Document:

EXHIBIT 4.b.5

                   INVESTMENT SUB-ADVISORY AGREEMENT
                                BETWEEN
                   RETIREMENT SYSTEM INVESTORS INC.
                                  AND
                   NORTHERN TRUST INVESTMENTS, N.A.

                  THIS AGREEMENT effective as of October 1, 2004 is entered into
between Retirement System Investors Inc., a Delaware Corporation (the
"Adviser"), and Northern Trust Investments, N.A. (the "Manager").

                              W I T N E S S E T H:
                              - - - - - - - - - -

                  WHEREAS, RSI Retirement Trust ("the Trust"), a trust organized
and existing pursuant to an Agreement and Declaration of Trust made as of
October 22, 1940, as amended from time to time ("Agreement and Declaration of
Trust"), which provides benefits for the employees (and their beneficiaries) of
savings institutions, related organizations, other corporate entities which have
established plans of participation and individual retirement accounts
("Unitholders") in the Trust; and

                  WHEREAS, the Trust is an investment company registered under
the Investment Company Act of 1940, as amended (the "Act"); and

                  WHEREAS, the Trustees of the Trust ("Trustees") are vested
with authority for the management and control of the assets of the Trust in
accordance with the provisions of the Agreement and Declaration of Trust and in
furtherance of such authority are vested with the power to designate an
investment manager or managers to manage (including the power to acquire and
dispose of) the assets of any of the Investment Funds (as defined in the
Agreement and Declaration of Trust) of the Trust; and

                  WHEREAS, the Trust and the Adviser have entered into an
Investment Management Agreement dated June 4, 2004, pursuant to which the
Adviser may designate Sub-Advisers to perform certain investment advisory
functions under the supervision of the Adviser and the Trustees; and

                  WHEREAS, the Trust and the Manager have previously entered
into an Investment management Agreement dated as of September 15, 2003, under
which the Manager manages a portion of the assets of the Trust, serving as a
sub-adviser to the Adviser; and

<PAGE>

                  WHEREAS, the Adviser wishes to appoint the Manager to continue
to manage a portion of the assets of the Trust, to act in such a capacity in the
manner set forth in this Agreement, and the Manager is willing to act in such
capacity in accordance with the provisions of this Agreement;

                  NOW, THEREFORE, the Trust hereby agrees with the
Manager as follows:

                  1. Appointment of the Manager

                  A. The Adviser hereby designates, appoints, engages and
retains the Manager as investment manager of the assets comprising the
Investment Fund of the Trust referred to on Schedule A hereto ("Investment
Fund"). The portion thereof to be managed by the Manager ("Account") shall be
designated by the Adviser.

                  B. The Adviser represents and warrants that it has the
authority to enter into this Investment Management Agreement with the Manager
pursuant to a vote of Trust unitholders, cast at a meeting called for the
purpose of voting on such approval, of a majority of the Trustees of the Trust
who are not parties to this Agreement or interested persons of any such party
and the provisions of Rule 15a-4 under the Act.

                  C. The Manager hereby accepts appointment to manage the assets
of the Account.

                  D. The term of this Agreement shall commence on the effective
date hereof and shall continue thereafter for a period of one year from the date
hereof and thereafter from year to year provided that such continuance is
approved annually in the manner required by the Act. The Adviser agrees to use
its best efforts to obtain the approval referenced in the preceding sentence.

                  E. The Manager and Adviser understand that the Investment Fund
is being managed in a "manager-of-managers" style, and understand and agree
that, pursuant to that management style, the Adviser will, among other things:
(1) continually evaluate the performance of the Manager and any other
subadvisers to the Investment Fund through quantitative and qualitative analysis
and consultations with the Manager and other subadvisers, if any, (2)
periodically make recommendations to the Trustees as to whether the contract
with one or more subadvisers should be renewed, modified, or terminated, and (3)
periodically report to the Trustees regarding the results of its evaluation and
monitoring functions. The Manager acknowledges that its services may be modified
or terminated pursuant to this process.

                  2. Assets of the Account

                  The Adviser shall certify or cause to be certified to the
Manager the assets comprising the Account as of the commencement of the term of
this Agreement. The Adviser may add to the Account assets acceptable to the
Manager or withdraw assets from the Account at any time or from time to time by
notification to the Manager. The Account shall consist of the assets certified
to the Manager as aforesaid, or any assets into which the same may be converted
from

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<PAGE>

time to time, together with any income therefrom or any other increment thereon
and assets added as aforesaid, less assets withdrawn as aforesaid.

