Document:

Exhibit 10.9

                                                                  Execution Copy

                              EMPLOYMENT AGREEMENT

      THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered as of December 13,
2007 (the "Effective  Date"),  by and between Claire's  Stores,  Inc., a Florida
corporation (the "Company"), and James Conroy (the "Executive").

      WHEREAS,  the  Company  desires to employ the  Executive  on the terms and
subject to the conditions set forth herein and the Executive has agreed to be so
employed.

      NOW,   THEREFORE,   in  consideration   of  the  mutual   representations,
warranties,  covenants and agreements  set forth herein,  and for other good and
valuable  consideration,  the  receipt  and  sufficiency  of  which  are  hereby
acknowledged,  the  parties  hereto,  intending  to be legally  bound,  agree as
follows:

1. Employment of Executive; Duties.

      1.1 Title.  During the Employment Period (as defined in Section 2 hereof),
the Executive shall serve as an Executive Vice President of the Company.

      1.2 Duties.

            (a) During the  Employment  Period,  the  Executive  shall have such
      executive  and  managerial  powers  and duties as may be  assigned  to the
      Executive by the Chief Executive  Officer or the Board of Directors of the
      Company  (the  "Board"),  commensurate  with the  Executive's  position as
      Executive Vice President,  and shall report to the Chief Executive Officer
      or the Board.  The Company may adjust the duties and  responsibilities  of
      Executive as Executive Vice President,  notwithstanding the specific title
      set forth in Section 1.1 hereof,  based upon the Company's needs from time
      to time. Except for sick leave, reasonable vacations and excused leaves of
      absence, the Executive shall, throughout the Employment Period, devote the
      whole of the  Executive's  working time,  attention,  knowledge and skills
      faithfully,  and to the best of the Executive's ability, to the duties and
      responsibilities  of  the  Executive's  positions  in  furtherance  of the
      business  affairs and activities of the Company and its  subsidiaries  and
      Affiliates (as defined in Section 5.4(a) hereof).

            (b) During the Employment Period, the Executive's principal place of
      employment shall be at the Company's office in Hoffman Estates,  Illinois.
      The  Executive  shall  relocate  his  principal  residence  to the greater
      Chicago metropolitan area.

            (c) The  Executive  shall at all times be subject to,  comply  with,
      observe and carry out (i) the Company's rules,  regulations,  policies and
      codes of ethics and/or conduct  applicable to its employees  generally and
      in effect  from time to time and (ii) such rules,  regulations,  policies,
      codes of ethics and/or conduct,  directions and  restrictions as the
<PAGE>

      Board may from time to time reasonably  establish or approve generally for
      senior executive officers of the Company.

2. Term of Employment.  This Agreement  shall govern the terms and conditions of
the Executive's  employment by the Company, and the termination thereof,  during
the Term.  The "Term" shall mean the period that commences on the Effective Date
and ends on  February  28,  2010  (the  "Term"),  provided  that the Term  shall
automatically  be extended for  successive  one year periods unless either party
provides  written notice (a "Notice of  Non-Renewal")  at least ninety (90) days
prior to the expiration of the Term that the Term shall not be further extended.
The portion of the Term during which the  Executive is actually  employed by the
Company under this Agreement is referred to as the "Employment Period".

3. Compensation and General Benefits.

      3.1 Base Salary.

            (a) During the Employment  Period,  the Company agrees to pay to the
      Executive an annual base salary in an amount equal to $585,000  (such base
      salary,  as may be adjusted from time to time pursuant to Section  3.1(b),
      is referred to herein as the "Base Salary").  The Executive's Base Salary,
      less  amounts  required  to be withheld  under  applicable  law,  shall be
      payable in equal  installments  in accordance  with the  Company's  normal
      payroll  practices  and  procedures  in  effect  from time to time for the
      payment of  salaries  to  officers  of the  Company,  but in no event less
      frequently than monthly.

            (b) The  Company  shall  review the  Executive's  performance  on an
      annual basis and, based on such review, may change the Base Salary, as it,
      acting  in its sole  discretion,  shall  determine  to be  reasonable  and
      appropriate.

      3.2 Bonus.  Pursuant to the Company's  Annual  Incentive Plan (the "AIP"),
with  respect to each fiscal year of the Company that begins after 2007 and that
ends during the Employment  Period,  the Executive  shall be eligible to receive
from the Company an annual performance bonus (the "Annual Bonus") based upon the
Company's  attainment  of annual goals  established  by the  Company,  which may
include the Company's comparable store sales,  earnings before interest,  taxes,
depreciation  and  amortization  ("EBITDA")  and/or cash generation  goals.  The
Executive's  target  Annual  Bonus shall be  seventy-five  percent  (75%) of the
Executive's  Base Salary if the Company meets targeted  levels of performance to
be determined by the Company for the  applicable  year.  Any Annual Bonus earned
shall  be  payable  in  full as soon as  reasonably  practicable  following  the
determination thereof, but in no event later than April 15 of the following year
(unless  administratively  impracticable to do so because the Company's  results
for the applicable  year had not yet been  finalized) and in accordance with the
Company's normal payroll practices and procedures. Except as otherwise expressly
provided in the AIP and Section 4 hereof,  any Annual Bonus (or portion thereof)
payable  under  this  Section  3.2 shall not be earned  and  payable  unless the
Executive is employed by the Company on the last day of the period to which such
Annual Bonus  relates,  provided that no Annual Bonus for any  preceding  period
shall be payable if the Executive's employment is terminated for Cause.

      3.3 Expenses.

                                       2
<PAGE>

            (a) In  addition  to any  amounts  to  which  the  Executive  may be
      entitled  pursuant to the other  provisions of this Section 3 or elsewhere
      herein, the Executive shall be entitled to receive  reimbursement from the
      Company  for  all  reasonable  and  necessary  expenses  incurred  by  the
      Executive  during the Term in performing the Executive's  duties hereunder
      on behalf of the Company,  subject to, and consistent  with, the Company's
      policies  for expense  payment and  reimbursement,  in effect from time to
      time.

            (b) In addition to any  reimbursement  to which the Executive may be
      entitled to under the Company's  relocation  policy,  the Executive  shall
      also be entitled to a  relocation  bonus of  $150,000,  payable as soon as
      practicable after the Effective Date.

      3.4 Benefits During the Employment  Period,  in addition to any amounts to
which the  Executive  may be entitled  pursuant to the other  provisions of this
Section 3 or elsewhere  herein,  the Executive  shall be entitled to participate
in, and to receive benefits under,  any benefit plans,  arrangements or policies
made  available  by the  Company to its  senior  executive  officers  generally,
subject to and on a basis  consistent  with the terms,  conditions  and  overall
administration of each such plan, arrangement or policy.

      3.5 Employee Stock Options.

            (a) Claire's, Inc. (the "Company Parent") has adopted a stock option
      plan, in the form attached hereto as Exhibit A and incorporated  herein by
      reference  (the  "Plan"),  for the grant of stock  options to employees or
      directors of the Company or of any  subsidiary  of the Company to purchase
      shares of Common Stock of the Company Parent (the "Common Stock").

            (b) On or shortly  after the Effective  Date,  pursuant to the Plan,
      the Executive shall be granted  nonqualified  options to purchase  437,500
      shares of Common Stock at a price per share equal to $10 for its shares on
      the terms set forth in the Option Grant Letter  attached hereto as Exhibit
      B and incorporated herein by reference (the "Option Letter").

      3.6 Stock Investment.

            (a) On or shortly  after the Effective  Date,  the Executive has the
      opportunity  to purchase up to 30,000 shares of Common Stock for aggregate
      cash consideration of $300,000 (the "Stock Purchase").  The Stock Purchase
      shall  otherwise  be on the terms set forth in the Stock  Letter  attached
      hereto as Exhibit C.

            (b) Upon  completion of the Stock  Purchase,  the Executive shall be
      granted an additional fully vested  nonqualified  stock option to purchase
      30,000  shares of Common Stock at a price per share equal to $10.00 on the
      terms set forth in the Option Letter.

4. Termination.

      4.1 General. The employment of the Executive hereunder (and the Employment
Period)  shall  terminate  as  provided  in  Section  2 hereof,  unless  earlier
terminated in accordance with the provisions of this Section 4.

                                       3
<PAGE>

      4.2 Death or Disability of the Executive.

            (a) The  employment of the Executive  hereunder  (and the Employment
      Period)  shall  terminate  upon (i) the death of the Executive and (ii) at
      the option of the  Company,  upon not less than  fifteen  (15) days' prior
      written notice to the Executive or the Executive's personal representative
      or guardian,  if the Executive suffers a "Total Disability" (as defined in
      Section 4.2(b) hereof).  Upon  termination for death or Total  Disability,
      the   Company   shall  pay  to  the   Executive,   guardian   or  personal
      representative,  as the case may be, a prorated  share of the Annual Bonus
      pursuant to Section 3.2 hereof (based on the period of actual  employment)
      that the Executive  would have been  entitled to had the Executive  worked
      the full year during which the termination occurred,  which bonus shall be
      based  on  actual  performance  of  the  Company  for  the  year  of  such
      termination.  Any bonus shall be payable as soon as reasonably practicable
      following the determination  thereof,  but in no event later than April 15
      of the  following  year (unless  administratively  impracticable  to do so
      because the  Company's  results for the  applicable  year had not yet been
      finalized),  and in accordance with the Company's normal payroll practices
      and procedures.

            (b) For purposes of this Agreement,  "Total  Disability"  shall mean
      (i) if the  Executive  is subject to a legal decree of  incompetency  (the
      date of such  decree  being  deemed  the  date on  which  such  disability
      occurred),  (ii) the written  determination by a physician selected by the
      Company  and  acceptable  to  Executive  (which  acceptance  shall  not be
      unreasonably withheld), (which expense shall be paid by the Company) that,
      because of a medically  determinable disease,  injury or other physical or
      mental disability,  the Executive is unable substantially to perform, with
      or without reasonable accommodation,  the material duties of the Executive
      required  hereby,  and that such  disability  has lasted  for ninety  (90)
      consecutive  days  or  any  one  hundred  twenty  (120)  days  during  the
      immediately  preceding twelve  (12)-month  period or is, as of the date of
      determination,  reasonably expected to last six (6) months or longer after
      the date of  determination,  in each case based upon  medically  available
      reliable  information or (iii)  Executive's  qualifying for benefits under
      the Company's long-term disability  coverage,  if any. In conjunction with
      determining  mental  and/or  physical  disability  for  purposes  of  this
      Agreement,  the Executive hereby consents to (x) any examinations that the
      Company  reasonably  determines are relevant to a determination of whether
      the Executive is mentally  and/or  physically  disabled or are required by
      the Company  physician,  (y) furnish  such medical  information  as may be
      reasonably  requested  and (z)  waive  any  applicable  physician  patient
      privilege  that  may  arise  because  of such  examination.  All  expenses
      incurred  by the  Executive  under  this  subsection  shall be paid by the
      Company.

      4.3 Termination by the Company Without Cause, Non-Renewal of the Agreement
by the Company,  Resignation by the Executive For Good Reason or in the event of
a Change of Control.

            (a) The Company may terminate  the  Executive's  employment  without
      "Cause"  (as  defined  in  Section  4.3(g)),  and  thereby  terminate  the
      Executive's

                                       4
<PAGE>

      employment  (and the  Employment  Period) under this Agreement at any time
      with no requirement for notice to the Executive.

            (b) Pursuant to Section 2, the Company may  terminate  the Executive
      upon expiration of the Term by providing a Notice of Non-Renewal.

            (c) The Executive may resign,  and thereby terminate the Executive's
      employment (and the Employment  Period), at any time for "Good Reason" (as
      defined in Section  4.3(f)  hereof),  upon not less than thirty (30) days'
      prior written  notice to the Company  specifying in reasonable  detail the
      reason  therefore;  provided,  however,  that  the  Company  shall  have a
      reasonable  opportunity  to cure  any  such  Good  Reason  (to the  extent
      possible)  within such thirty (30) day notice  period after the  Company's
      receipt of such notice;  and provided  further that, if the Company is not
      seeking to cure, the Company shall not be obligated to allow the Executive
      to continue  working  during such period and may, in its sole  discretion,
      accelerate such  termination of employment (and the Employment  Period) to
      any date during such period.  Executive may not terminate employment under
      this  Agreement for Good Reason  regarding  any of the  Company's  acts or
      omissions of which Executive had actual notice for sixty (60) days or more
      prior to giving notice of termination for Good Reason.

            (d) In the event the Executive's  employment is terminated  pursuant
      to this Section 4.3, then, subject to Section 4.3(e) hereof, the following
      provisions shall apply:

                  (i) The Company  shall  continue to pay the Executive the Base
            Salary to which the Executive  would have been entitled  pursuant to
            Section  3.1  hereof  (at the Base  Salary  rate  during the year of
            termination) for a twelve  (12)-month  period following such date of
            termination,  with all such amounts  payable in accordance  with the
            Company's normal payroll practices and procedures in the same manner
            and at the same time as though the  Executive  remained  employed by
            the Company.

                  (ii) If such  termination  occurs upon or within eighteen (18)
            months  following  a Change of  Control  (as  defined  in  Exhibit B
            attached  hereto),  the Company shall  continue to pay the Executive
            the Base  Salary to which the  Executive  would  have been  entitled
            pursuant  to Section  3.1 hereof (at the Base Salary rate during the
            year of  termination)  for the  greater  of (A) a twelve  (12)-month
            period  following  such date of  termination or (B) the period until
            the end of the then remaining Term, with all such amounts payable in
            accordance   with  the  Company's   normal  payroll   practices  and
            procedures  in the same  manner  and at the same time as though  the
            Executive remained employed by the Company.

                  (iii) In the event the  Executive's  employment  is terminated
            pursuant to this Section 4.3 without  Cause,  and if the Company has
            previously  effected  reductions in the Executive's  Base Salary and
            the base  salary of all  senior  executives  of the  Company,  which
            reductions were substantially similar, then the Base Salary rate for
            purposes  of  Section  4.3(c)(i)  or (ii)  hereof  shall be the Base
            Salary rate in effect immediately prior to such reductions.

                                       5
<PAGE>

                  (iv) The Company shall pay to the  Executive a prorated  share
            of the Annual  Bonus  pursuant to Section  3.2 hereof  (based on the
            period of actual  employment)  that the  Executive  would  have been
            entitled to had the Executive  worked the full year during which the
            termination occurred, based on actual performance of the Company for
            the year of such termination.  The bonus shall be payable as soon as
            reasonably  practicable following the determination  thereof, but in
            no  event  later  than  April  15  of  the  following  year  (unless
            administratively  impracticable  to  do  so  because  the  Company's
            results for the applicable year had not yet been finalized),  and in
            accordance   with  the  Company's   normal  payroll   practices  and
            procedures.

                  (v)  If  the  Executive  elects  continuation  coverage  (with
            respect to the Executive's  coverage  and/or any eligible  dependent
            coverage) under the Consolidated  Omnibus Budget  Reconciliation Act
            of  1986  ("COBRA  Continuation   Coverage")  with  respect  to  the
            Company's  group  health  insurance  plan,  the  Executive  shall be
            responsible  for payment of the monthly  cost of COBRA  Continuation
            Coverage.  Unless prohibited by law, the Company shall reimburse the
            Executive for any portion of the monthly cost of COBRA  Continuation
            Coverage  that  exceeds the amount of the monthly  health  insurance
            premium  (with  respect  to  the  Executive's  coverage  and/or  any
            eligible  dependent  coverage) payable by the Executive  immediately
            prior to the date of Executive's termination, such reimbursements to
            continue  (A) for a period of twelve (12) months or (B) in the event
            that the  Executive's  Base Salary is being paid pursuant to Section
            4.3(d)(ii),  for the period set forth therein. The Company shall pay
            the  reimbursements  on a  monthly  basis  in  accordance  with  the
            Company's normal payroll practices and procedures.

            (e) As a condition precedent to the Executive's right to receive the
      benefits  set forth in Section  4.3(d)  hereof,  the  Executive  agrees to
      execute a release of the Company and its respective Affiliates,  officers,
      directors, stockholders,  employees, agents, insurers, representatives and
      successors from and against any and all claims that the Executive may have
      against any such Person (as defined in Section 5.4(f) hereof)  relating to
      the Executive's  employment by the Company and the termination thereof, in
      the form  attached  hereto as Exhibit D, as such form may be amended  from
      time to time to comply with changes in law.

            (f) For purposes of this Agreement,  the Executive would be entitled
      to terminate the  Executive's  employment for "Good Reason" if without the
      Executive's prior written consent:

                  (i) the Company  fails to comply with any material  obligation
            imposed by this Agreement;

                  (ii) the Company effects a reduction in the  Executive's  Base
            Salary,  unless  all  senior  executives  of the  Company  receive a
            substantially similar reduction in base salary; or

                                       6
<PAGE>

                  (iii)  the  Company   requires  the   Executive  to  be  based
            (excluding  regular  travel   responsibilities)  at  any  office  or
            location  more than 75 miles outside of Hoffman  Estates,  Illinois,
            provided that the Executive had  previously  relocated his principal
            residence to the greater Chicago metropolitan area.

            (g) For purposes of this Agreement,  "Cause" means the occurrence of
      any one or more of the following events:

                  (i) an act of fraud, embezzlement, theft or any other material
            violation of law that occurs during or in the course of  Executive's
            employment with the Company;

                  (ii) intentional damage to the Company's assets;

                  (iii)  intentional  disclosure of the  Company's  confidential
            information contrary to the Company's policies;

                  (iv) material  breach of  Executive's  obligations  under this
            Agreement;

                  (v)  intentional   engagement  in  any  activity  which  would
            constitute  a  breach  of  Executive's  duty of  loyalty  or of your
            obligations under this Agreement;

                  (vi) material  breach of any of material the Company's  policy
            that has been communicated to the Executive in writing;

                  (vii) the  willful  and  continued  failure  to  substantially
            perform  Executive's  duties for the Company (other than as a result
            of incapacity due to physical or mental illness); or

                  (viii) willful conduct by Executive that is  demonstrably  and
            materially injurious to the Company, monetarily or otherwise.

            For  purposes of this Section  4.3(f),  an act, or a failure to act,
      shall not be  deemed  "willful"  or  "intentional"  unless it is done,  or
      omitted to be done,  by  Executive  in bad faith or  without a  reasonable
      belief that Executive's action or omission was in the best interest of the
      Company.  Failure to meet performance standards or objectives,  by itself,
      does not constitute "Cause".

      4.4  Termination  For  Cause,  Voluntary  Resignation  Other Than For Good
Reason or Election Not to Extend the Term by the Executive.

            (a) (i) the Company  may,  upon action of the Board,  terminate  the
      employment of the Executive  (and the  Employment  Period) at any time for
      "Cause,"  (ii) the Executive  may  voluntarily  resign other than for Good
      Reason  and  thereby   terminate  the  Executive's   employment  (and  the
      Employment  Period)  under this  Agreement  at any time upon not less than
      thirty (30) days' prior written  notice or (iii) the Executive may provide
      a Notice of  Non-Renewal  pursuant to Section 2 hereof,  in which case the
      Executive's employment will terminate upon expiration of the Term.

                                       7
<PAGE>

            (b) Upon  termination by the Company for Cause,  by the Executive as
      the  result of  resignation  for  other  than for Good  Reason,  or by the
      Executive  at the  end of the  Term  following  a  Notice  of  Non-Renewal
      provided by the Executive,  the Executive shall be entitled to receive all
      amounts of earned but unpaid Base Salary and  benefits  accrued and vested
      through the date of such termination.

            (c)  Before  the  Company  may  terminate  the  Executive  for Cause
      pursuant to Section 4.4(a)(i),  the Board shall deliver to the Executive a
      written  notice of the  Company's  intent to terminate  the  Executive for
      Cause, and the Executive shall have been given a reasonable opportunity to
      cure  any  such  acts  or  omissions  (which  are  susceptible  of cure as
      reasonably determined by the Board by majority vote thereof) within thirty
      (30) days after the Executive's receipt of such notice.

            (d) If the Executive's  employment terminates under this Section 4.4
      prior to the first  anniversary of the Effective Date, the Executive shall
      be  required  to  repay to the  Company  100% of the  relocation  bonus in
      Section  3.3(b),  and if  such  termination  occurs  prior  to the  second
      anniversary  of the Effective  Date,  the  Executive  shall be required to
      repay to the Company 50% of the relocation bonus in Section 3.3(b).

      4.5  Resignation  from  Officer  Positions.  Upon the  termination  of the
Executive's employment for any reason (unless otherwise agreed in writing by the
Company  and the  Executive),  the  Executive  will be deemed to have  resigned,
without any further action by the Executive,  from any and all officer, director
and/or  director  positions  that  the  Executive,  immediately  prior  to  such
termination,  (a) held with the  Company or any of its  Affiliates  and (b) held
with any other  entities at the direction of, or as a result of the  Executive's
affiliation  with, the Company or any of its Affiliates.  If for any reason this
Section 4.5 is deemed to be insufficient to effectuate such  resignations,  then
Executive will, upon the Company's request, execute any documents or instruments
that  the  Company  may  deem   necessary  or  desirable  to   effectuate   such
resignations.

      4.6 Section 409A of the Code.  Notwithstanding anything to the contrary in
this Agreement,  the parties  mutually desire to avoid adverse tax  consequences
associated  with the  application  of Section 409A of the Code to this Agreement
and  agree to  cooperate  fully and take  appropriate  reasonable  actions  that
preserve to the Executive,  to the maximum extent  practical,  the full economic
benefit of this  Agreement  while avoiding any such  consequences  under Section
409A of the Code,  including  delaying  payments and  reforming  the form of the
Agreement if such action would reduce or eliminate taxes and/or interest payable
as a  result  of  Section  409A of the  Code.  In this  regard,  notwithstanding
anything to the  contrary in this  Section 4, to the extent  necessary to comply
with Section 409A of the Code,  any payment  required under this Section 4 shall
be deferred  for a period of six (6)  months,  regardless  of the  circumstances
giving rise to or the basis for such payment.

                                       8
<PAGE>

5. Confidentiality, Work Product and Non-Competition and Non-Solicitation.

      5.1 Confidentiality.

            (a) In connection with the Executive's  employment with the Company,
      the Company promises to provide the Executive with access to "Confidential
      Information"  (as  defined  in  Section  5.4(d)  hereof) in support of the
      Executive's employment duties. The Executive recognizes that the Company's
      business interests require a confidential relationship between the Company
      and the Executive and the fullest  practical  protection and  confidential
      treatment of all Confidential  Information.  At all times, both during and
      after  the  Employment   Period,  the  Executive  shall  not  directly  or
      indirectly: (i) appropriate, download, print, copy, remove, use, disclose,
      divulge,  communicate or otherwise "Misappropriate" (as defined in Section
      5.4(e)  hereof),   any  Confidential   Information,   including,   without
      limitation,  originals or copies of any Confidential  Information,  in any
      media or format,  except for the Company's  benefit  within the course and
      scope of the Executive's employment or with the prior written consent of a
      majority  of the Board;  or (ii) take or  encourage  any action that would
      circumvent,  interfere with or otherwise  diminish the value or benefit of
      the Confidential  Information to any of the Company Parties (as defined in
      Section 5.4(b) hereof).

            (b) All  Confidential  Information,  and all other  information  and
      property  affecting  or  relating to the  business of the Company  Parties
      within the Executive's possession,  custody or control, regardless of form
      or format,  shall  remain,  at all times,  the property of the  respective
      Company  Parties,  the  appropriation,  use and/or  disclosure of which is
      governed and restricted by this Agreement.

            (c) The Executive acknowledges and agrees that:

                  (i) the  Executive  occupies  a  unique  position  within  the
            Company, and the Executive is and will be intimately involved in the
            development and/or implementation of Confidential Information;

                  (ii) in the event the Executive breaches this Section 5.1 with
            respect to any Confidential Information, such breach shall be deemed
            to be a Misappropriation of such Confidential Information; and

                  (iii) any  Misappropriation  of Confidential  Information will
            result in immediate and irreparable harm to the Company.

            (d) Upon receipt of any formal or informal request, by legal process
      or otherwise,  seeking the  Executive's  direct or indirect  disclosure or
      production of any  Confidential  Information to any Person,  the Executive
      shall  promptly  and timely  notify the Company and provide a  description
      and, if  applicable,  hand  deliver a copy of such request to the Company.
      The  Executive  irrevocably  nominates  and  appoints  the  Company as the
      Executive's  true and lawful  attorney-in-fact  to act in the  Executive's
      name,  place and stead to perform any act that the Executive might perform
      to defend and protect against any disclosure of Confidential Information.

