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                                                                     Exhibit 4.2

                           THE WILLIAM CARTER COMPANY

                   10.875% SENIOR SUBORDINATED NOTES DUE 2011

                      UNCONDITIONALLY GUARANTEED AS TO THE
                         PAYMENT OF PRINCIPAL, PREMIUM,
                             IF ANY, AND INTEREST BY

                           CARTER'S DE SAN PEDRO, INC.
                                       AND
                           CARTER'S IMAGINATION, INC.

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

                   EXCHANGE AND REGISTRATION RIGHTS AGREEMENT

                                                                 August 15, 2001

Goldman, Sachs & Co.,
Fleet Securities, Inc., and
BNP Paribas Securities Corp.,
   As representatives of the several Purchasers
   named in Schedule I to the Purchase Agreement
c/o Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004

Ladies and Gentlemen:

         The William Carter Company, a Massachusetts corporation (the
"Company"), proposes to issue and sell to the Purchasers (as defined herein)
upon the terms set forth in the Purchase Agreement (as defined herein) its
10.875% Senior Subordinated Notes due 2011, which are unconditionally
guaranteed by Carter's de San Pedro, Inc. and Carter's Imagination, Inc. As
an inducement to the Purchasers to enter into the Purchase Agreement and in
satisfaction of a condition to the obligations of the Purchasers thereunder,
the Company agrees with the Purchasers for the benefit of holders (as defined
herein) from time to time of the Registrable Securities (as defined herein)
as follows:

         1.       CERTAIN DEFINITIONS.  For purposes of this Exchange and
Registration Rights Agreement, the following terms shall have the following
respective meanings:

         "BASE INTEREST" shall mean the interest that would otherwise accrue on
     the Securities under the terms thereof and the Indenture, without giving
     effect to the provisions of this Agreement.

         The term "BROKER-DEALER" shall mean any broker or dealer registered
     with the Commission under the Exchange Act.

         "CLOSING DATE" shall mean the date on which the Securities are
     initially issued.

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         "COMMISSION" shall mean the United States Securities and Exchange
     Commission, or any other federal agency at the time administering the
     Exchange Act or the Securities Act, whichever is the relevant statute for
     the particular purpose.

         "EFFECTIVE TIME," in the case of (i) an Exchange Registration, shall
     mean the time and date as of which the Commission declares the Exchange
     Registration Statement effective or as of which the Exchange Registration
     Statement otherwise becomes effective and (ii) a Shelf Registration, shall
     mean the time and date as of which the Commission declares the Shelf
     Registration Statement effective or as of which the Shelf Registration
     Statement otherwise becomes effective.

         "ELECTING HOLDER" shall mean any holder of Registrable Securities that
     has returned a completed and signed Notice and Questionnaire to the Company
     in accordance with Section 3(d)(ii) or 3(d)(iii) hereof.

         "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, or any
     successor thereto, as the same shall be amended from time to time.

         "EXCHANGE OFFER" shall have the meaning assigned thereto in
     Section 2(a) hereof.

         "EXCHANGE REGISTRATION" shall have the meaning assigned thereto in
     Section 3(c) hereof.

         "EXCHANGE REGISTRATION STATEMENT" shall have the meaning assigned
     thereto in Section 2(a) hereof.

         "EXCHANGE SECURITIES" shall have the meaning assigned thereto in
     Section 2(a) hereof.

         "GUARANTORS" shall have the meaning assigned thereto in the Indenture.

         The term "HOLDER" shall mean each of the Purchasers and other persons
     who acquire Registrable Securities from time to time (including any
     successors or assigns), in each case for so long as such person owns any
     Registrable Securities.

         "INDENTURE" shall mean the Indenture, dated as of August 15, 2001,
     among the Company, the Guarantors and State Street Bank and Trust Company,
     as Trustee, as the same shall be amended from time to time.

         "NOTICE AND QUESTIONNAIRE" means a Notice of Registration Statement and
     Selling Securityholder Questionnaire substantially in the form of Exhibit A
     hereto.

         The term "PERSON" shall mean a corporation, association, partnership,
     organization, business, individual, government or political subdivision
     thereof or governmental agency.

         "PURCHASE AGREEMENT" shall mean the Purchase Agreement, dated as of
     August 8, 2001, among the Purchasers, CH Acquisitions LLC, the Guarantors
     and the Company relating to the Securities.

         "PURCHASERS" shall mean the Purchasers named in Schedule I to the
     Purchase Agreement.

         "REGISTRABLE SECURITIES" shall mean the Securities; PROVIDED, HOWEVER,
     that a Security shall cease to be a Registrable Security when (i) the
     Security has been exchanged for an Exchange Security in an Exchange Offer
     as contemplated in Section 2(a) hereof (PROVIDED that any Exchange Security
     that, pursuant to the last two sentences of Section 2(a), is

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     included in a prospectus for use in connection with resales by
     broker-dealers shall be deemed to be a Registrable Security with respect
     to Sections 5, 6 and 9 until resale of such Registrable Security has
     been effected within the 180-day period referred to in Section 2(a));
     (ii) a Shelf Registration Statement registering such Security under the
     Securities Act has been declared or becomes effective and such Security
     has been sold or otherwise transferred by the holder thereof pursuant to
     and in a manner contemplated by such effective Shelf Registration
     Statement; (iii) such Security is sold pursuant to Rule 144 under
     circumstances in which any legend borne by such Security relating to
     restrictions on transferability thereof, under the Securities Act or
     otherwise, is removed by the Company or pursuant to the Indenture; (iv)
     such Security is eligible to be sold pursuant to paragraph (k) of Rule
     144; or (v) such Security shall cease to be outstanding.

         "REGISTRATION DEFAULT" shall have the meaning assigned thereto in
     Section 2(c) hereof.

         "REGISTRATION EXPENSES" shall have the meaning assigned thereto in
     Section 4 hereof.

         "RESALE PERIOD" shall have the meaning assigned thereto in Section 2(a)
     hereof.

         "RESTRICTED HOLDER" shall mean (i) a holder of Securities or Exchange
     Securities that is an affiliate of the Company within the meaning of Rule
     405, (ii) a holder who acquires Exchange Securities outside the ordinary
     course of such holder's business, (iii) a holder who has arrangements or
     understandings with any person to participate in the Exchange Offer for the
     purpose of distributing Exchange Securities and (iv) a holder that is a
     broker-dealer, but only with respect to Exchange Securities received by
     such broker-dealer pursuant to an Exchange Offer in exchange for
     Registrable Securities acquired by the broker-dealer directly from the
     Company.

         "RULE 144," "RULE 405" AND "RULE 415" shall mean, in each case, such
     rule promulgated under the Securities Act (or any successor provision), as
     the same shall be amended from time to time.

         "SECURITIES" shall mean, collectively, the 10.875% Senior Subordinated
     Notes due 2011 of the Company to be issued and sold to the Purchasers, and
     securities issued in exchange therefor or in lieu thereof pursuant to the
     Indenture. Each Security is entitled to the benefit of the guarantees
     provided for in the Indenture (the "Guarantee") and, unless the context
     otherwise requires, any reference herein to a "Security," an "Exchange
     Security" or a "Registrable Security" shall include a reference to the
     related Guarantee.

         "SECURITIES ACT" shall mean the Securities Act of 1933, or any
     successor thereto, as the same shall be amended from time to time.

         "SHELF REGISTRATION" shall have the meaning assigned thereto in
     Section 2(b) hereof.

         "SHELF REGISTRATION STATEMENT" shall have the meaning assigned thereto
     in Section 2(b) hereof.

         "SPECIAL INTEREST" shall have the meaning assigned thereto in
     Section 2(c) hereof.

         "TRUST INDENTURE ACT" shall mean the Trust Indenture Act of 1939, or
     any successor thereto, and the rules, regulations and forms promulgated
     thereunder, all as the same shall be amended from time to time.

         Unless the context otherwise requires, any reference herein to a
"Section" or "clause" refers to a Section or clause, as the case may be, of this
Exchange and Registration

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Rights Agreement, and the words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Exchange and Registration Rights
Agreement as a whole and not to any particular Section or other subdivision.

         2.       REGISTRATION UNDER THE SECURITIES ACT.

         (a) Except as set forth in Section 2(b) below, the Company agrees to
     file under the Securities Act no later than 120 days after the Closing Date
     (or if such date is not a business day, the next succeeding business day),
     a registration statement relating to an offer to exchange (such
     registration statement, the "Exchange Registration Statement", and such
     offer, the "Exchange Offer") any and all of the Securities for a like
     aggregate principal amount of debt securities issued by the Company and
     guaranteed by the Guarantors, which debt securities and related guarantees
     are substantially identical to the Securities and the Guarantee,
     respectively (and are entitled to the benefits of a trust indenture which
     is substantially identical to the Indenture or is the Indenture and which
     has been qualified under the Trust Indenture Act), except that they have
     been registered pursuant to an effective registration statement under the
     Securities Act and do not contain provisions for the additional interest
     contemplated in Section 2(c) below (such new debt securities hereinafter
     called "Exchange Securities"). The Company agrees to use its best efforts
     to cause the Exchange Registration Statement to become effective under the
     Securities Act no later than 180 days after the Closing Date (or if such
     date is not a business day, the next succeeding business day). The Exchange
     Offer will be registered under the Securities Act on the appropriate form
     and will comply with all applicable tender offer rules and regulations
     under the Exchange Act. The Company further agrees to use its best efforts
     to commence and complete the Exchange Offer promptly, but no later than 45
     days after such registration statement has become effective (or if such
     date is not a business day, the next succeeding business day), hold the
     Exchange Offer open for at least 20 business days and exchange Exchange
     Securities for all Registrable Securities that have been properly tendered
     and not withdrawn on or prior to the expiration of the Exchange Offer. The
     Exchange Offer will be deemed to have been "completed" only if the debt
     securities and related guarantees received by holders other than Restricted
     Holders in the Exchange Offer for Registrable Securities are, upon receipt,
     transferable by each such holder without restriction under the Securities
     Act and the Exchange Act and without material restrictions under the blue
     sky or securities laws of a substantial majority of the States of the
     United States of America. The Exchange Offer shall be deemed to have been
     completed upon the earlier to occur of (i) the Company having exchanged the
     Exchange Securities for all outstanding Registrable Securities pursuant to
     the Exchange Offer and (ii) the Company having exchanged, pursuant to the
     Exchange Offer, Exchange Securities for all Registrable Securities that
     have been properly tendered and not withdrawn before the expiration of the
     Exchange Offer, which shall be on a date that is at least 20 business days
     following the commencement of the Exchange Offer. The Company agrees (x) to
     include in the Exchange Registration Statement a prospectus for use in any
     resales by any holder of Exchange Securities that is a broker-dealer and
     (y) to keep such Exchange Registration Statement effective for a period
     (the "Resale Period") beginning when Exchange Securities are first issued
     in the Exchange Offer and ending upon the earlier of the expiration of the
     180th day after the Exchange Offer has been completed or such time as such
     broker-dealers no longer own any Registrable Securities. With respect to
     such Exchange Registration Statement, such holders shall have the benefit
     of the rights of indemnification and contribution set forth in Sections
     6(a), (c), (d) and (e) hereof.

         (b) If (i) on or prior to the time the Exchange Offer is completed
     existing Commission interpretations are changed such that the debt
     securities or the related guarantees received by holders other than
     Restricted Holders in the Exchange Offer for Registrable Securities

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     are not or would not be, upon receipt, transferable by each such holder
     without restriction under the Securities Act, (ii) the Exchange Offer
     has not been completed within 225 days following the Closing Date or
     (iii) the Exchange Offer is not available to any holder of the
     Securities and such holder notifies the Company in writing within 20
     days following the completion of the Exchange Offer that such holder was
     prohibited from participating in the Exchange Offer, the Company shall,
     in lieu of (or, in the case of clause (iii), in addition to) conducting
     the Exchange Offer contemplated by Section 2(a), file under the
     Securities Act as soon as practicable, but no later than the later of 90
     days after the time such obligation to file arises, a "shelf"
     registration statement providing for the registration of, and the sale
     on a continuous or delayed basis by the holders of, all of the
     Registrable Securities, pursuant to Rule 415 or any similar rule that
     may be adopted by the Commission (such filing, the "Shelf Registration"
     and such registration statement, the "Shelf Registration Statement").
     The Company agrees to use its best efforts (x) to cause the Shelf
     Registration Statement to become or be declared effective no later than
     180 days after such Shelf Registration Statement is filed and to keep
     such Shelf Registration Statement continuously effective for a period
     ending on the earlier of the second anniversary of the Effective Time or
     such time as there are no longer any Registrable Securities outstanding,
     PROVIDED, HOWEVER, that no holder shall be entitled to be named as a
     selling securityholder in the Shelf Registration Statement or to use the
     prospectus forming a part thereof for resales of Registrable Securities
     unless such holder is an Electing Holder, and (y) after the Effective
     Time of the Shelf Registration Statement, promptly upon the request of
     any holder of Registrable Securities that is not then an Electing
     Holder, to take any action reasonably necessary to enable such holder to
     use the prospectus forming a part thereof for resales of Registrable
     Securities, including, without limitation, any action necessary to
     identify such holder as a selling securityholder in the Shelf
     Registration Statement, PROVIDED, HOWEVER, that nothing in this Clause
     (y) shall relieve any such holder of the obligation to return a
     completed and signed Notice and Questionnaire to the Company in
     accordance with Section 3(d)(iii) hereof. The Company further agrees to
     supplement or make amendments to the Shelf Registration Statement, as
     and when required by the rules, regulations or instructions applicable
     to the registration form used by the Company for such Shelf Registration
     Statement or by the Securities Act or rules and regulations thereunder
     for shelf registration, and the Company agrees to furnish to each
     Electing Holder copies of any such supplement or amendment prior to its
     being used or promptly following its filing with the Commission.

