In this task, you're given a passage that represents a legal contract or clause between multiple parties. Your job is to write questions that ask the basic details corresponding to the legal contracts or clauses. Avoid questions that can be answered correctly without actually understanding the paragraph, and which might have multiple answers. The answer to each question should be unambiguous.

Q: ALAMOGORDO FINANCIAL CORPORATION                                 1,101,643 Shares

                                  COMMON STOCK                            (Par Value $.0l Per Share)

                       Subscription Price $10.00 Per Share

                                AGENCY AGREEMENT

                              ___________ __, 2000

Charles Webb & Company, a Division of Keefe, Bruyette & Woods, Inc. 211 Bradenton Avenue Dublin, Ohio 43017

Ladies and Gentlemen:

         Alamogordo   Financial   Corporation,   a  federal   corporation   (the Company), AF Mutual Holding Company (the MHC) and Alamogordo Federal Savings and Loan Association,  a federally  chartered stock savings and loan association (the  Bank)  with its  deposit  accounts  insured by the  Savings  Association Insurance  Fund  (SAIF)   administered  by  the  Federal   Deposit   Insurance Corporation  (FDIC),  hereby confirm,  jointly and severally,  their agreement with Charles Webb & Company,  a Division of Keefe,  Bruyette & Woods,  Inc. (the Agent), as follows:

         Section 1. The  Offering.  In accordance  with the Stock  Issuance Plan adopted by its Board of Directors (the Plan),  the Company will offer and sell up to  1,101,643  shares of its common  stock,  par  value,  $.01 per share (the Shares or Common  Stock),  in a  subscription  offering  (the  Subscription Offering) to (1) depositors of the Bank with account balances of $50.00 or more as of September 30, 1998 (Eligible  Account  Holders),  (2) the Employee Stock Ownership Plan of the Bank (the ESOP), (3) depositors of the Bank with account balances  of $50.00 or more as of  December  31,  1999  (Supplemental  Eligible Account Holders), and (4) employees, officers and directors of the Bank. To the extent  Shares  remain  unsold in the  Subscription  Offering,  the  Company  is offering for sale in a community  offering  (the  Community  Offering and when referred to together  with the  Subscription  Offering,  the  Subscription  and Community  Offering)  the  Shares  not  so  subscribed  for or  ordered  in the Subscription Offering to members of the general public, with preference given to natural persons residing in the New Mexico counties of Otero and Lincoln

(Other Subscribers),  (all such offerees being referred to in the aggregate as Eligible  Offerees).  It is anticipated  that shares not subscribed for in the Subscription  and Community  Offering will be offered to certain  members of the general  public on a best efforts basis through a selected  dealers  arrangement (the Syndicated  Community  Offering) (the  Subscription  Offering,  Community Offering and Syndicated  Community Offering are collectively  referred to as the Offering).  It is acknowledged  that the purchase of Shares in the Offering is subject to the maximum and minimum purchase limitations as described in the Plan and that the Company and the Bank may  reject,  in whole or in part,  any orders received in the Community Offering or Syndicated Community Offering. The Company will  issue the Shares at a  purchase  price of $10.00 per share (the  Purchase Price).

         The Company has filed with the Securities and Exchange  Commission (the Commission)  a  registration  statement  on Form  S-1  (File  No.  333- ) (the Registration  Statement)  containing a prospectus relating to the Offering for the  registration  of the  Shares  under the  Securities  Act of 1933 (the 1933 Act),  and has filed such amendments  thereof and such amended  prospectuses as may have been  required to the date hereof.  The term  Registration  Statement shall  include  all  exhibits  thereto,  as  amended,  including  post-effective amendments.  The prospectus, as amended, on file with the Commission at the time the Registration  Statement initially became effective is hereinafter called the Prospectus,  except that if any Prospectus is filed by the Company pursuant to Rule 424(b) or (c) of the rules and regulations of the Commission under the 1933 Act (the 1933 Act  Regulations)  differing  from the prospectus on file at the time  the  Registration   Statement   initially  becomes  effective,   the  term Prospectus  shall refer to the prospectus filed pursuant to Rule 424(b) or (c) from and after the time said prospectus is filed with the Commission.

         In accordance  with Title 12, Parts 575 and 563b of the Code of Federal Regulations  (the MHC  Regulations),  the Company has filed with the Office of Thrift  Supervision (the OTS) an Application on Form MHC-2 with respect to the stock  issuance  (the  MHC  Application),  including  the  Prospectus  and the Valuation  Appraisal Report prepared by RP Financial,  LC (the  Appraisal) and has filed such amendments  thereto as may have been required by the OTS. The MHC Application  has been  approved by the OTS and the related  Prospectus  has been authorized for use by the OTS.





         Section 2. Retention of Agent;  Compensation;  Sale and Delivery of the Shares.  Subject to the terms and conditions  herein set forth,  the Company and the Bank have retained the Agent to consult with and to advise the Bank, the MHC and the Company,  and to assist the Company,  on a best  efforts  basis,  in the distribution  of the shares of Common Stock in the  Offering.  The services that the  Agent  will  provide  include,  but are not  limited  to (i)  training  the employees  of the Bank who will  perform  certain  ministerial  functions in the Subscription  and Community  Offering  regarding  the  mechanics and  regulatory requirements of the stock offering process,  (ii) managing the Stock Information Center by assisting  interested stock  subscribers and by keeping records of all stock orders and (iii) preparing marketing materials.

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         On the basis of the representations,  warranties, and agreements herein contained,  but subject to the terms and conditions  herein set forth, the Agent accepts such appointment and agrees to consult with and advise the Company,  the MHC and the Bank as to the  matters set forth in the letter  agreement  (Letter Agreement),  dated  November 29, 1999 between the Company and the Agent (a copy of which is attached  hereto as Exhibit A). It is  acknowledged  by the Company, the MHC and the Bank that the Agent  shall not be  required  to take or purchase any Shares or be  obligated to take any action  which is  inconsistent  with all applicable laws, regulations, decisions or orders.

         The  obligations of the Agent  pursuant to this  Agreement  (other than those set forth in  Sections  2(d),  8 and 9 hereof)  shall  terminate  upon the completion  or  termination  or  abandonment  of the Plan by the Company or upon termination  of the  Offering,  but in no event  later  than the date  (the End Date) which is 45 days after the Closing  Date (as  hereinafter  defined).  All fees or  expenses  due to the Agent but  unpaid  will be payable to the Agent in next day funds at the earlier of the Closing  Date (as  hereinafter  defined) or the End Date.  In the event the  Offering is extended  beyond the End Date,  the Company, the MHC, the Bank and the Agent may agree to renew this Agreement under mutually acceptable terms.

         In the event the Company is unable to sell a minimum of 708,050  Shares within the period  herein  provided,  this  Agreement  shall  terminate  and the Company shall refund to any persons who have  subscribed  for any of the Shares, the full amount which it may have  received  from them plus accrued  interest as set forth in the  Prospectus;  and none of the parties to this  Agreement  shall have any obligation to the other parties hereunder,  except as set forth in this Section 2 and in Sections 6, 8 and 9 hereof.

         In the event the Offering is terminated,  the Agent shall be reimbursed for its actual accountable out-of-pocket expenses.

         If all  conditions  precedent  to  the  consummation  of the  Offering, including, without limitation, the sale of all Shares required by the Plan to be sold, are satisfied,  the Company  agrees to issue,  or have issued,  the Shares sold in the Offering and to release for delivery certificates for such Shares on the Closing Date (as hereinafter  defined) against payment to the Company by any means authorized by the Plan; provided, however, that no funds shall be released to the Company  until the  conditions  specified  in Section 7 hereof shall have been  complied  with to the  reasonable  satisfaction  of the  Agent  and  their counsel.  The release of Shares against payment therefor shall be made on a date and at a place  acceptable  to the  Company,  the MHC,  the Bank and the  Agent. Certificates  for  shares  shall be  delivered  directly  to the  purchasers  in accordance with their directions.  The date upon which the Company shall release or deliver the Shares sold in the Offering, in accordance with the terms herein, is called the Closing Date.

         The Agent shall  receive the  following  compensation  for its services hereunder:

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          (a)  A  management  fee of $25,000,  payable in four  installments  of                $6,250 on  November 29 and  December  29, 1999 and January 29 and                February 29,  2000.  Should the  Offering be  terminated  for any                reason not  attributable  to the action or inaction of the Agent,                the Agent  shall  have  earned  and be  entitled  to be paid fees                accruing through the stage at which the termination occurred.

          (b)  A Success Fee of $75,000.

          (c)  If any of the shares remain  available after the Subscription and                Community  Offerings,  at the request of the Bank, the Agent will                seek to form a syndicate of registered  broker-dealers  to assist                in the sale of such Common Stock on a best efforts basis, subject                to the terms and  conditions  set forth in the  selected  dealers                agreement. the Agent will endeavor to distribute the Common Stock                among  dealers in a fashion  which  best  meets the  distribution                objectives of the Bank and the Plan. the Agent will be paid a fee                not to exceed 5.5% of the aggregate  Purchase Price of the Shares                sold by them.  the Agent will pass onto selected  broker-dealers,





               who assist in the  syndicated  community,  an amount  competitive                with  gross  underwriting  discounts  changed  at such  time  for                comparable  amounts of stock sold at a comparable price per share                in a similar market  environment.  Fees with respect to purchases                affected with the  assistance of a  broker/dealer  other than the                Agent shall be  transmitted  by the Agent to such  broker/dealer.                The decision to utilize selected  broker-dealers  will be made by                the Bank upon  consultation  with the Agent.  In the event,  with                respect to any  purchases  of Shares,  fees are paid  pursuant to                this subparagraph 2(c), such fees shall be in lieu of, and not in                addition to, payment pursuant to subparagraph 2(a) and 2(b).

          (d)  The Company  will bear those  expenses of the  proposed  offering                customarily  borne by  issuers,  including,  without  limitation,                regulatory   filing  fees,   Blue  Sky,  and  NASD  filing  and                registration  fees;  the  fees  of  the  Company's   accountants,                attorneys,  appraiser,  transfer agent and  registrar,  printing,                mailing and marketing and syndicate expenses  associated with the                Offering;  the fees set  forth in  Section  2; and fees for Blue                Sky legal work.  If the Agent  incurs  expenses on behalf of the                Company, the Company will reimburse the Agent for such expenses.

               The  Agent  shall  be  reimbursed  for  reasonable  out-of-pocket                expenses,   including   costs  of  travel,   meals  and  lodging,                photocopying,  telephone, facsimile and couriers. The Agent shall                also  be  reimbursed  for  its  fees  of  underwriter's   counsel                (including  counsel's   out-of-pocket  expenses)  not  to  exceed                $35,000. The selection of such counsel will be done by the Agent,                after consultation with the Bank.

         Section 3. Prospectus; Offering. The Shares are to be initially offered in the Offering at the Purchase Price as defined and set forth on the cover page of the Prospectus.

                                        4

         Section 4.  Representations and Warranties of the Company,  the MHC and the Bank. The Company,  the MHC and the Bank jointly and severally represent and warrant to and agree with the Agent as follows:

          (a)  The Registration Statement which was prepared by the Company, the                MHC and the  Bank and  filed  with the  Commission  was  declared                effective by the  Commission on __________  __, 2000. At the time                the Registration  Statement,  including the Prospectus  contained                therein   (including   any  amendment  or   supplement),   became                effective,  the Registration  Statement  contained all statements                that were required to be stated  therein in  accordance  with the                1933 Act and the 1933 Act  Regulations,  complied in all material                respects with the  requirements  of the 1933 Act and the 1933 Act                Regulations  and  the  Registration   Statement,   including  the                Prospectus   contained   therein   (including  any  amendment  or                supplement thereto), and any information regarding the Company or                the MHC or the Bank contained in Sales  Information (as such term                is defined in Section 8 hereof)  authorized  by the Company,  the                MHC or the Bank for use in connection with the Offering,  did 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, in light of the circumstances under which                they were made, not  misleading,  and at the time any Rule 424(b)                or (c)  Prospectus  was  filed  with  the  Commission  and at the                Closing  Date   referred  to  in  Section  2,  the   Registration                Statement,  including the Prospectus contained therein (including                any  amendment  or  supplement  thereto),   and  any  information                regarding  the  Company,  the MHC or the Bank  contained in Sales                Information  (as  such  term is  defined  in  Section  8  hereof)                authorized  by  the  Company,  the  MHC or the  Bank  for  use in                connection with the Offering will contain all statements that are                required to be stated therein in accordance with the 1933 Act and                the 1933 Act Regulations and will not contain an untrue statement                of a material fact or omit to state a material fact  necessary in                order  to  make  the   statements   therein,   in  light  of  the                circumstances   under  which  they  were  made,  not  misleading;                provided,  however,  that the  representations  and warranties in                this Section 4(a) shall not apply to statements or omissions made                in  reliance  upon and in  conformity  with  written  information                furnished to the Company, the MHC or the Bank by the Agent or its                counsel  expressly  regarding the Agent for use in the Prospectus                or  statements  in or  omissions  from any Sales  Information  or                information  filed pursuant to state  securities or blue sky laws                or regulations regarding the Agent.

          (b)  The MHC  Application  which was prepared by the Company,  the MHC                and the Bank and filed  with the OTS was  approved  by the OTS on                ___________  ___,  2000,  and the  related  Prospectus  has  been                authorized for use by the OTS. At the time of the approval of the                MHC Application, including the

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               Prospectus  (including any amendment or supplement  thereto),  by                the OTS and at all times  subsequent  thereto  until the  Closing                Date, the MHC  Application,  including the Prospectus  (including                any amendment or supplement thereto), will comply in all material                respects with the MHC Regulations, except to the extent waived in                writing by the OTS. The MHC Application, including the Prospectus                (including any amendment or supplement thereto), does not include                any  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, in light of the circumstances under which                they were  made,  not  misleading;  provided,  however,  that the                representations  and  warranties  in this  Section 4(b) shall not                apply to  statements  or omissions  made in reliance  upon and in                conformity with written information furnished to the Company, the                MHC or the Bank by the Agent or its counsel  expressly  regarding                the  Agent  for  use  in the  Prospectus  contained  in  the  MHC                Application   or  statements  in  or  omissions  from  any  sales                information.

          (c)  The Company and the MHC have  registered  with the OTS as savings                and loan  holding  companies  under the Home Owners' Loan Act, as                amended (HOLA).

          (d)  No order has been issued by the OTS or the FDIC  (hereinafter any                reference  to the FDIC  shall  include  the SAIF)  preventing  or                suspending the use of the Prospectus,  and no action by or before                any such government entity to revoke any approval,  authorization                or order of effectiveness related to the Offering is, to the best                knowledge  of  the  Company,  the  MHC or the  Bank,  pending  or                threatened.

          (e)  The MHC is and, as of the Closing Date,  will continue to be duly                organized and validly  existing as a federally  chartered  mutual                holding  company  under  the  laws  of the  United  States,  duly                authorized  to  conduct  its  business  and own its  property  as                described in the Registration Statement and the Prospectus; as of                the  Closing  Date,  the MHC will  have  obtained  all  licenses,                permits and other  governmental  authorizations  required for the                conduct of its business except those that  individually or in the                aggregate  would not  materially  adversely  affect the financial                condition,   earnings,  capital,  assets  or  properties  of  the                Company,  MHC and Bank taken as a whole;  as of the Closing Date,                all such licenses,  permits and governmental  authorizations will                be in full  force and  effect  and the MHC will be in  compliance                therewith in all material  respects;  as of the Closing Date, the                MHC will be duly  qualified as a foreign  corporation to transact                business  in each  jurisdiction  in which  the  failure  to be so                qualified  in one or  more  of such  jurisdictions  would  have a                material  adverse  effect on the financial  condition,  earnings,                capital,  assets,  properties or business of the Company, MHC and                Bank considered as one enterprise.

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          (f)  The MHC does not own any equity securities or any equity interest                in any business enterprise except as described in the Prospectus.

          (g)  The MHC is not authorized to issue any shares of capital stock.

          (h)  At the  Closing  Date,  the Plan will have  been  adopted  by the                Boards  of  Directors  of the  Company,  the MHC and the Bank and                approved  by the  members of the Bank,  and the offer and sale of                the Shares will have been  conducted in all material  respects in                accordance  with the  Plan,  the MHC  Regulations,  and all other                applicable laws, regulations, decisions and orders, including all                terms,  conditions,  requirements and provisions precedent to the                Offering  imposed  upon the  Company,  the MHC or the Bank by the                OTS, the Commission, or any other regulatory authority and in the                manner  described  in the  Prospectus.  No person  has  sought to                obtain  review of the final  action of the OTS in  approving  the                Plan or in approving the MHC Application, or any other statute or                regulation.

          (i)  The Bank has been organized and is a validly  existing  federally                chartered  savings and loan  association in capital stock form of                organization, duly authorized to conduct its business and own its                property  as  described  in the  Registration  Statement  and the                Prospectus;  the Bank has obtained all material licenses, permits                and other governmental  authorizations currently required for the                conduct  of  its  business;   all  such  licenses,   permits  and                governmental authorizations are in full force and effect, and the                Bank is in all material respects  complying with all laws, rules,                regulations  and  orders  applicable  to  the  operation  of  its                business;  the Bank is  existing  under  the  laws of the  United                States and is duly qualified as a foreign corporation to transact                business and is in good  standing in each  jurisdiction  in which                its  ownership  of property or leasing of property or the conduct                of its business requires such  qualification,  unless the failure                to be so qualified in one or more of such jurisdictions would not                have a material  adverse  effect on the  condition,  financial or                otherwise, or the business, operations or income of the Bank. The





               Bank does not own equity securities or any equity interest in any                other business  enterprise  except as described in the Prospectus                or as would not be material to the  operations of the Bank.  Upon                completion of the sale by the Company of the Shares  contemplated                by the Prospectus,  (i) all of the issued and outstanding capital                stock of the Bank will be owned by the Company,  (ii) the Company                will have no direct  subsidiaries  other than the Bank, and (iii)                the Company will be a  majority-owned  subsidiary of the MHC. The                Offering  will have been  effected  in all  material  respects in                accordance with all applicable statutes,  regulations,  decisions                and orders;  and,  except  with  respect to the filing of certain                post-sale,  post-Offering  reports,  and  documents in compliance                with the 1933 Act Regulations, the OTS' resolutions or letters of

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               approval, all terms, conditions, requirements and provisions with                respect to the Offering  imposed by the Commission,  the OTS, and                the FDIC,  if any,  will have been  complied with by the Company,                the MHC and the  Bank in all  material  respects  or  appropriate                waivers  will have been  obtained  and all  material  notice  and                waiting periods will have been satisfied, waived or elapsed.