                                       9
<PAGE>

            (e) At any  time the  Company  may  request,  during  or  after  the
      Employment  Period,  the  Executive  shall  deliver  to  the  Company  all
      originals and copies of Confidential Information and all other information
      and property  affecting or relating to the business of the Company Parties
      within the Executive's possession,  custody or control, regardless of form
      or format,  including,  without  limitation any  Confidential  Information
      produced by the Executive.  Both during and after the  Employment  Period,
      the Company shall have the right of reasonable access to review,  inspect,
      copy and/or confiscate any Confidential Information within the Executive's
      possession, custody or control.

            (f) Upon termination or expiration of this Agreement,  the Executive
      shall immediately return to the Company all Confidential Information,  and
      all other  information and property  affecting or relating to the business
      of the Company  Parties,  within the  Executive's  possession,  custody or
      control,  regardless  of form or format,  without the necessity of a prior
      Company request.

            (g) During the  Employment  Period,  the  Executive  represents  and
      agrees that the  Executive  will not use or disclose any  confidential  or
      proprietary  information  or trade  secrets of others,  including  but not
      limited to former  employers,  and that the Executive  will not bring onto
      the  premises of the Company or access such  confidential  or  proprietary
      information  or trade  secrets  of such  others,  unless  consented  to in
      writing by said others, and then only with the prior written authorization
      of the Company.

      5.2 Work Product/Intellectual Property.

            (a)  Assignment.  The  Executive  hereby  assigns to the Company all
      right,  title and  interest to all "Work  Product"  (as defined in Section
      5.4(h) hereof) that (i) relates to any of the Company  Parties'  actual or
      anticipated  business,  research  and  development  or  existing or future
      products or services, or (ii) is conceived, reduced to practice, developed
      or made using any equipment,  supplies, facilities, assets, information or
      resources of any of the Company Parties  (including,  without  limitation,
      any intellectual property rights).

            (b) Disclosure.  The Executive shall promptly  disclose Work Product
      to the Board and perform all actions  reasonably  requested by the Company
      (whether  during or after the Employment  Period) to establish and confirm
      the ownership and  proprietary  interest of any of the Company  Parties in
      any  Work  Product  (including,   without  limitation,  the  execution  of
      assignments,   consents,  powers  of  attorney,   applications  and  other
      instruments).  The  Executive  shall  not file  any  patent  or  copyright
      applications  related to any Work Product except with the written  consent
      of a majority of the Board.

      5.3 Non-Competition and Non-Solicitation.

            (a) In consideration of the Confidential  Information being provided
      to the  Executive  as stated in  Section  5.1  hereof,  and other good and
      valuable new consideration as stated in this Agreement, including, without
      limitation,  employment and/or continued  employment with the Company, and
      the business  relationships,  Company goodwill,  work experience,  client,
      customer and/or vendor  relationships  and other fruits of employment

                                       10
<PAGE>

      that the Executive will have the  opportunity  to obtain,  use and develop
      under this Agreement,  the Executive  agrees to the restrictive  covenants
      stated in this Section 5.3.

            (b) From the Effective Date until the end of the  Restricted  Period
      (as  defined in Section  5.4(g)  hereof),  the  Executive  agrees that the
      Executive will not, directly or indirectly,  on the Executive's own behalf
      or on the behalf of any other Person,  within the United States of America
      or in any  other  country  or  territory  in which the  businesses  of the
      Company are conducted:

                  (i)  engage in a  Competing  Business  (as  defined in Section
            5.4(c) hereof), including,  without limitation, by owning, managing,
            operating,  controlling,  being employed by, providing services as a
            consultant  or  independent  contractor to or  participating  in the
            ownership,   management,  operation  or  control  of  any  Competing
            Business;

                  (ii)  induce  or  attempt  to  induce  any  customer,  vendor,
            supplier,  licensor or other Person in a business  relationship with
            any Company  Party,  for or with which the  Executive  or  employees
            working under the Executive's supervision had any direct or indirect
            responsibility  or contact during the Employment  Period,  (A) to do
            business  with a  Competing  Business  or (B)  to  cease,  restrict,
            terminate  or  otherwise  reduce  business  with the Company for the
            benefit of a Competing Business, regardless of whether the Executive
            initiates contact; or

                  (iii) (A) solicit, recruit, persuade,  influence or induce, or
            attempt to solicit,  recruit,  persuade,  influence or induce anyone
            employed  or  otherwise  retained  by  any of  the  Company  Parties
            (including any independent  contractor or  consultant),  to cease or
            leave their  employment or  contractual  or consulting  relationship
            with  any  Company  Party,   regardless  of  whether  the  Executive
            initiates contact for such purposes or (B) hire, employ or otherwise
            attempt  to  establish,  for any  Person,  any  employment,  agency,
            consulting,  independent  contractor or other business  relationship
            with any Person who is or was employed or otherwise  retained by any
            of the Company  Parties  (including  any  independent  contractor or
            consultant).

            (c) The parties hereto  acknowledge and agree that,  notwithstanding
      anything in Section 5.3(b)(i)  hereof,  (i) the Executive may own or hold,
      solely as  passive  investments,  securities  of  Persons  engaged  in any
      business that would otherwise be included in Section 5.3(b)(i), as long as
      with respect to each such  investment the securities held by the Executive
      do not exceed five  percent  (5%) of the  outstanding  securities  of such
      Person  and such  securities  are  publicly  traded and  registered  under
      Section  12 of the  Securities  Exchange  Act of  1934,  as  amended  (the
      "Exchange  Act"),  and  (ii)  the  Executive  may  serve  on the  board of
      directors (or other comparable position) or as an officer of any entity at
      the  request  of  the  Board;  provided,  however,  that  in the  case  of
      investments  otherwise  permitted  under clause (i) above,  the  Executive
      shall not be permitted  to,  directly or  indirectly,  participate  in, or
      attempt to influence, the management, direction or policies of (other than
      through  the  exercise  of any  voting  rights

                                       11
<PAGE>

      held by the Executive in  connection  with such  securities),  or lend the
      Executive's name to, any such Person.

            (d) The Executive  acknowledges  that (i) the restrictive  covenants
      contained  in this  Section  5.3  hereof are  ancillary  to and part of an
      otherwise  enforceable  agreement,  such being the  agreements  concerning
      Confidential  Information  and  other  consideration  as  stated  in  this
      Agreement, (ii) at the time that these restrictive covenants are made, the
      limitations as to time, geographic scope and activity to be restrained, as
      described  herein,  are reasonable  and do not impose a greater  restraint
      than  necessary  to protect  the good will and other  legitimate  business
      interests  of the  Company,  including  without  limitation,  Confidential
      Information  (including  trade  secrets),  client,  customer and/or vendor
      relationships,  client and/or customer goodwill and business productivity,
      (iii) in the  event of  termination  of the  Executive's  employment,  the
      Executive's  experiences and  capabilities are such that the Executive can
      obtain gainful employment without violating this Agreement and without the
      Executive  incurring undue hardship,  (iv) based on the relevant  benefits
      and other new  consideration  provided for in this  Agreement,  including,
      without  limitation,  the disclosure and use of Confidential  Information,
      the restrictive  covenants of this Section 5.3, as applicable according to
      their  terms,  shall  remain in full force and effect even in the event of
      the Executive's involuntary  termination from employment,  with or without
      Cause and (v) the  Executive  has  carefully  read this  Agreement and has
      given careful  consideration to the restraints  imposed upon the Executive
      by this Agreement and consents to the terms of the  restrictive  covenants
      in this  Section  5.3,  with the  knowledge  that  this  Agreement  may be
      terminated at any time in accordance with the provisions hereof.

      5.4 Definitions. For purposes of this Agreement, the following terms shall
have the following meanings:

            (a) An "Affiliate"  of any specified  Person means any other Person,
      whether now or hereafter existing,  directly or indirectly  controlling or
      controlled  by, or under  direct or indirect  common  control  with,  such
      specified  Person.  For  purposes  hereof,  "control"  or any  other  form
      thereof,  when used with respect to any Person,  means the power to direct
      the  management  and  policies of such  Person,  directly  or  indirectly,
      whether  through  the  ownership  of voting  securities,  by  contract  or
      otherwise;  and  the  terms  "controlling"  and  "controlled"  shall  have
      meanings correlative to the foregoing.

            (b) "Company Parties" means the Company, and its direct and indirect
      parents, subsidiaries and Affiliates, and their successors in interest.

            (c) "Competing  Business" means any business that owns or operates a
      specialty retail chain, which chain derives 15% or more of its revenue for
      the  trailing  12 months from the sale of costume  jewelry or  accessories
      targeted to girls or women.

            (d) Confidential Information.

                  (i) Definition.  "Confidential  Information" means any and all
            material,  information,   ideas,  inventions,   formulae,  patterns,
            compilations,  programs,

                                       12
<PAGE>

            devices, methods, techniques, processes, know how, plans (marketing,
            business, strategic, technical or otherwise),  arrangements, pricing
            and other data of or relating to any of the Company Parties (as well
            as their customers and/or vendors) that is confidential, proprietary
            or trade secret (A) by its nature, (B) based on how it is treated or
            designated by a Company  Party,  (C) because the disclosure of which
            would  have a material  adverse  effect on the  business  or planned
            business  of any of the  Company  Parties  and/or (D) as a matter of
            law.

                  (ii)  Exclusions.  Confidential  Information  does not include
            material,  data,  and/or  information (A) that any Company Party has
            voluntarily  placed in the public domain, (B) that has been lawfully
            and independently developed and publicly disclosed by third parties,
            (C) that  constitutes  the  general  non-specialized  knowledge  and
            skills gained by the Executive  during the Employment  Period or (D)
            that  is  otherwise  in the  public  domain  through  lawful  means;
            provided,  however,  that  the  unauthorized  appropriation,  use or
            disclosure of Confidential Information by the Executive, directly or
            indirectly,  shall not affect the protection and relief  afforded by
            this Agreement regarding such information.

                  (iii) Inclusions.  Confidential Information includes,  without
            limitation, the following information (including without limitation,
            compilations or collections of information) relating or belonging to
            any  Company  Party  (as well as  their  clients,  customers  and/or
            vendors) and created,  prepared,  accessed,  used or reviewed by the
            Executive  during or after the  Employment  Period:  (1) product and
            manufacturing  information,  such as  ingredients,  combinations  of
            ingredients  and   manufacturing   processes;   (2)  scientific  and
            technical information,  such as research and development,  tests and
            test results,  formulae and formulations,  studies and analysis; (3)
            financial and cost  information,  such as operating  and  production
            costs,  costs of goods  sold,  costs of supplies  and  manufacturing
            materials,  non-public financial statements and reports,  profit and
            loss  information,  margin  information  and  financial  performance
            information;  (4)  customer  related  information,  such as customer
            related contracts,  engagement and scope of work letters,  proposals
            and presentations,  customer-related contacts, lists, identities and
            prospects,  practices,  plans,  histories,  requirements  and needs,
            price information and formulae and information  concerning client or
            customer products, services, businesses or equipment specifications;
            (5) vendor and supplier related information, such as the identities,
            practices,  history or  services  of any  vendors or  suppliers  and
            vendor  or  supplier  contacts;   (6)  sales,  marketing  and  price
            information,  such as marketing and sales programs and related data,
            sales and  marketing  strategies  and  plans,  sales  and  marketing
            procedures and processes,  pricing methods, practices and techniques
            and pricing  schedules and lists;  (7) database,  software and other
            computer  related  information,  such as  computer  programs,  data,
            compilations  of  information  and  records,  software  and computer
            files,   presentation  software  and  computer-stored  or  backed-up
            information including, but not limited to, e-mails,  databases, word
            processed documents,  spreadsheets,  notes,  schedules,  task lists,
            images and video; (8) employee-related information, such as lists or
            directories identifying employees,  representatives and contractors,
            and  information  regarding  the  competencies  (knowledge,   skill,

                                       13
<PAGE>

            experience),  compensation  and needs of employees,  representatives
            and  contractors  and  training  methods;   and  (9)  business-  and
            operation-related    information,   such   as   operating   methods,
            procedures,  techniques,  practices and processes, information about
            acquisitions, corporate or business opportunities, information about
            partners  and  potential  investors,  strategies,   projections  and
            related  documents,  contracts  and licenses  and business  records,
            files, equipment,  notebooks,  documents, memoranda, reports, notes,
            sample  books,  correspondence,  lists and other written and graphic
            business records.

            (e) "Misappropriate", or any form thereof, means:

                  (i)  the  acquisition  of any  Confidential  Information  by a
            Person  who  knows  or has  reason  to know  that  the  Confidential
            Information  was  acquired  by  theft,  bribery,  misrepresentation,
            breach or  inducement  of a breach of a duty to maintain  secrecy or
            espionage  through  electronic  or other means  (each,  an "Improper
            Means"); or

                  (ii) the  disclosure  or use of any  Confidential  Information
            without the express  consent of the Company by a Person who (A) used
            Improper Means to acquire knowledge of the Confidential  Information
            (B) at the time of  disclosure  or use,  knew or had  reason to know
            that his or her knowledge of the  Confidential  Information  was (x)
            derived from or through a Person who had utilized  Improper Means to
            acquire it, (y) acquired under  circumstances  giving rise to a duty
            to  maintain  its  secrecy or limit its use or (z)  derived  from or
            through a Person  who owed a duty to the  Company  to  maintain  its
            secrecy or limit its use or (C)  before a material  change of his or
            her  position,  knew or had reason to know that it was  Confidential
            Information  and that  knowledge of it had been acquired by accident
            or mistake.

            (f) "Person" means any individual, corporation, partnership, limited
      liability company, joint venture, association, business trust, joint-stock
      company, estate, trust, unincorporated  organization,  government or other
      agency or political  subdivision  thereof or any other legal or commercial
      entity.

            (g)  "Restricted  Period" means the longer of (i) twelve (12) months
      after the date of termination of employment (the  Executive's  last day of
      work for the  Company) or (ii) the period  during  which the  Executive is
      receiving payments from the Company pursuant to Section 4 hereof.

            (h) "Work  Product" means all patents and patent  applications,  all
      inventions,  innovations,  improvements,  developments,  methods, designs,
      analyses,  drawings,  reports,  creative  works,  discoveries,   software,
      computer programs,  modifications,  enhancements,  know-how, formulations,
      concepts and ideas,  and all similar or related  information (in each case
      whether or not patentable),  all copyrights and  copyrightable  works, all
      trade  secrets,  confidential  information,  and  all  other  intellectual
      property and intellectual  property rights that are conceived,  reduced to
      practice,  developed or made by the

                                       14
<PAGE>

      Executive either alone or with others in the course of employment with the
      Company (including employment prior to the date of this Agreement).

      5.5 Remedies.  Because the Executive's services are unique and because the
Executive has access to Confidential Information, the Executive acknowledges and
agrees that if the Executive breaches any of the provisions of Section 5 hereof,
the Company may suffer immediate and irreparable harm for which monetary damages
alone will not be a  sufficient  remedy.  The  restrictive  covenants  stated in
Section 5 hereof are without  prejudice  to the  Company's  rights and causes of
action at law.

      5.6 Interpretation; Severability.

            (a) The Executive has carefully  considered the possible  effects on
      the  Executive  of the  covenants  not  to  compete,  the  confidentiality
      provisions and the other obligations contained in this Agreement,  and the
      Executive  recognizes  that the Company has made every effort to limit the
      restrictions  placed upon the Executive to those that are  reasonable  and
      necessary to protect the Company's legitimate business interests.

            (b) The  Executive  acknowledges  and  agrees  that the  restrictive
      covenants  set forth in this  Agreement  are  reasonable  and necessary in
      order  to  protect  the  Company's  valid  business  interests.  It is the
      intention  of the  parties  hereto  that  the  covenants,  provisions  and
      agreements  contained  herein shall be  enforceable  to the fullest extent
      allowed by law. If any covenant,  provision or agreement  contained herein
      is found by a court having  jurisdiction  to be  unreasonable in duration,
      scope or character of restrictions, or otherwise to be unenforceable, such
      covenant,  provision  or  agreement  shall not be  rendered  unenforceable
      thereby,  but rather the duration,  scope or character of  restrictions of
      such covenant,  provision or agreement shall be deemed reduced or modified
      with  retroactive  effect to render such covenant,  provision or agreement
      reasonable  or  otherwise  enforceable  (as the  case  may  be),  and such
      covenant,  provision  or agreement  shall be enforced as modified.  If the
      court  having  jurisdiction  will not review the  covenant,  provision  or
      agreement, the parties hereto shall mutually agree to a revision having an
      effect as close as permitted by applicable  law to the provision  declared
      unenforceable.   The  parties   hereto   agree  that  if  a  court  having
      jurisdiction determines, despite the express intent of the parties hereto,
      that any portion of the  covenants,  provisions  or  agreements  contained
      herein  are not  enforceable,  the  remaining  covenants,  provisions  and
      agreements herein shall be valid and enforceable.  Moreover, to the extent
      that any provision is declared  unenforceable,  the Company shall have any
      and all rights  under  applicable  statutes  or common law to enforce  its
      rights  with  respect to any and all  Confidential  Information  or unfair
      competition by the Executive.

6. Miscellaneous.

      6.1 Public Statements.

            (a) Media  Nondisclosure.  The  Executive  agrees  that  during  the
      Employment  Period or at any time thereafter,  except as may be authorized
      in writing by the Company,  the Executive  will not directly or indirectly
      disclose or release to the Media any

                                       15
<PAGE>

      information  concerning  or  relating  to any  aspect  of the  Executive's
      employment or  termination  from  employment  with the Company  and/or any
      aspect of any  dispute  that is the  subject  of this  Agreement.  For the
      purposes of this Agreement, the term "Media" includes, without limitation,
      any  news  organization,  station,  publication,  show,  website,  web log
      (blog),  bulletin  board,  chat room and/or program (past,  present and/or
      future),  whether published through the means of print, radio,  television
      and/or the Internet or otherwise,  and any member,  representative,  agent
      and/or employee of the same.

            (b)   Non-Disparagement.   The  Executive  agrees  that  during  the
      Employment  Period or at any time thereafter,  the Executive will not make
      any statements,  comments or communications in any form, oral,  written or
      electronic to any Media or any customer, client or supplier of the Company
      or any  of its  Affiliates,  which  would  constitute  libel,  slander  or
      disparagement of the Company or any of its Affiliates,  including, without
      limitation,   any  such  statements,   comments  or  communications   that
      criticize,  ridicule  or  are  derogatory  to  the  Company  or any of its
      Affiliates; provided, however, that the terms of this Section 6.1(b) shall
      not apply to communications between the Executive and, as applicable,  the
      Executive's  attorneys or other persons with whom communications  would be
      subject to a claim of privilege existing under common law, statute or rule
      of procedure.  The Executive further agrees that the Executive will not in
      any way  solicit any such  statements,  comments  or  communications  from
      others.

      6.2  ARBITRATION.  SUBJECT TO THE RIGHTS UNDER  SECTION 6.3 HEREOF TO SEEK
INJUNCTIVE OR OTHER EQUITABLE RELIEF, BINDING ARBITRATION SHALL BE THE EXCLUSIVE
REMEDY FOR ANY AND ALL DISPUTES,  CLAIMS OR  CONTROVERSIES,  WHETHER  STATUTORY,
CONTRACTUAL  OR OTHERWISE,  BETWEEN THE PARTIES HERETO ARISING UNDER OR RELATING
TO THIS  AGREEMENT OR THE  EXECUTIVE'S  EMPLOYMENT  BY OR  TERMINATION  FROM THE
COMPANY  (INCLUDING,  BUT  NOT  LIMITED  TO,  THE  AMOUNT  OF  DAMAGES,  OR  THE
CALCULATION  OF ANY  BONUS  OR  OTHER  AMOUNT  OR  BENEFIT  DUE)  (COLLECTIVELY,
"DISPUTES").  THE  PARTIES  EACH  WAIVE THE RIGHT TO A JURY  TRIAL AND WAIVE THE
RIGHT TO ADJUDICATE THEIR DISPUTES UNDER THIS AGREEMENT  OUTSIDE THE ARBITRATION
FORUM  PROVIDED  FOR IN THIS  AGREEMENT,  EXCEPT AS  OTHERWISE  PROVIDED IN THIS
AGREEMENT.

            (a) Procedure Generally.  The parties agree to submit the Dispute to
      a  single  arbitrator  selected  from a  panel  of JAMS  arbitrators.  The
      arbitration will be governed by the JAMS  Comprehensive  Arbitration Rules
      and Procedures in effect at the time the arbitration is commenced, subject
      to the terms and  modifications of this Agreement.  If for any reason JAMS
      cannot serve as the arbitration  administrator or cannot fulfill the panel
      requirements  of the  Arbitration  Provision,  the  Company  may select an
      alternative  arbitration  administrator,  such as AAA,  to serve under the
      terms of this Agreement.

            (b)  Arbitrator  Selection.  To select the  arbitrator,  the parties
      shall make their  respective  strikes from a panel of former federal court
      judges and  magistrates,  to the extent  available  from JAMS (the  "First
      Panel").  If the parties  cannot agree upon an  arbitrator  from the First
      Panel or if such a panel is not available from JAMS, then the

                                       16
<PAGE>

      parties  will next make their  respective  strikes  from a panel of former
      Illinois state court trial and appellate  judges,  to the extent available
      from JAMS (the "Second Panel"). Any arbitrators proposed for the First and
      Second  Panels  provided for in this  Section  6.2(b) must be available to
      serve in the Agreed Venue.  If the parties cannot agree upon an arbitrator
      from the Second Panel or if such a panel is not available from JAMS,  then
      the parties will next make their respective  strikes from the panel of all
      other JAMS arbitrators available to serve in the Agreed Venue.

            (c) VENUE. THE PARTIES  STIPULATE AND AGREE THAT THE EXCLUSIVE VENUE
      OF ANY SUCH ARBITRATION PROCEEDING (AND OF ANY OTHER PROCEEDING, INCLUDING
      ANY COURT  PROCEEDING,  UNDER THIS AGREEMENT)  SHALL BE CHICAGO,  ILLINOIS
      (THE "AGREED VENUE").

            (d) Authority and Decision.  The arbitrator shall have the authority
      to award the same damages and other  relief that a court could award.  The
      arbitrator  shall issue a reasoned  award  explaining the decision and any
      damages awarded. The arbitrator's  decision will be final and binding upon
      the parties and  enforceable  by a court of  competent  jurisdiction.  The
      parties will abide by and perform any award rendered by the arbitrator. In
      rendering  the award,  the  arbitrator  shall state the reasons  therefor,
      including  (without  limitation)  any  computations  of actual  damages or
      offsets, if applicable.

            (e) Fees and Costs.  In the event of arbitration  under the terms of
      this   Agreement,   the  fees   charged  by  JAMS  or  other   arbitration
      administrator and the arbitrator shall be borne by the parties equally. In
      addition,  the  parties  shall  each bear their own  costs,  expenses  and
      attorneys' fees incurred in arbitration.

            (f)  Limited   Scope.   The  following  are  excluded  from  binding
      arbitration  under  this  Agreement:   claims  for  workers'  compensation
      benefits  or  unemployment  benefits;  replevin;  and  claims  for which a
      binding arbitration agreement is invalid as a matter of law.

      6.3 Injunctive  Relief.  The parties hereto may seek injunctive  relief in
arbitration;  provided,  however,  that  as  an  exception  to  the  arbitration
agreement set forth in Section 6.2 hereof, the parties, in addition to all other
available remedies, shall each have the right to initiate an action in any court
of competent  jurisdiction  in order to request  injunctive  or other  equitable
relief  regarding the terms of Sections 5 or 6.2 hereof.  The exclusive venue of
any such  proceeding  shall be in the Agreed  Venue.  The  parties  agree (a) to
submit to the  jurisdiction of any competent  court in the Agreed Venue,  (b) to
waive any and all  defenses  the  Executive  may have on the  grounds of lack of
jurisdiction  of such court and (c) that neither party shall be required to post
any bond,  undertaking  or other  financial  deposit or  guarantee in seeking or
obtaining such equitable relief.  Evidence adduced in any such proceeding for an
injunction may be used in arbitration as well. The existence of this right shall
not  preclude  or  otherwise  limit the  applicability  or exercise of any other
rights and remedies that a party hereto may have at law or in equity.

                                       17
<PAGE>

      6.4 Settlement of Existing Rights. In exchange for the other terms of this
Agreement, the Executive acknowledges and agrees that: (a) the Executive's entry
into this  Agreement is a condition of employment  and/or  continued  employment
with the Company,  as applicable;  (b) except as otherwise provided herein, this
Agreement will replace any existing employment agreement between the parties and
thereby act as a novation,  if  applicable;  (c) the Executive is being provided
with  access  to  Confidential  Information,   including,   without  limitation,
proprietary trade secrets of one or more Company Parties, to which the Executive
has not  previously  had access;  (d) all Company  inventions  and  intellectual
property  developed by the Executive during any past employment with the Company
and all goodwill  developed  with the  Company's  clients,  customers  and other
business  contacts by the Executive during any past employment with Company,  as
applicable,  is the exclusive property of the Company;  and (e) all Confidential
Information and/or specialized training accessed,  created, received or utilized
by the Executive during any past employment with Company, as applicable, will be
subject  to the  restrictions  on  Confidential  Information  described  in this
Agreement, whether previously so agreed or not.