         (c) In the event that (i) the Company has not filed the Exchange
     Registration Statement or Shelf Registration Statement on or before the
     date on which such registration statement is required to be filed pursuant
     to Section 2(a) or 2(b), respectively, or (ii) such Exchange Registration
     Statement or Shelf Registration Statement has not become effective or been
     declared effective by the Commission on or before the date on which such
     registration statement is required to become or be declared effective
     pursuant to Section 2(a) or 2(b), respectively, or (iii) the Exchange Offer
     has not been completed within 45 days after the initial effective date of
     the Exchange Registration Statement relating to the Exchange Offer (if the
     Exchange Offer is then required to be made) or (iv) any Exchange
     Registration Statement or Shelf Registration Statement required by Section
     2(a) or 2(b) hereof is filed and declared effective but shall thereafter
     either be withdrawn by the Company or shall become subject to an effective
     stop order issued pursuant to Section 8(d) of the Securities Act suspending
     the effectiveness of such registration statement (except as specifically
     permitted herein) without being succeeded promptly by an additional
     registration statement filed and declared effective (each such event
     referred to in clauses (i) through (iv) (excluding any permitted period
     provided in Section 2(f) hereof), a "Registration Default" and each period
     during which a Registration Default has occurred and is continuing, a
     "Registration Default Period"), then, as liquidated damages for such
     Registration Default, subject to the

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     provisions of Section 9(b), special interest ("Special Interest"), in
     addition to the Base Interest, shall accrue in an amount equal to $.05
     per week per $1,000 in principal amount of Registrable Securities held
     by such holder for each week or portion thereof that the Registration
     Default continues for the first 90-day Registration Default Period. The
     amount of the liquidated damages shall increase by an additional $.05
     per week per $1,000 in principal amount of Registrable Securities with
     respect to each subsequent 90-day period until all Registration Defaults
     have been cured, up to a maximum amount of liquidated damages of $.50
     per week per $1,000 in principal amount of Transfer Restricted
     Securities; PROVIDED that the Issuer and the Guarantors shall in no
     event be required to pay liquidated damages for more than one
     Registration Default at any given time. Notwithstanding anything to the
     contrary set forth herein, (1) upon filing of the Exchange Registration
     Statement (and/or, if applicable, the Shelf Registration Statement), in
     the case of (i) above, (2) upon the effectiveness of the Exchange
     Registration Statement (and/or, if applicable, the Shelf Registration
     Statement), in the case of (ii) above, or (3) upon the completion of the
     Exchange Offer, in the case of (iii) above, the liquidated damages
     payable with respect to the Transfer Restricted Securities as a result
     of such clause (i), (ii), or (iii), as applicable, shall cease.

         (d) The Company shall take, and shall cause the Guarantors to take, all
     actions necessary or advisable to be taken by it to ensure that the
     transactions contemplated herein are effected as so contemplated, including
     all actions necessary or desirable to register the Guarantee under the
     registration statement contemplated in Section 2(a) or 2(b) hereof, as
     applicable.

         (e) Any reference herein to a registration statement as of any time
     shall be deemed to include any document incorporated, or deemed to be
     incorporated, therein by reference as of such time and any reference herein
     to any post-effective amendment to a registration statement as of any time
     shall be deemed to include any document incorporated, or deemed to be
     incorporated, therein by reference as of such time.

         (f) The Company may suspend the Shelf Registration Statement
     contemplated in Section 2(b) hereof for a period not to exceed 45 days in
     any 90-day period or an aggregate of 90 days in any 12-month period if the
     Board of Directors of the Company shall have determined in good faith that
     because of valid business reasons (not including avoidance of the Company's
     obligations hereunder), including, without limitation, the acquisition or
     divestiture of assets, pending corporate developments and similar events,
     it is in the best interests of the Company to suspend the Shelf
     Registration Statement, and prior to such suspension, the Company provides
     the holders with written notice thereof, which notice need not specify the
     nature of the event giving rise to such suspension.

         3.       REGISTRATION PROCEDURES.

         If the Company files a registration statement pursuant to Section 2(a)
or Section 2(b), the following provisions shall apply:

         (a) At or before the Effective Time of the Exchange Offer or the Shelf
     Registration, as the case may be, the Company shall qualify the Indenture
     under the Trust Indenture Act of 1939.

         (b) In the event that such qualification would require the appointment
     of a new trustee under the Indenture, the Company shall appoint a new
     trustee thereunder pursuant to the applicable provisions of the Indenture.

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         (c) In connection with the Company's obligations with respect to the
     registration of Exchange Securities as contemplated by Section 2(a) (the
     "Exchange Registration"), if applicable, the Company shall, as soon as
     practicable (or as otherwise specified):

                  (i) prepare and file with the Commission, no later than 120
              days after the Closing Date, an Exchange Registration Statement on
              any form which may be utilized by the Company and which shall
              permit the Exchange Offer and resales of Exchange Securities by
              broker-dealers during the Resale Period to be effected as
              contemplated by Section 2(a), and use its best efforts to cause
              such Exchange Registration Statement to become effective no later
              than 180 days after the Closing Date;

                  (ii) as soon as practicable prepare and file with the
              Commission such amendments and supplements to such Exchange
              Registration Statement and the prospectus included therein as may
              be necessary to effect and maintain the effectiveness of such
              Exchange Registration Statement for the periods and purposes
              contemplated in Section 2(a) hereof and as may be required by the
              applicable rules and regulations of the Commission and the
              instructions applicable to the form of such Exchange Registration
              Statement, and promptly provide each broker-dealer holding
              Exchange Securities with such number of copies of the prospectus
              included therein (as then amended or supplemented), in conformity
              in all material respects with the requirements of the Securities
              Act and the Trust Indenture Act and the rules and regulations of
              the Commission thereunder, as such broker-dealer reasonably may
              request prior to the expiration of the Resale Period, for use in
              connection with resales of Exchange Securities;

                  (iii) promptly notify each broker-dealer that has requested
              copies of the prospectus included in such registration statement,
              and confirm such advice in writing, (A) when such Exchange
              Registration Statement or the prospectus included therein or any
              prospectus amendment or supplement or post-effective amendment has
              been filed, and, with respect to such Exchange Registration
              Statement or any post-effective amendment, when the same has
              become effective, (B) of the issuance by the Commission of any
              stop order suspending the effectiveness of such Exchange
              Registration Statement or the initiation or threatening of any
              proceedings for that purpose, (C) if at any time the
              representations and warranties of the Company contemplated by
              Section 5 cease to be true and correct in all material respects,
              (D) of the receipt by the Company of any notification with respect
              to the suspension of the qualification of the Exchange Securities
              for sale in any jurisdiction or the initiation or threatening of
              any proceeding for such purpose, or (E) at any time during the
              Resale Period when a prospectus is required to be delivered under
              the Securities Act, that such Exchange Registration Statement,
              prospectus, prospectus amendment or supplement or post-effective
              amendment does not conform in all material respects to the
              applicable requirements of the Securities Act and the Trust
              Indenture Act and the rules and regulations of the Commission
              thereunder or contains an untrue statement of a material fact or
              omits to state any material fact required to be stated therein or
              necessary to make the statements therein not misleading in light
              of the circumstances then existing;

                  (iv) in the event that the Company would be required, pursuant
              to Section 3(c)(iii)(E) above, to notify any broker-dealers
              holding Exchange Securities, without delay prepare and furnish to
              each such holder a reasonable number of copies of a prospectus
              supplemented or amended so that, as thereafter delivered to
              purchasers of such Exchange Securities during the Resale Period,
              such prospectus shall

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              conform in all material respects to the applicable requirements of
              the Securities Act and the Trust Indenture Act and the rules and
              regulations of the Commission thereunder and shall not contain an
              untrue statement of a material fact or omit to state a material
              fact required to be stated therein or necessary to make the
              statements therein not misleading in light of the circumstances
              then existing;

                  (v) use its best efforts to obtain the withdrawal of any order
              suspending the effectiveness of such Exchange Registration
              Statement or any post-effective amendment thereto at the earliest
              practicable date;

                  (vi) use its best efforts to (A) register or qualify the
              Exchange Securities under the securities laws or blue sky laws of
              such jurisdictions as are contemplated by Section 2(a) no later
              than the commencement of the Exchange Offer, (B) keep such
              registrations or qualifications in effect and comply with such
              laws so as to permit the continuance of offers, sales and dealings
              therein in such jurisdictions until the expiration of the Resale
              Period and (C) take any and all other actions as may be reasonably
              necessary or advisable to enable each broker-dealer holding
              Exchange Securities to consummate the disposition thereof in such
              jurisdictions; PROVIDED, HOWEVER, that none of the Company or the
              Guarantors shall be required for any such purpose to (1) qualify
              as a foreign corporation in any jurisdiction wherein it would not
              otherwise be required to qualify but for the requirements of this
              Section 3(c)(vi), (2) consent to general service of process in any
              such jurisdiction or (3) make any changes to its certificate of
              incorporation or by-laws or any agreement between it and its
              stockholders;

                  (vii) use its best efforts to obtain the consent or approval
              of each governmental agency or authority, whether federal, state
              or local, which may be required to effect the Exchange
              Registration, the Exchange Offer and the offering and sale of
              Exchange Securities by broker-dealers during the Resale Period;

                  (viii)   provide a CUSIP number for all Exchange Securities,
              not later than the applicable Effective Time;

                  (ix) comply with all applicable rules and regulations of the
              Commission, and make generally available to its securityholders as
              soon as practicable but no later than eighteen months after the
              effective date of such Exchange Registration Statement, an earning
              statement of the Company and its subsidiaries complying with
              Section 11(a) of the Securities Act (including, at the option of
              the Company, Rule 158 thereunder).

         (d) In connection with the Company's obligations with respect to the
     Shelf Registration, if applicable, the Company shall, as soon as
     practicable (or as otherwise specified):

                  (i) prepare and file with the Commission, as soon as
              practicable but in any case within the time periods specified in
              Section 2(b), a Shelf Registration Statement on any form which may
              be utilized by the Company and which shall register all of the
              Registrable Securities for resale by the holders thereof in
              accordance with such method or methods of disposition as may be
              specified by such of the holders as, from time to time, may be
              Electing Holders and use its best efforts to cause such Shelf
              Registration Statement to become effective as soon as practicable
              but in any case within the time periods specified in Section 2(b);

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                  (ii) not less than 30 calendar days prior to the Effective
              Time of the Shelf Registration Statement, mail the Notice and
              Questionnaire to the holders of Registrable Securities; no holder
              shall be entitled to be named as a selling securityholder in the
              Shelf Registration Statement as of the Effective Time, and no
              holder shall be entitled to use the prospectus forming a part
              thereof for resales of Registrable Securities at any time, unless
              such holder has returned a completed and signed Notice and
              Questionnaire to the Company by the deadline for response set
              forth therein; PROVIDED, HOWEVER, holders of Registrable
              Securities shall have at least 28 calendar days from the date on
              which the Notice and Questionnaire is first mailed to such holders
              to return a completed and signed Notice and Questionnaire to the
              Company;

                  (iii) after the Effective Time of the Shelf Registration
              Statement, upon the request of any holder of Registrable
              Securities that is not then an Electing Holder, promptly send a
              Notice and Questionnaire to such holder; PROVIDED that the Company
              shall not be required to take any action to name such holder as a
              selling securityholder in the Shelf Registration Statement or to
              enable such holder to use the prospectus forming a part thereof
              for resales of Registrable Securities until such holder has
              returned a completed and signed Notice and Questionnaire to the
              Company;

                  (iv) as soon as practicable prepare and file with the
              Commission such amendments and supplements to such Shelf
              Registration Statement and the prospectus included therein as may
              be necessary to effect and maintain the effectiveness of such
              Shelf Registration Statement for the period specified in Section
              2(b) hereof and as may be required by the applicable rules and
              regulations of the Commission and the instructions applicable to
              the form of such Shelf Registration Statement, and furnish to the
              Electing Holders copies of any such supplement or amendment
              simultaneously with or prior to its being used or filed with the
              Commission;

                  (v) comply with the provisions of the Securities Act with
              respect to the disposition of all of the Registrable Securities
              covered by such Shelf Registration Statement in accordance with
              the intended methods of disposition by the Electing Holders
              provided for in such Shelf Registration Statement;

                  (vi) provide (A) the Electing Holders, (B) the underwriters
              (which term, for purposes of this Exchange and Registration Rights
              Agreement, shall include a person deemed to be an underwriter
              within the meaning of Section 2(a)(11) of the Securities Act), if
              any, thereof, (C) any sales or placement agent therefor, (D)
              counsel for any such underwriter or agent and (E) not more than
              one counsel for all the Electing Holders the opportunity to
              participate in the preparation of such Shelf Registration
              Statement, each prospectus included therein or filed with the
              Commission and each amendment or supplement thereto;

                  (vii) for a reasonable period prior to the filing of such
              Shelf Registration Statement, and throughout the period specified
              in Section 2(b), make available at reasonable times at the
              Company's principal place of business or such other reasonable
              place for inspection by the persons referred to in Section
              3(d)(vi) who shall certify to the Company that they have a current
              intention to sell the Registrable Securities pursuant to the Shelf
              Registration such financial and other information and books and
              records of the Company, and cause the officers, employees, counsel
              and independent certified public accountants of the Company to
              respond to such

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              inquiries, as shall be reasonably necessary, in the judgment of
              the respective counsel referred to in such Section, to conduct
              a reasonable investigation within the meaning of Section 11 of
              the Securities Act; PROVIDED, HOWEVER, that each such party
              shall be required to maintain in confidence and not to disclose
              to any other person any information or records reasonably
              designated by the Company as being confidential, until such
              time as (A) such information becomes a matter of public record
              (whether by virtue of its inclusion in such registration
              statement or otherwise), or (B) such person shall be required
              so to disclose such information pursuant to a subpoena or order
              of any court or other governmental agency or body having
              jurisdiction over the matter (subject to the requirements of
              such order, and only after such person shall have given the
              Company prompt prior written notice of such requirement), or
              (C) such information is required to be set forth in such Shelf
              Registration Statement or the prospectus included therein or in
              an amendment to such Shelf Registration Statement or an
              amendment or supplement to such prospectus in order that such
              Shelf Registration Statement, prospectus, amendment or
              supplement, as the case may be, complies with applicable
              requirements of the federal securities laws and the rules and
              regulations of the Commission and does not contain an untrue
              statement of a material fact or omit to state therein a
              material fact required to be stated therein or necessary to
              make the statements therein not misleading in light of the
              circumstances then existing; PROVIDED, that such party shall
              prior to disclosure pursuant to the clause (c) above provide 5
              business day written notice to the Company of the information
              such party believes is required to be disclosed. If during such
              5 business day period, the Company shall advise such party that
              based upon advice of counsel, such information is not required
              to be disclosed pursuant to clause (c) above, then such party
              shall continue to maintain such information in confidence;

                  (viii) promptly notify each of the Electing Holders, any sales
              or placement agent therefor and any underwriter thereof (which
              notification may be made through any managing underwriter that is
              a representative of such underwriter for such purpose) and confirm
              such advice in writing, (A) when such Shelf Registration Statement
              or the prospectus included therein or any prospectus amendment or
              supplement or post-effective amendment has been filed, and, with
              respect to such Shelf Registration Statement or any post-effective
              amendment, when the same has become effective, (B) of the issuance
              by the Commission of any stop order suspending the effectiveness
              of such Shelf Registration Statement or the initiation or
              threatening of any proceedings for that purpose, (C) if at any
              time the representations and warranties of the Company
              contemplated by Section 3(d)(xvii) or Section 5 cease to be true
              and correct in all material respects, (D) of the receipt by the
              Company of any notification with respect to the suspension of the
              qualification of the Registrable Securities for sale in any
              jurisdiction or the initiation or threatening of any proceeding
              for such purpose, or (E) if at any time when a prospectus is
              required to be delivered under the Securities Act, that such Shelf
              Registration Statement, prospectus, prospectus amendment or
              supplement or post-effective amendment does not conform in all
              material respects to the applicable requirements of the Securities
              Act and the Trust Indenture Act and the rules and regulations of
              the Commission thereunder or contains an untrue statement of a
              material fact or omits to state any material fact required to be
              stated therein or necessary to make the statements therein not
              misleading in light of the circumstances then existing;

