor will be entitled to Incur Indebtedness if, on the date of such Incurrence and after giving effect thereto on a pro
forma basis, no Default has occurred and is continuing and the Consolidated Coverage Ratio would be greater than 2.0 to 1.

(b)  Notwithstanding the foregoing paragraph (a), the Company and the Restricted Subsidiaries will be entitled to Incur any or all
of the following Indebtedness:
(1)Indebtedness Incurred by the Company and the Restricted Subsidiaries (including Restricted Subsidiaries that become Subsidiaries
after the Issue Date) pursuant to the Credit Agreement; provided, however, that, after giving effect to any such Incurrence, the
aggregate principal amount of all 

37

Indebtedness Incurred under this clause (1) and then outstanding does not exceed the greater of (A) $325.0 million and (B) the Borrowing
Base, less in the case of clause (A) the sum of all mandatory principal payments with respect to such Indebtedness pursuant to Section
5.06(a)(3)(A) (which principal payments in the case of revolving loans are accompanied by a corresponding permanent commitment reduction);

(2)Indebtedness owed to and held by the Company or a Restricted Subsidiary (other than a Securitization Subsidiary); provided,
however, that any subsequent issuance or transfer of any Capital Stock which results in any such Restricted Subsidiary ceasing to be a
Restricted Subsidiary or any subsequent transfer of such Indebtedness (other than to the Company or a Restricted Subsidiary (other than a
Securitization Subsidiary)) shall be deemed, in each case, to constitute the Incurrence of such Indebtedness by the obligor thereon;

(3)the Notes and the Exchange Securities (other than any Additional Notes); 

(4)the Existing Notes and any other Indebtedness outstanding on the Issue Date after giving effect to the use of the net proceeds of the
sale of the Notes as described in the Offering Circular (other than Indebtedness described in clause (1), (2), (3) or (10) of this Section
5.03(b)); 

(5)Indebtedness of a Restricted Subsidiary Incurred and outstanding on or prior to the date on which such Subsidiary was acquired by the
Company (other than Indebtedness Incurred in connection with, or to provide all or any portion of the funds or credit support utilized to
consummate, the transaction or series of related transactions pursuant to which such Subsidiary became a Subsidiary or was acquired by the
Company); provided, however, that at the time of such acquisition and after giving pro forma effect thereto, the aggregate
principal amount of all Indebtedness Incurred pursuant to this clause (5) and then outstanding does not exceed $5.0 million (including any
Refinancing Indebtedness with respect thereto);

(6)Refinancing Indebtedness in respect of Indebtedness Incurred pursuant to Section 5.03(a) or pursuant to clause (3), (4) or (5) or
this clause (6) of this Section 5.03(b); provided, however, that to the extent such Refinancing Indebtedness directly or
indirectly Refinances Indebtedness of a Subsidiary Incurred pursuant to Section 5.03(b)(5), such Refinancing Indebtedness shall be Incurred
only by such Subsidiary; 

(7)Hedging Obligations consisting of Interest Rate Agreements, Currency Agreements or Commodity Agreements not entered into for
speculative purposes; 

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(8)obligations in respect of performance, bid and surety bonds and completion guarantees provided by the Company or any Restricted
Subsidiary in the ordinary course of business; 

(9)Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against
insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within two
Business Days of its Incurrence; 

(10)Indebtedness of the Company consisting of (A) guarantees of payments of accounts payable of third-party manufacturing facilities up
to the amount of the commitment therefor on the Issue Date but in any event not to exceed $4.5 million and (B) obligations of Calvin Klein,
Inc. for the payment of letters of credit issued on its behalf up to the amount of the commitment therefor on the Issue Date but in any event
not to exceed $1.5 million.

(11)Purchase Money Indebtedness and Capital Lease Obligations Incurred by the Company or a Restricted Subsidiary to acquire property in
the ordinary course of business and which do not in the aggregate exceed $10.0 million at any time outstanding; 

(12)the Subsidiary Guaranty of a Subsidiary Guarantor;

(13)any Permitted Guarantee by a Restricted Subsidiary described in clause (iii) of the definition of "Permitted Guarantees" or any
Indebtedness Incurred by a Restricted Subsidiary as a co-borrower of Indebtedness of the Company described in clause (iii) of the definition of
"Permitted Guarantees"; 

(14)Indebtedness of a Foreign Restricted Subsidiary which at any time outstanding does not exceed the greater of (A) the Foreign
Borrowing Base of such Foreign Restricted Subsidiary and (B) an amount which, when taken together with all Indebtedness Incurred by all other
Foreign Restricted Subsidiaries and then outstanding, does not exceed $5.0 million in the aggregate; 

(15)Indebtedness Incurred by a Securitization Subsidiary in a Qualified Securitization Transaction; and

(16)Indebtedness of the Company and any future Subsidiary Guarantors in an aggregate principal amount which, when taken together with
all other Indebtedness of the Company and its Restricted Subsidiaries outstanding on the date of such Incurrence (other than Indebtedness
permitted by clauses (1) through (15) above or Section 5.03(a)) does not exceed $30.0 million.

(c)  Notwithstanding the foregoing, neither the Company nor any Subsidiary Guarantor will Incur any Indebtedness pursuant to the
foregoing paragraph (b) if the proceeds thereof are used, directly or indirectly, to Refinance any Subordinated Obligations of the Company or
any Subsidiary Guarantor unless such Indebtedness shall 

39

be subordinated to the Notes or the applicable Subsidiary Guaranty to at least the same extent as such Subordinated Obligations.

(d)  For purposes of determining compliance with this Section 5.03:
(1)any Indebtedness remaining outstanding under the Credit Agreement after the application of the net proceeds of the sale of the Notes
will be treated as Incurred on the Issue Date under Section 5.03(b)(1) above;

(2)in the event that an item of Indebtedness meets the criteria of more than one of the types of Indebtedness described above, the
Company, in its sole discretion, will classify such item of Indebtedness at the time of Incurrence and will only be required to include the
amount and type of such Indebtedness in one of the above clauses; and

(3)the Company will be entitled to divide and classify an item of Indebtedness in more than one of the types of Indebtedness described
above.  

(e)  Notwithstanding any other provision of this Section 5.03, the accrual of interest, the accretion or amortization of original
issue discount and the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms will not be deemed to
be an incurrence of Indebtedness for purposes of this covenant; provided, however, that the amount thereof is included in
Consolidated Interest Expense of the Company and its consolidated Restricted Subsidiaries as accrued.

SECTION 5.04.  Limitation on Restricted Payments.  (a)  The Company will not, and will not permit any
Restricted Subsidiary, directly or indirectly, to make a Restricted Payment if at the time the Company or such Restricted Subsidiary makes such
Restricted Payment: 
(1)a Default shall have occurred and be continuing (or would result therefrom);

(2)the Company is not entitled to Incur an additional $1.00 of Indebtedness pursuant to Section 5.03(a); or 

(3)the aggregate amount of such Restricted Payment and all other Restricted Payments since May 5, 2003 would exceed the sum of (without
duplication):

(A)50% of the Consolidated Net Income accrued during the period (treated as one accounting period) from the beginning of the fiscal
quarter immediately following the fiscal quarter during which May 5, 2003 occured to the end of the most recent fiscal quarter for which
financial statements are available on or prior to the date of such Restricted Payment (or, in case such Consolidated Net Income shall be a
deficit, minus 100% of such deficit); plus

40

 
(B)100% of the aggregate Net Cash Proceeds received by the Company from the issuance or sale of its Capital Stock, including Capital
Stock issued pursuant to a stock option or similar plan established by the Company (other than Disqualified Stock) subsequent to May 5, 2003
(other than an issuance or sale to a Subsidiary of the Company and other than an issuance or sale to an employee stock ownership plan or to a
trust established by the Company or any of its Subsidiaries for the benefit of their employees) and 100% of any cash capital contribution
received by the Company from its stockholders subsequent to May 5, 2003; plus

(C)the amount by which Indebtedness of the Company is reduced on the Company's balance sheet upon the conversion or exchange subsequent
to May 5, 2003 of any Indebtedness of the Company convertible or exchangeable for Capital Stock (other than Disqualified Stock) of the Company
(less the amount of any cash, or the fair value of any other property, distributed by the Company upon such conversion or exchange);
provided, however, that the foregoing amount shall not exceed the Net Cash Proceeds received by the Company or any Restricted
Subsidiary from the sale of such Indebtedness (excluding Net Cash Proceeds of sales to a Subsidiary of the Company or to an employee stock
ownership plan or a trust established by the Company or any of its Subsidiaries for the benefit of their employees); plus

(D)an amount equal to the sum of (x) the reduction, net of costs, in the Investments (other than Permitted Investments) made by the
Company or any Restricted Subsidiary in any Person resulting from repurchases, repayments or redemptions of such Investments by such Person,
proceeds realized on the sale of such Investment and proceeds representing the return of capital (excluding dividends and distributions), in
each case received by the Company or any Restricted Subsidiary, and (y) to the extent such Person is an Unrestricted Subsidiary, the portion
(proportionate to the Company's equity interest in such Subsidiary) of the fair market value of the net assets of such Unrestricted Subsidiary
at the time such Unrestricted Subsidiary is designated a Restricted Subsidiary; provided, however, that the foregoing sum shall
not exceed, in the case of any such Person or Unrestricted Subsidiary, the amount of Investments (excluding Permitted Investments) previously
made (and treated as a Restricted Payment) by the Company or any Restricted Subsidiary in such Person or Unrestricted Subsidiary; plus

(E)$7.5 million.

(b)  The preceding provisions will not prohibit:
(1)any Restricted Payment made out of the Net Cash Proceeds of the substantially concurrent sale of, or made by exchange for, Capital
Stock of the Company (other than Disqualified Stock and other than Capital Stock issued or 

41

sold to a Subsidiary of the Company or an employee stock ownership plan or to a trust established by the Company or any of its Subsidiaries
for the benefit of their employees) or a substantially concurrent cash capital contribution received by the Company from its stockholders;
provided, however, that (A) such Restricted Payment shall be excluded in the calculation of the amount of Restricted Payments and
(B) the Net Cash Proceeds of such sale or such cash capital contribution (to the extent so used for such Restricted Payment) shall be excluded
from the calculation of amounts under Section 5.04(a)(3)(B);

(2)any purchase, repurchase, redemption, defeasance or other acquisition or retirement for value of Subordinated Obligations of the
Company or any Subsidiary Guarantor made by exchange for, or out of the proceeds of the substantially concurrent sale of, Indebtedness which is
permitted to be Incurred pursuant to Section 5.03; provided, however, that such purchase, repurchase, redemption, defeasance or
other acquisition or retirement for value shall be excluded in the calculation of the amount of Restricted Payments; 

(3)dividends paid within 60 days after the date of declaration thereof if at such date of declaration such dividend would have complied
with this covenant; provided, however, that at the time of payment of such dividend, no other Default shall have occurred and be
continuing (or result therefrom); provided further, however, that such dividend shall be included in the calculation of
the amount of Restricted Payments;

(4)the payment of dividends by the Company on its common stock in an annual amount of up to $0.15 per outstanding share of common stock;
provided, however, that such payment will be included in the calculation of the amount of Restricted Payments;

(5)repurchases by the Company of Capital Stock deemed to occur upon the exercise of options or warrants if such Capital Stock represents
all or a portion of the exercise price thereof; provided, however, that such repurchases will be excluded from the calculation of
the amount of Restricted Payments; and

(6)other Restricted Payments not exceeding $15.0 million in the aggregate at any one time outstanding; provided, however,
that (A) at the time of such Restricted Payments, no Default or Event of Default shall have occurred and be continuing (or result therefrom)
and (B) such Restricted Payments will be excluded in the calculation of the amount of Restricted Payments.

(c)  For purposes of determining compliance with this Section 5.04, in the event that a Restricted Payment meets the criteria of
more than one of the types of Restricted Payments described above, the Company may order and classify, and from time to time may reclassify,
such Restricted Payment if that classification would have been permitted at the time such Restricted Payment was made and at the time of the
reclassification.

42

 

SECTION 5.05.  Limitation on Restrictions on Distributions from Restricted Subsidiaries.  The Company will
not, and will not permit any Restricted Subsidiary to, create or otherwise cause or permit to exist or become effective any consensual
encumbrance or restriction on the ability of any Restricted Subsidiary to (a) pay dividends or make any other distributions on its Capital
Stock to the Company or a Restricted Subsidiary or pay any Indebtedness owed to the Company, (b) make any loans or advances to the Company or
(c) transfer any of its property or assets to the Company, except:
(1)with respect to clauses (a), (b) and (c) of this Section 5.05, 

(A)any encumbrance or restriction pursuant to an agreement in effect at or entered into on the Issue Date (after giving effect to the
use of the net proceeds of the sale of the Notes as described in the Offering Circular); 

(B)any encumbrance or restriction with respect to a Restricted Subsidiary pursuant to an agreement relating to any Indebtedness Incurred
by such Restricted Subsidiary on or prior to the date on which such Restricted Subsidiary was acquired by the Company (other than Indebtedness
Incurred as consideration in, or to provide all or any portion of the funds or credit support utilized to consummate, the transaction or series
of related transactions pursuant to which such Restricted Subsidiary became a Restricted Subsidiary or was acquired by the Company) and
outstanding on such date; 

(C)any encumbrance or restriction pursuant to an agreement effecting a Refinancing of Indebtedness Incurred pursuant to an agreement
referred to in clause (A) or (B) of this Section 5.05(1) or this clause (C) or contained in any amendment to an agreement referred to in
clause (A) or (B) of this Section 5.05(1) or this clause (C); provided, however, that the encumbrances and restrictions with
respect to such Restricted Subsidiary contained in any such refinancing agreement or amendment are no less favorable in any material respect to
the Noteholders than encumbrances and restrictions with respect to such Restricted Subsidiary contained in such predecessor agreements; 

(D)any encumbrance or restriction with respect to a Restricted Subsidiary imposed pursuant to an agreement entered into for the sale or
disposition of all or substantially all of the Capital Stock or assets of such Restricted Subsidiary pending the closing of such sale or
disposition and so long as the consummation of such transaction would not result in a Default or Event of Default;  

(E)any encumbrance or restriction under applicable corporate law or regulation relating to the payment of dividends or distributions;

43

(F)any encumbrance or restriction contained in the terms of any Indebtedness permitted to be Incurred under this Indenture;
provided that such encumbrances or restrictions are ordinary and customary with respect to the type of Indebtedness being Incurred if
the Board of Directors determines that any such encumbrance or restriction will not adversely affect the Company's ability to make principal or
interest payments on the Notes; and 

(G)any encumbrance or restriction with respect to Indebtedness or other contractual requirements of a Securitization Subsidiary in
connection with and, in the good faith determination of the Board of Directors, necessary to effectuate, a Qualified Securitization
Transaction; provided, however, that such encumbrance or restriction applies only to such Securitization Subsidiary; and 

(2)with respect to clause (c) of this Section 5.05 only, 

(A)any encumbrance or restriction consisting of customary nonassignment provisions in leases governing leasehold interests to the extent
such provisions restrict the transfer of the lease or the property leased thereunder; and 

(B)any encumbrance or restriction contained in security agreements or mortgages securing Indebtedness of a Restricted Subsidiary to the
extent such encumbrance or restriction restricts the transfer of the property subject to such security agreements or mortgages.  

SECTION 5.06.  Limitation on Sales of Assets and Subsidiary Stock.  (a)  The Company will not, and will not permit any Restricted
Subsidiary to, directly or indirectly, consummate any Asset Disposition unless: 

(1)the Company or such Restricted Subsidiary receives consideration at the time of such Asset Disposition at least equal to the fair
market value (including as to the value of all non-cash consideration), as determined in good faith by the Board of Directors, of the shares
and assets subject to such Asset Disposition; 

(2)in the case of an Asset Disposition other than an Asset Swap, at least 75% of the consideration thereof received by the Company or
such Restricted Subsidiary is in the form of cash or cash equivalents; and 

(3)an amount equal to 100% of the Net Available Cash from such Asset Disposition is applied by the Company (or such Restricted
Subsidiary, as the case may be)

44

 
(A)to the extent the Company elects (or is required by the terms of any Indebtedness), to prepay, repay, redeem or purchase Senior
Indebtedness of the Company or Indebtedness (other than any Disqualified Stock) of a Restricted Subsidiary (in each case other than
Indebtedness owed to the Company or an Affiliate of the Company) within one year from the later of the date of such Asset Disposition or the
receipt of such Net Available Cash; 

(B)to the extent the Company elects, to acquire Additional Assets within one year from the later of the date of such Asset Disposition
or the receipt of such Net Available Cash; and

(C)to the extent of the balance of such Net Available Cash after application in accordance with clauses (A) and (B), to make an offer to
the Holders (and to holders of other Senior Indebtedness of the Company designated by the Company) to purchase Notes (and such other Senior
Indebtedness of the Company) pursuant to and subject to the conditions contained in this Indenture; 

provided, however, that in connection with any prepayment, repayment or purchase of Indebtedness pursuant to clause (A) or (C)
above, the Company or such Restricted Subsidiary shall permanently retire such Indebtedness and shall cause the related loan commitment (if
any) to be permanently reduced in an amount equal to the principal amount so prepaid, repaid or purchased.  

