Document:

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                                                                    Exhibit 10.9

                                 PROMISSORY NOTE

$4,336,445                                                    New York, New York
                                                              January 1, 2000

        FOR VALUE RECEIVED, the undersigned, Frederick J. Rowan II (the
"Payor"), hereby promises to pay to the order of The William Carter Company, or
its successor or assign (the "Holder"), at the office of The William Carter
Company, 1590 Adamson Parkway, Suite 400, Morrow, Georgia 30260, Attn: Michael
D. Casey, in lawful money of the United States of America in immediately
available funds, the principal sum of FOUR MILLION THREE HUNDRED THIRTY-SIX
THOUSAND FOUR HUNDRED FORTY-FIVE DOLLARS ($4,336,445), together with any accrued
and unpaid interest on such principal amount from time to time outstanding,
which sum shall be due and payable in installments of $600,000 (or such lesser
amount as remains outstanding) commencing on March 31, 2002 and thereafter on
each anniversary thereof until such principal amount and all accrued and unpaid
interest thereon has been repaid.

        From the date hereof, interest (i) shall accrue on the outstanding
principal amount hereof at a rate which shall be calculated for each quarter of
part thereof of the Holder's fiscal year, and (ii) shall equal the average rate
paid by The William Carter Company under the revolving portion of its senior
credit facility during such period (or if there are no borrowings outstanding
during such period, the average rate that would have been paid thereunder), and
(iii) shall be calculated on the basis of the actual number of days elapsed over
365, from the date hereof to the date of payment.

        The Payor hereby promises to pay interest, on demand, on any overdue
principal and, to the extent permitted by law, on any overdue interest, and on
any overdue amount under any instrument now or hereafter evidencing or securing
the indebtedness evidenced hereby, at a rate equal to the rate of interest set
forth above, plus 2%, calculated on the basis of the actual number of days
elapsed over 365, from the date such principal or interest was due to the date
of payment.

        The Payor shall have the right at any time and from time to time on any
business day to prepay the principal amount of this Note, together with accrued
and unpaid interest thereon, in whole or in part, without penalty or premium,
upon at least two business days' prior written notice to the Holder hereof, such
notice to specify the prepayment date and the principal amount hereof to be
prepaid. In the event the Payor decides not to so prepay this Note in accordance
with any such notice delivered to the Holder hereof, the Payor shall so notify
the Holder hereof, not less than one business day before such prepayment would
otherwise have been made.

        All amounts paid or prepaid by Payor hereunder shall be applied first to
the accrued and unpaid interest, and then to reduce the outstanding principal
amount under this Note.

        All payment and prepayment of the principal hereof and interest hereon
and the respective dates thereof shall be endorsed by the Holder hereof on the
schedule attached hereto and made a part hereof, or on a continuation thereof
which shall be attached hereto and made a part hereof; PROVIDED, HOWEVER, that
the failure of the Holder hereof to make such a notation or any error in such a
notation shall not affect the obligations of the Payor under this Note.

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        This Promissory Note is secured by that certain Stock Pledge Agreement,
dated as of even date herewith, between the Holder and the Payor (the "Stock
Pledge Agreement").

        Notwithstanding anything to the contrary contained herein, in case of
the happening of any of the following events ("Events of Default"):

               (i) default shall be made in the payment of the principal of or
        interest on this Note when and as the same shall become due and payable,
        whether at the due date thereof or at a date fixed for prepayment
        thereof or otherwise;

               (ii) a breach of any covenant contained in this Note, other than
        the covenant to pay the principal of and interest on this Note, which
        breach shall continue unremedied for thirty days after written notice by
        the Holder;

               (iii) the Payor shall (a) voluntarily commence any proceeding or
        file any petition seeking relief under Title 11 of the United States
        Code or any other Federal or state bankruptcy, insolvency, liquidation
        or similar law, (b) consent to the institution of, or fail to controvert
        in a timely and appropriate manner, any such proceeding or the filing of
        any such petition, (c) apply for or consent to the appointment of a
        receiver, trustee, custodian, sequestrator or similar official for him
        or for a substantial part of his property, (d) file an answer admitting
        the material allegations of a petition filed against him in any such
        proceeding, (e) make a general assignment for the benefit of creditors
        or (f) become unable, admit in writing his inability or fail generally
        to pay his debts as they become due;

