EXHIBIT 10.6
Execution Copy
PRIVATE BRANDS AGREEMENT
     This PRIVATE BRANDS AGREEMENT (this “Agreement”), dated as of March 6, 2006
effective as of March 5, 2006 (the “Effective Time”), is made among Saks
Incorporated, a Tennessee corporation (“Seller”), The Bon-Ton Stores, Inc., a
Pennsylvania corporation (“Bon-Ton”), Herberger’s Department Stores, LLC, a
Minnesota limited liability company (“Herberger’s”), and Parisian, Inc., an
Alabama corporation (“Parisian,” with Bon-Ton, Herberger’s and Parisian being
collectively referred to herein as “Buyers” or individually as a “Buyer”).
RECITALS
     WHEREAS, pursuant to that certain Purchase Agreement, dated as of
October 29, 2005 (the “Purchase Agreement”), by and between Seller and Bon-Ton,
Seller has agreed to sell, or cause to be sold, to Bon-Ton the Securities, and
Bon-Ton has agreed to purchase the Securities as provided therein; and
     WHEREAS, in connection with the transactions contemplated by the Purchase
Agreement, Herberger’s and Parisian wish to continue selling in their retail
stores certain merchandise bearing the private label brands owned by McRae’s,
Inc., a subsidiary of Parisian, and other brands owned by third parties and
licensed to Seller, which merchandise was marketed and sold by Herberger’s and
Parisian to retail customers in the ordinary course of the Business immediately
prior to the Effective Time; and
     WHEREAS, the assets of Buyers include an existing inventory of products and
the right to acquire additional products that are the subject of outstanding and
unfilled orders with Vendors (as hereinafter defined),
     WHEREAS, following the execution of the Purchase Agreement Seller and
Bon-Ton entered into that certain Interim Private Brands Agreement dated as of
January 1, 2006 (“Interim Agreement”), under the terms of which Bon-Ton agreed
to order from Seller prior to the Closing certain merchandise bearing private
label brands for resale in Bon-Ton retail stores;
     WHEREAS, Bon-Ton wishes to continue selling in its retail stores
merchandise bearing private label brands; and
     WHEREAS, following the Closing Buyers are willing to purchase from Seller
and Seller is willing to sell to Buyers On Order Products and additional New
Order Products (as those terms are hereinafter defined) subject to the terms as
set forth in this Agreement.
     NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants and agreements contained in this
Agreement, and for other

 

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good and valuable consideration, the receipt and sufficiency of which are
acknowledged, the parties agree as follows:
     1. Scope.
     (a) Buyers shall acquire from Seller and Seller shall sell to Buyers the
Products on the terms and conditions set forth herein. For the purposes of this
Agreement: (i) “Products” shall mean collectively Inventory Products, On Order
Products, New Order Products, Direct Order Merchandise and Replenishment
Merchandise; (ii) “Inventory Products” shall mean merchandise bearing Private
Brands in the inventory of the Business at the Effective Time; (iii) “On Order
Products” shall mean merchandise attributable to the Business bearing Private
Brands that are the subject of purchase orders or commitment sheets issued by
Seller and accepted by Vendors prior to the Effective Time that remain unfilled
as of the Effective Time, or that Seller is or may otherwise become obligated to
purchase; (iv) “New Order Products” shall mean such other merchandise bearing
Private Brands as may be ordered by Buyers for delivery by Seller during the
Term of this Agreement; (v) “Replenishment Merchandise” shall mean regularly
stocked merchandise bearing Private Brands that Buyers shall maintain on their
replenishment system and order directly from Vendors (as defined below) and as
to which Buyers shall otherwise deal directly with Vendors; (vi) “Direct Order
Merchandise” shall mean merchandise bearing Private Brands sourced from Vendors
located in the United States as to which Buyers shall order merchandise directly
from the Vendors and otherwise deal directly with Vendors in connection
therewith, but excluding Replenishment Merchandise; (vii) “Seller Sourced
Products” shall mean, collectively, Inventory Products, On Order Products and
New Order Products; and (viii) “Private Brands” shall mean, collectively, those
trademarks set forth on Exhibit A identified as private brands owned by McRae’s,
Inc, a wholly-owned subsidiary of Parisian (“Owned Brands”), and the private
brands set forth on Exhibit A owned by third parties and licensed to Seller
(“Third Party Brands”). Notwithstanding the foregoing, Associated Merchandising
Corporation shall not be a Vendor of Direct Order Merchandise but shall be a
Vendor of On Order Products, New Order Products and Replenishment Merchandise.
     (b) Buyers shall purchase New Order Products pursuant to Purchase Orders
(as hereinafter defined) issued by Buyers from time to time under Section 4(a).
Subject to obtaining any necessary consents or approvals from Vendors or the
owners or licensors of any applicable Third Party Brands, Buyers’ obligations to
purchase Inventory Products and On Order Products shall be firm and not subject
to modification or cancellation.
     (c) Buyers acknowledge that: (i) Seller is entering into this Agreement as
an accommodation to Buyers so that Buyers will have sources of supply for
Products and may continue to offer to sell Products bearing Third Party Brands
(“Third Party Branded Products”) to retail customers in their stores for up to
six (6) months following the expiration or termination of this Agreement as more
fully set forth herein; (ii) Seller is not a manufacturer of the Products;
(iii) Seller has entered or will enter into agreements with one or more third
party vendors, agents or service providers (“Vendors”) to enable Seller to
deliver Seller Sourced Products to Buyers and Buyers to acquire Replenishment
Merchandise and Direct Order Merchandise from Vendors; (iv) Seller has agreed
that Buyers may enter into direct business relationships with Vendors of
Replenishment Merchandise and Direct Order Merchandise for the purposes of
acquiring such