      6.5  Indemnification.  The Executive  shall be entitled from the Effective
Date until the end of the  Employment  Period in the  capacity  as an officer or
director  of  the  Company  or any of its  subsidiaries  to the  benefit  of the
indemnification  provisions  contained  in the  By-Laws  of the  Company or as a
matter  of law,  whichever  is  greater.  In  addition,  during  the term of the
Executive's  employment  and, where  applicable  under the terms of the relevant
liability policy thereafter, the Executive shall be covered under any directors'
and officers' insurance policy maintained by the Company.

      6.6  Post-Termination  Assistance.   During  the  Restricted  Period,  the
Executive shall cooperate,  at the reasonable  request of the Company (i) in the
transition of any matter for which the Executive had authority or responsibility
during the Employment Period, or (ii) with respect to any other matter involving
the Company for which the Executive may be of assistance. The Executive shall be
entitled to reimbursement of any  out-of-pocket  expenses he incurs in providing
such assistance upon submission of documentation supporting such expenses.

      6.7 Entire Agreement; Waiver. This Agreement contains the entire agreement
between the Executive and the Company with respect to the subject matter hereof,
and supersedes any and all prior  understandings or agreements,  whether written
or oral. No  modification  or addition  hereto or waiver or  cancellation of any
provision  hereof shall be valid  except by a writing  signed by the party to be
charged  therewith.  No  delay on the part of any  party  to this  Agreement  in
exercising  any right or privilege  provided  hereunder or by law shall  impair,
prejudice or constitute a waiver of such right or privilege. Additionally, as of
the Effective  Date, the Executive  acknowledges  and agrees that the consulting
agreement  he is a party  to (the  "Consulting  Agreement")  terminates  and the
Executive  further   acknowledges  that  he  is  not  entitled  to  any  further
compensation under the Consulting Agreement.

      6.8 Governing  Law. This  Agreement  shall be governed by and construed in
accordance  with the laws of the State of Illinois  without regard to principles
of conflict of laws.

      6.9 Successors and Assigns;  Binding Agreement. The rights and obligations
of the  parties  under this  Agreement  shall be  binding  upon and inure to the
benefit  of the  parties  hereto

                                       18
<PAGE>

and their heirs,  personal  representatives,  successors and permitted  assigns.
This Agreement is a personal  contract,  and, except as  specifically  set forth
herein,  the  rights  and  interests  of the  Executive  herein may not be sold,
transferred,  assigned,  pledged or  hypothecated by any party without the prior
written  consent of the  others.  As used  herein,  the term  "successor"  as it
relates to the Company,  shall include,  but not be limited to, any successor by
way of  merger,  consolidation  or  sale  of all or  substantially  all of  such
Person's assets or equity interests.

      6.10 Representation by Counsel;  Independent Judgment. Each of the parties
hereto  acknowledges that (a) it or the Executive has read this Agreement in its
entirety  and  understands  all  of  its  terms  and  conditions,  (b) it or the
Executive has had the  opportunity to consult with any individuals of its or the
Executive's choice regarding its or the Executive's  agreement to the provisions
contained herein,  including legal counsel of its or the Executive's choice, and
any decision not to was the Executive's or its alone and (c) it or the Executive
is entering into this Agreement of its or the Executive's own free will, without
coercion  from any source,  based upon its or the  Executive's  own  independent
judgment.

      6.11  Interpretation.  The  parties  and their  respective  legal  counsel
actively participated in the negotiation and drafting of this Agreement,  and in
the event of any ambiguity or mistake  herein,  or any dispute among the parties
with respect to the provisions  hereto,  no provision of this Agreement shall be
construed  unfavorably  against  any  of the  parties  on the  ground  that  the
Executive, it, or the Executive's or its counsel was the drafter thereof.

      6.12  Survival.  The  applicable  provisions of Sections 4, 5 and 6 hereof
shall survive the termination of this Agreement.

      6.13 Notices. All notices and communications hereunder shall be in writing
and shall be deemed  properly  given and  effective  when  received,  if sent by
facsimile or telecopy,  or by postage  prepaid by registered or certified  mail,
return receipt  requested,  or by other delivery service which provides evidence
of delivery, as follows:

      If to the Company or the Company, to:

                           Claire's Stores, Inc.
                           2400 W. Central Rd.
                           Hoffman Estates, IL 60192
                           Attention:  General Counsel

      with a copy (which shall not constitute notice) to:

                           Morgan Lewis & Bockius
                           101 Park Avenue
                           New York, NY  10178
                           Attention:  Gary Rothstein, Esq.
                           Telephone:  (212) 309-6360
                           Facsimile:  (212) 309-6001
                           E-mail:  grothstein@morganlewis.com

                                       19
<PAGE>

      If to the Executive, to:

                           James Conroy
                           2771 NE 57th Court
                           Fort Lauderdale, FL 33308

or to such other  address as one party may provide in writing to the other party
from time to time.

      6.14 No Conflicts.  The Executive  represents  and warrants to the Company
that his  acceptance of  employment  and the  performance  of his duties for the
Company  will not  conflict  with or result  in a  violation  or  breach  of, or
constitute a default under any contract,  agreement or understanding to which he
is or was a party or of which he is aware and that  there  are no  restrictions,
covenants,  agreements or  limitations on his right or ability to enter into and
perform the terms of this Agreement.

      6.15  Counterparts.  This  Agreement  may  be  executed  in  one  or  more
counterparts,  each of  which  shall  be  deemed  an  original  and all of which
together shall constitute one and the same instrument. Facsimile transmission of
any  signed  original   document  or  retransmission  of  any  signed  facsimile
transmission will be deemed the same as delivery of an original.  At the request
of any party,  the parties  will  confirm  facsimile  transmission  by signing a
duplicate original document.

      6.16 Captions.  Paragraph  headings are for convenience only and shall not
be considered a part of this Agreement.

      6.17 No Third Party Beneficiary  Rights.  Except as otherwise  provided in
this Agreement,  no entity shall have any right to enforce any provision of this
Agreement, even if indirectly benefited by it.

      6.18  Withholdings.  Any payments provided for hereunder shall be paid net
of any applicable  withholdings  required under Federal,  state or local law and
any additional withholdings to which Executive has agreed.

      6.19 No Mitigation.  In the event of any  termination  of the  Executive's
employment  hereunder,  the Executive shall be under no obligation to seek other
employment  or otherwise  mitigate  the  obligations  of the Company  under this
Agreement.

      IN  WITNESS  WHEREOF,  the  parties  have duly  executed  this  Agreement,
intending it as a document  under seal,  to be effective  for all purposes as of
the Effective Date.

                                       20
<PAGE>

                                         CLAIRE'S STORES, INC.

                                         By:  /s/ Eugene S. Kahn
                                              ----------------------------------
                                         Name: Eugene S. Kahn
                                         Title: Chief Executive Officer

                                         EXECUTIVE

                                         /s/ James Conroy
                                         ---------------------------------------
                                         Name:  James Conroy

                                       21
<PAGE>

                                                                       Exhibit A

                                  CLAIRE'S INC.
                              STOCK INCENTIVE PLAN

Section 1. Purpose

      The Plan authorizes the Committee to provide employees or directors of the
Company  or  its  subsidiaries,  who  are in a  position  to  contribute  to the
long-term success of the Company or its subsidiaries,  with Shares or Options to
acquire Shares in the Company.  The Company believes that this incentive program
will cause those  individuals  to increase  their interest in the welfare of the
Company and its  subsidiaries,  and aid in attracting,  retaining and motivating
individuals of outstanding ability.

Section 2. Definitions

      Capitalized  terms used herein  shall have the  meanings set forth in this
Section.

      (a)   "Affiliate" of any specified Person means any other Person,  whether
            now or hereafter  existing,  directly or indirectly  controlling  or
            controlled by, or under direct or indirect common control with, such
            specified Person.  For purposes hereof,  "control" or any other form
            thereof,  when used with  respect to any Person,  means the power to
            direct the  management  and  policies  of such  Person,  directly or
            indirectly,  whether through the ownership of voting securities,  by
            contract or otherwise;  and the terms "controlling" and "controlled"
            shall have meanings correlative to the foregoing.

      (b)   "Claire's  Investor"  shall mean any of Apollo  Investment  Fund VI,
            L.P., Apollo Investors Claire's A LLC, and Apollo Investors Claire's
            B LLC, and each of their successors or assigns.

      (c)   "Board" means the Board of Directors of the Company.

      (d)   "Cause"  shall have the meaning  ascribed  thereto in any  effective
            employment  agreement  between the Company or  subsidiaries  and the
            Grantee, or if no employment  agreement is in effect that contains a
            definition  of  cause,  then  Cause  shall  mean  a  finding  by the
            Committee  that the  Grantee  has (i)  committed a felony or a crime
            involving  moral   turpitude,   (ii)  committed  any  act  of  gross
            negligence  or  fraud,   (iii)  failed,   refused  or  neglected  to
            substantially perform his duties (other than by reason of a physical
            or mental  impairment) or to implement the reasonable  directives of
            the Company  (which,  if curable,  is not cured within 30 days after
            notice  thereof to the Grantee by the  Committee),  (iv)  materially
            violated any policy of the Company (which, if curable,  is not cured
            within  30  days  after  notice   thereof  to  the  Grantee  by  the
            Committee),  or (v) engaged in conduct that is materially  injurious
            to the Company, monetarily or otherwise.

                                       1
<PAGE>

      (e)   "Committee"  shall  mean the  Compensation  Committee  of the Board,
            unless a different committee is appointed by the Board to administer
            the Plan.

      (f)   "Company"  shall mean Claire's Inc., a corporation  organized  under
            the laws of the State of Delaware.

      (g)   "Disability"   shall  have  the  meaning  ascribed  thereto  in  any
            effective  employment agreement between the Company and the Grantee,
            or  if  no  employment  agreement  is  in  effect  that  contains  a
            definition of disability, then Disability shall mean any physical or
            mental  incapacitation  which  results in a Grantee's  inability  to
            perform his duties and responsibilities  hereunder, as determined by
            the  Committee  in its good  faith  judgment,  for a  period  of 180
            consecutive days.

      (h)   "Employee"  shall mean any individual that is providing  services to
            the Company or any of its subsidiaries as an employee or director.

      (i)   "Grant Letter" shall mean a letter,  certificate or other  agreement
            accepted by the Grantee, evidencing the grant of an Option hereunder
            and containing such terms and conditions,  not inconsistent with the
            express provisions of the Plan, as the Committee shall approve.

      (j)   "Grantee" shall mean an Employee granted an Option under the Plan.

      (k)   "ISO"  shall  mean any  Option or  portion  thereof  that  meets the
            requirements  of an incentive  stock option under Section 422 of the
            Internal  Revenue  Code  of  1986,  and  that is  designated  by the
            Committee to be an ISO.

      (l)   "Nonqualified  Option" shall mean any Option or portion thereof that
            is not an ISO.

      (m)   "Options"  shall  refer to options  issued  under and subject to the
            Plan.

      (n)   "Person" means any  individual,  corporation,  partnership,  limited
            liability  company,  joint  venture,  association,  business  trust,
            joint-stock company,  estate,  trust,  unincorporated  organization,
            government or other agency or political  subdivision  thereof or any
            other legal or commercial entity.

      (o)   "Plan" shall mean this Stock  Incentive Plan as set forth herein and
            as amended from time to time.

      (p)   "Qualified  IPO" means a sale by the Company of Shares in an initial
            underwritten (firm commitment) public offering  registered under the
            Securities  Act of 1933,  with gross  proceeds to the Company of not
            less than $300 million,  resulting in the listing of the Shares on a
            nationally  recognized stock exchange,  including without limitation
            the Nasdaq Stock Market.

                                       2
<PAGE>

      (q)   "Share" shall mean a share of common stock of the Company, or of any
            class of  security,  if any,  into  which such  common  stock may be
            converted or for which such common stock may be exchanged.

      (r)   "Specified Conduct" means a Grantee's (i) unauthorized disclosure of
            confidential  information relating to the Company or its Affiliates,
            (ii)  engaging,  directly or  indirectly,  as an employee,  partner,
            consultant,  director,  stockholder, owner, or agent in any business
            that is competitive with the businesses conducted by the Company and
            its Affiliates at the time of  termination of Grantee's  employment,
            (iii)  soliciting or inducing,  directly or indirectly,  any former,
            present  or  prospective  customer  or client of the  Company or its
            Affiliates  to purchase  any  services  or  products  offered by the
            Company or its Affiliates  from any Person other than the Company or
            its  Affiliates,  or  (iv)  hiring,  directly  or  indirectly,   any
            individual  who was an  employee  of the  Company or its  Affiliates
            within  the six  month  period  prior to  termination  of  Grantee's
            employment, or soliciting or inducing,  directly or indirectly,  any
            such  individual to terminate his or her employment with the Company
            or its Affiliates.

Section 3. Shares Available under the Plan

      Subject to the  provisions  of Section 7, the total  number of Shares that
may be issued under the Plan shall not exceed 6,160,300.  If, prior to exercise,
any awards are forfeited,  lapse or terminate for any reason without issuance of
Shares,  the Shares  covered  thereby may again be available  for Option  grants
under the Plan.

Section 4. Administration of the Plan

      (a)  Authority of the  Committee.  The Plan shall be  administered  by the
Committee.  The  Committee  shall  have  full and  final  authority  to take the
following actions, in each case subject to and consistent with the provisions of
the Plan:

            (i) to  select  the  Employees  to whom  Options  or  Shares  may be
      granted;

            (ii) to  determine  the  number of Shares  awarded  or subject to an
      Option;

            (iii) to determine the terms and  conditions of any Shares or Option
      granted  under  the  Plan,  including  the  purchase  or  exercise  price,
      conditions relating to exercise, and termination of the right to exercise;

            (iv)  to  determine  whether  any  Option  shall  be  an  ISO  or  a
      Nonqualified Option;

            (v) to  determine  the  restrictions  or  conditions  related to the
      delivery, holding and disposition of Shares;

            (vi) to prescribe the form of each Grant Letter;

                                       3
<PAGE>

            (vii) to adopt,  amend,  suspend,  waive and rescind  such rules and
      regulations and appoint such agents as the Committee may deem necessary or
      advisable to administer the Plan;

            (viii) to correct any defect or supply any omission or reconcile any
      inconsistency  in the Plan and to construe and  interpret the Plan and any
      Option or award of Shares, or Grant Letter or other instrument  hereunder;
      and

            (ix)  to make  all  other  decisions  and  determinations  as may be
      required  under  the  terms  of the  Plan  or as the  Committee  may  deem
      necessary or advisable for the administration of the Plan.

      (b) Manner of Exercise of Committee Authority. Any action of the Committee
with respect to the Plan shall be final,  conclusive and binding on all Persons,
including the Company,  its  Affiliates,  Grantees,  or any Person  claiming any
rights  under the Plan from or  through  any  Grantee,  except to the extent the
Committee may subsequently  modify,  or take further action not consistent with,
its prior action.  If not specified in the Plan, the time at which the Committee
must or may make any determination shall be determined by the Committee, and any
such  determination  may  thereafter be modified by the  Committee.  The express
grant of any specific  power to the  Committee,  and the taking of any action by
the Committee,  shall not be construed as limiting any power or authority of the
Committee.  The Committee may delegate to officers or managers of the Company or
any  Affiliate  of the  Company  the  authority,  subject  to such  terms as the
Committee  shall  determine,  to perform  such  functions as the  Committee  may
determine, to the extent permitted under applicable law.

      (c)  Limitation  of  Liability.  Each  member  of the  Committee  shall be
entitled  to, in good  faith,  rely or act upon any report or other  information
furnished  to him by any officer or other  employee of the Company or any of its
Affiliates,  the  Company's  independent  certified  public  accountants  or any
executive compensation consultant,  legal counsel or other professional retained
by the  Company  to assist in the  administration  of the Plan.  To the  fullest
extent permitted by applicable law, no member of the Committee,  nor any officer
or  employee  of the  Company  acting  on  behalf  of the  Committee,  shall  be
personally liable for any action,  determination or interpretation taken or made
in good faith with respect to the Plan, and all members of the Committee and any
officer or  employee of the Company  acting on its behalf  shall,  to the extent
permitted by law, be fully indemnified and protected by the Company with respect
to any such action, determination or interpretation.

Section 5. Option Termination.

      Unless  otherwise  determined  by the  Committee  and set forth in a Grant
Letter, Options shall terminate on the earliest of:

            (a) the 91st day  following  the date the  Grantee  ceases  to be an
      Employee for any reason  (except if such  cessation is on account of death
      or Disability, the 181st day following such cessation); provided, however,
      that (i) in all cases the portion of any Option that did not vest prior to
      or upon the date of termination of employment or

                                       4
<PAGE>

      engagement  for  any  reason  shall   terminate   immediately   upon  such
      termination, and (ii) if such termination is for Cause, the vested portion
      shall terminate as well;

            (b) the seventh anniversary of the date of grant as set forth in the
      Grant Letter; and

            (c) cancellation,  termination or expiration of the Options pursuant
      to action taken by the Committee in accordance with Section 7.

Section 6. Exercise of Options

      (a) Only the vested  portion of any  Option  may be  exercised.  A Grantee
shall  exercise an Option by delivery of written  notice to the Company  setting
forth the number of Shares with respect to which the Option is to be  exercised,
together with cash, a certified  check or bank draft payable to the order of the
Company,  in amount equal to the sum of the  exercise  price for such Shares and
any  withholding tax obligation  arising in connection  with such exercise.  The
Committee may, in its sole discretion,  permit other forms of payment, including
notes or  other  contractual  obligations  of a  Grantee  to make  payment  on a
deferred basis.

      (b) Before the  Company  issues  any Shares to a Grantee  pursuant  to the
exercise  of an Option,  the  Company  shall have the right to require  that the
Grantee  make  such  provision,  or  furnish  the  Company  such  authorization,
necessary  or  desirable  so that the Company may satisfy its  obligation  under
applicable  tax laws to withhold  for income or other taxes due upon or incident
to such exercise. The Committee, may, in its discretion, permit such withholding
obligation  to be  satisfied  through  the  withholding  of  Shares  that  would
otherwise be delivered upon exercise of the Option.

      (c) As a  condition  to the grant of an Option or  delivery  of any Shares
upon exercise of an Option, the Company shall have the right to require that the
Grantee become party to any stockholders agreement then in effect.

Section 7. Adjustment Upon Changes in Capitalization

      In  the  event   any   recapitalization,   forward   or   reverse   split,
reorganization,   merger,  consolidation,   spin-off,  combination,  repurchase,
exchange or issuance of Shares or other securities,  any stock dividend or other
special and nonrecurring  dividend or distribution (whether in the form of cash,
securities  or other  property),  liquidation,  dissolution,  or  other  similar
transactions or events,  affects the Shares,  then the Committee shall make such
equitable  adjustment as it determines in its discretion is appropriate in order
to prevent  dilution or  enlargement  of the rights of Grantees  under the Plan,
including adjustment in (i) the number and kind of Shares deemed to be available
thereafter  for grants of Options or Shares under Section 3, (ii) the number and
kind of Shares that may be delivered or  deliverable  in respect of  outstanding
Options, and (iii) the exercise price. In addition,  the Committee is authorized
to make  such  adjustments  as it  shall in its sole  discretion  determine  are
appropriate  in the terms and  conditions  of,  and the  criteria  included  in,
Options and Shares (including,  without  limitation,  cancellation of Options in
exchange for the  in-the-money  value,  if any, of the vested  portion  thereof,
cancellation of unvested and/or  out-of-the-money  Options for no consideration,
substitution  of

                                       5
<PAGE>

Options using  securities of a successor or other  entity,  acceleration  of the
time that Options expire, or adjustment of performance  targets or the manner in
which they are  calculated)  in recognition  of unusual or  nonrecurring  events
(including,  without  limitation,  an event described in the preceding sentence)
affecting  the  Company,  the Claire's  Investors or any other  Affiliate of the
Company or the financial  statements of the Company,  the Claire's  Investors or
any  Affiliate of the  Company,  or in response to changes in  applicable  laws,
regulations or accounting principles.

Section 8. Restrictions/Rights on Shares.

      (a)  Restrictions  on  Issuing  Shares.  No  Shares  shall  be  issued  or
transferred to an Employee under the Plan unless and until all applicable  legal
requirements  have been complied with to the satisfaction of the Committee.  The
Committee  shall have the right to condition  the  acquisition  of Shares on the
Grantee's  undertaking  in  writing  to  comply  with such  restrictions  on any
subsequent  disposition  of the Shares issued or  transferred  thereunder as the
Committee  shall deem necessary or advisable as a result of any applicable  law,
regulation, official interpretation thereof, or any underwriting agreement.

      (b) ISO Notice.  A Grantee shall notify the Company of any  disposition of
Shares  acquired upon exercise of an ISO if such  disposition  occurs within one
year of the date of such  exercise  or within  two years of the date of grant of
such ISO.  The  Company  may impose  such  procedures  as it  determines  may be
necessary to ensure that such notification is made.

      (c) Transfer Restrictions.  Except for transfers made pursuant to Sections
8(d) or (e) below,  Shares  issued to a Grantee  pursuant to the Plan may not be
sold, pledged,  encumbered or otherwise  transferred,  other than by the laws of
decent and  distribution  (but such Shares shall in any event remain  subject to
the terms of the Plan and Grant Certificate).

      (d) Repurchase Right.  Unless otherwise  determined in a Grant Letter, the
Company shall have the right (but not the  obligation)  to repurchase any or all
of the Shares acquired upon exercise of the Options upon a Grantee's  ceasing to
be an Employee for any reason.  Such right shall be  exercisable  by the Company
during the one year period  following the later of the date of such cessation or
the date the Option is exercised.  The price per Share to be paid by the Company
should it choose to exercise  its  repurchase  right shall equal the fair market
value per share, as determined by the Board in good faith; provided, however, if
the Shares are to be repurchased following a termination for Cause, or if, prior
to such repurchase the Grantee engages in Specified Conduct,  then the price per
Share to be paid by the Company shall not exceed the price per Share paid by the
Grantee,  less any  distributions  paid in respect of such Share.  The price per
Share to be paid by the  Company  should it choose to  exercise  its  repurchase
right shall be paid in cash or by plain check against  delivery of  certificates
representing the repurchased Shares; provided that, if such payment would result
in a default or breach on the part of the  Company or any  subsidiary  under any
loan or other agreement, then payment shall be deferred until the first business
day that it may occur  without any such default or breach  existing or resulting
(and  such  deferral  shall  be  credited  with a  market  rate of  interest  as
determined by the Committee),  provided,  further that if such payment cannot be
made within two years of the date of such  repurchase,  the Grantee may elect to
cancel such  repurchase  and

                                       6
<PAGE>

receive a return of the repurchased  Shares.  The Company may offset against the
payment of the  repurchase  price any amounts owed by the Grantee to the Company
or any Affiliate of the Company.  Should the Company  choose not to exercise its
repurchase  right, or is otherwise  prohibited by law or contract from doing so,
any Claire's  Investor or its controlling  Affiliates may exercise such right as
if it were the Company.

      (e) Drag-Along Right. If one or more Claire's  Investors notifies a holder
of  Shares  issued  under  the  Plan  that it or  they  desires  to sell  Shares
representing  at least a majority of the  outstanding  Shares of the Company and
specifies the terms and conditions of such proposed  transfer,  then such holder
shall take all  necessary  and desirable  actions  reasonably  requested by such
Claire's  Investors in connection with the consummation of such sale, and within
ten (10)  business  days of the receipt of such notice (or such longer period of
time as such  Claire's  Investors  shall  designate  in such notice) such holder
shall  cause a pro  rata  number  of his  Shares  to be  sold to the  designated
purchaser on the same terms and conditions for the same per share  consideration
and at the same time as the Shares  being sold by such  Claire's  Investors.  In
furtherance,  and not in limitation, of the foregoing, in connection with such a
sale, such holder will, (i) consent to and raise no objections  against the sale
or the process  pursuant to which it was  arranged,  (ii) waive any  dissenter's
rights and other similar rights and (iii) execute all documents  containing such
terms and conditions as those executed by such Claire's Investors as directed by
such Claire's Investors.