                                        10

<Page>

                  (ix) use its best efforts to obtain the withdrawal of any
              order suspending the effectiveness of such registration statement
              or any post-effective amendment thereto at the earliest
              practicable date;

                  (x) if requested by any managing underwriter or underwriters,
              any placement or sales agent or any Electing Holder, promptly
              incorporate in a prospectus supplement or post-effective amendment
              such information as is required by the applicable rules and
              regulations of the Commission and as such managing underwriter or
              underwriters, such agent or such Electing Holder specifies should
              be included therein relating to the terms of the sale of such
              Registrable Securities, including information with respect to the
              principal amount of Registrable Securities being sold by such
              Electing Holder or agent or to any underwriters, the name and
              description of such Electing Holder, agent or underwriter, the
              offering price of such Registrable Securities and any discount,
              commission or other compensation payable in respect thereof, the
              purchase price being paid therefor by such underwriters and with
              respect to any other terms of the offering of the Registrable
              Securities to be sold by such Electing Holder or agent or to such
              underwriters; and make all required filings of such prospectus
              supplement or post-effective amendment promptly after notification
              of the matters to be incorporated in such prospectus supplement or
              post-effective amendment;

                  (xi) furnish to each Electing Holder, each placement or sales
              agent, if any, therefor, each underwriter, if any, thereof and the
              respective counsel referred to in Section 3(d)(vi) an executed
              copy (or, in the case of an Electing Holder, a conformed copy) of
              such Shelf Registration Statement, each such amendment and
              supplement thereto (in each case including all exhibits thereto
              (in the case of an Electing Holder of Registrable Securities, upon
              request) and documents incorporated by reference therein) and such
              number of copies of such Shelf Registration Statement (excluding
              exhibits thereto and documents incorporated by reference therein
              unless specifically so requested by such Electing Holder, agent or
              underwriter, as the case may be) and of the prospectus included in
              such Shelf Registration Statement (including each preliminary
              prospectus and any summary prospectus), in conformity in all
              material respects with the applicable requirements of the
              Securities Act and the Trust Indenture Act and the rules and
              regulations of the Commission thereunder, and such other
              documents, as such Electing Holder, agent, if any, and
              underwriter, if any, may reasonably request in order to facilitate
              the offering and disposition of the Registrable Securities owned
              by such Electing Holder, offered or sold by such agent or
              underwritten by such underwriter and to permit such Electing
              Holder, agent and underwriter to satisfy the prospectus delivery
              requirements of the Securities Act; and the Company hereby
              consents to the use of such prospectus (including such preliminary
              and summary prospectus) and any amendment or supplement thereto by
              each such Electing Holder and by any such agent and underwriter,
              in each case in the form most recently provided to such person by
              the Company, in connection with the offering and sale of the
              Registrable Securities covered by the prospectus (including such
              preliminary and summary prospectus) or any supplement or amendment
              thereto;

                  (xii) use best efforts to (A) register or qualify the
              Registrable Securities to be included in such Shelf Registration
              Statement under such securities laws or blue sky laws of such
              jurisdictions as any Electing Holder and each placement or sales
              agent, if any, therefor and underwriter, if any, thereof shall
              reasonably request, (B) keep such registrations or qualifications
              in effect and comply with such laws so as to permit the
              continuance of offers, sales and dealings therein in such
              jurisdictions

                                        11

<Page>

              during the period the Shelf Registration is required to remain
              effective under Section 2(b) above and for so long as may be
              necessary to enable any such Electing Holder, agent or
              underwriter to complete its distribution of Securities pursuant
              to such Shelf Registration Statement and (C) take any and all
              other actions as may be reasonably necessary or advisable to
              enable each such Electing Holder, agent, if any, and
              underwriter, if any, to consummate the disposition in such
              jurisdictions of such Registrable Securities; PROVIDED,
              HOWEVER, that none of the Company or the Guarantors shall be
              required for any such purpose to (1) qualify as a foreign
              corporation in any jurisdiction wherein it would not otherwise
              be required to qualify but for the requirements of this
              Section 3(d)(xii), (2) consent to general service of process in
              any such jurisdiction or (3) make any changes to its certificate
              of incorporation or by-laws or any agreement between it and its
              stockholders;

                  (xiii) use its best efforts to obtain the consent or approval
              of each governmental agency or authority, whether federal, state
              or local, which may be required to effect the Shelf Registration
              or the offering or sale in connection therewith or to enable the
              selling holder or holders to offer, or to consummate the
              disposition of, their Registrable Securities;

                  (xiv) unless any Registrable Securities shall be in book-entry
              only form, cooperate with the Electing Holders and the managing
              underwriters, if any, to facilitate the timely preparation and
              delivery of certificates representing Registrable Securities to be
              sold, which certificates, if so required by any securities
              exchange upon which any Registrable Securities are listed, shall
              be penned, lithographed or engraved, or produced by any
              combination of such methods, on steel engraved borders, and which
              certificates shall not bear any restrictive legends; and, in the
              case of an underwritten offering, enable such Registrable
              Securities to be in such denominations and registered in such
              names as the managing underwriters may request at least two
              business days prior to any sale of the Registrable Securities;

                  (xv) provide a CUSIP number for all Registrable Securities,
              not later than the applicable Effective Time;

                  (xvi) enter into one or more underwriting agreements,
              engagement letters, agency agreements, "best efforts" underwriting
              agreements or similar agreements, as appropriate, including
              customary provisions relating to indemnification and contribution,
              and take such other actions in connection therewith as any
              Electing Holders aggregating at least 20% in aggregate principal
              amount of the Registrable Securities at the time outstanding shall
              request in order to expedite or facilitate the disposition of such
              Registrable Securities;

                  (xvii) whether or not an agreement of the type referred to in
              Section 3(d)(xvi) hereof is entered into and whether or not any
              portion of the offering contemplated by the Shelf Registration is
              an underwritten offering or is made through a placement or sales
              agent or any other entity, (A) make such representations and
              warranties to the Electing Holders and the placement or sales
              agent, if any, therefor and the underwriters, if any, thereof in
              form, substance and scope as are customarily made in connection
              with an offering of debt securities pursuant to any appropriate
              agreement or to a registration statement filed on the form
              applicable to the Shelf Registration; (B) obtain an opinion of
              counsel to the Company in customary form and covering such
              matters, of the type customarily covered by such an opinion, as
              the managing underwriters, if any, or as any Electing Holders of
              at least 20% in aggregate principal amount of the Registrable
              Securities at the time outstanding may reasonably

                                        12

<Page>

              request, addressed to such Electing Holder or Electing Holders
              and the placement or sales agent, if any, therefor and the
              underwriters, if any, thereof and dated the effective date of
              such Shelf Registration Statement (and if such Shelf
              Registration Statement contemplates an underwritten offering of
              a part or all of the Registrable Securities, dated the date of
              the closing under the underwriting agreement relating thereto);
              (C) obtain a "cold comfort" letter or letters from the
              independent certified public accountants of the Company
              addressed to the selling Electing Holders, the placement or
              sales agent, if any, therefor or the underwriters, if any,
              thereof, dated (i) the effective date of such Shelf
              Registration Statement and (ii) the effective date of any
              prospectus supplement to the prospectus included in such Shelf
              Registration Statement or post-effective amendment to such
              Shelf Registration Statement which includes unaudited or
              audited financial statements as of a date or for a period
              subsequent to that of the latest such statements included in
              such prospectus (and, if such Shelf Registration Statement
              contemplates an underwritten offering pursuant to any
              prospectus supplement to the prospectus included in such Shelf
              Registration Statement or post-effective amendment to such
              Shelf Registration Statement which includes unaudited or
              audited financial statements as of a date or for a period
              subsequent to that of the latest such statements included in
              such prospectus, dated the date of the closing under the
              underwriting agreement relating thereto), such letter or
              letters to be in customary form and covering such matters of
              the type customarily covered by letters of such type; (D)
              deliver such documents and certificates, including officers'
              certificates, as may be reasonably requested by any Electing
              Holders of at least 20% in aggregate principal amount of the
              Registrable Securities at the time outstanding or the placement
              or sales agent, if any, therefor and the managing underwriters,
              if any, thereof to evidence the accuracy of the representations
              and warranties made pursuant to clause (A) above or those
              contained in Section 5(a) hereof and the compliance with or
              satisfaction of any agreements or conditions contained in the
              underwriting agreement or other agreement entered into by the
              Company or the Guarantors; and (E) undertake such obligations
              relating to expense reimbursement, indemnification and
              contribution as are provided in Section 6 hereof;

                  (xviii) notify in writing each holder of Registrable
              Securities of any proposal by the Company to amend or waive any
              provision of this Exchange and Registration Rights Agreement
              pursuant to Section 9(h) hereof and of any amendment or waiver
              effected pursuant thereto, each of which notices shall contain the
              text of the amendment or waiver proposed or effected, as the case
              may be;

                  (xix) in the event that any broker-dealer registered under the
              Exchange Act shall underwrite any Registrable Securities or
              participate as a member of an underwriting syndicate or selling
              group or "assist in the distribution" (within the meaning of the
              Conduct Rules (the "Conduct Rules) of the National Association of
              Securities Dealers, Inc. ("NASD") or any successor thereto, as
              amended from time to time) thereof, whether as a holder of such
              Registrable Securities or as an underwriter, a placement or sales
              agent or a broker or dealer in respect thereof, or otherwise,
              assist such broker-dealer in complying with the requirements of
              such Conduct Rules, including by (A) if such Conduct Rules shall
              so require, engaging a "qualified independent underwriter" (as
              defined in such Conduct Rules) to participate in the preparation
              of the Shelf Registration Statement relating to such Registrable
              Securities, to exercise usual standards of due diligence in
              respect thereto and, if any portion of the offering contemplated
              by such Shelf Registration Statement is an underwritten offering
              or is made through a placement or sales agent, to recommend

                                        13

<Page>

              the yield of such Registrable Securities, (B) indemnifying any
              such qualified independent underwriter to the extent of the
              indemnification of underwriters provided in Section 6 hereof
              (or to such other customary extent as may be requested by such
              underwriter), and (C) providing such information to such
              broker-dealer as may be required in order for such
              broker-dealer to comply with the requirements of the Conduct
              Rules; and

                  (xx) comply with all applicable rules and regulations of the
              Commission, and make generally available to its securityholders as
              soon as practicable but in any event not later than eighteen
              months after the effective date of such Shelf Registration
              Statement, an earning statement of the Company and its
              subsidiaries complying with Section 11(a) of the Securities Act
              (including, at the option of the Company, Rule 158 thereunder).

         (e) In the event that the Company would be required, pursuant to
     Section 3(d)(viii)(E) above, to notify the Electing Holders, the placement
     or sales agent, if any, therefor and the managing underwriters, if any,
     thereof, the Company shall without delay prepare and furnish to each of the
     Electing Holders, to each placement or sales agent, if any, and to each
     such underwriter, if any, a reasonable number of copies of a prospectus
     supplemented or amended so that, as thereafter delivered to purchasers of
     Registrable Securities, such prospectus shall conform in all material
     respects to the applicable requirements of the Securities Act and the Trust
     Indenture Act and the rules and regulations of the Commission thereunder
     and shall not contain an untrue statement of a material fact or omit to
     state a material fact required to be stated therein or necessary to make
     the statements therein not misleading in light of the circumstances then
     existing. Each Electing Holder agrees that upon receipt of any notice from
     the Company pursuant to Section 3(d)(viii)(E) hereof, such Electing Holder
     shall forthwith discontinue the disposition of Registrable Securities
     pursuant to the Shelf Registration Statement applicable to such Registrable
     Securities until such Electing Holder shall have received copies of such
     amended or supplemented prospectus, and if so directed by the Company, such
     Electing Holder shall deliver to the Company (at the Company's expense) all
     copies, other than permanent file copies, then in such Electing Holder's
     possession of the prospectus covering such Registrable Securities at the
     time of receipt of such notice.

         (f) In the event of a Shelf Registration, in addition to the
     information required to be provided by each Electing Holder in its Notice
     Questionnaire, the Company may require such Electing Holder to furnish to
     the Company such additional information regarding such Electing Holder and
     such Electing Holder's intended method of distribution of Registrable
     Securities as may be required in order to comply with the Securities Act.
     Each such Electing Holder agrees to notify the Company as promptly as
     practicable of any inaccuracy or change in information previously furnished
     by such Electing Holder to the Company or of the occurrence of any event in
     either case as a result of which any prospectus relating to such Shelf
     Registration contains or would contain an untrue statement of a material
     fact regarding such Electing Holder or such Electing Holder's intended
     method of disposition of such Registrable Securities or omits to state any
     material fact regarding such Electing Holder or such Electing Holder's
     intended method of disposition of such Registrable Securities required to
     be stated therein or necessary to make the statements therein not
     misleading in light of the circumstances then existing, and promptly to
     furnish to the Company any additional information required to correct and
     update any previously furnished information or required so that such
     prospectus shall not contain, with respect to such Electing Holder or the
     disposition of such Registrable Securities, an untrue statement of a
     material fact or omit to state a material fact required to be stated
     therein or necessary to make the statements therein not misleading in light
     of the circumstances then existing. No Electing Holder may

                                        14

<Page>

     include any of its Securities in any Shelf Registration pursuant to this
     Agreement unless and until such Electing Holder furnishes to the Company
     a complete and accurate Notice Questionnaire and provides any additional
     information the Company may require pursuant to this clause (f).

         (g) Until the expiration of two years after the Closing Date, the
     Company will not, and will not permit any of its "affiliates" (as defined
     in Rule 144) to, resell any of the Securities that have been reacquired by
     any of them except pursuant to an effective registration statement under
     the Securities Act; PROVIDED, that nothing shall prohibit an affiliate of
     the Company from reselling any Exchange Securities it acquires.