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merchandise; and (v) Buyers will receive the benefits of Seller’s business
relationships with Vendors and the owners or licensors of the Third Party
Brands.
     (d) With respect to Third Party Branded Products, Buyers acknowledge that:
(i) Seller does not own the Third Party Brands; (ii) Seller has entered into
license agreements with third parties that impose upon Seller certain
obligations and restrictions with respect to the use of Third Party Brands and
the sale and marketing of the Third Party Branded Products; (iii) Seller must
obtain the consent of the owners or licensors of the Third Party Brands in order
to permit the transfer or sale to Buyers of Third Party Branded Products, and
the resale of the Third Party Branded Products to customers in Buyers’ retail
stores; (iv) it shall be necessary for Buyers to take certain actions with
respect to Third Party Branded Products in order to prevent Seller from being in
breach or default of its obligations under its license agreements for the Third
Party Brands; and (v) agreements relating to Third Party Brands may terminate
prior to the expiration or termination of this Agreement (in which case Seller
shall be under no obligation to make such Third Party Branded Products available
to Buyers). Seller agrees that any amendment or modification of an agreement
relating to a Third Party Brand will not contain terms that are more onerous on
Buyers than similar terms imposed upon Seller. In no event shall any amendment
to or modification of an agreement relating to any Third Party Brand or the AMC
Agreement (as hereinafter defined) impose upon Buyers any additional obligation
to pay any minimum amounts (A) with respect to royalties relating to any Third
Party Brand or (B) with respect to any service charge under the AMC Agreement.
     (e) Buyers will promote, market and sell the Third Party Branded Products
in their businesses in the same manner and to the same extent as the Third Party
Branded Products were promoted, marketed and sold by Herberger’s and Parisian or
their Subsidiaries prior to the Effective Time. Without limiting the generality
of the foregoing, Buyers shall be responsible for their proportionate share of
any advertising or promotions obligations set forth in any license agreement
between Seller and the owner or licensor of any Third Party Brand in effect as
of the Effective Time (without any amendment or supplement thereto that would
have a material adverse effect upon the obligations of Buyers hereunder) and any
such license agreement entered into after the Effective Time with the consent of
any Buyer. Subject to the consent of the owners of the Third Party Brands,
Buyers shall sell the Third Party Branded Products to retail customers in the
ordinary course of business only in the retail department stores operated by
Buyers or their Affiliates. When and as requested (subject to reasonable notice)
by Seller, Buyers shall take any action deemed reasonably necessary by Seller to
protect the image, reputation and goodwill represented by the Third Party
Brands, to enable Buyers to remain in compliance with their obligations under
this Agreement with respect to the promotion, marketing and sale of Third Party
Branded Products, and to enable Seller to remain in compliance with Seller’s
obligations under any license agreement in effect as of the Effective Time
(without any amendment or supplement thereto that would have a material adverse
effect upon the obligations of Buyers hereunder) and any such license agreement
entered into after the Effective Time with the consent of any Buyer with the
owner or licensor of a Third Party Brand. Without limiting the generality of the
foregoing, when and as requested by Seller, Buyers shall: (i) deliver to Seller
copies of advertising or promotional material for Third Party Branded Products;
and (ii) modify or discontinue any advertising or promotional material or other
activity or practice with respect to the Third Party Branded Products that is
not in compliance with the requirements of this Agreement or Seller’s license
agreements for the Third Party Brands.

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     (f) Buyers shall not alter any Third Party Brand on any Third Party Branded
Product, apply or use any Third Party Brand on other goods or with respect to
any services, or relabel, retag, modify or repackage the Third Party Branded
Products in any manner. Seller’s obligation to deliver or sell to Buyers any
Seller Sourced Products under this Agreement or the Purchase Agreement, or
Buyers’ right to purchase from Vendors Replenishment Merchandise or Direct Order
Merchandise, shall be conditioned upon the receipt by Seller of any consent or
approval required under an agreement between Seller and a Vendor or the owner or
licensor of any Third Party Brand. Seller hereby agrees to use its commercially
reasonable efforts to obtain from any Vendors or the owners or licensors of any
applicable Third Party Brand any consents necessary for Seller to perform its
obligations under this Agreement and for Buyers and their Affiliates to sell all
Third Party Branded Products in the ordinary course of business in accordance
with the requirements of the license agreements for the Third Party Brands,
provided Seller shall not be obligated to pay any money or provide other
consideration to a Vendor or the owner or licensor of a Third Party Brand in
order to obtain any such consent. The delivery or sale of Third Party Branded
Products to Buyers shall not be deemed to be a grant to Buyers of any right,
title, interest or license in and to the Third Party Brands or other
intellectual property rights in the Third Party Branded Products other than the
limited right to promote, market and sell the Third Party Branded Products in
accordance with the terms of this Agreement. Buyers shall not seek to register
or otherwise contest the ownership of any Third Party Brand used on the
Products.
     (g) Buyers acknowledge that: (i) Seller’s agreement with AMC (“AMC
Agreement”), a Vendor of Seller Sourced Products and Replenishment Merchandise,
contains an annual minimum service charge requirement with respect to Seller
Sourced Products to be purchased under this Agreement and Replenishment
Merchandise to be purchased directly by Buyers; and (ii) Seller’s license
agreements with the owners or licensors of the Third Party Brands contain annual
minimum royalty obligations with respect to the Retail Sales (as hereinafter
defined) of Third Party Branded Products. The quantities of Seller Sourced
Products to be purchased under this Agreement by Seller from AMC and
Replenishment Merchandise to be purchased by Buyers directly from AMC represent
a substantial portion of the goods to be purchased by Seller under the AMC
Agreement. The royalties attributable to the Third Party Branded Products to be
purchased under this Agreement (or separately by Buyers with respect to the
Laura Ashley brands for the period February 1, 2007 through December 31, 2007)
represent a significant portion of the Seller’s minimum royalty obligations
under the license agreements for the Third Party Brands. Accordingly, Buyers
shall be responsible for their share of any shortfall in meeting the applicable
minimums if, in the case of the AMC Agreement, Buyer’s purchases of Seller
Sourced Products purchased by Seller from AMC or Replenishment Merchandise
purchased by Buyers from AMC, or in the case of the license agreements,
royalties from Retail Sales of each Third Party Branded Product, fail to meet
the minimum amounts set forth on Exhibit B for the periods indicated; provided,
however, that Buyers shall not be responsible for any portion of the shortfall
to the extent that any portion of such shortfall is attributable to: (x) the
failure of Seller to obtain from any Vendors or the owners or licensors of any
applicable Third Party Brands any consents or approvals required under any
agreement between Seller and a Vendor or such owner or licensor; or (y) Seller’s
failure to accept a Purchase Order pursuant to Section 4(b) of this Agreement.
Subject to the foregoing, the Buyers’ share of a shortfall shall be: (A) in the
case of the AMC Agreement, the amount, if any, by which the minimum set forth on
Exhibit B exceeds the service charges payable to AMC attributable to the Buyers’
actual purchases of Seller Sourced Products and Replenishment Merchandise
sourced through AMC;