      (f) Tag-Along  Right.  If one or more Claire's  Investors  desires to sell
Shares representing at least a majority of the outstanding Shares of the Company
(disregarding  any sale to Affiliates of such  Claire's  Investor),  the Company
shall  notify a holder of Shares in  writing.  After  such  notice,  a holder of
Shares issued under the Plan may, but is not  obligated  to, by written  notice,
request that such Claire's Investor cause such designated  purchaser to purchase
on the same terms and conditions as are  applicable to such Claire's  Investor's
Shares,  the number of such holder's Shares to be sold, which as a percentage of
such Holder's Shares shall not exceed the percentage of such Claire's Investor's
Shares to be sold.  The  Company  shall cause such  Claire's  Investor to agree,
within ten (10)  business  days of the  receipt of such  notice (or such  longer
period of time as such  Claire's  Investor  shall  designate  in such notice) to
cause such holder's  Shares to be purchased by the  designated  purchaser on the
same terms and conditions for the same per share  consideration  and at the same
time as the sale of the Claire's  Investor's Shares. In furtherance,  and not in
limitation,  of the foregoing, in connection with such a sale, such holder will,
(i) consent to and raise no objections  against the sale or the process pursuant
to which it was arranged,  (ii) waive any  dissenter's  rights and other similar
rights and (iii) execute all documents  containing  such terms and conditions as
those executed by such Claire's Investor as directed by such Claire's Investor.

      (g) Voting. Each holder of Shares issued under the Plan shall be deemed to
have  irrevocably  appointed  Apollo  Management  VI,  L.P. on behalf of certain
affiliated co-investment partnerships (with full power of substitution), as such
holder's proxy and  attorney-in-fact  (in such capacity,  the "Proxy Holder") to
vote and give or  withhold  consent,  with  respect to all  Shares  held by such
stockholder at any time, for all matters subject to the vote of such holder from
time to time in such manner as the Proxy Holder shall  determine in its sole and
absolute  discretion,  whether at any  meeting  (whether  annual or special  and
whether or not an  adjourned  meeting) of

                                       7
<PAGE>

the Company or by written consent or otherwise, giving and granting to the Proxy
Holder all powers such holder  would  possess if  personally  present and hereby
ratifying and confirming all that the Proxy Holder shall lawfully do or cause to
be done by virtue  hereof.  The Proxy Holder shall not have any liability to any
holder of  Shares as a result of any  action  taken or  failure  to take  action
pursuant to the foregoing  proxy except for any action or failure to take action
not taken or omitted in good faith or which involves intentional misconduct or a
knowing  violation of applicable law. The Company  acknowledges  the validity of
the foregoing irrevocable proxy, and agrees to recognize the Proxy Holder as the
sole attorney and proxy for each such holder of Shares at all times.

      (g) Qualified  IPO. The rights and  restrictions  contained in subsections
(d), (e) and (f) above shall lapse upon a Qualified IPO, and the restrictions in
paragraph (c) shall lapse on the first anniversary of a Qualified IPO; provided,
however,  that unless otherwise determined by the Committee,  each Grantee shall
enter into such  standstill  agreements  and related  agreements as the managing
underwriters of such Qualified IPO may request.

      (h) Certificates for Shares. Shares issued under the Plan may be evidenced
in such manner as the Committee shall  determine.  If certificates  representing
Shares are registered in the name of a Grantee,  such  certificates  may bear an
appropriate  legend  referring  to  the  terms,  conditions,   and  restrictions
applicable to such Shares, and the Company may retain physical possession of the
certificates,  in which case the Grantee  shall be required to have  delivered a
power of transfer to the Company, endorsed in blank, relating to the Shares.

      (i) Third Party  Beneficiaries  Rights.  The Claire's  Investors and their
Affiliates shall be third party beneficiaries under subsections (d) and (e), and
Apollo  Management VI, L.P. shall be a third party  beneficiary under subsection
(g), and they each shall be entitled to enforce  their rights  thereunder  as to
any Grantee.

Section 9. General Provisions

      (a) Grant Letter.  Each award under the Plan shall be evidenced by a Grant
Letter.  The terms and  provisions of such Grant Letters may vary among Grantees
and among different awards granted to the same Grantee.

      (b) No Right to  Employment.  The grant of an award  under the Plan in any
year shall not give the Grantee any right to similar grants in future years, any
right to continue such Grantee's employment relationship with the Company or its
Affiliates,  or, with respect to an Option,  until the Option is  exercised  and
Shares are issued,  any rights as a  stockholder  of the  Company.  All Grantees
shall remain  subject to discharge to the same extent as if the Plan were not in
effect. For purposes of the Plan, a Grantee shall cease to be an Employee upon a
sale of any  subsidiary  of the Company that  employs or engages  such  Grantee,
unless the Grantee shall otherwise  continue to provide  services to the Company
or another subsidiary of the Company as an employee or director.

      (c) No Funding.  No Grantee,  and no beneficiary or other Persons claiming
under or through the Grantee,  shall have any right, title or interest by reason
of any  award  under  the  Plan  to any  particular  assets  of the  Company  or
Affiliates of the Company,  or any Shares allocated or

                                       8
<PAGE>

reserved  for the  purposes  of the Plan or subject to any Option  except as set
forth  herein.  The Company  shall not be required to establish any fund or make
any  other  segregation  of  assets  to  assure  satisfaction  of the  Company's
obligations under the Plan.

      (d) No Transfers. No Option may be sold, transferred, assigned, pledged or
otherwise  encumbered,  except by will or the laws of descent and  distribution,
and an Option shall be  exercisable  during the  Grantee's  lifetime only by the
Grantee.  Upon a  Grantee's  death,  the  estate  or other  beneficiary  of such
deceased  Grantee  shall be subject to all the terms and  conditions of the Plan
and Grant Letter,  including the provisions  relating to the  termination of the
right to exercise an Option.

      (e)  Governing  Law;  Jurisdiction.  The  Plan  shall be  governed  by and
construed in accordance  with the laws of the State of Illinois,  without giving
effect to any choice of law or conflict of law provision or rule (whether of the
State of Illinois or any other jurisdiction) that would cause the application of
the laws of any  jurisdiction  other than the State of  Illinois,  except to the
extent  that the  Delaware  General  Corporation  Law applies as a result of the
Company being incorporated in the State of Delaware,  in which case the Delaware
General Corporation Law shall apply. Each Grantee, and each beneficiary or other
Person claiming under or through the Grantee by accepting the grant of an Option
consents to the  exclusive  jurisdiction  of any state or federal  court located
within the State of Illinois, agrees that all actions or proceedings relating to
the Plan shall be  litigated  in such  courts,  waives any  defense of forum non
conveniens,  and  agrees  to be bound by any final  and  nonappealable  judgment
rendered  thereby in  connection  with the Plan.  To the extent the Grantee is a
party to an  employment  agreement  with the Company or any of its  subsidiaries
that provides for binding arbitration of employment disputes,  then any disputes
between the Company and such Grantee  arising under the Plan shall be arbitrated
in accordance with the procedures set forth in such employment agreement.

Section 10. Amendment or Termination

      In addition to its authority  elsewhere in the Plan, the Committee may, at
any time,  amend or terminate the Plan or any Grant Letter;  provided,  however,
that, no such action shall adversely  affect the rights of Grantees with respect
to Options or other  awards  previously  granted  hereunder  or under such Grant
Letter.

                                       9
<PAGE>

                                                                       Exhibit B

                                  CLAIRE'S INC.
                               2400 W. Central Rd.
                            Hoffman Estates, IL 60192

December 13, 2007

James Conroy
2771 NE 57th Court
Fort Lauderdale, FL 33308

Re:  Grant of Stock Options

Dear James:

We are  pleased to inform  you that you have been  granted  options to  purchase
437,500(1)  shares of common stock of Claire's Inc. (the "Company"),  the parent
company of Claire's  Stores,  Inc. As further  described below, the options have
varying  features  relating to vesting and are denominated as a "Time Option," a
"Target Performance  Option," and a "Stretch  Performance Option." These options
are collectively referred to as the "Options," and the Target Performance Option
and  the  Stretch  Performance  Option  are  collectively  referred  to  as  the
"Performance  Options."  The Time Option and the  Performance  Options have been
granted  pursuant to the Company's Stock Incentive Plan (the "Plan"),  a copy of
which is  attached  as  Exhibit A, and the  Options  and  underlying  Shares are
subject  in all  respects  to the  provisions  of the Plan  (including,  without
limitation,  Section 8), except as  specifically  modified  hereby.  Capitalized
terms not  otherwise  defined in the text or in  paragraph  7 are defined in the
Plan.

1.    Time Option: The key terms of the Time Option are as follows:

      (a)   Number of Shares. 175,000

      (b)   Exercise Price per Share. $10.00

      (c)   Vesting.  The Time Option will vest and become  exercisable  in four
            equal annual installments on December 13 of each of 2008, 2009, 2010
            and 2011, provided that the Time Option will become fully vested and
            exercisable immediately prior to a Change of Control.

2.    Target Performance  Option: The key terms of the Target Performance Option
      are as follows:

      (a)   Number of Shares. 175,000

--------
(1) total of 1(a), 2(a), and 3(a)

                                       1
<PAGE>

      (b)   Exercise Price per Share. $10.00

      (c)   Vesting.  If on any Measurement  Date, the Value Per Share equals or
            exceeds the Target Stock Price (the "Target Performance Goal"), then
            (1) if such  Measurement  Date is other  than the date of a Claire's
            Investors  Liquidity Event, the Target  Performance Option will vest
            and become  exercisable in two equal annual  installments on each of
            the first two anniversaries of such Measurement Date,  provided that
            if a Change of Control occurs after any such  Measurement  Date, any
            unvested  installment shall become fully vested immediately prior to
            the Change of Control,  and (2) if such Measurement Date is the date
            of a Claire's  Investors  Liquidity  Event,  the Target  Performance
            Option will become fully vested and immediately  exercisable at such
            time.

3.    Stretch  Performance  Option:  The key  terms of the  Stretch  Performance
      Option are as follows:

      (a)   Number of Shares. 87,500

      (b)   Exercise Price per Share. $10.00

      (c)   Vesting.  If on any Measurement  Date, the Value Per Share equals or
            exceeds the Stretch  Target  Stock Price (the  "Stretch  Performance
            Goal"),  then (1) if such Measurement Date is other than the date of
            a Claire's Investors Liquidity Event, the Stretch Performance Option
            will vest and become exercisable in two equal annual installments on
            each  of the  first  two  anniversaries  of such  Measurement  Date,
            provided  that  if  a  Change  of  Control  occurs  after  any  such
            Measurement Date, any unvested installment shall become fully vested
            immediately  prior  to the  Change  of  Control,  and  (2)  if  such
            Measurement  Date is the  date  of a  Claire's  Investors  Liquidity
            Event, the Stretch  Performance  Option will become fully vested and
            immediately exercisable at such time.

4.    Termination of the Options.  The Options shall  terminate  pursuant to the
      provisions  of Section 5 of the Plan,  provided that  Performance  Options
      shall terminate no later than the date of a Claire's  Investors  Liquidity
      Event to the extent the Target Performance Goal or the Stretch Performance
      Goal, as  applicable,  is not achieved at such time, or was not previously
      achieved.

5.    Representations.  By accepting this award of Options, you represent to the
      following,  and  understand  that the Company  would not have granted this
      award to you but for your representations and acknowledgements below.

      (a)   Shares Unregistered;  Investor Knowledge.  You acknowledge and agree
            that (i)  neither  the grant of the Options nor the offer to acquire
            Shares upon exercise  thereof has been registered  under  applicable
            securities laws; (ii) there is no established  market for the Shares
            and it is not anticipated that there will be any such market for the
            Shares in the  foreseeable  future;  and (iii)  your  knowledge  and
            experience in financial  and business  matters are such that you are
            capable of evaluating  the merits and risks of any investment in the
            Shares.

                                       2
<PAGE>

      (b)   Acknowledgement. You acknowledge and agree that: (i) this award is a
            one-time  benefit,  which does not create any  contractual  or other
            right to receive future awards, or benefits in lieu of awards;  (ii)
            all   determinations   with  respect  to  any  such  future  awards,
            including,  but not  limited  to,  the times  when  awards  shall be
            granted, the number of shares subject to each award, the exercise or
            purchase  price,  and the time or times when each award  shall vest,
            will be at the sole  discretion of the Company;  (iii) this award is
            not  part  of  normal  or  expected  compensation  for  purposes  of
            calculating any severance,  resignation,  redundancy, end of service
            payments,  bonuses,   long-service  awards,  pension  or  retirement
            benefits  or similar  payments;  and (iv) THAT THIS AWARD  SHALL NOT
            CREATE  A RIGHT  TO  FURTHER  EMPLOYMENT  WITH  THE  COMPANY  OR ITS
            AFFILIATES  AND SHALL NOT INTERFERE  WITH THE ABILITY OF THE COMPANY
            OR ANY OF ITS AFFILIATES TO TERMINATE YOUR  EMPLOYMENT  RELATIONSHIP
            AT ANY TIME, AND UPON  TERMINATION OF YOUR EMPLOYMENT FOR ANY REASON
            WHATSOEVER,  ANY RIGHTS IN RESPECT OF THE OPTIONS OR THE  UNDERLYING
            SHARES TO WHICH YOU WOULD HAVE BEEN ENTITLED HAD YOUR EMPLOYMENT NOT
            TERMINATED SHALL LAPSE UPON THE DATE OF TERMINATION UNLESS EXPRESSLY
            STATED  OTHERWISE  HEREIN OR THE PLAN, AND YOU SHALL NOT BE ENTITLED
            TO ANY  COMPENSATION IN RESPECT OF LOSS OF ALL OR ANY OF THE OPTIONS
            OR UNDERLYING SHARES.

      (c)   Employee  Data  Privacy.  You  consent  to the  collection,  use and
            transfer of personal data as described in this  paragraph  5(c). You
            understand that the Company and its Affiliates hold certain personal
            information about you including, but not limited to, your name, home
            address and telephone number, date of birth, social security number,
            salary, nationality,  job title, common shares or directorships held
            in the Company,  details of all other  entitlement  to common shares
            awarded,  cancelled,  exercised,  vested, unvested or outstanding in
            your favor, for the purpose of managing and administering this award
            ("Data").  You  further  understand  that  the  Company  and/or  its
            Affiliates will transfer Data among  themselves as necessary for the
            purposes of  implementation,  administration  and management of this
            award,  and that the Company  and/or any of its  Affiliates may each
            further transfer Data to any third parties  assisting the Company in
            such  implementation,  administration and management.  You authorize
            them  to  receive,   possess,  use,  retain  and  transfer  Data  in
            electronic  or  other  form,  for  the  purposes  of   implementing,
            administering  and  managing  this award,  including  any  requisite
            transfer of such Data as may be required for the  administration  of
            this  award  and/or the  subsequent  holding  common  shares on your
            behalf  to a broker  or  other  third  party  with  whom the  shares
            acquired on exercise may be deposited. You understand that he or she
            may, at any time, view the Data, require any necessary amendments to
            it or withdraw the consent herein in writing by contacting the local
            human resources representative.

      (d)   Confidentiality. You agree not to disclose or discuss in any way the
            terms of this award to or with  anyone  other  than  members of your
            immediate  family,  or your

                                       3
<PAGE>

            personal  counsel or  financial  advisors  (and you will advise such
            persons of the confidential nature of this offer).

6.    Vesting  upon  Death/Disability.  As to the  Time  Option,  as well as the
      Performance   Options  where  the  Target   Performance  Goal  or  Stretch
      Performance Goal, as applicable,  had previously been achieved,  a portion
      of each such Option will become vested and exercisable upon termination of
      your  employment  with the  Company and its  Affiliates  by reason of your
      death or Disability, such portion to equal the portion of each such Option
      that  would  have  vested  on the  next  scheduled  vesting  date had your
      employment not so terminated,  multiplied by a fraction,  the numerator of
      which is the number of days that elapsed from the most recent vesting date
      to the date of such termination, and the denominator of which is 365.

7.    Definitions. For purposes of this letter:

      (a)   "Apollo" means Apollo  Management VI, L.P. and its Affiliates or any
            entity controlled thereby or any of the partners thereof.

      (b)   "Board"  means  the  board  of  directors  of  the  Company,  or any
            committee thereof duly authorized to act on behalf of the Board.

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

      (d)   "Change of Control" means:

            (i)   any event occurs the result of which is that any  "Person," as
                  such term is used in Sections  13(d) and 14(d) of the Exchange
                  Act, other than one or more Permitted Holders or their Related
                  Parties,  becomes the  beneficial  owner,  as defined in Rules
                  l3d-3 and l3d-5 under the  Exchange  Act (except that a Person
                  shall be deemed to have  "beneficial  ownership" of all shares
                  that any such Person has the right to acquire within one year)
                  directly or  indirectly,  of more than 50% of the Voting Stock
                  of the Company or any successor  company  thereto,  including,
                  without  limitation,  through  a merger  or  consolidation  or
                  purchase of Voting Stock of the Company; provided that none of
                  the Permitted  Holders or their Related Parties have the right
                  or ability by voting power,  contract or otherwise to elect or
                  designate  for  election  a majority  of the  Board;  provided
                  further  that the  transfer of 100% of the Voting Stock of the
                  Company to a Person that has an ownership  structure identical
                  to that of the Company prior to such  transfer,  such that the
                  Company  becomes a wholly  owned  Subsidiary  of such  Person,
                  shall not be treated as a Change of Control;

            (ii)  after an  initial  public  offering  of  Capital  Stock of the
                  Company  during  any  period  of two  (2)  consecutive  years,
                  individuals  who at the  beginning of such period  constituted
                  the Board,  together with any new directors  whose

                                       4
<PAGE>

                  election by such Board or whose nomination for election by the
                  stockholders  of the  Company  was  approved  by a  vote  of a
                  majority of the  directors of the Company then still in office
                  who were either  directors at the  beginning of such period or
                  whose  election or nomination  for election was  previously so
                  approved, cease for any reason to constitute a majority of the
                  Board then in office;

            (iii) the sale, lease, transfer, conveyance or other disposition, in
                  one or a series of related transactions other than a merger or
                  consolidation,  of all or  substantially  all of the assets of
                  the  Company  and its  Subsidiaries  taken  as a whole  to any
                  Person or group of  related  Persons  other  than a  Permitted
                  Holder or a Related Party of a Permitted Holder; or

            (iv)  the  adoption  of  a  plan  relating  to  the  liquidation  or
                  dissolution of the Company.

      (e)   "Claire's   Investors   Liquidity   Event"  means  any   transaction
            (including,  without  limitation,  a stock sale,  redemption  or buy
            back,  merger,  consolidation  or otherwise)  immediately  following
            which all of the Shares  held by all  Claire's  Investors  have been
            exchanged for or converted into consideration,  all or substantially
            all of which consists of cash or readily marketable  securities that
            the Claire's Investors can immediately resell for cash at prevailing
            quoted prices without legal, contractual or market restrictions.

      (f)   "Exchange  Act"  means  the  Securities  Exchange  Act of  1934,  as
            amended.

      (g)   "Investor  Sale"  means of sale of Shares by a Claire's  Investor in
            connection with or following a Qualified Public Offering.

      (h)   "Investor  Percentage" means the percentage  derived by dividing (i)
            the number of Shares of Common Stock held by all Claire's  Investors
            immediately  following  the  applicable  Investor  Sale, by (ii) the
            number  of  Shares  held by all  Claire's  Investors  as of the date
            hereof (subject to adjustment for stock splits etc.).

      (i)   "Fully Diluted Shares" means, on any Measurement Date, the number of
            Shares  outstanding,  plus  the  number  of  Shares  subject  to all
            outstanding options,  warrants and rights to acquire Shares, whether
            or not exercisable.

      (j)   "Measurement  Date" means (1) prior to a Qualified IPO, the last day
            of any fiscal quarter, starting with the last day of the eighth full
            fiscal  quarter after May 29, 2007,  (2) following a Qualified  IPO,
            each trading day,  starting  with the 90th trading day following the
            Qualified  IPO,  or (3) the date of a Claire's  Investors  Liquidity
            Event, whether before or after a Qualified IPO.

      (k)   "Net  Equity  Value"  means  (1)  8.5  multiplied  by the  Company's
            consolidated earnings,  before interest,  income taxes, depreciation
            and amortization ("EBITDA") for the four fiscal quarters ending upon
            a Measurement Date, plus (2) the sum of cash, cash equivalents,  and
            the aggregate exercise price of all

                                       5
<PAGE>

            outstanding  options or warrants to purchase Shares,  whether or not
            exercisable,  in each case as of the Measurement  Date, less (3) all
            debt and capital  leases  outstanding  as of the  Measurement  Date.
            EBITDA,  cash and debt shall be determined by the Committee based on
            the Company's financial statements for such period,  subject to such
            adjustments to reflect unusual, nonrecurring or extraordinary events
            as the Committee shall deem equitable and appropriate.

      (l)   "Permitted Holder" means Apollo.

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

      (n)   "Related Party" means:

            (i)   any controlling  stockholder,  50% (or more) owned Subsidiary,
                  or immediate  family member (in the case of an  individual) of
                  any Permitted Holder; or

            (ii)  any trust, corporation, partnership, limited liability company
                  or other entity,  the beneficiaries,  stockholders,  partners,
                  members, owners or Persons beneficially holding an 50% or more
                  controlling  interest  of  which  consist  of any  one or more
                  Permitted Holders and/or such other Persons referred to in the
                  immediately preceding clause (1).

      (o)   "Stretch  Target  Stock  Price"  means  $10.00,  accumulated  at  an
            effective  annual rate of 32% from May 29,  2007 to the  Measurement
            Date,  provided that the Committee shall make such adjustment to the
            Stretch Target Stock Price as it reasonably  determines is equitable
            and  appropriate  to reflect  changes to the  outstanding  Shares or
            capital  structure  of  the  Company,  including  contributions  and
            distributions of capital.

      (p)   "Subsidiary" means, with respect to any specified Person:

            (i)   any corporation, association or other business entity of which
                  more than 50% of the total  voting  power of shares of Capital
                  Stock  entitled  (without  regard  to  the  occurrence  of any
                  contingency and after giving effect to any voting agreement or
                  stockholders'  agreement  that  effectively  transfers  voting
                  power)  to vote in the  election  of  directors,  managers  or
                  trustees of the  corporation,  association  or other  business
                  entity  is at  the  time  owned  or  controlled,  directly  or
                  indirectly,  by  that  Person  or one  or  more  of the  other
                  Subsidiaries of that Person (or a combination thereof); and

            (ii)  any  partnership  (a) the sole general partner or the managing
                  general  partner of which is such  Person or a  Subsidiary  of
                  such Person or (b) the

                                       6
<PAGE>

                  only general  partners of which are that Person or one or more
                  Subsidiaries of that Person (or any combination thereof).

      (q)   "Target  Stock  Price"  means  $10.00,  accumulated  at an effective
            annual  rate of 22.5%  from May 29,  2007 to the  Measurement  Date,
            provided that the Committee shall make such adjustment to the Target
            Stock Price as it determines is equitable and appropriate to reflect
            changes  to the  outstanding  Shares  or  capital  structure  of the
            Company, including contributions and distributions of capital.

      (r)   "Value Per Share" means (1) prior to a Qualified IPO, the Net Equity
            Value divided by the Fully Diluted Shares, (2) following a Qualified
            IPO,  the  average  closing  price of a Share  for the  period of 90
            consecutive trading days ending on the Measurement Date, or (3) upon
            a Claire's  Investors  Liquidity Event, the price per Share realized
            by the Claire's Investors.

      (s)   "Voting  Stock" of an entity  means all classes of Capital  Stock of
            such entity then  outstanding  and normally  entitled to vote in the
            election  of  directors  or all  interests  in such  entity with the
            ability to control the management or actions of such entity.

8.    Federal  Taxes:  The Options  granted to you are treated as  "nonqualified
      options" for federal tax purposes, which means that when you exercise, the
      excess of the value of the Shares  issued on  exercise  over the  exercise
      price  paid  for the  Shares  is  income  to you,  subject  to  wage-based
      withholding  and  reporting.  When  you  sell  the  Shares  acquired  upon
      exercise,  the excess (or  shortfall)  between the amount you receive upon
      the sale and the value of the shares at the time of exercise is treated as
      capital gain (or loss).  State and local taxes may also apply.  You should
      consult your personal tax advisor for more information  concerning the tax
      treatment of your Options.  The Company is not making any  representations
      concerning the tax treatment of the Options,  and is not  responsible  for
      any  taxes,  interest  or  penalties  you  incur in  connection  with your
      Options,  even  if  the  taxing  authorities  successfully  challenge  any
      position taken by the Company in respect of wage withholding and reporting
      or otherwise.

We are  excited to give you this  opportunity  to share in our  future  success.
Please  indicate your  acceptance of this option grant and the terms of the Plan
by signing and returning a copy of this letter.

Sincerely,

CLAIRE'S INC.