                  3. Investment Powers

                  A. Subject to the provisions of paragraph B. of this Section
3, the Manager shall have exclusive authority and discretion, subject to and
consistent with the investment objectives and policies of the Investment Fund as
set forth in the current Prospectus of the Trust delivered to the Manager
("Prospectus") and as specified in writing from time to time by the Trustees or
the Adviser and accepted by the Manager, to manage (including the power to
acquire and dispose of) the assets of the Account, and, without limiting the
generality of the foregoing, to direct the Trustees in the exercise of the
powers relating to the Account which are specified in the Agreement and
Declaration of Trust as subject to such direction and as specified in writing
from time to time by the Trust and accepted by the Manager..

                  B. Notwithstanding the provisions of paragraph A. of this
Section 3, it is understood and agreed that an investment manager other than the
Manager may lend securities from the Account and may invest assets of the
Account on a temporary basis pending permanent investment or distribution, and
the Manager shall have no liability or responsibility with respect to the
exercise of such authority by such other investment manager; provided, however,
that the Manager shall coordinate the exercise of its authority hereunder which
may be affected by the exercise of such authority by the other investment
manager in such manner appropriate to the exercise of its authority as shall be
agreed upon by the Manager and such other investment manager. The Adviser will
advise the Manager of any arrangement with respect to any proposed lending of
securities from the Account.

                  C. The Manager shall consult with the Adviser or Trustees at
such times as the Adviser or the Trustees shall reasonably request with respect
to the overall investment policy of the Account, and with the instructions and
directions of the Adviser and of the Trustees, co-operate with the Adviser's (or
its designee's) personnel responsible for monitoring the Investment Fund's
compliance with and will conform to and comply with, the requirements of the
Act, the Internal Revenue Code of 1986, as amended, and all other applicable
federal and state laws and regulations including, among other things, the
preparation and filing of such reports as are, or may in the future be, required
by the Securities and Exchange Commission (the "Commission").

                  4. Standard of Care

                  A. The Manager shall invest the assets of the Account in the
manner provided herein and shall have no duty or responsibility with respect to
the diversification of the assets of the Trust, except with respect to the
diversification of the assets of the Account as contemplated by the Prospectus.

                  B. The Manager will be under no liability or obligation to
anyone with respect to any failure on the part of the Trust or any other
investment manager to perform any of their obligations under any agreement
affecting the Account or under the terms of this Agreement or for any error or
omission whatsoever on the part of the Trust, the Adviser, or any other
investment manager.

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<PAGE>

                  C. The Manager shall not be liable for the making retention or
sale of any investment or reinvestment made by it as herein provided, nor for
any loss to or diminution of the value of the property of the Account; provided,
however, that the Manager has acted in the premises with the care, skill,
prudence, and diligence under the circumstances then prevailing that a prudent
man acting in like capacity and familiar with such matters would use in the
conduct of any enterprise of a like character and with like aims; provided,
further, however, that nothing in this Agreement shall protect the Manager
against any liability to the Adviser, the Trust or Unitholders to which the
Manager would otherwise be subject by reason of willful misfeasance, bad faith
or negligence in the performance of its duties hereunder or by reason of its
reckless disregard of its obligations and duties hereunder. Nothing herein shall
be construed to waive any liability that the Manager has under federal or state
securities laws or any other applicable laws which cannot be waived.

                  D. The Manager may not consult with any other manager or
sub-adviser of the Investment Fund, including any other manager or sub-adviser
that is a principal underwriter or an affiliated person of a principal
underwriter, concerning transactions of the Investment Fund in securities or
other assets. Notwithstanding the terms of the this paragraph 4.D., the Manager
may consult at all times with the Adviser engaged by the Trust.