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and (B) in the case of each category of Third Party Branded Products, the
amount, if any, by which the minimum set forth on Exhibit B exceeds the
royalties actually paid by Buyers for such Third Party Branded Products. For the
purposes of this Agreement, “Retail Sales” shall mean Buyers’ gross retail sales
price of the Third Party Branded Products, less amounts granted for returns or
allowances to retail customers who purchase the Third Party Branded Products.
Retail Sales shall not include any sales or use taxes collected by Buyers from a
retail customer. Notwithstanding the foregoing, Buyers shall not be obligated to
pay any shortfall for an applicable period if Seller is not obligated to pay a
shortfall with respect to its contracted minimum to AMC or the owner or licensor
of a Third Party Brand.
     (h) Buyers acknowledge that Seller’s license agreement with the licensor of
the Laura Ashley Brand (“Laura Ashley License”) expires on December 31, 2007,
and that Seller has an obligation for minimum royalties through such date.
Concurrently with the expiration or termination of this Agreement, Buyers shall
enter into a sublicense agreement with Seller under the terms of which Buyers
will be licensed to source Laura Ashley branded merchandise from third parties,
will be obligated to pay the royalties on the Retail Sales of such merchandise,
and will be obligated to pay their proportionate share of the minimum royalties
of Seller determined in accordance with the principles set forth in
Section 1(g). The sublicense will contain such other terms and conditions as are
required under the Laura Ashley License and as are customary for an agreement of
this nature. The sublicense shall be subject to the consent of the licensor
under the terms of the Laura Ashley License.
     (i) For five (5) years from the Effective Time (or in the case of the owner
of the Preswick & Moore Brand fifteen (15) years), neither Seller and its
Affiliates, on the one hand, nor Buyers and their Affiliates, on the other hand,
may negotiate or enter into any agreement, arrangement or understanding, oral or
written, with any Vendor or owner or licensor of any Third Party Brand which
provides for the grant of exclusive rights to either of the Buyers or the Seller
(or any of their respective Affiliates) to the exclusion of the other.
     (j) Buyers acknowledge that Seller is maintaining personnel within its
private brands organization to provide services under this Agreement for the
benefit of Buyers, to service Seller’s retained businesses and to fulfill
Seller’s obligations to Belk, Inc. Seller acknowledges that Buyers plan to
develop their own private brands capability during the Term and to transition
some of the business processes of Seller’s private brands organization to
Buyers’ private brands organization. In connection therewith, Schedule 1
identifies the categories of services provided by the Seller’s private brands
organization, a description of the processes involved with each service, the
portion of the monthly Administrative Fee allocated to each category, and the
end date and/or phase out plan for each category. Seller shall provide the
category of service at the level and through the end of the month indicated. The
Administrative Fee will be reduced by the amount indicated at such time as a
category of service is discontinued or its level reduced. At the time a category
of service is discontinued or the level reduced, Seller’s staffing within its
private brands organization will be reduced accordingly. In connection with
Seller’s staff reductions, Buyers may wish to hire such personnel from Seller’s
private brands organization in order to staff Buyers’ private brands capability.
Buyers shall coordinate with Seller all communications to such personnel working
in Seller’s private brands organization and Seller shall reasonably cooperate
with Buyers in this effort. Buyers agree and acknowledge that Seller shall have
the right to approve the transfer date of employment of any employee of Seller
working in Seller’s private

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brands organization to a Buyer or any Affiliates of the Buyers, which approval
will not be unreasonably withheld or delayed.
     (k) Buyers shall establish a direct business relationship with each Vendor
of Replenishment Merchandise and Direct Order Merchandise. Seller shall provide
Buyers such information as Buyers may reasonably require to place orders for
Replenishment Merchandise and Direct Order Merchandise and to manage their
relationships with the Vendors of Replenishment Merchandise and Direct Order
Merchandise. All commercial terms for the acquisition of Replenishment
Merchandise and Direct Order Merchandise shall be established between Buyers and
the Vendors. Without limiting the generality of the foregoing, all orders for
Replenishment Merchandise and Direct Order Merchandise shall be placed by each
Buyer directly with each Vendor, with invoices for the Replenishment Merchandise
and Direct Order Merchandise to be issued by each Vendor to the applicable
Buyer, and payment to be made by the applicable Buyer directly to each Vendor.
Replenishment Merchandise and Direct Order Merchandise bearing Third Party
Brands shall be subject to the royalty obligations under Section 3(d).
Replenishment Merchandise purchased from AMC shall be credited against Seller’s
annual minimum service charge obligation to AMC under Section 1(g). In
connection therewith, within ten (10) days following the end of each month,
Buyers shall submit to Seller a written report identifying the quantity and
Buyer’s fully landed cost of Replenishment Merchandise purchased from AMC and
delivered to Buyers during the preceding month and such other information as
Seller may reasonably require.
     (l) Bon-Ton, Herberger’s and Parisian shall each be jointly and severally
liable for the obligations of Buyers under this Agreement.
     (m) THIS AGREEMENT AND THE PURCHASE AGREEMENT STATE THE ONLY TERMS AND
CONDITIONS UNDER WHICH SELLER SHALL SELL TO BUYERS, AND BUYERS SHALL PURCHASE
FROM SELLER, THE SELLER SOURCED PRODUCTS.
     2. Quantities.
     (a) From time to time as requested by Seller, Buyers shall provide a
forecast of their requirements for New Order Products. Any forecast of Buyers’
requirements for New Order Products shall not be binding in any way on Buyers or
Seller, it being understood that such forecasts shall be requested by Seller and
prepared by Buyers for planning purposes. Any such forecast may be modified at
any time by Buyers in their sole discretion.
     (b) Buyers’ commitment to purchase New Order Products from Seller shall be
limited to New Order Products that are subject to Purchase Orders issued by a
Buyer and accepted by Seller pursuant to Section 4.
     3. Price and Sales Reports.
     (a) The price for Inventory Products has been established and shall be
deemed to be subsumed within the purchase price for the Securities purchased
under the Purchase Agreement.