          (j)  The Company has been duly incorporated and is validly existing as                a  corporation  in good  standing  under  the laws of the  United                States  with  corporate  power and  authority  to own,  lease and                operate its  properties  and to conduct its business as described                in the  Registration  Statement  and the  Prospectus,  and at the                Closing  Date the Company  will be  qualified to do business as a                foreign  corporation in each jurisdiction in which the conduct of                its  business  requires  such  qualification,  except  where  the                failure to so qualify would not have a material adverse effect on                the   condition,   financial  or  otherwise,   or  the  business,                operations or income of the Company. The Company has obtained all                material licenses, permits and other governmental  authorizations                currently  required  for the  conduct of its  business;  all such                licenses,  permits and  governmental  authorizations  are in full                force and  effect,  and the Company is in all  material  respects                complying with all laws, rules, regulations and orders applicable                to the operation of its business.

          (k)  The Bank is a member  of the  Federal  Home  Loan  Bank of Dallas                (FHLB- Dallas). The deposit accounts of the Bank are insured by                the FDIC up to the applicable  limits; and no proceedings for the                termination  or revocation  of such  insurance are pending or, to                the best knowledge of the Company or the Bank, threatened.

          (l)  The Company,  the MHC and the Bank have good and marketable title                to all real property and good title to all other assets  material                to the business of the Company,  the MHC and the Bank, taken as a                whole,  and to  those  properties  and  assets  described  in the                Registration  Statement and Prospectus as owned by them, free and                clear of all liens, charges, encumbrances or restrictions, except                such  as  are  described  in  the   Registration   Statement  and                Prospectus,  or are not  material to the business of the Company,                the MHC and the Bank, taken as a whole; and all of the leases and                subleases  material to the business of the  Company,  the MHC and                the Bank, taken as a whole,  under which the Company,  the MHC or                the  Bank  hold  properties,  including  those  described  in the                Registration  Statement  and  Prospectus,  are in full  force and                effect.

          (m)  The  Company  and the Bank  have  received  an  opinion  of their                special  counsel,  Luse  Lehman  Gorman  Pomerenk  & Schick  with                respect to the federal  income tax  consequences  of the Offering                and the opinions of

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               ____________________  with  respect  to  New  Mexico  income  tax                consequences  of  the  Offering;  all  material  aspects  of  the                opinions   of  Luse   Lehman   Gorman   Pomerenk   &  Schick  and                _____________________    are   accurately   summarized   in   the                Registration  Statement and will be accurately  summarized in the                Prospectus; and further represent and warrant that the facts upon                which  such  opinions  are  based  are  truthful,   accurate  and                complete.

          (n)  The Company, the MHC and the Bank have all such power, authority,                authorizations,  approvals and orders as may be required to enter                into this  Agreement,  to carry out the provisions and conditions                hereof  and to  issue  and  sell  the  Shares  to be  sold by the                Company,  as provided  herein and as described in the  Prospectus                except approval or confirmation by the OTS of the final appraisal                of the Company. The consummation of the Offering,  the execution,                delivery and  performance of this Agreement and the  consummation                of the  transactions  herein  contemplated  have  been  duly  and                validly authorized by all necessary  corporate action on the part





               of the Company,  the MHC and the Bank and this Agreement has been                validly  executed and  delivered by the Company,  the MHC and the                Bank  and  is the  valid,  legal  and  binding  agreement  of the                Company,  the MHC and the Bank enforceable in accordance with its                terms  (except as the  enforceability  thereof  may be limited by                bankruptcy,  insolvency,  moratorium,  reorganization  or similar                laws  relating to or  affecting  the  enforcement  of  creditors'                rights  generally  or the rights of creditors of savings and loan                holding companies, the accounts of whose subsidiaries are insured                by the FDIC or by general equity principles regardless of whether                such enforceability is considered in a proceeding in equity or at                law,  and except to the  extent if any,  that the  provisions  of                Sections 8 and 9 hereof may be  unenforceable  as against  public                policy).

          (o)  The  Company,  the MHC and the Bank are not in  violation  of any                directive received from the OTS, the FDIC, or any other agency to                make any  material  change  in the  method  of  conducting  their                businesses  so as to comply  in all  material  respects  with all                applicable   statutes   and   regulations   (including,   without                limitation,  regulations, decisions, directives and orders of the                OTS,  and  the  FDIC)  and,  except  as may be set  forth  in the                Registration  Statement and the  Prospectus,  there is no suit or                proceeding or charge or action before or by any court, regulatory                authority  or  governmental  agency or body,  pending  or, to the                knowledge of the Company, the MHC or the Bank, threatened,  which                might   materially  and  adversely   affect  the  Offering,   the                performance  of  this  Agreement  or  the   consummation  of  the                transactions  contemplated  in the Plan and as  described  in the                Registration  Statement and the  Prospectus or which might result                in any material  adverse  change in the  condition  (financial or                otherwise), earnings, capital or properties of the

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               Company,  the MHC and the Bank, or which would materially  affect                their properties and assets.

          (p)  The financial  statements,  schedules  and notes related  thereto                which  are  included  in  the   Prospectus   fairly  present  the                consolidated  balance  sheet,  income  statement,   statement  of                changes in equity  and cash  flows of the Bank at the  respective                dates  indicated and for the respective  periods  covered thereby                and  comply  as  to  form  in  all  material  respects  with  the                applicable  accounting  requirements  of  Title 12 of the Code of                Federal Regulations and generally accepted accounting  principles                (including  those  requiring the  recording of certain  assets at                their current market value). Such financial statements, schedules                and notes related  thereto have been prepared in accordance  with                generally accepted  accounting  principles  consistently  applied                through  the periods  involved,  present  fairly in all  material                respects the  information  required to be stated  therein and are                consistent  with the most recent  financial  statements and other                reports  filed by the Bank  with the OTS.  The  other  financial,                statistical and pro forma  information and related notes included                in the Prospectus present fairly the information shown therein on                a basis  consistent  with the  audited  and  unaudited  financial                statements of the Bank included in the Prospectus,  and as to the                pro forma  adjustments,  the adjustments  described  therein have                been properly applied on the basis described therein.

          (q)  Since the  respective  dates as of which  information is given in                the Registration  Statement  including the Prospectus:  (i) there                has not been any material adverse change, financial or otherwise,                in the condition of the Company,  the MHC or the Bank  considered                as one enterprise,  or in the earnings,  capital or properties of                the Company,  the MHC or the Bank,  whether or not arising in the                ordinary course of business; (ii) there has not been any material                increase in the  long-term  debt of the Bank or in the  principal                amount of the Bank's  assets which are  classified by the Bank as                substandard,  doubtful  or loss or in  loans  past due 90 days or                more or real estate acquired by  foreclosure,  by deed-in-lieu of                foreclosure  or deemed  in-substance  foreclosure or any material                decrease in retained earnings or total assets of the Bank nor has                the  Company,  the MHC or the Bank issued any  securities  (other                than in  connection  with the  incorporation  of the  Company) or                incurred any liability or obligation for borrowing  other than in                the ordinary  course of  business;  (iii) there have not been any                material transactions entered into by the Company, the MHC or the                Bank; (iv) there has not been any material  adverse change in the                aggregate   dollar   amount  of  the  Bank's   deposits   or  its                consolidated  net worth;  (v) there has been no material  adverse                change in the  Company's,  the MHC's or the  Bank's  relationship                with  its  insurance  carriers,  including,  without  limitation,                cancellation or other termination of the Company's, the

                                       10





               MHC's or the Bank's  fidelity bond or any other type of insurance                coverage;  (vi) except as disclosed in the  Prospectus  there has                been no material change in management of the Company,  the MHC or                the Bank, neither of which has any material undisclosed liability                of any kind, contingent or otherwise;  (vii) the Company, the MHC                or the Bank has not sustained  any material loss or  interference                with its  respective  business or  properties  from fire,  flood,                windstorm, earthquake, accident or other calamity, whether or not                covered by insurance;  (viii) the Company, the MHC or the Bank is                not in default in the  payment of  principal  or  interest on any                outstanding   debt   obligations;    (ix)   the   capitalization,                liabilities,  assets, properties and business of the Company, the                MHC  and  the  Bank  conform  in  all  material  respects  to the                descriptions thereof contained in the Prospectus; and (x) neither                the  Company,  the MHC nor the Bank has any  material  contingent                liabilities, except as set forth in the Prospectus. All documents                made  available  to or  delivered  or to be made  available to or                delivered  by  the  Bank,   the  MHC  or  the  Company  or  their                representatives  in connection  with the issuance and sale of the                Shares,  including  records of account  holders,  depositors  and                other  members of the Bank,  or in  connection  with the  Agent's                exercise of due diligence,  except for those documents which were                prepared by parties other than the Bank,  the MHC, the Company or                their representatives, to the best knowledge of the Bank, the MHC                and the Company,  were on the dates on which they were delivered,                or will be on the dates on which they are to be delivered,  true,                complete and correct in all material respects.

          (r)  As of the date  hereof and as of the  Closing  Date,  neither the                Company, the MHC nor the Bank is (i) in violation of its articles                of incorporation or charter or bylaws,  respectively,  or (ii) in                default  in  the   performance  or  observance  of  any  material                obligation,  agreement,  covenant,  or condition contained in any                material  contract,  lease,  loan  agreement,  indenture or other                instrument  to  which  it is a party or by which it or any of its                property may be bound;  the  consummation  of the  Offering,  the                execution,  delivery and  performance  of this  Agreement and the                consummation of the transactions  herein  contemplated  have been                duly and validly authorized by all necessary  corporate action on                the part of the Company,  the MHC and the Bank and this Agreement                has been validly  executed and delivered by the Company,  the MHC                and the Bank and is a valid,  legal and binding  Agreement of the                Company,  the MHC and the Bank enforceable in accordance with its                terms, except as the enforceability thereof may be limited by (i)                bankruptcy,     insolvency,      reorganization,      moratorium,                conservatorship,  receivership  or  other  similar  laws  now  or                hereafter in effect  relating to or affecting the  enforcement of                creditors' rights generally or the rights of creditors of federal                savings institutions,  (ii) general equitable  principles,  (iii)                laws relating to the safety and  soundness of insured  depository                institutions, and (iv) applicable

                                       11

               law or public policy with respect to the  indemnification  and/or                contribution  provisions  contained  herein,  and except  that no                representation  or  warranty  need be made  as to the  effect  or                availability   of  equitable   remedies  or   injunctive   relief                (regardless  of whether such  enforceability  is  considered in a                proceeding  in  equity  or  at  law).  The  consummation  of  the                transactions  herein  contemplated will not: (i) conflict with or                constitute  a breach  of,  or  default  under,  or  result in the                creation of any material lien,  charge or encumbrance upon any of                the assets of the  Company,  the MHC or the Bank  pursuant to the                articles  of  incorporation  of the  Company or the  charter  and                bylaws of the Bank and the MHC, or any material  contract,  lease                or other instrument to which the Company, the MHC or the Bank has                a beneficial interest, or any applicable law, rule, regulation or                order;  (ii)  violate  any  authorization,  approval,  judgement,                decree,  order,  statute,  rule or  regulation  applicable to the                Company,  the MHC or the Bank,  except for such violations  which                would  not  have a  material  adverse  effect  on  the  financial                condition and results of  operations of the Company,  the MHC and                the Bank on a consolidated basis; or (iii) result in the creation                of any material lien,  charge or encumbrance upon any property of                the Company, the MHC or the Bank.

          (s)  No default exists, and no event has occurred which with notice or                lapse of time, or both, would  constitute a default,  on the part                of the Company,  the MHC or the Bank in the due  performance  and                observance of any term,  covenant or condition of any  indenture,                mortgage,  deed of trust,  note, bank loan or credit agreement or                any other  instrument or agreement to which the Company,  the MHC                or the Bank is a party  or by  which  any of them or any of their                property is bound or affected,  except such defaults  which would                not have a material adverse affect on the financial  condition or                results of operations  of the Company,  the MHC and the Bank on a                consolidated basis; such agreements are in full force and effect;                and no other party to any such  agreements  has instituted or, to                the  best  knowledge  of the  Company,  the  MHC  and  the  Bank,                threatened any action or proceeding wherein the Company,  the MHC                or  the  Bank  would  or  might  be  alleged  to  be  in  default





               thereunder.

          (t)  Upon  consummation of the Offering,  the  authorized,  issued and                outstanding  equity  capital  of the  Company  will be within the                range   set   forth  in  the   Prospectus   under   the   caption                Capitalization,  and no Shares  have been or will be issued and                outstanding  prior to the Closing Date (other than Shares held by                the MHC);  the Shares will have been duly and validly  authorized                for  issuance  and,  when  issued and  delivered  by the  Company                pursuant  to  the  Plan  against  payment  of  the  consideration                calculated as set forth in the Plan and in the  Prospectus,  will                be duly and validly issued, fully paid and non-assessable, except                for shares purchased by the ESOP with funds

                                       12

               borrowed from the Company to the extent payment  therefor in cash                has not been  received by the Company;  except to the extent that                subscription   rights  and  priorities   pursuant  thereto  exist                pursuant to the Plan, no preemptive  rights exist with respect to                the  Shares;  and the terms and  provisions  of the  Shares  will                conform  in all  material  respects  to the  description  thereof                contained in the  Registration  Statement and the Prospectus.  To                the best knowledge of the Company, the MHC and the Bank, upon the                issuance  of the  Shares,  good  title  to  the  Shares  will  be                transferred  from the Company to the purchasers  thereof  against                payment  therefor,  subject  to such  claims  as may be  asserted                against the purchasers thereof by third-party claimants.

          (u)  No approval of any  regulatory  or  supervisory  or other  public                authority  is  required  in  connection  with the  execution  and                delivery of this Agreement or the issuance of the Shares,  except                for the  approval of the  Commission,  the OTS and any  necessary                qualification,  notification, registration or exemption under the                securities  or blue sky laws of the  various  states in which the                Shares are to be offered, and except as may be required under the                rules and regulations of the NASD.

          (v)  The Accounting & Consulting Group L.L.P.  which has certified the                consolidated  audited  financial  statements and schedules of the                Bank included in the Prospectus, has advised the Company, the MHC                and the Bank in  writing  that  they  are,  with  respect  to the                Company,  the MHC and the Bank,  independent  public  accountants                within  the  meaning  of the Code of  Professional  Ethics of the                American  Institute of Certified Public  Accountants and Title 12                of the Code of Federal Regulations and Section 571.2(c)(3).

          (w)  RP  Financial  LC, which has  prepared  the  Valuation  Appraisal                Report as of December ___, 1999 (as amended or  supplemented,  if                so amended or supplemented)  (the  Appraisal),  has advised the                Company in writing that it is independent of the Company, the MHC                and the Bank within the meaning of the MHC Regulations.

          (x)  The Company,  the MHC and the Bank have timely filed all required                federal,  state and local tax returns;  the Company,  the MHC and                the Bank have paid all taxes that have  become due and payable in                respect of such returns,  except where  permitted to be extended,                have made adequate  reserves for similar  future tax  liabilities                and no deficiency  has been asserted with respect  thereto by any                taxing authority.

          (y)  The  Bank is in  compliance  in all  material  respects  with the                applicable financial record-keeping and reporting requirements of                the Currency and

                                       13

               Foreign  Transactions  Reporting Act of 1970, as amended, and the                regulations and rules thereunder.

          (z)  To the  knowledge of the Company,  the MHC and the Bank,  neither                the Company,  the MHC, the Bank nor employees of the Company, the                MHC or the Bank have made any  payment  of funds of the MHC,  the                Company or the Bank as a loan for the  purchase  of the Shares or                made any other  payment of funds  prohibited by law, and no funds                have been set aside to be used for any payment prohibited by law.

          (aa) Prior to the Offering,  neither the Company, the MHC nor the Bank                has: (i) issued any securities  within the last 18 months (except                for notes to  evidence  other bank loans and  reverse  repurchase                agreements  or  other  liabilities  in  the  ordinary  course  of                business or as  described in the  Prospectus,  and except for any                shares  issued  in  connection  with  the  incorporation  of  the                Company);  (ii) had any  material  dealings  within the 12 months                prior to the date  hereof  with any  member of the  NASD,  or any                person  related to or  associated  with such  member,  other than                discussions  and meetings  relating to the proposed  Offering and                routine  purchases  and sales of  United  States  government  and





               agency  securities;  (iii) entered into a financial or management                consulting agreement except as contemplated  hereunder;  and (iv)                engaged any intermediary  between the Agent and the Company,  the                MHC and the Bank in  connection  with the offering of the Shares,                and no  person  is  being  compensated  in any  manner  for  such                service.  Appropriate arrangements have been made for placing the                funds  received  from  subscriptions  for  Shares  in  a  special                interest-bearing  account with the Bank until all Shares are sold                and paid for, with  provision for refund to the purchasers in the                event that the Offering is not completed  for whatever  reason or                for delivery to the Company if all Shares are sold.

          (bb) The Company,  the MHC and the Bank have not relied upon the Agent                or its legal  counsel or other  advisors  for any  legal,  tax or                accounting advice in connection with the Offering.

          (cc) The Company is not required to be registered under the Investment                Company Act of 1940, as amended.