Notwithstanding the foregoing provisions of this Section 5.06, the Company and the Restricted Subsidiaries will not be required to apply any
Net Available Cash in accordance with this Section 5.06 except to the extent that the aggregate Net Available Cash from all Asset Dispositions
which is not applied in accordance with this Section 5.06 exceeds $20.0 million.  Pending application of Net Available Cash pursuant to this
Section 5.06, such Net Available Cash shall be invested in Temporary Cash Investments or applied to temporarily reduce revolving credit
indebtedness.  

(b)  For the purposes of this Section 5.06, the following are deemed to be cash or cash equivalents: 
(1)the assumption of Indebtedness of the Company or any Restricted Subsidiary and the release of the Company or such Restricted
Subsidiary from all liability on such Indebtedness in connection with such Asset Disposition; and

(2)securities, notes or other obligations received by the Company or any Restricted Subsidiary from the transferee to the extent 

45

converted within 90 days by the Company or such Restricted Subsidiary into cash or Temporary Cash Investments.  

(c)  In the event of an Asset Disposition that requires the purchase of Notes (and other Senior Indebtedness of the Company)
pursuant to clause (a)(3)(C) of this Section 5.06, the Company will purchase Notes tendered pursuant to an offer by the Company for the Notes
(and such other Senior Indebtedness) at a purchase price of 100% of their principal amount (or, in the event such other Senior Indebtedness of
the Company was issued with significant original issue discount, 100% of the accreted value thereof) without premium, plus accrued but unpaid
interest (or, in respect of such other Senior Indebtedness of the Company, such lesser price, if any, as may be provided for by the terms of
such Senior Indebtedness) in accordance with the procedures (including prorating in the event of oversubscription) set forth in this Indenture.
If the aggregate purchase price of the securities tendered exceeds the Net Available Cash allotted to their purchase, the Company will select
the securities to be purchased on a pro rata basis but in round denominations, which in the case of the Notes will be denominations of
$1,000 principal amount or multiples thereof.  The Company shall not be required to make such an offer to purchase Notes (and other Senior
Indebtedness of the Company) pursuant to this Section 5.06 if the Net Available Cash available therefor is less than $10.0 million (which
lesser amount shall be carried forward for purposes of determining whether such an offer is required with respect to the Net Available Cash
from any subsequent Asset Disposition).

(d)  The Company will comply, to the extent applicable, with the requirements of Section 14(e) of the Exchange Act and any other
securities laws or regulations in connection with the repurchase of Notes pursuant to this Section 5.06.  To the extent that the provisions of
any securities laws or regulations conflict with provisions of this Section 5.06, the Company will comply with the applicable securities laws
and regulations and will not be deemed to have breached its obligations under this Section 5.06 by virtue of its compliance with such
securities laws or regulations.  

SECTION 5.07.  Limitation on Affiliate Transactions.  (a)The Company will not, and will not permit any
Restricted Subsidiary to, enter into or permit to exist any transaction (including the purchase, sale, lease or exchange of any property,
employee compensation arrangements or the rendering of any service) with, or for the benefit of, any Affiliate of the Company (an "Affiliate
Transaction") unless: 
(1)the terms of the Affiliate Transaction are no less favorable to the Company or such Restricted Subsidiary than those that could be
obtained at the time of the Affiliate Transaction in arm's-length dealings with a Person who is not an Affiliate; 

(2)if such Affiliate Transaction involves an amount in excess of $5.0 million, the terms of the Affiliate Transaction are set forth
in writing and a majority of the non-employee directors of the Company disinterested with respect to such Affiliate Transaction have determined
in good faith that the criteria set forth in clause (1) of this Section 5.07 are satisfied and have approved the relevant

46

Affiliate Transaction as evidenced by a resolution of the Board of Directors; and 

(3)if such Affiliate Transaction involves an amount in excess of $17.5 million, the Board of Directors shall also have received a
written opinion from an Independent Qualified Party to the effect that such Affiliate Transaction is fair, from a financial standpoint, to the
Company and its Restricted Subsidiaries or is not less favorable to the Company and its Restricted Subsidiaries than could reasonably be
expected to be obtained at the time in an arm's-length transaction with a Person who was not an Affiliate.

(b)The provisions of the preceding paragraph (a) will not prohibit: 
(1)any Investment (other than a Permitted Investment) or other Restricted Payment, in each case permitted to be made pursuant to Section
5.04;

(2)any issuance of securities, or other payments, awards or grants in cash, securities or otherwise pursuant to, or the funding of,
employment arrangements, stock options and stock ownership plans in the ordinary course of business; 

(3)loans or advances to employees in the ordinary course of business in accordance with the past practices of the Company or its
Restricted Subsidiaries, but in any event not to exceed $2.0 million in the aggregate outstanding at any one time; 

(4)the payment of fees and compensation to, and the provision of employee benefit arrangements and indemnity for the benefit of,
directors, officers and employees of the Company or any of its Restricted Subsidiaries entered into in the ordinary course of business; 

(5)any transaction between the Company and a Restricted Subsidiary or between Restricted Subsidiaries (other than Securitization
Subsidiaries);

(6)any transaction with a Restricted Subsidiary or joint venture or similar entity which would constitute an Affiliate Transaction
solely because the Company or a Restricted Subsidiary owns an equity interest in or otherwise controls such Restricted Subsidiary, joint
venture or similar entity; 

(7)the issuance or sale of any Capital Stock (other than Disqualified Stock) of the Company; 

47

 
(8)any agreement or arrangement in effect on the Issue Date (after giving effect to the use of the net proceeds of the sale of the Notes
as described in the Offering Circular) or any amendment or replacement thereof; provided, however, that any such amendment or
replacement is not less favorable in any material respect to the Company or any of its Restricted Subsidiaries than that in effect on the Issue
Date;

(9)sales or other dispositions of accounts receivable or licensing royalties and related assets to a Securitization Subsidiary in a
Qualified Securitization Transaction which are customarily transferred in such a transaction; and

(10)purchases by the Company or any Restricted Subsidiary from TAL Apparel Limited and related companies in the ordinary course of
business on terms no less favorable to the Company or such Restricted Subsidiary than those that could be obtained at the time in arm's length
dealings with an unrelated Person.

SECTION 5.08.  Limitation on the Sale or Issuance of Capital Stock of Restricted Subsidiaries.  The Company:

(1)will not, and will not permit any Restricted Subsidiary to, sell, lease, transfer or otherwise dispose of any Capital Stock of any
Restricted Subsidiary to any Person (other than the Company or a Restricted Subsidiary other than a Securitization Subsidiary), and 

(2)will not permit any Restricted Subsidiary to issue any of its Capital Stock (other than, if necessary, shares of its Capital Stock
constituting directors' or other legally required qualifying shares) to any Person (other than the Company or a Restricted Subsidiary other
than a Securitization Subsidiary), 

unless

(A)immediately after giving effect to such issuance, sale or other disposition, neither the Company nor any of its Subsidiaries own any
Capital Stock of such Restricted Subsidiary; 

(B)immediately after giving effect to such issuance, sale or other disposition, such Restricted Subsidiary would no longer constitute a
Restricted Subsidiary and any Investment in such Person remaining after giving effect thereto is treated as a new Investment by the Company and
such Investment would be permitted to be made under Section 5.04 if made on the date of such issuance, sale or other disposition; or 

(C)immediately after giving effect to such issuance, sale or other disposition of Capital Stock, other than Disqualified Stock, such
Restricted Subsidiary would continue to be a Restricted Subsidiary,

48

and in the case of each of (A), (B) and (C), such issuance, sale or other disposition complies with, and the proceeds thereof are applied in
accordance with, Section 5.06.

SECTION 5.09.  Limitation on Liens.  The Company will not, and will not permit any Restricted Subsidiary to, issue, assume or
guarantee any Indebtedness for borrowed money secured by any Lien on any property or asset now owned or hereafter acquired by the Company or
such Restricted Subsidiary without making effective provision whereby any and all Notes then or thereafter outstanding will be secured by a
Lien equally and ratably with (or, if the obligation to be secured by such Lien is subordinated in right of payment to the Notes, prior to) any
and all other obligations thereby secured for so long as any such obligations shall be so secured.  

The foregoing restriction does not, however, apply to: 
(1)Liens existing on the Issue Date after giving effect to the use of the net proceeds of the sale of the Notes as described in the
Offering Circular; 

(2)Liens securing Hedging Obligations so long as such Hedging Obligations relate to Indebtedness that is, and is permitted to be under
this Indenture, secured by a Lien on the same property securing such Hedging Obligations; 

(3)Liens to secure Purchase Money Indebtedness that is otherwise permitted under this Indenture; provided that (i) any such Lien
is created solely for the purpose of securing Indebtedness representing, or incurred to finance, the cost of the acquisition or construction
that is the subject of the Purchase Money Indebtedness and (ii) such Lien is limited in the manner described in the definition of Purchase
Money Indebtedness;

(4)Liens securing Capital Lease Obligations; provided, however, that such Lien does not extend to any property other than
that subject to the underlying lease;

(5)Liens in favor of landlords contained in leases and subleases of real property granted by the Company or any Restricted Subsidiary or
inventory or fixtures located on the leased real property; provided, however, that such Liens are in the ordinary course of
business, are on terms customary for leases of such type and do not materially impair the use of the liened property in the operation of the
business of the Company or the Restricted Subsidiary;

(6)Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with
the importation of goods; 

(7)Liens imposed by law, including, carriers', warehousemen's and mechanics' Liens, in each case for sums not yet due or being contested
in good faith by appropriate proceedings; provided that any reserve or other appropriate provision as is required in conformity with
GAAP has been made therefor;

49

 
(8)Liens for taxes, assessments and governmental charges not yet subject to penalties for non-payment or which are being contested in
good faith and by appropriate proceedings; provided that any reserve or other appropriate provision as is required in conformity with
GAAP has been made therefor;

(9)Liens securing Indebtedness Incurred under Section 5.03(b)(1);

(10)Liens securing Indebtedness owed by a Restricted Subsidiary to the Company or to any other Restricted Subsidiary (other than a
Securitization Subsidiary); 

(11)Liens on the property of any Restricted Subsidiary existing at the time such Person becomes a Subsidiary and not incurred as result
of (or in connection with or in anticipation of) such Person becoming a Subsidiary; provided, however, that such Liens do not
extend to or cover any property or assets of the Company or any of the Restricted Subsidiaries other than the property encumbered at the time
such Person becomes a Subsidiary and do not secure Indebtedness with a principal amount in excess of the principal amount outstanding at such
time; 

(12)Liens securing the Notes and the Exchange Securities;

(13)Liens to secure taxes not yet due or which are being contested in good faith by the Company or a Restricted Subsidiary; 

(14)Liens securing Refinancing Indebtedness incurred to refinance Indebtedness that was previously so secured; provided that such
Lien extends to or covers only the same property that secures the Indebtedness being refinanced; 

(15)Liens (excluding in all cases Liens securing Limited Originator Recourse obligations) on (i) accounts receivable and related assets
transferred to, or on accounts receivable and related assets of, a Securitization Subsidiary in connection with a Qualified Securitization
Transaction and (ii) licensing royalties and related assets transferred to, or on licensing royalties and related assets of, a Securitization
Subsidiary in connection with a Qualified Securitization Transaction in an aggregate amount of up to 15% of the total revenues from royalties
or similar licensing payments of the Company and its Restricted Subsidiaries; 

(16)Liens securing Indebtedness Incurred under Section 5.03(b)(14); or

(17)Liens (exclusive of any Lien of any type otherwise permitted under clauses (1) through (16) of this Section 5.09) securing
Indebtedness for borrowed money of the Company or any Restricted Subsidiary in an aggregate principal amount which, together with the aggregate
amount of Attributable Indebtedness deemed to be outstanding in respect of all Sale/Leaseback Transactions entered into pursuant to Section
5.10(a) (exclusive of any such Sale/Leaseback Transactions otherwise permitted under clauses (1) through (16) of this Section 

50

5.09), does not at the time such Indebtedness is incurred exceed the greater of $40.0 million and 15% of Consolidated Net Tangible Assets,
as determined based on the consolidated balance sheet of the Company as of the end of the most recent fiscal quarter for which financial
statements are available.

Any Lien created for the benefit of the Holders pursuant to the preceding sentence shall provide by its terms that such Lien shall be
automatically and unconditionally released and discharged upon the release and discharge of the initial Lien.  

SECTION 5.10.  Limitation on Sale/Leaseback Transactions.  The Company will not, and will not permit any
Restricted Subsidiary to, enter into any Sale/Leaseback Transaction with respect to any property unless (a) the Company or such Subsidiary
would be entitled to (1) incur Indebtedness in an amount equal to the Attributable Debt with respect to such Sale/Leaseback Transaction
pursuant to Section 5.03 and (2) create a Lien on such property securing such Attributable Debt without equally and ratably securing the Notes
pursuant to Section 5.09, (b) the net proceeds received by the Company or any Restricted Subsidiary in connection with such Sale/Leaseback
Transaction are at least equal to the fair value (as determined by the Board of Directors) of such property and (c) the Company applies the
proceeds of such transaction in compliance with Section 5.06.

SECTION 5.11.  Future Subsidiary Guarantees.  The Company will not permit any Restricted Subsidiary,
directly or indirectly, to Guarantee any Indebtedness of the Company (other than Permitted Guarantees) or to Incur any Indebtedness under
Section 5.03(a) or Section 5.03(b)(16) unless such Restricted Subsidiary simultaneously executes and delivers a Guaranty Agreement providing
for the unconditional and irrevocable Guarantee of the Notes by such Restricted Subsidiary, jointly and severally with all other Subsidiary
Guarantors.  If the Indebtedness to be Guaranteed is subordinated to the Notes, the Guarantee of such Indebtedness will be subordinated to the
Guarantee of the Notes to the same extent as the Indebtedness to be Guaranteed is subordinated to the Notes.  Notwithstanding the foregoing,
any such Guarantee by a Restricted Subsidiary of the Notes will provide by its terms that it will be automatically and unconditionally released
and discharged upon either:
(1)the release or discharge of such Guarantee of payment of such other Indebtedness, except a discharge by or as a result of payment
under such Guarantee; or

(2)any sale or transfer, other than to the Company or a Subsidiary of the Company, of all of the Company's Capital Stock in, or all or
substantially all the assets of, such Restricted Subsidiary, which sale or transfer is made in compliance with the applicable provisions of
this Indenture.

SECTION 5.12.  Compliance Certificate.  The Company shall deliver to the Trustee within 120 days after the end of each fiscal
year of the Company an Officers' 

51

Certificate stating that in the course of the performance by the signers of their duties as officers of the Company they would normally have
knowledge of any Default and whether or not the signers know of any Default that occurred during such period.  If they do, the certificate
shall describe the Default, its status and what action the Company is taking or proposes to take with respect thereto.  The Company also shall
comply with TIA Section 314(a)(4).

SECTION 5.13.  Further Instruments and Acts.  Upon request of the Trustee, the Company will execute and
deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purpose of
this Indenture. 

SECTION 5.14.  Covenant Removal.  Notwithstanding any other provision of this Indenture, during any period
of time that both (1) the Notes are rated Investment Grade by each of Moody's Investor Service, Inc. and Standard & Poor's Ratings Group
and (2) no Default or Event of Default shall have occurred and be continuing, the Company and its Restricted Subsidiaries will not be subject
to the covenants set forth in Sections 5.03, 5.04, 5.05, 5.06, 5.07, 5.08 and clause (3) of Section 6.01.

ARTICLE 6

Merger and Consolidation

SECTION 6.01.  When Company May Merge or Transfer Assets.  The Company will not consolidate with or merge
with or into, or convey, transfer or lease, in one transaction or a series of transactions, directly or indirectly, all or substantially all
its assets to, any Person, unless: 

(1)the resulting, surviving or transferee Person (the "Successor Company") shall be a Person organized and existing under the
laws of the United States, any State thereof or the District of Columbia and the Successor Company (if not the Company) shall expressly assume,
by an indenture supplemental hereto, executed and delivered to the Trustee, in form satisfactory to the Trustee, all the obligations of the
Company under the Notes and this Indenture; 

(2)immediately after giving pro forma effect to such transaction (and treating any Indebtedness which becomes an obligation of
the Successor Company or any Subsidiary as a result of such transaction as having been Incurred by such Successor Company or such Subsidiary at
the time of such transaction), no Default or Event of Default shall have occurred and be continuing; 

(3)immediately after giving pro forma effect to such transaction, the Successor Company would be able to Incur an additional
$1.00 of Indebtedness pursuant to Section 5.03(a); and

52

 
(4)the Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture (if any) comply with this Indenture;  

provided, however, that clauses (3) and (4) will not be applicable to (A) a Restricted Subsidiary consolidating with, merging
into or transferring all or part of its properties and assets to the Company or (B) the Company merging with an Affiliate of the Company solely
for the purpose and with the sole effect of reincorporating the Company in another jurisdiction.  

For purposes of this Article 6, the sale, lease, conveyance, assignment, transfer or other disposition of all or substantially all of the
properties and assets of one or more Subsidiaries of the Company, which properties and assets, if held by the Company instead of such
Subsidiaries, would constitute all or substantially all of the properties and assets of the Company on a consolidated basis, shall be deemed to
be the transfer of all or substantially all of the properties and assets of the Company.  

The Successor Company shall be the successor to the Company and shall succeed to, and be substituted for, and may exercise every right and
power of, the Company under this Indenture, and the predecessor Company, except in the case of a lease, shall be released from the obligation
to pay the principal of and interest on the Notes.  

