Document:

Prepared by R.R. Donnelley Financial -- Constar Internl Inc. Short-Term Incentive Plan

 EXHIBIT 10.28 
 CONSTAR
INTERNATIONAL INC. 
 SHORT-TERM INCENTIVE PLAN 
  
 SECTION 1.    ESTABLISHMENT AND PURPOSE 
  
 1.1    Effective Date and Establishment of the Plan.    The Company hereby establishes the Constar International Inc. Short-Term Incentive Plan, as amended from time to time, to permit
the awarding of bonuses to eligible Employees, based on the achievement of certain pre-established performance goals. 
  
 Subject to approval by the stockholders of the Company, the Plan shall become effective as of                      and shall
continue until terminated by the Company pursuant to Section 9. No bonus shall be made pursuant to the Plan after its termination date; provided that bonuses granted prior to the termination date may extend and be paid beyond that date.

  
 1.2    Purpose.    The purposes of the Plan are to (i) align
compensation with key financial and business plan objectives, (ii) enhance shareholder value, (iii) communicate the drivers of success of the business, (iv) focus on pay-for-performance, (v) provide participants with an incentive for excellence in
individual performance and to promote teamwork among participants, and (vi) allow participants to share in the success of the Company. 
  
 The Plan is intended to secure the full deductibility of incentive awards payable to the Executive Officers. All compensation payable under this Plan to Executive Officers is intended to be deductible by the Company under
Section 162(m) of the Code. 
  
 SECTION 2.    DEFINITIONS 
  

As used in the Plan, the following terms shall have the meanings set forth below (unless otherwise expressly provided). 
  
 “Award Opportunity” means the various levels of incentive awards which a Participant may earn under the Plan, as
established by the Committee pursuant to Section 5.1. 
  
 “Base Salary” shall mean the regular base
salary earned by a Participant during the Plan Year prior to any salary reduction contributions made to any of the Company’s deferred compensation plans, except as otherwise determined by the Committee in its sole discretion. 

 
 “Board” means the Board of Directors of the Company. 
  

“Code” means the Internal Revenue Code of 1986, as amended. 
  
 “Committee” means the Compensation Committee of the Board, provided that such committee shall consist of two (2) or more individuals, appointed by the Board to administer the
Plan, pursuant to Section 3, who are “outside directors” to the extent required by and within the meaning of Section 162(m) of the Code, as amended from time to time. 
 

 1 

  
 “Company” means Constar International Inc. a corporation
organized under the laws of the State of Delaware, and any successor thereto. 
  
 “Disability” means
an Employee’s inability to render, for a period of six consecutive months, services to the Company by reason of permanent disability, as determined by the written medical opinion of an independent medical physician reasonably acceptable to the
Company. In no event shall an Employee be considered disabled for the purposes of this Agreement unless the Employee is deemed disabled pursuant to the Company’s long-term disability plan, if one is maintained by the Company. 

 
 “Effective Date” means the date the Plan becomes effective, as set forth in Section 1.1 herein. 

 
 “Employee” means an officer or other key employee of the Company or a Subsidiary including a director who is
such an employee. 
  
 “Exchange Act” means the Securities Exchange Act of 1934, as amended from time
to time. 
  
 “Executive Officer” shall mean a “covered employee” as described in Section
162(m) of the Code or any other executive officer designated by the Committee for purposes of exempting distributions under the Plan from Section 162(m) of the Code. 
  
 “Final Award” means the actual amount earned during a Plan Year by a Participant, as determined by the Committee after the end of such Plan Year.

  
 “Financial” shall mean the corporate financial performance of the Company. 

 
 “Non-financial” shall mean the non-financial performance of the Company’s operations designated as such
by the Chief Executive Officer and approved by the Committee for purposes of the Plan, such as a business unit, subsidiary, organizational unit, division or other such segmentation. 
  
 “Participant” means an Employee who is participating in the Plan pursuant to Section 4. 
  
 “Plan” means the Constar International Inc. Short-Term Incentive Plan, as amended from time to time. 
  