          (dd) Any certificates signed by an officer of the Company,  the MHC or                the  Bank  pursuant  to the  conditions  of  this  Agreement  and                delivered  to the  Agent or their  counsel  that  refers  to this                Agreement shall be deemed to be a representation  and warranty by                the  Company,  the MHC or the Bank to the Agent as to the matters                covered  thereby  with the same effect as if such  representation                and warranty were set forth herein.

                                       14

         Section 5. Representations and Warranties of the Agent.

         The Agent represents and warrants to the Company,  the MHC and the Bank that:

               (i) it is a corporation and is validly  existing in good standing           under the laws of the State of Ohio and  licensed to conduct  business           in the  State of Ohio  and it has the  full  power  and  authority  to           provide the  services  to be  furnished  to the Bank,  the MHC and the           Company hereunder.

               (ii)  The  execution  and  delivery  of  this  Agreement  and the           consummation of the  transactions  contemplated  hereby have been duly           and  validly  authorized  by all  necessary  action on the part of the           Agent,  and this  Agreement  has been duly and  validly  executed  and           delivered by the Agent and is a legal,  valid and binding agreement of           the Agent, enforceable in accordance with its terms.

               (iii)   Each  of  the  Agent  and  its   employees,   agents  and           representatives  who shall perform any of the services hereunder shall           be duly  authorized  and  empowered,  and  shall  have  all  licenses,           approvals and permits necessary to perform such services.

               (iv) The execution  and delivery of this  Agreement by the Agent,           the   consummation  of  the  transactions   contemplated   hereby  and           compliance  with the terms and  provisions  hereof  will not  conflict           with,  or result  in a breach  of,  any of the  terms,  provisions  or           conditions  of, or constitute a default (or an event which with notice           or  lapse of time or both  would  constitute  a  default)  under,  the           articles of incorporation of the Agent or any agreement,  indenture or           other  instrument  to which the Agent is a party or by which it or its           property is bound.

               (v) No approval of any  regulatory or supervisory or other public           authority is required in  connection  with the Agent's  execution  and           delivery of this Agreement, except as may have been received.

               (vi) There is no suit or proceeding or charge or action before or           by any court, regulatory authority or government agency or body or, to           the  knowledge  of the  Agent,  pending  or  threatened,  which  might           materially adversely affect the Agent's performance of this Agreement.

         Section  5.l  Covenants  of the  Company,  the MHC and  the  Bank.  The Company,  the MHC and the Bank hereby  jointly and  severally  covenant with the Agent as follows:

          (a)  The Company will not, at any time after the date the Registration                Statement is declared effective, file any amendment or supplement                to the Registration Statement without providing the Agent and its                counsel an opportunity to

                                       15

               review such  amendment  or  supplement  or file any  amendment or                supplement  to which  amendment  or  supplement  the Agent or its                counsel shall reasonably object.

          (b)  The MHC and Bank will not, at any time after the MHC  Application                is approved by the OTS,  file any amendment or supplement to such





               MHC  Application  without  providing the Agent and its counsel an                opportunity  to review such  amendment or  supplement or file any                amendment or  supplement  to which  amendment or  supplement  the                Agent or its counsel shall reasonably object.

          (c)  The Company,  the MHC and the Bank will use their best efforts to                cause any post-effective  amendment to the Registration Statement                to be declared effective by the Commission and any post-effective                amendment  to the MHC  Application  to be approved by the OTS and                will immediately  upon receipt of any information  concerning the                events listed below notify the Agent:  (i) when the  Registration                Statement,  as amended,  has become effective;  (ii) when the MHC                Application,  as amended has been approved by the OTS;  (iii) any                comments from the Commission,  the OTS or any other  governmental                entity  with  respect  to  the   Offering  or  the   transactions                contemplated  by  this  Agreement;  (iv)  of the  request  by the                Commission,  the OTS or any  other  governmental  entity  for any                amendment or supplement to the  Registration  Statement,  the MHC                Application or for additional information; (v) of the issuance by                the Commission,  the OTS or any other governmental  entity of any                order or other action  suspending  the Offering or the use of the                Registration  Statement or the  Prospectus or any other filing of                the Company,  the MHC or the Bank under the MHC  Regulations,  or                other applicable law, or the threat of any such action;  (vi) the                issuance by the Commission,  the OTS or any authority of any stop                order suspending the effectiveness of the Registration  Statement                or of the  initiation  or threat of  initiation  or threat of any                proceedings  for that purpose;  or (vii) of the occurrence of any                event mentioned in paragraph (g) below. The Company,  the MHC and                the Bank will make every  reasonable  effort  (i) to prevent  the                issuance by the Commission, the OTS or any state authority of any                such  order and,  if any such order  shall at any time be issued,                (ii) to obtain the lifting thereof at the earliest possible time.

          (d)  The  Company,  the MHC and the Bank will deliver to the Agent and                to its counsel two conformed copies of the Registration Statement                and  the  MHC  Application,  as  originally  filed  and  of  each                amendment or supplement thereto, including all exhibits. Further,                the Company,  the MHC and the Bank will  deliver such  additional                copies of the foregoing  documents to counsel to the Agent as may                be required for any NASD and blue sky filings.

                                       16

          (e)  The Company, the MHC and the Bank will furnish to the Agent, from                time to time during the period when the  Prospectus (or any later                prospectus  related to this offering) is required to be delivered                under the 1933 Act or the  Securities  Exchange  Act of 1934 (the                1934 Act), such number of copies of such Prospectus (as amended                or  supplemented)  as the Agent may  reasonably  request  for the                purposes  contemplated by the 1933 Act, the 1933 Act Regulations,                the 1934 Act or the rules and regulations  promulgated  under the                1934 Act (the 1934 Act Regulations). The Company authorizes the                Agent to use the  Prospectus  (as  amended  or  supplemented,  if                amended or supplemented) in any lawful manner contemplated by the                Plan in connection with the sale of the Shares by the Agent.

          (f)  The  Company,  the MHC and the Bank will  comply with any and all                material  terms,  conditions,  requirements  and provisions  with                respect  to  the  Offering,  and  the  transactions  contemplated                thereby,   imposed  by  the  Commission,   the  OTS  or  the  MHC                Regulations,  and by the 1933 Act, the 1933 Act Regulations,  the                1934 Act and the 1934 Act  Regulations  to be complied with prior                to or subsequent  to the Closing Date and when the  Prospectus is                required  to be  delivered,  and  during  such  time  period  the                Company,  the MHC and the Bank will comply, at their own expense,                with  all  material   requirements   imposed  upon  them  by  the                Commission, the OTS or the MHC Regulations,  and by the 1933 Act,                the  1933  Act  Regulations,  the  1934  Act  and  the  1934  Act                Regulations,  including, without limitation, Rule 10b-5 under the                1934 Act,  in each case as from time to time in force,  so far as                necessary  to permit the  continuance  of sales or dealing in the                Common Stock during such period in accordance with the provisions                hereof and the Prospectus.

          (g)  If, at any time during the period when the Prospectus relating to                the Shares is required to be delivered,  any event relating to or                affecting  the  Company,  the MHC or the Bank shall  occur,  as a                result of which it is necessary or appropriate, in the opinion of                counsel  for  the  Company,  the  MHC  and  the  Bank  or in  the                reasonable opinion of the Agent's counsel, to amend or supplement                the  Registration  Statement or  Prospectus  in order to make the                Registration  Statement or Prospectus  not misleading in light of                the  circumstances   existing  at  the  time  the  Prospectus  is                delivered to a purchaser,  the Company, the MHC and the Bank will                immediately  so inform the Agent and prepare  and file,  at their                own expense,  with the  Commission and the OTS and furnish to the                Agent a reasonable number of copies of an amendment or amendments                of, or a supplement or supplements to, the Registration Statement                or Prospectus (in form and substance  reasonably  satisfactory to                the Agent and its  counsel  after a  reasonable  time for review)                which will amend or  supplement  the  Registration  Statement  or





               Prospectus so that as amended

                                       17

               or  supplemented  it will not  contain an untrue  statement  of a                material fact or omit to state a material fact necessary in order                to make the  statements  therein,  in light of the  circumstances                existing at the time the  Prospectus is delivered to a purchaser,                not misleading.  For the purpose of this Agreement,  the Company,                the MHC and the Bank each will  timely  furnish to the Agent such                information  with respect to itself as the Agent may from time to                time reasonably request.

          (h)  The  Company,  the MHC and  the  Bank  will  take  all  necessary                actions,  in cooperating  with the Agent, and furnish to whomever                the Agent may  direct,  such  information  as may be  required to                qualify  or  register  the Shares  for  offering  and sale by the                Company or to exempt such Shares from registration,  or to exempt                the Company as a  broker-dealer  and its officers,  directors and                employees  as  broker-dealers  or  agents  under  the  applicable                securities  or blue sky laws of such  jurisdictions  in which the                Shares are required  under the MHC  Regulations  to be sold or as                the Agent and the  Company,  the MHC and the Bank may  reasonably                agree upon;  provided,  however,  that the  Company  shall not be                obligated to file any general  consent to service of process,  to                qualify to do business in any  jurisdiction in which it is not so                qualified,  or to register its  directors or officers as brokers,                dealers,  salesmen  or  agents  in  any  jurisdiction.   In  each                jurisdiction where any of the Shares shall have been qualified or                registered as above provided, the Company will make and file such                statements  and  reports in each  fiscal  period as are or may be                required by the laws of such jurisdiction.

          (i)  The  Company,  the MHC and  the  Bank  will  not  sell or  issue,                contract to sell or otherwise dispose of, for a period of 90 days                after  the  Closing  Date,  without  the  Agent's  prior  written                consent,  any Common Stock other than the Shares or other than in                connection  with  any  plan  or  arrangement   described  in  the                Prospectus, including existing stock benefit plans.

          (j)  The Company  shall  register its Common Stock under Section 12(g)                of the 1934 Act on or prior to the Closing  Date  pursuant to the                Plan and shall request that such  registration be effective prior                to or upon completion of the Offering. The Company shall maintain                the  effectiveness  of such  registration for not less than three                years or such shorter period as may be required by the OTS.

          (k)  During the period  during  which the  Company's  Common  Stock is                registered  under the 1934 Act or for  three  (3) years  from the                date  hereof,  whichever  period is  greater,  the  Company  will                furnish to its shareholders as soon as practicable  after the end                of each fiscal year an annual report of the Company  (including a                consolidated balance sheet and statements of consolidated

                                       18

               income,  shareholders'  equity and cash flows of the  Company and                its subsidiaries as at the end of and for such year, certified by                independent  public accountants in accordance with Regulation S-X                under the 1933 Act and the 1934 Act).

          (l)  During  the  period  of three  years  from the date  hereof,  the                Company  will  furnish to the Agent:  (i) as soon as  practicable                after such  information  is  publicly  available,  a copy of each                report of the Company  furnished to or filed with the  Commission                under the 1934 Act or any national  securities exchange or system                on which  any class of  securities  of the  Company  is listed or                quoted  (including,  but not limited  to,  reports on Forms 10-K,                10-Q and 8-K and all  proxy  statements  and  annual  reports  to                stockholders),  (ii) a copy of each other non-confidential report                of the  Company  mailed  to its  stockholders  or filed  with the                Commission,  the  OTS  or any  other  supervisory  or  regulatory                authority or any national  securities exchange or system on which                any class of securities of the Company is listed or quoted,  each                press  release and material news items and  additional  documents                and information  with respect to the Company,  MHC or the Bank as                the Agent may  reasonably  request;  and (iii) from time to time,                such other  nonconfidential  information  concerning the Company,                the MHC or the Bank as the Agent may reasonably request.

          (m)  The Company,  the MHC and the Bank will use the net proceeds from                the sale of the Shares in the manner set forth in the  Prospectus                under the caption Use of Proceeds.

          (n)  Other than as permitted  by the MHC  Regulations,  the HOLA,  the                1933 Act, the 1933 Act Regulations,  and the laws of any state in                which the Shares are  registered  or qualified for sale or exempt                from registration, neither the Company, the MHC nor the Bank will





               distribute any  prospectus,  offering  circular or other offering                material in connection with the offer and sale of the Shares.

          (o)  The Company will use its best efforts to (i) encourage and assist                a market maker to establish  and maintain a market for the Shares                and (ii) list and maintain  quotation of the Shares on a national                or regional  securities  exchange or on the Nasdaq  Stock  Market                (Nasdaq) effective on or prior to the Closing Date.

          (p)  The Bank will maintain  appropriate  arrangements  for depositing                all funds  received  from persons  mailing  subscriptions  for or                orders to purchase Shares in the Offering on an  interest-bearing                basis at the rate described in the  Prospectus  until the Closing                Date and satisfaction of all conditions  precedent to the release                of the Bank's obligation to refund payments received from

                                       19

               persons  subscribing  for or ordering  Shares in the  Offering in                accordance  with the Plan and as described in the  Prospectus  or                until  refunds  of such  funds  have  been  made  to the  persons                entitled  thereto  or  withdrawal   authorizations   canceled  in                accordance with the Plan and as described in the Prospectus.  The                Bank will maintain  such records of all funds  received to permit                the funds of each subscriber to be separately insured by the FDIC                (to the maximum extent  allowable) and to enable the Bank to make                the  appropriate  refunds  of such  funds in the event  that such                refunds are required to be made in  accordance  with the Plan and                as described in the Prospectus.

          (q)  The  Company,  the MHC and the Bank will take  such  actions  and                furnish such information as are reasonably requested by the Agent                in order  for the  Agent to  ensure  compliance  with the  NASD's                Interpretation Relating to Free Riding and Withholding.

          (r)  Neither  the  Company,  the MHC nor the Bank will  amend the Plan                without notifying the Agent prior thereto.

          (s)  The Company shall assist the Agent,  if necessary,  in connection                with  the   allocation   of  the   Shares  in  the  event  of  an                oversubscription and shall provide the Agent with any information                necessary to assist the Company in allocating  the Shares in such                event and such information  shall be accurate and reliable in all                material respects.

          (t)  Prior to the Closing Date, the Company, the MHC and the Bank will                inform  the  Agent of any event or  circumstances  of which it is                aware as a result  of which  the  Registration  Statement  and/or                Prospectus,  as then amended or  supplemented,  would  contain an                untrue  statement of a material  fact or omit to state a material                fact  necessary  in  order  to make the  statements  therein  not                misleading.

          (u)  Subsequent  to the date the  Registration  Statement  is declared                effective by the Commission and prior to the Closing Date, except                as  otherwise  may be indicated  or  contemplated  therein or set                forth in an amendment or supplement thereto, neither the Company,                the MHC nor the Bank will  have:  (i) issued  any  securities  or                incurred any liability or obligation,  direct or contingent,  for                borrowed  money,  except  borrowings  from  the  same or  similar                sources indicated in the Prospectus in the ordinary course of its                business,  or (ii) entered into any transaction which is material                in light of the  business and  properties  of the Company and the                Bank, taken as a whole.

          (v)  The facts and  representations  provided  to Luse  Lehman  Gorman                Pomerenk & Schick by the Bank,  the MHC and the  Company and upon                which Luse

                                       20

               Lehman  Gorman  Pomerenk  & Schick  will base its  opinion  under                Section 7(c)(1) are and will be truthful, accurate and complete.

         Section  6.  Payment  of  Expenses.  Whether  or not  the  Offering  is completed or the sale of the Shares by the Company is consummated,  the Company, the MHC and the Bank jointly and  severally  agree to pay or reimburse the Agent for the Company, the MHC and the Bank have agreed to reimburse the Agent for its out-of-pocket  expenses,  and its legal fees (as  specified in Section 2) and to indemnify the Agent against  certain claims or  liabilities,  including  certain liabilities  under the Securities Act, and will contribute to payments the Agent may be required to make in connection with any such claims or  liabilities;  and the fees set forth under Section 2. In the event the Company is unable to sell a minimum of 708,050  Shares,  the  Company,  the MHC and the Bank shall  promptly reimburse the Agent in accordance with Section 2 hereof.

         Section 7.  Conditions to the Agent's  Obligations.  The obligations of the Agent  hereunder,  as to the Shares to be delivered at the Closing Date, are





subject, to the extent not waived in writing by the Agent, to the condition that all representations  and warranties of the Company,  the MHC and the Bank herein are, at and as of the  commencement of the Offering and at and as of the Closing Date, true and correct in all material respects, the condition that the Company, the MHC and the Bank shall have performed all of their obligations  hereunder to be performed on or before such dates, and to the following further conditions:

          (a)  At the Closing Date, the Company, the MHC and the Bank shall have                conducted  the  Offering in all material  respects in  accordance                with the Plan,  the MHC  Regulations,  and all  other  applicable                laws,  regulations,  decisions  and orders,  including all terms,                conditions, requirements and provisions precedent to the Offering                imposed upon them by the OTS.

          (b)  The Registration  Statement shall have been declared effective by                the  Commission and the MHC  Application  and MHC Notice shall be                approved  by the OTS not later than 5:30 p.m. on the date of this                Agreement,  or with the Agent's consent at a later time and date;                and  at  the  Closing   Date,  no  stop  order   suspending   the                effectiveness  of the  Registration  Statement  shall  have  been                issued under the 1933 Act or proceedings  therefore  initiated or                threatened by the Commission or any state authority, and no order                or other action suspending the authorization of the Prospectus or                the  consummation  of the  Conversion  shall have been  issued or                proceedings  therefore initiated or, to the Company's,  the MHC's                or the Bank's knowledge,  threatened by the Commission,  the OTS,                the FDIC, or any state authority.

          (c)  At the Closing Date, the Agent shall have received:

                                       21

               (1) The  favorable  opinion,  dated  as of the  Closing  Date and                addressed to the Agent and for its benefit, of Luse Lehman Gorman                Pomerenk & Schick,  special counsel for the Company,  the MHC and                the Bank, in form and substance to the effect that:

                    (i) The  Company has been duly  incorporated  and is validly                existing as a corporation under the laws of the United States.

                    (ii) The Company has  corporate  power and authority to own,                lease and operate its  properties  and to conduct its business as                described in the Registration Statement and the Prospectus.