SECTION 6.02.  When a Subsidiary Guarantor May Merge or Transfer Assets.  The Company will not permit any
Subsidiary Guarantor to consolidate with or merge with or into, or convey, transfer or lease, in one transaction or a series of transactions,
all or substantially all of its assets to any Person unless: 
(1)except in the case of a Subsidiary Guarantor that has been disposed of in its entirety to another Person (other than to the Company
or an Affiliate of the Company), whether through a merger, consolidation or sale of Capital Stock or assets, if in connection therewith the
Company provides an Officers' Certificate to the Trustee to the effect that the Company will comply with its obligations under Section 5.06 in
respect of such disposition, the resulting, surviving or transferee Person (if not such Subsidiary) shall be a Person organized and existing
under the laws of the jurisdiction under which such Subsidiary was organized or under the laws of the United States, or any State thereof or
the District of Columbia, and such Person shall expressly assume, by a Guaranty Agreement, in a form satisfactory to the Trustee, all the
obligations of such Subsidiary, if any, under its Subsidiary Guaranty; 

(2)immediately after giving effect to such transaction or transactions on a pro forma basis (and treating any Indebtedness which
becomes an obligation of the resulting, surviving or transferee Person as a result of such transaction as having been issued by such Person at
the time of such transaction), no Default or Event of Default shall have occurred and be continuing; and 

53

 
(3)the Company delivers to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger
or transfer and such Guaranty Agreement, if any, complies with this Indenture.  

ARTICLE 7

Defaults and Remedies

SECTION 7.01.  Events of Default.  Each of the following is an "Event of Default":

(1)a default in the payment of interest on the Notes when due, which continues for 30 days; 

(2)a default in the payment of principal of any Note when due at its Stated Maturity, upon optional redemption, upon required purchase,
upon declaration of acceleration or otherwise; 

(3)subject to Section 5.14, the failure by the Company to comply with its obligations under Article 6.

(4)subject to Section 5.14, the failure by the Company to comply for 30 days after notice with any of its obligations under Article 4
(other than a failure to purchase Notes) or under Sections 5.02, 5.03, 5.04, 5.05, 5.06 (other than a failure to purchase Notes), 5.07, 5.08,
5.09, 5.10 or 5.11; 

(5)the failure by the Company or any Restricted Subsidiary to comply for 60 days after notice with its other covenants, obligations,
warranties or agreements contained in this Indenture; 

(6)Indebtedness of the Company, any Subsidiary Guarantor or any Significant Subsidiary is not paid within any applicable grace period
after final maturity or is accelerated by the holders thereof because of a default and the total amount of such Indebtedness unpaid or
accelerated exceeds $15.0 million (the "cross acceleration provision"); 

(7)the Company, a Subsidiary Guarantor or any Significant Subsidiary pursuant to or within the meaning of any Bankruptcy Law (the
"bankruptcy provisions"); 

(A)commences a voluntary case;

(B)consents to the entry of an order for relief against it in an involuntary case;

(C)consents to the appointment of a Custodian of it or for all or substantially all of its property; or

54

 

 
(D)makes a general assignment for the benefit of its creditors;

or takes any comparable action under any foreign laws relating to insolvency;

(8)a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:

(A)is for relief against the Company, a Subsidiary Guarantor or any Significant Subsidiary in an involuntary case;

(B)appoints a Custodian of the Company, a Subsidiary Guarantor or any Significant Subsidiary or for all or substantially all of the
property of any of them; or

(C)orders the winding up or liquidation of the Company, a Subsidiary Guarantor or any Significant Subsidiary;

or any similar relief is granted under any foreign laws and the order or decree remains unstayed and in effect for 60 days;

(9)a judgment or order is rendered against the Company, a Subsidiary Guarantor or any Significant Subsidiary, which requires the payment
in money by the Company, a Subsidiary Guarantor or any Significant Subsidiary either individually or in the aggregate, of an amount (to the
extent not covered by insurance) in excess of $15.0 million and such judgment or order remains unsatisfied, undischarged, unvacated,
unbonded and unstayed for 60 days (the "judgment default provision"); or 

(10)a Subsidiary Guaranty ceases to be in full force and effect (other than in accordance with the terms of such Subsidiary Guaranty) or
a Subsidiary Guarantor denies or disaffirms its obligations under its Subsidiary Guaranty. 

The foregoing will constitute Events of Default whatever the reason for any such Event of Default and whether it is voluntary or involuntary
or is effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body.

The term "Bankruptcy Law" means Title 11, United States Code, or any similar Federal or state law for the relief of debtors.
The term "Custodian" means any receiver, trustee, assignee, liquidator, custodian or similar official under any Bankruptcy Law.

A default under clauses (4) and (5) will not constitute an Event of Default until the Trustee or the Holders of at least 25% in principal
amount of the outstanding Notes notify the Company of the default and the Company does not cure such default within the time specified after
receipt of such notice.  Such notice must specify the Default, demand that it be remedied and state that such notice is a "Notice of
Default".

55

The Company shall deliver to the Trustee, within 30 days after the occurrence thereof, written notice in the form of an Officers'
Certificate of any Event of Default under clause (6) or (10) and any event which with the giving of notice or the lapse of time would become an
Event of Default under clause (4) or (5) or (9), its status and what action the Company is taking or proposes to take with respect thereto.

SECTION 7.02.  Acceleration.  If an Event of Default (other than an Event of Default specified in Section
7.01(7) or (8) with respect to the Company) occurs and is continuing, the Trustee by notice to the Company, or the Holders of at least 25% in
principal amount of the Securities by notice to the Company and the Trustee, may declare the principal of and accrued but unpaid interest on
all the Securities to be due and payable.  Upon such a declaration, such principal and interest shall be due and payable immediately.  If an
Event of Default specified in Section 7.01(7) or (8) with respect to the Company occurs, the principal of and interest on all the Securities
shall ipso facto become and be immediately due and payable without any declaration or other act on the part of the Trustee or any
Holders.  The Holders of a majority in principal amount of the Securities by notice to the Trustee may rescind an acceleration and its
consequences if the rescission would not conflict with any judgment or decree and if all existing Events of Default have been cured or waived
except nonpayment of principal or interest that has become due solely because of acceleration.  No such rescission shall affect any subsequent
Default or impair any right consequent thereto.

SECTION 7.03.  Other Remedies.  If an Event of Default occurs and is continuing, the Trustee may pursue
any available remedy to collect the payment of principal of or interest on the Securities or to enforce the performance of any provision of the
Securities or this Indenture.

The Trustee may maintain a proceeding even if it does not possess any of the Securities or does not produce any of them in the proceeding.
A delay or omission by the Trustee or any Holder in exercising any right or remedy accruing upon an Event of Default shall not impair the right
or remedy or constitute a waiver of or acquiescence in the Event of Default.  No remedy is exclusive of any other remedy.  All available
remedies are cumulative.

SECTION 7.04.  Waiver of Past Defaults.  The Holders of a majority in principal amount of the Securities
by notice to the Trustee may waive an existing Default and its consequences except (i) a Default in the payment of the principal of or interest
on a Security (ii) a Default arising from the failure to redeem or purchase any Security when required pursuant to this Indenture or (iii) a
Default in respect of a provision that under Section 10.02 cannot be amended without the consent of each Holder affected.  When a Default is
waived, it is deemed cured, but no such waiver shall extend to any subsequent or other Default or impair any consequent right.

SECTION 7.05.  Control by Majority.  The Holders of a majority in principal amount of the Securities may
direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power
conferred on the Trustee.  However, the Trustee may refuse to follow any direction 

56

that conflicts with law or this Indenture or, subject to Section 8.01, that the Trustee determines is unduly prejudicial to the rights of
other Holders or would involve the Trustee in personal liability; provided, however, that the Trustee may take any other action
deemed proper by the Trustee that is not inconsistent with such direction.  Prior to taking any action hereunder, the Trustee shall be entitled
to reasonable indemnification against all losses and expenses caused by taking or not taking such action.

SECTION 7.06.  Limitation on Suits.  Except to enforce the right to receive payment of principal, premium
(if any) or interest when due, no Holder may pursue any remedy with respect to this Indenture or the Securities unless:

(1)such Holder has previously given the Trustee written notice stating that an Event of Default is continuing;

(2)Holders of at least 25% in principal amount of the outstanding Securities make a written request to the Trustee to pursue the remedy;

(3)such Holder has offered the Trustee reasonable security or indemnity against any loss, liability or expense; 

(4)the Trustee has not complied with such request within 60 days after the receipt thereof and the offer of security or indemnity; and

(5)Holders of a majority in principal amount of the outstanding Securities have not given the Trustee a direction inconsistent with such
request during such 60-day period.  

A Holder may not use this Indenture to prejudice the rights of another Holder or to obtain a preference or priority over another Holder.

SECTION 7.07.  Rights of Holders to Receive Payment.  Notwithstanding any other provision of this
Indenture, the right of any Holder to receive payment of principal of and interest on the Securities held by such Holder, on or after the
respective due dates expressed in the Securities, or to bring suit for the enforcement of any such payment on or after such respective dates,
shall not be impaired or affected without the consent of such Holder.

SECTION 7.08.  Collection Suit by Trustee.  If an Event of Default specified in Section 7.01(1) or (2)
occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust against the Company for the whole
amount then due and owing (together with interest on any unpaid interest to the extent lawful) and the amounts provided for in Section
8.07.

SECTION 7.09.  Trustee May File Proofs of Claim.  The Trustee may file such proofs of claim and other
papers or documents as may be necessary or advisable in order to have the claims of the Trustee and the Holders allowed in any judicial
proceedings relative to the Company, its creditors or its property and, unless prohibited by law or applicable regulations, may vote on behalf
of the Holders in any election of a 

57

trustee in bankruptcy or other Person performing similar functions, and any Custodian in any such judicial proceeding is hereby authorized
by each Holder to make payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the
Holders, to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its
agents and its counsel, and any other amounts due the Trustee under Section 8.07.

SECTION 7.10.  Priorities.  If the Trustee collects any money or property pursuant to this Article 7, it
shall pay out the money or property in the following order:

FIRST:  to the Trustee for amounts due under Section 8.07;

SECOND:  to Holders for amounts due and unpaid on the Securities for principal and interest, ratably, without preference or priority of any
kind, according to the amounts due and payable on the Securities for principal and interest, respectively; and

THIRD:  to the Company.

The Trustee may fix a record date and payment date for any payment to Holders pursuant to this Section 7.10.  At least 15 days before such
record date, the Company shall mail to each Holder and the Trustee a notice that states the record date, the payment date and amount to be
paid.

SECTION 7.11.  Undertaking for Costs.  In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may require the filing
by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or
defenses made by the party litigant.  This Section 7.11 does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 7.07 or
a suit by Holders of more than 10% in principal amount of the Securities.

SECTION 7.12.  Waiver of Stay or Extension Laws.  The Company (to the extent it may lawfully do so) shall
not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law
wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Company
(to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and shall not hinder, delay or
impede the execution of any power herein granted to the Trustee, but shall suffer and permit the execution of every such power as though no
such law had been enacted.

58

 

ARTICLE 8

Trustee

SECTION 8.01.  Duties of Trustee.  (a)  If an Event of Default has occurred and is continuing, the Trustee
shall exercise the rights and powers vested in it by this Indenture and use the same degree of care and skill in their exercise as a prudent
Person would exercise or use under the circumstances in the conduct of such Person's own affairs.

(b)  Except during the continuance of an Event of Default:
(1)the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture and no implied
covenants or obligations shall be read into this Indenture against the Trustee; and

(2)in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture.
However, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this
Indenture.

(c)  The Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act or its own
willful misconduct, except that:
(1)this paragraph does not limit the effect of paragraph (b) of this Section 8.01;

(2)the Trustee shall not be liable for any error of judgment made in good faith by a Trust Officer unless it is proved that the Trustee
was negligent in ascertaining the pertinent facts; and

(3)the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 7.05.

(d)   Every provision of this Indenture that in any way relates to the Trustee is subject to this Section 8.01.

(e)  The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the
Company.

(f)  Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law.

(g)  No provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur financial
liability in the performance of any of its 

59

duties hereunder or in the exercise of any of its rights or powers, if it shall have reasonable grounds to believe that repayment of such
funds or adequate indemnity against such risk or liability is not reasonably assured to it.

(h)  Every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the
Trustee shall be subject to the provisions of this Section 8.01 and to the provisions of the TIA.

SECTION 8.02.  Rights of Trustee.  (a)  The Trustee may rely on any document believed by it to be genuine
and to have been signed or presented by the proper person.  The Trustee need not investigate any fact or matter stated in the document.

(b)  Before the Trustee acts or refrains from acting, it may require an Officers' Certificate or an Opinion of Counsel.  The Trustee shall
not be liable for any action it takes or omits to take in good faith in reliance on such Officers' Certificate or Opinion of Counsel.

(c)  The Trustee may act through agents and shall not be responsible for the misconduct or negligence of any agent appointed with due
care.

(d)  The Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its
rights or powers; provided, however, that the Trustee's conduct does not constitute willful misconduct or negligence.

(e)  The Trustee may consult with counsel, and the advice or opinion of counsel with respect to legal matters relating to this Indenture and
the Securities shall be full and complete authorization and protection from liability in respect to any action taken, omitted or suffered by it
hereunder in good faith and in accordance with the advice or opinion of such counsel.

SECTION 8.03.  Individual Rights of Trustee.  The Trustee in its individual or any other capacity may
become the owner or pledgee of Securities and may otherwise deal with the Company or its Affiliates with the same rights it would have if it
were not Trustee.  Any Paying Agent, Registrar, co-registrar or co-paying agent may do the same with like rights.  However, the Trustee must
comply with Sections 8.10 and 8.11.

SECTION 8.04.  Trustee's Disclaimer.  The Trustee shall not be responsible for and makes no representation
as to the validity or adequacy of this Indenture or the Securities, it shall not be accountable for the Company's use of the proceeds of the
Securities, and it shall not be responsible for any statement of the Company in this Indenture or in any document issued in connection with the
sale of the Securities or in the Securities other than the Trustee's certificate of authentication.

SECTION 8.05.  Notice of Defaults.  If a Default occurs and is continuing and if it is known to the
Trustee, the Trustee shall mail to each Holder notice of the Default within 90 days after it occurs.  Except in the case of a Default in
payment of principal of or interest on any Security (including payments pursuant to the mandatory 

60

redemption provisions of such Security, if any), the Trustee may withhold the notice if and so long as a committee of its Trust Officers in
good faith determines that withholding the notice is in the best interests of Holders.

SECTION 8.06.  Reports by Trustee to Holders.  As promptly as practicable after each February 15 beginning
with the February 15 following the date of this Indenture, and in any event prior to April 15 in each year, the Trustee shall mail to each
Holder a brief report dated as of February 15 that complies with TIA Section 313(a).  The Trustee also shall comply with TIA Section
313(b)(2).

A copy of each report at the time of its mailing to Holders shall be filed with the SEC and each stock exchange (if any) on which the
Securities are listed.  The Company agrees to notify promptly the Trustee whenever the Securities become listed on any stock exchange and of
any delisting thereof.

SECTION 8.07.  Compensation and Indemnity.  The Company shall pay to the Trustee from time to time
reasonable compensation for its services as the Company and the Trustee shall agree in writing.  The Trustee's compensation shall not be
limited by any law on compensation of a trustee of an express trust.  The Company shall reimburse the Trustee upon request for all reasonable
out-of-pocket expenses incurred or made by it, including costs of collection, in addition to the compensation for its services.  Such expenses
shall include the reasonable compensation and expenses, disbursements and advances of the Trustee's agents, counsel, accountants and experts.
Except as otherwise provided in this Section 8.07, the Company shall indemnify the Trustee against any and all loss, claim, damage, liability
or expense (including reasonable attorneys' fees) incurred by it in connection with the administration of this trust and the performance of its
duties hereunder.  The Trustee shall notify the Company promptly of any claim for which it may seek indemnity.  Failure by the Trustee to so
notify the Company shall not relieve the Company of its obligations hereunder except to the extent that the Company has been materially
prejudiced by such failure.  The Company shall defend the claim and the Trustee may have separate counsel; provided, that the Trustee
shall pay the reasonable fees and expenses of such separate counsel unless (a) the Company and the Trustee shall have mutually agreed to the
contrary, (b) the Company has failed within a reasonable time to retain counsel reasonably satisfactory to the Trustee, (c) the Trustee shall
have reasonably concluded that there may be legal defenses available to it that are different from or in addition to those available to the
Company or (d) the named parties in any claim (including any impleaded parties) include both the Company and the Trustee and representation of
both the Company and the Trustee by the same counsel would be inappropriate due to actual or potential differing interests between the Company
and the Trustee.  The Trustee shall not, without the prior written consent of the Company, effect any settlement of any action in respect of
which the Trustee is indemnified by the Company hereunder.  The Company need not reimburse any expense or indemnify against any loss, liability
or expense incurred by the Trustee through the Trustee's own willful misconduct, negligence or bad faith.

To secure the Company's payment obligations in this Section 8.07, the Trustee shall have a lien prior to the Securities on all money or
property held or collected 

61

by the Trustee other than money or property held in trust to pay principal of and interest on particular Securities.

