Document:

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                                                            Exhibit 10(e)(xi)

                           SCHERING-PLOUGH CORPORATION

                             SEVERANCE BENEFIT PLAN

                AMENDED AND RESTATED EFFECTIVE DECEMBER 17, 2004

                     WITH AMENDMENTS THROUGH APRIL 18, 2005
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                                    PREAMBLE

      Schering-Plough Corporation ("Schering-Plough") established the
Schering-Plough Severance Benefit Plan (the "Plan") for the purpose of providing
severance benefits to certain Employees whose employment terminates on or after
February 4, 2004. The Plan constitutes a formal employee welfare benefit plan
under the Employee Retirement Income Security Act of 1974, as amended ("ERISA").
The Plan is hereby amended and restated, effective for all terminations
occurring on or after December 17, 2004, and supersedes any policy, plan, or
program theretofore maintained or in effect under which Schering-Plough, or any
of its U.S. affiliated companies (or their predecessors), ever made payments of
severance benefits prior to December 17, 2004.

      The Plan, as set forth herein, is intended to alleviate in part or in full
financial hardships that may be experienced by certain of those Employees of
Schering-Plough and its U.S. affiliated companies, whose employment is
terminated for certain reasons. In essence, benefits under the Plan are intended
to be supplemental unemployment benefits. The Plan is not intended to be
included in the definitions of "employee pension benefit plan" and "pension
plan" set forth under Section 3(2) of ERISA as a "severance pay arrangement"
within the meaning of Section 3(2)(b)(i) of ERISA. Rather, the Plan is intended
to meet the descriptive requirements of a plan constituting a "severance pay
plan" within the meaning of regulations published by the Secretary of Labor at
Title 29, Code of Federal Regulations, Section 2510.3-2(b). Accordingly, the
benefits paid by the Plan are not deferred compensation and no employee shall
have a vested right to such benefits.

      The Plan shall continue until such time as it is amended or terminated in
accordance with Article 6.

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                                TABLE OF CONTENTS

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                                                                            PAGE
<S>                                                                         <C>
ARTICLE 1   DEFINITIONS................................................        1

ARTICLE 2   PARTICIPATION AND ELIGIBILITY FOR BENEFITS.................        6

ARTICLE 3   BENEFITS...................................................        8

ARTICLE 4   METHOD OF SEVERANCE PAYMENTS...............................       11

ARTICLE 5   THE ADMINISTRATIVE COMMITTEE...............................       12

ARTICLE 6   AMENDMENT AND TERMINATION..................................       13

ARTICLE 7   CLAIMS PROCEDURES..........................................       14

ARTICLE 8   MISCELLANEOUS..............................................       15
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                                    ARTICLE 1

                                   DEFINITIONS

When used herein, the following terms shall have the meanings set forth below.

1.01  "ADMINISTRATIVE COMMITTEE" means Schering-Plough Corporation's Employee
      Benefits Committee or its designee.

1.02  "BASE PAY" means the Employee's highest Weekly Base Rate of Pay during the
      12 month period prior to the his or her termination.

      In the case of a Termination Due to Change of Control, Base Pay shall mean
      the sum of (a) Employee's highest Weekly Base Rate of Pay during the 12
      month period prior to his or her termination or, if greater, the
      Employee's Weekly Base Rate of Pay in effect immediately prior to such
      Change of Control, and (b) an amount equal to 1/52 of the Employee's
      annual Target Incentive. Notwithstanding the foregoing, for purposes of
      calculating Base Pay in order to determine a Participant's benefit under
      Column A of Exhibit B, Base Pay shall not include any portion of the
      Employee's Target Incentive.

1.03  "BENEFITS" means the benefits that a Participant is eligible to receive
      pursuant to Article 3 of the Plan.

1.04  "CHANGE OF CONTROL" means a Change of Control (or Change in Control) as
      defined in the Company's 2002 Stock Incentive Plan and any successor to
      such plan.

1.05  "COMPANY" means Schering-Plough Corporation and its U.S. affiliated
      companies.

1.06  "COMPARABLE POSITION" means employment with the Company or a successor
      employer in which the individual's level of responsibilities would not
      constitute a Demotion. For purposes of a Termination Due to Change of
      Control, a position shall not be a Comparable Position if such position
      would require the Employee's principal business location to be relocated
      more than 50 miles from the Employee's principal business location
      immediately prior to the Change of Control.

1.07  "CORPORATE INTEGRITY AGREEMENT" means the five-year settlement agreement
      entered into between the Company and the Office of Inspector General of
      the U.S. Department of Health and Human Services, effective July 29, 2004.

1.08  "DEMOTION" means continued employment in a position that, as determined by
      the Administrative Committee, constitutes a demotion under
      Schering-Plough's U.S. compensation guidelines or a position that is one
      or more levels lower on a Company-recognized career ladder, whether or not
      such employment is with the Company or a successor employer.

1.09  "DECLINE TO RELOCATE" means a termination of a Participant's employment as
      a result of his or her rejection of an offer of continued employment in
      the same position or a

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      Comparable Position that would require relocation of the Participant's
      principal business location of more than 50 miles.

1.10  "EMPLOYEE" means any regular full-time or regular part-time employee of
      the Company who is employed in the United States and as to whom the terms
      and conditions of employment are not covered by a collective bargaining
      agreement unless the collective bargaining agreement specifically provides
      for coverage under the Plan. For this purpose, a regular part-time
      employee shall be an employee who is regularly scheduled to work
      approximately 20 to 32 hours per week. The term "Employee" shall not
      include (a) temporary employees (including college coops, summer
      employees, high school coops, flexible workforce employees and any other
      such temporary classifications); (b) any individual characterized by the
      Company as an "independent contractor" or as a "contract worker;" (c)
      officers and other employees of the Company who are parties to employment
      agreements; (d) officers or other employees of the Company who participate
      in any severance plan of the Company that provides for the payment of
      severance benefits in connection with a Change of Control of the Company
      and such individual qualifies for the payment of such benefits; (e) any
      other individual who is not treated by the Company as an employee for
      purposes of withholding federal income taxes, regardless of any contrary
      Internal Revenue Service, governmental, or judicial determination relating
      to such employment status or tax withholding; or (f) effective April 13,
      2005, any employee of the Company who (i) is not a U.S. citizen, (ii) is
      on temporary assignment in the United States, and (iii) normally works
      outside the United States. In the event that an individual engaged in an
      independent contractor or similar non-employee capacity is subsequently
      reclassified by the Company, the Internal Revenue Service, or a court as
      an employee, such individual, for purposes of the Plan, shall be deemed an
      Employee from the actual (and not effective) date of such classification,
      unless expressly provided otherwise by the Company.