                    (iii) The Bank has been organized and is a validly  existing                federally chartered savings and loan association in capital stock                form of organization,  authorized to conduct its business and own                its property as described in the  Registration  Statement and the                Prospectus. All of the outstanding capital stock of the Bank upon                completion  of the Offering  will be duly  authorized  and,  upon                payment  therefor,   will  be  validly  issued,  fully  paid  and                non-assessable  and will be owned by the Company,  free and clear                of any liens, encumbrances, claims or other restrictions.

                    (iv) The Bank is a member of the  FHLB-Dallas.  The  deposit                accounts  of the Bank are  insured by the FDIC up to the  maximum                amount allowed under law and no proceedings  for the  termination                or revocation of such insurance are pending or, to such counsel's                Actual Knowledge, threatened; to the extent that such information                constitutes  matters  of law  and  legal  conclusions,  has  been                reviewed  by such  counsel  and is  accurately  described  in all                material respects.

                    (v) The MHC has been duly organized and is validly  existing                as a federally chartered mutual holding company,  duly authorized                to conduct its  business and own its  properties  as described in                the Registration Statement and Prospectus.

                    (vi) Upon  consummation  of the Offering,  immediately  upon                completion  thereof  subject to  compliance  with all  conditions                imposed by the OTS under the terms of the OTS' approval order, in                an amount as described in the Prospectus, the authorized,  issued                and  outstanding  capital stock of the Company will be within the                range   set   forth  in  the   Prospectus   under   the   caption                Capitalization,  and no shares of Common Stock have been issued                prior  to the  Closing  Date;  at the time of the  Offering,  the                Shares  subscribed  for pursuant to the  Offering  will have been                duly and validly  authorized  for  issuance,  and when issued and                delivered by the Company  pursuant to the Plan against payment of                the consideration calculated as set forth in the Plan and

                                       22

               Prospectus,  will be duly and  validly  issued and fully paid and                non-assessable;  the  issuance  of the  Shares is not  subject to                preemptive  rights  and the terms and  provisions  of the  Shares                conform  in all  material  respects  to the  description  thereof





               contained in the Prospectus.  To such counsel's Actual Knowledge,                upon the issuance of the Shares, good title to the Shares will be                transferred  by the  Company to the  purchasers  thereof  against                payment  therefor,  subject  to such  claims  as may be  asserted                against the purchasers thereof by third-party claimants.

                    (vii) The execution  and delivery of this  Agreement and the                consummation of the transactions  contemplated  hereby, have been                duly and validly  authorized by all necessary  action on the part                of the  Company,  the MHC and the Bank;  and this  Agreement is a                valid and  binding  obligation  of the  Company,  the MHC and the                Bank,  enforceable  in accordance  with its terms,  except as the                enforceability   thereof  may  be  limited  by  (i)   bankruptcy,                insolvency,    reorganization,    moratorium,    conservatorship,                receivership  or other  similar  laws now or  hereafter in effect                relating to or affecting the  enforcement  of  creditors'  rights                generally or the rights of creditors of savings institutions, the                deposits  of which  are  insured  by the FDIC and  their  holding                companies, (ii) general equitable principles, (iii) laws relating                to the safety and  soundness of insured  depository  institutions                and their holding  companies,  and (iv)  applicable law or public                policy with respect to the  indemnification  and/or  contribution                provisions  contained herein,  including  without  limitation the                provisions of Sections 23A and 23B of the Federal Reserve Act and                except  that no  opinion  need be  expressed  as to the effect or                availability   of  equitable   remedies  or   injunctive   relief                (regardless  of whether such  enforceability  is  considered in a                proceeding in equity or at law).

                    (viii) The MHC  Application has been approved by the OTS and                the  Prospectus  has been  authorized  for use by the OTS, and no                action has been taken,  and to such  counsel's  Actual  Knowledge                none is pending or threatened,  to revoke any such  authorization                or approval.

                    (ix) The Plan has been duly adopted by the required  vote of                the  directors  of the Company,  the MHC and the Bank,  and based                upon the certificate of the inspector of election, by the members                of the Bank.

                    (x) Subject to the  satisfaction  of the  conditions  to the                OTS' approval of the Offering, no further approval, registration,                authorization,  consent or other order of any federal  regulatory                agency is required in connection  with the execution and delivery                of  this   Agreement,   the   issuance  of  the  Shares  and  the                consummation of the Offering, except as may be required under the                securities or blue sky laws of various jurisdictions (as to which                no opinion need be

                                       23

               rendered)  and  except  as may be  required  under  the rules and                regulations  of the NASD  and/or the NYSE (as to which no opinion                need  be  rendered).  To such  counsel's  Actual  Knowledge,  the                Offering  has  been  consummated  in  all  material  respects  in                accordance  with  MHC  Regulations,  except  that no  opinion  is                rendered  with  respect  to (a)  the  Registration  Statement  or                Prospectus,  which are covered by other  clauses of this opinion,                (b) the satisfaction of the  post-Offering  conditions in the OTS                Regulations or in the OTS approvals of the MHC  Application,  (c)                the securities or blue sky laws of various  jurisdictions,  and                (d) the rules and regulations of the NASD.

                    (xi) The Registration  Statement is effective under the 1933                Act,  and no stop order  suspending  the  effectiveness  has been                issued under the 1933 Act or proceedings  therefor  initiated or,                to such counsel's Actual Knowledge, threatened by the Commission.

                    (xii)  At  the  time  the  MHC  Application,  including  the                Prospectus  contained  therein,  was approved by the OTS, the MHC                Application, including the Prospectus contained therein, complied                as to form in all material  respects with the requirements of the                MHC  Regulations,  federal  law  and  all  applicable  rules  and                regulations  promulgated  thereunder  (other  than the  financial                statements,  the notes  thereto,  and other  tabular,  financial,                statistical and appraisal data included  therein,  as to which no                opinion need be rendered).

                    (xiii) At the time that the  Registration  Statement  became                effective,   (i)  the  Registration   Statement  (as  amended  or                supplemented,  if so amended  or  supplemented)  (other  than the                financial  statements,  the notes  thereto,  and  other  tabular,                financial, statistical and appraisal data included therein, as to                which no opinion  need be  rendered),  complied as to form in all                material  respects with the  requirements of the 1933 Act and the                1933 Act  Regulations,  and (ii) the  Prospectus  (other than the                financial  statements,  the notes  thereto,  and  other  tabular,                financial, statistical and appraisal data included therein, as to                which no opinion  need be  rendered)  complied  as to form in all                material respects with the requirements of the 1933 Act, the 1933                Act Regulations, the MHC Regulations and federal law.





                    (xiv) The terms and  provisions of the Shares of the Company                conform,  in all material  respects,  to the description  thereof                contained in the Registration  Statement and Prospectus,  and the                form of  certificate  used to  evidence  the Shares is in due and                proper form.

                    (xv) There are no legal or governmental  proceedings pending                or  threatened   which  are  required  to  be  disclosed  in  the                Registration Statement and Prospectus, other than those disclosed                therein, and to such counsel's

                                       24

               Actual Knowledge,  all pending legal and governmental proceedings                to which the Company,  the MHC or the Bank is a party or of which                any of their property is the subject,  which are not described in                the Registration Statement and the Prospectus, including ordinary                routine litigation incidental to the Company's,  the MHC's or the                Bank's business, are, considered in the aggregate, not material.

                    (xvi)  To such  counsel's  Actual  Knowledge,  there  are no                material  contracts,  indentures,   mortgages,  loan  agreements,                notes,  leases or other  instruments  required to be described or                referred to in the MHC Application, the Registration Statement or                the Prospectus or required to be filed as exhibits  thereto other                than those  described or referred to therein or filed as exhibits                thereto in the MHC Application, the Registration Statement or the                Prospectus.   The  description  in  the  MHC   Application,   the                Registration  Statement and the  Prospectus of such documents and                exhibits is accurate in all material respects and fairly presents                the information required to be shown.

                    (xvii) To such counsel's Actual Knowledge,  the Company, the                MHC and the Bank have  conducted  the  Offering,  in all material                respects,  in accordance with all applicable  requirements of the                Plan and  applicable  federal  law,  except  that no  opinion  is                rendered   with   respect  to  (a)  the  MHC   Application,   the                Registration Statement or Prospectus,  which are covered by other                clauses   of  this   opinion,   (b)  the   satisfaction   of  the                post-Offering  conditions  in the OTS  Regulations  or in the OTS                approval of the MHC Application, (c) the securities or blue sky                laws of various jurisdictions,  and (d) the rules and regulations                of the NASD. The Plan complies in all material  respects with all                applicable federal laws, rules, regulations, decisions and orders                including, but not limited to, the MHC Regulations;  no order has                been issued by the OTS, the  Commission,  the FDIC,  or any state                authority to suspend the  Offering or the use of the  Prospectus,                and no action for such purposes has been  instituted  or, to such                counsel's   Actual   Knowledge,   threatened   by  the  OTS,  the                Commission,  the FDIC,  or any state  authority and no person has                sought  to  obtain  regulatory  or  judicial  review of the final                action of the OTS, approving the Plan, the MHC Application or the                Prospectus.

                    (xviii) To such counsel's Actual Knowledge, the Company, the                MHC and the Bank have obtained all material licenses, permits and                other  governmental  authorizations  currently  required  for the                conduct of their  businesses and all such  licenses,  permits and                other  governmental  authorizations are in full force and effect,                and  the  Company,  the  MHC and  the  Bank  are in all  material                respects  complying  therewith,  except where the failure to have                such licenses,  permits and other governmental  authorizations or                the  failure  to be in  compliance  therewith  would  not  have a                material adverse effect on the

                                       25

               business  or  operations  of the Bank,  the MHC and the  Company,                taken as a whole.

                    (xix)  To  such  counsel's  Actual  Knowledge,  neither  the                Company,  the MHC nor the Bank is in violation of its articles of                incorporation   and  bylaws  or  its  Charter   and  bylaws,   as                appropriate or, to such counsel's Actual Knowledge, in default or                violation  of any  obligation,  agreement,  covenant or condition                contained in any contract,  indenture,  mortgage, loan agreement,                note,  lease  or  other  instrument  to which it is a party or by                which it or its property may be bound,  except for such  defaults                or violations  which would not have a material  adverse impact on                the financial  condition or results of operations of the Company,                the MHC and the Bank on a consolidated  basis;  to such counsel's                Actual  Knowledge,  the execution and delivery of this Agreement,                the  occurrence  of the  obligations  herein  set  forth  and the                consummation  of the  transactions  contemplated  herein will not                conflict  with or  constitute a breach of, or default  under,  or                result in the  creation  or  imposition  of any  lien,  charge or                encumbrance  upon any property or assets of the Company,  the MHC                or  the  Bank  pursuant  to  any  material  contract,  indenture,





               mortgage,  loan  agreement,  note,  lease or other  instrument to                which the Company, the MHC or the Bank is a party or by which any                of them may be bound,  or to which any of the  property or assets                of the Company, the MHC or the Bank are subject; and, such action                will  not  result  in  any  violation  of the  provisions  of the                certificate  of  incorporation  or bylaws of the  Company  or the                Charter  or bylaws  of the MHC or the Bank or, to such  counsel's                Actual  Knowledge,  result  in any  violation  of any  applicable                federal law, act, regulation (except that no opinion with respect                to the securities and blue sky laws of various  jurisdictions  or                the rules or  regulations  of the NASD need be rendered) or order                or court order, writ, injunction or decree.

                    (xx) The  Company's  articles  of  incorporation  and bylaws                comply in all material  respects with the regulations of the OTS.                The Bank's and MHC's  charter and bylaws  comply in all  material                respects with the rules and regulations of the OTS.

                    (xxi)  To  such  counsel's  Actual  Knowledge,  neither  the                Company,  the MHC nor the Bank is in violation  of any  directive                from  the OTS or the  FDIC to make  any  material  change  in the                method of conducting its respective business.

                    (xxii) The information in the Prospectus  under the captions                Regulation, The Stock Offering,  Restrictions on Acquisition                of  the  Alamogordo   Financial  and   Alamogordo   Federal  and                Description  of Capital Stock of the  Alamogordo  Financial, to                the extent that such information constitutes

                                       26

               matters  of  law,  summaries  of  legal  matters,   documents  or                proceedings,  or legal  conclusions,  has been  reviewed  by such                counsel and is correct in all material  respects.  The discussion                of  statutes  or  regulations  described  or  referred  to in the                Prospectus   are  accurate   summaries  and  fairly  present  the                information   required  to  be  shown.  The  information  in  the                Prospectus relating to the tax consequences of the stock offering                has been  reviewed  by such  counsel  and  fairly  describes  the                opinions  rendered  by Luse Lehman  Gorman  Pomerenk & Schick and                _____________________  to the Company,  the MHC and the Bank with                respect to such matters.

                    (xxiii) The  Company  and the MHC have been duly  registered                and are in good  standing as savings and loan  holding  companies                under the HOLA.

                    (xxiv) In addition, such counsel shall state that during the                preparation of the MHC Application,  the  Registration  Statement                and the Prospectus, they participated in conferences with certain                officers of, the independent public and internal accountants for,                and other  representatives of the Company,  the MHC and the Bank,                at which  conferences  the contents of the MHC  Application,  the                Registration  Statement and the  Prospectus  and related  matters                were  discussed  and,  while such counsel have not  confirmed the                accuracy or completeness of or otherwise verified the information                contained in the MHC Application,  the Registration  Statement or                the  Prospectus,  and do not assume any  responsibility  for such                information,   based  upon  such  conferences  and  a  review  of                documents deemed relevant for the purpose of rendering their view                (relying as to materiality as to factual  matters on certificates                of officers and other factual representations by the Company, the                MHC and the Bank), nothing has come to their attention that would                lead them to believe that the MHC  Application,  the Registration                Statement, the Prospectus, or any amendment or supplement thereto                (other than the  financial  statements,  the notes  thereto,  and                other tabular, financial, statistical and appraisal data included                therein as to which no view need be rendered) contained an untrue                statement of a material  fact or omitted to state a material fact                required to be stated therein or necessary to make the statements                therein,  in light of the  circumstances  under  which  they were                made, not misleading.

         In giving such opinion, such counsel may rely as to all matters of fact on  certificates  of officers or directors of the Company,  the MHC and the Bank and certificates of public officials. The opinion of Luse Lehman Gorman Pomerenk & Schick  shall be  governed  by the  Legal  Opinion  Accord  (Accord)  of the American  Bar  Association  Section of  Business  Law (1991).  The term  Actual Knowledge  as used herein  shall have the meaning set forth in the Accord.  For purposes of such opinion, no proceedings shall be deemed to be pending, no order or stop order shall be deemed to be issued,  and no action shall be deemed to be instituted unless, in each case, a director or executive officer of the Company, the MHC or the Bank shall have received a copy of such

                                       27

proceedings,  order,  stop order or action.  In  addition,  such  opinion may be limited to present  statutes,  regulations and judicial  interpretations  and to





facts as they  presently  exist;  in rendering  such opinion,  such counsel need assume no  obligation  to revise or  supplement  it should the  present  laws be changed by legislative or regulatory action, judicial decision or otherwise; and such counsel need express no view, opinion or belief with respect to whether any proposed  or  pending  legislation,  if  enacted,  or any  proposed  or  pending regulations or policy statements issued by any regulatory agency, whether or not promulgated  pursuant to any such legislation,  would affect the validity of the Offering or any aspect  thereof.  Such counsel may assume that any  agreement is the valid and binding obligation of any parties to such agreement other than the Company, the MHC or the Bank.

         The  favorable  opinion,  dated as of the Closing Date and addressed to the  Agent and for their  benefit,  of the  Bank's  local  counsel,  in form and substance to the effect that, to the best of such counsel's  knowledge,  (i) the Company,  the MHC and the Bank have good and marketable  title to all properties and assets which are  material to the  business of the Company,  the MHC and the Bank and to those properties and assets described in the Registration  Statement and  Prospectus,  as owned  by them,  free  and  clear  of all  liens,  charges, encumbrances or  restrictions,  except such as are described in the Registration Statement and Prospectus, or are not material in relation to the business of the Company,  the MHC and the Bank  considered  as one  enterprise;  (ii) all of the leases and  subleases  material to the business of the Company,  the MHC and the Bank under which the Company, the MHC and the Bank hold properties, as described in the Registration Statement and Prospectus,  are in full force and effect; and (iii) the Bank is duly qualified as a foreign  corporation to transact  business and is in good standing in each  jurisdiction in which its ownership of property or  leasing  of  property  or  the  conduct  of  its  business   requires   such qualification,  unless  the  failure to be so  qualified  in one or more of such jurisdictions  would  not  have a  material  adverse  effect  on the  condition, financial or otherwise, or the business, operations or income of the Bank.

          (d)  At the Closing Date,  the Agent shall have received the favorable                opinion,  dated as of the  Closing  Date,  of Silver,  Freedman &                Taff, L.L.P.,  the Agent's counsel,  with respect to such matters                as the Agent may reasonably  require.  Such opinion may rely upon                the opinions of counsel to the Company, the MHC and the Bank, and                as  to  matters  of  fact,  upon  certificates  of  officers  and                directors of the Company, the MHC and the Bank delivered pursuant                hereto or as such counsel shall reasonably request.