By: /s/ Eugene S. Kahn
    --------------------------------------
Name: Eugene S. Kahn

                                       7
<PAGE>

Title: Chief Executive Officer

Agreed to and Accepted by:

/s/ James Conroy
------------------------------------------

                                       8
<PAGE>

                                                                       Exhibit C

                                  CLAIRE'S INC.
                               2400 W. Central Rd.
                            Hoffman Estates, IL 60192

December 13, 2007

James Conroy
2771 NE 57th Court
Fort Lauderdale, FL 33308

Dear James:

We are  pleased  to inform you that you have been  awarded  the  opportunity  to
purchase  shares of common stock of Claire's  Inc. (the  "Company"),  the parent
company of Claire's Stores, Inc., and to receive a matching stock award grant on
a buy one, get one ("BOGO") basis,  in each case on the terms  described  below.
This  opportunity is being made available to you pursuant to the Company's Stock
Incentive  Plan (the "Plan"),  a copy of which is attached as Exhibit A, and the
Shares you purchase (the  "Purchased  Shares"),  the matching  option grant (the
"BOGO  Option"),  and any Shares  acquired upon exercise of the BOGO Option (the
"BOGO Shares") are subject in all respects to the provisions of the Plan, except
as specifically modified hereby.  Capitalized terms not otherwise defined in the
text are defined in the Plan.

9.    Opportunity  to Purchase  Shares.  You may purchase  Shares at a price per
      Share of $10.00.  You must purchase Shares in increments of 1,000, and the
      number of Shares you may purchase is limited to 30,000 shares.

10.   Grant of Matching  Option:  On the date that you  complete the purchase of
      Shares  described in paragraph 1 above,  you will be granted a BOGO Option
      relating to the same number of Shares that you purchase under  paragraph 1
      above at an  exercise  price per Share of $10.00.  The BOGO Option will be
      immediately  exercisable  from the date it is  granted  until  the date it
      expires or otherwise  terminates  pursuant to Section 4 of the your Option
      Grant Letter dated December 13, 2007.

11.   Rights/Restrictions  on Shares.  The Purchased  Shares and the BOGO Shares
      are subject to the rights and  restrictions  set forth in Section 8 of the
      Plan, provided that in addition to the Company's rights under Section 8(d)
      of the Plan (Repurchase  Right), if you voluntarily resign from employment
      with the Company and its  Affiliates  prior to the earlier of December 13,
      2011 or the date of a Qualified  IPO,  then the price per Share to be paid
      by the Company for any BOGO Shares it chooses to repurchase  under Section
      8(d) of the Plan  shall not  exceed  the price per Share  paid by you upon
      exercise of the BOGO  Option,  less any  distributions  paid in respect of
      such Share.

12.   Representations.  By accepting  this  opportunity  to purchase  Shares and
      receive an option award,  you represent to the  following,  and understand
      that the Company would not have

                                       1
<PAGE>

      made this opportunity  available to you but for your  representations  and
      acknowledgements below.

      (a)   Shares Unregistered;  Investor Knowledge.  You acknowledge and agree
            that (i) neither the  opportunity to purchase  Shares,  the grant of
            the BOGO  Option  nor the  offer to  acquire  Shares  upon  exercise
            thereof has been registered under  applicable  securities laws; (ii)
            there  is no  established  market  for  the  Shares  and  it is  not
            anticipated that there will be any such market for the Shares in the
            foreseeable  future;  and (iii) your  knowledge  and  experience  in
            financial  and  business  matters  are such that you are  capable of
            evaluating the merits and risks of any investment in the Shares.

      (b)   Acknowledgement. You acknowledge and agree that: (i) this award is a
            one-time  benefit,  which does not create any  contractual  or other
            right to receive future awards, or benefits in lieu of awards;  (ii)
            all   determinations   with  respect  to  any  such  future  awards,
            including,  but not  limited  to,  the times  when  awards  shall be
            granted, the number of shares subject to each award, the exercise or
            purchase  price,  and the time or times when each award  shall vest,
            will be at the sole  discretion of the Company;  (iii) this award is
            not  part  of  normal  or  expected  compensation  for  purposes  of
            calculating any severance,  resignation,  redundancy, end of service
            payments,  bonuses,   long-service  awards,  pension  or  retirement
            benefits  or similar  payments;  and (iv) THAT THIS AWARD  SHALL NOT
            CREATE  A RIGHT  TO  FURTHER  EMPLOYMENT  WITH  THE  COMPANY  OR ITS
            AFFILIATES  AND SHALL NOT INTERFERE  WITH THE ABILITY OF THE COMPANY
            OR ITS AFFILIATES TO TERMINATE YOUR  EMPLOYMENT  RELATIONSHIP AT ANY
            TIME,  AND  UPON  TERMINATION  OF YOUR  EMPLOYMENT  FOR  ANY  REASON
            WHATSOEVER,  ANY RIGHTS IN RESPECT OF THE PURCHASED SHARES, THE BOGO
            OPTION  OR THE  UNDERLYING  SHARES  TO WHICH  YOU  WOULD  HAVE  BEEN
            ENTITLED HAD YOUR  EMPLOYMENT  NOT  TERMINATED  SHALL LAPSE UPON THE
            DATE OF TERMINATION  UNLESS EXPRESSLY STATED OTHERWISE HEREIN OR THE
            PLAN, AND YOU SHALL NOT BE ENTITLED TO ANY  COMPENSATION  IN RESPECT
            OF LOSS OF ALL OR ANY OF THE  PURCHASED  SHARES,  THE BOGO OPTION OR
            UNDERLYING SHARES.

      (c)   Employee  Data  Privacy.  You  consent  to the  collection,  use and
            transfer of personal data as described in this  paragraph  4(c). You
            understand that the Company and its Affiliates hold certain personal
            information about you including, but not limited to, your name, home
            address and telephone number, date of birth, social security number,
            salary, nationality,  job title, common shares or directorships held
            in the Company,  details of all other  entitlement  to common shares
            awarded,  cancelled,  exercised,  vested, unvested or outstanding in
            your favor, for the purpose of managing and administering this award
            ("Data").  You  further  understand  that  the  Company  and/or  its
            Affiliates will transfer Data among  themselves as necessary for the
            purposes of  implementation,  administration  and management of this
            award,  and that the Company  and/or any of its  Affiliates may

                                       2
<PAGE>

            each  further  transfer  Data to any  third  parties  assisting  the
            Company in such implementation,  administration and management.  You
            authorize them to receive, possess, use, retain and transfer Data in
            electronic  or  other  form,  for  the  purposes  of   implementing,
            administering  and  managing  this award,  including  any  requisite
            transfer of such Data as may be required for the  administration  of
            this  award  and/or the  subsequent  holding  common  shares on your
            behalf  to a broker  or  other  third  party  with  whom the  shares
            acquired on exercise may be deposited. You understand that he or she
            may, at any time, view the Data, require any necessary amendments to
            it or withdraw the consent herein in writing by contacting the local
            human resources representative.

      (d)   Confidentiality. You agree not to disclose or discuss in any way the
            terms of this award to or with  anyone  other  than  members of your
            immediate  family,  or your personal  counsel or financial  advisors
            (and you will advise such persons of the confidential nature of this
            offer).

13.   Federal Taxes:  The BOGO Option is treated as a "nonqualified  option" for
      federal tax purposes,  which generally  means that when you exercise,  the
      excess of the value of the Shares  issued on  exercise  over the  exercise
      price  paid  for the  Shares  is  income  to you,  subject  to  wage-based
      withholding and reporting.  However, if you exercise the BOGO Option prior
      to the earlier of December 13, 2011 or the date of a Qualified IPO, unless
      you make a "section 83(b) election" within 30 days of exercise, taxes will
      be  deferred  until the  earlier  of  December  13,  2011 or the date of a
      Qualified IPO, at which time the value of the Shares at such time over the
      exercise  price paid is income to you,  subject to wage-based  withholding
      and reporting.  When you sell your Purchased  Shares,  or your BOGO Shares
      (assuming an 83(b)  election,  if  applicable,  was made),  the excess (or
      shortfall)  between the amount you receive  upon the sale and the value of
      the shares at the time you  acquired  them is treated as capital  gain (or
      loss).  State and local  taxes may also  apply.  You should  consult  your
      personal tax advisor for more information  concerning the tax treatment of
      your  Purchased  Shares,  BOGO Option and BOGO Shares.  The Company is not
      making  any  representations  concerning  tax  consequences,  and  is  not
      responsible  for any taxes,  interest or penalties you incur in connection
      with  your  Shares  or  BOGO  Option,   even  if  the  taxing  authorities
      successfully  challenge  any  position  taken by the Company in respect of
      wage withholding and reporting or otherwise.

14.   Acceptance.  In order to accept  this offer to purchase  Shares,  you must
      countersign below, indicate the number of Shares you desire to purchase in
      the  space  indicated   immediately  above  your  signature.   Return  the
      countersigned  copy of this  letter,  along with a check for the  purchase
      price, NO LATER THAN FRIDAY, JANUARY 4, 2008 to Joe DeFalco.

We are  excited to give you this  opportunity  to share in our  future  success.
Please contact Joe DeFalco should you have any questions.

Sincerely,

                                       3
<PAGE>

CLAIRE'S INC.

By: /s/ Eugene S. Kahn
    -----------------------------------------------
Name: Eugene S. Kahn
Title: Chief Executive Officer

Agreed to and Accepted as to ___________ Shares by:

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

                                       4
<PAGE>

                                                                       Exhibit D

                                     RELEASE

      I,  James  Conroy,  the  undersigned,  agree to accept  the  compensation,
payments, benefits and other consideration provided for in Section 4.3(d) of the
employment  agreement  between me and by and between Claire's Stores,  Inc. (the
"Company")  dated as of December 13, 2007 (the  "Employment  Agreement") in full
resolution  and  satisfaction  of, and hereby  IRREVOCABLY  AND  UNCONDITIONALLY
RELEASE, REMISE AND FOREVER DISCHARGE the Company and Releasees from any and all
agreements,  promises, liabilities,  claims, demands, rights and entitlements of
any kind  whatsoever,  in law or equity,  whether known or unknown,  asserted or
unasserted,  fixed or contingent,  apparent or concealed,  to the maximum extent
permitted  by law  ("Claims"),  which I, my  heirs,  executors,  administrators,
successors  or assigns ever had, now have or  hereafter  can,  shall or may have
for,  upon,  or by reason of any  matter,  cause or thing  whatsoever  existing,
arising,  occurring or relating to my employment and/or termination thereof with
the  Company and  Releasees,  or my status as a  stockholder  of the Company and
Releasees,  at any  time  on or  prior  to  the  date I  execute  this  Release,
including,  without limitation, any and all Claims arising out of or relating to
compensation,  benefits, any and all contract claims, tort claims, fraud claims,
claims for bonuses, commissions, sales credits, etc., defamation, disparagement,
or other personal injury claims,  claims for accrued  vacation pay, claims under
any federal, state or municipal wage payment,  discrimination or fair employment
practices  law,  statute or  regulation,  and claims  for  costs,  expenses  and
attorneys' fees with respect thereto. This release and waiver includes,  without
limitation,  any and all rights and claims  under Title VII of the Civil  Rights
Act of 1964,  the  Civil  Rights  Acts of  1866,  1871 and  1991,  the  Employee
Retirement  Income  Security  Act,  the Age  Discrimination  in  Employment  Act
(including  but not limited to the Older Workers  Benefit  Protection  Act), the
Americans with  Disabilities  Act, the National Labor  Relations Act, the Family
and  Medical  Leave  Act,  the  Equal  Pay Act,  the  Sarbanes-Oxley  Act,  [add
applicable  state  laws]  and all  amendments  to the  foregoing,  and any other
federal,  state  or  local  statute,  ordinance,  regulation  or  constitutional
provision regarding employment,  compensation, employee benefits, termination of
employment or discrimination in employment.  Notwithstanding the above, I do not
release  my right  to any  right to  indemnification  I may have as a  director,
officer or employee pursuant to applicable law and/or the Company's  certificate
of  incorporation  nor do I release any rights to any earned and vested benefits
to which I am entitled under the terms of any employee  benefit plan  maintained
by the Company or any of its subsidiaries.

      I  represent  and affirm (i) that I have not filed any Claim  against  the
Company or Releasees and (ii) that to the best of my knowledge and belief, there
are no outstanding Claims.

      For the purpose of implementing a full and complete  release and discharge
of Claims,  I expressly  acknowledge that this Release is intended to include in
its  effect,  without  limitation,  all the Claims  described  in the  preceding
paragraphs,  whether  known or  unknown,  apparent or  concealed,  and that this
Release  contemplates  the extinction of all such Claims,  including  Claims for
attorney's  fees. I expressly  waive any right to assert after the  execution of

                                       1
<PAGE>

this  Release that any such Claim has,  through  ignorance  or  oversight,  been
omitted from the scope of the Release.

      For  purposes  of this  Release,  the term  "the  Company  and  Releasees"
includes  the  Company  and its past,  present  and future  direct and  indirect
parents,  subsidiaries,  affiliates,  divisions,  predecessors,  successors, and
assigns, and their past, present and future officers,  directors,  shareholders,
representatives,   agents,  attorneys  and  employees,  in  their  official  and
individual capacities,  and all other related individuals and entities,  jointly
and  individually,  and this Release  shall inure to the benefit of and shall be
binding and enforceable by all such entities and individuals.

      I understand that I have a period of up to 21 days from my receipt of this
Release to review and consider this Release.  I further  understand  that once I
have  signed  this  Release,  I may  revoke  it at any  time  during  the 7 days
following  its  execution by  delivering a written  notice of  revocation to the
Company,  attention  General  Counsel.  I further  understand  that if I fail to
execute and return this Release to the Company, attention General Counsel, prior
to the  expiration of such 21 day period,  or revoke my execution of the Release
during such 7 day period, I will not be entitled to the compensation,  payments,
benefits  and  other  consideration  provided  for  in  Section  4.3(d)  of  the
Employment Agreement.

I ACKNOWLEDGE THAT I HAVE READ THIS
RELEASE AND I UNDERSTAND
AND ACCEPT ITS TERMS

------------------------------              ---------------------
James Conroy                                Date

Sworn to before me this
___ day of ________, 20__

------------------------------
Notary Public

                                       2AMENDED AND RESTATED MASTER INTERCOMPANY        EXHIBIT 4.1.1
                                LOAN AGREEMENT

                               21 NOVEMBER 2007

                       PERMANENT FUNDING (NO. 2) LIMITED
                                 AS FUNDING 2

                          PERMANENT MASTER ISSUER PLC
                               AS MASTER ISSUER

                             THE BANK OF NEW YORK
                         AS FUNDING 2 SECURITY TRUSTEE

                                      AND

                                CITIBANK, N.A.
                                 AS AGENT BANK

<PAGE>

                                   CONTENTS

CLAUSE                                                                     PAGE

1.       Definitions and Interpretation.......................................1
2.       The Facility.........................................................2
3.       Conditions Precedent.................................................2
4.       Purpose..............................................................3
5.       Limited Recourse.....................................................4
6.       Advance of Loan Tranches.............................................5
7.       Interest.............................................................6
8.       Repayment...........................................................10
9.       Prepayment..........................................................11
10.      Taxes...............................................................12
11.      Illegality..........................................................13
12.      Mitigation..........................................................13
13.      Representations and Warranties of Funding.2.........................13
14.      Covenants...........................................................15
15.      Default.............................................................18
16.      Default Interest and Indemnity......................................19
17.      Payments............................................................20
18.      Entrenched Provisions...............................................21
19.      Further Provisions..................................................21
20.      Redenomination......................................................22
21.      Notices.............................................................23
22.      Governing Law and Submission to Jurisdiction........................23

SCHEDULE

1.       Condi tions Precedent...............................................24
2.       Form of Loan Tranche Notice.........................................26
3.       Form of Loan Tranche Supplement.....................................27
4.       Solvency Certificate................................................33

Signatories..................................................................35

<PAGE>

THIS AMENDED AND RESTATED MASTER INTERCOMPANY LOAN AGREEMENT (this AGREEMENT)
is made as a deed on 21 November 2007

BETWEEN:

(1)      PERMANENT FUNDING (NO. 2) LIMITED (registered number 4441772), a
         private limited company incorporated under the laws of England and
         Wales whose registered office is at 35 Great St. Helen's, London EC3A
         6AP (FUNDING 2);

(2)      PERMANENT MASTER ISSUER PLC (registered number 5922774), a public
         limited company incorporated under the laws of England and Wales whose
         registered office is at 35 Great St. Helen's, London EC3A 6AP (the
         MASTER ISSUER);

(3)      THE BANK OF NEW YORK, a national association acting through its office
         at One Canada Square, London E14 5AL (acting in its capacity as the
         FUNDING 2 SECURITY TRUSTEE, which expression shall include such
         company and all other persons or companies for the time being acting
         as security trustee (or co-trustee) pursuant to the terms of the
         Funding 2 Deed of Charge); and

(4)      CITIBANK, N.A., acting through its office at Citigroup Centre, Canada
         Square, Canary Wharf, London E14 5LB (acting in its capacity as the
         AGENT BANK).

WHEREAS:

(A)      From time to time, the Master Issuer has issued and will issue Notes
         pursuant to the Programme.

(B)      From time to time after the date hereof, the Master Issuer
         Subordinated Loan Provider will make Master Issuer Subordinated Loans
         to the Master Issuer pursuant to the Master Issuer Subordinated Loan
         Agreements.

(C)      From time to time after the date hereof, the Master Issuer Start-up
         Loan Provider will advance Master Issuer Start-up Loans to the Master
         Issuer pursuant to the Master Issuer Start-up Loan Agreements.

(D)      The Master Issuer has agreed that it will lend the proceeds (or, as
         applicable, the sterling equivalent thereof) of any issue of Notes,
         any borrowings under the Master Issuer Subordinated Loan Agreements
         and any borrowings under the Master Issuer Start-up Loan Agreements to
         Funding 2.

(E)      The Master Intercompany Loan Agreement sets out the terms and
         conditions with respect to lending by the Master Issuer of the
         proceeds of the issue of Notes.

(F)      The parties to the Master Intercompany Loan Agreement have agreed to
         further amend and restate the terms of the Master Intercompany Loan
         Agreement as set out herein including to set out the terms and
         conditions with respect to lending by the Master Issuer of the
         proceeds of the borrowings under the Master Issuer Subordinated Loan
         Agreements and the Master Issuer Start-up Loan Agreements to Funding
         2.

1.       DEFINITIONS AND INTERPRETATION

1.1      The amended and restated master definitions and construction schedule
         signed by, amongst others, the parties to this Agreement and dated 21
         November 2007 (as the same may be amended, varied or supplemented from
         time to time with the consent of the parties to this Agreement) (the
         MASTER DEFINITIONS AND CONSTRUCTION SCHEDULE) is expressly and
         specifically incorporated into this Agreement and, accordingly, the
         expressions defined in the Master Definitions and Construction

                                       1

<PAGE>

         Schedule (as so amended, varied or supplemented from time to time)
         shall, except where the context otherwise requires and save where
         otherwise defined herein, have the same meanings in this Agreement
         (including the Recitals hereto) and this Agreement shall be construed
         in accordance with the interpretation provisions set out in Clause 3
         of the Master Definitions and Construction Schedule.

1.2      This Agreement amends and restates the Master Intercompany Loan
         Agreement made on 17 October 2006 as amended and restated on 1 March
         2007 (the PRINCIPAL AGREEMENT). As of the date of this Agreement, any
         future rights or obligations (excluding such obligations accrued to
         the date of this Agreement) of a party under the Principal Agreement
         shall be extinguished and shall instead be governed by this Agreement.

2.       THE FACILITY

         Subject to the terms of this Agreement, the Master Issuer agrees to
         make available to Funding 2 a facility (the MASTER INTERCOMPANY LOAN
         FACILITY). On the London Business Day prior to each Closing Date
         and/or each Advance Date (as applicable), the Master Issuer shall
         offer Loan Tranches to Funding 2 under the Master Intercompany Loan
         Facility that correspond to:

         (a)     each Series and Class of Notes to be issued by the Master
                 Issuer on the relevant Closing Date;

         (b)     each Master Issuer Subordinated Loan to be advanced to the
                 Master Issuer on the relevant Advance Date; and/or

         (c)     each Master Issuer Start-Up Loan to be advanced to the Master
                 Issuer on the relevant Advance Date.

         Each Loan Tranche shall be denominated in Sterling. Subject to the
         terms of this Agreement, on each Closing Date and/or each Advance Date
         (as applicable), Funding 2 shall accept the offer.

3.       CONDITIONS PRECEDENT

         Save as the Master Issuer, Funding 2 and the Funding 2 Security
         Trustee may otherwise agree, each Loan Tranche will not be available
         for utilisation on the relevant Closing Date and/or Advance Date (as
         applicable) unless:

         (a)     (with respect to all Rated Loan Tranches) the related Series
                 and Class of Notes has been issued by the Master Issuer on the
                 relevant Closing Date and the subscription proceeds thereof
                 have been received by or on behalf of the Master Issuer;

         (b)     (with respect to all Subordinated Loan Tranches) the related
                 Master Issuer Subordinated Loan has been advanced by the
                 Master Issuer Subordinated Loan Provider to the Master Issuer
                 on the relevant Advance Date and the proceeds thereof have
                 been received by or on behalf of the Master Issuer;

         (c)     (with respect to all Start-Up Loan Tranches) the related
                 Master Issuer Start-Up Loan has been advanced by the Master
                 Issuer Start-Up Loan Provider to the Master Issuer on the
                 relevant Advance Date and the proceeds thereof have been
                 received by or on behalf of the Master Issuer;

         (d)     the Funding 2 Security Trustee has confirmed to Funding 2 that
                 it or its advisers have received all the information and
                 documents listed in Schedule 1 hereto (Conditions Precedent)
                 in form and substance satisfactory to the Funding 2 Security
                 Trustee;

                                       2

<PAGE>

         (e)     Funding 2 and the Master Issuer have signed a Loan Tranche
                 Supplement (substantially in the form set out in Schedule 3
                 hereto (Form of Loan Tranche Supplement));

         (f)     Funding 2 has confirmed in the applicable Loan Tranche
                 Supplement that:

                 (i)     no Master Intercompany Loan Event of Default has
                         occurred and is continuing unremedied (if capable of
                         remedy) or unwaived or would result from the making of
                         such Loan Tranche;

                 (ii)    the representations set out in Clause 13 are true on
                         and as of the relevant Closing Date by reference to
                         the facts and circumstances then existing; and

                 (iii)   there will be no debit balance on the Funding 2
                         Principal Deficiency Ledger after the application of
                         the Funding 2 Available Revenue Receipts on the next
                         Funding 2 Interest Payment Date;

         (g)     Funding 2 has delivered a solvency certificate substantially
                 in the form set out in Schedule 4 hereto;

         (h)     the Master Issuer has confirmed in the applicable Loan Tranche
                 Supplement that no Note Event of Default has occurred and is
                 continuing unremedied (if capable of remedy) or unwaived or
                 would result from the making of such Loan Tranche;

         (i)     each of the Rating Agencies has confirmed in writing to the
                 Master Issuer Security Trustee and/or the Funding 2 Security
                 Trustee that there will not, as a result of the Master Issuer
                 issuing any Notes on the Closing Date, be any reduction,
                 qualification or withdrawal of the then current ratings by the
                 Rating Agencies of any then outstanding Notes of the Master
                 Issuer;

         (j)     one or more Deeds of Accession relating to the Funding 2 Deed
                 of Charge have been executed by any additional Funding 2
                 Secured Creditors and the parties to the Funding 2 Deed of
                 Charge; and

         (k)     all other conditions precedent as may be specified in the
                 applicable Loan Tranche Supplement have been satisfied.

4.       PURPOSE

4.1      PURPOSE AND APPLICATION OF RATED LOAN TRANCHES AND SUBORDINATED LOAN
         TRANCHES

(a)      The proceeds of each Loan Tranche (excluding any Start-Up Loan
         Tranche) may only be used by Funding 2:

         (i)     to pay the Seller the Purchase Price for the sale of any New
                 Portfolio to the Mortgages Trustee on the relevant Closing
                 Date (which payment shall increase the Funding 2 Share of the
                 Trust Property in accordance with the terms of the Mortgages
                 Trust Deed);

         (ii)    to acquire part of the Funding 1 Share and/or the Seller Share
                 of the Trust Property (such payment to be made to Funding 1
                 and/or the Seller, as the case may be, which shall increase
                 the Funding 2 Share of the Trust Property in accordance with
                 the terms of the Mortgages Trust Deed);

                                       3

<PAGE>

         (iii)   (in the case of Rated Loan Tranches only) to refinance the
                 existing debt of Funding 2, including any existing Loan
                 Tranche or of any New Issuer or New Beneficiary in order to
                 refinance a New Intercompany Loan (in whole or in part);
                 and/or

         (iv)    to fund or partly fund or replenish the Funding 2 General
                 Reserve Fund and/or (if any) the Funding 2 Liquidity Reserve
                 Fund (in whole or in part).