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     (b) The price for On Order Products and New Order Products shall be
Seller’s fully landed cost for such Products, including the invoice price from
each Vendor of Products, all freight (air, ocean or land), insurance, duties,
brokers or agents fees or commissions, imposts, levies, taxes or other amounts
paid by Seller with respect to the procurement of Products. The fully landed
cost of On Order Products and New Order Products shall not include Seller’s
administrative costs of its private brands organization, royalties payable by
Seller to the owners or licensors of the Third Party Brands, or Seller’s fees
for services provided under the Buyer Transition Services Agreement.
     (c) Buyer shall pay to Seller a separate fee to cover Seller’s
administrative costs of its private brands organization (“Administrative Fee”).
The Administrative Fee is set forth on page 2 of Schedule 1 and shall be payable
monthly in arrears five (5) days following the end of each calendar month. The
Administrative Fee for a partial month (i.e., the period from the Effective Time
to the end of the month in which this Agreement is executed, or the period
beginning on the day after the last full calendar month in the Term to the date
of expiration or termination) shall be prorated on a daily basis. The
Administrative Fee for the first partial month shall be paid on the Effective
Time. The Administrative Fee shall be adjusted in accordance with Section 1(j).
     (d) In connection with sales by Buyers of Third Party Branded Products,
Buyers shall pay to Seller the applicable royalties payable by Seller to the
owners or licensors of the Third Party Brands. The amount of such royalties
shall be the Retail Sales of the Third Party Branded Products times the
applicable percentage indicated on Exhibit A. Within ten (10) days following the
end of a calendar quarter (i.e., each three (3) month period ending on March 31,
June 30, September 30 and December 31 of each year) Buyers shall submit to
Seller a written sales report signed and certified as accurate in all material
respects by an officer of each Buyer identifying the Retail Sales of each
category of Third Party Branded Products sold by Buyers during the applicable
quarter. Such report shall be required even if no sales of a particular Third
Party Branded Product have been made in such quarter. Payment of the royalties
due with respect to each category of Third Party Branded Products shall
accompany each report. In no event shall Seller’s receipt of Buyers’ report or
acceptance of a royalty payment be deemed to be a waiver of Seller’s right to
challenge (on behalf of itself or the owner or licensor of a Third Party Brand)
the accuracy of any report or the amount of any payment due from Buyers.
     4. Purchase Orders.
     (a) A purchase order issued by each Buyer for the New Order Products may
consist of a hard copy in the same form utilized by Seller in the ordinary
course of business immediately prior to the Effective Time, an electronic
message in a form and delivered pursuant to procedures established by Seller, or
other written communication from a Buyer to Seller in a form acceptable to
Seller which complies with the requirements of this Agreement (“Purchase
Orders”). All Purchase Orders issued by a Buyer shall: (i) reference this
Agreement; (ii) identify the New Order Products and requested delivery date or
dates; and (iii) identify the quantities to be purchased, the requested delivery
point, and the requested delivery date, which shall be no sooner than permitted
by the customary lead times for the delivery of New Order Products from Vendors
to Seller. REGARDLESS OF FORM, EVERY PURCHASE ORDER ISSUED UNDER THIS AGREEMENT
SHALL BE DEEMED TO EXCLUDE THE STANDARD TERMS AND

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CONDITIONS SET FORTH ON THE REVERSE SIDE OF ANY SUCH FORM OR ANY OTHER FORM OR
AGREEMENT USED BY EITHER PARTY.
     (b) Seller shall accept a Purchase Order for New Order Products issued by a
Buyer conforming to the lead times and other procedures and requirements
established by Seller and Vendors to the extent the quantity of New Order
Products being ordered is no greater than the quantity of the same or comparable
merchandise ordered for the comparable procurement cycle immediately prior to
the Effective Time. Seller shall have the right to accept or reject a Purchase
Order that does not so conform. Notwithstanding the quantity limitations set
forth in the first sentence of this Section 4(b), and provided all other
conditions of the first sentence have been met, Seller shall accept Purchase
Orders for additional New Order Products to the extent the quantities of such
additional New Order Products fairly reflect Buyers’ requirements with respect
to: (i) stores planned by Buyers prior to the Effective Time but opened after
the Effective Time; (ii) stores of Buyers that were existing at the Effective
Time which are expanded after the Effective Time; (iii) additional demand
reasonably anticipated by Buyers at such stores; or (iv) as permitted by any
plan developed in accordance with the provisions of Section 4(e). Once accepted
by Seller, a Purchase Order shall be deemed to be non-cancelable by Buyer.
Seller may cancel a Purchase Order if and to the extent any Vendor refuses to
accept Seller’s purchase order to acquire New Order Products from the Vendor, or
if following such acceptance, the Vendor fails or refuses to deliver New Order
Products in accordance with Seller’s purchase order.
     (c) Wherever commercially reasonable, Seller shall cause New Order Products
to be shipped directly from the Vendor to a destination designated by a Buyer in
its Purchase Order. Buyers may change the quantities and delivery dates on
individual Purchase Orders without penalty, provided a Buyer notifies Seller of
the changes in accordance with the applicable Vendor’s lead times and the Vendor
otherwise accepts any such change.
     (d) Seller’s ability to fulfill Buyers’ Purchase Orders for New Order
Products shall be dependent upon Buyers issuing Purchase Orders conforming to
the lead times and other procedures and requirements established by Seller and
Vendors. Seller shall use reasonable commercial efforts to deliver New Order
Products in accordance with Buyers’ Purchase Orders, provided under no
circumstances shall Seller be liable to Buyers for any failure to perform under
any Purchase Order or this Agreement caused by any failure or refusal of a
Vendor to perform any obligation to Seller with respect to any such Buyer’s
Purchase Order.
     (e) Buyers and Seller shall cooperate in good faith to develop mutually
acceptable plans for the purchase by Buyers of New Order Products for stores
owned and operated by Bon-Ton other than the stores that are the subject of the
Purchase Agreement and this Agreement. Such plans shall take into consideration:
(i) Bon-Ton’s reasonable requirements for such New Order Products, including the
assortment and quantity of such New Order Products; (ii) the commitments of
Seller’s private brands organization to Belk, Inc. and Seller’s retained
businesses; and (iii) Seller’s obligations to Vendors or the owners or licensors
of Third Party Brands. The plans shall also provide for an appropriate
adjustment of the Administrative Fee to reflect the increases in Seller’s costs,
if any, associated with the additional volume. Once the plan has been mutually
agreed upon, Buyers’ orders for New Order Products made under the plan shall be
subject to the terms and conditions of this Agreement.