      An Employee also includes any employee of the Company otherwise satisfying
      the definition for Employee above who works in the United States
      permanently or who normally works in the United States and receives
      compensation from one of the Company's United States affiliates or
      participating companies but is on temporary assignment outside of the
      United States.

1.11  "EMPLOYMENT SERVICE DATE" means the first day on which an individual
      became an Employee.

1.12  "EMPLOYMENT TERMINATION DATE" means the date on which the employment of
      the Employee by the Company is terminated.

1.13  "ERISA" means the Employee Retirement Income Security Act of 1974, as
      amended.

1.14  "JOB ELIMINATION" means a termination of a Participant's employment by the
      Company due to job elimination, as determined by the Administrative
      Committee in its sole discretion, for purposes of the Plan only.

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1.15  "JOB RESTRUCTURING" means a termination of a Participant's employment by
      the Company due to a change in required competencies or qualifications for
      the Participant's job, as determined by the Administrative Committee in
      its sole discretion, for purposes of the Plan only.

1.16  "MISCONDUCT" means conduct which includes (a) falsification of company
      records/misrepresentation; (b) theft; (c) acts or threats of violence; (d)
      refusal to carry out assigned work; (e) unauthorized possession of alcohol
      or illegal drugs on company premises; (f) being under the influence of
      alcohol or illegal drugs during work hours; (g) willful intent to damage
      or destroy company property; (h) violation of the Business Conduct Policy;
      (i) acts of discrimination/harassment; (j) conduct jeopardizing the
      integrity of our products; (k) violation of Company rules, policies,
      and/or practices; or (l) other conduct considered to be detrimental to the
      Company.

1.17  "PARTICIPANT" means any Terminated Employee eligible for Benefits in
      accordance with Article 2.

1.18  "PLAN" means the Schering-Plough Severance Benefit Plan, as set forth
      herein, and as the same may from time to time be amended.

1.19  "PLAN YEAR" means the period commencing on each January 1 during which the
      Plan is in effect and ending on the subsequent December 31.

1.20  "SEVERANCE BENEFIT PLAN COMMITTEE" means the Committee that reviews
      initial benefit claims under the Plan, which shall be comprised of no less
      than three members who shall include the Company's Executive Director of
      Global Benefits, and Vice Presidents of Human Resources representing the
      Company's major operating groups as the Company shall appoint.

1.21  "TARGET INCENTIVE" means an Employee's target incentive for any given year
      under the Company's annual incentive plan applicable to the Employee
      immediately preceding his or her termination. Notwithstanding the
      foregoing sentence, in the event of a Termination Due to Change of
      Control, Target Incentive shall mean the greater of the Target Incentive
      described in the preceding sentence or the Target Incentive in effect
      immediately preceding the Change of Control.

1.22  "TERMINATED EMPLOYEE" means an Employee who has experienced an Employment
      Termination Date.

1.23  "TERMINATION DUE TO CHANGE OF CONTROL" means a termination of a
      Participant's employment by the Company within two years following a
      Change of Control that is involuntary or that is as a result of his or her
      written rejection of an offer of continued employment with the Company or
      an affiliate if such employment is not a Comparable Position. For purposes
      of the preceding sentence, an involuntary termination shall be deemed to
      occur as of the sixtieth (60th) day (or such longer period of time as the
      Company shall establish not to exceed one year) immediately following the
      later of (a) the date on which the Participant rejects in writing an offer
      of continued employment

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      with the Company or an affiliate for a position that is not a Comparable
      Position; or (b) the date of the Change of Control.

1.24  "TERMINATION DUE TO NON-PERFORMANCE" means a termination of an Employee's
      employment by the Company due to the Employee's failure to perform his or
      her job assignments in a satisfactory manner, as determined by the
      Administrative Committee in its sole discretion, for purposes of the Plan
      only. In addition, a Termination Due to Non-Performance means a
      termination of an Employee's employment by the Company due to the Employee
      being deemed an "ineligible person" pursuant to the Corporate Integrity
      Agreement.

1.25  "TERMINATION DUE TO WORKFORCE RESTRUCTURING" means termination of an
      Employee's employment by the Company due to a Decline to Relocate, a Job
      Elimination, a Job Restructuring, or such other termination determined by
      the Administrative Committee.

      An Employee who has been absent from employment on a (a) short-term
      disability leave, or (b) long-term disability leave or "medical no pay"
      leave lasting, in both cases, for a period of less than two years shall be
      deemed to have suffered a Termination Due to Workforce Restructuring if
      neither the Employee's latest position nor a Comparable Position exists
      for the Employee once he or she is released to return to work. Nothing in
      this paragraph shall prevent such an Employee from experiencing a
      Termination Due to Workforce Restructuring as a result of a Job
      Elimination, Job Restructuring, or other determination by the
      Administrative Committee or its designee to the extent otherwise provided
      under this Plan.

1.26  "VOLUNTARY RESIGNATION" means a resignation that is a voluntary separation
      from employment initiated by the Employee.

1.27  "WEEKLY BASE RATE OF PAY" means

      (a) for a regular full-time Employee paid on a weekly payroll period
          basis, the Employee's weekly rate of pay.

      (b) for a regular full-time Employee paid on a bi-monthly payroll period
          basis, the Employee's rate of pay for one payroll period divided by
          2.166.

      (c) for a regular part-time Employee paid on any hourly basis, the
          Employee's highest base hourly rate during the last 12 months
          multiplied by the average number of weekly hours worked during that 12
          month period.

1.28  "YEARS OF SERVICE" means the total number of a Participant's full years of
      active service with the Company subject to the following rules:

      (a) For purposes of determining a Participant's number of Years of
          Service, a full year of active service is any consecutive twelve-month
          period of service occurring after the Participant's most recent break
          in service lasting one year or more. For example, a Participant whose
          Employment Service Date is June 21, 2003 will be credited with

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          one Year of Service at the end of the business day June 20, 2004
          provided that he or she has been continuously employed by the Company
          through that date.

      (b) For purposes of determining a Participant's number of Years of
          Service, such Participant shall be treated as if his Employment
          Termination Date was December 31 of the calendar year in which his or
          her actual Employment Termination Date occurs.

      (c) Any break in a Participant's active service for a period of less than
          one year shall be disregarded for purposes of calculating a
          Participant's number of Years of Service. For example, a Participant
          who was hired on June 1, 2000, was terminated on February 3, 2002,
          rehired on December 18, 2002, and terminated again on March 3, 2003
          shall have three Years of Service under the Plan.