                  5. General Provisions

                  A. Compensation for the services of the Manager will be as set
forth in Schedule A hereto.

                  B. With respect to securities in the Account, the Manager
shall purchase such securities from or through and sell such securities to or
through such persons, brokers or dealers as the Manager shall deem appropriate
to carry out the policy with respect to brokerage as set forth in the Prospectus
or as the Manager may direct from time to time. In providing the Account with
investment supervision, it is recognized that the Manager will give primary
consideration to securing the most favorable price and efficient execution. The
Manager shall have discretion to effect investment transactions for the
Investment Fund through broker-dealers (including, to the extent legally
permissible, broker-dealers affiliated with the Manager) qualified to obtain
best execution of such transactions who provide brokerage and/or research
services, as such services are defined in Section 28(e) of the Exchange Act of
1934, as amended (the "Exchange Act"). The Manager shall not be responsible for
any acts or omissions by any such broker or brokers, or any third party not
owned by the Manager, provided that the Manager is not negligent in the
selection of such broker or brokers, or third parties. The Manager is hereby
authorized to combine orders on behalf of the Account with orders on behalf of
other clients of the Manager. It is understood that it is desirable for the
Trust that the Manager have access to supplemental research and security and
economic analysis and statistical services and information with respect to the
availability of securities or purchasers or sellers of securities provided by
brokers and of use to the Trust although such access may require the allocation
of brokerage business to brokers who execute transactions at a higher cost to
the Trust than other brokers who provide only execution of portfolio
transactions. Therefore, the Manager is authorized to place orders for the
purchase and sale of securities with such brokers, subject to review by the
Trust from time to time with respect to the

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<PAGE>

extent and continuation of this practice. It is understood that the services
provided by such brokers may be useful to the Manager in connection with its
services to other clients.

                  C. This Agreement shall automatically terminate in the event
of its "assignment" (as that term is defined in the Act) or upon termination of
the Investment Management Agreement between the Trust and the Adviser. The
Manager agrees that it will promptly notify the Trust and the Adviser of the
occurrence or anticipated occurrence of any event that would result in the
assignment of this Agreement, including, but not limited to, a change or
anticipated change in control (as defined in the Act) of the Manager; provided
that the Manager need not provide notice of such an anticipated event before the
anticipated event is a matter of public record.

                  D. This Agreement may be terminated, without the payment of
any penalty, by either party hereto on not more than sixty (60) days' nor less
than thirty (30) days' written notice delivered or mailed by registered mail,
postage prepaid, to the other party; any such termination on behalf of the Trust
to be pursuant to a vote of the Trustees or by a vote of a majority of the
outstanding voting securities (as defined in the Act) of the Investment Fund.

                  E. The Manager shall maintain all books and records with
respect to the Investment Fund's portfolio transactions effected by it as
required by subparagraphs (b)(5), (6), (7), (9), (10) and (11) and paragraph (f)
of Rule 31a-1 under the Act, and shall furnish to the Investment Fund's Board of
Trustees such periodic and special reports as the Trustees may reasonably
request. The Manager shall make reasonably available its employees and officers
for consultation with the Trustees or officers or employees of the Adviser with
respect to any matter discussed herein, including, without limitation, the
valuation of the Investment Fund's securities.

                  F. The Manager or an affiliate shall provide the Investment
Fund's custodian on each business day with information relating to all
transactions concerning the portion of the Investment Fund's assets it manages,
and shall provide the Adviser with such information upon request of the Adviser.

                  G. The Manager shall keep the Investment Fund's books and
records required to be maintained by the Manager pursuant to this Agreement and
shall timely furnish to the Adviser all information relating to the Manager's
services hereunder needed by the Adviser to keep the other books and records of
the Investment Fund required by Rule 31a-1 under the Act or any successor
regulation. The Manager agrees that all records which it maintains for the
Investment Fund are the property of the Investment Fund, and the Manager will
surrender promptly to the Investment Fund any of such records upon the
Investment Fund's request; provided, however, that the Manager may retain a copy
of such records. The Manager further agrees to preserve for the periods
prescribed by Rule 31a-2 of the Commission under the Act or any successor
regulation any such records as are required to be maintained by it pursuant to
this Agreement.

                  H. The Manager may rely on the authenticity, truth and
accuracy of, and will be fully protected in acting upon:

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<PAGE>

                  (a)   Any notice, direction, certification,
                        approval or other writing of the Adviser,
                        if evidenced by an instrument signed by the
                        President, a Vice President, the Treasurer
                        or the Assistant Treasurer of the Adviser;

                  (b)   Any copy of a resolution of the Trustees,
                        if certified by the Secretary of the Trust;

                  (c)   Any notification or information provided by
                        the custodian of the assets in the Account,
                        if evidenced by an instrument signed by an
                        officer of the custodian; or

                  (d)   Any oral notice or instruction reasonably
                        believed to be genuine and to be given by
                        the Adviser or the Trustees or its
                        authorized delegate or by the custodian or
                        any other investment manager.

                  I. The Manager may rely on, and will be fully protected with
respect to any action taken or omitted in reliance on, any information,
statement or certificate delivered to the Manager by the Adviser or Trustees
with respect to any matter concerning the Trust and the operation and
administration of the Account. The Manager is expressly authorized to consult
with the Adviser with respect to any matters arising in the administration of
the Account and to act on the advice of the Adviser, provided nothing herein
shall limit the full responsibility of the Manager for the management of the
assets of the Account as provided herein.