“Plan Year” means the Company’s fiscal year, commencing on each January 1 and ending on each December 31; provided, however, that
for purposes of this Plan, the first Plan Year shall be the period beginning on the Effective Date and ending on December 31, 2002. 
  
 “Retirement” means, with respect to any Participant, resignation or termination of employment after attainment of an age regarded by the Company or, if applicable, a Subsidiary as the normal retirement age
for its employees in general, based upon the Company’s or the Subsidiary’s general employment and related policies and practices. 
 

 2 

  
 “Subsidiary” means any (i) corporation if fifty percent (50%) or
more of the total combined voting power of all classes of stock is owned, either directly or indirectly, by the Company or another Subsidiary or (ii) limited liability company if fifty percent (50%) or more of the membership interests is owned,
either directly or indirectly, by the Company or another Subsidiary. 
  
 “Target Incentive Award”
means the award to be paid to a Participant when 100% of performance measures are achieved, as established by the Committee. 
  
 SECTION
3.    ADMINISTRATION 
  
 The Plan shall be administered by the Committee. Except with respect
to the matters that under Section 162(m) of the Code and Treasury Regulation Section 1.162-27(e) are required to be determined or established by the Committee to qualify awards under the Plan as qualified performance-based compensation, the
Committee shall have the power to delegate to any officer or employee of the Company the authority to administer and interpret the procedural aspects of the Plan, subject to the Plan’s terms, including adopting and enforcing rules to decide
procedural and administrative issues. 
  
 The Committee shall employ such legal counsel, independent auditors and
consultants as it deems appropriate for the administration of the Plan and shall be entitled to rely in good faith upon any report, calculation or other information furnished to it by any officer or employee of the Company or from the financial,
accounting, legal or other advisers of the Company. 
  
 Subject to the limitations set forth herein, the Committee,
subject to ratification by the Board, shall: (i) select from the Employees, those who shall participate in the Plan, (ii) grant Award Opportunities in such forms and amounts as it shall determine, (iii) impose such limitations, restrictions and
conditions upon such awards as it shall deem appropriate, (iv) interpret the Plan and adopt, amend and rescind administrative guidelines and other rules and regulations relating to the Plan, (v) make any and all legal and factual determinations in
connection with the administration and interpretation of the Plan, (vi) correct any defect or omission or reconcile any inconsistency in this Plan or in any Award Opportunity granted hereunder and (vii) make all other necessary determinations and
take all other actions necessary or advisable for the implementation and administration of the Plan. The Committee’s determinations, subject to ratification by the Board, shall be conclusive and binding upon all parties. 

 
 SECTION 4.    ELIGIBILITY AND PARTICIPATION 
  
 4.1    Eligibility.    Each Employee who is recommended by the Chief Executive Officer of the Company to participate in the
Plan, and who is approved by the Committee, shall participate in the Plan for such Plan Year, subject to the limitations of Section 7 herein. 
  
 4.2    Participation.    Participation in the Plan shall be determined annually by the Committee based upon the criteria set forth herein. Employees who
are eligible to participate in the Plan shall be notified of the performance goals and related Award Opportunities for the relevant Plan Year, as soon as practicable. 
 

 3 

  
 4.3    Partial Plan Year
Participation.    In the event that an Employee becomes eligible to participate in the Plan subsequent to the commencement of a Plan Year, then such Employee’s Final Award shall be based on the Base Salary earned as an
eligible Employee. 
  
 4.4    No Right to Participate.    No
Participant or other Employee shall at any time have a right to participate in the Plan for any Plan Year, regardless of whether he or she participated in the Plan during a prior Plan Year. 
  

SECTION 5.    AWARD DETERMINATION 
  
 5.1    Performance Goals.    Prior to the beginning of each Plan Year, or as soon as practicable thereafter (but in no event more than ninety (90) days from the beginning of such Plan
Year), the Committee shall, in its sole discretion, approve or establish in writing the performance goals for that Plan Year. For any performance period that is less than twelve months, the performance goals shall be established before twenty-five
percent (25%) of the relevant performance period has lapsed. 
  