               (iv) an involuntary proceeding shall be commenced or an
        involuntary petition shall be filed in a court of competent jurisdiction
        seeking (a) relief in respect of the Payor, or of a substantial part of
        the property of the Payor, under Title 11 of the United States Code or
        any other Federal or state bankruptcy, insolvency, receivership or
        similar law or (b) the appointment of a receiver, trustee, Custodian,
        sequestrator or similar official for the Payor or for a substantial part
        of the property of the Payor; and such proceeding or petition shall
        continue undismissed for 60 days or an order or decree approving or
        ordering any of the foregoing shall continue unstayed and in effect for
        60 days;

               (v) an Approved Sale or an Initial Public Offering (each as
        defined in the Stock Acquisition Agreement, dated as of October 30, 1996
        between Carter Holdings, Inc. and the Payor (the "Stock Acquisition
        Agreement")) of Carter Holdings, Inc., a Massachusetts corporation, or
        The William Carter Company, a Massachusetts corporation, shall be
        consummated;

               (vi) an Event of Default (as defined in the Stock Pledge
        Agreement) shall have occurred under the Stock Pledge Agreement;

               (vii) Payor shall, for any reason, cease to be an employee of
        Holder and the date set for repurchase of the Pledged Shares (as defined
        in the Stock Pledge Agreement) pursuant to Section 4(a), 4(b) or 4(c) of
        the Stock Acquisition Agreement, as the case may be, shall have passed;

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then, in any such event (other than an event described in paragraph (iii) or
(iv) above), the Holder hereof may declare the principal amount of this Note
then outstanding to be forthwith due and payable, whereupon the principal
hereof, together with accrued and unpaid interest thereon, shall become
forthwith due and payable both as to principal and interest, without
presentment, demand, protest or any other notice of any kind, all of which are
hereby expressly waived by the Payor (to the extent permitted by law), anything
contained herein to the contrary notwithstanding; and, in any event described in
paragraph (iii) or (iv) above, the principal amount of this Note, together with
accrued and unpaid interest thereon, shall automatically become due and payable
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived by the Payor.

        If any payment under this Note is not made when due, whether at maturity
or by acceleration, Payor shall pay all costs of collection whether or not suit
is filed hereon, on the Stock Pledge Agreement or otherwise, including, but not
limited to, reasonable attorneys' fees and all expenses incurred in connection
with the protection or realization of any collateral.

        Payor hereby certifies and declares that all acts, conditions and things
required to be done and performed and to have happened precedent to the creation
and issuance of this Note, and to constitute this Note the legal, valid and
binding obligation of Payor, enforceable in accordance with the terms hereof,
have been done and performed and happened in due and strict compliance with all
applicable laws.

        The Payor hereby waives (to the extent permitted by law) diligence,
presentment, demand, protest and notice of any kind whatsoever except as
expressly required herein. The nonexercise by the Holder of any of its rights
hereunder or under the Stock Pledge Agreement in any particular instance shall
not constitute a waiver thereof in that or any subsequent instance. The Holder
shall at all times have the right to proceed against any portion of the security
held herefor in such order and in such manner as the Holder may select, without
waiving any rights with respect to any other security. No delay or omission on
the part of the Holder in exercising any right hereunder or under the Stock
Pledge Agreement or other agreement shall operate as a waiver of such right or
of any other right under this Note.

        This Note may be assigned, pledged, hypothecated or otherwise
transferred by the Holder hereof.

        Any notice to be given hereunder shall be in writing and shall be deemed
to have been given (i) when presented personally or (ii) three business days
after being deposited in a regularly maintained receptacle for the United States
Postal Service, postage prepaid, registered or certified, return receipt
requested addressed to the respective party at the address specified herein or
such other address as any party may from time to time designate by written
notice to the other as herein required.

        The Payor irrevocably submits to the jurisdiction of (a) the Supreme
Court of the State of New York, New York County, and (b) the United States
District Court for the Southern District of New York, for the purposes of any
suit, action or other proceeding arising out of or relating to this Note.
Pledgor expressly waives any objection which he may have now or hereafter to the
laying of the venue or to the jurisdiction of any such suit, action or
proceedings.