(b)      The proceeds of each Start-Up Loan Tranche may only be used by Funding
         2 either:

         (i)     to fund the Funding 2 General Reserve Fund and/or (if any) the
                 Funding 2 Liquidity Reserve Fund (in whole or in part);

         (ii)    to fund the payment of the fees, costs and expenses incurred
                 by or on behalf of Funding 2 in connection with the payment to
                 the Seller of part of the consideration for Loans (together
                 with their Related Security) sold to the Mortgages Trustee
                 and/or the acquisition of part of the Funding 1 Share of the
                 Trust Property and/or Seller Share of the Trust Property on
                 the relevant Closing Date and/or Advance Date; and/or

         (iii)   to fund the payment of the fees, costs and expenses payable or
                 incurred by or on behalf of Funding 2 under the Master
                 Intercompany Loan Agreement which relate to the costs of
                 issuance of the Notes on the relevant Closing Date and/or the
                 advance of a Master Issuer Subordinated Loan on the relevant
                 Advance Date.

4.2      APPLICATION OF AMOUNTS

         Without prejudice to the obligations of Funding 2 under this Clause 4,
         neither the Funding 2 Security Trustee nor any of the Funding 2
         Secured Creditors shall be obliged to concern themselves as to the
         application of amounts raised by Funding 2 under a Loan Tranche.

5.       LIMITED RECOURSE

5.1      RECOURSE LIMITED TO AVAILABLE FUNDS

         Subject to Clause 5.2 but notwithstanding the terms of any other
         provision in this Agreement or any other Transaction Document, each of
         the Master Issuer and the Funding 2 Security Trustee agree that the
         liability of Funding 2 in respect of its obligations to repay
         principal and pay interest or any other amounts due under this
         Agreement or for any breach of any representation, warranty, covenant
         or undertaking of Funding 2 under this Agreement shall be limited to
         amounts standing to the credit of the Funding 2 GIC Account and the
         Funding 2 Transaction Account from time to time (including, for the
         avoidance of doubt, amounts received by Funding 2 in respect of the
         Funding 2 Share of the Trust Property and from the Funding 2 Swap
         Provider) provided that the application of such amounts to the
         discharge of Funding 2's obligations under this Agreement shall be
         subject to the terms of the Funding 2 Deed of Charge and the relevant
         Funding 2 Priority of Payments in all cases.

5.2      SHORTFALL ON FINAL REPAYMENT DATE

         To the extent that on the Final Repayment Date of any Loan Tranche
         advanced under this Agreement there is a shortfall between all amounts
         (including interest and principal) payable on that Loan Tranche under
         this Agreement and the amounts available therefor, that shortfall
         shall not be due and payable to the Master Issuer until the time, if
         ever, when Funding 2 has enough money available to pay the shortfall
         on that Loan Tranche after making any other payments due that rank
         higher in priority to that Loan Tranche. Following enforcement of the
         Funding 2 Security and distribution of all enforcement proceeds in
         accordance with the Funding 2 Deed of Charge, all

                                       4

<PAGE>

         outstanding claims that the Master Issuer and the Funding 2 Security
         Trustee may otherwise have against Funding 2 will be extinguished.

6.       ADVANCE OF LOAN TRANCHES

6.1      NOTICE TO FUNDING 2

         Not later than 2:00 p.m. (London time) on the relevant Closing Date
         (or such later time as may be agreed in writing by Funding 2, the
         Master Issuer and the Funding 2 Security Trustee), Funding 2 shall
         give to the Master Issuer (copied to the Funding 2 Security Trustee) a
         Loan Tranche Notice (substantially in the form set out in Schedule 1
         hereto (Form of Loan Tranche Notice)) which shall request the drawing
         of a Loan Tranche and delivery of which shall (subject to the terms of
         this Agreement and (in the case of Rated Loan Tranches) to the issue
         of the relevant Series and Class of Notes by the Master Issuer, (in
         the case of Subordinated Loan Tranches) to the advance by the Master
         Issuer Subordinated Loan Provider of the relevant Master Issuer
         Subordinated Loan to the Master Issuer and (in the case of Start-Up
         Loan Tranches) to the advance by the Master Issuer Start-Up Loan
         Provider of the relevant Master Issuer Start-Up Loan to the Master
         Issuer) oblige Funding 2 to borrow the whole amount stated in the Loan
         Tranche Notice on the relevant Closing Date upon the terms and subject
         to the conditions contained in this Agreement and such Loan Tranche
         Notice will set out, inter alia:

         (a)     the amount and currency or currencies of the proposed issue of
                 each Series and Class of Notes under the Programme;

         (b)     (in the case of Rated Loan Tranches only) the Specified
                 Currency Exchange Rate(s) at which the Master Issuer will swap
                 the proceeds of each Series and Class of Notes that is not
                 denominated in Sterling into Sterling; and

         (c)     the principal amount of each Loan Tranche available for
                 drawing under the Master Intercompany Loan Facility on such
                 Closing Date.

6.2      LOAN TRANCHES CORRESPOND TO SERIES AND CLASSES OF NOTES, MASTER ISSUER
         SUBORDINATED LOAN OR MASTER ISSUER START-UP LOAN

         Each Loan Tranche shall be identified by reference to the relevant
         Series and Class of Notes, the Master Issuer Subordinated Loan or the
         Master Issuer Start-Up Loan that is used to fund it, as set out in the
         applicable Loan Tranche Supplement.

6.3      LOAN TRANCHE SUPPLEMENT

         The Loan Tranche Supplement to be signed on each Closing Date in
         accordance with Clause 3(e) shall record, amongst other things, the
         amount of each Loan Tranche to be made on such Closing Date or Advance
         Date (as applicable), which shall correspond to the principal amount
         of such Loan Tranche that is available for drawing which is notified
         to the Master Issuer in the applicable Loan Tranche Notice.

6.4      SINGLE DRAWING OF THE LOAN TRANCHE

         On satisfaction of the conditions set out in Clause 3 the Master
         Issuer shall make the applicable Loan Tranches available to Funding 2
         on the relevant Closing Date. Each Loan Tranche to be made on the
         relevant Closing Date or Advance Date (as applicable) will only be
         available for drawing by Funding 2 on the relevant Closing Date and
         will not be available for drawing on a later date.

                                       5

<PAGE>

6.5      REDEMPTION/PAYMENT BASIS

         Each Rated Loan Tranche may be a Bullet Loan Tranche, a Scheduled
         Amortisation Loan Tranche, a Pass-Through Loan Tranche or a
         combination of any of the foregoing, depending upon the
         Redemption/Payment Basis shown in the applicable Loan Tranche
         Supplement.

7.       INTEREST

7.1      LOAN TRANCHE INTEREST PERIODS

(a)      The first Loan Tranche Interest Period in respect of a Loan Tranche
         will commence on (and include) the Loan Tranche Interest Commencement
         Date relating to that Loan Tranche and end on (but exclude) the first
         Funding 2 Interest Payment Date falling thereafter. Each subsequent
         Loan Tranche Interest Period shall commence on (and include) a Funding
         2 Interest Payment Date and end on (but exclude) the next following
         Funding 2 Interest Payment Date.

(b)      Whenever it is necessary to compute an amount of interest in respect
         of a Loan Tranche for any period (including any Loan Tranche Interest
         Period), such interest shall be calculated on the basis of actual days
         elapsed in a 365 day year.

7.2      DETERMINATION OF LOAN TRANCHE INTEREST AMOUNT

         In relation to any Loan Tranche, the rate of interest payable (the
         LOAN TRANCHE RATE OF INTEREST) and the relevant Sterling interest
         amount (each a LOAN TRANCHE INTEREST AMOUNT) in respect of such Loan
         Tranche shall be determined on the basis of the provisions set out
         below:

         (a)     On the Loan Tranche Interest Determination Date in relation to
                 such Loan Tranche, the Agent Bank will determine the Relevant
                 Screen Rate in respect of such Loan Tranche at or about 11.00
                 am London time. If the Relevant Screen Rate is unavailable,
                 the Agent Bank will request the principal London office of
                 each of the Reference Banks to provide the Agent Bank with its
                 offered quotation to leading banks for three-month Sterling
                 deposits of [POUND]10,000,000 in the London inter-bank market
                 as at or about 11.00 a.m. London time on such Loan Tranche
                 Interest Determination Date.

         (b)     The Loan Tranche Rate of Interest for such Loan Tranche for
                 the Loan Tranche Interest Period relating to such Loan Tranche
                 shall be the aggregate of:

                 (i)     the Relevant Margin in respect of such Loan Tranche;
                         and

                 (ii)    the Relevant Screen Rate in respect of such Loan
                         Tranche or, if the Relevant Screen Rate is
                         unavailable, the arithmetic mean (or, in the case of
                         the initial Loan Tranche Interest Determination Date
                         for such Loan Tranche, the linear interpolation of the
                         arithmetic mean) of such offered quotations by the
                         Reference Banks (rounded upwards, if necessary, to
                         five decimal places).

         (c)     If on any Loan Tranche Interest Determination Date in relation
                 to such Loan Tranche, the Relevant Screen Rate in respect of
                 such Loan Tranche is unavailable and only two or three of the
                 Reference Banks provide offered quotations, the Loan Tranche
                 Rate of Interest for such Loan Tranche for the relevant Loan
                 Tranche Interest Period shall be determined in accordance with
                 the provisions of subparagraph (a) above on the basis of the
                 offered quotations of those Reference Banks providing such
                 quotations.

         (d)     If, on any such Loan Tranche Interest Determination Date, only
                 one or none of the Reference Banks provides the Agent Bank
                 with such an offered quotation, the Agent Bank

                                       6

<PAGE>

                 shall forthwith consult with the Funding 2 Security Trustee
                 for the purposes of agreeing two banks (or, where one only of
                 the Reference Banks provided such a quotation, one additional
                 bank) to provide such a quotation or quotations to the Agent
                 Bank (which bank or banks are in the opinion of the Funding 2
                 Security Trustee suitable for such purpose) and the Loan
                 Tranche Rate of Interest for such Loan Tranche for the Loan
                 Tranche Interest Period in question shall be determined, as
                 aforesaid, on the basis of the offered quotations of such
                 banks as so agreed (or, as the case may be, the offered
                 quotations of such bank as so agreed and the relevant
                 Reference Bank).

         (e)     If no such bank or banks is or are so agreed or such bank or
                 banks as so agreed does or do not provide such a quotation or
                 quotations, then the Loan Tranche Rate of Interest for such
                 Loan Tranche for the relevant Loan Tranche Interest Periods
                 shall be the Loan Tranche Rate of Interest in relation to such
                 Loan Tranche in effect for the immediately preceding Loan
                 Tranche Interest Period to which subparagraph (a) above shall
                 have applied but taking account of any change in the Relevant
                 Margin in relation to such Loan Tranche.

         (f)     There will be no minimum or maximum Loan Tranche Rate of
                 Interest for such Loan Tranche.

         (g)     The Agent Bank shall as soon as practicable after 11:00 a.m.
                 (London time) on each Loan Tranche Interest Determination
                 Date, determine and notify the Master Issuer, Funding 2, the
                 Cash Manager and the Funding 2 Security Trustee of: (i) the
                 Loan Tranche Rate of Interest applicable to such Loan Tranche
                 for the relevant Loan Tranche Interest Period and (ii) the
                 Loan Tranche Interest Amount payable in respect of each Rated
                 Loan Tranche for the relevant Loan Tranche Interest Period.
                 The Cash Manager shall determine the Loan Tranche Interest
                 Amount payable in respect of each Subordinated Loan Tranche
                 and each Start-Up Loan Tranche for the relevant Loan Tranche
                 Interest Period.

         (h)     The Loan Tranche Interest Amount for such Loan Tranche shall
                 be determined by applying the relevant Loan Tranche Rate of
                 Interest to the Outstanding Principal Balance of such Loan
                 Tranche, multiplying the sum by the day count fraction
                 described in Clause 7.1 and rounding the resultant figure to
                 the nearest penny (half a penny being rounded upwards).

         (i)     If the Agent Bank does not at any time for any reason
                 determine the Loan Tranche Rate of Interest for any Loan
                 Tranche and the Loan Tranche Interest Amount for any Rated
                 Loan Tranche in accordance with paragraphs 7.2(a) to (g)
                 above, the Funding 2 Security Trustee shall (subject to it
                 being indemnified to its satisfaction) determine the Loan
                 Tranche Rate of Interest for each Loan Tranche and Loan
                 Tranche Interest Amount for each Rated Loan Tranche and any
                 such determination shall be deemed to have been made by the
                 Agent Bank.

         (j)     All notifications, opinions, determinations, certificates,
                 calculations and decisions given, expressed, made or obtained
                 for the purposes of this Clause 7, whether by the Agent Bank
                 or the Funding 2 Security Trustee, shall (in the absence of
                 wilful default, bad faith or manifest error) be binding on
                 Funding 2, the Master Issuer, the Cash Manager, the Agent
                 Bank, the Funding 2 Security Trustee and (in such absence as
                 aforesaid) no liability to Funding 2 shall attach to the
                 Master Issuer, the Agent Bank, the Funding 2 Security Trustee
                 or the Cash Manager in connection with the exercise or
                 non-exercise by them or any of them of their powers, duties
                 and discretions hereunder.

7.3      PAYMENT ON FUNDING 2 INTEREST PAYMENT DATES

         Subject to Clause 5.1, Funding 2 shall pay interest in respect of each
         Loan Tranche on the Funding 2 Interest Payment Dates specified in the
         applicable Loan Tranche Supplement.

                                       7

<PAGE>

7.4      DEFERRED INTEREST

         Subject to Clause 5.2, to the extent that there are insufficient funds
         available to pay interest on a Loan Tranche on any Funding 2 Interest
         Payment Date, the shortfall in the interest amount payable will not
         then fall due but will instead be due on the following Funding 2
         Interest Payment Date on which sufficient funds are available to pay
         such interest, and pending such payment, will accrue interest at the
         rate specified for such Loan Tranche in the applicable Loan Tranche
         Supplement.

7.5      CERTAIN FEES

         In addition to the interest and principal payments to be made by
         Funding 2 in respect of each Loan Tranche under this Clause 7 and
         Clause 8, respectively, on each Funding 2 Interest Payment Date or on
         any other date on which the Master Issuer notifies Funding 2, but
         subject to Clause 5.1, Funding 2 shall pay to the Master Issuer for
         same day value to the Master Issuer Transaction Account a fee for the
         provision of the Master Intercompany Loan Facility (except that in the
         case of payments due under paragraphs (b), (d), (e) and (j) below,
         such payments shall be paid when due by the Master Issuer). Such fee
         shall be an amount or amounts in the aggregate equal to the following:

         (a)     the fees, costs, charges, liabilities and expenses and any
                 other amounts due and payable to the Note Trustee and the
                 Funding 2 Security Trustee pursuant to the Master Issuer Trust
                 Deed, the Master Issuer Deed of Charge or any other
                 Transaction Document, together with interest thereon as
                 provided therein;

         (b)     the reasonable fees and expenses of any legal advisers,
                 accountants and auditors appointed by the Master Issuer and
                 properly incurred in their performance of their functions
                 under the Transaction Documents which have fallen due;

         (c)     the fees, costs and expenses due and payable to the Paying
                 Agents, the Agent Bank, the Transfer Agent and the Registrar
                 pursuant to the Master Issuer Paying Agent and Agent Bank
                 Agreement;

         (d)     any amounts due and payable by the Master Issuer to HM Revenue
                 and Customs in respect of the Master Issuer's liability to
                 United Kingdom corporation tax (insofar as payment is not or
                 will not be capable of being satisfied by the surrender of
                 group relief or out of the profits, income or gains of the
                 Master Issuer and subject to the terms of the Master Issuer
                 Deed of Charge) or any other Taxes payable by the Master
                 Issuer;

         (e)     the fees, costs, charges, liabilities and expenses due and
                 payable to the Master Issuer Account Bank pursuant to the
                 Master Issuer Bank Account Agreement (if any);

         (f)     the fees, costs, charges, liabilities and expenses due and
                 payable to the Master Issuer Cash Manager pursuant to the
                 Master Issuer Cash Management Agreement;

         (g)     the fees, costs, charges, liabilities and expenses due and
                 payable to the Master Issuer Corporate Services Provider
                 pursuant to the Master Issuer Corporate Services Agreement;

         (h)     any termination payment due and payable by the Master Issuer
                 to a Master Issuer Swap Provider pursuant to a Master Issuer
                 Swap Agreement (which amount received by the Master Issuer
                 from Funding 2 by way of the Senior Fee, and any amount
                 received by the Master Issuer in consideration of it entering
                 into an agreement in replacement of such Master Issuer Swap
                 Agreement, shall be deemed to be received by the Master Issuer
                 in respect of the Loan Tranche corresponding to the Series and
                 Class of Notes to which such Master Issuer Swap Agreement
                 relates);

                                       8

<PAGE>

         (i)     an amount equal to 0.01% of the interest amounts paid by
                 Funding 2 to the Master Issuer on the Loan Tranches on Funding
                 2 Interest Payment Date, provided that the amount payable by
                 Funding 2 to the Master Issuer pursuant to this paragraph
                 (i)together with the amount payable by Funding 2 to the Master
                 Issuer pursuant to paragraph (d) above, in respect of each
                 accounting period of the Master Issuer, shall in aggregate not
                 exceed an amount equal to 0.01% of the interest amounts paid
                 by Funding 2 to the Master Issuer in respect of the Loan
                 Tranches in that accounting period; and

         (j)     any other amounts due or overdue by the Master Issuer to third
                 parties including the Rating Agencies and the amounts paid by
                 the Master Issuer under the Programme Agreement, each
                 Subscription Agreement, each Underwriting Agreement and in
                 consideration of the Master Issuer entering into any
                 replacement Master Issuer Swap Agreement to the extent not
                 paid or payable using any early termination amount received or
                 receivable by the Master Issuer pursuant to the Master Issuer
                 Swap Agreement it replaces and excluding, for the avoidance of
                 doubt, any amounts specified in paragraphs (d) to (i) above
                 and any amounts owing to the Noteholders,

         together with, (i) in respect of taxable supplies made to the Master
         Issuer, an amount in respect of any VAT or similar tax payable in
         respect thereof against production of a valid tax invoice; and (ii) in
         respect of taxable supplies made to a person other than the Master
         Issuer, any amount in respect of any VAT or Irrecoverable VAT or
         similar tax (as the case may be) payable in respect thereof as
         provided in the relevant agreement (against production of a copy of
         the relevant tax invoice), and to be applied subject to and in
         accordance with the provisions of the Master Issuer Pre-Enforcement
         Revenue Priority of Payments in the Master Issuer Cash Management
         Agreement. The parties acknowledge that the amount payable by Funding
         2 to the Master Issuer pursuant to this Clause 7.5 shall be paid in
         accordance with the Funding 2 Deed of Charge and the relevant Funding
         2 Priority of Payments (which prior to service of a Master
         Intercompany Loan Acceleration Notice shall be paragraph (a)(ii) of
         the Funding 2 Pre-Enforcement Revenue Priority of Payments in the case
         of the amount payable pursuant to paragraphs (a) to (g) and (j) above
         and paragraph (s)(ii) of the Funding 2 Pre-Enforcement Revenue
         Priority of Payments in the case of the amount payable pursuant to
         paragraphs (h) and (i) above) and (in each case) subject to the
         provisions of Clause 5.1 such that in the event of a shortfall
         resulting in any such amount not being paid on a Funding 2 Interest
         Payment Date then such amount shall not be paid until the next Funding
         2 Interest Payment Date (if any) on which Funding 2 has sufficient
         amounts standing to the credit of the Funding 2 GIC Account and the
         Funding 2 Transaction Account to pay such amount in accordance with
         the Funding 2 Deed of Charge and the relevant Funding 2 Priority of
         Payments.

7.6      SET-OFF

         Funding 2 and each of the other parties to this Agreement agree that
         the Master Issuer shall be entitled to set-off those amounts due and
         payable by Funding 2 pursuant to Clause 7.5 on the Closing Date for a
         Loan Tranche against the amount to be advanced by the Master Issuer to
         Funding 2 under such Loan Tranche on such Closing Date.

                                       9

<PAGE>

8.       REPAYMENT

8.1      REPAYMENT OF RATED LOAN TRANCHES

         Subject to Clause 5, on each Loan Payment Date, other than a Loan
         Payment Date on which a Rated Loan Tranche is to be repaid under
         Clause 9, Funding 2 shall repay principal in respect of such Rated
         Loan Tranche in an amount equal to:

         (a)     prior to the occurrence of a Trigger Event, service on Funding
                 2 of a Master Intercompany Loan Acceleration Notice or the
                 service on the Master Issuer of a Note Acceleration Notice,
                 the lower of:

                 (i)     the amount due to be paid on such Loan Payment Date as
                         specified for such Rated Loan Tranche in the
                         applicable Loan Tranche Supplement; and

                 (ii)    the amount which is available, under the terms of the
                         Funding 2 Deed of Charge and the Cash Management
                         Agreement, to repay principal in respect of such Rated
                         Loan Tranche as set out in Part 2 of Schedule 4 of the
                         Funding 2 Deed of Charge,

                 provided that, in the case of any Pass-Through Loan Tranche,
                 the amount of principal to be repaid by Funding 2 in respect
                 of such Rated Loan Tranche on any applicable Loan Payment Date
                 occurring on or following its Step-Up Date shall be calculated
                 in accordance with subparagraph (ii) above; or

         (b)     following the occurrence of a Non-Asset Trigger Event but
                 prior to the occurrence of an Asset Trigger Event, service on
                 Funding 2 of a Master Intercompany Loan Acceleration Notice or
                 service on the Master Issuer of a Note Acceleration Notice,
                 the amount which is available under the terms of the Funding 2
                 Deed of Charge and the Cash Management Agreement to repay
                 principal in respect of such Loan Tranche in such
                 circumstances as set out in Part 2 of Schedule 4 of the
                 Funding 2 Deed of Charge; or

         (c)     following the occurrence of an Asset Trigger Event but prior
                 to service on Funding 2 of a Master Intercompany Loan
                 Acceleration Notice or service on the Master Issuer of a Note
                 Acceleration Notice, the amount which is available under the
                 terms of the Funding 2 Deed of Charge and the Cash Management
                 Agreement to repay principal in respect of such Rated Loan
                 Tranche in such circumstances as set out in Part 2 of Schedule
                 4 of the Funding 2 Deed of Charge; or

         (d)     following service on Funding 2 of a Master Intercompany Loan
                 Acceleration Notice but prior to service on the Master Issuer
                 of a Note Acceleration Notice, the amount which is available
                 under the terms of the Funding 2 Deed of Charge and the Cash
                 Management Agreement to repay principal in respect of such
                 Rated Loan Tranche in such circumstances as set out in Part 2
                 of Schedule 4 of the Funding 2 Deed of Charge; or

         (e)     following service on the Master Issuer of a Note Acceleration
                 Notice, the amount which is available under the terms of the
                 Funding 2 Deed of Charge and the Cash Management Agreement to
                 repay principal in respect of such Loan Tranche in such
                 circumstances as set out in Part 3 of Schedule 4 of the
                 Funding 2 Deed of Charge.

8.2      REPAYMENT OF SUBORDINATED LOAN TRANCHES

(a)      Funding 2 shall make repayments of all or any part of a Subordinated
         Loan Tranche on each Funding 2 Interest Payment Date if, and to the
         extent that, there are Funding 2 Available Principal Receipts
         available therefor after making the payments and provisions referred
         to in paragraphs (a) to (p) of the

                                      10

<PAGE>

         Funding 2 Pre-Enforcement Principal Priority of Payments, until such
         Subordinated Loan Tranche has been reduced to the Required
         Subordinated Loan Principal Outstanding Amount.

8.3      REPAYMENT OF START-UP LOAN TRANCHES

(a)      Funding 2 shall make repayments of all or any part of a Start-Up Loan
         Tranche on each Funding 2 Interest Payment Date if, and to the extent
         that, there are Funding 2 Available Revenue Receipts available
         therefor after making the payments and provisions referred to in
         paragraphs (a) to (t) of the Funding 2 Pre-Enforcement Revenue
         Priority of Payments, until such Start-Up Loan Tranche and any accrued
         but unpaid interest thereon has been fully repaid.

8.4      DEFERRAL OF PRINCIPAL ON LOAN TRANCHES

         To the extent that there are insufficient funds available to Funding 2
         to repay the amount due to be paid on such Loan Payment Date, Funding
         2 will be required to repay the shortfall, to the extent that it
         receives funds therefor (and subject to the terms of the Funding 2
         Deed of Charge and the Cash Management Agreement) on subsequent
         Funding 2 Payment Dates in respect of such Loan Tranche.

8.5      RATED LOAN TRANCHE RATINGS

         Unless otherwise specified for any Rated Loan Tranche in the
         applicable Loan Tranche Supplement, such Rated Loan Tranche shall be
         repaid (as to both interest and principal) in the priority according
         to the Loan Tranche Rating of that Rated Loan Tranche. The Loan
         Tranche Rating for a Rated Loan Tranche will be specified for such
         Rated Loan Tranche in the applicable Loan Tranche Supplement.