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                                    ARTICLE 2

                   PARTICIPATION AND ELIGIBILITY FOR BENEFITS

2.01  Eligibility.

      (a) Subject to Sections 2.01(b), 2.02, and 2.03, any Terminated Employee
          (other than an employee who is employed in Puerto Rico) who has
          provided the Company with at least 90 consecutive days of service and
          incurs a Termination Due to Workforce Restructuring, a Termination Due
          to Non-Performance, or a Termination Due to Change of Control shall
          become a Participant and shall be eligible for Benefits in accordance
          with the provisions of this Plan. A Terminated Employee who is
          eligible to participate in the Plan as a result of a Termination Due
          to Change of Control shall not otherwise be deemed to have incurred a
          Termination Due to Workforce Restructuring or a Termination Due to
          Non-Performance.

          For purposes of determining whether a Participant who either (i)
          transferred employment from NeoGenesis Pharmaceuticals, Inc. to the
          Company in connection with the asset purchase agreement, dated
          February 14, 2005, or (ii) became an Employee as a result of the
          Company's collaborative agreement with Bayer HealthCare AG, dated
          October 1, 2004, has satisfied the 90 consecutive days of service
          requirement set forth in this section 2.01(a) above, his or her
          service shall include service with NeoGenesis Pharmaceuticals, Inc.
          and Bayer HealthCare AG, as appropriate. In no event shall such
          individual be credited with such prior service for purposes of
          calculating their severance benefits under the Plan.

      (b) Notwithstanding anything herein to the contrary, a Terminated Employee
          shall not be considered to have incurred a Termination Due to
          Workforce Restructuring, a Termination Due to Non-Performance, or a
          Termination Due to Change of Control for the purposes of the Plan, if
          his or her employment is discontinued due to (i) a Voluntary
          Resignation; (ii) voluntary resignation after reaching early or normal
          retirement date under the Company's qualified pension plan; (iii) the
          divestiture of a business unit of the Company if the Employee is
          offered a Comparable Position with the Company or a successor
          employer; (iv) a rejection of an offer of a Comparable Position that
          is not a Decline to Relocate; (v) a Decline to Relocate and such
          Terminated Employee was on international assignment immediately
          preceding his or her termination; (vi) discharge for Misconduct; (vii)
          being placed on layoff status; (viii) failure to transfer to another
          location after initially accepting the transfer within the acceptance
          period of the offer; (ix) a termination of employment during or
          immediately following a long-term disability leave or a "medical no
          pay" leave lasting, in each case, at least two years; (x) death; or
          (xi) his or her refusal to cooperate with the screening process
          pursuant to the Corporate Integrity Agreement.

      (c) Notwithstanding anything herein to the contrary, in no event shall any
          Employee or former Employee who is receiving benefits under a
          Company-sponsored long-term disability plan and/or who was on "medical
          no pay" leave of absence lasting, in the aggregate, for a period of
          two consecutive years or more ending at or immediately preceding the
          time of his or her termination of employment be eligible for Benefits

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          under this Plan. For clarification purposes, the determination of
          whether an Employee or former Employee is ineligible for benefits as a
          result of the two-year leave of absence restriction set forth in the
          preceding sentence shall be made by aggregating any time periods in
          which the Employee or former Employee had received benefits under a
          Company-sponsored long-term disability plan together with any
          consecutive time periods that he or she was on "medical no pay" leave.

2.02  Termination of Eligibility for Benefits. A Participant shall cease to
      participate in the Plan, and all Benefits shall cease upon the occurrence
      of the earliest of:

      (a) Termination of the Plan prior to, or more than two years following, a
          Change of Control;

      (b) Inability of the Company to pay Benefits when due;

      (c) Completion of payment to the Participant of the Benefits for which the
          Participant is eligible; and

      (d) The Administrative Committee's determination, in its sole discretion,
          of the occurrence of the Employee's Misconduct, regardless of whether
          such determination occurs before or after the Employee's Employment
          Termination Date, unless the Administrative Committee determines in
          its sole discretion that Misconduct shall not cause the cessation of
          Benefits in a particular case. Notwithstanding the foregoing, the
          Administrative Committee must act in good faith in making such a
          determination at any time within the two years following a Change of
          Control.

2.03  Waiver and Release. Notwithstanding anything in the Plan to the contrary,
      unless determined otherwise by the Administrative Committee in its sole
      discretion, no Benefits shall be due or paid under the Plan to any
      Employee, unless the Employee executes (and does not rescind) a written
      waiver and release, in a form prescribed by Schering-Plough, of any and
      all claims against Schering-Plough, its affiliates, and all related
      parties arising out of the Employee's employment or termination of
      employment.

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                                    ARTICLE 3

                                    BENEFITS

3.01  Amount of Severance Pay. The amount of severance pay payable to a
      Participant shall be equal to the number of weeks of the Participant's
      Base Pay corresponding to his or her Years of Service at his or her
      Employment Termination Date as set forth on that portion of Exhibit A
      applicable to the reason for his or her termination from employment
      (determined by the Company, in its sole discretion) as listed on Exhibit A
      hereto.

      In the event of a Termination Due to Change of Control, the amount of
      severance pay payable to a Participant shall be equal to the number of
      weeks of the Participant's Base Pay corresponding to his or her Years of
      Service at his or her Employment Termination Date as set forth under
      Column B of Exhibit B applicable to his or her band as listed on Exhibit B
      hereto.

      Notwithstanding the foregoing, in the event of a Termination Due to Change
      of Control for a Participant who was an E-grade employee as of December
      31, 2003, the amount of severance pay payable to the Participant shall be
      equal to the greater of the benefits as listed under Column A and B under
      Exhibit B hereto as applicable to E-grade employees and to his or her
      Years of Service at his or her Employment Termination Date.

      Notwithstanding the foregoing, in the event of a Termination Due to Change
      of Control for a Participant who was a weekly/hourly or a semi-monthly
      employee as of December 31, 2003, the amount of severance pay payable to
      the Participant shall be equal to the greater of the benefits as listed
      under Column A and B under Exhibit B hereto as applicable to his or her
      pay status and Years of Service at his or her Employment Termination Date.

3.02  Medical and Dental Benefits. A Participant covered under any of the
      Company's group medical and dental plans prior to his or her Employment
      Termination Date shall be provided the opportunity to elect to continue
      such coverage in accordance with the provisions of the Consolidated
      Omnibus Budget Reconciliation Act of 1985, Section 4980B of the Internal
      Revenue Code of 1986, as amended, and Section 601, et seq., of ERISA
      ("COBRA") and in accordance with the Company's regular COBRA coverage
      payment practices.