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        All agreements between Payor and the Holder hereof are expressly limited
so that in no contingency or event whatsoever, whether by reason of advancement
of the proceeds of the loan evidenced hereby, acceleration of maturity of the
unpaid principal balance hereof, or otherwise, shall the interest contracted
for, charged or received by the Holder exceed the maximum amount permissible
under applicable law. If, from any circumstance whatsoever, interest would
otherwise be payable to the Holder hereof in excess of the maximum lawful
amount, then IPSO FACTO, the interest payable to the Holder shall be reduced to
the maximum amount permitted under applicable law, and the amount of interest
for any subsequent period, to the extent less than that permitted by applicable
law, shall to that extent be increased by the amount of such reduction. If from
any circumstance the Holder hereof shall ever receive anything of value deemed
interest by applicable law in excess of the maximum lawful amount, an amount
equal to any excessive interest shall be applied to the reduction of the unpaid
principal balance due hereunder and not to the payment of interest, or if such
excessive interest exceeds the unpaid principal balance due hereunder, such
excess shall be refunded to Payor. All interest paid or agreed to be paid to the
Holder hereof shall, to the extent permitted by applicable law, be amortized,
prorated, allocated or spread throughout the full period until payment in full
of the principal balance due hereunder (including the period of any renewal or
extension) so that interest thereon for such period shall not exceed the maximum
amount permitted by applicable law. The provisions of this paragraph shall
control all agreements between the Payor and the Holder hereof.

        Any provision of this Note that is declared invalid, illegal or
unenforceable in any jurisdiction shall not affect in any way the remaining
provisions hereof in such jurisdiction or render that or any other provision of
this Note invalid, illegal or unenforceable in any other jurisdiction.

        This Note has been executed and delivered in the State of New York and
shall be governed and construed, and all rights and obligation hereunder shall
be determined, in accordance with the laws of the State of New York.

        Executed and delivered by the undersigned as of this 1st day of January,
2000 in the County, City and State of New York.

          Address for notices                 Payor
          to the Payor:

                                              /s/ FREDERICK J. ROWAN, II
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                                               Frederick J. Rowan, II

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                      SCHEDULE OF PAYMENTS AND PREPAYMENTS<PAGE>
                                                                   Exhibit 10.10

                             STOCK PLEDGE AGREEMENT

         This Stock Pledge Agreement (the "Agreement") is entered into as of
January 1, 2000 by and between Frederick J. Rowan, II ("Pledgor") and THE
WILLIAM CARTER COMPANY, a Massachusetts corporation (the "Secured Party").

                               W I T N E S S E T H

         WHEREAS, the Secured Party has agreed to make a loan to Pledgor in the
aggregate amount of $4,336,445.00 and, as evidence thereof, Pledgor has executed
and delivered to the Secured Party a Promissory Note dated as of even date
herewith (the "Note");

         WHEREAS, Pledgor holds an aggregate of 56,649.455 shares (the "Pledged
Shares") of the Class C Stock, par value $0.01 per share, of CARTER HOLDINGS,
Inc., a Massachusetts corporation ("CARTER HOLDINGS"); and

         WHEREAS, as a condition to the making of the loan evidenced by the
Note, the parties contemplate that the Pledged Shares will be pledged and
delivered by the Pledgor to the Secured Party, with duly endorsed instruments of
transfer, as security for such loan.

         NOW, THEREFORE, in consideration of the mutual covenants, conditions
and provisions contained herein and in the Note and for other good and valuable
consideration, the parties hereto agree as follows:

                  Section 1. DEFINITIONS. Capitalized terms used herein without
definition, which are defined in or by reference in the Note, shall have the
respective meanings specified therein.

                  Section 2. PLEDGE. Pledgor hereby conveys, pledges, assigns
and transfers to the Secured Party, and hereby grants to the Secured Party, a
valid, first priority security interest (the "Security Interest") in Pledgor's
right, title, interest in and to the following (the "Pledged Collateral"):

         (a) the Pledged Shares and the certificates representing the Pledged
Shares, all dividends, cash, securities, instruments and other property from
time to time paid, payable or otherwise distributed in respect of or in exchange
for all or any part of the Pledged Shares and all proceeds thereof; and

         (b) all securities issued by CARTER HOLDINGS, or any successor thereto,
from time to time acquired by Pledgor in substitution for or in addition to any
of the foregoing, whenever and however acquired, including without limitation
all stock of CARTER HOLDINGS, all securities convertible into or exchangeable
for such stock and all options, warrants and other rights to purchase such
stock, all certificates and instruments representing such securities, together
with the interest coupons (if any) attached thereto, and all dividends, cash,
securities, instruments and other property from time to time paid, payable or
otherwise distributed in respect of or in exchange for any or all of such
securities and all proceeds thereof.