         4.       REGISTRATION EXPENSES.

         The Company agrees to bear and to pay or cause to be paid promptly all
expenses incident to the Company's performance of or compliance with this
Exchange and Registration Rights Agreement, including (a) all Commission and any
NASD registration, filing and review fees and expenses including fees and
disbursements of counsel for the placement or sales agent or underwriters in
connection with such registration, filing and review, (b) all fees and expenses
in connection with the qualification of the Securities for offering and sale
under the State securities and blue sky laws referred to in Section 3(d)(xii)
hereof and determination of their eligibility for investment under the laws of
such jurisdictions as any managing underwriters or the Electing Holders may
designate, including any fees and disbursements of counsel for the Electing
Holders or underwriters in connection with such qualification and determination;
PROVIDED that such fees of counsel under clauses (a) and (b) hereof shall not,
in the aggregate, exceed $75,000, (c) all expenses relating to the preparation,
printing, production, distribution and reproduction of each registration
statement required to be filed hereunder, each prospectus included therein or
prepared for distribution pursuant hereto, each amendment or supplement to the
foregoing, the expenses of preparing the Securities for delivery and the
expenses of printing or producing any underwriting agreements, agreements among
underwriters, selling agreements and blue sky or legal investment memoranda and
all other documents in connection with the offering, sale or delivery of
Securities to be disposed of (including certificates representing the
Securities), (d) messenger, telephone and delivery expenses relating to the
offering, sale or delivery of Securities and the preparation of documents
referred in clause (c) above, (e) fees and expenses of the Trustee under the
Indenture, any agent of the Trustee and any counsel for the Trustee and of any
collateral agent or custodian, (f) internal expenses (including all salaries and
expenses of the Company's officers and employees performing legal or accounting
duties), (g) fees, disbursements and expenses of counsel and independent
certified public accountants of the Company (including the expenses of any
opinions or "cold comfort" letters required by or incident to such performance
and compliance), (h) fees, disbursements and expenses of any "qualified
independent underwriter" engaged pursuant to Section 3(d)(xix) hereof, (i) fees,
disbursements and expenses of one counsel for the Electing Holders retained in
connection with a Shelf Registration, as selected by the Electing Holders of at
least a majority in aggregate principal amount of the Registrable Securities
held by Electing Holders (which counsel shall be reasonably satisfactory to the
Company), (j) any fees charged by securities rating services for rating the
Securities, and (k) fees, expenses and disbursements of any other persons,
including special experts, retained by the Company in connection with such
registration (collectively, the "Registration Expenses"). To the extent that any
Registration Expenses are incurred, assumed or paid by any holder of Registrable
Securities or any placement or sales agent therefor or underwriter thereof, the
Company shall reimburse such person for the full amount of the Registration
Expenses so incurred, assumed or paid promptly after receipt of a request
therefor. Notwithstanding the foregoing, the holders of the Registrable
Securities being registered shall pay all agency fees and commissions and
underwriting discounts and commissions attributable to the sale of such
Registrable Securities

                                        15

<Page>

and the fees and disbursements of any counsel or other advisors or experts
retained by such holders (severally or jointly), other than the counsel and
experts specifically referred to above.

         5.       REPRESENTATIONS AND WARRANTIES.

         Each of the Company and the Guarantors represents and warrants to, and
agrees with, each Purchaser and each of the holders from time to time of
Registrable Securities that:

         (a) Each registration statement covering Registrable Securities and
     each prospectus (including any preliminary or summary prospectus) contained
     therein or furnished pursuant to Section 3(d) or Section 3(c) hereof and
     any further amendments or supplements to any such registration statement or
     prospectus, when it becomes effective or is filed with the Commission, as
     the case may be, and, in the case of an underwritten offering of
     Registrable Securities, at the time of the closing under the underwriting
     agreement relating thereto, will conform in all material respects to the
     requirements of the Securities Act and the Trust Indenture Act and the
     rules and regulations of the Commission thereunder and will not contain an
     untrue statement of a material fact or omit to state a material fact
     required to be stated therein or necessary to make the statements therein
     not misleading; and at all times subsequent to the Effective Time when a
     prospectus would be required to be delivered under the Securities Act,
     other than from (i) such time as a notice has been given to holders of
     Registrable Securities pursuant to Section 3(d)(viii)(E) or Section
     3(c)(iii)(E) hereof until (ii) such time as the Company furnishes an
     amended or supplemented prospectus pursuant to Section 3(e) or Section
     3(c)(iv) hereof, each such registration statement, and each prospectus
     (including any summary prospectus) contained therein or furnished pursuant
     to Section 3(d) or Section 3(c) hereof, as then amended or supplemented,
     will conform in all material respects to the requirements of the Securities
     Act and the Trust Indenture Act and the rules and regulations of the
     Commission thereunder and will not contain an untrue statement of a
     material fact or omit to state a material fact required to be stated
     therein or necessary to make the statements therein not misleading in the
     light of the circumstances then existing; PROVIDED, HOWEVER, that this
     representation and warranty shall not apply to any statements or omissions
     made in reliance upon and in conformity with information furnished in
     writing to the Company by a holder of Registrable Securities expressly for
     use therein.

         (b) Any documents incorporated by reference in any prospectus referred
     to in Section 5(a) hereof, when they become or became effective or are or
     were filed with the Commission, as the case may be, will conform or
     conformed in all material respects to the requirements of the Securities
     Act or the Exchange Act, as applicable, and none of such documents will
     contain or contained an untrue statement of a material fact or will omit or
     omitted to state a material fact required to be stated therein or necessary
     to make the statements therein not misleading; PROVIDED, HOWEVER, that this
     representation and warranty shall not apply to any statements or omissions
     made in reliance upon and in conformity with information furnished in
     writing to the Company by a holder of Registrable Securities expressly for
     use therein.

         (c) The compliance by the Company with all of the provisions of this
     Exchange and Registration Rights Agreement and the consummation of the
     transactions herein contemplated will not conflict with or result in a
     breach of any of the terms or provisions of, or constitute a default under,
     any indenture, mortgage, deed of trust, loan agreement or other agreement
     or instrument to which the Company or any subsidiary of the Company is a
     party or by which the Company or any subsidiary of the Company is bound or
     to which any of the property or assets of the Company or any subsidiary of
     the Company is subject, except for any such conflict, breach or default
     which would not have a material adverse effect on the Company and its
     subsidiaries taken as a whole, nor will such action result in

                                        16

<Page>

     any violation of the provisions of the certificate of incorporation, as
     amended, or the by-laws of the Company or the Guarantors or any statute
     or any order, rule or regulation of any court or governmental agency or
     body having jurisdiction over the Company or any subsidiary of the
     Company or any of their properties; and no consent, approval,
     authorization, order, registration or qualification of or with any such
     court or governmental agency or body is required for the consummation by
     the Company and the Guarantors of the transactions contemplated by this
     Exchange and Registration Rights Agreement, except the registration
     under the Securities Act of the Securities, qualification of the
     Indenture under the Trust Indenture Act and such consents, approvals,
     authorizations, registrations or qualifications as may be required under
     State securities or blue sky laws in connection with the offering and
     distribution of the Securities.

         (d) This Exchange and Registration Rights Agreement has been duly
     authorized, executed and delivered by the Company.

         6.       INDEMNIFICATION.

         (a) INDEMNIFICATION BY THE COMPANY AND THE GUARANTORS. The Company and
     the Guarantors, jointly and severally, will indemnify and hold harmless
     each of the holders of Registrable Securities included in an Exchange
     Registration Statement, each of the Electing Holders of Registrable
     Securities included in a Shelf Registration Statement and each person who
     participates as a placement or sales agent or as an underwriter in any
     offering or sale of such Registrable Securities against any losses, claims,
     damages or liabilities, joint or several, to which such holder, agent or
     underwriter may become subject under the Securities Act or otherwise,
     insofar as such losses, claims, damages or liabilities (or actions in
     respect thereof) arise out of or are based upon an untrue statement or
     alleged untrue statement of a material fact contained in any Exchange
     Registration Statement or Shelf Registration Statement, as the case may be,
     under which such Registrable Securities were registered under the
     Securities Act, or any preliminary, final or summary prospectus contained
     therein or furnished by the Company to any such holder, Electing Holder,
     agent or underwriter, or any amendment or supplement thereto, or arise out
     of or are based upon the omission or alleged omission to state therein a
     material fact required to be stated therein or necessary to make the
     statements therein not misleading, and will reimburse such holder, such
     Electing Holder, such agent and such underwriter for any legal or other
     expenses reasonably incurred by them in connection with investigating or
     defending any such action or claim as such expenses are incurred; PROVIDED,
     HOWEVER, that none of the Company or the Guarantors shall be liable to any
     such person in any such case to the extent that any such loss, claim,
     damage or liability arises out of or is based upon an untrue statement or
     alleged untrue statement or omission or alleged omission made in such
     registration statement, or preliminary, final or summary prospectus, or
     amendment or supplement thereto, in reliance upon and in conformity with
     written information furnished to the Company by such person expressly for
     use therein.

         (b) INDEMNIFICATION BY THE HOLDERS AND ANY AGENTS AND UNDERWRITERS. The
     Company will require, as a condition to including any Registrable
     Securities in any registration statement filed pursuant to Section 2(b)
     hereof and to entering into any underwriting agreement with respect
     thereto, that the Company shall have received an undertaking reasonably
     satisfactory to it from the Electing Holder of such Registrable Securities
     and from each underwriter named in any such underwriting agreement,
     severally and not jointly, to (i) indemnify and hold harmless the Company,
     the Guarantors, and all other holders of Registrable Securities, against
     any losses, claims, damages or liabilities to which the Company, the
     Guarantors or such other holders of Registrable Securities may become
     subject, under the Securities Act or otherwise, insofar as such losses,
     claims, damages or

                                        17
<Page>

     liabilities (or actions in respect thereof) arise out of or are based
     upon an untrue statement or alleged untrue statement of a material fact
     contained in such registration statement, or any preliminary, final or
     summary prospectus contained therein or furnished by the Company to any
     such Electing Holder, agent or underwriter, or any amendment or
     supplement thereto, or arise out of or are based upon the omission or
     alleged omission to state therein a material fact required to be stated
     therein or necessary to make the statements therein not misleading, in
     each case to the extent, but only to the extent, that such untrue
     statement or alleged untrue statement or omission or alleged omission
     was made in reliance upon and in conformity with written information
     furnished to the Company by such Electing Holder or underwriter
     expressly for use therein, and (ii) reimburse the Company and the
     Guarantors for any legal or other expenses reasonably incurred by the
     Company and the Guarantors in connection with investigating or defending
     any such action or claim as such expenses are incurred; PROVIDED,
     HOWEVER, that no such Electing Holder shall be required to undertake
     liability to any person under this Section 6(b) for any amounts in
     excess of the dollar amount of the proceeds to be received by such
     Electing Holder from the sale of such Electing Holder's Registrable
     Securities pursuant to such registration. The Company may, as a
     condition to include any Registrable Securities in any such registration
     statement or enter into any underwriting agreement with respect thereto,
     require each such Electing Holder and underwriter to enter into an
     undertaking reasonably satisfactory to the Company to the effect set
     forth in this clause (b).

         (c) NOTICES OF CLAIMS, ETC. Promptly after receipt by an indemnified
     party under subsection (a) or (b) above of written notice of the
     commencement of any action, such indemnified party shall, if a claim in
     respect thereof is to be made against an indemnifying party pursuant to the
     indemnification provisions of or contemplated by this Section 6, notify
     such indemnifying party in writing of the commencement of such action; but
     the omission so to notify the indemnifying party shall not relieve it from
     any liability which it may have to any indemnified party otherwise than
     under the indemnification provisions of or contemplated by Section 6(a) or
     6(b) hereof. In case any such action shall be brought against any
     indemnified party and it shall notify an indemnifying party of the
     commencement thereof, such indemnifying party shall be entitled to
     participate therein and, to the extent that it shall wish, jointly with any
     other indemnifying party similarly notified, to assume the defense thereof,
     with counsel reasonably satisfactory to such indemnified party (who shall
     not, except with the consent of the indemnified party, be counsel to the
     indemnifying party), and, after notice from the indemnifying party to such
     indemnified party of its election so to assume the defense thereof, such
     indemnifying party shall not be liable to such indemnified party for any
     legal expenses of other counsel or any other expenses, in each case
     subsequently incurred by such indemnified party, in connection with the
     defense thereof other than reasonable costs of investigation. No
     indemnified party shall, without the written consent of the indemnifying
     party, which consent shall not be unreasonably withheld, effect the
     settlement or compromise of, or consent to the entity of any judgment with
     respect to, any pending or threatened action or claim in respect of which
     indemnification or contribution may be sought hereunder. No indemnifying
     party shall, without the written consent of the indemnified party, effect
     the settlement or compromise of, or consent to the entry of any judgment
     with respect to, any pending or threatened action or claim in respect of
     which indemnification or contribution may be sought hereunder (whether or
     not the indemnified party is an actual or potential party to such action or
     claim) unless such settlement, compromise or judgment (i) includes an
     unconditional release of the indemnified party from all liability arising
     out of such action or claim and (ii) does not include a statement as to or
     an admission of fault, culpability or a failure to act by or on behalf of
     any indemnified party.

                                        18

<Page>

         (d) CONTRIBUTION. If for any reason the indemnification provisions
     contemplated by Section 6(a) or Section 6(b) are unavailable to or
     insufficient to hold harmless an indemnified party in respect of any
     losses, claims, damages or liabilities (or actions in respect thereof)
     referred to therein, then each indemnifying party shall contribute to the
     amount paid or payable by such indemnified party as a result of such
     losses, claims, damages or liabilities (or actions in respect thereof) in
     such proportion as is appropriate to reflect the relative fault of the
     indemnifying party and the indemnified party in connection with the
     statements or omissions which resulted in such losses, claims, damages or
     liabilities (or actions in respect thereof), as well as any other relevant
     equitable considerations. The relative fault of such indemnifying party and
     indemnified party shall be determined by reference to, among other things,
     whether the untrue or alleged untrue statement of a material fact or
     omission or alleged omission to state a material fact relates to
     information supplied by such indemnifying party or by such indemnified
     party, and the parties' relative intent, knowledge, access to information
     and opportunity to correct or prevent such statement or omission. The
     parties hereto agree that it would not be just and equitable if
     contributions pursuant to this Section 6(d) were determined by pro rata
     allocation (even if the holders or any agents or underwriters or all of
     them were treated as one entity for such purpose) or by any other method of
     allocation which does not take account of the equitable considerations
     referred to in this Section 6(d). The amount paid or payable by an
     indemnified party as a result of the losses, claims, damages, or
     liabilities (or actions in respect thereof) referred to above shall be
     deemed to include any legal or other fees or expenses reasonably incurred
     by such indemnified party in connection with investigating or defending any
     such action or claim. Notwithstanding the provisions of this Section 6(d),
     no holder shall be required to contribute any amount in excess of the
     amount by which the dollar amount of the proceeds received by such holder
     from the sale of any Registrable Securities (after deducting any fees,
     discounts and commissions applicable thereto) exceeds the amount of any
     damages which such holder has otherwise been required to pay by reason of
     such untrue or alleged untrue statement or omission or alleged omission,
     and no underwriter shall be required to contribute any amount in excess of
     the amount by which the total price at which the Registrable Securities
     underwritten by it and distributed to the public were offered to the public
     exceeds the amount of any damages which such underwriter has otherwise been
     required to pay by reason of such untrue or alleged untrue statement or
     omission or alleged omission. No person guilty of fraudulent
     misrepresentation (within the meaning of Section 11(f) of the Securities
     Act) shall be entitled to contribution from any person who was not guilty
     of such fraudulent misrepresentation. The holders' and any underwriters'
     obligations in this Section 6(d) to contribute shall be several in
     proportion to the principal amount of Registrable Securities registered or
     underwritten, as the case may be, by them and not joint.