      Participants who experience a Termination Due to Workforce Restructuring
      or Termination due to Non-Performance shall be eligible to continue
      medical and dental benefits under COBRA coverage at active employee rates,
      as the same may be changed from time to time, for the greater of (a) three
      months or (b) the number of weeks of severance under Section 3.01 (to a
      maximum of 12 months) following his or her Employment Termination Date.

      Participants who experience a Termination Due to Change of Control shall
      be eligible (a) to continue medical and dental benefits under COBRA
      coverage at active employee rates, as the same may be changed from time to
      time, for the greater of (i) three months or (ii) the number of weeks of
      severance pay under Section 3.01 (to a maximum of 18 months)

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      following his or her Employment Termination Date, and (b) for retiree
      medical benefits under the terms of the retiree medical coverage generally
      applicable to the Company's retiree medical eligible retirees provided
      that such Participants are at least age 50 at the time of their
      termination of employment.

3.03  Life Insurance. Participants who experience a Termination Due to Workforce
      Restructuring or Termination Due to Non-Performance shall be eligible to
      receive continued basic life insurance coverage for the greater of (a)
      three months or (b) the number of weeks of severance under Section 3.01
      (to a maximum of 12 months) following his or her Employment Termination
      Date.

      Participants who experience a Termination Due to Change of Control shall
      be eligible to receive continued basic life insurance coverage for the
      greater of (a) three months or (b) the number of weeks of severance under
      Section 3.01 (to a maximum of 18 months) following his or her Employment
      Termination Date. At the end of the coverage period, the Participant may
      convert the life insurance coverage to a personal policy.

3.04  Incentive Plan Payments. A Participant's entitlement to an incentive
      payment under the annual incentive plan applicable to such Participant
      following a termination of employment and the amount of such incentive
      payment, if any, shall be determined solely be reference to the applicable
      terms of such annual incentive plan, provided, however, for purposes of
      calculating a Participant's severance pay with respect to a Termination
      Due to Change of Control, a Participant's Base Pay shall include a pro
      rata portion of his or her Target Incentive as described under the
      definition of Base Pay in Section 1.02 of the Plan.

3.05  Reduction for Other Payments; Offsets. The Benefits payable hereunder to
      any Participant shall be reduced by any and all payments required to be
      made by the Company or its affiliates under federal, state, and local law,
      under any employment agreement or special severance arrangement or under
      any other separation policy, plan, or program. The Benefits payable
      hereunder to any Participant shall also be reduced by (a) any benefits
      previously paid to such Participant under this or any other separation or
      severance plan sponsored by the Company with respect to any periods of
      service with respect to which Benefits are being paid under this Plan; and
      (b) any and all amounts that the Participant owes to the Company or an
      affiliate.

3.06  Effect on Other Benefit Plans. Except as expressly provided herein,
      nothing under the Plan shall constitute an extension of eligibility for,
      or the vesting or exercise periods relating to, any employee benefit or
      equity compensation plan or an agreement with the Company.

3.07  Different Severance Benefits. Notwithstanding the foregoing, the Human
      Resources representative having jurisdiction over the Participant may
      recommend, and the Senior Vice President Global Human Resources, acting on
      behalf of the Company, will have complete discretion to approve a
      different amount of severance pay and/or benefits, either higher or lower
      (including no severance pay and/or benefits at all), than otherwise

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      provided on Exhibit A, provided that no such discretion shall be
      applicable to a Termination Due to Change of Control.

3.08  Change of Control Notification. Not later than six months following a
      Change of Control, the Company shall notify all of its otherwise eligible
      Employees (who were Employees as of the day immediately before the Change
      of Control) who have not been given notice of termination of whether they
      will, until the second anniversary of such Change of Control, continue in
      the same job, be offered a Comparable Position, or be involuntarily
      terminated.

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                                   ARTICLE 4

                          METHOD OF SEVERANCE PAYMENTS

4.01  Method of Payment. The severance pay to which a Participant is eligible,
      as calculated pursuant to Article 3, shall be paid in accordance with the
      provisions of this Article 4.

      (a) Severance payments payable under this Plan shall be made in a single
          sum cash payment.

      (b) Payment shall be made by mailing to the last address provided by the
          Participant to the Company. Separate payment(s) shall be made to pay
          any earned and unused vacation pay for the year during which the
          Employment Termination Date occurs. In no event shall interest be
          credited on any amounts for which a Participant may become eligible.

      (c) In general, payments shall be made as promptly as practicable after
          the participant's Employment Termination Date, the execution of the
          release required under Section 2.03, and the expiration of the
          required release revocation period.

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                                   ARTICLE 5

                          THE ADMINISTRATIVE COMMITTEE

5.01  Authority and Duties. The Administrative Committee shall have the full
      power, authority, and discretion to construe, interpret, and administer
      the Plan, to correct deficiencies therein, and to supply omissions. All
      decisions, actions, and interpretations of the Administrative Committee
      shall be final, binding, and conclusive upon the parties, subject only to
      determinations by the applicable claims fiduciary with respect to denied
      claims for Benefits. Unless the Administrative Committee determines
      otherwise, the Human Resources Managers of the Company shall have the
      authority to act on behalf of the Administrative Committee in all respects
      set forth in this Section 5.01.

5.02  Records. The Company shall supply to the Administrative Committee all
      records and information necessary to the performance of the Administrative
      Committee's duties.

5.03  Payment. The Company shall make payments of Benefits, in such amount as
      determined by the Administrative Committee under Article 3, from its
      general assets to Participants in accordance with the terms of the Plan,
      as directed by the Administrative Committee.

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                                    ARTICLE 6

                            AMENDMENT AND TERMINATION

6.01  The Plan may be amended, suspended, discontinued, or terminated at any
      time by the Board of Directors of Schering-Plough Corporation or its
      designee, in whole or in part, for any reason, and without either the
      consent of or the prior notification to any Participant. No such amendment
      shall give the Company the right to recover any amount paid to a
      Participant prior to the date of such amendment. Any such amendment,
      however, may cause the cessation and discontinuance of payments of
      Benefits to any person or persons under the Plan. No such amendment made
      following a Change of Control may reduce the benefits to which any
      Participant may become entitled in the two years following such Change of
      Control. Notwithstanding the foregoing, no amendment of any kind may be
      made to the Plan for a period of two years following a Change of Control.

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                                    ARTICLE 7

                                CLAIMS PROCEDURES

7.01  Claim. Each eligible terminated Employee may contest the administration of
      Benefits by completing and filing with the Severance Benefit Plan
      Committee a written request for review in the manner specified by the
      Administrative Committee. Each such application must be filed within 60
      days following the Employee's termination of employment and must be
      supported by such information as the Severance Benefit Plan Committee
      deems relevant and appropriate.