                  J. Communications from the Manager to the Adviser shall be
addressed to:

                          Retirement System Investors Inc.
                          150 East 42nd Street - 27th Floor
                          New York, New York 10017-5633
                          Attn.: Stephen P. Pollak
                                 Executive Vice President, Counsel and Secretary

Communications to the Manager from the Adviser shall be addressed to
the address set forth in Schedule A hereto. In the event of a change
of address, communications shall be addressed to such new address as
designated in a written notice from the Adviser, the Trustees or the
Manager, as the case may be. All communications addressed in the above
manner and by ordinary mail, overnight courier, registered mail or
delivered by hand shall be sufficient under this Agreement.

                  K. Unless the Adviser instructs the Manager otherwise in
writing, the Manager will vote proxies for securities held in the Account in
accordance with the Manager's written policies for proxy voting. The Adviser
agrees to instruct the custodian to forward to the Manager copies of all proxies
and shareholder communications relating to securities held in the Account. The
Adviser agrees that the Manager will not be liable for failing to vote any
proxies where it has not received such proxies or related shareholder
communications on a timely basis. The Manager will not be responsible for taking
any action or rendering any advice with respect to any legal proceedings or
bankruptcies involving the issuers of securities held in the Account.

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<PAGE>

                  L. In connection with its duties under this Agreement, the
Manager agrees to maintain adequate compliance procedures to ensure its
compliance with the Act, the Investment Advisers Act of 1940, and other
applicable federal and state laws and regulations.

                  M. The Adviser acknowledges (i) receipt of the written
disclosure statement required by Rule 204-3 of the Investment Advisers Act of
1940 at least 48 hours before execution of this Agreement; (ii) that services
provided hereunder by Manager shall not be deemed exclusive and that Manager
shall be free to render similar services to others; and (iii) that Manager may
give advice and take action in the performance of duties to others which may
differ from the advice given, or the timing and nature of the action taken, with
respect to the Trust's Account.

                  N. All agreements hereunder will be governed by the laws of
the State of New York, without reference to such State's conflict of law rules.

                  O. No term or provision of this Agreement may be amended,
modified or waived without the affirmative vote or action by the written
agreement of the Trust and the Manager and in accordance with the Act.

                  P. Without the prior express consent of the Manager, the
Adviser agrees that it will not use the name, logo, insignia, or other
identifying mark of the Manager or any person controlling, controlled by or
under common control with the Manager (a "Manager Affiliate") or describe the
Manager any Manager Affiliate in any manner or in any materials, including
registration statements and marketing and sales materials, without providing
such materials to the Manager within a reasonable time prior to such proposed
use, and providing the Manager reasonable time to approve, modify or reject such
materials, except that sales or marketing materials containing the same text
referring to the Manager as that used in previously approved materials may be
used by the Trust without prior submission to the Manager. The Manager agrees
that it shall not unreasonably withhold approval of any such materials.

                  Q. The parties acknowledge and agree that (a) the Manager is
not the sponsor, administrator or distributor of, and does not control, the
Trust, the Adviser, Investment Fund or Account, (b) no director, officer or
employee of the Manager or of any Manager Affiliate serves as a trustee, officer
or employee of the Trust, the Adviser, Investment Fund or Account, and (c) the
Manager's responsibilities hereunder relate solely to the day-to-day management
of the assets in the Account and the Manager has no responsibility for any other
aspect of the operations or administration of the Trust, the Adviser, Investment
Fund or Account. Without limiting the foregoing, the Manger shall have no
responsibility in determining the fair value of any asset held by the Trust,
Investment Fund or Account, except that the Manager shall provide, as requested,
reasonable assistance to the Trust, the Adviser, or any other investment adviser
engaged by the Trust to act as adviser pursuant to Section 1.E above, in making
such a determination as to any asset held by the Account.