         (e) The obligations of the Company and the Guarantors under this
     Section 6 shall be in addition to any liability which the Company or the
     Guarantors may otherwise have and shall extend, upon the same terms and
     conditions, to each officer, director and partner of each holder, agent and
     underwriter and each person, if any, who controls any holder, agent or
     underwriter within the meaning of the Securities Act; and the obligations
     of the holders and any agents or underwriters contemplated by this Section
     6 shall be in addition to any liability which the respective holder, agent
     or underwriter may otherwise have and shall extend, upon the same terms and
     conditions, to each officer and director of the Company or the Guarantors
     (including any person who, with his consent, is named in any registration
     statement as about to become a director of the Company or the Guarantors)
     and to each person, if any, who controls the Company within the meaning of
     the Securities Act.

         7.       UNDERWRITTEN OFFERINGS.

                                        19

<Page>

         (a) SELECTION OF UNDERWRITERS. If any of the Registrable Securities
     covered by the Shelf Registration are to be sold pursuant to an
     underwritten offering, the managing underwriter or underwriters thereof
     shall be designated by Electing Holders holding at least a majority in
     aggregate principal amount of the Registrable Securities to be included in
     such offering, provided that such designated managing underwriter or
     underwriters is or are reasonably acceptable to the Company.

         (b) PARTICIPATION BY HOLDERS. Each holder of Registrable Securities
     hereby agrees with each other such holder that no such holder may
     participate in any underwritten offering hereunder unless such holder (i)
     agrees to sell such holder's Registrable Securities on the basis provided
     in any underwriting arrangements approved by the persons entitled hereunder
     to approve such arrangements and (ii) completes and executes all
     questionnaires, powers of attorney, indemnities, underwriting agreements
     and other documents reasonably required under the terms of such
     underwriting arrangements.

         8.       RULE 144.

         The Company covenants to the holders of Registrable Securities that to
the extent it shall be required to do so under the Exchange Act, the Company
shall timely file the reports required to be filed by it under the Exchange Act
or the Securities Act (including the reports under Section 13 and 15(d) of the
Exchange Act referred to in subparagraph (c)(1) of Rule 144 adopted by the
Commission under the Securities Act) and the rules and regulations adopted by
the Commission thereunder, and shall take such further action as any holder of
Registrable Securities may reasonably request, all to the extent required from
time to time to enable such holder to sell Registrable Securities without
registration under the Securities Act within the limitations of the exemption
provided by Rule 144 under the Securities Act, as such Rule may be amended from
time to time, or any similar or successor rule or regulation hereafter adopted
by the Commission. Upon the request of any holder of Registrable Securities in
connection with that holder's sale pursuant to Rule 144, the Company shall
deliver to such holder a written statement as to whether it has complied with
such requirements.

         9.       MISCELLANEOUS.

         (a) NO INCONSISTENT AGREEMENTS. The Company represents, warrants,
     covenants and agrees that it has not granted, and shall not grant,
     registration rights with respect to Registrable Securities or any other
     securities which would be inconsistent with the terms contained in this
     Exchange and Registration Rights Agreement.

         (b) SPECIFIC PERFORMANCE. The parties hereto acknowledge that there
     would be no adequate remedy at law if the Company fails to perform any of
     its obligations hereunder and that the Purchasers and the holders from time
     to time of the Registrable Securities may be irreparably harmed by any such
     failure, and accordingly agree that the Purchasers and such holders, in
     addition to any other remedy to which they may be entitled at law or in
     equity, shall be entitled to compel specific performance of the obligations
     of the Company under this Exchange and Registration Rights Agreement in
     accordance with the terms and conditions of this Exchange and Registration
     Rights Agreement, in any court of the United States or any State thereof
     having jurisdiction.

         (c) NOTICES. All notices, requests, claims, demands, waivers and other
     communications hereunder shall be in writing and shall be deemed to have
     been duly given when delivered by hand, if delivered personally or by
     courier, or three days after being deposited in the mail (registered or
     certified mail, postage prepaid, return receipt requested) as follows: If
     to the Company, to it at 1590 Adamson Parkway, Suite 4000, Morrow, Georgia
     30260, and if to a

                                        20

<Page>

     holder, to the address of such holder set forth in the security register
     or other records of the Company, or to such other address as the Company
     or any such holder may have furnished to the other in writing in
     accordance herewith, except that notices of change of address shall be
     effective only upon receipt.

         (d) PARTIES IN INTEREST. All the terms and provisions of this Exchange
     and Registration Rights Agreement shall be binding upon, shall inure to the
     benefit of and shall be enforceable by the parties hereto and the holders
     from time to time of the Registrable Securities and the respective
     successors and assigns of the parties hereto and such holders. In the event
     that any transferee of any holder of Registrable Securities shall acquire
     Registrable Securities, in any manner, whether by gift, bequest, purchase,
     operation of law or otherwise, such transferee shall, without any further
     writing or action of any kind, be deemed a beneficiary hereof for all
     purposes and such Registrable Securities shall be held subject to all of
     the terms of this Exchange and Registration Rights Agreement, and by taking
     and holding such Registrable Securities such transferee shall be entitled
     to receive the benefits of, and be conclusively deemed to have agreed to be
     bound by all of the applicable terms and provisions of this Exchange and
     Registration Rights Agreement. If the Company shall so request, any such
     successor, assign or transferee shall agree in writing to acquire and hold
     the Registrable Securities subject to all of the applicable terms hereof.

         (e) SURVIVAL. The respective indemnities, agreements, representations,
     warranties and each other provision set forth in this Exchange and
     Registration Rights Agreement or made pursuant hereto shall remain in full
     force and effect regardless of any investigation (or statement as to the
     results thereof) made by or on behalf of any holder of Registrable
     Securities, any director, officer or partner of such holder, any agent or
     underwriter or any director, officer or partner thereof, or any controlling
     person of any of the foregoing, and shall survive delivery of and payment
     for the Registrable Securities pursuant to the Purchase Agreement and the
     transfer and registration of Registrable Securities by such holder and the
     consummation of an Exchange Offer.

         (f) GOVERNING LAW. This Exchange and Registration Rights Agreement
     shall be governed by and construed in accordance with the laws of the State
     of New York

         (g) HEADINGS. The descriptive headings of the several Sections and
     paragraphs of this Exchange and Registration Rights Agreement are inserted
     for convenience only, do not constitute a part of this Exchange and
     Registration Rights Agreement and shall not affect in any way the meaning
     or interpretation of this Exchange and Registration Rights Agreement.

         (h) ENTIRE AGREEMENT; AMENDMENTS. This Exchange and Registration Rights
     Agreement and the other writings referred to herein (including the
     Indenture and the form of Securities) or delivered pursuant hereto which
     form a part hereof contain the entire understanding of the parties with
     respect to its subject matter. This Exchange and Registration Rights
     Agreement supersedes all prior agreements and understandings between the
     parties with respect to its subject matter. This Exchange and Registration
     Rights Agreement may be amended and the observance of any term of this
     Exchange and Registration Rights Agreement may be waived (either generally
     or in a particular instance and either retroactively or prospectively) only
     by a written instrument duly executed by the Company and the holders of at
     least a majority in aggregate principal amount of the Registrable
     Securities at the time outstanding. Each holder of any Registrable
     Securities at the time or thereafter outstanding shall be bound by any
     amendment or waiver effected pursuant to this Section 9(h), whether or not
     any notice, writing or marking indicating such amendment or waiver appears
     on such Registrable Securities or is delivered to such holder.

                                        21

<Page>

         (i) INSPECTION. For so long as this Exchange and Registration Rights
     Agreement shall be in effect, this Exchange and Registration Rights
     Agreement and a complete list of the names and addresses of all the holders
     of Registrable Securities shall be made available for inspection and
     copying on any business day by any holder of Registrable Securities for
     proper purposes only (which shall include any purpose related to the rights
     of the holders of Registrable Securities under the Securities, the
     Indenture and this Agreement) at the offices of the Company at the address
     thereof set forth in Section 9(c) above and at the office of the Trustee
     under the Indenture.

         (j) COUNTERPARTS. This agreement may be executed by the parties in
     counterparts, each of which shall be deemed to be an original, but all such
     respective counterparts shall together constitute one and the same
     instrument.

                                        22

<Page>

         If the foregoing is in accordance with your understanding, please sign
and return to us five counterparts hereof, and upon the acceptance hereof by
you, on behalf of each of the Purchasers, this letter and such acceptance hereof
shall constitute a binding agreement between each of the Purchasers, the
Guarantors and the Company. It is understood that your acceptance of this letter
on behalf of each of the Purchasers is pursuant to the authority set forth in a
form of Agreement among Purchasers, the form of which shall be submitted to the
Company for examination upon request, but without warranty on your part as to
the authority of the signers thereof.

                                          Very truly yours,

                                          The William Carter Company

                                          By: /s/ DAVID A. BROWN
                                              --------------------------------
                                              Name:  DAVID A. BROWN
                                              Title: EXECUTIVE VICE PRESIDENT

                                          Carter's de San Pedro, Inc.

                                          By: /s/ DAVID A. BROWN
                                              --------------------------------
                                              Name:  DAVID A. BROWN
                                              Title: VICE PRESIDENT

                                          Carter's Imagination, Inc.

                                          By: /s/ DAVID A. BROWN
                                              --------------------------------
                                              Name:  DAVID A. BROWN
                                              Title: VICE PRESIDENT

Accepted as of the date hereof:
Goldman, Sachs & Co.
Fleet Securities, Inc.
BNP Paribas Securities Corp.

By: Goldman Sachs & Co.

     By: /s/ GOLDMAN, SACHS & CO.
        ------------------------------
            (Goldman, Sachs & Co)<Page>
                                    FORM OF
                             LETTER OF TRANSMITTAL
                                       OF
                           THE WILLIAM CARTER COMPANY

                             OFFER TO EXCHANGE ITS
              10.875% SERIES B SENIOR SUBORDINATED NOTES DUE 2011
                           WHICH HAVE BEEN REGISTERED
                  UNDER THE SECURITIES ACT OF 1933, AS AMENDED
                       FOR AND EQUAL PRINCIPAL AMOUNT OF
                 ITS 10.875% SENIOR SUBORDINATED NOTES DUE 2011
                       WHICH HAVE NOT BEEN SO REGISTERED
                           PURSUANT TO THE PROSPECTUS
                             DATED OCTOBER   , 2001

    This Letter of Transmittal, Certificates (as defined below) and any other
required documents should be sent or delivered by each holder of Outstanding
Notes (as defined below) or such holder's agent to the Exchange Agent at the
address set forth below.

                 THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS:
                      STATE STREET BANK AND TRUST COMPANY

      BY HAND DELIVERY, OVERNIGHT COURIER OR REGISTERED OR CERTIFIED MAIL:
                      State Street Bank and Trust Company
                        2 Avenue de Lafayette, 6th Floor
                                Boston, MA 02111
                        Attention: Exchanges/Sandra Wong
                           Facsimile: (617) 662-1452

    DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE, OR TRANSMISSION VIA FACSIMILE TO A NUMBER OTHER THAN AS SET FORTH ABOVE,
WILL NOT CONSTITUTE A VALID DELIVERY.

    THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.

       THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.
          NEW YORK CITY TIME, ON             , 2001, UNLESS EXTENDED.

    Capitalized terms used herein but not defined shall have the same meaning
given them in the Prospectus (as defined below).

    This Letter of Transmittal is to be completed by holders of Outstanding
Notes either if Outstanding Notes are to be forwarded herewith or if tenders of
Outstanding Notes are to be made by book-entry transfer to the Exchange Agent's
account at The Depository Trust Company ("DTC") pursuant to the procedures set
forth in "The Exchange Offer--Procedures for Tendering" in the Prospectus and an
Agent's message (as defined herein) is not delivered.

    Holders of Outstanding Notes whose certificates ("Certificates") for such
Outstanding Notes are not immediately available or who cannot deliver their
Certificates and all other documents required hereby to the Exchange Agent on or
prior to the Expiration Date (as defined in "Exchange Offer--Expiration Dates;
Extensions; Amendments" of the Prospectus) or who cannot comply with the
book-entry transfer procedures on a timely basis must tender their Outstanding
Notes according to the guaranteed delivery procedures set forth in "The Exchange
Offer--Guaranteed Delivery Procedures" of the Prospectus.
<Page>
    The William Carter Company is not making the exchange offer to holders of
Outstanding Notes in any jurisdiction in which the exchange offer or the
acceptance of the exchange offer would not be in compliance with the securities
or Blue Sky laws of such jurisdiction. The William Carter Company also will not
accept surrenders for exchange from holders of Outstanding Notes in any
jurisdiction in which the exchange offer or the acceptance of the exchange offer
would not be in compliance with the securities or Blue Sky laws or such
jurisdiction.

    DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE
DELIVERY TO THE EXCHANGE AGENT.

    List below the Outstanding Notes to which this Letter of Transmittal
relates. If the space provided below is inadequate, the Certificate numbers
and/or the number of Outstanding Notes tendered should be listed on a separate
signed schedule and attached hereto.

            NOTE: SIGNATURES MUST BE PROVIDED ON THE FOLLOWING PAGE.
              PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.

<Table>
<Caption>
                                ALL TENDERING HOLDERS MUST COMPLETE THIS BOX.
                                  DESCRIPTION OF OUTSTANDING NOTES TENDERED
     NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) APPEAR(S) ON              OUTSTANDING NOTES TENDERED
               OUTSTANDING NOTES TENDERED)                        (ATTACH ADDITIONAL LIST IF NECESSARY)
                                                                                        PRINCIPAL AMOUNT OF
                                                                                         OUTSTANDING NOTES
                                                             CERTIFICATE NUMBER(S)*          TENDERED**
<S>                                                         <C>                       <C>

                                                                                      TOTAL:
  *  Need not be completed by holders tendering by book-entry transfer.
 **  All Outstanding Notes held shall be deemed tendered unless a lesser number is specified in this column.
</Table>

                                       2
<Page>
               BOXES BELOW FOR USE BY ELIGIBLE INSTITUTIONS ONLY

  / /  CHECK HERE IF OUTSTANDING NOTES ARE BEING TENDERED BY BOOK-ENTRY
     TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE
     DTC AND COMPLETE THE FOLLOWING:

  Name of Tendering Institution: _____________________________________________
  DTC Account Number: ________________________________________________________
  Transaction Code Number: ___________________________________________________

  / /  CHECK HERE AND ENCLOSE A PHOTOCOPY OF THE NOTICE OF GUARANTEED DELIVERY
     IF OUTSTANDING NOTES TENDERED ARE BEING DELIVERED PURSUANT TO A NOTICE OF
     GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE
     THE FOLLOWING:

  Name(s) of Registered Name(s) Holder(s): ___________________________________
  Window Ticket Number (if any): _____________________________________________
  Date of Execution of Notice of Guaranteed Delivery: ________________________
  Name of Institution which Guaranteed Delivery: _____________________________
  If Guaranteed Delivery is to be made by Book-Entry Transfer: _______________
    Name of Tendering Institution: ___________________________________________
    DTC Account Number: ______________________________________________________
    Transaction Code Number: _________________________________________________

  / /  CHECK HERE IF OUTSTANDING NOTES ARE BEING TENDERED BY BOOK ENTRY
     TRANSFER AND NON-EXCHANGED ARE TO BE RETURNED BY CREDITING THE DTC
     ACCOUNT NUMBER SET -FORTH ABOVE.