7.02  Appeals of Denied Claims for Benefits. In the event that any claim for
      benefits is denied in whole or in part, the claimant whose claim has been
      so denied shall be notified of such denial by the Severance Benefit Plan
      Committee within 90 days of receipt of the claim (unless the Severance
      Benefit Plan Committee determines that special circumstances require an
      extension of time of up to an additional 90 days for processing the
      claim). The notice advising of the denial shall specify the reason(s) for
      denial, make specific reference to relevant Plan provisions, describe any
      additional material or information necessary for the claimant to perfect
      the claim (explaining why such material or information is needed), and
      shall advise the claimant of the procedure for the appeal of such denial
      and a statement of the claimant's right to bring a civil action under
      Section 502(a) of ERISA following an adverse benefit determination on
      appeal. All appeals shall be made by the following procedure:

      (a) A claimant whose claim has been denied shall file with the
          Administrative Committee a notice of desire to appeal the denial. Such
          notice shall be filed within 60 days of notification by the Severance
          Benefits Plan Committee of the initial claim denial, be made in
          writing, and set forth all of the facts upon which the appeal is
          based. Appeals not timely filed shall be barred.

      (b) The Administrative Committee shall consider the merits of the
          claimant's written presentations, the merits of any facts or evidence
          in support of the denial of benefits, and such other facts and
          circumstances as the Administrative Committee shall deem relevant.

      (c) The Administrative Committee shall render a determination upon the
          appealed claim within 60 days of its receipt of such appeal (unless
          the Administrative Committee determines that special circumstances
          require an extension of time of up to an additional 60 days for
          processing the appeal). The determination shall specify the reason(s)
          for the denial, make specific reference to relevant Plan provisions,
          and contain a statement of the claimant's right to bring a civil
          action under Section 502(a) of ERISA.

      (d) The determination so rendered shall be binding upon all parties.

          No Employee may bring a civil action under Section 502(a) of ERISA
          until the Employee has exhausted his or her rights under this Section
          7.02.

                                      -14-
<PAGE>
                                    ARTICLE 8

                                  MISCELLANEOUS

8.01  Nonalienation of Benefits. None of the payments, benefits, or rights of
      any Participant shall be subject to any claim of any creditor, and, in
      particular, to the fullest extent permitted by law, all such payments,
      benefits and rights shall be free from attachment, garnishment, trustee's
      process, or any other legal or equitable process available to any creditor
      of such Participant. No Participant shall have the right to alienate,
      anticipate, commute, plead, encumber, or assign any of the benefits or
      payments which he/she may expect to receive, contingently or otherwise,
      under the Plan.

8.02  No Contract of Employment. Neither the establishment of the Plan, nor any
      modification thereof, nor the creation of any fund, trust or account, nor
      the payment of any benefits shall be construed as giving any Participant
      or Employee, or any person whosoever, the right to be retained in the
      service of the Company, and all Participants and other Employees shall
      remain subject to discharge to the same extent as if the Plan had never
      been adopted.

8.03  Severability of Provisions. If any provision of the Plan shall be held
      invalid or unenforceable, such invalidity or unenforceability shall not
      affect any other provisions hereof, and the Plan shall be construed and
      enforced as if such provisions had not been included.

8.04  Heirs, Assigns, and Personal Representatives. The Plan shall be binding
      upon the heirs, executors, administrators, successors, and assigns of the
      parties, including each Participant, present and future.

8.05  Headings and Captions. The headings and captions herein are provided for
      reference and convenience only, shall not be considered part of the Plan,
      and shall not be employed in the construction of the Plan.

8.06  Number. Except where otherwise clearly indicated by context, the singular
      shall include the plural, and vice-versa.

8.07  Unfunded Plan. The Plan shall not be funded. No Participant shall have any
      right to, or interest in, any assets of Schering-Plough that may be
      applied by Schering-Plough to the payment of Benefits.

8.08  Payments to Incompetent Persons, Etc. Any benefit payable to or for the
      benefit of a minor, an incompetent person or other person incapable of
      receipting therefor shall be deemed paid when paid to such person's
      guardian or to the party providing or reasonably appearing to provide for
      the care of such person, and such payment shall fully discharge
      Schering-Plough, the Administrative Committee and all other parties with
      respect thereto.

8.09  Lost Payees. Benefits shall be deemed forfeited if the Administrative
      Committee is unable to locate a Participant to whom Benefits are due. Such
      Benefits shall be reinstated

                                      -15-
<PAGE>
      if application is made by the Participant for the forfeited Benefits
      within one year of the Participant's Employment Termination Date and while
      the Plan is in operation.

8.10  Controlling Law. The Plan shall be construed and enforced according to the
      laws of the State of New Jersey to the extent not superseded by federal
      law.

                                      -16-
<PAGE>
                           SCHERING-PLOUGH CORPORATION
                               SEVERANCE PAY PLAN
                                    EXHIBIT A

                   TERMINATION DUE TO WORKFORCE RESTRUCTURING

           (CHART SHOWS AMOUNT OF SEVERANCE PAY IN WEEKS OF BASE PAY)

<TABLE>
<CAPTION>
                                                             BANDS D-O;
                                           BANDS D-O;        BASE > OR =
  YEARS OF SERVICE       BANDS A-C       BASE <$275,000       $275,000
  ----------------       ---------       --------------       --------
<S>                      <C>             <C>                 <C>
        1                   15                 26                39
        2                   15                 26                39
        3                   15                 26                39
        4                   15                 26                39
        5                   15                 26                39
        6                   17                 26                39
        7                   19                 26                39
        8                   21                 26                41
        9                   23                 28                43
       10                   25                 30                45
       11                   27                 32                47
       12                   29                 34                49
       13                   31                 36                51
       14                   33                 38                53
       15                   35                 40                55
       16                   37                 42                57
       17                   39                 44                59
       18                   41                 46                61
       19                   43                 48                63
       20                   45                 50                65
       21                   47                 52                67
       22                   49                 54                69
       23                   51                 56                71
       24                   53                 58                73
       25                   55                 60                75
       26                   57                 62                77
       27                   59                 64                79
       28                   61                 66                81
       29                   63                 68                83
    30 and above            65                 70                85
</TABLE>

                                      -17-
<PAGE>
                           SCHERING-PLOUGH CORPORATION
                               SEVERANCE PAY PLAN
                               EXHIBIT A (CONT'D)

                       TERMINATION DUE TO NON-PERFORMANCE

           (CHART SHOWS AMOUNT OF SEVERANCE PAY IN WEEKS OF BASE PAY)