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         Section 3. SECURED OBLIGATIONS. The Security Interest shall secure for
the benefit of the Secured Party the following (collectively, the "Secured
Obligations"):

         (a) payment and performance of each and every obligation, covenant and
agreement of the Pledgor now, or hereafter existing contained herein or in the
Note, whether for principal, interest, fees, expenses or otherwise, and any
amendments or supplements thereto, extensions or renewals thereof or
replacements therefor; and

         (b) payment of all sums advanced upon an Event of Default or in
accordance herewith by Secured Party to protect the Pledged Collateral, with
interest thereon at the rate equal to the highest interest rate under the Note
as in effect from time to time;

in each case whether direct or indirect, joint or several, absolute or
contingent, liquidated or unliquidated, now or hereafter existing, renewed or
restructured, whether or not from time to time decreased or extinguished (except
as provided in Section 17 hereof) and later increased, created or incurred, and
including all indebtedness, obligations and liabilities of the Pledgor under any
instrument now or hereafter evidencing or securing any of the foregoing.

         Section 4. DELIVERY OF COLLATERAL; ISSUANCE OF ADDITIONAL SHARES.

         (a) All certificates or instruments representing or evidencing the
Pledged Shares shall be delivered to the Secured Party on the date hereof, and
shall be held by the Secured Party pursuant hereto at all times hereafter, and
all certificates and instruments representing or evidencing stock or other
securities acquired by the Pledgor after the date hereof and constituting
Pledged Collateral hereunder shall be delivered to the Secured Party immediately
upon, and held by the Secured Party at all times after, acquisition thereof by
Pledgor. All such certificates or instruments shall be in suitable form for
transfer by delivery, or shall be accompanied by duly executed instruments of
transfer or assignment in blank, all in form and substance satisfactory to the
Secured Party.

         (b) Upon the occurrence and during the continuance of an Event of
Default hereunder, the Secured Party shall have the right, at any time in its
discretion, to transfer to or to cause to be registered on the books of CARTER
HOLDINGS in the name of the Secured Party or any of its nominees any or all of
the Pledged Collateral (with, in the discretion of the Secured Party, such
transfer or registration expressly empowering the Secured Party to vote shares
of stock included in the Pledged Collateral), subject only to the revocable
rights specified in Section 7(a). In addition, the Secured Party shall have the
right at any time to exchange certificates or instruments representing or
evidencing Pledged Collateral for certificates or instruments of smaller or
larger denominations.

         Section 5. REPRESENTATIONS AND WARRANTIES; CERTAIN COVENANTS.

         (a) Pledgor hereby represents and warrants that Pledgor is the legal
and equitable owner of the Pledged Collateral free and clear of all liens,
charges, encumbrances and security interests of every kind and nature, other
than Permitted Encumbrances (as defined below).

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         (b) Pledgor covenants that:

                  (i) except for the Security Interest granted hereby and the
         security interests permitted under or otherwise contemplated hereby
         ("Permitted Encumbrances"), Pledgor will not create, assume, incur or
         permit to exist or to be created, assumed or incurred, directly, or
         indirectly, any lien of any kind on, or any repurchase agreement with
         respect to, the Pledged Collateral, and will defend the Pledged
         Collateral against, and take such action as is necessary to remove, any
         such lien, and will defend the Security Interest against the claims and
         demands of all persons; and

                  (ii) Pledgor shall advise the Secured Party promptly, in
         reasonable detail, of any lien or claim made or asserted against any of
         the Pledged Collateral; and of the occurrence of any other event which
         would have a material adverse effect on the enforceability of the
         Security Interest created hereunder.

         (c) Pledgor may, upon thirty (30) days prior notice to Secured Party,
transfer a part of the Pledged Collateral to one or more persons if: (i) the
person(s) acquiring such Pledged Collateral grant(s) to Secured Party a pledge
of such Pledged Collateral, on terms and conditions reasonably acceptable to
Secured Party; (ii) the ownership of such Pledged Collateral by such person(s)
would not cause Pledgor to breach any of his covenants set forth herein or cause
any Event of Default (or event that with giving of notice, lapse of time or both
could constitute an Event of Default); and (iii) each such person is otherwise
reasonably acceptable to Secured Party. Pledgor shall not otherwise transfer, or
consent to the transfer of, any of the Pledged Collateral.