The Company's payment and indemnification obligations pursuant to this Section 8.07 shall survive the discharge of this Indenture.  When the
Trustee incurs expenses after the occurrence of a Default specified in Section 7.01(7) or (8) with respect to the Company, the expenses are
intended to constitute expenses of administration under the Bankruptcy Law.

SECTION 8.08.  Replacement of Trustee.  The Trustee may resign at any time by so notifying the Company in
writing at least 30 days prior to the date of the proposed resignation.  The Holders of a majority in principal amount of the Securities may
remove the Trustee by so notifying the Trustee in writing and may appoint a successor Trustee.  The Company shall remove the Trustee
if:
(1)the Trustee fails to comply with Section 8.10;

(2)the Trustee is adjudged bankrupt or insolvent;

(3)a receiver or other public officer takes charge of the Trustee or its property; or

(4)the Trustee otherwise becomes incapable of acting.

If the Trustee resigns, is removed by the Company or by the Holders of a majority in principal amount of the Securities and such Holders do
not reasonably promptly appoint a successor Trustee, or if a vacancy exists in the office of Trustee for any reason (the Trustee in such event
being referred to herein as the retiring Trustee), the Company shall promptly appoint a successor Trustee.

A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company.  Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties
of the Trustee under this Indenture.  The successor Trustee shall mail a notice of its succession to Holders.  The retiring Trustee shall
promptly transfer all property held by it as Trustee to the successor Trustee, subject to the lien provided for in Section 8.07.

If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee or the
Holders of 10% in principal amount of the Securities may petition any court of competent jurisdiction for the appointment of a successor
Trustee.

If the Trustee fails to comply with Section 8.10, any Holder may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.

62

Notwithstanding the replacement of the Trustee pursuant to this Section 8.08, the Company's obligations under Section 8.07 shall continue
for the benefit of the retiring Trustee.

SECTION 8.09.  Successor Trustee by Merger.  If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all its corporate trust business or assets to, another corporation or banking association, the resulting,
surviving or transferee corporation without any further act shall be the successor Trustee.

In case at the time such successor or successors by merger, conversion or consolidation to the Trustee shall succeed to the trusts created
by this Indenture any of the Securities shall have been authenticated but not delivered, any such successor to the Trustee may adopt the
certificate of authentication of any predecessor trustee, and deliver such Securities so authenticated; and in case at that time any of the
Securities shall not have been authenticated, any successor to the Trustee may authenticate such Securities either in the name of any
predecessor hereunder or in the name of the successor to the Trustee; and in all such cases such certificates shall have the full force which
it is anywhere in the Securities or in this Indenture provided that the certificate of the Trustee shall have.

SECTION 8.10.  Eligibility; Disqualification.  The Trustee shall at all times satisfy the requirements of
TIA Section 310(a)(1) and Section 310(a)(2).  The Trustee shall have a combined capital and surplus of at least $50.0 million as set forth in
its most recent published annual report of condition.  The Trustee shall comply with TIA Section 310(b); provided, however, that
there shall be excluded from the operation of TIA Section 310(b)(1) any indenture or indentures under which other securities or certificates of
interest or participation in other securities of the Company are outstanding if the requirements for such exclusion set forth in TIA Section
310(b)(1) are met.

SECTION 8.11.  Preferential Collection of Claims Against Company.  The Trustee shall comply with TIA
Section 311(a), excluding any creditor relationship listed in TIA Section 311(b).  A Trustee who has resigned or been removed shall be subject
to TIA Section 311(a) to the extent indicated therein.

ARTICLE 9

Discharge of Indenture; Defeasance

SECTION 9.01.  Discharge of Liability on Securities; Defeasance.  (a) When (1) the Company delivers to the
Trustee all outstanding Securities (other than Securities replaced pursuant to Section 2.07) for cancellation or (2) all outstanding Securities
have become due and payable, whether at maturity or on a redemption date as a result of the mailing of a notice of redemption pursuant to
Article 3 hereof and the Company irrevocably deposits with the Trustee funds sufficient to pay at maturity or upon redemption all outstanding
Securities, including interest thereon to maturity or such redemption date (other than Securities replaced pursuant to Section 2.07), and if in
either 

63

case the Company pays all other sums payable hereunder by the Company, then this Indenture shall, subject to Section 9.01(c), cease to be of
further effect.  The Trustee shall acknowledge satisfaction and discharge of this Indenture, upon written direction of the Company, accompanied
by an Officers' Certificate and an Opinion of Counsel at the cost and expense of the Company.

(b)  Subject to Sections 9.01(c) and 9.02, the Company at any time may terminate (1) all its obligations under the Securities and this
Indenture ("legal defeasance option") or (2) its obligations under Sections 4.01, 4.02, 5.02, 5.03, 5.04, 5.05, 5.06, 5.07, 5.08,
5.09, 5.10 and 5.11 and the operation of Sections 7.01(4), 7.01(6), 7.01(7), 7.01(8) and 7.01(9) (but, in the case of Sections
7.01(7) and (8), with respect only to Significant Subsidiaries and Subsidiary Guarantors) and the limitations contained in Section 6.01(3)
("covenant defeasance option").  The Company may exercise its legal defeasance option notwithstanding its prior exercise of its covenant
defeasance option. 

If the Company exercises its legal defeasance option, payment of the Securities may not be accelerated because of an Event of Default with
respect thereto.  If the Company exercises its covenant defeasance option, payment of the Securities may not be accelerated because of an Event
of Default specified in Sections 7.01(4), 7.01(6), 7.01(7), 7.01(8) and 7.01(9) (but, in the case of Sections 7.01(7) and (8), with respect
only to Significant Subsidiaries and Subsidiary Guarantors) or because of the failure of the Company to comply with Section 6.01(3).  If the
Company exercises its legal defeasance option or its covenant defeasance option, each Subsidiary Guarantor, if any, shall be released from all
its obligations with respect to its Subsidiary Guaranty.

Upon satisfaction of the conditions set forth herein and upon written request of the Company, the Trustee shall acknowledge in writing the
discharge of those obligations that the Company terminates.

(c)  Notwithstanding clauses (a) and (b) above, the Company's obligations in Sections 2.03, 2.04, 2.05, 2.06, 2.07, 2.08, 8.07 and
8.08 and in this Article 9 shall survive until the Securities have been paid in full.  Thereafter, the Company's obligations in Sections 8.07,
9.04 and 9.05 shall survive.

SECTION 9.02.  Conditions to Defeasance.  The Company may exercise its legal defeasance option or its
covenant defeasance option only if:
(1)the Company irrevocably deposits in trust with the Trustee money or U.S. Government Obligations for the payment of principal of and
interest on the Securities to maturity or redemption, as the case may be;

(2)the Company delivers to the Trustee a certificate from a nationally recognized firm of independent accountants expressing their
opinion that the payments of principal and interest when due and without reinvestment on the deposited U.S. Government obligations plus any
deposited money without investment will provide cash at such times and in such amounts as will be 

64

sufficient to pay principal and interest when due on all the Securities to maturity or redemption, as the case may be;

(3)123 days pass after the deposit is made and during the 123-day period no Default specified in Section 7.01(7) or (8) with respect to
the Company occurs which is continuing at the end of the period;

(4)the exercise does not result in or constitute a Default or Event of Default under this Indenture;

(5)the deposit does not constitute a default under any other agreement binding on the Company;

(6)the Company delivers to the Trustee an Opinion of Counsel to the effect that the trust resulting from the deposit does not
constitute, or is qualified as, a regulated investment company under the Investment Company Act of 1940;

(7)in the case of the legal defeasance option, the Company shall have delivered to the Trustee an Opinion of Counsel stating that (A)
the Company has received from, or there has been published by, the Internal Revenue Service a ruling or (B) since the date of this Indenture
there has been a change in the applicable Federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel
shall confirm that, the Holders will not recognize income, gain or loss for Federal income tax purposes as a result of such defeasance and will
be subject to Federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such defeasance
had not occurred;

(8)in the case of the covenant defeasance option, the Company shall have delivered to the Trustee an Opinion of Counsel to the effect
that the Holders will not recognize income, gain or loss for Federal income tax purposes as a result of such covenant defeasance and will be
subject to Federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant
defeasance had not occurred; and

(9)the Company delivers to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent to
the defeasance and discharge of the securities as contemplated by this Article 9 have been complied with.

Before or after a deposit, the Company may make arrangements satisfactory to the Trustee for the redemption of Securities at a future date
in accordance with Article 3.

SECTION 9.03.  Application of Trust Money.  The Trustee shall hold in trust money or U.S. Government
obligations deposited with it pursuant to this Article 9.  It shall apply the deposited money and the money from U.S. Government Obligations
through the Paying Agent and in accordance with this Indenture to the payment of principal of and interest on the Securities.

65

 

SECTION 9.04.  Repayment to Company.  The Trustee and the Paying Agent shall promptly turn over to the
Company upon written request any excess money or securities held by them at any time.

Subject to any applicable abandoned property law, the Trustee and the Paying Agent shall pay to the Company upon written request any money
held by them for the payment of principal or interest that remains unclaimed for two years, and, thereafter, Holders entitled to the money must
look to the Company for payment as general creditors.

SECTION 9.05.  Indemnity for Government Obligations.  The Company shall pay and shall indemnify the
Trustee against any tax, fee or other charge imposed on or assessed against deposited U.S. Government Obligations or the principal and interest
received on such U.S. Government Obligations.

SECTION 9.06.  Reinstatement.  If the Trustee or Paying Agent is unable to apply any money or U.S.
Government obligations in accordance with this Article 9 by reason of any legal proceeding or by reason of any order or judgment of any court
or governmental authority enjoining, restraining or otherwise prohibiting such application, the Company's obligations under this Indenture and
the Securities shall be revived and reinstated as though no deposit had occurred pursuant to this Article 9 until such time as the Trustee or
Paying Agent is permitted to apply all such money or U.S. Government Obligations in accordance with this Article 9; provided,
however, that, if the Company has made any payment of interest on or principal of any Securities because of the reinstatement of its
obligations, the Company shall be subrogated to the rights of the Holders of such Securities to receive such payment from the money or U.S.
Government Obligations held by the Trustee or Paying Agent.

ARTICLE 10

Supplements and Amendments

SECTION 10.01.  Without Consent of Holders.  The Company, the Subsidiary Guarantors and the Trustee may
amend or supplement this Indenture and the Securities without notice to or the consent of any Holder:

(1)to cure any ambiguity, omission, defect or inconsistency;

(2)to provide for the assumption by a successor corporation of the obligations of the Company or any Subsidiary Guarantor under this
Indenture;

(3)to provide for uncertificated Securities in addition to or in place of certificated Securities; provided, however, that
the uncertificated Securities are issued in registered form for purposes of Section 163(f) of the Code or in a manner such that the
uncertificated Securities are described in Section 163(f)(2)(B) of the Code;

66

 
(4)to add guarantees with respect to the Securities, including any Subsidiary Guaranties, or to secure the Securities;

(5)to add to the covenants of the Company or a Subsidiary Guarantor for the benefit of the Holders or to surrender any right or power
herein conferred upon the Company or a Restricted Subsidiary;

(6)to make any change that does not adversely affect the rights of any Holder; or

(7)to comply with any requirement of the SEC in connection with the qualification of this Indenture under the TIA.

After an amendment or supplement under this Section 10.01 becomes effective, the Company shall mail to Holders a notice briefly
describing such amendment or supplement.  The failure to give such notice to all Holders, or any defect therein, shall not impair or affect the
validity of an amendment or supplement under this Section 10.01.

SECTION 10.02.  With Consent of Holders. The Company, the Subsidiary Guarantors and the Trustee may amend, or waive any past
Default or noncompliance with any provision of, this Indenture or the Securities without notice to any Holder but with the written consent of
the Holders of at least a majority in principal amount of the Securities then outstanding (including consents obtained in connection with a
tender offer or exchange for the Securities).  However, without the consent of each Holder affected thereby, an amendment or waiver may
not:

(1)reduce the amount of Securities whose Holders must consent to an amendment;

(2)reduce the rate of or extend the time for payment of interest on any Security;

(3)reduce the principal amount of or extend the Stated Maturity of any Security;

(4)reduce the amount payable upon the redemption of any Security or change the time at which any Security may be redeemed in accordance
with Article 3;

(5)make any Security payable in money other than that stated in the Security;

(6)impair the right of any Holder to receive payment of principal of and interest on such Holder's Securities on or after the due dates
therefor or to institute suit for the enforcement of any payment on or with respect to such Holder's Securities;

67

 
(7)make any change in the amendment provisions that require each Holder's consent or in the waiver provisions of this Indenture;

(8)make any change in the ranking or priority of any Security that would adversely affect the Holders; or

(9)make any change in any Subsidiary Guaranty that would adversely affect the Holders.

It shall not be necessary for the consent of the Holders under this Indenture to approve the particular form of any proposed amendment, but
it shall be sufficient if such consent approves the substance thereof.

After an amendment under this Indenture becomes effective, the Company is required to mail to Holders a notice briefly describing such
amendment.  However, the failure to give such notice to all Holders, or any defect therein, will not impair or affect the validity of the
amendment.

SECTION 10.03.  Compliance with Trust Indenture Act.  Every amendment to this Indenture or the Securities
shall comply with the TIA as then in effect.

SECTION 10.04.  Revocation and Effect of Consents and Waivers.  A consent to an amendment or a waiver by a
Holder of a Security shall bind the Holder and every subsequent Holder of that Security or portion of the Security that evidences the same debt
as the consenting Holder's Security, even if notation of the consent or waiver is not made on the Security.  However, any such Holder or
subsequent Holder may revoke the consent or waiver as to such Holder's Security or portion of the Security if the Trustee receives the notice
of revocation before the date the amendment or waiver becomes effective.  After an amendment or waiver becomes effective, it shall bind every
Holder.  An amendment or waiver becomes effective upon the execution of such amendment or waiver by the Trustee.

The Company may, but shall not be obligated to, fix a record date for the purpose of determining the Holders entitled to give their consent
or take any other action described above or required or permitted to be taken pursuant to this Indenture.  If a record date is fixed, then
notwithstanding the immediately preceding paragraph, those Persons who were Holders at such record date (or their duly designated proxies), and
only those Persons, shall be entitled to give such consent or to revoke any consent previously given or to take any such action, whether or not
such Persons continue to be Holders after such record date.  No such consent shall be valid or effective for more than 120 days after such
record date.

SECTION 10.05.  Notation on or Exchange of Securities.  If an amendment or waiver changes the terms of a
Security, the Trustee may require the Holder of the Security to deliver it to the Trustee.  The Trustee may place an appropriate notation on
the Security regarding the changed terms and return it to the Holder.  Alternatively, if the Company or the Trustee so determines, the Company
in exchange for 

68

the Security shall issue and the Trustee shall authenticate a new Security that reflects the changed terms.  Failure to make the appropriate
notation or to issue a new Security shall not affect the validity of such amendment or waiver.

SECTION 10.06.  Trustee To Sign Amendments.  The Trustee shall sign any amendment authorized pursuant to
this Article 10 if the amendment does not adversely affect the rights, duties, liabilities or immunities of the Trustee.  If it does, the
Trustee may but need not sign it.  In signing such amendment the Trustee shall be entitled to receive indemnity reasonably satisfactory to it
and to receive, and (subject to Section 8.01) shall be fully protected in relying upon, an Officers' Certificate and an Opinion of Counsel
stating that such amendment is authorized or permitted by this Indenture.

SECTION 10.07.  Payment for Consent.  Neither the Company nor any Affiliate of the Company shall, directly
or indirectly, pay or cause to be paid any consideration, whether by way of interest, fee or otherwise, to any Holder for or as an inducement
to any consent, waiver or amendment of any of the terms or provisions of this Indenture or the Securities unless such consideration is offered
to be paid to all Holders that so consent, waive or agree to amend in the time frame set forth in solicitation documents relating to such
consent, waiver or agreement to amend.

ARTICLE 11

Miscellaneous

SECTION 11.01.  Trust Indenture Act Controls.  If any provision of this Indenture limits, qualifies or
conflicts with another provision which is required to be included in this Indenture by the TIA, the required provision shall control.

SECTION 11.02.  Notices.  Any notice or communication shall be in writing and delivered in person or
mailed by first-class mail addressed as follows:

if to the Company or any Subsidiary Guarantor:
Phillips-Van Heusen Corporation

200 Madison Avenue

New York, NY 10016

Attention: Secretary

with a copy to:

Katten Muchin Zavis Rosenman 

575 Madison Avenue

New York, NY 10022-2585

Attention: David H. Landau, Esq.

if to the Trustee:
SunTrust Bank

25 Park Place, 24th Floor

69

 

Atlanta, GA 30303

Attention: Jack Ellerin

with a copy to:

Powell Goldstein Frazer & Murphy LLP

191 Peachtree Street, N.E., 16th Floor

Atlanta, GA 30303

Attention: Gregory H. Worthy, Esq.

The Company, any Subsidiary Guarantor or the Trustee by notice to the other may designate additional or different addresses for subsequent
notices or communications.

Any such notice or communication mailed to a Holder shall be mailed to the Holder at such Holder's address as it appears on the registration
books of the Registrar and shall be sufficiently given if so mailed within the time prescribed.

Failure to mail a notice or communication to a Holder or any defect in the notice or communication shall not affect its sufficiency with
respect to other Holders.  If a notice or communication is mailed in the manner provided above, it is duly given, whether or not the addressee
receives such notice or communication.