<TABLE>
<CAPTION>
             YEARS OF SERVICE                   BANDS A-O
             ----------------                   ---------
<S>                                             <C>
                   1                                 8
                   2                                 8
                   3                                 8
                   4                                 8
                   5                                 8
                   6                                 8
                   7                                 8
                   8                                 8
                   9                                 9
                  10                                10
                  11                                11
                  12                                12
                  13                                13
                  14                                14
                  15                                15
                  16                                16
                  17                                17
                  18                                18
                  19                                19
                  20                                20
                  21                                21
                  22                                22
                  23                                23
                  24                                24
                  25                                25
                  26                                26
                  27                                27
                  28                                28
                  29                                29
               30 and above                         30
</TABLE>

                                      -18-
<PAGE>
                           SCHERING-PLOUGH CORPORATION
                               SEVERANCE PAY PLAN
                                    EXHIBIT B

                      TERMINATION DUE TO CHANGE OF CONTROL

           (CHART SHOWS AMOUNT OF SEVERANCE PAY IN WEEKS OF BASE PAY)

<TABLE>
<CAPTION>
                        COLUMN A                                                      COLUMN B
   (If this column is applicable, multiply applicable        (If this column is  applicable, multiply applicable number
number of weeks by Base Pay excluding Target Incentive)       of weeks by Base Pay including 1/52 of Target Incentive)
-------------------------------------------------------     ------------------------------------------------------------

                                                                                     BANDS D-O;        BANDS D-O;
                                                                                     BASE(1) <       BASE(1) > OR =
WEEKLY / HOURLY   SEMI-MONTHLY      E-GRADE      YEARS OF SERVICE    BANDS A-C        $275,000          $275,000
---------------   ------------      -------      ----------------    ---------        --------          --------
<S>               <C>               <C>          <C>                 <C>             <C>             <C>
        8              16              32                1               23              39                 59
        8              16              32                2               23              39                 59
       12              16              32                3               23              39                 59
       16              16              32                4               23              39                 59
       20              20              40                5               23              39                 59
       24              24              48                6               26              39                 59
       28              28              56                7               29              39                 59
       32              32              64                8               32              39                 62
       36              36              72                9               35              42                 65
       40              40              80               10               38              45                 68
       44              44              88               11               41              48                 71
       48              48              96               12               44              51                 74
       52              52             104               13               47              54                 77
       56              56             104               14               50              57                 80
       60              60             104               15               53              60                 83
       64              64             104               16               56              63                 86
       68              68             104               17               59              66                 89
       72              72             104               18               62              69                 92
       76              76             104               19               65              72                 95
       80              80             104               20               68              75                 98
       84              84             104               21               71              78                101
       88              88             104               22               74              81                104
       92              92             104               23               77              84                107
       96              96             104               24               80              87                110
      100             100             104               25               83              90                113
      104             104             104               26               86              93                116
      104             104             104               27               89              96                119
      104             104             104               28               92              99                122
      104             104             104               29               95             102                125
      104             104             104          30 and above          98             105                128
</TABLE>

----------

(1) For this purpose, Base Pay excludes Target Incentive.

                                      -19-<PAGE>
                                                                   EXHIBIT 10.26

       FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

         This First Amendment to Amended and Restated Loan and Security
Agreement (the "First Amendment") is made as of this 22nd day of April, 2005 by
and among

         Fleet Retail Group, Inc. f/k/a Fleet Retail Finance Inc. (the
"Lender"), a Delaware corporation with its principal executive offices at 40
Broad Street, Boston, Massachusetts 02109, and

         Aeropostale, Inc., (the "Borrower"), a Delaware corporation with its
principal executive offices at 112 West 34th Street, New York, New York 10120

in consideration of the mutual covenants herein contained and benefits to be
derived here from.

                              W I T N E S S E T H:

         WHEREAS, on October 7, 2003 the Lender and the Borrower entered into a
certain Amended and Restated Loan and Security Agreement (as amended and in
effect, the "Agreement"); and

         WHEREAS, the Lender and the Borrower desire to modify certain
provisions of the Agreement as set forth herein.

         NOW, THEREFORE, it is hereby agreed among the Lender and the Borrower
as follows:

1.       Capitalized Terms.  All capitalized terms used herein and not otherwise
         defined shall have the same meaning herein as in the Agreement.

2.       Amendments to Article 1.  The provisions of Article 1 of the Agreement
         are hereby amended as follows:

         (a)      by inserting the following new definitions in the appropriate
                  alphabetical order:

                  (i)   "COMMITMENT INCREASE" is defined in Section 2-2.

                  (ii)  "COMMITMENT INCREASE FEE" is defined in Section 2-12.

                  (iii) "FIRST AMENDMENT EFFECTIVE DATE" shall mean April 22,
                        2005.

                  (iv)  "LENDER'S FEE" is defined in Section 2-24.

         (b)      the definition of "COMMITMENT" is hereby deleted in its
                  entirety, and the following substituted in its stead:

                  "COMMITMENT":  Subject to the provisions of Sections 2-2 and
                   2-23 hereof, as of the First Amendment Effective Date, as
                   follows:

<TABLE>
<CAPTION>
                            LENDER                   DOLLAR COMMITMENT         COMMITMENT
                                                                               PERCENTAGE
<S>                                                  <C>                       <C>
                   Fleet Retail Group, Inc.           $50,000,000.00              100%
</TABLE>
<PAGE>
         (c)      The definition of "EURODOLLAR MARGIN" is hereby deleted in its
                  entirety, and the following substituted in its stead:

                  ""EURODOLLAR MARGIN": Shall mean the following percentages
         based upon the following performance criteria:

<TABLE>
<CAPTION>
                   Level                  Trailing Twelve Month EBITDA          Eurodollar Margin
<S>                                  <C>                                        <C>
                         I            Greater than or equal to $90,000,000            0.75%
                        II           Greater than or equal to $60,000,000             1.00%
                                           and less than $90,000,000
                       III                   Less than $60,000,000                    1.25%
</TABLE>

                  The Eurodollar Margin shall be established at Level I, as of
                  the First Amendment Effective Date. Thereafter, the Eurodollar
                  Margin shall be adjusted quarterly after the Lender's receipt
                  and review of the financial statements required pursuant to
                  Section 5-7 and 5-8 hereof, such adjustment to take
                  retroactive effect as of the first day of each February, May,
                  August, and November, commencing May 1, 2005, based upon the
                  Borrower's trailing twelve month EBITDA calculated as of the
                  most recent quarter then ended. Upon the occurrence of an
                  Event of Default, at the option of the Lender, interest shall
                  be determined in the manner set forth in Section 2.10(f)."