  / /  CHECK HERE IF YOU ARE A BROKER-DEALER WHO ACQUIRED THE OUTSTANDING
     NOTES FOR YOUR OWN ACCOUNT AS A RESULT OF MARKET-MAKING OR OTHER TRADING
     ACTIVITIES (A "PARTICIPATING BROKER-DEALER") AND WISH TO RECEIVE TEN
     ADDITIONAL COPIES OF THE PROSPECTUS AND TEN COPIES OF ANY AMENDMENTS OR
     SUPPLEMENTS THERETO.

  Name: ______________________________________________________________________
  Address: ___________________________________________________________________

                                       3
<Page>
    LADIES AND GENTLEMEN:

    The undersigned hereby tenders to The William Carter Corporation, a
Massachusetts corporation (the "Purchaser"), the above-described principal
amount of the Purchaser's outstanding 10.875% Senior Subordinated Notes due 2011
(collectively, the "Outstanding Notes") in exchange for a like principal amount
of the Purchaser's new 10.875% Series B Senior Subordinated Notes due 2011 (the
"Exchange Outstanding Notes") which have been registered under the Securities
Act of 1933, as amended (the "Securities Act"), upon the terms and subject to
the conditions set forth in the Prospectus dated       , 2001 (as the same may
be amended or supplemented from time to time, the "Prospectus"), receipt of
which is acknowledged, and in this Letter of Transmittal (which, together with
the Prospectus, constitute the "Exchange Offer").

    Subject to and effective upon the acceptance for exchange of all or any
portion of the Outstanding Notes tendered herewith in accordance with the terms
and conditions of the Exchange Offer (including, if the Exchange Offer is
extended or amended, the terms and conditions of any such extension or
amendment), the undersigned hereby sells, assigns and transfers to or upon the
order of the Purchaser all right, title and interest in and to such Outstanding
Notes as are being tendered herewith. The undersigned hereby irrevocably
constitutes and appoints the Exchange Agent as its agent and attorney-in-fact
(with full knowledge that the Exchange Agent is also acting as agent of the
Purchaser in connection with the Exchange Offer) with respect to the Outstanding
Notes tendered, with full power of substitution (such power of attorney being
deemed to be an irrevocable power coupled with an interest), subject only to the
right of withdrawal described in the Prospectus, to (i) deliver Certificates for
Outstanding Notes to the Purchaser, together with all accompanying evidences of
transfer and authenticity to, or upon the order of, the Purchaser, upon receipt
by the Exchange Agent, as the undersigned's agent, of the Exchange Notes to be
issued in exchange for such Outstanding Notes, (ii) present Certificates for
such Outstanding Notes for transfer, and to transfer the Outstanding Notes on
the books of the Purchaser, and (iii) receive for the account of the Purchaser
all benefits and otherwise exercise all rights of beneficial ownership of such
Outstanding Notes, all in accordance with the terms and conditions of the
Exchange Offer.

    THE UNDERSIGNED HEREBY REPRESENTS AND WARRANTS THAT THE UNDERSIGNED HAS FULL
POWER AND AUTHORITY TO TENDER, EXCHANGE, SELL, ASSIGN AND TRANSFER THE
OUTSTANDING NOTES TENDERED HEREBY AND THAT, WHEN THE SAME ARE ACCEPTED FOR
EXCHANGE, THE PURCHASER WILL ACQUIRE GOOD, MARKETABLE AND UNENCUMBERED TITLE
THERETO, FREE AND CLEAR OF ALL LIENS, RESTRICTIONS, CHARGES AND ENCUMBRANCES,
AND THAT THE OUTSTANDING NOTES TENDERED HEREBY ARE NOT SUBJECT TO ANY ADVERSE
CLAIMS OR PROXIES. THE UNDERSIGNED WILL, UPON REQUEST, EXECUTE AND DELIVER ANY
ADDITIONAL DOCUMENTS DEEMED BY THE PURCHASER OR THE EXCHANGE AGENT TO BE
NECESSARY OR DESIRABLE TO COMPLETE THE EXCHANGE, ASSIGNMENT AND TRANSFER OF THE
OUTSTANDING NOTES TENDERED HEREBY, AND THE UNDERSIGNED WILL COMPLY WITH ITS
OBLIGATIONS UNDER THE REGISTRATION RIGHTS AGREEMENT. THE UNDERSIGNED HAS READ
AND AGREES TO ALL OF THE TERMS OF THE EXCHANGE OFFER.

    The name(s) and address(es) of the registered holder(s) of the Outstanding
Notes tendered hereby should be printed above, if they are not already set forth
above, as they appear on the Certificates representing such Outstanding Notes.
The Certificate number(s) and the Outstanding Notes that the undersigned wishes
to tender should be indicated in the appropriate boxes above.

    If any tendered Outstanding Notes are not exchanged pursuant to the Exchange
Offer for any reason, or if Certificates are submitted for more Outstanding
Notes than are tendered or accepted for exchange, Certificates for such
non-exchanged or non-tendered Outstanding Notes will be returned (or, in the
case of Outstanding Notes tendered by book-entry transfer, such Outstanding
Notes will be credited to an account maintained at DTC), without expense to the
tendering holder, promptly following the expiration or termination of the
Exchange Offer.

                                       4
<Page>
    If the undersigned is a broker-dealer holding Outstanding Notes acquired for
its own account as a result of market-making activities or other trading
activities, it agrees to deliver a prospectus meeting the requirements of the
Securities Act in connection with any resale of Exchange Notes received in
respect of such Outstanding Notes pursuant to the Exchange Offer.

    The undersigned understands that tenders of Outstanding Notes pursuant to
any one of the procedures described in "The Exchange Offer--Procedures for
Tendering" in the Prospectus and in the instructions will, upon the Purchaser's
acceptance for exchange of such tendered Outstanding Notes, constitute a binding
agreement between the undersigned and the Purchaser upon the terms and subject
to the conditions of the Exchange Offer. The undersigned recognizes that, under
certain circumstances set forth in the Prospectus, the Purchaser may not be
required to accept for exchange any of the Outstanding Notes tendered hereby.

    Unless otherwise indicated herein in the box entitled "Special Issuance
Instructions" below, the undersigned hereby directs that the Exchange Notes be
issued in the name(s) of the undersigned or, in the case of a book-entry
transfer of Outstanding Notes, that such Exchange Notes be credited to the
account indicated above maintained at DTC. If applicable, substitute
Certificates representing Outstanding Notes not exchanged or not accepted for
exchange will be issued to the undersigned or, in the case of a book-entry
transfer of Outstanding Notes, will be credited to the account indicated above
maintained at DTC. Similarly, unless otherwise indicated under "Special Delivery
Instructions" below, please deliver Exchange Notes to the undersigned at the
address shown below the undersigned's signature.

    BY TENDERING OUTSTANDING NOTES AND EXECUTING THIS LETTER OF TRANSMITTAL, THE
UNDERSIGNED HEREBY REPRESENTS AND AGREES THAT (I) THE UNDERSIGNED IS NOT AN
"AFFILIATE" OF THE PURCHASER, (II) THE UNDERSIGNED HAS NO ARRANGEMENT OR
UNDERSTANDING WITH ANY PERSON TO PARTICIPATE IN THE DISTRIBUTION (WITHIN THE
MEANING OF THE SECURITIES ACT) OF EXCHANGE NOTES TO BE RECEIVED IN THE EXCHANGE
OFFER, (III) ANY EXCHANGE NOTES TO BE RECEIVED BY THE UNDERSIGNED IN THE
EXCHANGE OFFER ARE BEING ACQUIRED IN THE ORDINARY COURSE OF ITS BUSINESS, AND
(IV) IF THE UNDERSIGNED IS NOT A BROKER-DEALER, THE UNDERSIGNED IS NOT ENGAGED
IN, AND DOES NOT INTEND TO ENGAGE IN, A DISTRIBUTION (WITHIN THE MEANING OF THE
SECURITIES ACT) OF SUCH EXCHANGE NOTES. ANY HOLDER OF OUTSTANDING NOTES THAT IS
NOT A BROKER-DEALER AND THAT IS USING THE EXCHANGE OFFER TO PARTICIPATE IN A
DISTRIBUTION (WITHIN THE MEANING OF THE SECURITIES ACT) OF EXCHANGE NOTES IS
HEREBY NOTIFIED (1) THAT IT WILL NOT BE ABLE TO RELY ON THE POSITION OF THE
STAFF OF THE DIVISION OF CORPORATE FINANCE OF THE SECURITIES AND EXCHANGE
COMMISSION (THE "STAFF") SET FORTH IN EXXON CAPITAL HOLDINGS CORPORATION
(AVAILABLE APRIL 13, 1989) AND SIMILAR LETTERS AND (2) THAT IT MUST COMPLY WITH
THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF THE SECURITIES ACT IN
CONNECTION WITH ANY RESALE OF EXCHANGE NOTES.

    ANY HOLDER OF OUTSTANDING NOTES THAT IS A BROKER-DEALER, BY TENDERING
OUTSTANDING NOTES PURSUANT TO THE EXCHANGE OFFER AND EXECUTING THIS LETTER OF
TRANSMITTAL, REPRESENTS AND AGREES, CONSISTENT WITH CERTAIN INTERPRETIVE LETTERS
ISSUED BY THE STAFF TO THIRD PARTIES, THAT (A) SUCH OUTSTANDING NOTES HELD BY
THE BROKER-DEALER ARE HELD ONLY AS A NOMINEE, OR (B) SUCH OUTSTANDING NOTES WERE
ACQUIRED BY SUCH BROKER-DEALER FOR ITS OWN ACCOUNT AS A RESULT OF MARKET-MAKING
ACTIVITIES OR OTHER TRADING ACTIVITIES AND IT WILL DELIVER THE PROSPECTUS (AS
AMENDED OR SUPPLEMENTED FROM TIME TO TIME) MEETING THE REQUIREMENTS OF THE
SECURITIES ACT IN CONNECTION WITH ANY RESALE OF SUCH EXCHANGE NOTES (PROVIDED
THAT, BY SO ACKNOWLEDGING AND BY DELIVERING A PROSPECTUS, SUCH BROKER-DEALER
WILL NOT BE DEEMED TO ADMIT THAT IT IS AN "UNDERWRITER" WITHIN THE MEANING OF
THE SECURITIES ACT).

                                       5
<Page>
    The Purchaser has agreed that, subject to the provisions of the Registration
Rights Agreement, the Prospectus, as it may be amended or supplemented from time
to time, may be used by a Participating Broker-Dealer (as defined below) in
connection with resales of Exchange Notes received in exchange for Outstanding
Notes, where such Outstanding Notes were acquired by such Participating Broker-
Dealer for its own account as a result of market-making activities or other
trading activities, for a period ending upon the earlier of the expiration of
the 180th day after the Exchange Offer has been completed or such time as such
broker dealers no longer own any of the Exchange Notes. In that regard, each
Broker-Dealer who acquired Outstanding Notes for its own account and as a result
of market-making or other trading activities (a "Participating Broker-Dealer"),
by tendering such Outstanding Notes and executing this Letter of Transmittal,
agrees that, upon receipt of notice from the Purchaser of the occurrence of any
event or the discovery of any fact which makes any statement contained therein,
in light of the circumstances under which they were made, misleading or of the
occurrence of certain other events specified in the Registration Rights
Agreement, such Participating Broker-Dealer will suspend the sale of Exchange
Notes pursuant to the Prospectus until the Purchaser has amended or supplemented
the Prospectus to correct such misstatement or omission and has furnished copies
of the amended or supplemented Prospectus to the Participating Broker-Dealer or
the Purchaser has given notice that the sale of the Exchange Notes may be
resumed, as the case may be. If the Purchaser gives such notice to suspend the
sale of the Exchange Notes, it shall extend the 180-day period referred to above
during which Participating Broker-Dealers are entitled to use the Prospectus in
connection with the resale of Exchange Notes by the number of days during the
period from and including the date of the giving of such notice to and including
the date when Participating Broker-Dealers shall have received copies of the
supplemented or amended Prospectus necessary to permit resales of the Exchange
Notes or to and including the date on which the Purchaser has given notice that
the sale of Exchange Notes may be resumed, as the case may be.

    We understand that all resales of the exchange notes must be made in
compliance with applicable state securities or Blue Sky laws. If a resale does
not qualify for an exemption from these laws, we acknowledge that it may be
necessary to register or qualify the exchange notes in a particular state or to
make the resale through a licensed broker-dealer in order to comply with these
laws. We further understand that the Purchaser assumes no responsibility
regarding compliance with state securities or Blue Sky laws in connection with
resales.

    As a result, a Participating Broker-Dealer who intends to use the Prospectus
in connection with resales of Exchange Notes received in exchange for
Outstanding Notes pursuant to the Exchange Offer must notify the Purchaser, or
cause the Purchaser to be notified, on or prior to the Expiration Date, that it
is a Participating Broker-Dealer. Such notice may be given in the space provided
above or may be delivered to the Exchange Agent at the address set forth in the
Prospectus under "The Exchange Offer--Exchange Agent."

    Interest on each Exchange Note will accrue from the last date on which
interest was paid on the Outstanding Note being tendered for exchange or, if no
interest has been paid, from the date on which the Outstanding Notes were issued
in the original offering. Therefore, holders who exchange their Outstanding
Notes for Exchange Notes will receive the same interest payment on February 15,
2002 (the first interest payment date with respect to the Outstanding Notes and
the Exchange Notes to be issued pursuant to the Exchange Offer) that they would
have received had they not accepted the Exchange Offer. Interest on the
Outstanding Notes accepted for exchange will cease to accrue upon issuance of
the Exchange Notes, and the undersigned waives the right to receive any interest
on such Outstanding Notes after such issuance.

    All authority herein conferred or agreed to be conferred in this Letter of
Transmittal shall survive the death or incapacity of the undersigned, and any
obligation of the undersigned hereunder shall be binding upon the heirs,
executors, administrators, personal representatives, trustees in bankruptcy,
legal representatives, successors and assigns of the undersigned. Except as
stated in the Prospectus, this tender is irrevocable.