          (e)  At the Closing Date, the Agent shall receive a certificate of the                Chief  Executive  Officer  and  the  Principal  Financial  and/or                Accounting  Officer of the Company,  the MHC and the Bank in form                and substance  reasonably  satisfactory  to the Agent's  Counsel,                dated as of such Closing Date, to the effect that:  (i) they have                carefully  reviewed the Prospectus and, in their opinion,  at the                time  the  Prospectus   became  authorized  for  final  use,  the                Prospectus  did not  contain any untrue  statement  of a material                fact or omit to state a material fact  necessary in order to make                the statements therein, in light of the circumstances under which                they were made, not misleading; (ii) since

                                       28

               the date the Prospectus became authorized for final use, no event                has occurred  which should have been set forth in an amendment or                supplement  to the  Prospectus  which has not been so set  forth,                including  specifically,  but without  limitation,  any  material                adverse  change in the condition,  financial or otherwise,  or in                the earnings, capital, properties or business of the Company, the                MHC or the Bank,  and the  conditions set forth in this Section 7                have been satisfied; (iii) since the respective dates as of which                information  is  given  in the  Registration  Statement  and  the                Prospectus,  there  has been no  material  adverse  change in the                condition, financial or otherwise, or in the earnings, capital or                properties of the Company, the MHC or the Bank, independently, or                of  the  Company,  the  MHC  and  the  Bank,  considered  as  one                enterprise,  whether  or not  arising in the  ordinary  course of                business;  (iv) the  representations  and warranties in Section 4                are true and  correct  with the same  force and  effect as though                expressly  made at and as of the Closing  Date;  (v) the Company,                MHC and the Bank have complied in all material  respects with all                agreements  and  satisfied  all  conditions  on their  part to be                performed  or  satisfied at or prior to the Closing Date and will                comply  in all  material  respects  with  all  obligations  to be                satisfied  by  them  after  the  Offering;  (vi)  no  stop  order                suspending the  effectiveness of the  Registration  Statement has                been initiated or, to the best knowledge of the Company,  the MHC                or the Bank, threatened by the Commission or any state authority;                (vii) no order  suspending the Offering or the  effectiveness  of                the  Prospectus  has  been  issued  and no  proceedings  for that                purpose are pending or, to the best knowledge of the Company, the                MHC or the Bank, threatened by the OTS, the Commission, the FDIC,                or any state  authority;  and (viii) to the best knowledge of the                Company,  the MHC or the  Bank,  no person  has  sought to obtain                review of the final action of the OTS approving the Plan.

          (f)  Prior to and at the Closing Date: (i) in the  reasonable  opinion                of the Agent, there shall have been no material adverse change in                the  condition,  financial  or  otherwise,  or in the earnings or                business of the Company, the MHC or the Bank independently, or of                the Company, the MHC and the Bank,  considered as one enterprise,





               from that as of the latest  dates as of which such  condition  is                set forth in the Prospectus other than  transactions  referred to                or contemplated  therein;  (ii) the Company,  the MHC or the Bank                shall not have  received  from the OTS or the FDIC any  direction                (oral or  written) to make any  material  change in the method of                conducting  their business with which it has not complied  (which                direction,  if any,  shall have been  disclosed  to the Agent) or                which   materially  and  adversely  would  affect  the  business,                operations or financial  condition or income of the Company,  the                MHC and the Bank taken as a whole; (iii) the Company, the MHC and                the Bank shall not have been in default  (nor shall an event have                occurred  which,  with  notice  or lapse  of time or both,  would                constitute a default) under any provision of

                                       29

               any   agreement  or  instrument   relating  to  any   outstanding                indebtedness;  (iv) no action,  suit or proceeding,  at law or in                equity or before or by any federal or state commission,  board or                other  administrative   agency,  shall  be  pending  or,  to  the                knowledge of the Company, the MHC or the Bank, threatened against                the  Company,  the MHC or the  Bank  or  affecting  any of  their                properties  wherein an  unfavorable  decision,  ruling or finding                would materially and adversely  affect the business,  operations,                financial  condition  or income of the  Company,  the MHC and the                Bank taken as a whole;  and (v) the Shares have been qualified or                registered for offering and sale or exempted  therefrom under the                securities  or blue sky laws of the  jurisdictions  as the  Agent                shall have reasonably  requested and as agreed to by the Company,                the MHC and the Bank.

          (g)  Concurrently  with the  execution  of this  Agreement,  the Agent                shall  receive a letter from The  Accounting &  Consulting  Group                L.L.P.  dated as of the date of the  Prospectus  and addressed to                the Agent:  (i) confirming that The Accounting & Consulting Group                L.L.P.  is a firm  of  independent  public  accounts  within  the                meaning  of Rule 101 of the Code of  Professional  Ethics  of the                American Institute of Certified Public Accountants and applicable                regulations  of the OTS and stating in effect that in its opinion                the  consolidated  financial  statements,  schedules  and related                notes of the Bank as of September  30, 1999 and 1998 and for each                of the three years in the period ended September 30, 1998, as are                included in the Prospectus and covered by their opinion  included                therein,  comply  as to form in all  material  respects  with the                applicable  accounting  requirements and related  published rules                and  regulations  of the OTS and the 1933 Act;  (ii)  stating  in                effect that, on the basis of certain agreed upon  procedures (but                not an audit  in  accordance  with  generally  accepted  auditing                standards)  consisting  of a  reading  of  the  latest  available                unaudited interim  consolidated  financial statements of the Bank                prepared by the Bank, a reading of the minutes of the meetings of                the Board of Directors and members of the Bank and  consultations                with  officers  of  the  Bank   responsible   for  financial  and                accounting matters,  nothing came to their attention which caused                them to believe  that:  (A) the  unaudited  financial  statements                included in the  Prospectus  are not in conformity  with the 1933                Act, applicable accounting  requirements of the OTS and generally                accepted  accounting  principles applied on a basis substantially                consistent with that of the audited financial statements included                in the Prospectus;  or (b) during the period from the date of the                latest unaudited  consolidated  financial  statements included in                the  Prospectus to a specified  date not more than three business                days  prior to the  date of the  Prospectus,  except  as has been                described   in  the   Prospectus,   there  was  any  increase  in                borrowings, other than normal deposit fluctuations,  by the Bank;                or (c) there was any decrease in the  consolidated  net assets of                the Bank at the date of such letter as compared with amounts

                                       30

               shown in the latest unaudited consolidated statement of condition                included in the  Prospectus;  and (iii) stating that, in addition                to  the  audit  referred  to in  their  opinion  included  in the                Prospectus and the  performance of the procedures  referred to in                clause (ii) of this  subsection  (f), they have compared with the                general  accounting records of the Bank, which are subject to the                internal  controls of the Bank, the  accounting  system and other                data prepared by the Bank, directly from such accounting records,                to the extent  specified  in such  letter,  such  amounts  and/or                percentages  set  forth  in  the  Prospectus  as  the  Agent  may                reasonably request; and they have reported on the results of such                comparisons.

          (h)  At the Closing  Date,  the Agent shall receive a letter dated the                Closing Date,  addressed to the Agent,  confirming the statements                made by The  Accounting & Consulting  Group L.L.P.  in the letter                delivered by it pursuant to subsection (f) of this Section 7, the                specified  date  referred to in clause (ii) of  subsection  (f)





               thereof to be a date specified in such letter, which shall not be                more than three business days prior to the Closing Date.

          (i)  At the Closing  Date,  the Agent  shall  receive a letter from RP                Financial LC, dated the date thereof and addressed to counsel for                the Agent (i)  confirming  that said firm is  independent  of the                Company,  the MHC and the Bank and is  experienced  and expert in                the area of corporate  appraisals  within the meaning of Title 12                of the Code of Federal Regulations, Section 563b.7(f)(1)(i), (ii)                stating  in  effect  that the  Appraisal  prepared  by such  firm                complies   in  all   material   respects   with  the   applicable                requirements of Title 12 of the Code of Federal Regulations,  and                (iii)  further  stating that their  opinion of the  aggregate pro                forma market value of the Company, the MHC and the Bank expressed                in  their  Appraisal  dated as of  December  __,  1999,  and most                recently updated, remains in effect.

          (j)  The Company,  the MHC and the Bank shall not have sustained since                the  date of the  latest  financial  statements  included  in the                Prospectus  any material loss or  interference  with its business                from fire,  explosion,  flood or other  calamity,  whether or not                covered  by  insurance,  or from any  labor  dispute  or court or                governmental action, order or decree, otherwise than as set forth                or contemplated in the Registration  Statement and Prospectus and                since the  respective  dates as of which  information is given in                the Registration  Statement and Prospectus,  there shall not have                been any change in the long- term debt of the Company, the MHC or                the Bank other than debt  incurred in relation to the purchase of                Shares  by the  Bank's  Eligible  Plans,  or any  change,  or any                development  involving a prospective  change, in or affecting the                general affairs,  management,  financial position,  stockholders'                equity or  results  of  operations  of the  Company  or the Bank,                otherwise than as set forth or

                                       31

               contemplated in the  Registration  Statement and Prospectus,  the                effect of  which,  in any such case  described  above,  is in the                Agent's reasonable judgment  sufficiently material and adverse as                to make it  impracticable  or  inadvisable  to  proceed  with the                Subscription  Offering or the delivery of the Shares on the terms                and in the manner contemplated in the Prospectus.

          (k)  At or prior to the Closing Date, the Agent shall  receive:  (i) a                copy of the letters from the OTS  approving  the MHC  Application                and  authorizing  the use of the  Prospectus;  (ii) a copy of the                order from the Commission  declaring the  Registration  Statement                effective;  (iii)  certificate  of  good  standing  from  the OTS                evidencing  the good standing of the Company;  (iv) a certificate                from the FDIC evidencing the Bank's insurance of accounts;  (v) a                certificate of the FHLB-Dallas  evidencing the Bank's  membership                thereof; (vi) a certificate from the OTS evidencing the Company's                and the MHC's  standing as  registered  savings and loan  holding                companies;  (vii) a copy of the Bank's federal stock charter; and                (viii) a copy of the Company's federal charter; and (viii) a copy                of the MHC's federal charter.

          (l)  Subsequent to the date hereof,  there shall not have occurred any                of the  following:  (i) a suspension  or limitation in trading in                securities  generally  on the New York Stock  Exchange  or in the                over-the-counter  market,  or quotations  halted generally on the                Nasdaq, or minimum or maximum prices for trading have been fixed,                or maximum ranges for prices for securities have been required by                either  of  such  exchanges  or  the  NASD  or by  order  of  the                Commission or any other  governmental  authority;  (ii) a general                moratorium on the operations of commercial banks, federal savings                institutions  or  a  general  moratorium  on  the  withdrawal  of                deposits from commercial  banks or federal  savings  institutions                declared  by federal  authorities;  (iii) the  engagement  by the                United  States  in   hostilities   which  have  resulted  in  the                declaration, on or after the date hereof, of a national emergency                or war; or (iv) a material decline in the price of equity or debt                securities if the effect of such a declaration or decline, in the                Agent's   reasonable   judgement,   makes  it   impracticable  or                inadvisable  to proceed  with the Offering or the delivery of the                shares  on  the  terms  and  in the  manner  contemplated  in the                Registration Statement and the Prospectus.

          (m)  At or prior to the Closing Date,  counsel to the Agent shall have                been  furnished  with such  documents  and  opinions  as they may                reasonably  require for the purpose of enabling them to pass upon                the  sale  of the  Shares  as  herein  contemplated  and  related                proceedings   or  in  order  to  evidence   the   occurrence   or                completeness of any of the representations or warranties,  or the                fulfillment of any of the conditions,  herein contained;  and all                proceedings  taken  by  the  Company,  the  MHC or  the  Bank  in                connection with the Offering and the sale

                                       32





               of the Shares as herein  contemplated  shall be  satisfactory  in                form and substance to the Agent and its counsel.

         Section 8. Indemnification.

          (a)  The Company,  the MHC and the Bank jointly and severally agree to                indemnify and hold harmless the Agent,  its  respective  officers                and directors, employees and agents, and each person, if any, who                controls  the Agent  within the meaning of Section 15 of the 1933                Act or Section  20(a) of the 1934 Act,  against any and all loss,                liability, claim, damage or expense whatsoever (including but not                limited to settlement expenses), joint or several, that the Agent                or any of them may  suffer  or to which  the  Agent  and any such                persons may become subject under all applicable  federal or state                laws or  otherwise,  and to promptly  reimburse the Agent and any                such  persons  upon  written  demand for any  expense  (including                reasonable  fees and  disbursements  of counsel)  incurred by the                Agent or any of them in connection with investigating,  preparing                or  defending  any  actions,   proceedings  or  claims   (whether                commenced  or  threatened)  to the extent  such  losses,  claims,                damages,  liabilities  or actions:  (i) arise out of or are based                upon any  untrue  statement  or  alleged  untrue  statement  of a                material  fact  contained in the  Registration  Statement (or any                amendment or supplement thereto), preliminary or final Prospectus                (or any amendment or supplement thereto), the MHC Application (or                any  amendment  or  supplement  thereto),  or any  instrument  or                document  executed by the  Company,  the MHC or the Bank or based                upon written information  supplied by the Company, the MHC or the                Bank filed in any state or  jurisdiction  to  register or qualify                any or all of the Shares or to claim an exemption  therefrom,  or                provided to any state or  jurisdiction to exempt the Company as a                broker-dealer  or  its  officers,   directors  and  employees  as                broker-dealers  or  agent,  under  the  securities  laws  thereof                (collectively,  the Blue  Sky  Application),  or any  document,                advertisement,    oral   statement   or   communication   (Sales                Information)  prepared,  made or executed by or on behalf of the                Company,  the MHC or the Bank with  their  consent  or based upon                written  or oral  information  furnished  by or on  behalf of the                Company,  the  MHC or the  Bank,  whether  or  not  filed  in any                jurisdiction,  in order to qualify or  register  the Shares or to                claim an exemption  therefrom  under the securities laws thereof;                (ii)  arise  out of or are based  upon the  omission  or  alleged                omission  to  state  in  any  of  the   foregoing   documents  or                information,  a material  fact  required to be stated  therein or                necessary  to  make  the  statements  therein,  in  light  of the                circumstances  under  which they were made,  not  misleading;  or                (iii) arise from any theory of liability  whatsoever  relating to                or arising from or based upon the Registration  Statement (or any                amendment or supplement thereto), preliminary or final Prospectus                (or any amendment or supplement thereto), the MHC Application

                                       33

               (or  any   amendment  or  supplement   thereto),   any  Blue  Sky                Application   or  Sales   Information   or  other   documentation                distributed in connection with the Offering;  provided,  however,                that no  indemnification  is required under this paragraph (a) to                the extent such losses, claims,  damages,  liabilities or actions                arise out of or are based upon any untrue  material  statement or                alleged  untrue  material  statement in, or material  omission or                alleged material  omission from, the  Registration  Statement (or                any  amendment  or  supplement  thereto),  preliminary  or  final                Prospectus  (or any  amendment or  supplement  thereto),  the MHC                Application  (or any amendment or supplement  thereto),  any Blue                Sky Application or Sales Information made in reliance upon and in                conformity with information  furnished in writing to the Company,                the MHC or the Bank by the  Agent or its  counsel  regarding  the                Agent  provided,  that it is agreed and understood  that the only                information  furnished in writing to the Company,  the MHC or the                Bank  by the  Agent  regarding  the  Agent  is set  forth  in the                Prospectus;  and,  provided  further,  that such  indemnification                shall be to the extent  permitted by the  Commissioner,  the OTS,                the FDIC and the Board of Governors of the Federal  Reserve.  The                indemnification  provided for in this  paragraph (a) shall not be                applicable with respect to any loss, liability, claim, damage, or                expense  whatsoever if it is  determined  by final  judgment of a                court  having  jurisdiction  over  the  matter  that  such  loss,                liability, claim, damage or expense was primarily a result of the                Agent's willful misconduct or gross negligence.

          (b)  The Agent agrees to indemnify and hold harmless the Company,  the                MHC and the Bank,  their  directors and officers and each person,                if any, who controls the Company,  the MHC or the Bank within the                meaning of  Section  15 of the 1933 Act or  Section  20(a) of the                1934 Act against any and all loss,  liability,  claim,  damage or                expense  whatsoever  (including  but not  limited  to  settlement                expenses),  joint or  several,  which they,  or any of them,  may                suffer or to which they, or any of them may become  subject under                all  applicable  federal  and  state  laws or  otherwise,  and to                promptly  reimburse the Company,  the MHC, the Bank, and any such                persons   upon  written   demand  for  any  expenses   (including





               reasonable fees and  disbursements of counsel)  incurred by them,                or any of them, in connection  with  investigating,  preparing or                defending any actions,  proceedings or claims (whether  commenced                or  threatened)  to the  extent  such  losses,  claims,  damages,                liabilities  or  actions:  (i) arise out of or are based upon any                untrue  statement or alleged untrue  statement of a material fact                contained  in the  Registration  Statement  (or any  amendment or                supplement  thereto),  the MHC  Application  (or any amendment or                supplement thereto),  the preliminary or final Prospectus (or any                amendment or supplement  thereto),  any Blue Sky  Application  or                Sales  Information,  (ii) are based upon the  omission or alleged                omission  to state in any of the  foregoing  documents a material                fact required to be stated therein

                                       34

               or necessary to make the statements  therein, in the light of the                circumstances  under  which they were made,  not  misleading,  or                (iii) arise from any theory of liability  whatsoever  relating to                or arising from or based upon the Registration  Statement (or any                amendment or supplement thereto), preliminary or final Prospectus                (or any amendment or supplement thereto), the MHC Application (or                any amendment or supplement  thereto),or any Blue Sky Application                or  Sales  Information  or  other  documentation  distributed  in                connection with the Offering; provided, however, that the Agent's                obligations  under this Section 8(b) shall exist only if and only                to the extent (i) that such untrue  statement  or alleged  untrue                statement was made in, or such material fact or alleged  material                fact  was  omitted  from,  the  Registration  Statement  (or  any                amendment  or  supplement  thereto),  the  preliminary  or  final                Prospectus  (or any  amendment or  supplement  thereto),  the MHC                Application (or any amendment or supplement thereto), or any Blue                Sky  Application  or Sales  Information  in reliance  upon and in                conformity with information  furnished in writing to the Company,                the MHC or the Bank by the  Agent or its  counsel  regarding  the                Agent,  provided,  that it is agreed and understood that the only                information  furnished in writing to the Company,  the MHC or the                Bank  by the  Agent  regarding  the  Agent  is set  forth  in the                Prospectus.  The  indemnification  provided for in this Section 8                (b) shall not be applicable with respect to any loss,  liability,                claim, damage, or expense whatsoever if it is determined by final                judgment of a court having jurisdiction over the matter that such                loss, liability,  claim, damage or expense was primarily a result                of the Company's,  the MHC's or the Bank's willful  misconduct or                gross negligence.