         (d)      the definition of "LOAN CEILING" is hereby deleted in its
                  entirety, and the following substituted in its stead:

                  ""LOAN CEILING": $50,000,000.00, subject to the provisions of
                  Section 2-2."

         (e)      the definition of "MATURITY DATE" is hereby deleted in its
                  entirety, and the following substituted in its stead:

                           ""MATURITY DATE":    April 22, 2010."

3.       Amendment to Article 2.  The provisions of Article 2 of the Agreement
         are hereby amended as follows:

         (a)      Amendment to Section 2-2. The provisions of Section 2-2 are
                  hereby deleted in their entirety, and the following
                  substituted in their stead:

                           "2-2.    Increase in Commitment

                                    (a) The Borrower shall have the right at any
                     time, to request that the Lender increase the existing
                     Commitment by $5,000,000.00 increments, not exceeding in
                     the aggregate $25,000,000.00, provided, however, that after
                     giving effect to any and all such increases, the total
                     Commitment shall not exceed $75,000,000.00. Subject to the
                     satisfaction of the conditions set forth below, the Lender
                     shall increase its Commitment and the Loan Ceiling by the
                     amount so requested (any increase, singly, and in the
                     aggregate, the "Commitment Increase").

                                    (b) Any Commitment Increase shall not become
                     effective unless and until each of the following conditions
                     have been satisfied:
<PAGE>
                                        (i) As of the date of the Borrower's
                                request for any Commitment Increase and as of
                                the effective date of any Commitment Increase,
                                no Event of Default shall exist or shall
                                thereafter arise as a result of the Commitment
                                Increase;

                                        (ii) The Borrower shall have paid such
                                reasonable fees and expenses actually incurred
                                by the Lender in connection with any Commitment
                                Increase, including, without limitation, the
                                Commitment Increase Fee, and reasonable
                                attorneys' fees and expenses;

                                        (iii) The Borrower shall have delivered
                                to the Lender an opinion, in form previously
                                delivered to the Lender, from counsel to the
                                Borrower reasonably satisfactory to the Lender
                                and dated such date;

                                        (iv) The Borrower shall have delivered
                                to Lender a blocked account agreement with
                                Citibank, N.A., or any subsequent financial
                                institution in which the Borrower's credit card
                                receipts are concentrated, in form and substance
                                reasonably satisfactory to Lender; and

                                        (v) The Borrower shall have delivered
                                such other instruments, documents and agreements
                                as the Lender may reasonably have requested in
                                order to effectuate any Commitment Increase and
                                to ratify and confirm the security interests
                                granted to the Lender pursuant to the Loan
                                Documents.

                           The Lender shall promptly notify the Borrower as to
                  the effectiveness of each Commitment Increase, and at such
                  time (i) the Commitment and Loan Ceiling hereunder, and for
                  all purposes of, this Agreement shall be increased by the
                  amount of the Commitment Increase, (ii) the definitions of
                  Commitment and Loan Ceiling shall be deemed modified, without
                  further action, to reflect the Commitment Increase, and (iii)
                  this Agreement shall be deemed amended, without further
                  action, to the extent necessary to reflect the Commitment
                  Increase."

         (b)      Amendment to Section 2-9(c).  The reference in Section 2-9(c)
                  to Section 7-5(b)(v) is hereby deleted and the following
                  section reference is inserted in lieu thereof:

                           "Section 7-5(c)"

         (c)      Amendment to Section 2-12.  The provisions of Section 2-12 are
                  hereby deleted in their entirety, and the following
                  substituted in their stead:

                           "2-12. Commitment Increase Fee.  As compensation for
                  the Lender to make a Commitment Increase pursuant to the
                  provisions of Section 2-2 above, and as compensation for the
                  Lender's maintenance of sufficient funds available for such
                  purpose, the Lender shall have earned a COMMITMENT INCREASE
                  FEE (so referred to herein) in an amount equal to 0.10% of
                  each Commitment Increase."

         (d)      Amendment to Section 2-13.  The provisions of Section 2-13 are
                  hereby deleted in their entirety, and the following
                  substituted in their stead:

                           "2-13. Line (Unused) Fee.  Upon the effectiveness of
                  any Commitment Increase pursuant to the provisions of Section
                  2-2 above, and in addition to any other fee paid by Borrower
                  on account of the Revolving Credit, the Borrower shall pay the
                  Lender an LINE (UNUSED) FEE (so referred to herein) in
                  arrears, on the first day of each month, commencing with the
                  first month immediately following the month in which any
                  Commitment Increase became effective (and on the Termination
                  Date). The Line (Unused) Fee shall be equal to 0.20% per annum
                  of the difference during the month just
<PAGE>
                  ended (or relevant period with respect to the payment being
                  made on the Termination Date) between the Commitment Increase
                  and the average unused portion of the Commitment Increase
                  (including, for purposes hereof, the average Stated Amount of
                  Outstanding L/Cs issued pursuant to the Commitment Increase
                  during such period) during such period."

         (e)      Amendment to Section 2-15.  The provisions of Section 2-15 are
                  hereby deleted in their entirety, and the following
                  substituted in their stead:

                           "2-15. Concerning Fees.  The Borrower shall not be
                           entitled to any credit, rebate or repayment of the
                           Commitment Fee, Line (Unused) Fee, Early Termination
                           Fee, Lender's Fee, Commitment Increase Fee, or other
                           fee previously earned by the Lender pursuant to this
                           Agreement notwithstanding any termination of this
                           Agreement or suspension or termination of the
                           Lender's obligation to make loans and advances
                           hereunder."

         (f)      Insertion of Section 2-24. Section 2-24 is hereby deleted in
                  its entirety, and the following substituted in its stead:

                           "2-24. Lender's Fee.  The Borrower shall pay Lender a
                           LENDER'S FEE (so referred to herein) in the amount of
                           $25,000.00 per annum, which shall be payable by the
                           Borrower annually in advance on the First Amendment
                           Effective Date, and on each anniversary of the First
                           Amendment Effective Date thereafter until the
                           Termination Date. Each such Lender's Fee shall be
                           fully earned as of the date paid."

4.       Amendment to Article 5.  The provisions of Article 5 of the Agreement
         are hereby amended as follows:

         (a)      Amendment to Section 5-6.  The provisions of Section 5-6 are
                  hereby deleted in their entirety, and the following is
                  inserted in their place:

                           "5-6.    Intentionally Omitted."