 The performance goals may include, without
limitation, any combination of Financial, Non-financial and individual performance goals, as determined by the Committee and ratified by the Board. Performance measures and their relative weight may vary by job classification. The Committee also
shall have the authority to exercise subjective discretion in the determination of Final Awards, as well as the authority to delegate the ability to exercise subjective discretion in this respect. 
  
 The Committee also may establish one or more Company-wide performance goals which must be achieved for any Participant to receive an award
for that Plan Year. 
  
 The performance period with respect to which awards may be payable under the Plan shall
generally be the Plan Year; provided, however, that the Committee shall have the authority and discretion to designate different performance periods under the Plan. 
  
 5.2    Objective Compensation Formula.    Prior to the beginning of each Plan Year, or as soon as practicable thereafter (but
in no event more than ninety (90) days from the beginning of such Plan Year), the Committee shall, subject to ratification by the Board, approve or establish in writing the objective compensation formula or standard for that Plan Year. Such
objective compensation formula or standard shall be the method for computing the amount of compensation payable to the Participant if the performance goals are attained. The formula or standard is objective if a third party having knowledge of the
relevant performance results could calculate the amount to be paid to a Participant. 
  
 5.3    Award Opportunities.    Prior to the beginning of each Plan Year, or as soon as practicable thereafter (but in no event more than ninety (90) days from the beginning of such Plan
Year), the Committee shall establish an Award Opportunity for each Participant. Such Award Opportunity may vary in relation to the job classification of each Participant. In the event a Participant changes job levels during a Plan Year, the
Participant’s Award Opportunity may be adjusted to reflect the amount of time at each job level during the Plan Year. 
 

 4 

  
 5.4    Adjustment of Performance
Goals.    The Committee (subject to ratification by the Board) shall have the right to adjust the performance goals and the Award Opportunities (either up or down) during a Plan Year, to the extent permitted by Code Section
162(m) and the regulations and interpretative rulings thereunder, if it determines that external changes or other unanticipated business conditions have materially affected the fairness of the goals and have unduly influenced the Company’s
ability to meet them. Further, in the event of a Plan Year of less than twelve (12) months, the Committee shall have the right to adjust the performance goals and the Award Opportunities accordingly. 
  
 5.5    Final Award Determinations.    At the end of each Plan Year, Final Awards shall be
computed for each Participant as determined by the Committee. Each such award shall be based upon (i) the Participant’s Target Incentive Award percentage, multiplied by his Base Salary, in whole or in part (or other preestablished objective
compensation formula in accordance with Section 5.2), and (ii) the attainment of Financial, Non-financial and individual performance goals. Final Award amounts may vary above or below the Target Incentive Award, based on the level of achievement of
the pre-established Financial, Non-financial, and individual performance goals. Notwithstanding the foregoing, the Committee shall have, in its sole discretion, the right to reduce or eliminate the compensation or other economic benefit upon
attainment of Financial, Non-financial and individual performance goals. 
  
 5.6    Limitations.    The amount payable to a Participant for any calendar year shall not exceed 90 percent the Participant’s Base Salary. 
  
 SECTION 6.    PAYMENT OF FINAL AWARDS 
  
 6.1    Form and Timing of Payment.    Within 60 days after the end of each Plan Year, the Committee shall certify in writing the extent to which the
Company and each Participant has achieved the performance goals for such Plan Year, including the specific target objective(s) and the satisfaction of any other material terms of the awards, and the Committee shall calculate the amount of each
Participant’s incentive award for the relevant period. Subject to Section 7, Final Award payments are payable to the Participant, or to his estate in the case of death, in a single cash payment within 75 days after the end of each Plan Year.

  
 6.2    Payment of Partial Awards.    In the event a Participant no
longer meets the eligibility criteria as set forth in the Plan during the course of a particular Plan Year, the Committee may, in its sole discretion, compute and pay a partial award for the portion of the Plan Year that an Employee was a
Participant. 
  
 6.3    Unsecured Interest.    No Participant or any
other party claiming an interest in amounts earned under the Plan shall have any interest whatsoever in any specific asset of the Company. To the extent that any party acquires a right to receive payments under the Plan, such right shall be
equivalent to that of an unsecured general creditor of the Company. 
 