          (c)  Each  indemnified  party shall give prompt written notice to each                indemnifying  party of any  action,  proceeding,  claim  (whether                commenced  or  threatened),  or  suit  instituted  against  it in                respect of which indemnity may be sought  hereunder,  but failure                to so notify an indemnifying  party shall not relieve it from any                liability  which  it may have on  account  of this  Section  8 or                otherwise.  An  indemnifying  party  may  participate  at its own                expense in the  defense of such  action.  In  addition,  if it so                elects within a reasonable time after receipt of such notice,  an                indemnifying party,  jointly with any other indemnifying  parties                receiving  such  notice,  may assume  defense of such action with                counsel chosen by it and approved by the indemnified parties that                are defendants in such action,  unless such  indemnified  parties                reasonably object to such assumption on the ground that there may                be legal defenses available to them that are different from or in                addition to those  available to such  indemnifying  party.  If an                indemnifying  party  assumes  the  defense  of such  action,  the                indemnifying  parties  shall  not be  liable  for  any  fees  and                expenses  of  counsel  for  the  indemnified   parties   incurred                thereafter in connection  with such action,  proceeding or claim,                other than reasonable costs

                                       35

               of investigation.  In no event shall the indemnifying  parties be                liable for the fees and expenses of more than one  separate  firm                of attorneys (and any special  counsel that said firm may retain)                for each  indemnified  party in  connection  with any one action,                proceeding  or claim or separate but similar or related  actions,                proceedings or claims in the same jurisdiction arising out of the                same general allegations or circumstances.

          (d)  The  agreements  contained  in this  Section  8 and in  Section 9                hereof and the representations and warranties of the Company, the                MHC  and the  Bank  set  forth  in this  Agreement  shall  remain                operative  and in full  force and effect  regardless  of: (i) any                investigation  made by or on behalf  of agent or their  officers,                directors or controlling persons,  agent or employees or by or on                behalf  of the  Company,  the MHC or the  Bank  or any  officers,                directors  or  controlling  persons,  agent or  employees  of the                Company,  the  MHC or the  Bank;  (ii)  delivery  of and  payment                hereunder  for the  Shares;  or  (iii)  any  termination  of this





               Agreement.

         Section 9.  Contribution.  In order to provide  for just and  equitable contribution  in  circumstances  in which the  indemnification  provided  for in Section 8 is due in  accordance  with its terms but is for any reason  held by a court to be unavailable  from the Company,  the MHC, the Bank or the Agent,  the Company,  the MHC,  the Bank and the Agent  shall  contribute  to the  aggregate losses, claims, damages and liabilities (including any investigation,  legal and other  expenses  incurred in connection  with, and any amount paid in settlement of, any action,  suit or proceeding of any claims asserted,  but after deducting any  contribution  received by the Company,  the MHC, the Bank or the Agent from persons  other  than  the  other  party  thereto,  who may  also be  liable  for contribution)  in such  proportion  so that the  Agent is  responsible  for that portion  represented by the percentage  that the fees paid to the Agent pursuant to  Section 2 of this  Agreement  (not  including  expenses)  bears to the gross proceeds  received by the Company  from the sale of the Shares in the  Offering, and the Company,  the MHC and the Bank shall be responsible for the balance. If, however,  the allocation provided above is not permitted by applicable law or if the indemnified  party failed to give the notice required under Section 8 above, then each indemnifying  party shall contribute to such amount paid or payable by such indemnified  party in such proportion as is appropriate to reflect not only such relative fault of the Company, the MHC and the Bank on the one hand and the Agent on the other in connection with the statements or omissions which resulted in such losses,  claims,  damages or  liabilities  (or actions,  proceedings  or claims in respect  thereto),  but also the  relative  benefits  received  by the Company,  the MHC and the Bank on the one hand and the Agent on the  other  from the Offering (before deducting expenses). The relative fault shall be determined by  reference  to,  among other  things,  whether  the untrue or alleged  untrue statement  of a material  fact or the  omission  or alleged  omission to state a material fact relates to information supplied by the Company, the MHC and/or the Bank on the one hand or the Agent on the other and the parties' relative intent, good faith,  knowledge,  access to  information  and  opportunity  to correct or prevent such statement or omission. The Company, the MHC, the Bank and the Agent agree that it would not be just and equitable if  contribution  pursuant to this Section 9 were determined by pro-rata allocation or by any other

                                       36

method  of   allocation   which  does  not  take  into  account  the   equitable considerations  referred to above in this  Section 9. The amount paid or payable by  an  indemnified  party  as a  result  of  the  losses,  claims,  damages  or liabilities (or actions,  proceedings or claims in respect thereof)  referred to above in this  Section 9 shall be deemed to include any legal or other  expenses reasonably  incurred by such indemnified party in connection with  investigating or defending any such action,  proceeding or claim. It is expressly  agreed that the Agent shall not be liable for any loss, liability,  claim, damage or expense or be required  to  contribute  any amount  which in the  aggregate  exceeds the amount paid (excluding reimbursable expenses) to the Agent under this Agreement. It is understood  that the above stated  limitation on the Agent's  liability is essential  to the  Agent and that the Agent  would  not have  entered  into this Agreement  if such  limitation  had not been  agreed to by the  parties  to this Agreement.  No person found guilty of any fraudulent  misrepresentation  (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to  contribution from any person who was not found guilty of such  fraudulent  misrepresentation. The  obligations  of the Company,  the MHC and the Bank under this Section 9 and under Section 8 shall be in addition to any liability  which the Company and the Bank may  otherwise  have.  For purposes of this Section 9, each of the Agent's, the Company's,  the MHC or the Bank's officers and directors and each person, if any,  who  controls  the Agent or the  Company or the MHC or the Bank within the meaning  of the  1933  Act and the  1934 Act  shall  have  the  same  rights  to contribution as the Agent, the Company,  the MHC or the Bank. Any party entitled to contribution, promptly after receipt of notice of commencement of any action, suit,  claim or  proceeding  against  such party in respect of which a claim for contribution may be made against another party under this Section 9, will notify such party from whom  contribution may be sought,  but the omission to so notify such party shall not relieve the party from whom contribution may be sought from any other  obligation it may have hereunder or otherwise than under this Section 9.

         Section 10. Survival of Agreements,  Representations  and  Indemnities. The respective  indemnities of the Company,  the MHC, the Bank and the Agent and the representations and warranties and other statements of the Company, the MHC, the Bank and the Agent set forth in or made  pursuant  to this  Agreement  shall remain in full force and effect,  regardless of any  termination or cancellation of this Agreement or any  investigation  made by or on behalf of the Agent,  the Company,  the MHC, the Bank or any  controlling  person referred to in Section 8 hereof,  and shall  survive the  issuance of the Shares,  and any  successor  or assign of the Agent,  the Company,  the MHC, the Bank, and any such  controlling person  shall  be  entitled  to  the  benefit  of  the  respective   agreements, indemnities, warranties and representations.

         Section 11.  Termination.  The Agent may  terminate  this  Agreement by giving  the  notice  indicated  below in this  Section 11 at any time after this Agreement becomes effective as follows:

          (a)  In the  event  the  Company  fails to sell the  required  minimum                number of the Shares by _________,  2000, and in accordance  with                the provisions of the Plan or as required by the MHC Regulations,                and applicable law, this Agreement shall terminate upon refund by                the Company to each person who has  subscribed for or ordered any                of the Shares the full amount which it may





                                       37

               have  received  from  such  person,  together  with  interest  as                provided in the Prospectus,  and no party to this Agreement shall                have any obligation to the other hereunder, except for payment by                the  Company,  the MHC and/or  the Bank as set forth in  Sections                2(a), 6, 8 and 9 hereof.

          (b)  If any of the  conditions  specified  in Section 7 shall not have                been  fulfilled  when and as  required by this  Agreement  unless                waived in writing, or by the Closing Date, this Agreement and all                of the Agent's  obligations  hereunder  may be  cancelled  by the                Agent  by  notifying  the  Company,  the MHC and the Bank of such                cancellation in writing or by telegram at any time at or prior to                the  Closing  Date,  and any such  cancellation  shall be without                liability  of any party to any other  party  except as  otherwise                provided in Sections 2(a), 6, 8 and 9 hereof.

          (c)  If the Agent  elects to terminate  this  Agreement as provided in                this Section, the Company, the MHC and the Bank shall be notified                promptly by telephone or telegram, confirmed by letter.

         The Company,  the MHC and the Bank may terminate  this Agreement in the event the Agent is in material breach of the  representations  and warranties or covenants  contained  in Section 5 and such  breach has not been cured after the Company,  the MHC and the Bank  have  provided  the  Agent  with  notice of such breach.

         This Agreement may also be terminated by mutual written  consent of the parties hereto.

         Section 12. Notices.  All  communications  hereunder,  except as herein otherwise specifically  provided,  shall be mailed in writing and if sent to the Agent shall be mailed,  delivered or telegraphed and confirmed to Charles Webb & Company,  a Division of Keefe,  Bruyette & Woods,  Inc., 211 Bradenton,  Dublin, Ohio 43017-3514,  Attention: Patricia A. McJoynt, Executive Vice President (with a copy to Silver, Freedman & Taff, L.L.P., Attention: Martin L. Meyrowitz, P.C.) and, if sent to the Company, the MHC and the Bank, shall be mailed, delivered or telegraphed  and  confirmed  to the  Company,  the MHC and the  Bank at 500 10th Street, Alamogordo, New Mexico 88310-0690, Attention: Miles Ledgewood, President (with a copy to Luse Lehman Gorman Pomerenk & Schick, Attention: Eric Luse).

         Section  13.  Parties.  The  Company,  the MHC and the  Bank  shall  be entitled to act and rely on any request,  notice,  consent,  waiver or agreement purportedly  given on behalf of the Agent when the same shall have been given by the  undersigned.  The Agent shall be  entitled to act and rely on any  request, notice, consent, waiver or agreement purportedly given on behalf of the Company, the MHC or the Bank,  when the same shall have been given by the  undersigned or any other  officer of the Company,  the MHC or the Bank.  This  Agreement  shall inure  solely to the  benefit  of, and shall be  binding  upon,  the Agent,  the Company, the MHC, the Bank, and their respective  successors and assigns, and no other person  shall have or be  construed to have any legal or equitable  right, remedy

                                       38

or claim under or in respect of or by virtue of this  Agreement or any provision herein  contained.  It is  understood  and  agreed  that this  Agreement  is the exclusive agreement among the parties hereto, and supersedes any prior agreement among the  parties  and may not be varied  except in  writing  signed by all the parties.

         Section 14. Closing.  The closing for the sale of the Shares shall take place on the Closing Date at such location as mutually  agreed upon by the Agent and the Company,  the MHC and the Bank. At the closing, the Company, the MHC and the Bank shall deliver to the Agent in next day funds the commissions,  fees and expenses  due and owing to the Agent as set forth in Sections 2 and 6 hereof and the  opinions  and  certificates  required  hereby  and other  documents  deemed reasonably  necessary by the Agent shall be executed and delivered to effect the sale of the  Shares as  contemplated  hereby  and  pursuant  to the terms of the Prospectus.

         Section 15. Partial Invalidity.  In the event that any term,  provision or covenant herein or the application  thereof to any  circumstance or situation shall be invalid or unenforceable, in whole or in part, the remainder hereof and the application of said term,  provision or covenant to any other  circumstances or situation shall not be affected thereby, and each term, provision or covenant herein shall be valid and enforceable to the full extent permitted by law.

         Section  16.  Construction.   This  Agreement  shall  be  construed  in accordance with the laws of the State of Kansas.

         Section 17.  Counterparts.  This  Agreement may be executed in separate counterparts,  each of which so executed and delivered shall be an original, but all of which together shall constitute but one and the same instrument.

         If the  foregoing  correctly  sets  forth  the  arrangement  among  the Company,  the MHC, the Bank and the Agent, please indicate acceptance thereof in





the space provided below for that purpose, whereupon this letter and the Agent's acceptance shall constitute a binding agreement.

         Section 18. Entire Agreement.  This Agreement,  including schedules and exhibits hereto,  which are integral parts hereof and incorporated as though set forth in full,  constitutes the entire agreement between the parties  pertaining to the subject matter hereof  superseding  any and all prior or  contemporaneous oral  or  prior   written   agreements,   proposals,   letters   of  intent  and understandings,  and cannot be modified, changed, waived or terminated except by a writing  which  expressly  states  that it is an  amendment,  modification  or waiver, refers to this Agreement and is signed by the party

                                       39

to be charged.  No course of conduct or dealing  shall be  construed  to modify, amend or otherwise affect any of the provisions hereof.

                                               Very truly yours,

ALAMOGORDO FINANCIAL                           ALAMOGORDO FEDERAL SAVINGS AND CORPORATION                                    LOAN ASSOCIATION

By Its Authorized                              By Its Authorized Representative:                                Representative:

- ----------------------------                   --------------------------------- Miles Ledgerwood                               Miles Ledgerwood Chairman                                       Chairman

AF MUTUAL HOLDING COMPANY

By Its Authorized Representative:

- ---------------------------- Miles Ledgerwood Chairman

Accepted as of the date first above written

Charles Webb & Company, a Division Keefe, Bruyette & Woods, Inc.

By Its Authorized Representative:

- ----------------------------- Patricia A. McJoynt Executive Vice President

                                       40

A: Highlight the parts (if any) of this contract related to Insurance that should be reviewed by a lawyer. Details: Is there a requirement for insurance that must be maintained by one party for the benefit of the counterparty?
****
Q: Exhibit 10.2   Portions of this Exhibit have been omitted pursuant to a request for confidential treatment filed with the Securities and Exchange  Commission. The omissions have been indicated by asterisks (*****), and the omitted text has been filed separately with the  Securities and Exchange Commission.      CONTENT LICENSE, MARKETING AND SALES AGREEMENT    This CONTENT LICENSE, MARKETING AND SALES AGREEMENT (the Agreement) is entered into and  effective as of January 15, 2008, (the Effective Date) by and between eFashion Solutions, LLC, a New Jersey limited liability  company having its principal place of business at 80 Enterprise Avenue South, Secaucus, NJ 07094 (EFS) and Playboy.com,  Inc., a Delaware corporation with offices at 680 North Lake Shore Drive, Chicago, IL 60611 (Client, which shall include  affiliates controlling, controlled by or under common control with Playboy.com, Inc.).    WHEREAS, Client is in the business of, inter alia, developing, marketing, promoting, distributing and selling branded and  unbranded merchandise via physical media, worldwide, via mail order catalogs (the Catalogs) where orders are taken via  multiple order channels including online, phone, fax and mail and via the Internet through its PLAYBOY-branded and BUNNY  SHOP-branded e-commerce websites as designated on Exhibit 1 (the Websites) (the Catalogs and Websites shall be  collectively referred to as the Playboy Commerce Business).    WHEREAS, the parties intend that EFS will operate under license from Client the Playboy Commerce Business,  including, but not limited to, the marketing, promotion and distribution of branded, unbranded and co-branded soft and hard  goods which include but are not limited to men's and women's apparel, home, lingerie, men's and women's accessories, jewelry,  books and DVD's and related products (collectively, Merchandise) via the Catalogs and the Websites (including other Micro- Sites (as defined in Section 1.1(d)(vii))).    NOW THEREFORE, in consideration of the promises contained herein, the receipt and sufficiency of which are hereby  acknowledged, the parties hereto each intending to be legally bound, agree as follows:    1. Operation of the Playboy Commerce Business     1.1. Obligations of EFS.    (a) Operations. EFS, at its sole cost and expense, shall be solely responsible for (i) developing, designing,  operating, maintaining and distributing the Catalogs; (ii) developing, designing, operating, maintaining and hosting the Websites; (iii)  except as otherwise set forth in this Agreement, the creation (except for that provided by Client) and use of all content to be  displayed in the Catalogs and on the Websites; and (iv) marketing and promotion of the Playboy Commerce Business. EFS shall  be permitted to display on the bottom of each page of the Websites Powered by eFashionSolutions which shall appear  substantially as set forth in Exhibit 2, attached hereto and hereby incorporated by reference.