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     5. Delivery, Title and Risk of Loss.
     (a) Inventory Products shall be deemed to be delivered to a Buyer at the
Effective Time. On Order Products and New Order Products shall be deemed to be
delivered to a Buyer at such time as the On Order Products or New Order Products
are delivered to Seller by a Vendor under the applicable purchase order or other
agreement between Seller and the Vendor.
     (b) Freight, insurance and other costs attributable to the delivery and
sale of On Order Products and New Order Products shall be determined in
accordance with the applicable purchase order or other agreement between Seller
and the Vendor.
     (c) Title and risk of loss for Inventory Products shall be deemed to pass
to a Buyer at the Effective Time. Title and risk of loss for On Order Products
and New Order Products shall be deemed to pass automatically from Seller to a
Buyer at such time as title and risk of loss passes from the Vendor to Seller
pursuant to the applicable purchase order or other agreement between Seller and
the Vendor.
     6. Billing and Payment.
     (a) Buyers shall at all times maintain and update on a weekly basis an
irrevocable trade letter(s) of credit (“LOC”) for the benefit of Seller in a
form reasonably acceptable to Seller, on behalf of Buyers and their
subsidiaries, branches and divisions receiving On Order Products or New Order
Products under this Agreement from time to time, at such banks or other
financial institutions as are reasonably acceptable to Seller, according to such
terms as may be reasonably designated by Seller from time to time, and in an
amount equal to: (i) the fully landed cost for the On Order Products or New
Order Products included in all outstanding Purchase Orders; plus (ii) the amount
of the Administrative Fee for the then current month and any unpaid amount of
the Administrative Fee for the previous month; plus (iii) the accrued and unpaid
royalties due with respect to Retail Sales of Third Party Branded Products in
previous quarters and the estimated royalties due with respect to actual and
projected Retail Sales of Third Party Branded Products delivered in the current
quarter (the “LOC Amount”). Seller shall issue a commercial invoice for payment
of the purchase price of Seller On Order Products or New Order Products, as the
case may be, no sooner than one (1) business day after delivery to Buyer of the
On Order Products or New Order Products pursuant to Section 5(a) and shall be
entitled to draw down on each LOC upon presenting the invoice to the issuing
bank. In addition, in the event that Buyers fail to pay when due the
Administrative Fee or royalties with respect to Retail Sales of Third Party
Branded Products, other than amounts disputed in good faith, then Seller shall
be entitled to draw down on each LOC upon presenting an invoice for any such
amounts that are due but unpaid to the issuing bank with a copy of such invoice
delivered to Bon-Ton. Buyers shall: (A) provide to Seller the original of each
LOC and amendment thereto; (B) provide to Seller a copy of each notice or other
communication to the bank(s) or other financial institution(s) with respect to
any change, modification, amendment or cancellation of the LOC(s); (C) notify
Seller immediately of any cancellation or modification of the terms of an LOC;
(D) cause each bank or other financial institution to cooperate with Seller in
collecting amounts drawn on the LOC(s) and otherwise provide such information as
Seller may reasonably require from time to time; (E) pay all fees, costs and
expenses in connection with the LOC(s); and (F) provide such other information
with respect to Bon-Ton and the LOC(s) as Seller may reasonably request from
time

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to time. Failure to maintain the LOC(s) in effect in accordance with this
Section 6(a), or to comply with the other requirements of this Section 6(a),
shall constitute a material breach of this Agreement and Seller may, without
liability and in addition to its other remedies under this Agreement, suspend
its obligations hereunder with respect to all outstanding Purchase Orders for On
Order Products or New Order Products until such time as Bon-Ton complies with
the requirements of this Section 6(a) to Seller’s reasonable satisfaction.
     (b) Unless paid as provided in Section 6(a), Buyers shall promptly pay
Seller’s invoices and other amounts due under this Agreement. Seller will
provide reasonable additional information requested by Buyers in writing
supporting Seller’s invoices. Unless directed otherwise by Seller, Buyers shall
pay all invoices or other amounts due, as applicable, in the case of invoices,
not later than fifteen (15) days following receipt by a Buyer of Seller’s
invoice, or, in the case of other amounts, on the due date. Buyers shall not be
entitled to offset any amounts owing to it by Seller or any of Seller’s
Affiliates against amounts payable by Buyers hereunder or under any other
agreement or arrangement. Should Buyers reasonably and in good faith dispute any
portion of an invoice, Buyers shall pay the undisputed portion of the invoice in
accordance with this Section 6(b) and promptly notify Seller in writing of the
nature and basis of the dispute.
     (c) If a bank or other financial institution fails to honor any amount
drawn on an LOC, such failure shall be considered a material breach of this
Agreement (except to the extent of any invoiced amounts reasonably disputed by
Buyers in good faith and of which dispute Buyers have notified Seller in
accordance with the requirements of this Agreement) and Seller may, without
liability, suspend its obligations hereunder with respect to all undelivered On
Order Products or New Order Products or outstanding Purchase Orders for On Order
Products or New Order Products until such time as such invoices have been paid
in full. The remedy provided to Seller by this Section 6(c) shall be without
limitation of any other applicable provisions of this Agreement, including
Sections 6(e) and 8. Notwithstanding the foregoing, Seller shall be entitled to
draw the full face amount of any LOC, in prepayment of the applicable Purchase
Orders, if such LOC: (i) is scheduled to expire within thirty (30) days; and
(ii) has not been replaced with a substitute LOC that complies with the
requirements of Section 6(a).
     (d) All charges and fees to be paid by Buyers to Seller under this
Agreement are exclusive of any applicable taxes required by law to be collected
from Buyers (including withholding, sales, use, excise or services taxes, which
may be assessed on the provision of any services hereunder). If a withholding,
sales, use, excise or services tax is assessed on the delivery or sale of Seller
Sourced Products or the provision of any other services under this Agreement,
Buyers shall pay directly, reimburse or indemnify Seller and its Affiliates for
such tax. The parties shall cooperate with each other in determining the extent
to which any tax is due and owing under the circumstances, and shall provide and
make available to each other any resale certificate, information regarding
out-of-state use of materials, services or sale, and other exemption
certificates or information reasonably requested by the other party.
     (e) All payments required to be made pursuant to this Agreement shall bear
interest from and including: (i) the date ten (10) days following receipt by
Buyers of Seller’s invoice for undisputed invoiced amounts (but only in cases in
which Buyers have not paid within fifteen (15) days following receipt by Buyers
of Seller’s invoice); or (ii) the due date with respect

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to other amounts, in each case to but excluding the date of payment at a rate
equal to a per annum rate 150 basis points above LIBOR, or such higher rate as
Seller may be obligated to pay to an owner or licensor under a license agreement
for a Third Party Brand, or to a Vendor under an applicable agreement or
purchase order, from the date such interest begins to accrue to the payment
date. Such interest shall be payable at the same time as the payment to which it
relates is made and shall be calculated on the basis of the number of days
(excluding the payment date) by which the payment date follows the date such
payment is due.
     7. Books and Records; Audits.
     (a) Buyers shall prepare and maintain complete and accurate books of
account and records (specifically including without limitation the originals or
copies of documents supporting entries in the books of account and records)
covering all transactions arising out of or relating to this Agreement. Seller
and its duly authorized representatives (or in the case of Third Party Branded
Products, the owner or licensor of the Third Party Brand), upon appropriate
advance notice to Buyers, shall have the right, during regular business hours,
for the duration of this Agreement, and for a term of one (1) year following the
early termination or expiration of this Agreement, to audit said books of
account and records and examine all other documents and materials in the
possession of, or under the control of, Buyers with respect to the subject
matter of this Agreement. All such books of account, records and documents shall
be kept available by Buyers for at least one (1) year after the early
termination or expiration of this Agreement.
     (b) If, as a result of any audit of Buyers’ books and records, it is shown
that with respect to any calendar quarter during the Term, royalties or minimums
paid by Buyers to Seller were: (i) less than the amounts which should have been
paid, Buyers immediately shall pay such shortfall to Seller together with the
interest due under Section 6(e) with respect to the shortfall; and (ii) greater
than the amounts which should have been paid, Seller shall refund such
overpayment to Buyer(s) to the extent Seller is entitled to, or obtains after
utilizing commercially reasonable efforts without incurring any cost or expense,
a refund of the overpayment from a Vendor or the owner or licensor of a Third
Party Brand. If the amount of a shortfall is equal to four percent (4%) or more
of the payment actually due Seller, Buyers shall reimburse Seller for the cost
to Seller of such audit. Such payments shall be made within ten (10) days
following delivery to Buyers of a written demand by Seller for payment.
     (c) In addition to any inspection or audit by Seller or an owner or
licensor of a Third Party Brand of the books and records of Buyers under
Section 7(a), Buyers shall permit the owner or licensor of a Third Party Brand,
as applicable, to inspect the facilities and operations where a Buyer conducts
business activities with respect to Products to the extent required by the
agreement relating to the applicable Third Party Brand.
     (d) In the event of an assignment by Seller of this Agreement to one of the
companies identified in Schedule 2 (“Subject Buyers”), Seller’s audit,
inspection and access rights under this Section 7 shall be limited to audit,
inspection and access by an independent certified public accounting firm
designated by Seller (selected from one of the “Big Four” or a reasonable
substitute), and in connection with its activities such accounting firm shall
not disclose to Seller or to any other Person Confidential Information of Buyers
and their Affiliates not otherwise known to Seller in the ordinary course of the
business relationship between the parties.