8.6      SUBORDINATION OF SUBORDINATED LOAN TRANCHES AND START-UP LOAN TRANCHES
         TO RATED LOAN TRANCHES

         Each Rated Loan Tranche shall be paid (as to interest) and repaid (as
         to principal) in priority to each Subordinated Loan Tranche and each
         Start-Up Loan Tranche.

8.7      SUBORDINATION OF START-UP LOAN TRANCHES TO SUBORDINATED LOAN TRANCHES

         Each Subordinated Loan Tranche shall be paid (as to interest) and
         repaid (as to principal) in priority to each Start-Up Loan Tranche.

8.8      PAYMENT SUBJECT TO TERMS OF THE FUNDING 2 DEED OF CHARGE

         The terms and conditions of Clause 7 and this Clause 8 are to be read
         in conjunction with the provisions of the Funding 2 Deed of Charge, as
         the same may be amended or varied from time to time in accordance with
         the provisions thereof.

9.       PREPAYMENT

9.1      PREPAYMENT FOR TAXATION OR OTHER REASONS

         If:

         (a)     Funding 2 is required to withhold or deduct from any payment
                 of principal or interest in respect of any Loan Tranche any
                 amount for or on account of Tax; or

         (b)     the Master Issuer is required to withhold or deduct from any
                 payment of principal, interest or premium in respect of its
                 Notes any amount for or on account of Tax; or

                                      11

<PAGE>

         (c)     the Master Issuer or Funding 2, as the case may be, falls
                 within the Securitisation Tax Regime but subsequently ceases
                 to fall within the Securitisation Tax Regime; or

         (d)     a Loan Tranche becomes illegal as described in Clause 11,

         then, without prejudice to the obligations of Funding 2 under Clause
         11 and subject to Clause 12, Funding 2 may prepay, in the case of (a)
         to (c) above, subject to the Master Issuer satisfying the requirements
         of Condition 5(E) of the related Notes, on any Funding 2 Interest
         Payment Date, having given not more than 60 days' and not less than 30
         days' (or such shorter period as may be required by any relevant law
         in the case of any Loan Tranche which becomes illegal pursuant to
         Clause 11) prior written notice to the Master Issuer and the Note
         Trustee (or on or before the latest date permitted by the relevant law
         in the case of Clause 11) so long as the relevant circumstances
         continue, the applicable Loan Tranches (which in the case of (c)
         above, shall include all outstanding Loan Tranches) without penalty or
         premium but subject to Clause 16, provided that (in the case of a
         Rated Loan Tranche) the Master Issuer is able to repay the related
         Notes used to fund such Rated Loan Tranche on such Funding 2 Interest
         Payment Date from funds received from repayment of such Rated Loan
         Tranche.

9.2      PREPAYMENT AT OPTION OF MASTER ISSUER

         The Master Issuer, at its option, may require Funding 2 to prepay the
         outstanding principal amount of a Rated Loan Tranche (together with
         any accrued interest) on any Funding 2 Interest Payment Date on which
         the Master Issuer has decided to exercise its option, if any, to
         redeem in full the Notes used to fund such Rated Loan Tranche. The
         Master Issuer shall give Funding 2 not more than 60 days' and not less
         than 30 days' prior written notice of the Master Issuer's decision to
         exercise its option to require Funding 2 to prepay the relevant Loan
         Tranche. Any prepayment by Funding 2 will be made without penalty or
         premium but will be subject to Clause 16.

9.3      APPLICATION OF MONIES

(a)      The Master Issuer hereby agrees to apply any amounts received by way
         of prepayment of a Rated Loan Tranche pursuant to Clause 9.1 or Clause
         9.2 in making prepayments under the relevant Series and Class of
         Notes.

(b)      The Master Issuer hereby agrees to apply any amounts received by way
         of prepayment of a Subordinated Loan Tranche pursuant to Clause 9.1 in
         making prepayments under the relevant Master Issuer Subordinated Loan
         Agreement.

(c)      The Master Issuer hereby agrees to apply any amounts received by way
         of prepayment of a Start-Up Loan Tranche pursuant to Clause 9.1 in
         making prepayments under the relevant Master Issuer Start-Up Loan
         Agreement.

10.      TAXES

10.1     NO GROSS UP

         All payments by Funding 2 under this Agreement shall be made without
         any deduction or withholding for or on account of, and free and clear
         of, any Taxes, except to the extent that Funding 2 is required by law
         to make payment subject to such deduction or withholding.

10.2     TAX RECEIPTS

         All Taxes required by law to be deducted or withheld by Funding 2 from
         any amounts paid or payable under this Agreement shall be paid by
         Funding 2 when due and Funding 2 shall, within 30

                                      12

<PAGE>

         days of the payment being made, deliver to the Master Issuer evidence
         satisfactory to the Master Issuer (including all relevant Tax
         receipts) that the payment has been duly remitted to the appropriate
         authority.

11.      ILLEGALITY

         If, at any time, it is unlawful for the Master Issuer to make, fund or
         allow to remain outstanding a Loan Tranche made by it under this
         Agreement, then the Master Issuer shall, promptly after becoming aware
         of the same, deliver to Funding 2, the Funding 2 Security Trustee and
         the Rating Agencies a legal opinion to that effect from reputable
         counsel and if the Master Issuer so requires, Funding 2 shall promptly
         to the extent necessary to cure such illegality prepay such Loan
         Tranche subject to and in accordance with the provisions of Clause
         9.1.

12.      MITIGATION

         If circumstances arise in respect of the Master Issuer which would, or
         would upon the giving of notice, result in:

         (a)     the prepayment of the Loan Tranches pursuant to Clause 11; or

         (b)     a withholding or deduction from the amount to be paid by
                 Funding 2 for or on account of Taxes pursuant to Clause 10,

         then, without in any way limiting, reducing or otherwise qualifying
         the obligations of Funding 2 under this Agreement, the Master Issuer
         shall:

         (i)     promptly upon becoming aware of the circumstances, notify the
                 Funding 2 Security Trustee, Funding 2 and the Rating Agencies;
                 and

         (ii)    upon written request from Funding 2, take such reasonable
                 steps as may be practical to mitigate the effects of those
                 circumstances including (without limitation) the assignment of
                 the Master Issuer's rights under this Agreement to, and
                 assumption of all the Master Issuer's obligations under this
                 Agreement by, another company satisfactory to the Funding 2
                 Security Trustee, which is willing to participate in the Loan
                 Tranches in its place and which is not subject to (a) and/or
                 (b) above,

         provided that no such transfer or assignment and transfer of such
         rights and obligations may be permitted unless the Rating Agencies
         confirm in writing to Funding 2 and the Funding 2 Security Trustee
         that there will be no downgrading of the then current rating of the
         Notes issued by the Master Issuer as a result and Funding 2
         indemnifies the Master Issuer for any reasonable costs and expenses
         properly incurred as a result of such transfer or assignment.

13.      QREPRESENTATIONS AND WARRANTIES OF FUNDING 2

13.1     REPRESENTATIONS AND WARRANTIES

         Funding 2 makes the representations and warranties set out in this
         Clause 13 to the Master Issuer and the Funding 2 Security Trustee (as
         trustee for each of the Funding 2 Secured Creditors).

13.2     STATUS

         (a)     It is a limited liability company duly incorporated, validly
                 existing and registered under the laws of the jurisdiction in
                 which it is incorporated, capable of being sued in its own
                 right and not subject to any immunity from any proceedings;
                 and

                                      13

<PAGE>

         (b)     it has the power to own its property and assets and to carry
                 on its business as it is being conducted.

13.3     POWERS AND AUTHORITY

         It has the power to enter into, perform and deliver, and has taken all
         necessary corporate and other action to authorise the execution,
         delivery and performance by it of, each of the Transaction Documents
         to which it is a party.

13.4     LEGAL VALIDITY

         Each Transaction Document to which it is or will be a party
         constitutes or when executed in accordance with its terms will
         constitute, a legal, valid and binding obligation of Funding 2.

13.5     NON-CONFLICT

         The execution by it of each of the Transaction Documents to which it
         is a party and the exercise by it of its rights and the performance of
         its obligations under such Transaction Documents including, without
         limitation, borrowing pursuant to the terms of this Agreement or
         granting any security contemplated by the Transaction Documents will
         not:

         (a)     result in the existence or imposition of, nor oblige it to
                 create, any Security Interest in favour of any person (other
                 than the Funding 2 Secured Creditors or as otherwise
                 contemplated in the Transaction Documents) over all or any of
                 its present or future revenues or assets;

         (b)     conflict with any document which is binding upon it or any of
                 its assets;

         (c)     conflict with its constitutional documents; or

         (d)     conflict with any law, regulation or official or judicial
                 order of any government, governmental body or court, domestic
                 or foreign, having jurisdiction over it.

13.6     NO LITIGATION

         No litigation, arbitration or administrative proceedings are current
         or, to its knowledge, pending or threatened.

13.7     NO DEFAULT

         No Master Intercompany Loan Event of Default is continuing unremedied
         (if capable of remedy) or unwaived or would result from the making of
         any Loan Tranche.

13.8     AUTHORISATIONS

         All consents, licences, approvals, notices and authorisations required
         or desirable in connection with the entry into, performance, validity
         and enforceability of, and the transactions contemplated by, the
         Transaction Documents have been obtained or effected (as appropriate)
         and are in full force and effect.

13.9     REGISTRATION REQUIREMENTS

         Except for due registration of the Funding 2 Deed of Charge under
         Section 395 of the Companies Act 1985, it is not necessary that the
         Funding 2 Deed of Charge or this Agreement be filed, recorded or
         enrolled with any authority or that, except for registration fees
         payable to the Registrar of

                                      14

<PAGE>

         Companies in respect of the Funding 2 Deed of Charge, any stamp,
         registration or similar tax be paid on or in respect thereof.

13.10    RANKING OF SECURITY

         The security conferred by the Funding 2 Deed of Charge constitutes a
         first priority security interest of the type described, and over the
         security assets referred to, in the Funding 2 Deed of Charge and the
         Funding 2 Charged Property is not subject to any prior or pari passu
         Security Interests.

13.11    NO OTHER BUSINESS

(a)      It has not traded or carried on any business since its date of
         incorporation or engaged in any activity whatsoever that is not
         incidental to or necessary in connection with any of the activities in
         which the Transaction Documents provide or envisage that it will
         engage; and

(b)      it is not party to any material agreements other than the Transaction
         Documents.

13.12    OWNERSHIP

(a)      Its entire issued share capital is legally and beneficially owned and
         controlled by Holdings; and

(b)      its shares are fully paid.

13.13    GOOD TITLE AS TO ASSETS

         Subject to the Security Interests created under the Funding 2 Deed of
         Charge, it is and will remain the absolute beneficial owner of the
         Funding 2 Share and absolute legal and beneficial owner of all other
         assets charged or assigned by the Funding 2 Deed of Charge to which it
         is a party.

13.14    TAX

(a)      It is a resident for tax purposes and legally domiciled in its
         jurisdiction of incorporation;

(b)      it has no branch, business establishment or other fixed establishment
         outside the United Kingdom; and

(c)      no part of its purpose or objects in being party to the Transaction
         Documents and the transactions contemplated by them has been, is or
         will be an 'unallowable purpose' within the meaning of paragraph 13 of
         Schedule 9 to the Finance Act 1996, paragraph 23 of Schedule 26 to the
         Finance Act 2002 or Regulation 12 of the Taxation of Securitisation
         Companies Regulations 2006.

13.15    REPETITION

         The representations in this Clause 13 shall survive the execution of
         this Agreement and the making of each Loan Tranche under this
         Agreement, and shall be repeated by Funding 2 on each Closing Date
         relating to the making of each Loan Tranche by reference to the facts
         and circumstances then existing.

14.      COVENANTS

14.1     DURATION

         The undertakings in this Clause 14 shall remain in force from the date
         of this Agreement for so long as any amount is or may be outstanding
         under this Agreement.

                                      15

<PAGE>

14.2     INFORMATION

         Funding 2 shall supply to the Funding 2 Security Trustee and the
         Rating Agencies:

         (a)     as soon as the same are available its audited accounts for
                 that Financial Year; and

         (b)     promptly, such other information in connection with the
                 matters contemplated by the Transaction Documents, as the
                 Funding 2 Security Trustee or the Rating Agencies may
                 reasonably request.

14.3     NOTIFICATION OF DEFAULT

         Funding 2 shall notify the Master Issuer and the Funding 2 Security
         Trustee of any Master Intercompany Loan Event of Default (and the
         steps, if any, being taken to remedy it) promptly upon Funding 2
         becoming aware of its occurrence.

14.4     AUTHORISATIONS

         Funding 2 shall promptly:

         (a)     obtain, maintain and comply with the terms of; and

         (b)     upon request, supply certified copies to the Master Issuer and
                 the Funding 2 Security Trustee of,

         any authorisation required under any law or regulation to enable it to
         perform its obligations under, or for the validity or enforceability
         of, any Transaction Document to which it is a party.

14.5     PARI PASSU RANKING

         Funding 2 shall procure that its obligations under the Transaction
         Documents do and will rank at least pari passu with all its other
         present and future unsecured obligations, except for obligations
         mandatorily preferred by law.

14.6     NEGATIVE PLEDGE

         Funding 2 shall not create or permit to subsist any Security Interest
         over or in respect of any of its assets (unless arising by operation
         of law) other than as provided pursuant to the Transaction Documents.

14.7     DISPOSALS

         Funding 2 shall not, either in a single transaction or in a series of
         transactions, whether related or not and whether voluntarily or
         involuntarily, sell, lend, assign, transfer, lease, part with or
         otherwise dispose of or grant any option over all or any part of its
         assets, properties or undertakings or any interest, estate, right,
         title or benefit therein, other than as provided for pursuant to the
         Transaction Documents.

14.8     MERGERS AND ACQUISITIONS

(a)      Funding 2 shall not enter into any amalgamation, demerger, merger or
         reconstruction.

(b)      Funding 2 shall not acquire any assets or business or make any
         investments other than as contemplated in the Transaction Documents.

                                      16

<PAGE>

14.9     LENDING AND BORROWING

(a)      Except as provided or contemplated under the Transaction Documents,
         Funding 2 shall not make any loans or provide any other form of credit
         to any person.

(b)      Funding 2 shall not give any guarantee or indemnity to or for the
         benefit of any person in respect of any obligation of any other person
         or enter into any document under which Funding 2 assumes any liability
         of any other person.

(c)      Funding 2 shall not incur any indebtedness in respect of any borrowed
         money other than under the Transaction Documents.

14.10    SHARES AND DIVIDENDS

         Funding 2 shall not:

         (a)     declare or pay any dividend or make any other distribution in
                 respect of any of its shares other than in accordance with the
                 Funding 2 Deed of Charge;

         (b)     issue any further shares or alter any rights attaching to its
                 issued shares as at the date hereof; or

         (c)     repay or redeem any of its share capital.

14.11    CHANGE OF BUSINESS

(a)      Funding 2 shall not carry on any business or engage in any activity
         other than as contemplated by the Transaction Documents or which is
         not incidental to or necessary in connection with any of the
         activities in which the Transaction Documents provide or envisage that
         Funding 2 will engage.

(b)      Funding 2 shall not have any subsidiaries or subsidiary undertakings
         as defined in the Companies Act 1985, as amended.

(c)      Funding 2 shall not have any employees or own any premises.

14.12    TAX

(a)      Funding 2 shall not apply to become part of any group for the purposes
         of sections 43A-D of the Value Added Tax Act 1994 (including any other
         legislative provisions supplementing the same) with the Master Issuer
         unless required to do so by law.

(b)      If Funding 2 falls within the Securitisation Tax Regime, Funding 2
         shall take reasonable steps to ensure that it does not fall outside
         the Securitisation Tax Regime.

14.13    UNITED STATES ACTIVITIES

         Funding 2 will not engage in any activities in the United States
         (directly or through agents), will not derive any income from United
         States sources as determined under United States income tax principles
         and will not hold any property if doing so would cause it to be
         engaged or deemed to be engaged in a trade or business within the
         United States as determined under United States tax principles.

                                      17

<PAGE>

15.      DEFAULT

15.1     MASTER INTERCOMPANY LOAN EVENTS OF DEFAULT

         Each of the events set out in Clause 15.2 to Clause 15.8 (inclusive)
         is a MASTER INTERCOMPANY LOAN EVENT OF DEFAULT (whether or not caused
         by any reason whatsoever outside the control of Funding 2 or any other
         person).

15.2     NON-PAYMENT

         Subject to Clause 5.1, Funding 2 does not pay on the due date or such
         failure to pay continues for a period of three London Business Days
         after such due date any amount payable by it under this Agreement or
         any other loan agreement entered into by Funding 2 at the place at and
         in the currency in which it is expressed to be payable.

15.3     BREACH OF OTHER OBLIGATIONS

         Funding 2 does not comply in any material respect (in the opinion of
         the Funding 2 Security Trustee) with any of its obligations under the
         Transaction Documents to which it is a party (other than those
         referred to in Clause 15.2) and such non-compliance, if capable of
         remedy, is not remedied promptly and in any event within twenty London
         Business Days of Funding 2 becoming aware of the non-compliance or
         receipt of a written notice from the Funding 2 Security Trustee
         requiring Funding 2's non-compliance to be remedied.

15.4     MISREPRESENTATION

         A representation, warranty or statement made or repeated in or in
         connection with any Transaction Document or in any document delivered
         by or on behalf of Funding 2 under or in connection with any
         Transaction Document is incorrect in any material respect (in the
         opinion of the Funding 2 Security Trustee) when made or deemed to be
         made or repeated.

15.5     INSOLVENCY

         Any corporate action is taken by Funding 2, or any legal proceedings
         are started, for the winding-up, dissolution, administration or
         appointment of a liquidator, receiver, administrator, administrative
         receiver, trustee or similar officer of Funding 2 or of any or all of
         Funding 2's revenues and assets or any application is made or petition
         is lodged for the making of an administration order in relation to
         Funding 2.

15.6     CREDITORS' PROCESS

         Any attachment, sequestration, distress or execution affects any asset
         of Funding 2 and is not discharged within twenty London Business Days.

15.7     UNLAWFULNESS

         It is or becomes unlawful for Funding 2 to perform any of its
         obligations under any Transaction Document.

15.8     THE FUNDING 2 DEED OF CHARGE

         The Funding 2 Deed of Charge is no longer binding on or enforceable
         against Funding 2 or effective to create the security intended to be
         created by it.

                                      18

<PAGE>

15.9     OWNERSHIP

         The entire issued share capital of Funding 2 ceases to be legally and
         beneficially owned and controlled by Holdings.

15.10    ACCELERATION OF MASTER INTERCOMPANY LOAN

         Upon the occurrence of a Master Intercompany Loan Event of Default
         which is continuing unremedied and/or has not been waived, the Funding
         2 Security Trustee may by written notice to Funding 2 (a MASTER
         INTERCOMPANY LOAN ACCELERATION NOTICE) which is copied to each of the
         Funding 2 Secured Creditors and the Mortgages Trustee:

         (a)     declare all Loan Tranches made under this Agreement to be
                 immediately due and payable, whereupon the same shall, subject
                 to Clause 15.11, become so payable together with accrued
                 interest thereon and any other sums then owed by Funding 2
                 under this Agreement; and/or

         (b)     declare the Loan Tranches to be due and payable on demand of
                 the Funding 2 Security Trustee.

15.11    REPAYMENT OF MASTER INTERCOMPANY LOAN ON ACCELERATION

         Upon the Funding 2 Security Trustee declaring the Loan Tranches to be
         immediately due and payable pursuant to Clause 15.10, the amount due
         and payable in respect of each Loan Tranche shall be paid by Funding 2
         without penalty or premium but subject to Clause 16.

16.      DEFAULT INTEREST AND INDEMNITY

16.1     DEFAULT LOAN INTEREST PERIODS

         If any sum due and payable by Funding 2 under this Agreement is not
         paid on the due date for payment in accordance with this Agreement or
         if any sum due and payable by Funding 2 under any judgment or decree
         of any court in connection with this Agreement is not paid on the date
         of such judgment or decree, the period beginning on such due date or,
         as the case may be, the date of such judgment or decree and ending on
         the date upon which the obligation of Funding 2 to pay such sum (the
         balance thereof for the time being unpaid being herein referred to as
         an UNPAID SUM) is discharged shall be divided into successive periods,
         each of which (other than the first) shall start on (and include) a
         Funding 2 Interest Payment Date and end on (but exclude) the next
         Funding 2 Interest Payment Date unless the Funding 2 Security Trustee
         otherwise provides having regard to when such unpaid sum is likely to
         be paid.

16.2     DEFAULT INTEREST

         During each such period relating to an unpaid sum as is mentioned in
         this Clause 16 an unpaid sum shall bear interest at the rate per annum
         which the Master Issuer, acting reasonably, determines and certifies
         to Funding 2 and the Funding 2 Security Trustee will be sufficient to
         enable it to pay interest and other costs and indemnities on or in
         respect of any amount which the Master Issuer does not pay as a result
         of Funding 2's non-payment under this Agreement, as a result of such
         unpaid sum not being paid to it.

16.3     PAYMENT OF DEFAULT INTEREST

         Any interest which shall have accrued under Clause 16.2 in respect of
         an unpaid sum shall be due and payable and shall be paid by Funding 2
         at the end of the period by reference to which it is calculated.

                                      19

<PAGE>

16.4     BROKEN PERIODS

         Funding 2 shall forthwith on demand indemnify the Master Issuer
         against any loss or liability that the Master Issuer incurs as a
         consequence of any payment of principal being received from any source
         otherwise than on a Funding 2 Interest Payment Date or an overdue
         amount being received otherwise than on its due date.

16.5     FUNDING 2'S PAYMENT INDEMNITY

         Funding 2 undertakes to indemnify the Master Issuer:

         (a)     against any cost, claim, loss, expense (including legal fees)
                 or liability together with any amount in respect of
                 Irrecoverable VAT thereon (other than by reason of the
                 negligence or wilful default by the Master Issuer) which it
                 may sustain or incur as a consequence of the occurrence of any
                 Master Intercompany Loan Event of Default or any default by
                 Funding 2 in the performance of any of the obligations
                 expressed to be assumed by it in any of the Transaction
                 Documents (other than by reason of negligence or wilful
                 default on the part of the Master Issuer or prior breach by
                 the Master Issuer of the terms of any of the Transaction
                 Documents to which it is a party);

         (b)     against any loss it may suffer as a result of its funding a
                 Loan Tranche requested by Funding 2 under the Master
                 Intercompany Loan Agreement but not made; and

         (c)     against any other loss or liability (other than by reason of
                 the negligence or default of the Master Issuer or breach by
                 the Master Issuer of the terms of any of the Transaction
                 Documents to which it is a party (except where such breach is
                 caused by the prior breach of Funding 2) or loss of profit) it
                 may suffer by reason of having made a Loan Tranche available
                 or entering into this Agreement or enforcing any security
                 granted pursuant to the Funding 2 Deed of Charge.

17.      PAYMENTS

17.1     PAYMENT

(a)      Subject to Clause 5, all amounts of interest and principal to be paid
         to the Master Issuer under this Agreement shall be paid in Sterling
         for value by Funding 2 to the Master Issuer Transaction Account.

(b)      On each date on which this Agreement requires any amount other than
         the amounts specified in Clause 17.1 to be paid by Funding 2, Funding
         2 shall, save as provided otherwise herein, make the same available to
         the Master Issuer by payment in Sterling in immediately available,
         freely transferable, cleared funds to the Master Issuer Transaction
         Account.

17.2     ALTERNATIVE PAYMENT ARRANGEMENTS

         If, at any time, it shall become impracticable (by reason of any
         action of any governmental authority or any change in law, exchange
         control regulations or any similar event) for Funding 2 to make any
         payments under this Agreement in the manner specified in Clause 17.1,
         then Funding 2 shall make such alternative arrangements for the
         payment direct to the Master Issuer of amounts due under this
         Agreement as are acceptable to the Funding 2 Security Trustee.

                                      20

<PAGE>

17.3     NO SET-OFF

         All payments required to be made by Funding 2 under this Agreement
         shall be calculated without reference to any set-off or counterclaim
         and shall be made free and clear of, and without any deduction for or
         on account of, any set-off or counterclaim.

18.      ENTRENCHED PROVISIONS

         Each of Funding 2, the Master Issuer and the Funding 2 Security
         Trustee acknowledge and agree that Funding 2 may from time to time
         enter into New Funding 2 Loan Agreements and that the obligation of
         Funding 2 to repay the Loan Tranches made under this Agreement will
         rank pari passu with the obligations of Funding 2 to repay any such
         other loans made under such New Funding 2 Loan Agreements. If Funding
         2 intends to enter into a New Funding 2 Loan Agreement then the
         provisions of this Agreement may be varied (with the consent of the
         parties to this Agreement to the extent necessary to reflect the terms
         of such New Funding 2 Loan Agreement) in accordance with Clause 18 of
         the Funding 2 Deed of Charge PROVIDED THAT no variation shall be made
         to any of the following terms without the prior written consent of the
         Funding 2 Secured Creditors and the Rating Agencies:

         (a)     the determination of the Loan Tranche Rates of Interest;

         (b)     Clause 5 (Limited Recourse);

         (c)     Clause 10 (Taxes); and

         (d)     Clause 19.5 (Funding 2 Security Trustee).