                                       6
<Page>

                              HOLDER(S) SIGN HERE
                         (SEE INSTRUCTIONS 2, 5 AND 6)
                  (PLEASE COMPLETE SUBSTITUTE FORM W-9 BELOW)
     (NOTE: SIGNATURES(S) MUST BE GUARANTEED IF REQUIRED BY INSTRUCTION 2)

      Must be signed by registered holder(s) exactly as name(s) appear(s) on
  Certificate(s) for the Outstanding Notes hereby tendered or on a security
  position listing, or by any person(s) authorized to become the registered
  holder(s) by endorsements and documents transmitted herewith (including such
  opinions of counsel, certificates and other information as may be required
  by the Purchaser for the Outstanding Notes to comply with any restrictions
  on transfer applicable to the Outstanding Notes). If signature is by an
  attorney-in-fact, executor, administrator, trustee, guardian, officer of a
  corporation or another acting in a fiduciary capacity or representative
  capacity, please set forth the signer's full title. See Instruction 5.

  ____________________________________________________________________________
  ____________________________________________________________________________
                          (Signature(s) of Holder(s))

  Date ___________, 2001

  Name(s) ____________________________________________________________________
  ____________________________________________________________________________

  Capacity or Title __________________________________________________________

  Address ____________________________________________________________________
                               (Include Zip Code)

  Area Code and Telephone Number _____________________________________________

  ____________________________________________________________________________
                         (Tax Identification Number(s))

                                       7
<Page>
------------------------------------------------------

                         SPECIAL ISSUANCE INSTRUCTIONS
                         (SEE INSTRUCTIONS 1, 5 AND 6)

      To be completed ONLY if Exchange Notes or any Outstanding Notes that are
  not tendered are to be issued in the name of someone other than the
  registered holder of the Outstanding Notes whose name(s) appear(s) above.

  ISSUE:

  / /  Exchange Notes to:

  / /  Outstanding Notes not tendered to:

  Name(s): ___________________________________________________________________
  ____________________________________________________________________________
                                 (PLEASE PRINT)

  Address: ___________________________________________________________________
  ____________________________________________________________________________
                                                                   (ZIP CODE)

   __________________________________________________________________________
              (TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER)
                       (SEE ENCLOSED SUBSTITUTE FORM W-9)

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

                         SPECIAL DELIVERY INSTRUCTIONS
                         (SEE INSTRUCTIONS 1, 5 AND 6)

      To be completed ONLY if Exchange Notes or any Outstanding Notes that are
  not tendered are to be sent to someone other than the registered holder of
  the Outstanding Notes whose name(s) appear(s) above, or to the registered
  holder(s) at an address other than that shown above.

  MAIL:

  / /  Exchange Notes to:

  / /  Outstanding Notes not tendered to:

  Name(s): ___________________________________________________________________
  ____________________________________________________________________________
                                 (PLEASE PRINT)

  Address: ___________________________________________________________________
  ____________________________________________________________________________
-----------------------------------------------------              (ZIP CODE)

                                       8
<Page>
                           GUARANTEE OF SIGNATURE(S)
                   (IF REQUIRED -- SEE INSTRUCTIONS 2 AND 5)

  Authorized Signature _______________________________________________________

  Name _______________________________________________________________________
                             (PLEASE PRINT OR TYPE)

  Full Title _________________________________________________________________

  Name of Firm _______________________________________________________________
  Address ____________________________________________________________________
  ____________________________________________________________________________
                                   (ZIP CODE)

  Area Code and Telephone Number _____________________________________________

  Dated: ___________, 2001

                                       9
<Page>
                                  INSTRUCTIONS
                    FORMING PART OF THE TERMS AND CONDITIONS
                             OF THE EXCHANGE OFFER

DELIVERY OF LETTER OF TRANSMITTAL AND OUTSTANDING NOTES; GUARANTEED DELIVERY
PROCEDURES.  THIS LETTER OF TRANSMITTAL IS TO BE COMPLETED EITHER IF
(A) TENDERS ARE TO BE MADE PURSUANT TO THE PROCEDURES FOR TENDER BY BOOK-ENTRY
TRANSFER SET FORTH IN "THE EXCHANGE OFFER--PROCEDURES FOR TENDERING" IN THE
PROSPECTUS AND AN AGENT'S MESSAGE IS NOT DELIVERED OR (B) CERTIFICATES ARE TO BE
FORWARDED HEREWITH. TIMELY CONFIRMATION OF A BOOK-ENTRY TRANSFER OF SUCH
OUTSTANDING NOTES INTO THE EXCHANGE AGENT'S ACCOUNT AT DTC, OR CERTIFICATES AS
WELL AS THIS LETTER OF TRANSMITTAL (OR FACSIMILE THEREOF), PROPERLY COMPLETED
AND DULY EXECUTED, WITH ANY REQUIRED SIGNATURE GUARANTEES, AND ANY OTHER
DOCUMENTS REQUIRED BY THIS LETTER OF TRANSMITTAL, MUST BE RECEIVED BY THE
EXCHANGE AGENT AT ITS ADDRESSES SET FORTH HEREIN ON OR PRIOR TO THE EXPIRATION
DATE. TENDERS BY BOOK-ENTRY TRANSFER MAY ALSO BE MADE BY DELIVERING AN AGENT'S
MESSAGE IN LIEU OF THIS LETTER OF TRANSMITTAL. THE TERM "AGENT'S MESSAGE" MEANS
A MESSAGE, TRANSMITTED BY DTC TO, AND RECEIVED BY, THE EXCHANGE AGENT AND
FORMING A PART OF A BOOK-ENTRY CONFIRMATION, WHICH STATES THAT DTC HAS RECEIVED
AN EXPRESS ACKNOWLEDGMENT FROM THE TENDERING PARTICIPANT, WHICH ACKNOWLEDGMENT
STATES THAT SUCH PARTICIPANT HAS RECEIVED AND AGREES TO BE BOUND BY THE LETTER
OF TRANSMITTAL AND THAT THE PURCHASER MAY ENFORCE THE LETTER OF TRANSMITTAL
AGAINST SUCH PARTICIPANT. THE TERM "BOOK-ENTRY CONFIRMATION" MEANS A TIMELY
CONFIRMATION OF BOOK-ENTRY TRANSFER OF OUTSTANDING NOTES INTO THE EXCHANGE
AGENT'S ACCOUNT AT DTC.

    Holders who wish to tender their Outstanding Notes and (i) whose Outstanding
Notes are not immediately available, (ii) who cannot deliver their Outstanding
Notes, this Letter of Transmittal and any other required documents to the
Exchange Agent on or prior to the Expiration Date or (iii) who cannot complete
the procedures for book-entry transfer on or prior to the Expiration Date may
tender their Outstanding Notes by properly completing and duly executing a
Notice of Guaranteed Delivery pursuant to the guaranteed delivery procedures set
forth in "The Exchange Offer--Guaranteed Delivery Procedures" in the Prospectus.
Pursuant to such procedures: (a) such tender must be made by or through an
Eligible Institution (as defined below); (b) a properly completed and duly
executed Notice of Guaranteed Delivery, substantially in the form made available
by the Purchaser, must be received by the Exchange Agent on or prior to the
Expiration Date; and (c) the Certificates (or a book-entry confirmation)
representing tendered Outstanding Notes, in proper form for transfer, together
with a Letter of Transmittal (or facsimile thereof or Agent's Message in lieu
thereof), properly completed and duly executed, with any required signature
guarantees and any other documents required by this Letter of Transmittal, must
be received by the Exchange Agent within five business days after the Expiration
Date, all as provided in "The Exchange Offer--Procedures for Tendering" in the
Prospectus.

    The Notice of Guaranteed Delivery may be delivered by hand or transmitted by
facsimile or mail to the Exchange Agent, and must include a guarantee by an
Eligible Institution in the form set forth in such Notice. For Outstanding Notes
to be properly tendered pursuant to the guaranteed delivery procedure, the
Exchange Agent must receive a Notice of Guaranteed Delivery on or prior to the
Expiration Date. As used herein and in the Prospectus, "Eligible Institution"
means a firm or other entity identified in Rule 17Ad-15 under the Exchange Act
as "an eligible guarantor institution," including (as such terms are defined
therein): (i) a bank; (ii) a broker, dealer, municipal securities broker or
dealer or government securities broker or dealer; (iii) a credit union; (iv) a
national securities exchange, registered securities association or clearing
agency; or (v) a savings association that is a participant in a Securities
Transfer Association.

    THE METHOD OF DELIVERY OF OUTSTANDING NOTES, THIS LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING
HOLDER, AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
EXCHANGE AGENT. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, OR OVERNIGHT DELIVERY SERVICE IS RECOMMENDED. IN
ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.

                                       10
<Page>
    THE PURCHASER WILL NOT ACCEPT ANY ALTERNATIVE, CONDITIONAL OR CONTINGENT
TENDERS. EACH TENDERING HOLDER, BY EXECUTION OF A LETTER OF TRANSMITTAL (OR
FACSIMILE THEREOF OR AGENT'S MESSAGE IN LIEU THEREOF), WAIVES ANY RIGHT TO
RECEIVE ANY NOTICE OF THE ACCEPTANCE OF SUCH TENDER.

GUARANTEE OF SIGNATURES.  NO SIGNATURE GUARANTEE ON THIS LETTER OF TRANSMITTAL
IS REQUIRED IF: THIS LETTER OF TRANSMITTAL IS SIGNED BY THE REGISTERED HOLDER
(WHICH TERM, FOR PURPOSES OF THIS DOCUMENT, SHALL INCLUDE ANY PARTICIPANT IN DTC
WHOSE NAME APPEARS ON A SECURITY POSITION LISTING AS THE OWNER OF THE
OUTSTANDING NOTES) OF OUTSTANDING NOTES TENDERED HEREWITH, UNLESS SUCH HOLDER(S)
HAS COMPLETED EITHER THE BOX ENTITLED "SPECIAL ISSUANCE INSTRUCTIONS" OR THE BOX
ENTITLED "SPECIAL DELIVERY INSTRUCTIONS" ABOVE, OR SUCH OUTSTANDING NOTES ARE
TENDERED FOR THE ACCOUNT OF A FIRM THAT IS AN ELIGIBLE INSTITUTION.

    In all other cases, an Eligible Institution must guarantee the signature(s)
on this Letter of Transmittal. See Instruction 5.

INADEQUATE SPACE.  IF THE SPACE PROVIDED IN THE BOX CAPTIONED "DESCRIPTION OF
OUTSTANDING NOTES TENDERED" ABOVE IS INADEQUATE, THE CERTIFICATE NUMBER(S)
AND/OR THE PRINCIPAL AMOUNT OF OUTSTANDING NOTES AND ANY OTHER REQUIRED
INFORMATION SHOULD BE LISTED ON A SEPARATE SIGNED SCHEDULE AND SUCH SCHEDULE
SHOULD BE ATTACHED TO THIS LETTER OF TRANSMITTAL.

PARTIAL TENDERS AND WITHDRAWAL RIGHTS.  IF LESS THAN ALL THE OUTSTANDING NOTES
EVIDENCED BY ANY CERTIFICATE SUBMITTED ARE TO BE TENDERED, FILL IN THE PRINCIPAL
AMOUNT OF OUTSTANDING NOTES WHICH ARE TO BE TENDERED IN THE BOX ENTITLED
"PRINCIPAL AMOUNT OF OUTSTANDING NOTES TENDERED." IN SUCH CASE, NEW
CERTIFICATE(S) FOR THE REMAINDER OF THE OUTSTANDING NOTES THAT WERE EVIDENCED BY
YOUR OLD CERTIFICATE(S) WILL BE SENT TO THE HOLDER OF THE OUTSTANDING NOTES,
PROMPTLY AFTER THE EXPIRATION DATE. ALL OUTSTANDING NOTES REPRESENTED BY
CERTIFICATES DELIVERED TO THE EXCHANGE AGENT WILL BE DEEMED TO HAVE BEEN
TENDERED UNLESS OTHERWISE INDICATED.

    Except as otherwise provided herein, tenders of Outstanding Notes may be
withdrawn at any time on or prior to the Expiration Date. In order for a
withdrawal to be effective on or prior to that time, a written, telegraphic,
telex or facsimile transmission of such notice of withdrawal must be timely
received by the Exchange Agent at one of its addresses set forth above or in the
Prospectus on or prior to the Expiration Date. Any such notice of withdrawal
must (i) specify the name of the person who tendered the Outstanding Notes to be
withdrawn, (ii) identify the Outstanding Notes to be withdrawn, including the
Certificate number(s) and the aggregate principal amount of such Outstanding
Notes or, in the case of Outstanding Notes transferred by book-entry transfer,
the name and number of the account at DTC to be credited with the withdrawal of
Outstanding Notes, (iii) be signed by the holder in the same manner as the
original signature on this Letter of Transmittal, including any required
signature guarantees, or be accompanied by documents sufficient to permit the
Exchange Agent to register the transfer of such Outstanding Notes into the name
of the person withdrawing the tender and (iv) if Certificates for Outstanding
Notes have been tendered, the name of the registered holder of the Outstanding
Notes as set forth on the Certificate for the Outstanding Notes, if different
from that of the person who tendered such Outstanding Notes. Withdrawals of
tenders of Outstanding Notes may not be rescinded. Outstanding Notes properly
withdrawn will not be deemed validly tendered for purposes of the Exchange
Offer, but may be retendered at any subsequent time on or prior to the
Expiration Date by following any of the procedures described in the Prospectus
under "The Exchange Offer--Procedures for Tendering."

SIGNATURES ON LETTER OF TRANSMITTAL, ASSIGNMENTS AND ENDORSEMENTS.  IF THIS
LETTER OF TRANSMITTAL IS SIGNED BY THE REGISTERED HOLDER(S) OF THE OUTSTANDING
NOTES TENDERED HEREBY, THE SIGNATURE(S) MUST CORRESPOND EXACTLY WITH THE NAME(S)
AS WRITTEN ON THE FACE OF THE CERTIFICATE(S) OR ON A SECURITY POSITION LISTING
WITHOUT ALTERATION, ENLARGEMENT OR ANY CHANGE WHATSOEVER.

                                       11
<Page>
    If any of the Outstanding Notes tendered hereby are owned of record by two
or more joint owners, all such owners must sign this Letter of Transmittal.

    If any tendered Outstanding Notes are registered in different name(s) on
several Certificates, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal (or facsimiles thereof or Agent's Message in
lieu thereof) as there are different registrations of Certificates.

    If this Letter of Transmittal or any Certificates or bond powers are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing and must submit proper evidence
satisfactory to the Purchaser, in its sole discretion, of such persons'
authority to so act.