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   (b) Fulfillment Services. EFS, at its sole cost and expense or (with respect to pass-through expenses such as  shipping, gift wrapping, etc.) at the consumer's expense, shall be solely responsible for conducting all business activities related to  the Playboy Commerce Business, including, but not limited to the following activities: (i) setting the price consumers will pay for  Merchandise offered through the Catalogs and Websites and for shipping thereof; (ii) processing all Catalog and Website orders  placed by consumers, including, but not limited to, all picking, packing, billing, shipping, gift wrapping and other value-added  services necessary to process orders from order placement to delivery, which shall be performed substantially as set forth in  Exhibit 3, attached hereto and hereby incorporated by reference (collectively, Fulfillment Services); (iii) providing pricing, billing  and financial clearinghouse services in connection with the Playboy Commerce Business; (iv) handling all customer service matters  (provided, however, that Client and EFS shall agree upon a hot transfer process whereby non-e-commerce-related customer  calls will be rerouted); (v) handling all financial transactions related to the Playboy Commerce Business, including, but not limited  to, establishing merchant accounts with a banking institution to be approved by Client; (vi) handling all aspects of procuring  Merchandise to be made available for sale through the Playboy Commerce Business, including, without limitation, all warehouse  and inventory maintenance and control; and (vii) except as otherwise set forth in this Agreement, handling all advertising,  promotion and marketing relating to the Playboy Commerce Business. Client acknowledges that the efficient and cost effective  fulfillment of orders on the Websites will require that third parties that provide Merchandise to EFS under a Playboy license  adhere to certain shipping and packaging guidelines provided by EFS, and which comply with Client's packaging guidelines as set  forth in Exhibit 3. Client agrees to provide reasonable assistance to EFS to enable EFS to have such third parties agree to abide  by the EFS guidelines.    (c) Client Approval. All aspects of the Websites and the Catalogs, including, but not limited to, their look and  feel (including as set forth in Section 1.1(d)(iii) below), use of the Playboy Marks (as defined in Section 7.2), functionality,  models to be used and all Merchandise sold therein, shall be subject to Client's prior written approval, which shall not be  unreasonably withheld. Further, EFS acknowledges that Client reserves the right to change the names of the PlayboyStore and  ShopTheBunny/BunnyShop Catalog and Websites to new Client brands and/or to add names to be used provided that Client  provides EFS with no less than six (6) months prior written notice. In the event that names are changed, except to the extent that  there is an extenuating reason for such name change, EFS shall be permitted to continue to use domain names then in use for  purposes of Micro Sites and/or forwarding domains (i.e., driving traffic to the new names).    (d) Websites    (i) Unless otherwise agreed by the parties and provided that this Agreement is executed not later than  January 15, 2008, EFS agrees that no later than March 1, 2008, both Websites shall launch and be fully operational, with the  exception of the gift wrapping which EFS shall make available as set forth in the time and action calendar (attached hereto as  Exhibit 12 and hereby incorporated by reference) and local billing (pursuant to Section 3.1, below), and EFS shall be ready to  perform all aspects of administration of the Website business, including, but not limited to, all Fulfillment Services. In furtherance of  this launch

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   date, EFS and Client shall perform all activities and deliver all deliverables in accordance with the time and action calendar. Client  acknowledges that if it is unable to perform any obligations within the time period agreed to in the time and action calendar that the  launch of the Websites may be delayed accordingly.    (ii) Client and EFS acknowledge that design and functionality of the Websites consistent with best  practices for e-commerce is critical to ensure the maximum sales performance of the Websites and to maintain the goodwill of  Client's customers. EFS will utilize best industry practices to maintain the shopping areas of the Websites in order to ensure that  such areas feature functionality that is deemed best practice in the e-commerce industry and is updated with all content and brand  imagery necessary to keep the shopping areas of the Websites up-to-date and fresh, in all instances maintaining the high level of  brand integrity of the PLAYBOY brand while focusing on customer experience. From time to time, Client will provide updated  photo and brand elements for purposes of utilization by EFS in Website design.    (iii) In addition to any guidelines provided by Client, EFS shall use and comply with any style guides  provided by Client to ensure consistency among retail channels (e.g., graphics, patterns, colors, logos, etc.), visual brand displays  and seasonal color palettes. EFS shall maintain the shopping areas of the Websites consistent with the style guides (as modified for  e-commerce) to maximize sales, brand appearance and marketability. Client will provide new brand and content assets from time- to-time along with updated style guides in both digital and hard copies, and EFS will update the Websites and future Catalogs  accordingly within a commercially reasonable time following receipt. As of the Effective Date hereof, updated style guides are  provided twice per year. EFS will have not less than six (6) months advance notice of upcoming new style guides.    (iv) EFS will host all content displayed on the Websites on an EFS-hosted server provided by EFS at its  sole cost and expense. EFS may at its election use a reputable third party hosting service to host the Websites; provided,  however, that EFS shall nevertheless be responsible for ensuring the availability of the Websites as set forth in this Agreement.  EFS shall provide as required all updates of content on the Websites, including enhancements, modifications and additions thereto.   (v) EFS agrees to at all times during the Term use its best efforts to market the Websites no less diligently  than it does other online properties managed by EFS on behalf of third parties (including without limitation, maintaining best  practice functionality, search engine optimization tactics, utilizing customer acquisition and retention campaigns, etc.).    (vi) EFS shall take all reasonable measures to ensure the performance of each of the Websites, including,  at a minimum, availability at least ninety-nine and one-half percent (99.5%) of the time per month as averaged over any one (1)  month period, excepting scheduled maintenance or a Force Majeure Event (as defined in Section 14.7).    (vii) Subject to the prior, written approval of Client, which shall not be unreasonably withheld, EFS shall  have the right at its sole cost and expense to design and launch as many micro- and sub-domain websites as EFS deems  appropriate in order to take full

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   advantage of online marketing channels (collectively, Micro Sites); provided, however, that all such Micro Sites shall be  designed and maintained consistent with the terms of this Agreement. At a minimum, EFS agrees to launch a version of the  PlayboyStore.com Website, which does not contain products or content containing nudity, marital aid or massager Merchandise,  within forty-five (45) days following launch of the PlayboyStore.com Website.     (viii) Front-End Platform. In the event that EFS chooses to use the Demandware, Inc. (Demandware)  front-end platform software and services for the Websites, EFS shall enter into a separate agreement directly with Demandware;  provided, however, that the terms of any such agreement must be approved by Client in advance in writing.    (e) Catalogs    (i) EFS agrees that (A) the first issue of each of the Catalogs shall be sent to consumers by March 15,  2008; and (B) no later than March 1, 2008, EFS shall be ready to perform all aspects of administration of the Catalog business,  including, but not limited to, all Fulfillment Services.    (ii) EFS shall provide a copy of each Catalog to Client for review and approval not less than five (5)  business days prior to printing. EFS shall promptly make any changes to the Catalog as may be reasonably requested by Client.  No Catalog shall be sent to printing without the written approval of Client, which shall not be unreasonably withheld.    (f) Models and Photography. EFS agrees that all female models depicted in or in connection with the Playboy  Commerce Business shall be approved by Client and shall be Playmates (or other Playboy models, including, but not limited The  Girls Next Door) as requested by the Client unless otherwise mutually agreed in advance in writing by the parties. In addition,  EFS agrees to shoot major photography in connection with the Playboy Commerce Business in Los Angeles and in coordination  with Client, as requested by Client and in line with current and past practices (taking into account changes in Client's Catalog- related strategy) with respect to process, cost and frequency. EFS shall be responsible for all costs and expenses in connection  with such photography, including, but not limited to, payments to models and photographers, based upon an estimated schedule of  costs attached as Exhibit 4. EFS shall secure model and photographer releases in a form provided by Client and shall provide all  content created under this Section 1.1(f) to Client within thirty (30) days of creation. All such photographs shall be deemed  Playboy Content for purposes of this Agreement, for which EFS shall have a license to use during the Term solely in connection  with the Playboy Commerce Business and as is necessary to promote the Websites. During the Term, Client shall not be  permitted to sell or otherwise provide such photographs to third party retailers (except for those retailers operating under the  PLAYBOY brand) or Licensees (as defined in Section 2.4), without the prior written approval of EFS.     (i) Client shall own all content produced pursuant to Section 1.1(f) (whether or not actually used), and  EFS hereby assigns to Client all right, title and interest, including all rights in copyright, in and to the photographs and materials,  and agrees to cooperate with all reasonable requests by Client, and take all reasonable actions, to effect or perfect such  assignment. EFS hereby provides Client with an irrevocable power of attorney appointing Client as its irrevocable attorney-in-fact  coupled with an interest to execute all such assignments on

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   behalf of EFS in the event that EFS fails to do so within thirty (30) days following written request by Client. Client hereby grants  to EFS a limited and perpetual right and license to use such photographs and materials for research and forecasting purposes,  including, but not limited to, combining the same with reports and analytics concerning the performance of the Websites, providing  information to strategic partners to better define consumer purchasing habits, and for trend forecasting and planning purposes. In  addition, during the Term, EFS may use such photographs and materials to provide information to Client Licensees to better  define consumer purchasing habits, refine the design and performance of the Websites and EFS Portals on which the Merchandise  is sold in connection with any EFS Analysis (as defined below), and for marketing and planning purposes. For the avoidance of  doubt, no information provided to third parties under this Section 1.1(i) shall: (i) specifically or by inference identify or in any way  reference Client; (ii) disclose any proprietary information of Client; or (iii) disclose any personally identifiable information of or  otherwise identify any consumer of the Websites or the Catalogs.     (g) Compliance with Guidelines. EFS shall at all times comply with the provisions and limitations set forth in  Client's editorial and advertising guidelines, which are attached hereto as Exhibit 5 and hereby incorporated by reference, as the  same may be amended from time to time at Client's sole discretion, effective upon fifteen (15) business days prior written notice  to EFS (the Guidelines).    (h) Compliance with Laws. Throughout the Term, EFS shall be solely responsible for knowledge of and  compliance with all applicable international, federal, state and local laws, rules, regulations, ordinances, industry guidelines and  similar restrictions (collectively, Laws) in connection with operation of the Playboy Commerce Business. EFS shall be  responsible for monitoring such Laws and taking any actions necessary to keep compliant all aspects of the Playboy Commerce  Business, including, but not limited to, the Privacy Policy (as defined in Section 5.1(a)), as well as best practices relating to Direct  Marketing Association (DMA) Guidelines (as they relate to the DMA Privacy Promise, pander files, etc.).     (i) Product Placement. At no additional cost to Client, EFS will provide preferential placement in the Catalogs  and/or on the Websites, as requested by Client, for certain Merchandise from time-to-time, e.g. apparel, magazines, books,  DVD's, etc. or marketing campaigns that tie to events and initiatives of Client and its affiliates, consistent with Client's past  practices in the prior placement of such items in the Catalogs and/or on the Websites.    (j) Staffing/Retention of Client Employees. EFS agrees to staff the Playboy Commerce Business sufficiently to  operate and grow the Playboy Commerce Business. An initial organizational chart approved by both parties is attached as Exhibit  6, attached hereto and hereby incorporated by reference. EFS agrees to employ certain individuals who are currently employed  by the Client (names, titles and current salaries are listed in Exhibit 6), the hiring of whom shall be complete no later than March 1,  2008. Client shall coordinate with EFS regarding the termination of these employees and their subsequent hire by EFS. Each of  the hired employees shall be required to comply with all policies and procedures of EFS which are generally applicable to its  employees; provided however that levels of seniority and tenure of hired employees (as they relate to vacation time, etc.) will  carry over to EFS. Client shall have

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   input and approval rights regarding the hiring of key positions in connection with the Playboy Commerce Business, including  replacement personnel, which approval shall not be unreasonably withheld. EFS agrees that ***** primary responsibilities will  continue to be the Playboy Commerce Business.    (k) Keywords. EFS may use Playboy Marks as keyword-targeted advertising on any portal, search engine or  other website; provided, however that such use is directly related to the Merchandise available on the Playboy Commerce  Business or the promotion of the Websites. Any use of Playboy Marks as keywords not directly related to Merchandise shall be  subject to Client's prior written approval.     (l) Service Model Option. Client shall have the right upon not less than six (6) months prior written notice to  request that, at any time as of the third anniversary of the Effective Date, EFS provide its services to Client via a service model,  in which case, upon effective date of transition to a service model, EFS will no longer be a licensee but rather a vendor. In such  transition to a service model, the parties will work in good faith to establish a reasonably equivalent economic benefit for EFS  (adjusting for operational responsibilities and economic risk being transferred to Client). The parties agree that Client will not be  charged a higher fee than what is being made available by EFS to its other Clients for similar services. The terms of such  arrangement will allow for Client to recognize the top-line revenues from the Playboy Commerce Business as well as assume  responsibility for various operations of the business as determined by Client, with the remaining services to be provided by EFS.  In such event, EFS shall provide Client with all best practice services and tools that are provided to EFS' largest clients. The  parties further agree that in the event Client elects to receive services hereunder via the service model, during the transition to the  service model, the operation of the Websites will remain on the EFS core technology platform.     (m) Insurance. EFS shall maintain at all times during the Term of this Agreement insurance as provided below and  shall name Client, its parent company, subsidiaries and affiliated entities and their respective officers, directors, shareholders,  agents and employees as additional insureds to the extent of indemnity provided herein under its liability policies as follows:     (i) Commercial general liability insurance including premises/operations, broad form property damage,  independent contractors, and contractual liability covering EFS' obligations hereunder for bodily injury and property damage, with  a combined single limit of not less than $1,000,000 each occurrence and $6,000,000 umbrella coverage;     (ii) Workers' compensation insurance in statutory amounts covering EFS and its employees; and     (iii) Errors and omissions insurance, and employer's liability insurance in an amount not less than  $1,000,000 per accident/disease.     (iv) All insurance required above shall be carried with insurance companies licensed to do business in the  state(s) where operations are maintained with a rating

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   of no less than A-. EFS shall deliver to Client, upon execution of the Agreement, certificates of insurance as evidence of the  required coverages. EFS agrees that these policies shall not be canceled or materially changed without at least thirty (30) days'  prior written notice to Client. Such notice shall include written confirmation and details of replacement insurance coverages and  other material revisions to the policies, which shall be effective immediately upon any cancellation or material change in EFS'  policies in order that no gap in coverage results.     1.2. Obligations of Client.    (a) Client will provide instructions and specifications for linking to the Licensed Domain Names (as defined in  Section 7.3) from the EFS-hosted server.    (b) Client will provide image and descriptive content, the selection of which shall be at Client' discretion, related  to the Client Inventory (as defined in Section 2.2) as may be in Client's possession, subject to rights availability and the license  grant contained in Section 7.1 (collectively, the Playboy Content), for use by EFS in connection with the Playboy Commerce  Business. Client shall use commercially reasonable efforts to ensure that all digital images provided to EFS conform to the file  format and size requirements specified by EFS. Client will use commercially reasonable efforts to provide EFS with at least six (6)  months notice prior to providing any new brand imagery, brand elements or style guides, and EFS will prepare a time and action  calendar for the updating of respective sections of the Websites and/or Catalogs.    (c) Client shall be solely responsible for the design and maintenance of www.playboy.com (the Playboy Site).  Client agrees to place a persistent shopping button on the main navigation bar of the Playboy Site (with Shop Playboy or such  other wording as may be mutually agreed upon by the parties), and Client further agrees that the shopping button will be located  on the main navigation bar of all sub pages. Client will also promote the Playboy Commerce Business with calls to action in its  rotation of house ads throughout the Playboy Site (the placement of which to be determined by Client in its sole reasonable  discretion, taking into account conversion rates and click-through success), with creative to be provided by EFS and approved by  Client. EFS acknowledges that the Playboy Site is currently undergoing a redesign. The parties will work together in good faith to  provide additional promotion on the Playboy Site of the Playboy Commerce Business, which shall fit within context of the new  design of the Playboy Site. Notwithstanding the foregoing, Client agrees that the shopping button directing customers to the  Websites will continue to be located on the main navigation bar appearing above the fold on the Playboy Site and all sub pages.  Client and EFS will work together in good faith to provide additional promotion of the Websites licensed by EFS.    2. Merchandise.     2.1. Merchandise Assortment.     (a) The Merchandise mix shall be determined by EFS in its reasonable discretion in operating the business with  input and collaboration from Client, provided that EFS agrees it will merchandise individual items as directed by Client based on  factors such as alignment with Client's retail stores (for Bunny Shop only) or for new Client media initiatives (e.g., a new book,  special edition of PLAYBOY Magazine, etc.) with unit decisions made by

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   EFS in its reasonable discretion. The parties agree that there will be regular merchandising meetings between the parties to discuss  sales performance, fashion, brand and retail trends, and initiatives. It is contemplated that such meetings shall take place no less  than once per month during the first year of the Term and then no less than quarterly thereafter.     (b) The parties agree that the Merchandise mix as of the Effective Date for each of the Websites and Catalogs is  an approved baseline of categories and the general mix of Merchandise and that there will be no material deviations from such mix  without the mutual agreement of Client and EFS, provided however that (i) EFS shall use commercially reasonable efforts to work  with Client to align the merchandising of the Bunny Shop with that of Client's retail stores and (ii) EFS shall collaborate with Client  to reduce the amount of unbranded (i.e., non-Playboy branded) apparel from its current levels (currently ***** of all apparel and  ***** of the total Merchandise mix), which shall in no event comprise more than ***** of EFS' total Merchandise mix. For the  avoidance of doubt, Merchandise shall not include ticket sales to Client-sponsored or other events. For purposes of this  Agreement, the term branded Merchandise shall refer to Merchandise which contains or references any of the Playboy Marks  or is otherwise branded or labeled with a Playboy Mark, and the term unbranded Merchandise shall refer to Merchandise  which does not contain or make reference to any of the Playboy Marks.     (c) Notwithstanding the provisions of this Section 2.1, if Client determines in its sole discretion that certain  Merchandise must be removed or altered for legal reasons, EFS shall promptly take such action required by Client. If Client  requests that EFS change or discontinue any Merchandise for reasons other than legal, Client will provide EFS with sufficient  notice and a reasonable sell-off period to minimize any disruption to the Playboy Commerce Business and EFS shall comply. In  the event that the Merchandise required to be removed is a current item being sold and such removal results in an actual material  impact on revenues or Merchandise Gross Margin as demonstrated by EFS, EFS and Client will work together to agree on an  equitable adjustment to the Minimum Royalty.     2.2. Purchase and Use of Existing Inventory. EFS will purchase from Client all existing product inventory of Merchandise  held by or on behalf of Client in connection with the Playboy Commerce Business, including, but not limited to, back issues of  PLAYBOY Magazine held by Client as of forty-five (45) days after as of the Effective Date hereof, as determined by Client  (collectively, the Client Inventory), as set forth in Section 6.6. During the Term, Client Inventory supplied to EFS shall be sold  by EFS solely through the Playboy Commerce Business.     2.3. Transition Period. In addition, prior to launch of the Websites, Client (in collaboration with EFS) shall purchase new  and replenishment Merchandise on behalf of EFS for March 1, 2008 orders, with such Merchandise to be shipped to EFS  directly. For such orders, EFS shall pay the vendor in full, with such payments to be made directly to each vendor in accordance  with such vendor's payment terms, and therefore, the Merchandise purchased in connection with March 1, 2008 orders shall not  be subject to the discount for Client Inventory set forth in Section 6.6.     2.4. Licensees. Client shall notify each of its Licensees (as defined below) of the provisions of this Agreement relating to  the sale and provision of Merchandise to EFS. EFS