 5 

  
 SECTION 7.    TERMINATION OF EMPLOYMENT 
  
 7.1    Termination of Employment Due to Death, Disability, or Retirement.    In the event a
Participant’s employment is terminated by reason of Death, Disability, or Retirement, the Final Award determined in accordance with Section 5.4 herein shall be reduced to reflect participation in the Plan prior to such termination only. In the
case of a Participant’s Disability, termination of employment shall be deemed to have occurred on the date the Committee determines that the requirements of Disability have been satisfied. 
  

The Final Award thus determined shall be payable to such Participant at the time that the Final Awards for such Plan Year would otherwise be payable to active
Participants. 
  
 7.2    Termination of Employment for Other
Reasons.    In the event a Participant’s employment is terminated for any reason other than Death, Disability, or Retirement prior to the last day of the performance period, all of the Participant’s rights to such
Final Award shall be forfeited. 
  
 SECTION 8.    RIGHTS OF PARTICIPANTS 
  
 8.1    Employment.    Nothing in the Plan shall interfere with or limit in any way the
right of the Company to terminate a Participant’s employment at any time or confer upon any Participant any right to continue in the employ of the Company. 
  
 8.2    Nontransferability.    No right or interest of any Participant in the Plan shall be assignable or transferable, or subject to any lien, directly,
by operation of law, or otherwise, including, but not limited to, execution, levy, garnishment, attachment, pledge, and bankruptcy. 
  
 SECTION 9.    AMENDMENT AND MODIFICATION 
  
 The Board or the Committee,
in its sole discretion, without notice, at any time and from time to time, may modify or amend, in whole or in part, any or all of the provisions of the Plan, or suspend or terminate it entirely; provided, however, that no such modification,
amendment, suspension, or termination may, without the consent of a Participant, reduce the right of a Participant to a payment or distribution hereunder which he has already earned and to which he is otherwise entitled. 
  
 SECTION 10.    MISCELLANEOUS 
  
 10.1    Governing Law.    The Plan, and all agreements hereunder, shall be governed by and construed in accordance with the laws of the State of Delaware.

  
 10.2    Withholding Taxes.    The Company shall have the right to
deduct from all payments under the Plan any Federal, state, or local income and employment taxes required by law to be withheld with respect to such payments. 
  
 10.3    Gender and Number.    Except where otherwise indicated by the context, any masculine term used herein also shall include the feminine, the plural
shall include the singular, and the singular shall include the plural. 
 

 6 

  
 10.4    Severability.    In the
event any provision of the Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Plan and the Plan shall be construed and enforced as if the illegal or invalid provision had
not been included. 
  
 10.5    Costs of the Plan.    All costs of
implementing and administering the Plan shall be borne by the Company. 
  
 10.6    Successors.    All obligations of the Company under the Plan shall be binding upon and inure to the benefit of any successor to the Company, whether the existence of such
successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company. 
  
 10.7    Meaning of “Company”.    Any reference to the Company includes, if and to the extent applicable, a
reference to any Subsidiary. 
  
 To record the adoption of the Plan, the Company has caused its authorized officers
to affix its corporation name and seal this              day of
                    , 2002. 
  
 
	 [CORPORATE SEAL]
 	  	 CONSTAR INTERNATIONAL INC.
 
	 
	 Attest:                                    
                                        
               
 	  	 By:                                     
                                        
                    
 

 
 

 7--------------------------------------------------------------------------------

                           SEVENTH AMENDMENT AGREEMENT

                            Dated as of May 17, 2002

                           LILLIAN VERNON CORPORATION,

                   LILLIAN VERNON FULFILLMENT SERVICES, INC.,

                             LVC RETAIL CORPORATION,

                       LILLIAN VERNON INTERNATIONAL, LTD.,

                           THE BANKS NAMED HEREIN and

                               JPMORGAN CHASE BANK
                  (Formerly known as The Chase Manhattan Bank)

                      Financing Transaction Document Index

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

Loan Documentation                                                           Tab
------------------                                                           ---