SECTION 11.03.  Communication by Holders with Other Holders.  Holders may communicate pursuant to TIA
Section 312(b) with other Holders with respect to their rights under this Indenture or the Securities.  The Company, any Subsidiary Guarantor,
the Trustee, the Registrar and anyone else shall have the protection of TIA Section 312(c).

SECTION 11.04.  Certificate and Opinion as to Conditions Precedent.  Upon any request or application by
the Company to the Trustee to take or refrain from taking any action under this Indenture, the Company shall furnish to the Trustee:

(1)an Officers' Certificate in form and substance reasonably satisfactory to the Trustee stating that, in the opinion of the signers,
all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with; and

(2)an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee stating that, in the opinion of such counsel, all
such conditions precedent have been complied with.

SECTION 11.05.  Statements Required in Certificate or Opinion.  Each certificate or opinion with respect to compliance with a
covenant or condition provided for in this Indenture shall include:

(1)a statement that the individual making such certificate or opinion has read such covenant or condition;

70

 
(2)a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in
such certificate or opinion are based;

(3)a statement that, in the opinion of such individual, he has made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or condition has been complied with; and

(4)a statement as to whether or not, in the opinion of such individual, such covenant or condition has been complied with.

SECTION 11.06.  When Securities Disregarded.  In determining whether the Holders of the required principal amount of Securities
have concurred in any direction, waiver or consent, Securities owned by the Company or by any Person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company shall be disregarded and deemed not to be outstanding, except that,
for the purpose of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Securities
which the Trustee knows are so owned shall be so disregarded.  Also, subject to the foregoing, only Securities outstanding at the time shall be
considered in any such determination. 

SECTION 11.07.  Rules by Trustee, Paying Agent and Registrar.  The Trustee may make reasonable rules
for action by or a meeting of Holders.  The Registrar and the Paying Agent may make reasonable rules for their functions.

SECTION 11.08.  Legal Holidays.  If a payment date is a Legal Holiday, payment shall be made on the next
succeeding day that is not a Legal Holiday, and no interest shall accrue for the intervening period.  If a regular record date is a Legal
Holiday, the record date shall not be affected.

SECTION 11.09.  Governing Law.  This Indenture and the Securities shall be governed by, and construed in
accordance with, the laws of the State of New York but without giving effect to applicable principles of conflicts of law to the extent that
the application of the laws of another jurisdiction would be required thereby.

SECTION 11.10.  No Recourse Against Others.  No director, officer, employee, incorporator or
stockholder, as such, of the Company or any Subsidiary shall have any liability for any obligations of the Company or such Subsidiary under the
Securities, any Subsidiary Guaranty or this Indenture or for any claim based on, in respect of or by reason of such obligations or their
creation.  Each Holder, by accepting a Security, waives and releases all such liability.  The waiver and release are part of the consideration
for issuance of the Securities.  Such waiver and release may not be effective to waive liabilities under the U.S. Federal securities laws, and
it is the view of the SEC that such a waiver is against public policy.

71

 

SECTION 11.11.  Successors.  All agreements of the Company in this Indenture and the Securities shall bind
its successors.  All agreements of the Trustee in this Indenture shall bind its successors.

SECTION 11.12.  Multiple Originals.  The parties may sign any number of copies of this Indenture.  Each
signed copy shall be an original, but all of them together represent the same agreement.  One signed copy is enough to prove this
Indenture.

SECTION 11.13.  Table of Contents; Headings.  The table of contents, cross-reference sheet and headings of
the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not intended to be considered a part
hereof and shall not modify or restrict any of the terms or provisions hereof.

 

 

 

 

72

IN WITNESS WHEREOF, the parties have caused this Indenture to be duly executed as of the date first written above.
PHILLIPS-VAN HEUSEN CORPORATION

By:  /s/ Mark D. Fischer

Name:  Mark D. Fischer

Title:  Vice President, General Counsel and Secretary

SUNTRUST BANK,

as Trustee

By:  /s/ Jack Ellerin

Name:  Jack Ellerin

Title:  Assistant Vice President

73

RULE 144A/REGULATION S APPENDIX

PROVISIONS RELATING TO INITIAL SECURITIES,

PRIVATE EXCHANGE SECURITIES

AND EXCHANGE SECURITIES

1.Definitions

1.1Definitions

Capitalized terms used but not otherwise defined in this Appendix shall have the meanings assigned in the Indenture.  For the purposes
of this Appendix the following terms shall have the meanings indicated below:

"Applicable Procedures" means, with respect to any transfer or transaction involving a Temporary Regulation S Global Security or beneficial
interest therein, the rules and procedures of the Depository, Euroclear and Clearstream for such a Temporary Regulation S Global Security, in
each case to the extent applicable to such transaction and as in effect from time to time.

"Clearstream" means Clearstream Banking, Société Anonyme, or any successor securities clearing agency.

"Definitive Security" means a certificated Initial Security or Exchange Security or Private Exchange Security bearing, if required, the
restricted securities legend set forth in Section 2.3(e).

"Depository" means The Depository Trust Company, its nominees and their respective successors.

"Distribution Compliance Period", with respect to any Securities, means the period of 40 consecutive days beginning on and including the
later of (i) the day on which such Securities are first offered to Persons other than distributors (as defined in Regulation S under the
Securities Act) in reliance on Regulation S and (ii) the Issue Date with respect to such Securities.

"Euroclear" means Euroclear Bank S.A., as operator of the Euroclear System or any successor securities clearing agency.

"Exchange Securities" means (1) the 7 1/4% Senior Notes due February 15, 2011 issued pursuant to the Indenture in connection with the
Registered Exchange offer pursuant to the Registration Rights Agreement and (2) Additional Securities, if any, issued pursuant to a
registration statement filed with the SEC under the Securities Act.

Appendix - 1

"Initial Purchasers" means with respect to the Initial Securities issued on the Issue Date, Credit Suisse First Boston Corporation, J.P.
Morgan Securities Inc., Lehman Brothers Inc. and Fleet Securities, Inc. and (2) with respect to each issuance of Additional Securities, the
Persons purchasing such Additional Securities under the related Purchase Agreement.

"Initial Securities" means $150,000,000 aggregate principal amount of 7 1/4% Senior Notes due February 15, 2011 issued on the Issue Date and
(2) Additional Securities, if any, issued in a transaction exempt from the registration requirements of the Securities Act.

"Private Exchange" means the offer by the Company, pursuant to a Registration Rights Agreement, to the Initial Purchasers to issue and
deliver to each Initial Purchaser, in exchange for the Initial Securities held by the Initial Purchaser as part of its initial distribution, a
like aggregate principal amount of Private Exchange Securities.

"Private Exchange Securities" means any 7 1/4% Senior Notes due February 15, 2011 issued in connection with a Private Exchange.

"Purchase Agreement" means (1) with respect to the Initial Securities issued on the Issue Date, the Purchase Agreement dated February 12,
2004, among the Company and the Initial Purchasers and (2) with respect to each issuance of Additional Securities, the purchase agreement or
underwriting agreement among the Issuer, the Company, any Subsidiary Guarantors and the Persons purchasing such Additional Securities.

"QIB" means a "qualified institutional buyer" as defined in Rule 144A.

"Registered Exchange Offer" means the offer by the Company, pursuant to a Registration Rights Agreement, to certain Holders of Initial
Securities, to issue and deliver to such Holders, in exchange for the Initial Securities, a like aggregate principal amount of Exchange
Securities registered under the Securities Act.

"Registration Rights Agreement" means (1) with respect to the Initial Securities issued on the Issue Date, the Registration Rights Agreement
dated February 12, 2004, among the Company and the Initial Purchasers and (2) with respect to each issuance of Additional Securities issued in
a transaction exempt from the registration requirements of the Securities Act, the registration rights agreement, if any, among the Issuer, the
Company and the Persons purchasing such Additional Securities under the related Purchase Agreement.

"Securities Custodian" means the custodian with respect to a Global  Security (as appointed by the Depository) or any successor Person
thereto, and shall initially be the Trustee.

Appendix - 2

"Shelf Registration Statement" means the registration statement issued by the Company in connection with the offer and sale of Initial
Securities or Private Exchange Securities pursuant to a Registration Rights Agreement.

"Transfer Restricted Securities" means Securities that bear or are required to bear the legend set forth in Section 2.3(e) hereto.
1.2Other Definitions

	
Term
	
Defined

in Section:

	 	 
	
"Agent Members"
	
2.1(b)

	
"Global Securities"
	
2.1(a)

	
"Permanent Regulation S Global Security"
	
2.1(a)

	
"Regulation S"
	
2.1(a)

	
"Rule 144A"
	
2.1(a)

	
"Rule 144A Global Security"
	
2.1(a)

	
"Temporary Regulation S Global Security"
	
2.1(a)

2.The Securities.

2.1(a)Form and Dating.  The Initial Securities will be offered and sold by the Company pursuant to a Purchase Agreement.  The
Initial Securities will be resold initially only to (i) QIBs in reliance on Rule 144A under the Securities Act ("Rule 144A") and (ii)
Persons other than U.S. Persons (as defined in Regulation S) in reliance on Regulation S under the Securities Act ("Regulation S").
Initial Securities may thereafter be transferred to QIBs, purchasers in reliance on Regulation S and others as provided in the Securities, in
each case subject to the restrictions on transfer set forth herein.  Initial Securities initially resold pursuant to Rule 144A shall be issued
initially in the form of one or more permanent global Securities in definitive, fully registered form (collectively, the "Rule 144A Global
Security") and Initial Securities initially resold pursuant to Regulation S shall be issued initially in the form of one or more temporary
global securities in definitive, fully registered form (collectively, the "Temporary Regulation S Global Security"), in each case
without interest coupons and with the global securities legend and restricted securities legend set forth in Exhibit 1 hereto, which shall be
deposited on behalf of the purchasers of the Initial Securities represented thereby with the Securities Custodian, and registered in the name
of the Depository or a nominee of the Depository, duly executed by the Company and authenticated by the Trustee as provided in the Indenture.
Except as set forth in this Section 2.1(a), beneficial ownership interests in the Temporary Regulation S Global Security (x) will not be
exchangeable for interests in the Rule 144A Global Security, a permanent global security (the "Permanent Regulation S Global Security")
or any other Security without a legend containing restrictions on transfer of such Security, prior to the expiration of the Distribution
Compliance Period and (y) then only upon certification in form reasonably satisfactory to the Trustee that beneficial ownership interests in
such Temporary Regulation S Global 

Appendix - 3

Security are owned either by non-U.S. persons or U.S. persons who purchased such interests in a transaction that did not require
registration under the Securities Act.

Beneficial interests in the Temporary Regulation S Global Security may be exchanged for interests in Rule 144A Global Securities only if (1)
such exchange occurs in connection with a transfer of Securities in compliance with Rule 144A, and (2) the transferor of the beneficial
interest in the Temporary Regulation S Global Security first delivers to the Trustee a written certificate (in the form provided in Exhibit 1
hereto) to the effect that the beneficial interest in the Temporary Regulation S Global Security is being transferred to a Person (a) who the
transferor reasonably believes to be a QIB (b) purchasing for its own account or the account of a QIB in a transaction meeting the requirements
of Rule 144A, and (c) in accordance with all applicable securities laws of the States of the United States and other jurisdictions.

Beneficial interests in the Rule 144A Global Security may be transferred to a Person who takes delivery in the form of an interest in the
Regulation S Global Security, whether before or after the expiration of the Distribution Compliance Period, only if the transferor first
delivers to the trustee a written certificate (in the form provided in Exhibit 1 hereto) to the effect that if such transfer is being made in
accordance with rule 903 or 904 of Regulation S or Rule 144 (if available) and that, if such transfer occurs prior to the expiration of the
Distribution Compliance Period, the interest transferred will be held immediately thereafter through Euroclear Bank S.A./N.A. or Clearstream
Banking Société Anonyme.

The Rule 144A Global Security, the Temporary Regulation S Global Security and the Permanent Regulation S Global Security are collectively
referred to herein as "Global Securities".  The aggregate principal amount of the Global Securities may from time to time be increased
or decreased by adjustments made on the records of the Trustee and the Depository or its nominee as hereinafter provided.

(b)Book-Entry Provisions.  This Section 2.1(b) shall apply only to a Global Security deposited with or on behalf of the
Depository.

The Company shall execute and the Trustee shall, in accordance with this Section 2.1(b), authenticate and deliver initially one or more
Global Securities that (a) shall be registered in the name of the Depository for such Global Security or Global Securities or the nominee of
such Depository and (b) shall be delivered by the Trustee to such Depository or pursuant to such Depository's instructions or held by the
Trustee as custodian for the Depository.

Members of, or participants in, the Depository ("Agent Members") shall have no rights under the Indenture with respect to any Global
Security held on their behalf by the Depository or by the Trustee as the custodian of the Depository or under such Global Security, and the
Company, the Trustee and any agent of the Company or the Trustee shall be entitled to treat the Depository as the absolute owner of such Global
Security for all purposes whatsoever.  Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee or any agent of the
Company or the Trustee from 

Appendix - 4

giving effect to any written certification, proxy or other authorization furnished by the Depository or impair, as between the Depository
and its Agent Members, the operation of customary practices of such Depository governing the exercise of the rights of a holder of a beneficial
interest in any Global Security.

(c)Certificated Securities.  Except as provided in this Section 2.1 or Section 2.3 or 2.4, owners of beneficial interests in
Global Securities shall not be entitled to receive physical delivery of Definitive Securities.

2.2Authentication.  The Trustee shall authenticate and deliver:  (1) on the Issue Date, an aggregate principal amount of $150.0
million 7 1/4% Senior Notes due February 15, 2011, (2) any Additional Securities for an original issue in an aggregate principal amount
specified in the written order of the Company pursuant to Section 2.02 of the Indenture and (2) Exchange Securities or Private Exchange
Securities for issue only in a Registered Exchange Offer or a Private Exchange, respectively, pursuant to the Registration Rights Agreement,
for a like principal amount of Initial Securities, in each case upon a written order of the Company signed by two Officers or by an Officer and
either an Assistant Treasurer or an Assistant Secretary of the Company.  Such order shall specify the amount of the Securities to be
authenticated and the date on which the original issue of Securities is to be authenticated and, in the case of any issuance of Additional
Securities pursuant to Section 2.13 of the Indenture, shall certify that such issuance is in compliance with Section 4.03 of the
Indenture..

2.3Transfer and Exchange.  (a)  Transfer and Exchange of Definitive Securities.  When Definitive Securities are presented
to the Registrar or a co-registrar with a request:
(x)to register the transfer of such Definitive Securities; or

(y)to exchange such Definitive Securities for an equal principal amount of Definitive Securities of other authorized
denominations,

the Registrar or co-registrar shall register the transfer or make the exchange as requested if its reasonable requirements for such
transaction are met; provided, however, that the Definitive Securities surrendered for transfer or exchange:
(i)shall be duly endorsed or accompanied by a written instrument of transfer in form reasonably satisfactory to the Company and the
Registrar or co-registrar, duly executed by the Holder thereof or its attorney duly authorized in writing; and

(ii)if such Definitive Securities are required to bear a restricted securities legend, they are being transferred or exchanged pursuant
to an effective registration statement under the Securities Act, pursuant to Section 2.3 (b) or pursuant to clause (A), (B) or (C) below, and
are accompanied by the following additional information and documents, as applicable:
Appendix - 5

(A)if such Definitive Securities are being delivered to the Registrar by a Holder for registration in the name of such Holder, without
transfer, a certification from such Holder to that effect; or

(B)if such Definitive Securities are being transferred to the Company, a certification to that effect; or

(C)if such Definitive Securities are being transferred (x) pursuant to an exemption from registration in accordance with Rule 144A,
Regulation S or Rule 144 under the Securities Act; or (y) in reliance upon another exemption from the requirements of the Securities Act: (i) a
certification to that effect (in the form set forth on the reverse of the Security) and (ii) if the Company so requests, an opinion of counsel
or other evidence reasonably satisfactory to it as to the compliance with the restrictions set forth in the legend set forth in Section
2.3(e)(i).

(b)Restrictions on Transfer of a Definitive Security for a Beneficial Interest in a Global Security.  A Definitive Security may
not be exchanged for a beneficial interest in a Rule 144A Global Security or a Permanent Regulation S Global Security except upon satisfaction
of the requirements set forth below.  Upon receipt by the Trustee of a Definitive Security, duly endorsed or accompanied by appropriate
instruments of transfer, in form satisfactory to the Trustee, together with:
(i)certification, in the form set forth on the reverse of the Security, that such Definitive Security is either (A) being transferred to
a QIB in accordance with Rule 144A or (B) is being transferred after expiration of the Distribution Compliance Period by a Person who initially
purchased such Security in reliance on Regulation S to a buyer who elects to hold its interest in such Security in the form of a beneficial
interest in the Permanent Regulation S Global Security; and

(ii)written instructions directing the Trustee to make, or to direct the Securities Custodian to make, an adjustment on its books and
records with respect to such Rule 144A Global Security (in the case of a transfer pursuant to clause (b)(i)(A)) or Permanent Regulation S
Security (in the case of a transfer pursuant to clause (b)(i)(B)) to reflect an increase in the aggregate principal amount of the Securities
represented by the Rule 144A Global Security or Permanent Regulation S Global Security, as applicable, such instructions to contain information
regarding the Depository account to be credited with such increase,

then the Trustee shall cancel such Definitive Security and cause, or direct the Securities Custodian to cause, in accordance with the
standing instructions and procedures existing between the Depository and the Securities Custodian, the aggregate principal amount of Securities
represented by the Rule 144A Global Security or Permanent Regulation S Global Security, as applicable, to be increased by the aggregate
principal amount of the Definitive Security to be exchanged and shall credit or cause to be credited to the account of the Person specified in
such instructions a beneficial interest in the Rule 144A Global 

Appendix - 6

Security or Permanent Regulation S Global Security, as applicable, equal to the principal amount of the Definitive Security so canceled.  If
no Rule 144A Global Securities or Permanent Regulation S Global Securities, as applicable, are then outstanding, the Company shall issue and
the Trustee shall authenticate, upon written order of the Company in the form of an Officers' Certificate, a new Rule 144A Global Security or
Permanent Regulation S Global Security, as applicable, in the appropriate principal amount.