         Section 6. FURTHER ASSURANCES. Pledgor agrees that at any time and from
time to time, at the expense of Pledgor, Pledgor will promptly execute and
deliver all further instruments and documents, and take all further action that
the Secured Party may reasonably request, in order to perfect and protect the
Security Interest granted or intended to be granted hereby or to enable the
Secured Party to exercise and enforce its rights and remedies hereunder with
respect to any Pledged Collateral.

         Section 7. VOTING RIGHTS; DIVIDENDS; ETC.

         (a) So long as no Event of Default hereunder shall have occurred and be
continuing:

                  (i) Pledgor shall be entitled to exercise any and all voting
         and other consensual rights (if any) pertaining to the Pledged
         Collateral or any part thereof for any purpose not prohibited by the
         terms of this Agreement; and

                  (ii) except as otherwise provided in Sections 4(b) and 7(c)
         hereof, Pledgor shall be entitled to receive and retain any dividends,
         cash and other property from time to time paid, payable or otherwise
         distributed in respect of the Pledged Collateral.

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         (b) Pledgor hereby irrevocably appoints the Secured Party as Pledgor's
proxyholder with respect to the Pledged Shares and any other voting securities
forming a part of the Pledged Collateral with full power and authority to vote
such Pledged Shares and other voting securities and to otherwise act with
respect to such Pledged Shares or other voting securities on behalf of such
Pledgor, PROVIDED that this proxy shall only be operative upon the occurrence of
an Event of Default and so long as such Event of Default continues. Such proxy
shall be irrevocable for so long as any of the Secured Obligations remain in
existence. Pledgor shall execute and deliver (or cause to be executed and
delivered) to the Secured Party all proxies and other instruments as the Secured
Party may reasonably request for the purpose of enabling the Secured Party to
exercise the voting and other rights which it is entitled to exercise pursuant
to this Section 7(b); and

         (c) Upon the occurrence and during the continuance of an Event of
Default hereunder, all rights of the Pledgor to receive and retain dividends,
cash and other property, which they would otherwise be authorized to receive and
retain pursuant to Section 7(a)(ii), shall cease and all such rights shall
thereupon be vested in the Secured Party, who shall thereupon have the sole
right to receive and hold as Pledged Collateral such dividends, cash and other
property. All cash and other property received by Pledgor contrary to the
provisions of this Section 7(c) shall be received in trust for the benefit of
the Secured Party, shall be segregated from other property or funds of Pledgor
and shall be forthwith delivered to the Secured Party as Pledged Collateral in
the same form as so received (with any necessary transfer documents or
endorsements).

         Section 8. DISPOSITIONS AND RELEASE OF COLLATERAL. Pledgor covenants
that Pledgor shall not enter into or perform any agreement to sell, lease,
transfer or otherwise dispose of all or any part of the Pledged Collateral
unless the Security Interest in such Pledged Collateral shall have been released
prior to the time such agreement is entered into.

         Section 9. REASONABLE CARE. The Secured Party shall be deemed to have
exercised reasonable care in the custody and preservation of the Pledged
Collateral in its possession if the Pledged Collateral is accorded treatment
substantially equal to that which the Secured Party accords its own property, it
being understood that the Secured Party shall have no responsibility for (a)
ascertaining or taking action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relative to any Pledged Collateral, whether
or not the Secured Party has or is deemed to have knowledge of such matters,
unless reasonably requested in writing to do so by Pledgor, or (b) taking any
necessary steps (other than steps taken in accordance with the standard of care
set forth above to maintain possession of the Pledged Collateral) to preserve
rights against any parties with respect to any Pledged Collateral.

         Section 10. SECURED PARTY APPOINTED ATTORNEY-IN-FACT. Pledgor hereby
irrevocably appoints the Secured Party Pledgor's attorney-in-fact, with full
authority in the place and stead of Pledgor and in Pledgor's name or otherwise,
if Secured Party elects, upon an Event of Default, to take any action and to
execute any instrument which the Secured Party may deem reasonably necessary or
advisable to accomplish the purposes of this Agreement, including, without
limitation, to receive, endorse and collect all instruments made payable to
Pledgor representing any dividend, interest payment or other distribution in
respect of the Pledged

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Collateral or any part thereof and to give full discharge for the same, when and
to the extent permitted by this Agreement.