Seventh Amendment Agreement                                                   1

Seventh Amendment Fee Letter                                                  2

Secretary's Certificate of the Borrower and each Guarantor                    3

<PAGE>

                                                                  EXECUTION COPY

================================================================================

                           SEVENTH AMENDMENT AGREEMENT

                            Dated as of May 17, 2002

                                      among

                           LILLIAN VERNON CORPORATION,

                                  as Borrower,

                   LILLIAN VERNON FULFILLMENT SERVICES, INC.,

                           LVC RETAIL CORPORATION and

                       LILLIAN VERNON INTERNATIONAL, LTD.

                                 as Guarantors,

                               JPMORGAN CHASE BANK
                  (formerly known as The Chase Manhattan Bank),

                                    as Agent,

                                       and

                             THE BANKS NAMED HEREIN

                                   ----------

              To The Credit Agreement Dated as of August 19, 1996

                                   ----------

================================================================================
<PAGE>

     THIS SEVENTH AMENDMENT AGREEMENT, dated as of May 17, 2002 (this
"Amendment"), among LILLIAN VERNON CORPORATION, a Delaware Corporation (the
"Borrower"), LILLIAN VERNON FULFILLMENT SERVICES, a Virginia corporation
("LVFS"), LVC RETAIL CORPORATION, a Delaware corporation ("LVC"), and LILLIAN
VERNON INTERNATIONAL, LTD., a New York corporation ("LVI Inc.", and together
with LVFS and LVC, the "Guarantors"), the several banks from time to time
parties to the Agreement (as defined below) (the "Banks") and JPMORGAN CHASE
BANK (formerly known as The Chase Manhattan Bank), a New York banking
corporation, as agent for the Banks hereunder (in such capacity, the "Agent");

                              W I T N E S S E T H :

     WHEREAS, the parties hereto have entered into a Revolving Credit Agreement
dated as of August 19, 1996 (as amended, restated, supplemented or otherwise
modified from time to time, the "Agreement");

     WHEREAS, the Borrower has requested the Banks reduce the amount of the
credit facility and amend certain financial covenants of the Borrower, effective
as of the date hereof (the "Amendment Effective Date"); and

     WHEREAS, the Borrower and Guarantors desire, and each Bank and the Agent
are willing, on the terms and conditions set forth below, to modify certain
terms of the Agreement as set forth below;

     NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereto hereby agree as follows:

     SECTION 1. Defined Terms. Capitalized terms used herein and not defined
herein shall have the meanings specified in the Agreement.

     SECTION 2. Amendment to the Agreement.

     (a) Schedule 2.01 to the Agreement is hereby amended by deleting such
schedule in its entirety and inserting in lieu thereof the Schedule 2.01
attached to this Amendment.

     (b) Section 1.01 of the Agreement is hereby amended by deleting the defined
term "Applicable Spread" contained therein and inserting in lieu thereof the
following:

          "Applicable Spread " shall mean 100 basis points.

     (c) Section 1.01 of the Agreement is hereby amended by adding the following
term immediately following the term "Assignment and Acceptance":

          "Available Commitment": as to any Bank at any time, an amount equal to
          (a) the amount of such Bank's Tranche 1 Commitment at such time less
          (b) the aggregate principal amount of all revolving credit loans made
          by such Bank to the Borrower

<PAGE>

          pursuant to Section 2.02 hereof then outstanding; collectively, as to
          all the Lenders, the "Available Commitments".

     (d) Section 1.01 of the Agreement is hereby amended by deleting therefrom
the terms "Available Amount" and "Unavailable Amount".

     (e) Section 2.05(a) of the Agreement is hereby amended by deleting the
first sentence thereof in its entirety and inserting in lieu thereof the
following:

          The Borrower agrees to pay to each Bank, through the Agent, a
          commitment fee (the "Tranche 1 Commitment Fee"), which Tranche 1
          Commitment Fee shall be a quarterly fee, computed at the rate of
          0.375% per annum on the average daily amount of the Available
          Commitments during each calendar quarter, and which shall be payable
          to the Banks pro rata based upon the Tranche 1 Commitments of the
          Banks.