(c)Transfer and Exchange of Global Securities.  (i) The transfer and exchange of Global Securities or beneficial interests
therein shall be effected through the Depository, in accordance with the Indenture (including applicable restrictions on transfer set forth
herein, if any) and the procedures of the Depository therefor.  A transferor of a beneficial interest in a Global Security shall deliver to the
Registrar a written order given in accordance with the Depository's procedures containing information regarding the participant account of the
Depository to be credited with a beneficial interest in the Global Security.  The Registrar shall, in accordance with such instructions,
instruct the Depository to credit to the account of the Person specified in such instructions a beneficial interest in the Global Security and
to debit the account of the Person making the transfer the beneficial interest in the Global Security being transferred.
(ii)If the proposed transfer is a transfer of a beneficial interest in one Global Security to a beneficial interest in another Global
Security, the Registrar shall reflect on its books and records the date and an increase in the principal amount of the Global Security to which
such interest is being transferred in an amount equal to the principal amount of the interest to be so transferred, and the Registrar shall
reflect on its books and records the date and a corresponding decrease in the principal amount of the Global Security from which such interest
is being transferred.

(iii)Notwithstanding any other provisions of this Appendix (other than the provisions set forth in Section 2.4), a Global Security may
not be transferred except as a whole and not in part by the Depository to a nominee of the Depository or by a nominee of the Depository to the
Depository or another nominee of the Depository or by the Depository or any such nominee to a successor Depository or a nominee of such
successor Depository.

(iv)In the event that a Global Security is exchanged for Definitive Securities pursuant to Section 2.4 of this Appendix prior to the
consummation of a Registered Exchange Offer or the effectiveness of a Shelf Registration Statement with respect to such Securities, such
Securities may be exchanged only in accordance with such procedures as are substantially consistent with the provisions of this Section 2.3
(including the certification requirements set forth on the reverse of the Initial Securities intended to ensure that such transfers comply with
Rule 144A or Regulation S, as the case may be) and such other procedures as may from time to time be adopted by the Company.

Appendix - 7

(d)Restrictions on Transfer of Temporary Regulation S Global Securities.  During the Distribution Compliance Period, beneficial
ownership interests in Temporary Regulation S Global Securities may only be sold, pledged or transferred through Euroclear or Clearstream in
accordance with the Applicable Procedures and only (i) to the Company, (ii) so long as such Security is eligible for resale pursuant to Rule
144A, to a Person whom the selling holder reasonably believes is a QIB that purchases for its own account or for the account of a QIB in a
transaction meeting the requirements of Rule 144A, (iii) in an offshore transaction in accordance with Regulation S (other than a transaction
resulting in an exchange for interest in a Permanent Regulation S Global Security), (iv) pursuant to an exemption from registration under the
Securities Act provided by Rule 144 (if applicable) under the Securities Act or (v) pursuant to an effective registration statement under the
Securities Act, in each case in accordance with any applicable securities laws of any state of the United States.

(e)Legend.
(i)Except as permitted by the following paragraphs (ii), (iii) and (iv), each Security certificate evidencing the Global Securities (and
all Securities issued in exchange therefore or in substitution thereof), in the case of Securities offered otherwise than in reliance on
Regulation S, shall bear a legend in substantially the following form:
THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND THIS SECURITY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
APPLICABLE EXEMPTION THEREFROM.  EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER OF THIS SECURITY MAY BE RELYING ON THE
EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.

THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) THIS SECURITY MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED, ONLY (I) TO THE COMPANY, (II) IN THE UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL
BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (III) OUTSIDE THE UNITED
STATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT, (IV) PURSUANT TO EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (V) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT 

Appendix - 8

UNDER THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH (V) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES AND OTHER JURISDICTIONS, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS SECURITY FROM
IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.

Each certificate evidencing a Security offered in reliance on Regulation S shall, in lieu of the foregoing, bear a legend in substantially
the following form:
THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION ORIGINALLY EXEMPT FROM REGISTRATION UNDER THE U.S. SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE TRANSFERRED IN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY U.S.
PERSON EXCEPT PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND ALL APPLICABLE STATE SECURITIES
LAWS. TERMS USED ABOVE HAVE THE MEANINGS GIVEN TO THEM IN REGULATION S UNDER THE SECURITIES ACT.

Each Definitive Security will also bear the following additional legend:
IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH
REGISTRAR AND TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.

(ii)Upon any sale or transfer of a Transfer Restricted Security (including any Transfer Restricted Security represented by a Global
Security) pursuant to Rule 144(k) under the Securities Act, the Registrar shall permit the transferee thereof to exchange such Transfer
Restricted Security for a certificated Security that does not bear the legend set forth above and rescind any restriction on the transfer of
such Transfer Restricted Security, if the transferor thereof certifies in writing to the Registrar that such sale or transfer was made in
reliance on Rule 144(k) (such certification to be in the form set forth on the reverse of the Security).

(iii)After a transfer of any Initial Securities or Private Exchange Securities pursuant to and during the period of the effectiveness of
a Shelf Registration Statement with respect to such Initial Securities or Private Exchange Securities, as the case may be, all requirements
pertaining to legends on such Initial Security or such Private Exchange Security will cease to apply, the 

Appendix - 9

requirements requiring any such Initial Security or such Private Exchange Security issued to certain Holders be issued in global form will
cease to apply, and a certificated Initial Security or Private Exchange Security or an Initial Security or Private Exchange Security in global
form, in each case without restrictive transfer legends, will be available to the transferee of the Holder of such Initial Securities or
Private Exchange Securities upon exchange of such transferring Holders certificated Initial Security or Private Exchange Security or
appropriate directions to transfer such Holder's interest in the Global Security, as applicable.

(iv)Upon the consummation of a Registered Exchange Offer with respect to the Initial Securities, all requirements pertaining to such
Initial Securities that Initial Securities issued to certain Holders be issued in global form will still apply with respect to Holders of such
Initial Securities that do not exchange their Initial Securities, and Exchange Securities in certificated or global form, in each case without
the restrictive securities legend set forth in Exhibit 1 hereto will be available to Holders that exchange such Initial Securities in such
Registered Exchange Offer.

(v)Upon the consummation of a Private Exchange with respect to the Initial Securities, all requirements pertaining to such Initial
Securities that Initial Securities issued to certain Holders be issued in global form will still apply with respect to Holders of such Initial
Securities that do not exchange their Initial Securities, and Private Exchange Securities in global form with the global securities legend and
the Restricted Securities Legend set forth in Exhibit 1 hereto will be available to Holders that exchange such Initial Securities in such
Private Exchange.

(f)Cancellation or Adjustment of Global Security.  At such time as all beneficial interests in a Global Security have either been
exchanged for Definitive Securities, redeemed, purchased or canceled, such Global Security shall be returned to the Depository for cancellation
or retained and canceled by the Trustee.  At any time prior to such cancellation, if any beneficial interest in a Global Security is exchanged
for certificated Securities, redeemed, purchased or canceled, the principal amount of Securities represented by such Global Security shall be
reduced and an adjustment shall be made on the books and records of the Trustee (if it is then the Securities Custodian for such Global
Security) with respect to such Global Security, by the Trustee or the Securities Custodian, to reflect such reduction.

(g)Obligations with Respect to Transfers and Exchanges of Securities.
(i)To permit registrations of transfers and exchanges, the Company shall execute and the Trustee shall authenticate Definitive
Securities and Global Securities at the Registrar's or co-registrar's request.

(ii)No service charge shall be made for any registration of transfer or exchange, but the Company may require payment of a sum
sufficient to cover any 

Appendix - 10

transfer tax, assessments, or similar governmental charge payable in connection therewith (other than any such transfer taxes, assessments
or similar governmental charge payable upon exchange or transfer pursuant to Article 4 or Sections 2.09, 3.06, 5.06 or 10.05 of the
Indenture).

(iii)The Registrar or co-registrar shall not be required to register the transfer of or exchange of (a) any Definitive Security selected
for redemption in whole or in part pursuant to Article 3 of the Indenture, except the unredeemed portion of any Definitive Security being
redeemed in part, or (b) any Security for a period beginning 15 Business Days before the mailing of a notice of an offer to repurchase or
redeem Securities or 15 Business Days before an interest payment date.

(iv)Prior to the due presentation for registration of transfer of any Security, the Company, the Trustee, the Paying Agent, the
Registrar or any co-registrar may deem and treat the person in whose name a security is registered as the absolute owner of such Security for
the purpose of receiving payment of principal of and interest on such Security and for all other purposes whatsoever, whether or not such
Security is overdue, and none of the Company, the Trustee, the Paying Agent, the Registrar or any co-registrar shall be affected by notice to
the contrary.

(v)All Securities issued upon any transfer or exchange pursuant to the terms of the Indenture shall evidence the same debt and shall be
entitled to the same benefits under the Indenture as the Securities surrendered upon such transfer or exchange.

(h)No obligation of the Trustee.
(i)The Trustee shall have no responsibility or obligation to any beneficial owner of a Global Security, a member of, or a participant in
the Depository or other Person with respect to the accuracy of the records of the Depository or its nominee or of any participant or member
thereof, with respect to any ownership interest in the Securities or with respect to the delivery to any participant, member, beneficial owner
or other Person (other than the Depository) of any notice (including any notice of redemption) or the payment of any amount, under or with
respect to such Securities.  All notices and communications to be given to the Holders and all payments to be made to Holders under the
Securities shall be given or made only to or upon the order of the registered Holders (which shall be the Depository or its nominee in the case
of a Global Security).  The rights of beneficial owners in any Global Security shall be exercised only through the Depository subject to the
applicable rules and procedures of the Depository.  The Trustee may rely and shall be fully protected in relying upon information furnished by
the Depository with respect to its members, participants and any beneficial owners.

Appendix - 11

(ii)The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer
imposed under the Indenture or under applicable law with respect to any transfer of any interest in any Security (including any transfers
between or among Depository participants, members or beneficial owners in any Global Security) other than to require delivery of such
certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by, the terms of the
Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof.

2.4Certificated Securities.

(a)A Global Security deposited with the Depository or with the Trustee as Custodian for the Depository pursuant to Section 2.1 shall be
transferred to the beneficial owners thereof in the form of Definitive Securities in an aggregate principal amount equal to the principal
amount of such Global Security, in exchange for such Global Security, only if such transfer complies with Section 2.3 hereof and (i) the
Depository notifies the Company that it is unwilling or unable to continue as Depository for such Global Security or if at any time such
Depository ceases to be a "clearing agency" registered under the Exchange Act and, in either case, a successor Depository is not appointed by
the Company within 90 days of such notice, or (ii) an Event of Default has occurred and is continuing or (iii) the Company, in its sole
discretion, notifies the Trustee in writing that it elects to cause the issuance of Definitive Securities under the Indenture.

(b)Any Global Security that is transferable to the beneficial owners thereof pursuant to this Section 2.4 shall be surrendered by the
Depository to the Trustee located at its principal corporate trust office in Atlanta, Georgia, to be so transferred, in whole or from time to
time in part, without charge, and the Trustee shall authenticate and deliver, upon such transfer of each portion of such Global Security, an
equal aggregate principal amount of Definitive Securities of authorized denominations.  Any portion of a Global Security transferred pursuant
to this Section 2.4 shall be executed, authenticated and delivered only in denominations of $1,000 principal amount and any integral multiple
thereof and registered in such names as the Depository shall direct.  Any Definitive Security delivered in exchange for an interest in the
Transfer Restricted Security shall, except as otherwise provided by Section 2.3 (e) hereof, bear the restricted securities legend and
definitive security legend set forth in Exhibit 1 hereto.

(c)Subject to the provisions of Section 2.4(b) hereof, the registered Holder of a Global Security shall be entitled to grant proxies and
otherwise authorize any Person, including Agent Members and Persons that may hold interests through Agent Members, to take any action which a
Holder is entitled to take under the Indenture or the Securities.

(d)In the event of the occurrence of one of the events specified in Section 2.4 (a) hereof, the Company shall promptly make available to
the Trustee a 

Appendix - 12

reasonable supply of Definitive Securities in definitive, fully registered form without interest coupons.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Appendix - 13

EXHIBIT 1 to RULE 144A/REGULATION S APPENDIX

[FORM OF FACE OF INITIAL SECURITY]

[Global Securities Legend]

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"),
NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN
THE NAME OF CEDE & CO.  OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE &
CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR
SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.

[For Permanent Regulation S Global Security]

UNTIL 40 DAYS AFTER THE COMMENCEMENT OF THE OFFERING, AN OFFER OR SALE OF NOTES WITHIN THE UNITED STATES BY A DEALER (AS DEFINED IN THE
U.S. SECURITIES ACT) MAY VIOLATE THE REGISTRATION REQUIREMENTS OF THE U.S. SECURITIES ACT IF SUCH OFFER OR SALE IS MADE OTHERWISE THAN IN
ACCORDANCE WITH THE RULE 144A THEREUNDER.

[For Securities Offered Otherwise than in Reliance on Regulation S]

THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND THIS SECURITY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
APPLICABLE EXEMPTION THEREFROM.  EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER OF THIS SECURITY MAY BE RELYING ON THE
EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.

Ex. 1 - 1

THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) THIS SECURITY MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED, ONLY (I) TO THE COMPANY, (II) IN THE UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL
BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (III) OUTSIDE THE UNITED
STATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT, (IV) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (V) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT, IN EACH OF CASES (I) THROUGH (V) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES AND OTHER
JURISDICTIONS, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS SECURITY FROM IT OF THE RESALE
RESTRICTIONS REFERRED TO IN (A) ABOVE.

[For Securities Offered in Reliance on Regulation S]

THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION ORIGINALLY EXEMPT FROM REGISTRATION UNDER THE U.S. SECURITIES
ACT OF 1933, AS AMENDED (THE ``SECURITIES ACT''), AND MAY NOT BE TRANSFERRED IN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY
U.S. PERSON EXCEPT PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND ALL APPLICABLE STATE
SECURITIES LAWS. TERMS USED ABOVE HAVE THE MEANINGS GIVEN TO THEM IN REGULATION S UNDER THE SECURITIES ACT.

[For Temporary Regulation S Global Security]

EXCEPT AS SET FORTH BELOW, BENEFICIAL OWNERSHIP INTERESTS IN THIS TEMPORARY REGULATION S GLOBAL SECURITY WILL NOT BE EXCHANGEABLE FOR
INTERESTS IN THE PERMANENT REGULATION S GLOBAL SECURITY OR ANY OTHER SECURITY REPRESENTING AN INTEREST IN THE SECURITIES REPRESENTED HEREBY
WHICH DO NOT CONTAIN A LEGEND CONTAINING RESTRICTIONS ON TRANSFER, UNTIL THE EXPIRATION OF THE "40-DAY DISTRIBUTION COMPLIANCE PERIOD" (WITHIN
THE MEANING OF RULE 903(b)(2) OF REGULATION S UNDER THE SECURITIES ACT) AND THEN ONLY UPON CERTIFICATION IN FORM REASONABLY SATISFACTORY TO THE
TRUSTEE THAT SUCH BENEFICIAL INTERESTS ARE OWNED EITHER BY NON-U.S. PERSONS OR U.S. PERSONS WHO PURCHASED SUCH INTERESTS IN A TRANSACTION THAT
DID NOT REQUIRE REGISTRATION UNDER THE SECURITIES ACT.  DURING SUCH 40-DAY DISTRIBUTION COMPLIANCE PERIOD, BENEFICIAL OWNERSHIP INTERESTS IN
THIS TEMPORARY REGULATION S GLOBAL SECURITY MAY 

Ex. 1 - 2

ONLY BE SOLD, PLEDGED OR TRANSFERRED THROUGH EUROCLEAR BANK S.A./N.A., AS OPERATOR OF THE EUROCLEAR SYSTEM OR CLEARSTREAM BANKING,
SOCIÉTÉ ANONYME AND ONLY (I) TO THE COMPANY, (II) IN THE UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (III)
OUTSIDE THE UNITED STATES IN A TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT, OR (IV) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH (IV) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES AND OTHER JURISDICTIONS.  HOLDERS OF INTERESTS IN THIS TEMPORARY REGULATION S GLOBAL SECURITY WILL NOTIFY ANY PURCHASER OF THIS
SECURITY OF THE RESALE RESTRICTIONS REFERRED TO ABOVE, IF THEN APPLICABLE.