         Section 11. SECURED PARTY MAY PERFORM. Upon the occurrence and during
the continuance of an Event of Default hereunder (including an Event of Default
resulting from a failure to perform any agreement contained herein), if Pledgor
fails to perform any agreement contained herein, the Secured Party may itself
perform, or cause performance of, such agreement, and the expenses of the
Secured Party incurred in connection therewith shall be payable by Pledgor.

         Section 12. EVENTS OF DEFAULT; REMEDIES.

         (a) The occurrence of any of the following events shall constitute an
event of default ("Event of Default") hereunder:

                  (i) Any Event of Default (as defined in the Note) shall have
         occurred, which Event of Default shall not be waived or, if capable of
         being cured, shall not be cured within the respective periods provided
         in such Note;

                  (ii) Pledgor fails, breaches or defaults in the payment or
         performance of any of the obligations, covenants or conditions
         contained in this Agreement; or

                  (iii) Any statement, representation or warranty made or
         furnished by Pledgor in connection with this Agreement or any other
         writing delivered to the Secured Party in connection with this
         Agreement and the transactions contemplated herein is false, misleading
         or erroneous in any material respect when made.

         (b) Upon or after the occurrence of an Event of Default:

                  (i) The Secured Party may exercise (in compliance with all
         applicable securities laws) in respect of the Pledged Collateral, in
         addition to other rights, powers and remedies provided for herein or
         otherwise available to it, all the rights, powers and remedies of a
         secured party after default under the Uniform Commercial Code in force
         and effect in each state in which such rights, powers and remedies are
         asserted, all of which rights, powers and remedies shall be cumulative
         and not exclusive, to the extent permitted by applicable law.

                  (ii) The Secured Party may also, without notice except as
         specified below, sell the Pledged Collateral or any part thereof in one
         or more parcels at public or private sale, at any exchange, over the
         counter or at any of the Secured Party's offices or elsewhere, for
         cash, on credit or for future delivery, and at such price or prices and
         upon such other terms as may be commercially reasonable or otherwise in
         such manner as necessary to comply with applicable federal and state
         securities laws. Pledgor agrees that the Secured Party shall not be
         required to register or qualify any of the Pledged Collateral under
         applicable state or federal securities laws in connection with any such
         sale if the sale is effected in a manner that complies with all
         applicable federal and state securities laws. The Secured

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         Party shall be authorized at any such sale (if it deems it advisable to
         do so) to restrict the prospective bidders or purchasers to persons who
         will represent and agree that they are purchasing the Pledged
         Collateral for their own account, for investment and not with a view to
         the distribution thereof. Upon consummation of any such sale the
         Secured Party shall have the right to assign, transfer and deliver to
         the purchaser or purchasers at any such sale, and such purchasers shall
         hold, the property sold absolutely free from any claim or right on the
         part of the Pledgor, and Pledgor hereby waives (to the extent permitted
         by law) all rights of redemption, stay or appraisal which he now has or
         may have at any time in the future under applicable law now existing or
         hereafter enacted.

                  (iii) The Secured Party shall give the Pledgor at least ten
         (10) days' (or such longer period as shall be specified by applicable
         law) notice of the time and place of any public sale or the time after
         which any private sale is to be made, which Pledgor agrees shall
         constitute commercially reasonable notification. At any such public
         sale and (to the extent permitted by law) at any such private sale, the
         Secured Party may bid, in whole or in part, in the form of cancellation
         of Secured Obligations, and the Secured Party may purchase the whole or
         any part of the Pledged Collateral. The Secured Party shall not be
         obligated to make any sale of Pledged Collateral regardless of notice
         of sale having been given. The Secured Party may adjourn any public or
         private sale from time to time by announcement at the time and place
         fixed therefor, and such sale may, without further notice, be made at
         the time and place to which it was so adjourned.

                  (iv) If a sale of all or any part of the Pledged Collateral is
         made on credit or for future delivery, the Pledged Collateral so sold
         may be retained by the Secured Party until the sale price is paid by
         the purchaser or purchasers thereof, but the Secured Party shall not
         incur any liability in case any such purchaser or purchasers shall fail
         to take up and pay for the Pledged Collateral so sold and, in case of
         any such failure, such Pledged Collateral may be sold again upon like
         notice. Pledgor agrees to the maximum extent permitted by applicable
         law that any sale of the Pledged Collateral conducted by the Secured
         Party in accordance with the foregoing provisions of this Section shall
         be deemed to be a commercially reasonable sale under applicable law.