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     8. Term of Agreement; Termination.
     (a) This Agreement shall commence on the Effective Time and shall continue
(unless sooner terminated pursuant to the terms hereof) through January 31, 2007
(“Term”). This Agreement shall not be subject to renewal.
     (b) Buyers may terminate this Agreement at any time upon written notice to
Seller in the event of a material breach of this Agreement by Seller. Such
termination shall become effective thirty (30) days from the date of Seller’s
receipt of such notice unless the breach is cured or, if not able to be cured
within said 30-day period, significant steps to cure have been taken by Seller
within that period.
     (c) Seller may terminate this Agreement at any time upon written notice to
Buyers in the event of a material breach of this Agreement by a Buyer. Such
termination shall become effective thirty (30) days from the date of Buyers’
receipt of such notice unless the breach is cured or, if not able to be cured
within said 30-day period, significant steps to cure have been taken by Buyers
within that period; provided, that if such breach relates to the non-payment by
Buyers of any amount due under Section 6, then termination under this
Section 8(c) shall be effective fifteen (15) days from the date of receipt of
notice of breach from Seller unless all unpaid fees or expenses that are in
payment default have been paid in full within such 15-day period.
     (d) Following the expiration or earlier termination of this Agreement for
any reason, Seller shall not be obligated to accept any Purchase Order for New
Order Products. Following the expiration of this Agreement under Section 8(a) or
the termination of this Agreement by Buyers under Section 8(b), but subject to
the terms and conditions of this Agreement, Seller shall continue to deliver any
previously undelivered On Order Products and to fill previously accepted
outstanding and unfilled Purchase Orders for New Order Products. Following any
termination of this Agreement by Seller under Section 8(c), but subject to the
terms and conditions of this Agreement, Seller may elect to continue to deliver
any previously undelivered On Order Products and to fill previously accepted
outstanding and unfilled Purchase Orders for New Order Products, provided under
no circumstances shall Seller be obligated to do so. Buyers shall continue to
maintain the letter of credit required under Section 6(a) until Buyers have paid
for all Products delivered by Seller following the expiration or termination of
this Agreement. Subject to Sections 1(c) through 1(h), Section 1(k),
Section 3(d) and Section 6, Buyers shall have six (6) months following the
expiration or termination of this Agreement to sell off their inventory of Third
Party Branded Products, or such longer or shorter period as may be permitted
under an applicable license agreement for the Third Party Brand.
     (e) Notwithstanding any other provision in this Agreement to the contrary,
whether this Agreement expires or is terminated by Seller or Buyers, or whether
this Agreement is subject to a partial termination under Section 9, Buyers shall
remain liable for the payment of the Administrative Fee accrued prior to
expiration or termination and all amounts due with respect to On Order Products
or New Order Products delivered under the terms of this Agreement, even though
such On Order Products or New Order Products may not be delivered until after
such expiration or termination. Further, in the event of expiration or
termination of this Agreement, Sections 1(e) through 1(i), 1(k), 1(l), 3(a),
3(b), 3(d), 5, 6, 7, 8, 10, 12, 13 and 15

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through 24 shall continue in full force and effect; provided that Sections 1(g)
and 1(h) shall not survive if this Agreement is terminated pursuant to Section
8(b).
     9. Partial Termination. Subject to Section 8(d), this Agreement shall
automatically terminate with respect to: (i) any category of Third Party Branded
Product upon the expiration or termination for any reason of the applicable
license agreement between Seller and the owner or licensor of the Third Party
Brand; or (ii) any other Product affected by the expiration or termination of a
purchase order, sourcing or other agreement between Seller and a Vendor of the
Product.
     10. Confidentiality. Each party shall, and shall cause each of its
Affiliates and each of its and their officers, directors and employees to, hold
all information relating to the business of the other party disclosed to it by
reason of this Agreement (the “Confidential Information”) confidential, and
shall not disclose or permit to be disclosed any such Confidential Information
to any third party unless legally compelled to disclose such information;
provided, however, that to the extent that a Person receiving Confidential
Information hereunder may become legally compelled to disclose any Confidential
Information, such Person: (a) may only disclose such information if it shall
first have used commercially reasonable efforts to, and, if practicable, shall
have afforded the other party the opportunity to, obtain an appropriate
protective order or other satisfactory assurance of confidential treatment for
the information required to be so disclosed; and (b) if such protective order or
other remedy is not obtained, or the other party waives such Person’s compliance
with the provisions of this Section 10, shall only furnish that portion of the
Confidential Information which is legally required to be so disclosed. As used
herein, “Confidential Information” does not include any information that: (i) is
or becomes generally available to the public other than as a result of a
disclosure by the party receiving the Confidential Information; (ii) was
available to the receiving party on a non-confidential basis prior to its
disclosure by the disclosing party (except to the extent that such information
was available to Seller in connection with the Business); (iii) becomes
available to the receiving party from a Person other than the disclosing party
or its Affiliates who is not, to the receiving party’s knowledge, subject to any
legally binding obligation to keep such information confidential; or (iv) such
party demonstrates is or was independently developed by or on behalf of a party
without the direct or indirect use of any of the other party’s Confidential
Information.
     11. Third Party Non-Disclosure Agreements. To the extent that any
information disclosed under this Agreement requires a specific form of
non-disclosure agreement under the terms of an applicable license agreement for
a Third Party Brand as a condition of its disclosure or use, Buyers shall
execute (and shall cause Buyers’ employees to execute, if and to the extent
required) any such form.
     12. Limitation of Liability; Disclaimer; Indemnity.
     (a) Except in the case of fraud, willful misconduct or gross negligence,
each party and their respective Affiliates shall not be liable to the other
parties, their Affiliates or any third party for any special, incidental,
consequential (including loss of revenues or profits), exemplary or punitive
damages arising from any claim relating to this Agreement or any of the Products
to be provided hereunder or the performance of or failure to perform such
party’s