19.      FURTHER PROVISIONS

19.1     EVIDENCE OF INDEBTEDNESS

         In any proceeding, action or claim relating to a Loan Tranche a
         statement as to any amount due to the Master Issuer under such Loan
         Tranche which is certified as being correct by an officer of the
         Funding 2 Security Trustee shall, unless otherwise provided in this
         Agreement, be prima facie evidence that such amount is in fact due and
         payable.

19.2     ENTIRE AGREEMENT, AMENDMENTS AND WAIVER AND RIGHTS CUMULATIVE

(a)      This Agreement sets out the entire agreement and understanding between
         the parties with respect to the subject matter of this Agreement
         superseding all prior oral or written understandings other than the
         other Transaction Documents.

(b)      Subject to Clause 18, no amendment or waiver of any provision of this
         Agreement nor consent to any departure by any of the parties therefrom
         shall in any event be effective unless the same shall be in writing
         and signed by each of the parties hereto. In the case of a waiver or
         consent, such waiver or consent shall be effective only in the
         specific instance and as against the party or parties giving it for
         the specific purpose for which it is given.

(c)      The respective rights of each of the parties to this Agreement are
         cumulative and may be exercised as often as they consider appropriate.
         No failure on the part of any party to exercise, and no delay in
         exercising, any right hereunder shall operate as a waiver thereof, nor
         shall any single or partial exercise of any such right preclude any
         other or further exercise thereof or the exercise of any other right.
         The remedies in this Agreement are cumulative and not exclusive of any
         remedies provided by law.

                                      21
<PAGE>

19.3     ASSIGNMENT

         Neither the Master Issuer nor Funding 2 may assign or transfer any of
         its respective rights and obligations under this Agreement PROVIDED
         THAT:

         (a)     the Master Issuer may assign its rights, title, interest or
                 benefit hereunder to the Master Issuer Security Trustee
                 pursuant to the Master Issuer Deed of Charge; and

         (b)     Funding 2 may assign its rights hereunder to the Funding 2
                 Security Trustee pursuant to the Funding 2 Deed of Charge.

19.4     SEVERABILITY

         If a provision of this Agreement is or becomes illegal, invalid or
         unenforceable in any jurisdiction, that shall not affect:

         (a)     the validity or enforceability in that jurisdiction of any
                 other provision of this Agreement; or

         (b)     the validity or enforceability in other jurisdictions of that
                 or any other provision of this Agreement.

19.5     FUNDING 2 SECURITY TRUSTEE

         The Funding 2 Security Trustee shall have no responsibility for any of
         the obligations of the Master Issuer or any other party to this
         Agreement (other than itself). For the avoidance of doubt, the parties
         to this Agreement acknowledge that the rights and obligations of the
         Funding 2 Security Trustee under this Agreement are governed by the
         Funding 2 Deed of Charge.

19.6     COUNTERPARTS

         This Agreement may be executed in any number of counterparts (manually
         or by facsimile) and by different parties hereto in separate
         counterparts, each of which when so executed shall be deemed to be an
         original and all of which when taken together shall constitute one and
         the same instrument.

19.7     THIRD PARTY RIGHTS

         A person who is not a party to this Agreement may not enforce any of
         its terms under the Contracts (Rights of Third Parties) Act 1999, but
         this shall not affect any right or remedy of a third party which
         exists or is available apart from that Act.

20.      REDENOMINATION

         Each obligation under this Agreement which has been denominated in
         Sterling shall be redenominated in Euro in accordance with applicable
         legislation passed by the European Monetary Union upon such
         redenomination of the Notes.

                                      22

<PAGE>

21.      NOTICES

         Any notices to be given pursuant to this Agreement to any of the
         parties hereto shall be sufficiently served if sent by prepaid first
         class post, by hand or facsimile transmission and shall be deemed to
         be given (in the case of facsimile transmission) when despatched,
         (where delivered by hand) on the day of delivery if delivered before
         5.00 p.m. on a London Business Day or on the next London Business Day
         if delivered thereafter or (in the case of first class post) when it
         would be received in the ordinary course of the post and shall be
         sent:

         (a)     in the case of the Master Issuer: to Permanent Master Issuer
                 PLC, 35 Great St. Helen's, London EC3A 6AP (facsimile number
                 +44 (0)20 7398 6325) for the attention of the Secretary with a
                 copy to Bank of Scotland plc, Treasury Division, 33 Old Broad
                 Street, London EC2N 1HZ (facsimile number +44 (0)20 7574 8303)
                 for the attention of Head of Mortgage Securitisation and
                 Covered Bonds;

         (b)     in the case of Funding 2: to Permanent Funding (No. 2)
                 Limited, 35 Great St. Helen's, London EC3A 6AP (facsimile
                 number +44 (0)20 7398 6325) for the attention of the Secretary
                 with a copy to Bank of Scotland plc, Treasury Division, 33 Old
                 Broad Street, London EC2N 1HZ (facsimile number +44 (0)20 7574
                 8303) for the attention of Head of Mortgage Securitisation and
                 Covered Bonds;

         (c)     in the case of the Funding 2 Security Trustee: to the Bank of
                 New York, One Canada Square, London E14 5AL (facsimile number
                 +44 (0)20 7964 2533), for the attention of Corporate Trust
                 Administration - ABS/MBS); and

         (d)     in the case of Agent Bank, to Citibank, N.A., Citigroup
                 Centre, Canada Square, Canary Wharf, London E14 5LB,
                 (facsimile number 020 7508 3881) for the attention of Rate
                 Fixing,

         or to such other address or facsimile number or for the attention of
         such other person or entity as may from time to time be notified by
         any party to the others by written notice in accordance with the
         provisions of this Clause 21. All notices served under this Agreement
         shall be simultaneously copied to the Funding 2 Security Trustee by
         the person serving the same.

22.      GOVERNING LAW AND SUBMISSION TO JURISDICTION

22.1     This Agreement is governed by the laws of England.

22.2     Each party to this Agreement hereby irrevocably submits to the
         exclusive jurisdiction of the English courts in any action or
         proceeding arising out of or relating to this Agreement, and hereby
         irrevocably agrees that all claims in respect of such action or
         proceeding may be heard and determined by such courts. Each party to
         this Agreement hereby irrevocably waives, to the fullest extent it may
         possibly do so, any defence or claim that the English courts are an
         inconvenient forum for the maintenance or hearing of such action or
         proceeding.

IN WITNESS WHEREOF the parties have executed and delivered this Agreement as a
deed on the day and year first before written.

                                      23

<PAGE>

                                  SCHEDULE 1

                             CONDITIONS PRECEDENT

1.       AUTHORISATIONS

1.1      A copy of the memorandum and articles of association and certificate
         of incorporation of Funding 2.

1.2      A copy of a resolution of the board of directors of Funding 2
         authorising the entry into, execution and performance of the Loan
         Tranche Supplement and each of the relevant Transaction Documents
         related to the relevant Loan Tranche Supplement to which Funding 2 is
         a party and authorising specified persons to execute those on its
         behalf.

1.3      A certificate of a director of Funding 2 certifying:

         (a)     that each document delivered under this paragraph 1 of
                 Schedule 1 is correct, complete and in full force and effect
                 as at a date no later than the date of the Loan Tranche
                 Supplement and undertaking to notify the Funding 2 Security
                 Trustee if that position should change prior to the relevant
                 Closing Date; and

         (b)     as to the identity and specimen signatures of the directors
                 and signatories of Funding 2.

2.       LEGAL OPINION

         Legal opinions of:

         (a)     Allen & Overy LLP, English and U.S. legal advisers to the
                 Seller, the Master Issuer and Funding 2, addressed to the
                 Funding 2 Security Trustee; and

         (b)     Shepherd and Wedderburn LLP, Scottish legal advisers to the
                 Seller, the Master Issuer and Funding 2, addressed to the
                 Funding 2 Security Trustee.

3.       TRANSACTION DOCUMENTS

         Duly executed copies of:

3.1      Bank Account Agreement;

3.2      Cash Management Agreement;

3.3      Controlling Beneficiary Deed;

3.4      Corporate Services Agreement;

3.5      Data Processor Agreement;

3.6      Funding 2 Deed of Charge;

3.7      Funding 2 Guaranteed Investment Contract;

3.8      Funding 2 Start-Up Loan Agreements (if applicable);

3.9      Funding 2 Swap Agreement;

                                      24

<PAGE>

3.10     Master Definitions and Construction Schedule;

3.11     Master Intercompany Loan Agreement;

3.12     Master Issuer Bank Account Agreement;

3.13     Master Issuer Cash Management Agreement;

3.14     Master Issuer Corporate Services Agreement;

3.15     Master Issuer Deed of Charge;

3.16     Master Issuer Master Definitions Schedule;

3.17     Master Issuer Paying Agent and Agent Bank Agreement;

3.18     Master Issuer Post-Enforcement Call Option Agreement;

3.19     Master Issuer Start-up Loan Agreement (dated the relevant Closing
         Date) (if applicable);

3.20     Master Issuer Subordinated Loan Agreement (dated the relevant Advance
         Date) (if applicable);

3.21     Master Issuer Swap Agreements;

3.22     Master Issuer Trust Deed;

3.23     Mortgage Sale Agreement;

3.24     Mortgages Trust Deed;

3.25     Mortgages Trustee Guaranteed Investment Contract;

3.26     Seller Mortgages Trust Assignment Agreement; and

3.27     Servicing Agreement.

                                      25

<PAGE>

                                  SCHEDULE 2

                          FORM OF LOAN TRANCHE NOTICE

From:    Permanent Funding (No. 2) Limited (FUNDING 2)

To:      Permanent Master Issuer plc (the MASTER ISSUER)

Copy:    The Bank of New York (the FUNDING 2 SECURITY TRUSTEE)

Dear Sirs,

1.       We refer to the agreement between, inter alios, ourselves, the Master
         Issuer and the Funding 2 Security Trustee (as from time to time
         amended, varied, novated or supplemented (the MASTER INTERCOMPANY LOAN
         AGREEMENT)) dated 17 October 2006 whereby a Master Intercompany Loan
         Facility was made available to us. Terms defined in the Master
         Intercompany Loan Agreement shall have the same meaning in this
         notice.

2.       We hereby give you notice that, pursuant to the Master Intercompany
         Loan Agreement and upon the terms and subject to the conditions
         contained therein, we wish the following Loan Tranches to be made
         available to us on [specify Closing Date]:

         (a)     Issue [*] [*] [AAA/AA/A/BBB/BB/Subordinated/Start-Up] Loan
                 Tranche to be funded by the Series [*] [Class [*] Notes/Master
                 Issuer Subordinated Loan/Master Issuer Start-Up Loan on the
                 [Closing Date:/Advance Date]

                 (i)     principal amount and currency of [*];

                 (ii)    specified Currency Exchange Rate of GBP 1.00/[*];

                 (iii)   Principal amount (in Sterling) available to be drawn
                         in respect of such Loan Tranche of [POUND][*];

         [repeat for all applicable Loan Tranches]

3.       The interest rate(s) applicable to each Loan Tranche will be as
         follows:

         (a)     Issue [*] [*] [AAA/AA/A/BBB/BB/Master Issuer
                 Subordinated/Master Issuer Start-Up] Loan Tranche: [*] [Set
                 out relevant interest rate(s)]

         [repeat for all applicable Loan Tranches]

Yours faithfully,

For and on behalf of
PERMANENT FUNDING (NO. 2) LIMITED

                                      26

<PAGE>

                                  SCHEDULE 3

                        FORM OF LOAN TRANCHE SUPPLEMENT

                        FORM OF LOAN TRANCHE SUPPLEMENT

                                   [*] - [*]

                       PERMANENT FUNDING (NO. 2) LIMITED
                                 as Funding 2

                          PERMANENT MASTER ISSUER PLC
                               as Master Issuer

                             THE BANK OF NEW YORK
                         as Funding 2 Security Trustee

                                      and

                                CITIBANK, N.A.
                                 as Agent Bank

                                      27

<PAGE>

THIS LOAN TRANCHE SUPPLEMENT is dated [*]

BETWEEN:

(1)      PERMANENT FUNDING (NO. 2) LIMITED (registered number 4441772), a
         private limited company incorporated under the laws of England and
         Wales whose registered office is at 35 Great St. Helen's, London EC3A
         6AP (as FUNDING 2);

(2)      PERMANENT MASTER ISSUER PLC (registered number 5922774), a public
         limited company incorporated under the laws of England and Wales whose
         registered office is at 35 Great St. Helen's, London EC3A 6AP (as
         MASTER ISSUER);

(3)      THE BANK OF NEW YORK, acting through its office at One Canada Square,
         London E14 5AL (in its capacity as FUNDING 2 SECURITY TRUSTEE which,
         expression shall include such company and all other persons or
         companies for the time being acting as security trustee (or
         co-trustee) pursuant to the terms of the Funding 2 Deed of Charge);
         and

(4)      CITIBANK, N.A., acting through its office at Citigroup Centre, Canada
         Square, Canary Wharf, London E14 5LB (in its capacity as AGENT BANK).

This document constitutes the Loan Tranche Supplement relating to the Loan
Tranches described herein. Terms used herein shall be deemed to be defined as
such for the purposes of the Master Intercompany Loan Agreement entered into
between the parties hereto on 17 October 2006 as amended and restated on 1
March 2007 and [*] November 2007. This Loan Tranche Supplement contains the
final terms of the Loan Tranches identified and described herein, is
supplemental to and must be read in conjunction with the Master Intercompany
Loan Agreement.

[TO BE REPEATED FOR EACH LOAN TRANCHE FUNDED BY A SERIES AND CLASS OF NOTES A
MASTER ISSUER SUBORDINATED LOAN AND/OR A START-UP LOAN DATED THE SAME CLOSING
DATE AND/OR ADVANCE DATE]

LOAN TRANCHE: The Series [*] [Class [*] Notes/Master Issuer Subordinated Loan
Advance/Master Issuer Start-Up Loan] will fund the [[*]-[*]
[AAA/AA/A/BBB/BB/Master Issuer Subordinated/Master Issuer Start-Up]] Loan
Tranche which shall have the following terms:

1.       Borrower:                           Permanent Funding (No. 2) Limited

2.       Lender:                             Permanent Master Issuer plc

3.       (a)     Loan Tranche Rating:        [Not Applicable/l]

         (b)     Series Number:              [*]

4.       Initial Outstanding Principal
         Balance:                            [*]

5.       (a)     [Closing Date/Advance
                 Date]:                      [*]

         (b)     Loan Tranche Interest
                 Commencement Date:          [*]

         (c)     Loan Tranche Interest
                 Determination Dates:        [*]

6.       Final Repayment Date:               [*]

                                      28

<PAGE>

7.       Loan Payment Dates:                 [*]

8.       Relevant Margin:                    [*]

9.       Relevant Screen Rate:               [*]

10.      Call Option Date:                   [Not Applicable/The Funding 2
                                             Payment Date occurring in (specify
                                             date)]

11.      Step-Up Date:                       [Not Applicable/The Funding 2
                                             Payment Date occurring in [specify
                                             date]]

12.      Relevant Margin following
         Step-Up Date:                       [Not Applicable/[*]]

13.      Redemption/Payment Basis:           [Bullet Redemption]
                                             [Scheduled Amortisation]
                                             [Pass-through]
                                             [Not Applicable]

14.      Change of Redemption/Payment
         Basis:                              [Specify details of any provision
                                             for change of Loan Tranches into
                                             another Redemption/Payment Basis

15.      Details relating to Bullet
         Loan Tranche:                       [Applicable/Not Applicable]

                                             [if not applicable, delete the
                                             remaining subparagraphs of this
                                             paragraph]

         (a)     Relevant Accumulation
                 Amount:                     [*]

         (b)     Bullet Redemption
                 Date:                       [*]

16.      Details relating to Scheduled       [Applicable/Not Applicable]
         Amortisation Loan Tranche:

                                             [if the Scheduled Amortisation
                                             Loan Tranche is applicable,
                                             specify the Scheduled Amortisation
                                             Dates and Scheduled Amortisation
                                             Instalments below]

                                             [if not applicable, delete the
                                             remaining subparagraphs of this
                                             paragraph]

         (a)     Scheduled
                 Amortisation Dates:         Funding 2 Payment Dates occurring
                                             in [*]

         (b)     Relevant Accumulation
                 Amounts:                    [*]

17.      Details relating to                 [Applicable/Not Applicable]
         Pass-through Loan Tranches:

                                             [If the Pass-through Loan Tranche
                                             is applicable, specify the Funding
                                             2 Interest Payment Date following
                                             which the Pass-Through Loan
                                             Tranches will be due]

                                      29

<PAGE>

18.      Other terms and special
         conditions:                         [Not Applicable/give details]

                                      30

<PAGE>

CONFIRMATIONS:

Funding 2 confirms that:

(a)      no Master Intercompany Loan Event of Default has occurred and is
         continuing which has not been waived, or would result from the making
         of such Loan Tranche;

(b)      the representations and warranties set out in Clause 13 of the Master
         Intercompany Loan Agreement are true on and as of the Closing Date
         specified in this Loan Tranche Supplement by reference to the facts
         and circumstances then existing; and

(c)      as of the Closing Date specified in this Loan Tranche Supplement,
         there will be no debit balance on the Funding 2 Principal Deficiency
         Ledger after the application of the Funding 2 Available Revenue
         Receipts on the next Funding 2 Interest Payment Date.

The Master Issuer confirms that no Note Event of Default has occurred and is
continuing which has not been waived, or would result from the making of such
Loan Tranche.

                                      31

<PAGE>

                                EXECUTION PAGE
                          FOR LOAN TRANCHE SUPPLEMENT

FUNDING 2

EXECUTED as a DEED by                       )
PERMANENT FUNDING (NO. 2) LIMITED           )
acting by two directors                     )

MASTER ISSUER

EXECUTED as a DEED by                       )
PERMANENT MASTER ISSUER PLC                 )
acting by two directors                     )

FUNDING 2 SECURITY TRUSTEE

EXECUTED as a DEED for and on behalf of:    )
                                            )
THE BANK OF NEW YORK                        )
by its authorised signatory                 )

Authorised Signatory                        )

Witness's signature                         )

Name:

Address:

AGENT BANK

EXECUTED as a DEED by an authorised
signatory for                               )
and on behalf of:                           )
CITIBANK, N.A.                              )

Authorised Signatory                        )

Witness's signature                         )

Name:

Address:

                                      32

<PAGE>

                                  SCHEDULE 4

                             SOLVENCY CERTIFICATE

                PERMANENT FUNDING (NO. 2) LIMITED (THE COMPANY)

To:      Permanent Master Issuer plc (the MASTER ISSUER)

Copy:    The Bank of New York (the FUNDING 2 SECURITY TRUSTEE)

We the undersigned HEREBY CERTIFY, that (i) having made all appropriate
searches and investigations of the Company's books and records and the
Company's accounts (both management and those required by law); and (ii) the
officers of the Company having duly considered the provisions of the insolvency
laws of the United Kingdom (including, without limitation, the provisions of
sections 123 and 238 to 243 and 423 of the Insolvency Act 1986, as amended (the
ACT) and the provisions of the equivalent common law of Scotland regarding
gratuitous alienations and fraudulent preferences) we have determined that:

(a)      the Company is not unable to pay its debts within the meaning of
         section 123 of the Act and would not become unable to do so in
         consequence of entering into the Transaction Documents to which it is
         a party or making any drawing or granting any security under the
         Transaction Documents to which it is a party, and the Company's assets
         currently exceed its liabilities (taking into account its actual,
         contingent and prospective liabilities) and will continue to do so
         notwithstanding the entry into by it of the Transaction Documents and
         the making of any drawing or the granting of any security under the
         Transaction Documents to which it is a party;

(b)      no execution or other process issued on a judgment, decree or order of
         any court in favour of a creditor of the Company remains unsatisfied
         in whole or in part;

(c)      to the best of our knowledge and belief no corporate action has been
         taken or is pending, no other steps have been taken and no legal
         proceedings have been commenced or are threatened or are pending for
         (i) the winding-up, liquidation, dissolution, administration or
         reorganisation of the Company; or (ii) the Company to enter into any
         composition or arrangement with its creditors generally; or (iii) the
         appointment of a receiver, administrator, administrative receiver,
         trustee or similar officer in respect of the Company or any of its
         property, undertaking or assets. No event equivalent to any of the
         foregoing has occurred in or under the laws of any relevant
         jurisdiction;

(d)      neither the entry into of the Transaction Documents to which it is a
         party nor the making of any drawing nor granting of security under the
         Transaction Documents to which it is a party would be a transaction at
         an undervalue within the meaning of section 238 of the Act, since the
         value of any consideration received by the Company as a result of such
         drawing and/or grant of security would not be significantly less than
         the value of any consideration provided by the Company under the
         Transaction Documents to which it is a party;

(e)      the entry into of the Transaction Documents to which it is a party,
         any drawing made by the Company under or pursuant to the Transaction
         Documents to which it is a party, and any security granted by the
         Company under or pursuant to the Transaction Documents to which it is
         a party will be entered into or made, as the case may be, by the
         Company, in good faith and for the purpose of carrying on its
         business, and there are reasonable grounds for believing that such
         entry into of such Transaction Documents, such drawings and grants of
         security would benefit the Company;

(f)      neither the entry into the Transaction Documents to which it is a
         party nor the making of any drawing nor the granting of any security
         under the Transaction Documents to which it is a party

                                      33

<PAGE>

         would be a gratuitous alienation under section 242 of the Act (and
         equivalent provisions of common law of Scotland), since such drawing
         and/or grant of security was made for adequate consideration;

(g)      in entering into the Transaction Documents to which it is a party,
         making a drawing under or pursuant to the Transaction Documents to
         which it is a party and/or granting security under or pursuant to the
         Transaction Documents to which it is a party the Company has no desire
         to give a preference to any person as contemplated by section 239 of
         the Act nor is it the purpose of the Company to put assets beyond the
         reach of a person who is making, or may at some time make, a claim
         against the Company or of otherwise prejudicing the interests of such
         a person in relation to the claim which he is making or may make;

(h)      in entering into the Transaction Documents to which it is a party,
         making a drawing under or pursuant to the Transaction Documents to
         which it is a party and/or granting security under or pursuant to the
         Transaction Documents to which it is a party, the Company has not and
         will not breach any provision or exceed any powers contained in its
         Memorandum and Articles of Association; and

(i)      the transaction contemplated by the Transaction Documents constitute
         reciprocal obligations of the Company with the other parties thereto
         for the purposes of section 243 of the Act (and equivalent provisions
         of common law of Scotland) and neither the entry into the Transaction
         Documents to which it is a party nor the making of any drawing nor the
         granting of any security under or pursuant to the Transaction
         Documents to which it is a party is or will be collusive for the
         purposes of prejudicing the general body of creditors of the Company.

Terms defined in the amended and restated master definitions and construction
schedule signed by, amongst others, the Master Issuer and the Funding 2
Security Trustee and dated [*] November 2007 (as the same may be amended,
varied or supplemented from time to time) shall have the same respective
meanings when used in this Certificate.

DATED [*]

Signed for and on behalf of Permanent Funding (No. 2) Limited

.......................................
Director

.......................................
Director/Secretary

                                      34

<PAGE>

                                  SIGNATORIES

FUNDING 2

EXECUTED as a DEED by                       ) /S/ CLAUDIA WALLACE
PERMANENT FUNDING (NO. 2) LIMITED           )
acting by two directors                     ) /S/ HELENA WHITAKER

MASTER ISSUER

EXECUTED as a DEED by                       ) /S/ CLAUDIA WALLACE
PERMANENT MASTER ISSUER PLC                 )
acting by two directors                     ) /S/ HELENA WHITAKER

FUNDING 2 SECURITY TRUSTEE

EXECUTED as a DEED for and on behalf of:    ) /S/ VINCENT GIRAUD
THE BANK OF NEW YORK                        )
by its authorised signatory                 )

Authorised Signatory                        )

Witness's signature /S/ CHRIS WALL

Name:

Address: ALLEN & OVERY LLP
         40 BANK STREET
         LONDON E14 5DU

AGENT BANK

EXECUTED as a DEED by an authorised
signatory for                               )
and on behalf of:
CITIBANK, N.A.                              )

Authorised Signatory                        ) /S/ GEORGIA MITCHELL

Witness's signature /S/ CHRIS WALL

Name:

Address: ALLEN & OVERY LLP
         40 BANK STREET
         LONDON E14 5DU

                                      35

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00134-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00134-of-00352.parquet"}]]