                  (v) As an alternative to exercising the power of sale herein
         conferred upon it, the Secured Party may proceed by a suit or suits at
         law or in equity to foreclose the Security Interest and to sell the
         Pledged Collateral, or any portion thereof, pursuant to a judgment or
         decree of a court or courts of competent jurisdiction.

                  (vi) Any cash held by the Secured Party as Pledged Collateral
         and all cash proceeds received by the Secured Party in respect of any
         sale of, collection from, or other realization upon all or any part of
         the Pledged Collateral shall be applied as follows: (a) first, to the
         payment to the Secured Party of the costs and expenses of retaking,
         holding and preparing for sale of the Pledged Collateral and any other
         fees, expenses, claims, demands, losses, judgments, damages and

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         liabilities payable to the Secured Party pursuant to any provision
         hereof; and (b) second, in accordance with the provisions of the Note.

                  (vii) Any surplus of such cash or cash proceeds held by the
         Secured Party and remaining after payment in full of all the Secured
         Obligations shall be reassigned and redelivered as provided in Section
         17 hereof.

         Section 13. SECURITY INTEREST ABSOLUTE. All rights of the Secured Party
hereunder, the Security Interest, and all obligations of the Pledgor hereunder,
shall be absolute and unconditional irrespective of:

         (a) any lack of validity or enforceability of the Note, any agreement
with respect to any of the Secured Obligations, or any other agreement or
instrument relating to any of the foregoing;

         (b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Secured Obligations, or any other amendment or
waiver of or any consent to and departure from the Note or any other agreement
or instrument;

         (c) any exchange, release or non-perfection of any other collateral, or
any release of, amendment to, waiver of, consent to or departure from any
guaranty, for all or any of the Secured Obligations; and

         (d) any other circumstance which might otherwise constitute a defense
available to, or a discharge of, Pledgor in respect of the Secured Obligations
or in respect of this Agreement.

         Section 14. NOTICES. All notices, demands, requests, and other
communications required or permitted hereunder shall be in writing and shall be
deemed to have been given (i) when presented personally or (ii) three (3)
business days after being deposited in a regularly maintained receptacle for the
United States Postal Service, postage prepaid, registered or certified, return
receipt requested, addressed to the respective party, as the case may be, at the
following address, or such other address as any party may from time to time
designate by written notice to the others as herein required.

If to the Secured Party:         The William Carter Company
                                 1590 Adamson Parkway
                                 Suite 400
                                 Morrow, Georgia 30260
                                 Attn: David A. Brown

If to Pledgor:                   Frederick J. Rowan, II
                                 1835 Balleybunion Drive
                                 Duluth, GA  30136

         Section 15. AMENDMENTS AND WAIVERS. This Agreement may only be amended
by a document signed by the Secured Party and the Pledgor. No waiver of any
provision of this Agreement nor consent by the Secured Party to any departure by
Pledgor therefrom shall in any

                                       7
<PAGE>

event be effective unless the same shall be in writing and signed by the Secured
Party. Any such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given. No failure on the part of
the Secured Party to exercise, and no delay in exercising, any right hereunder
shall operate as a waiver thereof (except as provided above) nor shall any
single or partial exercise of any right hereunder preclude any other or further
exercise thereof or the exercise of any other right.

         Section 16. ELECTION OF REMEDIES. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law. The Secured Party
shall have all of the rights and remedies granted herein and available at law or
in equity, and these same rights and remedies may be pursued separately,
successively or concurrently against Pledgor, at the sole discretion of the
Secured Party. In the event of a breach by any party to this Agreement of its
obligations under this Agreement, any party injured by such breach, in addition
to being entitled to exercise all rights granted by law, including recovery of
damages, shall be entitled to specific performance of its rights under this
Agreement. The parties agree that the provisions of this Agreement shall be
specifically enforceable, it being agreed by the parties that the remedy at law,
including monetary damages, for breach of any such provision will be inadequate
compensation for any loss and that any defense in any action for specific
performance that a remedy at law would be adequate is hereby waived.