                  R. The Adviser agrees to indemnify and hold harmless the
Manager and any Manager Affiliate, and any shareholder, partner, director,
officer and employee of any of the foregoing (each an "Indemnified Manager
Party"), against any loss, claim, settlement, damage, charge, liability or
expense, including, without limitation, reasonable attorneys' and accountants'
fees ("Losses"), to which such persons may become subject, insofar as such
Losses arise out of or

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<PAGE>

are based upon (a) any inaccuracy or omission in any prospectus, registration
statement, annual or other periodic report or proxy statement of the Trust or
any advertising, marketing, shareholder communication, or promotional material
generated, by the Adviser or the Trust unless such inaccuracy or omission was
caused by an Indemnified Manager Party, (b) any violation of any law, rule or
regulation relating to the registration or qualification of shares of the Trust,
(c) any breach by the Adviser of any representation, warranty or agreement
contained in this Agreement or (d) the services provided by the Manager to the
Adviser hereunder or the operation of the Trust except to the extent such Losses
result from an Indemnified Manager Party's willful misfeasance, bad faith, or
negligence.

              [BALANCE OF PAGE INTENTIONALLY LEFT BLANK]

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<PAGE>

                  IN WITNESS WHEREOF, the Adviser and the Manager have
executed this Agreement, effective as of the date of this Agreement
first set forth above.

                                      NORTHERN TRUST INVESTMENTS, N.A.

                                      By:
                                         ---------------------------------------

                                      Title:
                                            ------------------------------------

                                      RETIREMENT SYSTEM INVESTORS INC.

                                      By:
                                         ---------------------------------------

                                      Title: Executive Vice President, Counsel
                                             and Secretary

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<PAGE>

                                   SCHEDULE A

                        RETIREMENT SYSTEM INVESTORS INC.
                        INVESTMENT SUB-ADVISORY AGREEMENT

Name of Manager:     Northern Trust Investments, N.A.
Address:             50 South LaSalle Street
                     Chicago, Illinois 60675

Attention:           Mr. Michael Lucas

Investment Fund:     Core Equity Fund

Compensation Terms:

Terms used herein shall have the meaning used in the Investment Management
Agreement between the Adviser and the Manager ("Agreement"). The Adviser agrees
to pay to the Manager, as full compensation and reimbursement for the services
to be rendered pursuant to the Agreement and any expenses incurred in connection
therewith, a fee at the end of each fiscal quarter of the Trust, computed by
applying the following rate the Account:

          Effective October 1, 2004, 0.16% of the first $25 million of
          assets, 0.10% of the next $25 million of assets, 0.06% of
          the next $50 million of assets, and 0.04% of assets in
          excess of $100 million.

Billing is done for each quarter on the basis of services performed during that
particular quarter. The quarterly fee is calculated on the basis of the average
of the asset value as of the last day of each month of each calendar quarter,
equal to one-fourth of the annual rate.

If the Agreement commences on a date other than on the beginning of any such
quarterly period, or terminates on a date other than the end of any such
quarterly period, the fee payable hereunder shall be proportionately reduced
according to the number of days during such period services were rendered by the
Manager.

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IN WITNESS WHEREOF, the parties to the Agreement, effective as of October 1,
2004, have executed this Schedule A, effective as of the same dates.

                                      NORTHERN TRUST INVESTMENTS, N.A.

                                      By:
                                         ---------------------------------------

                                      Title:
                                            ------------------------------------

                                      RETIREMENT SYSTEM INVESTORS INC.

                                      By:
                                         ---------------------------------------

                                      Title:Executive Vice President, Counsel
                                            and Secretary

                                  11EX-10.25

 

Exhibit 10.25

AÉROPOSTALE, INC.

LONG-TERM INCENTIVE DEFERRED COMPENSATION PLAN

(Effective as of January 1, 2004)

 

 

CERTIFICATE

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

		
	By: 	

		
	Title: 	

Dated this ____ day of _____________, 2004

2

 

AÉROPOSTALE, INC. LONG-TERM INCENTIVE

DEFERRED COMPENSATION PLAN

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

Definitions

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

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

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

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

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

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

 

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

4

 

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

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

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

ARTICLE II

Eligibility and Participation

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

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

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

ARTICLE III

Incentive Credits

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

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

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

5

 

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

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

ARTICLE IV

Establishment and Maintenance of Accounts

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

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

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

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

6

 

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

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

ARTICLE V

Vesting

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

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

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

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

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

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

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

7

 

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

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

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

ARTICLE VI

Payment of Benefits

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

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

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

8

 

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

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

ARTICLE VII

Source of Benefits

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

ARTICLE VIII

Administration

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

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

9

 

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

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

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

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

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

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

10

 

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

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

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

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

ARTICLE IX

Amendment or Termination

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

11

 

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

ARTICLE X

Miscellaneous

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

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

12

 

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

	 	 	 	 	 
	 	AÉROPOSTALE, INC.

 	 
	 	By:  	 	 
	 	 	 	 
	 	 	 	 

13

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