         (b)      Amendment to Section 5-7.  The provisions of Section 5-7 are
                  hereby deleted in their entirety, and the following is
                  inserted in their place:

                           "5-7.    Quarterly Reports.  Within forty-five (45)
days following the end of each of the Borrower's fiscal quarters, the Borrower
shall provide the Lender with original counterparts of an internally prepared
financial statement of the Borrower's and AWI's financial condition and the
results of their respective operations for, the period ending with the end of
the subject quarter, which financial statement shall include, at a minimum, a
balance sheet, income statement (on a "consolidated" basis), cash flow and
comparison of same store sales for the corresponding quarter of the then
immediately previous year, as well as to the Business Plan, and Management's
analysis and discussion of the operating results reflected therein. The delivery
to the Lender of the Borrower's Form 10Q or Form 10K, as the case may be, which
is filed with the Securities and Exchange Commission shall satisfy the
Borrower's obligations under this Section 5-7."

         (c)      Amendment to Section 5-9.  The provisions of Section 5-9 are
                  hereby deleted in their entirety, and the following is
                  inserted in their place:

                           "5-9.    Intentionally Omitted."
<PAGE>
5.       Amendment to Article 7.  The reference in Section 7-5(c) to
         Section 2-8(e) is hereby deleted and the following section reference is
         inserted in lieu thereof:

                    "Section 2-7(e)"

6.       Amendment to Article 12.  The notice address of the Borrower and its
         counsel in Section 12-1 is hereby deleted and the following is inserted
         in lieu thereof:

                    "If to the Borrower:

                                         Aeropostale, Inc.
                                         201 Willowbrook Blvd.
                                         Wayne, New Jersey 07470
                                         Attention: Joseph Pachella, VP and
                                                    Treasurer
                                         Fax: (973) 872-5650

                    With a copy to:      Edward M. Slezak, Esquire
                                         General Counsel
                                         Aeropostale, Inc.
                                         112 West 34th Street, 22nd Floor
                                         New York, New York 10120
                                         Fax: (646) 619-4873"

7.       Ratification of Loan Documents.  Except as provided herein, all terms
         and conditions of the Agreement and the other Loan Documents remain in
         full force and effect. The Borrower hereby ratifies, confirms, and
         reaffirms all representations, warranties, and covenants contained
         therein and hereby represents that no Events of Default exist under the
         Loan Documents. The Borrower hereby represents and confirms that there
         has been no change to Exhibit 4-6 and Exhibit 4-7 of the Agreement. The
         Borrower further ratifies and confirms that any and all Collateral
         previously granted to the Lender continues to secure the existing
         Liabilities as well as the Liabilities as amended hereby, and any
         future Liabilities.

8.       Ratification of the Exhibits.  The Borrower shall ratify, confirm, and
         reaffirm all representations, warranties, and covenants contained in
         any and all exhibits within ninety (90) days of the First Amendment
         Effective Date. At that time, should any of the information on any of
         the exhibits to the Agreement have become inaccurate in any respect,
         the Borrower shall promptly advise the Lender in writing with such
         revisions or updates as may be necessary or appropriate to update or
         correct the same and, subject to the proviso hereto, such exhibits and
         the corresponding representations, warranties and covenants shall be
         deemed to be amended to reflect such revisions or updates; provided
         however that no such exhibit shall be deemed to have been amended,
         modified or superseded by any such correction or update, nor shall any
         breach of representation or warranty resulting from any inaccuracy or
         incompleteness of such exhibit be deemed to have been cured or waived,
         unless and until the Lender, in its sole discretion, shall have
         accepted in writing such revisions.

9.       Conditions to Effectiveness.  This First Amendment shall become
         effective upon the satisfaction of the following conditions precedent:

        (a)     This First Amendment shall have been duly executed and delivered
                by the Borrower and the Lender and shall be in full force and
                effect. The Lender shall have received a fully executed copy of
                this Amendment.

        (b)     All proceedings in connection with the transactions contemplated
                by this First Amendment and all documents incident thereto shall
                be reasonably satisfactory in substance and form to the Lender,
<PAGE>
                and the Lender shall have received all information and such
                counterpart originals or certified or other copies of such
                documents as the Lender may reasonably request.

        (c)     The Borrower shall have paid all reasonable costs and expenses
                of the Lender including, without limitation, all reasonable
                attorneys' fees and expenses actually incurred by the Lender in
                connection with the preparation, negotiation and execution of
                this First Amendment.

10.      Miscellaneous.

                        (a) This First Amendment may be executed in several
                counterparts and by each party on a separate counterpart, each
                of which when so executed and delivered shall be an original,
                and all of which together shall constitute one instrument.

                        (b) This First Amendment expresses the entire
                understanding of the parties with respect to the transactions
                contemplated hereby. No prior negotiations or discussions shall
                limit, modify, or otherwise affect the provisions hereof.

                        (c) Any determination that any provision of this First
                Amendment or any application hereof is invalid, illegal or
                unenforceable in any respect and in any instance shall not
                effect the validity, legality, or enforceability of such
                provision in any other instance, or the validity, legality or
                enforceability of any other provisions of this First Amendment.

                        (d) The Borrower warrants and represents that the
                Borrower has consulted with independent legal counsel of the
                Borrower's selection in connection with this First Amendment and
                is not relying on any representations or warranties of the
                Lender or its counsel in entering into this First Amendment.

                        (e) The Borrower acknowledges and agrees that the
                Borrower does not have any claims, counterclaims, offsets, or
                defenses against the Lender directly or indirectly relating to
                the Borrower's relationship with the Lender, and/or the
                Borrower's Liabilities, and to the extent that the Borrower has
                or ever had any such claims, counterclaims, offsets, or defenses
                against the Lender, the Borrower affirmatively WAIVES the same.
                The Borrower, and for its representatives, successors and
                assigns, hereby RELEASES, and forever discharges the Lender and
                its officers, directors, agents, servants, attorneys, and
                employees, and its respective representatives, successors and
                assigns, of, to, and from all known debts, demands, actions,
                suits, accounts, covenants, contracts, agreements, damages, and
                any and all claims, demands, or liabilities whatsoever, of every
                name and nature, both at law and in equity through the date
                hereof.

                  [remainder of page left intentionally blank]
<PAGE>
         IN WITNESS WHEREOF, the parties have hereunto caused this First
Amendment to be executed and their seals to be hereto affixed as of the date
first above written.

                                       AEROPOSTALE, INC.
                                       ("Borrower")

                                       By:    /s/ Michael J. Cunningham
                                              -------------------------

                                       Name:  Michael J. Cunningham
                                              ---------------------

                                       Title: EVP and Chief Financial Officer
                                              -------------------------------

                                       FLEET RETAIL GROUP, INC.
                                       ("Lender")

                                       By:    /s/ Christine Hutchinson
                                              ------------------------

                                       Name:  Christine Hutchinson
                                              ----------------------

                                       Title: Vice President
                                              ----------------------

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