         Section 17. RELEASE OF PLEDGED COLLATERAL AND TERMINATION. Unless an
Event of Default shall have occurred and be continuing, the Pledged Collateral
shall be released from the pledge of this Agreement, and the Secured Party shall
reassign and redeliver (or cause to be reassigned and redelivered) to Pledgor,
or, subject to compliance with applicable law, to each person or persons as
Pledgor shall designate or to whoever may be lawfully entitled to receive such
surplus, against receipt, certificates representing the Pledged Shares (if any)
or such Pledged Collateral other than Pledged Shares (if any) as shall not have
been sold or otherwise applied by the Secured Party pursuant to the terms hereof
and shall still be held by it hereunder, together with appropriate instruments
of reassignment and release as follows: promptly after payment of any optional
prepayment of principal in respect of the Note, that number of Pledged Shares
(to the nearest whole share) and that amount of Pledged Collateral other than
Pledged Shares (to the nearest whole unit) determined by multiplying (i) the
fraction equaling the amount of such optional prepayment divided by the unpaid
principal amount of the Note immediately prior to such optional prepayment, by
(ii) the number of Pledged Shares or the amount of such other Pledged
Collateral, as the case may be, then subject to this Agreement. Upon payment in
full of the principal of and interest on the Note, the Secured Party shall
transfer or reassign and redeliver all remaining Pledged Collateral in such
manner and to such persons as provided for above in respect of partial
prepayments. Any transfer, redelivery or reassignment provided for above shall
be without recourse upon or warranty by the Secured Party (other than a warranty
that the Secured Party has not assigned its rights and interests hereunder to
any other person) and at the expense of Pledgor.

         Section 18. CONTINUING SECURITY INTEREST; ASSIGNMENTS. This Agreement
shall create a continuing security interest in the Pledged Collateral and shall
(a) remain in full force and effect until termination as provided in Section 17,
(b) be binding upon the Pledgor, the Secured Party and their respective
successors and assigns, and (c) inure, together with the rights, powers and
remedies of the Pledgor and the Secured Party hereunder, to the benefit of the

                                       8
<PAGE>

Pledgor and the Secured Party and their respective successors, transferees and
assigns, as the case may be. Notwithstanding the foregoing clause (b), Pledgor
shall not be permitted to assign this Agreement or any interest herein.

         Section 19. APPLICABLE LAW AND JURISDICTION.

         (a) The parties hereto expressly acknowledge and agree that this
Agreement shall be governed by and construed in accordance with the laws of the
State of New York. Pledgor hereby expressly and irrevocably agrees and consents
that any suit, action or proceeding arising out of or relating to this Agreement
arid the transactions contemplated herein may be instituted by the Secured Party
in any State or Federal court sitting in the County of New York, State of New
York, United States of America and, by the execution and delivery of this
Agreement, Pledgor expressly waives any objection which he may have now or
hereafter to the laying of the venue or to the jurisdiction of any such suit,
action or proceeding, and irrevocably submits generally and unconditionally to
the jurisdiction of any such court in any such suit, action or proceeding.

         (b) Nothing contained in subsection (a) hereof shall preclude the
Secured Party from bringing any suit, action or proceeding arising out of or
relating to this Agreement or the Note in the courts of any place where Pledgor
or any of Pledgor's property or assets may be found or located. To the extent
permitted by the applicable laws of any such jurisdiction, Pledgor hereby
irrevocably submits to the jurisdiction of any such court and expressly waives,
in respect of any such suit, action or proceeding, the jurisdiction of any court
or courts which now or hereafter, by reason of his present or future domicile,
or otherwise, may be available to him. PLEDGOR AND THE SECURED PARTY HEREBY
WAIVE THE RIGHT TO A TRIAL BY JURY.

         Section 20. SEVERABILITY. Any provision of this Agreement which is
prohibited, unenforceable or not authorized in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition,
unenforceability or non-authorization, without invalidating the remaining
provisions hereof or affecting the validity, enforceability or legality of such
provision in any other jurisdiction.

         Section 2l. NUMBER AND GENDER. Whenever used herein, the singular
number shall include the plural and the plural the singular, and the use of any
gender shall be applicable to all genders.

         Section 22. CAPTIONS. The captions, headings, and arrangements used in
this Agreement are for convenience only and do not and shall not be deemed to
affect, limit, amplify or modify the terms and provisions hereof.

         Section 23. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same instrument.

                                       9
<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their respective officers thereunto duly authorized,
as of the date first above written.

                                    "PLEDGOR"

                                    /s/ FREDERICK J. ROWAN, II
                                    ------------------------------
                                    Frederick J. Rowan, II

                                    "SECURED PARTY"

                                    THE WILLIAM CARTER COMPANY

                                    By: /s/ DAVID A. BROWN
                                        --------------------------
                                        Name:  David A. Brown
                                        Title: Executive Vice President
                                               and Secretary

                                       10

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