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obligations under this Agreement, whether such claim is based on warranty,
contract, tort (including negligence or strict liability) or otherwise, all of
which are hereby excluded by agreement of the parties regardless of whether or
not a party to this Agreement has been advised of the possibility of such
damages. Any of the foregoing categories of damages Seller is required to pay a
third party on account of or attributable to a Buyer’s conduct shall be deemed
to be direct damages of Seller and not subject to the previous sentence or the
limitations of the next sentence. Notwithstanding anything in this Agreement to
the contrary, Seller shall be under no obligation to deliver or sell any Seller
Sourced Product under this Agreement to the extent that Seller, in its
reasonable discretion, determines that to do so would conflict with, violate or
breach its obligations under any license or other agreement to which either
Seller or any of its Affiliates is bound. SELLER SPECIFICALLY DISCLAIMS ALL
WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, ARISING OUT OF OR RELATED TO THIS
AGREEMENT, INCLUDING WITHOUT LIMITATION ANY WARRANTY OF MERCHANTABILITY, FITNESS
OR NON-INFRINGEMENT. Except in the case of fraud, willful misconduct or gross
negligence, notwithstanding the foregoing, Seller’s cumulative aggregate
liability to Buyers and their Affiliates under this Agreement shall not exceed
the amount paid for the Products or the Administrative Fee giving rise to the
claim. Notwithstanding anything contained herein to the contrary, the
limitations set forth in this Section 12(a) shall not apply with respect to any
breach of Section 10.
     (b) Buyers shall indemnify Seller and each of its Affiliates against all
Losses and Expenses attributable to: (i) third party claims arising from or
relating to the activities contemplated by this Agreement to the extent that
such Losses and Expenses arise from the fraud, gross negligence or willful
misconduct of a Buyer, any of their Affiliates or any of their respective
employees, officers or directors; and (ii) product liability claims involving
personal injury or property damage arising out of the use of any Product.
     (c) Seller shall indemnify Buyers and each of their Affiliates against all
Losses and Expenses attributable to any third party claims arising from or
relating to the activities contemplated by this Agreement to the extent that
such Losses and Expenses arise from the fraud, gross negligence or willful
misconduct of Seller, any of its Affiliates or any of their respective
employees, officers or directors.
     (d) All claims for indemnification pursuant to this Section 12 shall be
made in accordance with the procedures set forth in Sections 10.3 and 10.5 of
the Purchase Agreement. Notwithstanding any other provision of this Section 12
or any provision set forth in the Purchase Agreement, Buyers and their
Affiliates shall not be limited in any recovery of Losses or Expenses under this
Agreement by any provision set forth in the Purchase Agreement, and any Losses
or Expenses paid by Seller to Buyers or their Affiliates under this Agreement
shall not be counted for purposes of any aggregate damage limitations set forth
in the Purchase Agreement. In addition, for the avoidance of doubt, no Loss or
Expense suffered by Buyers or their Affiliates pursuant to this Agreement shall
be counted for purposes of satisfying the deductibles set forth in the proviso
to Section 10.1(a) of the Purchase Agreement.
     (e) At their expense, Seller, on the one hand, and Buyers, on the other
hand, shall each procure and maintain in full force and effect at all times
during which the Products are being sold, and for a period of one (1) year
thereafter, with responsible insurance carriers

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acceptable to the other part(ies)at least Five Million Dollars ($5,000,000) of
products liability insurance coverage with respect to their sale of the
Products. Such insurance coverage shall name the other part(ies) and the owner
or licensor of each Third Party Brand as an additional insured and shall provide
for a minimum of twenty (20) days prior written notice to the other part(ies) in
the event that the insurance carrier intends to cancel or substantially reduce
the insurance coverage. Such insurance coverage may be obtained in conjunction
with a policy of product liability insurance which covers other products
manufactured and/or sold by a party. Seller, on the one hand, and Buyers, on the
other hand, shall each also procure and maintain during the Term of this
Agreement and for a period of one (1) year thereafter, at least the minimum
business insurance coverages, including but not limited to bodily injury,
property damage, workers compensation, business interruption and general
liability that are required by the laws and regulations of any jurisdiction in
which Seller or Buyers sell the Products. Upon request, Seller and Buyers shall
furnish or cause to be furnished to the other part(ies) a certificate(s) of
insurance, or upon request, a certified copy of said insurance policy(s),
evidencing the maintenance of the insurance coverages required by this
Section 12(e).
     13. Relationship of Parties. The contractual relationship between the
parties established under this Agreement is solely that of seller and purchaser.
Except as specifically provided herein, neither party shall: (a) act or
represent or hold itself out as having authority to act as an agent or partner
of the other party; or (b) in any way bind or commit the other party to any
obligations or agreement. Nothing contained in this Agreement shall be construed
as creating a partnership, joint venture, agency, trust, fiduciary relationship
or other association of any kind, each party being individually responsible only
for its obligations as set forth in this Agreement. The parties’ respective
rights and obligations hereunder shall be limited to the contractual rights and
obligations expressly set forth herein on the terms and conditions set forth
herein.
     14. Force Majeure. If Seller, any of its Affiliates or any Vendor is
prevented from or delayed in complying, either totally or in part, with any of
the terms or provisions of this Agreement by reason of fire, flood, storm,
strike, walkout, lockout or other labor trouble or shortage, delays by
unaffiliated suppliers or carriers, shortages of fuel, power, raw materials or
components, any law, order, proclamation, regulation, ordinance, demand, seizure
or requirement of any governmental authority, riot, civil commotion, war,
rebellion, acts of terrorism, nuclear accident or other causes beyond the
reasonable control of any such Person or other acts of God, or acts, omissions
or delays in acting by any governmental or military authority or Buyers, then
upon notice to Buyers, the affected provisions and/or other requirements of this
Agreement shall be suspended during the period of such disability and Seller
shall have no liability to Buyers, their Affiliates or any other Person in
connection therewith. Seller and Buyers shall make commercially reasonable
efforts to remove such disability within thirty (30) days after giving notice of
such disability; provided, however, that nothing in this Section 14 will be
construed to require the settlement of any strike, walkout, lockout or other
labor dispute on terms which, in the reasonable judgment of Seller, are contrary
to its interest. It is understood that the settlement of a strike, walkout,
lockout or other labor dispute will be entirely within the discretion of Seller.
In the event that Seller shall fail to perform its obligations hereunder for at
least twenty (20) days as a consequence of any such force majeure event, then
the Administrative Fee shall be reduced by that portion of the Administrative
Fee