     (f) Section 2.10 of the Agreement is hereby amended by deleting such
section in its entirety and inserting in lieu thereof the following:

          [Intentionally omitted.]

     (g) Section 6.10 of the Agreement is hereby amended by deleting such
Section in its entirety and inserting in lieu thereof the following:

               SECTION 6.10. Consolidated Capital Expenditures. Permit, during
          any fiscal year of the Borrower, Consolidated Capital Expenditures to
          exceed $5,000,000.

     (h) Section 6.11 of the Agreement is hereby amended by deleting such
Section in its entirety and inserting in lieu thereof the following:

               SECTION 6.11. Consolidated Net Income. Permit Consolidated Net
          Income to be less than zero for any fiscal year, calculated in
          accordance with GAAP; provided that for the fiscal periods set forth
          below the Borrower may have a net loss of up to but not exceeding the
          Permitted Net Loss set forth opposite such period as follows:

               Fiscal Period                          Permitted Net Loss
               -------------                          ------------------
               Fiscal Year 2002                       $10,000,000

               Fiscal Year 2003,
                 first quarter                        $ 6,000,000
                 first two quarters, year to date     $11,000,000
                 first three quarters, year to date   $ 7,500,000
                 four quarters, year to date          $ 6,750,000

                                       2
<PAGE>

     (i) Section 6.12 of the Agreement is hereby amended by deleting such
Section in its entirety and inserting in lieu thereof the following:

               SECTION 6.12. Consolidated Working Capital. With respect to each
          fiscal period set forth below, permit the Consolidated Working Capital
          to be less than the amount set forth opposite such period as follows:

                  Fiscal Period          Consolidated Working Capital
                  -------------          ----------------------------
                  4th Quarter 2002       $49,000,000
                  1st Quarter 2003       $39,000,000
                  2nd Quarter 2003       $28,000,000
                  3rd Quarter 2003       $17,000,000
                  4th Quarter 2003       $40,000,000
                  1st Quarter 2004       $36,000,000
                  2nd Quarter 2004       $24,000,000
                  3rd Quarter 2004       $15,000,000
                  4th Quarter 2004       $45,000,000
                  1st Quarter 2005       $39,000,000
                  2nd Quarter 2005       $27,000,000
                  3rd Quarter 2005       $18,000,000
                  4th Quarter 2005       $50,000,000

     (j) Section 6.13 of the Agreement is hereby amended by deleting the proviso
at the end thereof and inserting in lieu thereof the following:

          ; provided that this covenant shall have no force and effect in
          respect of (i) the Borrower's second, third and fourth fiscal quarters
          of its fiscal year 2002, (ii) all of Borrower's fiscal year 2003 and
          (iii) the Borrower's first and second fiscal quarters of its fiscal
          year 2004.

     (k) Section 6.14 of the Agreement is hereby amended by deleting such
Section in its entirety and inserting in lieu thereof the following:

               SECTION 6.14. Consolidated Tangible Net worth Plus Subordinated
          Debt. With respect to each fiscal period set forth below, at any time
          permit the sum of Consolidated Tangible Net Worth plus Subordinated
          Debt to be less than the amount set forth opposite such period as
          follows:

Fiscal Period             Consolidated Tangible Net Worth plus Subordinated Debt
-------------             ------------------------------------------------------

4th Quarter 2002                    $85,000,000
1st Quarter 2003                    $80,000,000
2nd Quarter 2003                    $75,000,000
3rd Quarter 2003                    $80,000,000
4th Quarter 2003                    $80,000,000

                                       3
<PAGE>

1st Quarter 2004                    $78,000,000
2nd Quarter 2004                    $75,000,000
3rd Quarter 2004                    $80,000,000
4th Quarter 2004                    $80,000,000
1st Quarter 2005                    $80,000,000
2nd Quarter 2005                    $75,000,000
3rd Quarter 2005                    $80,000,000
4th Quarter 2005                    $80,000,000

     (l) Section 6.15 of the Agreement is hereby amended by deleting such
provision in its entirety and inserting in lieu thereof the following:

               SECTION 6.15. Consolidated Total Unsubordinated Liabilities to
          Consolidated Tangible Net Worth. Permit the ratio of (i) Consolidated
          Total Unsubordinated Liabilities to (ii) the sum of (x) Consolidated
          Tangible Net Worth and (y) Subordinated Debt, to be greater than

                    (a) For the period up to and including the second quarter
               for the Borrower's fiscal year 2003, (A) 0.4 at the end of each
               fiscal year and at the end of the first quarter of each fiscal
               year, and (B) 0.6 at the end of each of the second and third
               quarters of each fiscal year; provided that, with respect to the
               third fiscal quarter in its fiscal year 2002 only, such ratio may
               be greater than 0.6, but shall not be greater than 0.65; and

                    (b) For the period beginning with the third quarter for the
               Borrower's fiscal year 2003 and ending on the Maturity Date, (A)
               0.85 at the end of the third quarter of each fiscal year, (B)
               0.45 at the end of the fourth quarter of each fiscal year, (C)
               0.4 at the end of the first quarter of each fiscal year, and (D)
               0.6 at the end of each of the second quarter of each fiscal year.

     (m) Article VI of the Agreement is hereby amended by adding at the end
thereof a new Section 6.17 to read in its entirety as follows:

               SECTION 6.17. Clean-Up Period. Fail to repay in full all
          revolving credit loans made by such Bank to the Borrower pursuant to
          Section 2.02 hereof, plus all interest accrued thereon for a period of
          90 consecutive days in each fiscal year beginning on February 24,
          2002.

     SECTION 3. Conditions To Effectiveness. This Amendment shall become
effective only upon the satisfaction or waiver of all of the following
conditions precedent:

     (A) The parties hereto shall have duly executed and delivered this
Amendment.

     (B) The Agent shall have received certificates of the Secretary or
Assistant Secretary of the Borrower and each of the Guarantors dated as of the
Amendment Effective Date,

                                       4
<PAGE>

certifying: (i) that its respective By-laws either are attached to such
certificate, or to the extent not attached have not been amended since the
Closing Date, (ii) that its respective charter or certificate, as the case may
be, either is attached to such certificate or to the extent not attached has not
been amended since the Closing Date, and (iii) as to the incumbency and
signatures of each of its respective officers executing this Amendment and any
other documents to which it is a party.

     (C) The Agent shall have received from the Borrower the fees and expense
reimbursements referred to under Section 7 hereof.

     SECTION 4. Representations and Warranties. In order to induce the Banks and
Agent to enter into this Amendment, the Borrower and the Guarantors hereby
jointly and severally represent and warrant to the Agent: (i) that the
representations and warranties contained in the Agreement are true and correct
on and as of the Amendment Effective Date as though made on and as of such date,
except for changes which have occurred and which were not prohibited by the
terms of the Agreement; (ii) that no Default or Event of Default has occurred
and is continuing, or would result from the execution, delivery and performance
by the Borrower and the Guarantors, of this Amendment or the Agreement (as
amended by this Amendment); (iii) that the Borrower and the Guarantors have full
power, right and legal authority to execute, deliver and perform its obligations
under this Amendment; (iv) that the Borrower and Guarantors have taken all
action necessary to authorize the execution and delivery of, and the performance
of its obligations under this Amendment; and (v) that this Amendment constitutes
a legal, valid and binding obligation of the Borrower and the Guarantors
enforceable against each of them in accordance with its terms, subject to the
effect of any applicable bankruptcy, insolvency, reorganization or moratorium or
similar laws affecting the rights of creditors generally and by general
equitable principles (whether enforcement is sought by proceedings in equity or
at law).

     SECTION 5. Guaranty. The Guarantors each acknowledge receipt of a copy of
this Amendment Agreement and hereby ratify and affirm their guaranty of the
Obligations of the Borrower under the Agreement as amended hereby.