BENEFICIAL INTERESTS IN THIS TEMPORARY REGULATION S GLOBAL SECURITY MAY BE EXCHANGED FOR INTERESTS IN A RULE 144A GLOBAL SECURITY ONLY IF
(1) SUCH EXCHANGE OCCURS IN CONNECTION WITH A TRANSFER OF THE SECURITIES IN COMPLIANCE WITH RULE 144A AND (2) THE TRANSFEROR OF THE REGULATION
S GLOBAL SECURITY FIRST DELIVERS TO THE TRUSTEE A WRITTEN CERTIFICATE (IN THE FORM ATTACHED TO THIS CERTIFICATE) TO THE EFFECT THAT THE
REGULATION S GLOBAL SECURITY IS BEING TRANSFERRED TO A PERSON (A) WHO THE TRANSFEROR REASONABLY BELIEVES TO BE A QUALIFIED INSTITUTIONAL BUYER
WITHIN THE MEANING OF RULE 144A (B) WHO IS PURCHASING FOR ITS OWN ACCOUNT OR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, AND (C) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES AND OTHER
JURISDICTIONS.

BENEFICIAL INTEREST IN A RULE 144A GLOBAL SECURITY MAY BE TRANSFERRED TO A PERSON WHO TAKES DELIVERY IN THE FORM OF AN INTEREST IN THE
REGULATION S GLOBAL SECURITY, WHETHER BEFORE OR AFTER THE EXPIRATION OF THE 40-DAY DISTRIBUTION COMPLIANCE PERIOD, ONLY IF THE TRANSFEROR FIRST
DELIVERS TO THE TRUSTEE A WRITTEN CERTIFICATE (IN THE FORM ATTACHED TO THIS CERTIFICATE) TO THE EFFECT THAT SUCH TRANSFER IS BEING MADE IN
ACCORDANCE WITH RULE 903 OR 904 OF REGULATION S OR RULE 144 (IF AVAILABLE) AND THAT, IF SUCH TRANSFER OCCURS PRIOR TO THE EXPIRATION OF THE 40-
DAY DISTRIBUTION COMPLIANCE PERIOD, THE INTEREST TRANSFERRED WILL BE HELD IMMEDIATELY THEREAFTER THROUGH EUROCLEAR BANK S.A./N.A. OR
CLEARSTREAM BANKING SOCIÉTÉ ANONYME.

Ex. 1 - 3

 

[For Definitive Securities]

IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS
SUCH REGISTRAR AND TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.

 

 

 

 

 

Ex. 1 - 4

CUSIP No. _____

No. ____________$ ____________

7 1/4% Senior Notes due February 15, 2011

Phillips-Van Heusen Corporation, a Delaware corporation, promises to pay to Cede & Co., or registered assigns, the principal sum of
Ÿ
 Dollars on February 15, 2011.

Interest Payment Dates:  February 15 and August 15.

Record Dates:  February 1 and August 1.

Additional provisions of this Security are set forth on the other side of this Security.

Dated:
Phillips-Van Heusen Corporation
By:

Name:  

Title:

By:

Name:  

Title:

TRUSTEE'S CERTIFICATE OF

AUTHENTICATION
SUNTRUST BANK,

as Trustee, certifies 

that this is one of 

the Securities referred to 

in the Indenture.

by

Authorized Signatory

Ex. 1 - 5

[FORM OF REVERSE SIDE OF INITIAL SECURITY]

[FORM OF REVERSE SIDE OF SECURITY]

7 1/4% Senior Notes due February 15, 2011

1.Interest

Phillips-Van Heusen Corporation, a Delaware corporation (such corporation, and its successors and assigns under the Indenture
hereinafter referred to, being herein called the "Company"), promises to pay interest on the principal amount of this Security at the
rate per annum shown above; provided, however, that if a Registration Default (as defined in the Registration Rights Agreement)
occurs, additional interest will accrue on this Security at a rate of 0.25% per annum (increasing by an additional 0.25% per annum after each
consecutive 90-day period that occurs after the date on which such Registration Default occurs up to a maximum additional interest rate of
1.00%) from and including the date on which any such Registration Default shall occur to but excluding the date on which all Registration
Defaults have been cured or otherwise cease to exist.  The Company will pay interest semiannually in arrears on February 15 and August
15 of each year, commencing August 15, 2004.  Interest on the Securities will accrue from the most recent date to which interest has been paid
or, if no interest has been paid, from February 18, 2004.  Interest will be computed on the basis of a 360-day year of twelve 30-day months.
The Company will pay interest on overdue principal at the above rate and will pay interest on overdue installments of interest at such rate to
the extent lawful.

2.Method of Payment

The Company will pay interest on the Securities (except defaulted interest) to the Persons who are registered holders of Securities at
the close of business on the February 1 or August 1 immediately preceding the interest payment date even if Securities are canceled after the
record date and on or before the interest payment date.  Holders must surrender Securities to a Paying Agent to collect principal payments.
The Company will pay principal and interest in money of the United States that at the time of payment is legal tender for payment of public and
private debts.  Payments in respect of the Securities represented by a Global Security (including principal, premium, if any, and interest)
will be made by wire transfer of immediately available funds to the accounts specified by The Depository Trust Company.  The Company will make
all payments in respect of a certificated Security (including principal, premium, if any, and interest) by mailing a check to the registered
address of each Holder thereof; provided, however, that payments on a certificated Security will be made by wire transfer to a
U.S. dollar account maintained by the payee with a bank in the United States if such Holder elects payment by wire transfer by giving written
notice to the Trustee or the Paying Agent to such effect designating such account no later than 30 days immediately preceding the relevant due
date for payment (or such other date as the Trustee may accept in its discretion).

Ex. 1 - 6

3.Paying Agent and Registrar

Initially, SunTrust Bank, a state banking corporation (the "Trustee") will act as Paying Agent and Registrar.  The Company may
appoint and change any Paying Agent, Registrar or co-registrar without notice.  The Company or any of its domestically incorporated Wholly
Owned Subsidiaries may act as Paying Agent, Registrar or co-registrar.

4.Indenture

The Company issued the Securities under an Indenture dated as of February 18, 2004 (the "Indenture"), between the Company and the
Trustee.  The terms of the Securities include those stated in the Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939 (15 U.S.C.  Sections 77aaa-77bbbb) as in effect on the date of the Indenture (the "Act").  Terms defined in
the Indenture and not defined herein have the meanings ascribed thereto in the Indenture.  The Securities are subject to all such terms, and
Holders are referred to the Indenture and the Act for a statement of those terms.

The Securities are general unsecured obligations of the Company.  The Company shall be entitled, subject to its compliance with
Section 5.03 of the Indenture, to issue Additional Securities pursuant to Section 2.13 of the Indenture. The Securities issued on the Issue
Date and any Additional Securities will be treated as a single class for all purposes under the Indenture.  Subject to Section 5.14, the
Indenture contains covenants that limit the ability of the Company and its subsidiaries to incur or guarantee additional indebtedness; pay
dividends or make distributions on, or redeem or repurchase capital stock or subordinated indebtedness; make other restricted payments,
including investments; sell or otherwise dispose of assets, including capital stock of subsidiaries; enter into transactions with affiliates;
create certain liens; issue stock of subsidiaries; enter into sale/leaseback transactions; or consolidate or merge or sell all or substantially
all of the Company's assets and the assets of its subsidiaries.  These covenants are subject to important exceptions and qualifications.

5.Optional Redemption

Except as set forth below, the Company shall not be entitled to redeem the Securities at its option prior to February 15, 2008.

On and after February 15, 2008, the Company shall be entitled at its option to redeem all or a portion of the Securities upon not less than
30 nor more than 60 days' notice, at the redemption prices (expressed in percentages of principal amount on the redemption date), plus accrued
interest to the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant
interest payment date), if redeemed during the 12-month period commencing on February 15 of the years set forth below: 

	
Period
	
Price

	
2008
	
103.625%

	
2009
	
101.813%

	
2010 and thereafter
	
100.000% 

Ex. 1 - 7

In addition, prior to February 15, 2007, the Company shall be entitled at its option on one or more occasions to redeem Securities (which
includes Additional Securities, if any) in an aggregate principal amount not to exceed 35% of the aggregate principal amount of the Securities
(which includes Additional Securities, if any originally issued at a redemption price (expressed as a percentage of principal amount) of
107.25%, plus accrued and unpaid interest to the redemption date, with the net cash proceeds of one or more Equity Offerings; provided,
however that:
(6)at least 65% of such aggregate principal amount of Securities (which includes Additional Securities, if any) remains outstanding
immediately after the occurrence of each such redemption (other than Securities held, directly or indirectly, by the Company or its
Affiliates); and 

(7)each such redemption occurs within 90 days after the date of the related Equity Offering.

6.Notice of Redemption

Notice of redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each Holder of Securities
to be redeemed at its registered address.  Securities in denominations larger than $1,000 principal amount may be redeemed in part but only in
whole multiples of $1,000.  If money sufficient to pay the redemption price of and accrued interest on all Securities (or portions thereof) to
be redeemed on the redemption date is deposited with the Paying Agent on or before the redemption date and certain other conditions are
satisfied, on and after such date interest ceases to accrue on such Securities (or such portions thereof) called for redemption.

7.Put Provisions

Upon a Change of Control, any Holder of Securities will have the right to cause the Company to repurchase all or any part of the
Securities of such Holder at a repurchase price equal to 101% of the principal amount of the Securities to be repurchased plus accrued and
unpaid interest, if any, to the date of repurchase (subject to the right of holders of record on the relevant record date to receive interest
due on the related interest payment date) as provided in, and subject to the terms of, the Indenture.

8.Guarantee

The payment by the Company of the principal of, and premium and interest on, the Securities is guaranteed by the Subsidiary Guarantors,
if any, on a joint and several basis, on the terms set forth in the Indenture.

Ex. 1 - 8

9.Denominations; Transfer; Exchange

The Securities are in registered form without coupons in denominations of $1,000 principal amount and whole multiples of $1,000.  A
Holder may transfer or exchange Securities in accordance with the Indenture.  The Registrar may require a Holder, among other things, to
furnish appropriate endorsements or transfer documents and to pay any taxes and fees required by law or permitted by the Indenture.  The
Registrar need not register the transfer or exchange of any Securities selected for redemption (except, in the case of a Security to be
redeemed in part, the portion of the Security not to be redeemed) or any Securities for a period of 15 days before a selection of Securities to
be redeemed or 15 days before an interest payment date.

10.Persons Deemed Owners

The registered Holder of this Security may be treated as the owner of it for all purposes.

11.Unclaimed Money

If money for the payment of principal or interest remains unclaimed for two years, the Trustee or Paying Agent shall pay the money back
to the Company at its written request unless an abandoned property law designates another Person.  After any such payment, Holders entitled to
the money must look only to the Company and not to the Trustee for payment.

12.Discharge and Defeasance

Subject to certain conditions, the Company at any time shall be entitled to terminate some or all of its obligations under the
Securities and the Indenture if the Company deposits with the Trustee money or U.S. Government Obligations for the payment of principal and
interest on the Securities to redemption or maturity, as the case may be.

13.Amendment, Waiver

Subject to certain exceptions set forth in the Indenture, (i) the Indenture and the Securities may be amended with the written consent
of the Holders of at least a majority in principal amount outstanding of the Securities and (ii) any default or noncompliance with any
provision may be waived with the written consent of the Holders of a majority in principal amount outstanding of the Securities. Subject to
certain exceptions set forth in the Indenture, without the consent of any Holder, the Company, the Subsidiary Guarantors and the Trustee shall
be entitled to amend the Indenture or the Securities to cure any ambiguity, omission, defect or inconsistency, or to comply with Article 6 of
the Indenture, or to provide for uncertificated Securities in addition to or in place of certificated Securities, or to add guarantees with
respect to the Securities, including Subsidiary Guaranties, or to secure the Securities, or to add additional covenants or surrender rights and
powers conferred on the Company or a Restricted Subsidiary, or to comply with any requirement of the SEC in connection with qualifying the
Indenture 

Ex. 1 - 9

under the Act, or to make any change that does not adversely affect the rights of any Holder.

14.Defaults and Remedies

Under the Indenture, Events of Default include (i) default in payment of interest on the Securities when due, continued for 30 days;
(ii) default in payment of principal on the Securities when due at maturity, upon redemption pursuant to paragraph 5 of the Securities, upon
required purchase, upon acceleration or otherwise, or failure by the Company to redeem or purchase Securities when required; (iii) failure by
the Company to comply with other agreements in the Indenture or the Securities, in certain cases subject to notice and lapse of time; (iv)
certain accelerations or payment default in respect of other Indebtedness of the Company, any Subsidiary Guarantor or any Significant
Subsidiary if the amount accelerated (or if the amount of such Indebtedness with respect to which such a payment is not made after expiration
of any applicable grace period) exceeds $15.0 million; (v) certain events of bankruptcy or insolvency with respect to the Company, any
Subsidiary Guarantor and the Significant Subsidiaries; (vi) certain judgments or decrees for the payment of money in excess of $15.0 million;
and (vii) certain defaults with respect to Subsidiary Guaranties. If an Event of Default occurs and is continuing, the Trustee or the Holders
of at least 25% in principal amount of the Securities may declare all the Securities to be due and payable immediately. Certain events of
bankruptcy or insolvency are Events of Default which will result in the Securities being due and payable immediately upon the occurrence of
such Events of Default.

Holders may not enforce the Indenture or the Securities except as provided in the Indenture. The Trustee may refuse to enforce the Indenture
or the Securities unless it receives indemnity or security reasonably satisfactory to it. Subject to certain limitations, Holders of a majority
in principal amount of the Securities may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders
notice of any continuing Default (except a Default in payment of principal or interest) if it determines that withholding notice is in the best
interest of the Holders.

15.Trustee Dealings with the Company

Subject to certain limitations imposed by the Trust Indenture Act, the Trustee under the Indenture, in its individual or any other
capacity, may become the owner or pledgee of Securities and may otherwise deal with and collect obligations owed to it by the Company or its
Affiliates and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee.

16.No Recourse Against Others

No director, officer, employee, incorporator or stockholder, as such, of the Company or any Subsidiary shall have any liability for any
obligations of the Company or such Subsidiary under the Securities, any Subsidiary Guaranty or the Indenture or for any claim based on, in
respect of or by reason of such obligations or their creation.  By 

Ex. 1 - 10

accepting a Security, each Holder waives and releases all such liability.  The waiver and release are part of the consideration for the
issue of the Securities.

17.Authentication

This Security shall not be valid until an authorized signatory of the Trustee (or an authenticating agent) manually signs the
certificate of authentication on the other side of this Security.

18.Abbreviations

Customary abbreviations may be used in the name of a Holder or an assignee, such as TEN COM (= tenants in common), TEN ENT (= tenants by
the entireties), JT TEN (= joint tenants with rights of survivorship and not as tenants in common), CUST (= custodian), and U/G/M/A (= Uniform
Gift to Minors Act).

19.CUSIP Numbers

Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures the Company has caused CUSIP
numbers to be printed on the Securities and has directed the Trustee to use CUSIP numbers in notices of redemption as a convenience to Holders.
No representation is made as to the accuracy of such numbers either as printed on the Securities or as contained in any notice of redemption
and reliance may be placed only on the other identification numbers placed thereon.

20.Governing Law.

THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO
APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

The Company will furnish to any Holder upon written request and without charge to the Holder a copy of the Indenture which has in it the
text of this Security in larger type.  Requests may be made to:
Phillips-Van Heusen Corporation

200 Madison Avenue

New York, NY 10016

Attention: Secretary

Ex. 1 - 11

 

ASSIGNMENT FORM

To assign this Security, fill in the form below:

I or we assign and transfer this Security to

(Print or type assignee's name, address and zip code)

(Insert assignee's soc.  sec.  or tax I.D.  No.)

and irrevocably appoint
                        
;               agent to transfer this Security on the books of the
Company.  The agent may substitute another to act for him.

Date:Your Signature:

Sign exactly as your name appears on the other side of this Security.

In connection with any transfer of any of the Securities evidenced by this certificate occurring prior to the expiration of the period
referred to in Rule 144(k) under the Securities Act after the later of the date of original issuance of such Securities and the last date, if
any, on which such Securities were owned by the Company or any Affiliate of the Company, the undersigned confirms that such Securities are
being transferred in accordance with its terms:

CHECK ONE BOX BELOW
(1) ̈
to the Company; or

(2) ̈
pursuant to an effective registration statement under the U.S. Securities Act of 1933, as amended (the "Securities Act"); or

(3) ̈
inside the United States to a "qualified institutional buyer" (as defined in Rule 144A under the Securities Act) that purchases for its own
account or for the account of a qualified institutional buyer to whom notice is given that such transfer is being made in reliance on Rule
144A, in each case pursuant to and in compliance with Rule 144A under the Securities Act; or

(4) ̈
outside the United States in an offshore transaction within the meaning of Regulation S under the Securities Act in compliance with Rule
904 of Regulation S under the Securities Act; or

Ex. 1 - 12

(5) ̈
pursuant to the exemption from registration provided by Rule 144 under the Securities Act.