    When this Letter of Transmittal is signed by the registered owner(s) of the
Outstanding Notes listed and transmitted hereby, no endorsement(s) of
Certificate(s) or separate bond power(s) are required unless Exchange Notes are
to be issued in the name of a person other than the registered holder(s).
Signature(s) on such Certificate(s) or bond power(s) must be guaranteed by an
Eligible Institution.

    If this Letter of Transmittal is signed by a person other than the
registered owner(s) of the Outstanding Notes listed, the Certificates must be
endorsed or accompanied by appropriate bond powers, signed exactly as the name
or names of the registered owner(s) appear(s) on the Certificates, and also must
be accompanied by such opinions of counsel, certifications and other information
as the Purchaser may require in accordance with the restrictions on transfer
applicable to the Outstanding Notes. Signatures on such Certificates or bond
powers must be guaranteed by an Eligible Institution.

SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS.  IF EXCHANGE NOTES ARE TO BE ISSUED
IN THE NAME OF A PERSON OTHER THAN THE SIGNER OF THIS LETTER OF TRANSMITTAL, OR
IF EXCHANGE NOTES ARE TO BE SENT TO SOMEONE OTHER THAN THE SIGNER OF THIS LETTER
OF TRANSMITTAL OR TO AN ADDRESS OTHER THAN THAT SHOWN ABOVE, THE APPROPRIATE
BOXES ON THIS LETTER OF TRANSMITTAL SHOULD BE COMPLETED. CERTIFICATES FOR
OUTSTANDING NOTES NOT EXCHANGED WILL BE RETURNED BY MAIL OR, IF TENDERED BY
BOOK-ENTRY TRANSFER, BY CREDITING THE ACCOUNT INDICATED ABOVE MAINTAINED AT DTC.
SEE INSTRUCTION 4.

IRREGULARITIES.  THE PURCHASER WILL DETERMINE, IN ITS SOLE DISCRETION, ALL
QUESTIONS AS TO THE FORM OF DOCUMENTS, VALIDITY, ELIGIBILITY (INCLUDING TIME OF
RECEIPT) AND ACCEPTANCE FOR EXCHANGE OF ANY TENDER OF OUTSTANDING NOTES WHICH
DETERMINATION SHALL BE FINAL AND BINDING ON ALL PARTIES. THE PURCHASER RESERVES
THE ABSOLUTE RIGHT, IN ITS SOLE AND ABSOLUTE DISCRETION, TO REJECT ANY AND ALL
TENDERS DETERMINED BY IT NOT TO BE IN PROPER FORM OR THE ACCEPTANCE OF WHICH, OR
EXCHANGE FOR, MAY, IN THE VIEW OF COUNSEL TO THE PURCHASER, BE UNLAWFUL. THE
PURCHASER ALSO RESERVES THE ABSOLUTE RIGHT, SUBJECT TO APPLICABLE LAW, TO WAIVE
ANY OF THE CONDITIONS OF THE EXCHANGE OFFER SET FORTH IN THE PROSPECTUS UNDER
"THE EXCHANGE OFFER--CONDITIONS OF THE EXCHANGE OFFER" OR ANY CONDITIONS OR
IRREGULARITY IN ANY TENDER OF OUTSTANDING NOTES OF ANY PARTICULAR HOLDER WHETHER
OR NOT SIMILAR CONDITIONS OR IRREGULARITIES ARE WAIVED IN THE CASE OF OTHER
HOLDERS. THE PURCHASER'S INTERPRETATION OF THE TERMS AND CONDITIONS OF THE
EXCHANGE OFFER (INCLUDING THIS LETTER OF TRANSMITTAL AND THE INSTRUCTIONS
HERETO) WILL BE FINAL AND BINDING. NO TENDER OF OUTSTANDING NOTES WILL BE DEEMED
TO HAVE BEEN VALIDLY MADE UNTIL ALL IRREGULARITIES WITH RESPECT TO SUCH TENDER
HAVE BEEN CURED OR WAIVED. NEITHER THE PURCHASER, ANY AFFILIATES OR ASSIGNS OF
THE PURCHASER, THE EXCHANGE AGENT, OR ANY OTHER PERSON SHALL BE UNDER ANY DUTY
TO GIVE NOTIFICATION OF ANY IRREGULARITIES IN TENDERS OR INCUR ANY LIABILITY FOR
FAILURE TO GIVE SUCH NOTIFICATION.

QUESTIONS, REQUESTS FOR ASSISTANCE AND ADDITIONAL COPIES.  QUESTIONS AND
REQUESTS FOR ASSISTANCE REGARDING HOW TO COMPLETE AND TENDER THIS LETTER OF
TRANSMITTAL MAY BE DIRECTED TO THE EXCHANGE AGENT AT ITS ADDRESS AND TELEPHONE
NUMBER SET FORTH ON THE FRONT OF THIS LETTER OF TRANSMITTAL. ALL OTHER QUESTIONS
SHOULD BE DIRECTED TO             . ADDITIONAL COPIES OF THE PROSPECTUS, THIS
LETTER OF TRANSMITTAL AND THE NOTICE OF GUARANTEED DELIVERY MAY BE OBTAINED FROM
THE EXCHANGE AGENT OR FROM YOUR BROKER, DEALER, COMMERCIAL BANK, TRUST COMPANY
OR OTHER NOMINEE.

                                       12
<Page>
BACKUP WITHHOLDING; SUBSTITUTE FORM W-9.  UNDER U.S. FEDERAL INCOME TAX LAW, A
HOLDER WHOSE TENDERED OUTSTANDING NOTES ARE ACCEPTED FOR EXCHANGE IS REQUIRED TO
PROVIDE THE EXCHANGE AGENT WITH SUCH HOLDER'S CORRECT TAXPAYER IDENTIFICATION
NUMBER ("TIN") ON SUBSTITUTE FORM W-9 BELOW. IF THE EXCHANGE AGENT IS NOT
PROVIDED WITH THE CORRECT TIN, THE INTERNAL REVENUE SERVICE (THE "IRS") MAY
SUBJECT THE HOLDER OR OTHER PAYEE TO A $50 PENALTY. IN ADDITION, PAYMENTS TO
SUCH HOLDERS OR OTHER PAYEES WITH RESPECT TO OUTSTANDING NOTES EXCHANGED
PURSUANT TO THE EXCHANGE OFFER MAY BE SUBJECT TO BACKUP WITHHOLDING. PURSUANT TO
RECENTLY ENACTED TAX LEGISLATION, THE BACKUP WITHHOLDING TAX RATE (THE "BACKUP
WITHHOLDING RATE") WILL BE (I) 30.5% FOR AMOUNTS PAID AFTER AUGUST 6, 2001
THROUGH THE END OF 2001, (II) 30% FOR AMOUNTS PAID DURING 2002 AND 2003,
(III) 29% FOR AMOUNTS PAID DURING 2004 AND 2005, AND (IV) 28% FOR AMOUNTS PAID
DURING 2006 THROUGH 2010. THIS LEGISLATION WILL EXPIRE AND THE BACKUP
WITHHOLDING RATE WILL BE 31% FOR AMOUNTS PAID AFTER DECEMBER 31, 2010, UNLESS
CONGRESS ENACTS TAX LEGISLATION PROVIDING OTHERWISE.

    If the tendering holder has not been issued a TIN and has applied for a TIN
or intends to apply for a TIN in the near future. The holder may write "Applied
For" in Part I and must also complete the Certificate of Awaiting Taxpayer
Identification Number below in order to avoid backup withholding.
Notwithstanding that Part I is so filled and the Certificate of Awaiting
Taxpayer Identification Number is completed, the Exchange Agent will withhold a
percentage (at the Backup Withholding Rate) of all payments made prior to the
time a properly certified TIN is provided to the Exchange Agent. The Exchange
Agent will retain such amounts withheld during the 60-day period following the
date of the Substitute Form W-9. If the holder furnishes the Exchange Agent with
its TIN within 60 days after the date of the Substitute Form W-9, the amounts
retained during the 60-day period will be remitted to the holder and no further
amounts shall be retained or withheld from payments made to the holder
thereafter. If, however, the holder has not provided the Exchange Agent with its
TIN within such 60-day period, amounts withheld will be remitted to the IRS as
backup withholding. In addition, a percentage (at the Backup Withholding Rate)
of all payments made thereafter will be withheld and remitted to the IRS until a
correct TIN is provided.

    The holder is required to give the Exchange Agent the TIN (e.g., social
security number or employer identification number) of the registered owner of
the Outstanding Notes or of the last transferee appearing on the transfers
attached to, or endorsed on, the Outstanding Notes.

    Certain holders (including, among others, corporations, financial
institutions and certain foreign persons) may not be subject to these backup
withholding and reporting requirements. Such holders should nevertheless
complete the attached Substitute Form W-9 below, and write "exempt" on the face
thereof, to avoid possible erroneous backup withholding. A foreign person may
qualify as an exempt recipient by submitting a properly completed IRS
Form W-8BEN, W-8ECI, W-8IMY or W-8 EXP (as applicable), signed under penalties
of perjury, attesting to that holder's exempt status.

    Backup withholding is not an additional U.S. Federal income tax. Rather, the
U.S. Federal income tax liability of a person subject to backup withholding will
be reduced by the amount of tax withheld. If withholding results in an
overpayment of taxes, a refund may be obtained.

LOST, DESTROYED OR STOLEN CERTIFICATES.  IF ANY CERTIFICATE(S) REPRESENTING
OUTSTANDING NOTES HAVE BEEN LOST, DESTROYED OR STOLEN, THE HOLDER SHOULD
PROMPTLY NOTIFY THE EXCHANGE AGENT. THE HOLDER WILL THEN BE INSTRUCTED AS TO THE
STEPS THAT MUST BE TAKEN IN ORDER TO REPLACE THE CERTIFICATE(S). THIS LETTER OF
TRANSMITTAL AND RELATED DOCUMENTS CANNOT BE PROCESSED UNTIL THE PROCEDURES FOR
REPLACING LOST, DESTROYED OR STOLEN CERTIFICATE(S) HAVE BEEN FOLLOWED.

                                       13
<Page>
SECURITY TRANSFER TAXES.  HOLDERS WHO TENDER THEIR OUTSTANDING NOTES FOR
EXCHANGE WILL NOT BE OBLIGATED TO PAY ANY TRANSFER TAXES IN CONNECTION
THEREWITH. IF, HOWEVER, EXCHANGE NOTES ARE TO BE DELIVERED TO, OR ARE TO BE
ISSUED IN THE NAME OF, ANY PERSON OTHER THAN THE REGISTERED HOLDER OF THE
OUTSTANDING NOTES TENDERED, OR IF A TRANSFER TAX IS IMPOSED FOR ANY REASON OTHER
THAN THE EXCHANGE OF OUTSTANDING NOTES IN CONNECTION WITH THE EXCHANGE OFFER,
THEN THE AMOUNT OF ANY SUCH TRANSFER TAX (WHETHER IMPOSED ON THE REGISTERED
HOLDER OR ANY OTHER PERSONS) WILL BE PAYABLE BY THE TENDERING HOLDER. IF
SATISFACTORY EVIDENCE OF PAYMENT OF SUCH TAXES OR EXEMPTION THEREFROM IS NOT
SUBMITTED WITH THE LETTER OF TRANSMITTAL, THE AMOUNT OF SUCH TRANSFER TAXES WILL
BE BILLED DIRECTLY TO SUCH TENDERING HOLDER.

    IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE THEREOF) AND ALL OTHER
REQUIRED DOCUMENTS MUST BE RECEIVED BY THE EXCHANGE AGENT ON OR PRIOR TO THE
EXPIRATION DATE.

                                       14
<Page>

<Table>
<C>                                          <S>                      <C>
-------------------------------------------------------------------------------------------------------------
                    PAYOR'S NAME: STATE STREET BANK AND TRUST COMPANY, AS EXCHANGE AGENT
-------------------------------------------------------------------------------------------------------------

                                             PART I--PLEASE
              SUBSTITUTE                     PROVIDE YOUR TIN IN                SOCIAL SECURITY OR
               FORM W-9                      THE BOX AT RIGHT             EMPLOYER IDENTIFICATION NUMBER
      DEPARTMENT OF THE TREASURY             AND CERTIFY BY
       INTERNAL REVENUE SERVICE              SIGNING AND DATING              ------------------------
                                             BELOW.                    (If awaiting TIN write "Applied For")
                                             ----------------------------------------------------------------

                                             NAME (PLEASE PRINT)
     PAYOR'S REQUEST FOR TAXPAYER
   IDENTIFICATION NUMBER ("TIN") AND         ADDRESS
             CERTIFICATION
                                             CITY                      STATE           ZIP CODE
                                             ----------------------------------------------------------------
                                             PART II--FOR U.S. PAYEES EXEMPT FROM BACKUP WITHOLDING
                                             If you are exempt from backup withholding write "Exempt" in Part
                                             II. (You should still provide your TIN and complete, sign and
                                             date the certification below.)
                                             ----------------------------------------------------------------
                                             CERTIFICATION--UNDER PENALTIES OF PERJURY, I CERTIFY THAT:

                                             1.  The number shown on this form is my correct Taxpayer
                                             Identification Number (or I am waiting for a number to be issued
                                                 to me), and

                                             2.  I am not subject to backup withholding because either (a) I
                                             am exempt from backup withholding, (b) I have not been notified
                                                 by the Internal Revenue Service ("IRS") that I am subject to
                                                 backup withholding as a result of a failure to report all
                                                 interest or dividends, or (c) the IRS has notified me that I
                                                 am no longer subject to backup withholding, and

                                             3.  I am a U.S. person (including a U.S. resident alien).

                                             Certification Instructions--You must cross out item (2) above if
                                             you have been notified by the IRS that you are subject to backup
                                             withholding because of underreporting interest or dividends on
                                             your tax return. However, if after being notified by the IRS
                                             that you were subject to backup withholding you received another
                                             notification from the IRS that you are no longer subject to
                                             backup withholding, do not cross out item (2).

                                             Signature:  Date: , 2001
-------------------------------------------------------------------------------------------------------------
</Table>

NOTE:  FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
       OF UP TO 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. YOU MUST
       COMPLETE THE FOLLOWING CERTIFICATE IF YOU WROTE "APPLIED FOR" IN PART I
       OF SUBSTITUTE FORM W-9.

                                       15
<Page>

                 PAYOR'S NAME: STATE STREET BANK AND TRUST COMPANY,
                                  AS EXCHANGE AGENT

               CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER

      I certify under penalties of perjury that a taxpayer identification
  number has not been issued to me, and either (a) I have mailed or delivered
  an application to receive a taxpayer identification number to the
  appropriate Internal Revenue Service Center or Social Security
  Administration Office or (b) I intend to mail or deliver an application in
  the near future. I understand that if I do not provide a taxpayer
  identification number within sixty (60) days, up to 31% of all reportable
  payments made to me thereafter will be withheld until I provide a number.

  Signature(s): ___________________________  Date: ___________________________

                                       16

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