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allocated to the function or functions that Seller fails to perform after such
twenty (20) day period and prior to the time that Seller restores such function
or functions.
     15. Notices. All notices or other communications required or permitted
hereunder shall be in writing and shall be delivered personally, by facsimile or
sent by private courier or by registered or certified mail, and shall be deemed
given when so delivered personally, by facsimile or by private courier or, if
mailed, two business days after the mailing, as follows:
     If to Buyers, to:
The Bon-Ton Stores, Inc.
2801 Market Street
York, PA 17402
Facsimile: (717) 751-3008
Attention: Vice President and General Counsel
with a copy to:
Wolf, Block, Schorr and Solis-Cohen LLP
1650 Arch Street, 22nd Floor
Philadelphia, PA 19103
Facsimile: (215) 977-2334
Attention: Henry F. Miller, Esquire
     If to Seller, to:
Saks Incorporated
750 Lakeshore Parkway
Birmingham, Alabama 35211
Facsimile: (205) 940-4468
Attention: Executive Vice President and General Counsel
with a copy to:
Sidley Austin LLP
One South Dearborn Street
Chicago, Illinois 60603
Facsimile: (312) 853-7036
Attention: Michael S. Sigal and Gary D. Gerstman
or to such other address as such party may indicate by a notice delivered to the
other party hereto.
     16. Successors and Assigns. The rights under this Agreement shall not be
assignable by Buyers and the duties shall not be delegated by Buyers without the
prior written consent of Seller, such consent not to be unreasonably withheld or
delayed. The rights of Seller

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and its Affiliates under Section 1(i) of this Agreement shall not be assignable
by Seller to any Person (together with its Affiliates) that prior to such
assignment is predominantly engaged in the traditional department store business
or in the retail apparel business without the prior written consent of Buyers,
such consent not to be unreasonably withheld or delayed. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their successors
and permitted assigns. Except for the rights afforded owners or licensors of
Third Party Brands expressly set forth herein, nothing in this Agreement,
expressed or implied, is intended or shall be construed to confer upon any
Person other than the parties and successors and assigns permitted by this
Section 16 any right, remedy or claim under or by reason of this Agreement.
     17. Entire Agreement; Amendments. This Agreement, the Exhibits and
Schedules attached hereto and the Purchase Orders or other documents delivered
pursuant hereto contain the entire understanding of the parties hereto with
regard to the subject matter contained herein or therein, and supersede all
other prior representations, warranties, agreements, understandings or letters
of intent between or among any of the parties hereto (it being understood,
however, that the Purchase Agreement, agreements contemplated thereby and the
Interim Agreement set forth certain additional understandings between Seller and
Buyer regarding their relationship after the Effective Time). This Agreement
replaces and supersedes in its entirety the Private Brands Agreement attached as
Exhibit G to the Purchase Agreement. This Agreement shall not be amended,
modified or supplemented except by a written instrument signed by an authorized
representative of each of the parties hereto.
     18. Partial Invalidity. Wherever possible, each provision hereof shall be
interpreted in such manner as to be effective and valid under applicable law,
but in case any one or more of the provisions contained herein shall, for any
reason, be held to be invalid, illegal or unenforceable in any respect, such
provision shall be ineffective to the extent, but only to the extent, of such
invalidity, illegality or unenforceability without invalidating the remainder of
such invalid, illegal or unenforceable provision or provisions or any other
provisions hereof, unless such a construction would be unreasonable.
     19. Waivers. Any term or provision of this Agreement may be waived, or the
time for its performance may be extended, by the party or parties entitled to
the benefit thereof. Any such waiver shall be validly and sufficiently
authorized for the purposes of this Agreement if, as to any party, it is
authorized in writing by an authorized representative of such party. The failure
of any party hereto to enforce at any time any provision of this Agreement shall
not be construed to be a waiver of such provision, nor in any way to affect the
validity of this Agreement or any part hereof or the right of any party
thereafter to enforce each and every such provision. No waiver of any breach of
this Agreement shall be held to constitute a waiver of any other or subsequent
breach.
     20. Execution in Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be considered an original instrument, but
all of which shall be considered one and the same agreement, and shall become
binding when one or more counterparts have been signed by each of the parties
hereto and delivered to Seller and Buyers.
     21. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York without giving effect
to the

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principles of conflicts of law thereof except Section 5-1401 of the New York
General Obligations Law.
     22. Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
     23. Interpretation. Capitalized terms used in this Agreement and not
otherwise defined herein have the meanings given to such terms in the Purchase
Agreement. For purposes of this Agreement: (a) the words “include,” “includes”
and “including” shall be deemed to be followed by the words “without
limitation”; (b) the word “or” is not exclusive; and (c) the words “herein,”
“hereof,” “hereby,” “hereto” and “hereunder” refer to this Agreement as a whole.
Unless the context otherwise requires, references herein (i) to Sections mean
the Sections of this Agreement and (ii) to an agreement, instrument or other
document means such agreement, instrument or other document as amended,
supplemented and modified from time to time to the extent permitted by the
provisions thereof and by this Agreement. Headings of Sections are inserted for
convenience of reference only and shall not be deemed a part of or to affect the
meaning or interpretation of this Agreement. This Agreement shall be construed
without regard to any presumption or rule requiring construction or
interpretation against the party drafting an instrument or causing any
instrument to be drafted.
     24. Exhibits and Schedules. Exhibits A and B and Schedules 1 and 2 shall be
construed with and as an integral part of this Agreement to the same extent as
if it was set forth verbatim herein.
[Remainder of page intentionally left blank]

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     IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
duly executed, all as of the Effective Time.

            SAKS INCORPORATED
      By:   /S/ CHARLES J. HANSEN         Name:   Charles J. Hansen       
Title:   Executive Vice President        THE BON-TON STORES, INC.
      By:   /S/ JAMES H. BAIREUTHER         Name:   James H. Baireuther       
Title:   Vice Chairman and Chief Administrative Officer        HERBERGER’S
DEPARTMENT STORES, LLC
      By:   /S/ JAMES H. BAIREUTHER         Name:   James H. Baireuther       
Title:   Senior Vice President and Chief Administrative Officer        PARISIAN,
INC.
      By:   /S/ JAMES H. BAIREUTHER         Name:   James H. Baireuther       
Title:   Senior Vice President and Chief Administrative Officer     

Signature Page
to
Private Brands Agreement