Unless one of the boxes is checked, the Trustee will refuse to register any of the Securities evidenced by this certificate in the name of
any person other than the registered holder thereof; provided, however, that if box (4) or (5) is checked, the Trustee shall be
entitled to require, prior to registering any such transfer of the Securities, such legal opinions, certifications and other information as the
Company or Registrar has reasonably requested to confirm that such transfer is being made pursuant to an exemption from, or in a transaction
not subject to, the registration requirements of the Securities Act, such as the exemption provided by Rule 144 under such Act.

Signature

Signature Guarantee:

Signature must be guaranteed Signature

Signatures must be guaranteed by an "eligible guarantor institution" 'meeting the requirements of the Registrar, which requirements include
membership or participation in the Security Transfer Agent Medallion Program ("STAMP") or such other "signature guarantee program" as may be
determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as
amended.

Ex. 1 - 13

TO BE COMPLETED BY PURCHASER IF (3) ABOVE IS CHECKED

The undersigned represents and warrants that it is purchasing this Security for its own account or an account with respect to which it
exercises sole investment discretion and that it and any such account is a "qualified institutional buyer" within the meaning of Rule 144A
under the Securities Act of 1933, as amended and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it
has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request
such information and that it is aware that the transferor is relying upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.

Date:
NOTICE:  To be executed by an executive officer

 

 

Ex. 1 - 14

[TO BE ATTACHED TO GLOBAL SECURITIES]

SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY

The following increases or decreases in this Global Security have been made:

	
Date of Exchange
	
Amount of decrease in principal amount of this Global Security
	
Amount of increase in principal amount of this Global Security
	
Principal amount of this Global Security following such decrease or increase
	
Signature of authorized officer of Trustee or Securities Custodian

	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 

 

 

 

 

Ex. 1 - 15

OPTION OF HOLDER TO ELECT PURCHASE

If you want to elect to have this Security purchased by the Company pursuant to Article 4 or Section 5.06 of the Indenture, check the
box:

 ̈

If you want to elect to have only part of this Security purchased by the Company pursuant to Article 4 or Section 5.06 of the Indenture,
state the amount in principal amount:  $·

Date:Your Signature:
(Sign exactly as your name appears on the other side of this Security.)

Signature Guarantee:
(Signature must be guaranteed)

Signatures must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Registrar, which requirements
include membership or participation in the Security Transfer Agent Medallion Program ("STAMP") or such other "signature guarantee program" as
may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934,
as amended.

Ex. 1 - 16

EXHIBIT A

[FORM OF FACE OF EXCHANGE SECURITY

OR PRIVATE EXCHANGE SECURITY * **

 

 

 

 

 

 

                                    

* If the Security is to be issued in global form add the Global Securities Legend from Exhibit 1 to Appendix A and the
attachment from such Exhibit 1 captioned "TO BE ATTACHED TO GLOBAL SECURITIES - SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY".

** If the Security is a Private Exchange Security issued in a Private Exchange to an Initial Purchaser holding an unsold portion
of its initial allotment, add the Restricted Securities Legend from Exhibit 1 to Appendix A and replace the Assignment Form included in this
Exhibit A with the Assignment Form included in such Exhibit 1.

 

Exhibit A-1

CUSIP No. _____

No. ____________$ ____________

7 1/4% Senior Notes due February 15, 2011

Phillips-Van Heusen Corporation, a Delaware corporation, promises to pay to Cede & Co., or registered assigns, the principal sum of
·
 Dollars on February 15, 2011.

Interest Payment Dates:  February 15 and August 15.

Record Dates:  February 1 and August 1.

Additional provisions of this Security are set forth on the other side of this Security.

Dated:
Phillips-Van Heusen Corporation
By:

Name:  

Title:

By:

Name:  

Title:

TRUSTEE'S CERTIFICATE OF

AUTHENTICATION

SUNTRUST BANK,

as Trustee, certifies 

that this is one of 

the Securities referred to 

in the Indenture.

by

Authorized Signatory

Exhibit A-2

[FORM OF REVERSE SIDE OF EXCHANGE SECURITY

OR PRIVATE EXCHANGE SECURITY]

[FORM OF REVERSE SIDE OF SECURITY]

7 1/4% Senior Notes due February 15, 2011

1.Interest

Phillips-Van Heusen Corporation, a Delaware corporation (such corporation, and its successors and assigns under the Indenture
hereinafter referred to, being herein called the "Company"), promises to pay interest on the principal amount of this Security at the
rate per annum shown above[; provided, however, that if a Registration Default (as defined in the Registration Rights
Agreement) occurs, additional interest will accrue on this Security at a rate of 0.25% per annum (increasing by an additional 0.25% per annum
after each consecutive 90-day period that occurs after the date on which such Registration Default occurs up to a maximum additional interest
rate of 1.00%) from and including the date on which any such Registration Default shall occur to but excluding the date on which all
Registration Defaults have been cured or otherwise cease to exist.]1  The Company will
pay interest semiannually in arrears on February 15 and August 15 of each year, commencing August 15, 2004.  Interest on the Securities
will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from February 18, 2004.  Interest will
be computed on the basis of a 360-day year of twelve 30-day months.  The Company will pay interest on overdue principal at the above rate and
will pay interest on overdue installments of interest at such rate to the extent lawful.

2.Method of Payment

The Company will pay interest on the Securities (except defaulted interest) to the Persons who are registered holders of Securities at
the close of business on the February 1 or August 1 immediately preceding the interest payment date even if Securities are canceled after the
record date and on or before the interest payment date.  Holders must surrender Securities to a Paying Agent to collect principal payments.
The Company will pay principal and interest in money of the United States that at the time of payment is legal tender for payment of public and
private debts.  Payments in respect of the Securities represented by a Global Security (including principal, premium, if any, and interest)
will be made by wire transfer of immediately available funds to the accounts specified by The Depository Trust Company.  The Company will make
all payments in 

1 Insert if at the date of issuance of the Exchange Security or Private Exchange Security (as the case may be) any Registration
Default has occurred with respect to the related Initial Securities during the interest period in which such date of issuance occurs.

Exhibit A-3

 

respect of a certificated Security (including principal, premium, if any, and interest) by mailing a check to the registered address of each
Holder thereof; provided, however, that payments on a certificated Security will be made by wire transfer to a U.S. dollar
account maintained by the payee with a bank in the United States if such Holder elects payment by wire transfer by giving written notice to the
Trustee or the Paying Agent to such effect designating such account no later than 30 days immediately preceding the relevant due date for
payment (or such other date as the Trustee may accept in its discretion).

3.Paying Agent and Registrar

Initially, SunTrust Bank, a state banking corporation (the "Trustee") will act as Paying Agent and Registrar.  The Company may
appoint and change any Paying Agent, Registrar or co-registrar without notice.  The Company or any of its domestically incorporated Wholly
Owned Subsidiaries may act as Paying Agent, Registrar or co-registrar.

4.Indenture

The Company issued the Securities under an Indenture dated as of February 18, 2004 (the "Indenture"), between the Company and the
Trustee.  The terms of the Securities include those stated in the Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939 (15 U.S.C.  Sections 77aaa-77bbbb) as in effect on the date of the Indenture (the "Act").  Terms defined in
the Indenture and not defined herein have the meanings ascribed thereto in the Indenture.  The Securities are subject to all such terms, and
Holders are referred to the Indenture and the Act for a statement of those terms.

The Securities are general unsecured obligations of the Company.  The Company shall be entitled, subject to its compliance with
Section 5.03 of the Indenture, to issue Additional Securities pursuant to Section 2.13 of the Indenture. The Securities issued on the Issue
Date and any Additional Securities will be treated as a single class for all purposes under the Indenture.  Subject to Section 5.14, the
Indenture contains covenants that limit the ability of the Company and its subsidiaries to incur or guarantee additional indebtedness; pay
dividends or make distributions on, or redeem or repurchase capital stock or subordinated indebtedness; make other restricted payments,
including investments; sell or otherwise dispose of assets, including capital stock of subsidiaries; enter into transactions with affiliates;
create certain liens; issue stock of subsidiaries; enter into sale/leaseback transactions; or consolidate or merge or sell all or substantially
all of the Company's assets and the assets of its subsidiaries.  These covenants are subject to important exceptions and qualifications.

5.Optional Redemption

Except as set forth below, the Company shall not be entitled to redeem the Securities at its option prior to February 15, 2008.

On and after February 15, 2008, the Company shall be entitled at its option to redeem all or a portion of the Securities upon not less than
30 nor more than 60 days' 

Exhibit A-4

notice, at the redemption prices (expressed in percentages of principal amount on the redemption date), plus accrued interest to the
redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment
date), if redeemed during the 12-month period commencing on February 15 of the years set forth below: 

	
Period
	
Price

	
2008
	
103.625%

	
2009
	
101.813%

	
2010 and thereafter
	
100.000% 

In addition, prior to February 15, 2007, the Company shall be entitled at its option on one or more occasions to redeem Securities (which
includes Additional Securities, if any) in an aggregate principal amount not to exceed 35% of the aggregate principal amount of the Securities
(which includes Additional Securities, if any originally issued at a redemption price (expressed as a percentage of principal amount) of
107.25%, plus accrued and unpaid interest to the redemption date, with the net cash proceeds of one or more Equity Offerings; provided,
however that:
(1)at least 65% of such aggregate principal amount of Securities (which includes Additional Securities, if any) remains outstanding
immediately after the occurrence of each such redemption (other than Securities held, directly or indirectly, by the Company or its
Affiliates); and 

(2)each such redemption occurs within 90 days after the date of the related Equity Offering.

6.Notice of Redemption

Notice of redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each Holder of Securities
to be redeemed at its registered address.  Securities in denominations larger than $1,000 principal amount may be redeemed in part but only in
whole multiples of $1,000.  If money sufficient to pay the redemption price of and accrued interest on all Securities (or portions thereof) to
be redeemed on the redemption date is deposited with the Paying Agent on or before the redemption date and certain other conditions are
satisfied, on and after such date interest ceases to accrue on such Securities (or such portions thereof) called for redemption.

7.Put Provisions

Upon a Change of Control, any Holder of Securities will have the right to cause the Company to repurchase all or any part of the
Securities of such Holder at a repurchase price equal to 101% of the principal amount of the Securities to be repurchased plus accrued and
unpaid interest, if any, to the date of repurchase (subject to the right of holders of record on the relevant record date to receive interest
due on the related interest payment date) as provided in, and subject to the terms of, the Indenture.

Exhibit A-5

8.Guarantee

The payment by the Company of the principal of, and premium and interest on, the Securities is guaranteed by the Subsidiary Guarantors,
if any, on a joint and several basis, on the terms set forth in the Indenture.

9.Denominations; Transfer; Exchange

The Securities are in registered form without coupons in denominations of $1,000 principal amount and whole multiples of $1,000.  A
Holder may transfer or exchange Securities in accordance with the Indenture.  The Registrar may require a Holder, among other things, to
furnish appropriate endorsements or transfer documents and to pay any taxes and fees required by law or permitted by the Indenture.  The
Registrar need not register the transfer or exchange of any Securities selected for redemption (except, in the case of a Security to be
redeemed in part, the portion of the Security not to be redeemed) or any Securities for a period of 15 days before a selection of Securities to
be redeemed or 15 days before an interest payment date.

10.Persons Deemed Owners

The registered Holder of this Security may be treated as the owner of it for all purposes.

11.Unclaimed Money

If money for the payment of principal or interest remains unclaimed for two years, the Trustee or Paying Agent shall pay the money back
to the Company at its written request unless an abandoned property law designates another Person.  After any such payment, Holders entitled to
the money must look only to the Company and not to the Trustee for payment.

12.Discharge and Defeasance

Subject to certain conditions, the Company at any time shall be entitled to terminate some or all of its obligations under the
Securities and the Indenture if the Company deposits with the Trustee money or U.S. Government Obligations for the payment of principal and
interest on the Securities to redemption or maturity, as the case may be.

13.Amendment, Waiver

Subject to certain exceptions set forth in the Indenture, (i) the Indenture and the Securities may be amended with the written consent
of the Holders of at least a majority in principal amount outstanding of the Securities and (ii) any default or noncompliance with any
provision may be waived with the written consent of the Holders of a majority in principal amount outstanding of the Securities. Subject to
certain exceptions set forth in the Indenture, without the consent of any Holder, the Company, the Subsidiary Guarantors and the Trustee shall
be entitled to amend the Indenture or the Securities to

Exhibit A-6

cure any ambiguity, omission, defect or inconsistency, or to comply with Article 6 of the Indenture, or to provide for uncertificated
Securities in addition to or in place of certificated Securities, or to add guarantees with respect to the Securities, including Subsidiary
Guaranties, or to secure the Securities, or to add additional covenants or surrender rights and powers conferred on the Company or a Restricted
Subsidiary, or to comply with any requirement of the SEC in connection with qualifying the Indenture under the Act, or to make any change that
does not adversely affect the rights of any Holder.

14.Defaults and Remedies

Under the Indenture, Events of Default include (i) default in payment of interest on the Securities when due, continued for 30 days;
(ii) default in payment of principal on the Securities when due at maturity, upon redemption pursuant to paragraph 5 of the Securities, upon
required purchase, upon acceleration or otherwise, or failure by the Company to redeem or purchase Securities when required; (iii) failure by
the Company to comply with other agreements in the Indenture or the Securities, in certain cases subject to notice and lapse of time; (iv)
certain accelerations or payment default in respect other Indebtedness of the Company, any Subsidiary Guarantor or any Significant Subsidiary
if the amount accelerated (or if the amount of such Indebtedness with respect to which such a payment is not made after expiration of any
applicable grace period) exceeds $15.0 million; (v) certain events of bankruptcy or insolvency with respect to the Company, any Subsidiary
Guarantor and the Significant Subsidiaries; (vi) certain judgments or decrees for the payment of money in excess of $15.0 million; and (vii)
certain defaults with respect to Subsidiary Guaranties. If an Event of Default occurs and is continuing, the Trustee or the Holders of at least
25% in principal amount of the Securities may declare all the Securities to be due and payable immediately. Certain events of bankruptcy or
insolvency are Events of Default which will result in the Securities being due and payable immediately upon the occurrence of such Events of
Default.

Holders may not enforce the Indenture or the Securities except as provided in the Indenture. The Trustee may refuse to enforce the Indenture
or the Securities unless it receives indemnity or security reasonably satisfactory to it. Subject to certain limitations, Holders of a majority
in principal amount of the Securities may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders
notice of any continuing Default (except a Default in payment of principal or interest) if it determines that withholding notice is in the best
interest of the Holders.

15.Trustee Dealings with the Company

Subject to certain limitations imposed by the Trust Indenture Act, the Trustee under the Indenture, in its individual or any other
capacity, may become the owner or pledgee of Securities and may otherwise deal with and collect obligations owed to it by the Company or its
Affiliates and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee.

Exhibit A-7

16.No Recourse Against Others

No director, officer, employee, incorporator or stockholder, as such, of the Company or any Subsidiary shall have any liability for any
obligations of the Company or such Subsidiary under the Securities, any Subsidiary Guaranty or the Indenture or for any claim based on, in
respect of or by reason of such obligations or their creation.  By accepting a Security, each Holder waives and releases all such liability.
The waiver and release are part of the consideration for the issue of the Securities.

17.Authentication

This Security shall not be valid until an authorized signatory of the Trustee (or an authenticating agent) manually signs the
certificate of authentication on the other side of this Security.

18.Abbreviations

Customary abbreviations may be used in the name of a Holder or an assignee, such as TEN COM (= tenants in common), TEN ENT (= tenants by
the entireties), JT TEN (= joint tenants with rights of survivorship and not as tenants in common), CUST (= custodian), and U/G/M/A (= Uniform
Gift to Minors Act).

19.CUSIP Numbers

Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures the Company has caused CUSIP
numbers to be printed on the Securities and has directed the Trustee to use CUSIP numbers in notices of redemption as a convenience to Holders.
No representation is made as to the accuracy of such numbers either as printed on the Securities or as contained in any notice of redemption
and reliance may be placed only on the other identification numbers placed thereon.

20.Governing Law.

THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO
APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

The Company will furnish to any Holder upon written request and without charge to the Holder a copy of the Indenture which has in it the
text of this Security in larger type.  Requests may be made to:
Phillips-Van Heusen Corporation

200 Madison Avenue

New York, NY 10016

Attention: Secretary

Exhibit A-8

 

ASSIGNMENT FORM

To assign this Security, fill in the form below:

I or we assign and transfer this Security to

(Print or type assignee's name, address and zip code)

(Insert assignee's soc.  sec.  or tax I.D.  No.)

and irrevocably appoint
                        
;               agent to transfer this Security on the books of the
Company.  The agent may substitute another to act for him.

Date:Your Signature:

Sign exactly as your name appears on the other side of this Security.

 

 

 

Exhibit A-9

 

OPTION OF HOLDER TO ELECT PURCHASE

If you want to elect to have this Security purchased by the Company pursuant to Article 4 or Section 5.06 of the Indenture, check the
box:

 ̈

If you want to elect to have only part of this Security purchased by the Company pursuant to Article 4 or Section 5.06 of the Indenture,
state the amount in principal amount:  $·

Date:Your Signature:
(Sign exactly as your name appears on the other side of this Security.)

Signature Guarantee:
(Signature must be guaranteed)

Signatures must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Registrar, which requirements
include membership or participation in the Security Transfer Agent Medallion Program ("STAMP") or such other "signature guarantee program" as
may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934,
as amended.

 

Exhibit A-10

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