     SECTION 6. Reference To and Effect on The Documents. Each reference in the
Agreement to "this Agreement", "hereunder", "hereof", "herein" or words of like
import, and each reference to the Agreement in documents related to the
Agreement, shall mean and be a reference to the Agreement as amended hereby.
Except as specifically amended hereby, the Agreement and all such related
documents, and all other documents, agreements, instruments or writings entered
into in connection therewith, shall remain in full force and effect and are
hereby ratified, confirmed and acknowledged by the Borrower.

     SECTION 7. Fees and Expenses. The Borrower agrees to pay or reimburse the
Agent, as stated in Section 10.05 of the Agreement (as amended hereby), for its
reasonable out-of-pocket costs and expenses, including, without limitation, the
reasonable fees and disbursements of counsel to the Agent incurred by the Agent
in connection with the preparation, reproduction, execution and delivery of this
Amendment and any other instruments and documents to be delivered hereunder.

                                       5
<PAGE>

     SECTION 8. Governing Law. This Amendment and the rights and obligations of
the parties hereunder shall be governed by and construed and interpreted in
accordance with the substantive laws of the State of New York, without regard to
its conflict of laws principles.

     SECTION 9. Counterparts. This Amendment may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any party hereto may execute this Amendment by signing any such
counterpart.

                                       6
<PAGE>

     IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.

                           JPMORGAN CHASE BANK,
                           As Bank and as Agent,

                           By: /s/ MARGARET J. NOLAN
                               ------------------------
                               Name:  Margaret J. Nolan
                               Title: Vice President

                           SUNTRUST BANK

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

                                       7
<PAGE>

     IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.

                           JPMORGAN CHASE BANK,
                           As Bank and as Agent,

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

                           SUNTRUST BANK

                           By: /s/ VERNON TOWLER
                               ------------------------
                               Name:  Vernon Towler
                               Title: Vice President

                                       8
<PAGE>

                       SIGNATURE PAGE TO SEVENTH AMENDMENT
                       TO LILLIAN VERNON CREDIT AGREEMENT

                           LILLIAN VERNON CORPORATION

                           By: /s/ WAYNE A. PALLADINO
                               ------------------------------
                               Name:  Wayne A. Palladino
                               Title: Chief Financial Officer

                           LILLIAN VERNON FULFILLMENT
                           SERVICES, INC.

                           By: /s/ SUSAN C. HANDLER
                               ------------------------------
                               Name:  Susan C. Handler
                               Title: Secretary

                           LVC RETAIL CORPORATION

                           By: /s/ HARRIET KRAYNIK
                               ------------------------------
                               Name:  Harriet Kraynik
                               Title: Secretary-Treasurer

                           LILLIAN VERNON INTERNATIONAL, INC.

                           By: /s/ SUSAN C. HANDLER
                               ------------------------------
                               Name:  Susan C. Handler
                               Title: Secretary

                                       9
<PAGE>

                                  SCHEDULE 2.01

                                   COMMITMENTS

                                    TRANCHE l

                                                     TRANCHE 1
                                                     COMMITMENT AMOUNT FOR
TRANCHE 1                                            FIRST AND SECOND QUARTERS
BANK                                                 OF BORROWER'S FISCAL YEAR
---------                                            -------------------------

JPMORGAN CHASE BANK                                         $ 7,500,000
SUNTRUST BANK                                               $ 7,500,000
                                                            -----------
TOTAL (for 1st and 2nd quarters)                            $15,000,000

                                                     TRANCHE 1
                                                     COMMITMENT AMOUNT FOR
TRANCHE 1                                            THIRD AND FOURTH QUARTERS
BANK                                                 OF BORROWER'S FISCAL YEAR
---------                                            -------------------------

JPMORGAN CHASE BANK                                         $10,000,000
SUNTRUST BANK                                               $10,000,000
                                                            -----------
TOTAL (for 3rd and 4th quarters)                            $20,000,000

                                    TRANCHE 2

TRANCHE 2                                                   TRANCHE 2
BANK                                                    COMMITMENT AMOUNT
---------                                               -----------------

JPMORGAN CHASE BANK                                         $12,000,000
                                                            -----------
TOTAL                                                       $12,000,000

                                       10

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