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   shall be permitted to deal directly with and purchase Merchandise directly from those third parties licensed by Client to produce  products under the PLAYBOY brand (Licensees). EFS shall be free to negotiate directly with Licensees, and Client will use  commercially reasonable efforts to assist EFS in securing favorable terms on pricing and service levels. EFS acknowledges,  however, that Client cannot guarantee that EFS will secure such favorable terms. EFS shall enter into separate agreements with all  Licensees and any such agreements shall supersede any agreement between Client and such Licensee solely with respect to EFS'  relationship with such Licensee, as approved by Client.     2.5. International Sales. For a period of one (1) year after launch of the Websites, EFS shall be permitted to fulfill orders  placed by customers in the UK and Australia *****; provided, however that: (a) EFS is solely responsible for the collection and  remittance of all regulations, tariffs, VAT and any other taxes or charges; and (b) during this period, EFS may not sell or otherwise  ship EFS Produced Merchandise apparel. During the foregoing one (1) year period (the US Shipping Period), EFS shall be  permitted to initiate negotiations for the terms of purchase of Merchandise from local Licensees in the territories. In the event that  EFS has not entered into meaningful negotiations with any Licensee within three (3) months following the end of the US Shipping  Period, or if negotiations do not result in an actual agreement within six (6) months following the end of the US Shipping Period,  then Client may remove such market(s) from the Territory (as defined in Section 3.4) in its sole discretion.     2.6. Manufacture of Merchandise.     (a) Subject to provisions in existing agreements as disclosed herein on Exhibit 7, which shall be updated from  time-to-time, Client's prior written consent and the Licensees' right of first refusal as set forth below, EFS shall be permitted to  design and manufacture, or arrange for third parties (which have been approved by Client in advance in writing, said approval not  to be unreasonably withheld) to manufacture on its behalf, products branded with the Playboy Marks to be sold on the Websites  and/or through the Catalogs (EFS Produced Merchandise). EFS agrees that it shall approach Licensees regarding any planned  EFS Produced Merchandise and give such Licensees a seven (7) day right of first refusal with respect to the design and  manufacture thereof, whereby EFS may set forth commercially reasonable requirements with respect to pricing, delivery and  product specifications. If such Licensee is unwilling or unable to comply with EFS' request, EFS shall be free to proceed with the  manufacturing of EFS Produced Merchandise as set forth in this Section 2.6. *****     (b) In EFS' discretion, EFS Produced Merchandise may be created in any product categories where there is no  exclusivity conflict with a Client Licensee, as set forth in Exhibit 7.     (c) Subject to Sections 2.6(a) and (b), EFS may subcontract the manufacture of EFS Produced Merchandise,  provided: (i) EFS notifies Client in advance of any intended supplier/subcontractor and obtains Client's prior written approval of  such supplier/subcontractor, which shall not be unreasonably withheld; (ii) EFS obtains from each such supplier/subcontractor an  executed written agreement in the form substantially identical to that attached hereto and made a part hereof as Exhibit 8; and (iii)  furnishes a copy of each such executed agreement to Client. EFS shall abide by, and shall ensure that any third-party

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   supplier/subcontractor it uses to design and/or manufacture any EFS Produced Merchandise abides by any design, manufacturing  and other guidelines of Client. At the end of each Year of the Term hereof and at any other time so requested by Client during the  Term, EFS shall provide Client with an updated list of the names and addresses of all manufacturing sources, subcontractors,  suppliers and others which have been engaged in the design and/or manufacture of EFS Produced Merchandise.     (d) EFS understands and agrees that any and all EFS Produced Merchandise and any other items bearing the  Playboy Marks or intended for use in connection with the EFS Produced Merchandise must be approved in accordance with the  approval process as set forth in Exhibit 9, attached hereto and hereby incorporated by reference. In the event Client fails to  provide its approval or disapproval of any or all things submitted to Client pursuant to this Section 2.6(d) within fourteen (14)  days of Client's receipt thereof, EFS may send written notice to Client advising no response was received. If Client does not  respond within five (5) days of Client's receipt thereof, then Client shall be deemed to have given disapproval.     2.7. Co-branding. EFS shall have the right to co-brand or co-market certain Merchandise, combining a Playboy Mark  with other current EFS clients, subject to Client's approval at Client's sole discretion as to the co-brand partner, the Merchandise  that will be co-branded and the appearance of the branding on the Merchandise. Any co-branding with non-EFS clients will be  subject to prior written approval by Client on a case by case basis. The parties agree that the co-branding or co-marketing of any  Merchandise shall be subject to a separate agreement to be negotiated between the parties, including provisions regarding the  royalties to be paid to Client for such Merchandise and any approval process to be followed.     2.8. Shopping Portal. EFS shall be permitted to sell Merchandise on EFS owned and operated shopping portal websites  (EFS Portals) subject in all respects to the standards, approvals and requirements applicable to the sale of Merchandise on the  Websites and provided that integration with third party brands and products is acceptable to Client, approval not to be  unreasonably withheld. EFS agrees that it will use the merchandising presence on the EFS Portals to also market the Websites in  order to drive additional customer acquisition.     2.9. Mass-Customized Merchandise. Client agrees that mass-customized Merchandise (i.e., Merchandise allowing  consumers to choose customizable options, including, but not limited to, color) shall be available for sale on the Websites and/or  through the Catalogs, such that customers may select and order pre-configured semi-customized Merchandise based upon  specifications that shall be agreed upon in advance by Client and EFS. EFS shall be responsible for fulfilling orders of all semi- customized Merchandise, including fulfilling any build-to-order or special features requested by the customer, as permitted during  the order process.     2.10. Exclusive Merchandise. Subject to Client's prior written approval in each case, EFS shall have the right to work  with Client's manufacturers for the production of Merchandise that will be designed and offered for sale exclusively via the  Playboy Commerce Business.     2.11. Merchandise. All EFS Produced Merchandise, co-branded Merchandise, mass-customized Merchandise,  exclusive Merchandise and Client Inventory shall be deemed Merchandise for purposes of the calculation of Royalties (defined  below) to be paid by EFS.

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   2.12. Merchandise Supplied to Client and Employees. EFS agrees to make Merchandise available to Client for Client's  own use, such as for events, photo shoots, gifts, etc. ***** when at least two (2) weeks' notice is provided, and ***** when  less than two (2) weeks' notice is provided. In addition, employees of Client and EFS shall be permitted to purchase  Merchandise through the Playboy Commerce Business and shall receive a ***** discount on posted prices. Further, EFS  acknowledges that Client may offer discounts of up to ***** to Client's premium customers at Client's discretion as part of a  loyalty program or other promotional incentive, and EFS shall honor such discounts.      2.13. Product Quality. EFS hereby warrants and agrees that: (a) the Merchandise designed, manufactured, advertised,  promoted, sold or distributed under this Agreement shall meet the high standards of quality, workmanship, material, design, size,  color and style established by Client from time to time and in accordance with the terms and conditions of this Agreement,  provided that EFS can rely on the approvals granted by Client pursuant to Section 2.6; (b) EFS will not knowingly or negligently  cause or authorize any or all of the Merchandise not conforming to this Agreement to be sold or distributed, as doing so may  adversely affect Client's goodwill in the Playboy Marks; and (c) any such non-conforming Merchandise shall be destroyed at  EFS' expense. All of the Merchandise shall conform to and comply with, in all respects, all Laws governing the design, quality,  labeling and safety of such Merchandise and shall not violate the rights of any third parties. EFS shall not cause, condone or  authorize: (x) the use of any substandard or offensive materials in or in connection with any of the Merchandise; (y) any violation  of any Law, including, but not limited to, provisions thereof imposing advertising standards or requiring trade or content  description of the Merchandise; or (z) the use of any Playboy Mark or any other word, device or symbol associated in any way  with any or all of Client and its subsidiaries and affiliates in connection with any product or activity that is not the subject of this  Agreement.     3. Territory.    3.1. International Sales. Upon the launch of Websites, the exclusive territory for the Websites will include the USA,  Canada, UK and Australia (collectively, the Website Territory). For any market that is included in the initial Website Territory  or is added later, EFS agrees to (a) actively market, including, but not limited to, via SEO (optimizing the Websites and creating  custom pages to maximize search engine optimization in local markets), search engine marketing and affiliate marketing, (b)  provide local billing and customized Websites for local audiences, vis a vis language and targeted merchandising, and (c) provide  competitive and timely fulfillment. Client agrees to register and maintain the applicable domain name extensions in each such  market, including .ca, .au, .com, and .uk for the Websites; provided that such domain names are available. Client acknowledges  that the functionality for local billing will not be deployed by March 1, 2008, but will be deployed for the UK and Australia not  later than ninety (90) days following launch of the Websites.    3.2. Pilot Program. Client agrees that within six (6) months of the launch of the Websites, Client and EFS will use  commercially reasonable efforts to collaborate on a strategy for an international expansion of the customer base for the Websites  beyond the established Website Territory and to identify up to two (2) markets for a pilot test to actively market. If the test is  successful as determined by Client in its reasonable discretion, these markets will be added

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   to the Territory under the terms of the Agreement.    3.3. Continuation of Current Online Business. Client agrees that, barring cultural sensitivities, or regulatory or legal  circumstances, EFS shall be permitted to continue operating the Websites to fulfill international online business as is currently being  conducted.    3.4. Catalog Territory. Upon the launch of the Catalogs, the exclusive territory for the Catalog will include the USA and  Canada (Catalog Territory). The Website Territory and the Catalog Territory shall be collectively referred to as the Territory.  The parties agree that the Catalog Territory is the initial territory for the Catalogs and, within a reasonable time period after the  launch of the Websites, to discuss and agree upon the strategy for the distribution of the Catalogs throughout the Website  Territory. In the event that if within one (1) year of launch of the Websites, EFS has not begun distribution of the Catalogs in the  UK or Australia, Client may, in its sole discretion: (a) rescind EFS' right to pursue such distribution; and (b) either by itself or  through third parties, effect Catalog distribution in those countries; provided that in either case, EFS shall perform all order  fulfillment in connection therewith in accordance with the terms and conditions of this Agreement and provided the parties can  reach agreement on the financial terms associated with such services.    3.5. Pre-Existing Domestic and International Partners. EFS understands that Client has pre-existing agreements  internationally and domestically (e.g., product Licensees, retail store partners, location-based entertainment venues and media  partners). EFS agrees that it will work in good faith with such Client partners to identify areas of cross promotion and other  synergies.     3.6. International Products. EFS understands that certain markets will have their own product Licensees, and EFS will  comply fully with all restrictions (including, but not limited to, with respect to regulatory and brand issues) and exclusive  arrangements for all markets. Given that there may be different product margins in such territories, the associated Royalty will be  computed separately for international markets (pursuant to Section 6.1(c)), as necessary.     4. Advertising Commitments.    4.1. Catalog Budget. EFS will commit to an annual Catalog budget equal to or greater than *****, which represents  ***** of the actual amount spent by Client on the Catalogs for 2007. In addition, EFS shall use commercially reasonable efforts  to achieve a target in 2008 of not less than ***** of 2007 Catalog circulated pages. It is EFS' intent to maximize both Website  and Catalog sales, and the parties agree that they will collaborate during the Term to define the budget and sales matrix to  maximize sales in both channels to bring the greatest overall sales growth. EFS shall have the right to decrease the Catalog budget  below the ***** minimum only if EFS can demonstrate that online marketing activities yield a higher return-on-investment and  provided all such reduced dollars are then reinvested in online marketing spend over and above the minimum online marketing  commitment described in Section 4.2, below.

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   4.2. Online Marketing Budget. EFS understands and acknowledges that agreement to an online marketing plan is critical  to the success of the Playboy Commerce Business. Accordingly, EFS agrees it will spend annually a minimum of ***** of Net  Website Sales (as defined below) on online marketing (Online Marketing Budget). Net Website Sales shall mean total  Merchandise sales derived through the Websites via any order channel less applicable, actual Merchandise returns, if any, during  the applicable period. In the event such online marketing yields a ***** return or more on spend at an average gross margin  return on advertising of *****, then EFS will increase the Online Marketing Budget as it deems appropriate to maximize sales of  Merchandise. The Online Marketing Budget will be used by the EFS marketing team to promote the PLAYBOY and BUNNY  SHOP brands online, drive traffic to and sales on the Websites, purchase search engine placement, drive affiliate sales and to  participate in other online marketing initiatives. In addition, EFS commits to continuous SEO efforts during the Term to maximize  discovery of, and algorithmic search results for, the Websites.    4.3. Corporate Marketing Commitments. Client agrees that the following marketing activities shall be performed:    (a) Client and EFS shall jointly issue a press release following the execution of this Agreement announcing  Client's selection of EFS as its end-to-end ecommerce services and platform provider for the Websites; which release shall be  subject to Client's final approval not to be unreasonably withheld;    (b) Subject to confidentiality obligations hereunder, EFS may prepare and distribute a case study upon launching  the Websites with respect to the business arrangement between EFS and Client, subject to Client's prior written approval not to  be unreasonably withheld;    (c) Subject to confidentiality obligations hereunder, EFS may to prepare and distribute a second case study  within three (3) to six (6) months of the launch of the Websites detailing the return on investment resulting from the business  relationship between Client and EFS, subject to Client's prior written approval not to be unreasonably withheld;     (d) Client shall provide a reasonable and appropriate reference on behalf of EFS to EFS customers and potential  customers contingent upon EFS' successful implementation of services hereunder;    (e) Client shall provide reasonable press and investment analyst (in the event that EFS becomes a publicly traded  company) support for articles, interviews, and other public relations activities relating to the relationship between EFS and Client.    (f) EFS may not issue any press release or make any public statement concerning the subject matter of this  Agreement or the parties' relationship without Client's prior review and written approval, which shall not be unreasonably  withheld. EFS agrees to promptly make any changes reasonably requested by Client to any public announcement, statement or  use of Client's name and/or intellectual property prior to any public release.

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   4.4. Third Party Advertising. Client grants EFS the right to: (a) sell and place on the Websites promotional banner  advertisements (the frequency, placement and volume of which to be mutually agreed upon by the parties) that advertise and  market third party products and services that do not compete with Client's products or services and comply with Client's  advertising guidelines (Advertisements), provided that such advertising efforts are mutual (i.e., equivalent promotion of Client  and its affiliates on third party websites) and are executed in a manner that minimizes adverse impact on sales; and (b) send emails  containing Advertisements to customers who specifically opt in to receive email notifications from EFS and Client. All  Advertisements on the Websites and emails to Playboy Commerce Business customers will require the prior written consent of  Client (which will not be unreasonably withheld or delayed). EFS shall provide quarterly reports detailing page exits, abandonment  rates and overall Website conversion rates. If Client determines based upon such reports that any such advertising is adversely  impacting Website conversions, EFS will, at Client's direction, cease placing Advertisements on the Websites and/or sending third  party Advertisement emails. Client shall be entitled to receive an Advertising Fee in connection with the sale of Advertisements as  set forth in Section 6.4.    (a) EFS shall be responsible for maintaining the Advertisements on the Websites. EFS shall ensure that the  Advertisements do not violate any Law or right of any third party or otherwise contain content reasonably likely to diminish the  value of Client's brand or detract from the goodwill of the Client. Upon written request of Client, EFS shall discontinue or modify  any Advertisement that in the reasonable opinion of Client is not appropriate for the Client brand or is competitive with Client  business.    4.5. Promotion of Client Partners. At no additional cost to Client, EFS will continuously and prominently promote  Client's related businesses on the Websites and in emails to customers confirming orders, including without limitation PLAYBOY- branded online, publishing and television properties, or such other businesses as Client may request from time to time; provided,  however, that in the event any such promotional activities interfere with or diminish sales on a Website, as demonstrated by EFS  to Client's reasonable satisfaction, EFS shall be permitted to reduce or restructure such promotions as reasonably necessary to  improve sales on the applicable Website. EFS shall be responsible for determining the timing, frequency and scope of all such  promotional activities with input from Client. Creative shall be provided by Client at Client's expense. Where there is traceable  resulting commerce from the above activities, EFS will be entitled to Client's then current standard bounties or affiliate fees.    4.6. Catalog Inserts & Packaging Onserts. At Client's cost for materials (but excluding costs for labor or other EFS  charges), EFS agrees to include up to two (2) inserts per month in each of the Catalogs and up to two (2) onserts per month in all  outgoing Merchandise packaging, promoting Client products and services and/or those of Client's affiliates, Licensees or  sponsors. Client shall be responsible for all creative and printing costs associated with such inserts and onserts. EFS may include  onserts in product packaging but only with the prior written approval of Client, not to be unreasonably withheld.    5. User Agreements and Data.

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   5.1. Terms of Use & Privacy Policy.    (a) EFS shall prominently display, as is customary in the industry, and implement a terms of use policy (TOU)  on the Websites, which shall comply with all applicable Laws and which at a minimum prohibits orders from any customer under  eighteen (18) years of age (or the applicable age of majority in the jurisdiction in which the customer resides) and explains EFS'  purchasing and return policies. EFS shall implement a privacy policy (Privacy Policy) applicable to users of the Websites and  the Catalogs that is no less protective of user privacy than is required under the Laws of or otherwise applicable to the Territory.  Such Privacy Policy shall be prominently displayed, as is customary in the industry, within the Websites and the Catalogs and be  easily accessible to users. EFS shall not take any action, and shall not operate the Websites or the Catalogs, in contravention of  such Privacy Policy or of any applicable Law, including, but not limited to, data protection provisions imposed by the United  Sates, the European Union or the other countries of the Territory and other applicable Laws.     (b) Client shall have the right to review the TOU and Privacy Policy, to require reasonable changes thereto  (subject to applicable Laws), and to request certification from EFS that it is complying with this Section 5.1. All such requests  shall be promptly met.     5.2. Information on Usage and Users. EFS shall be solely responsible for and shall ensure the security of all customer  data collected in connection with the Playboy Commerce Business, including, but not limited to, personally identifiable information  and transaction information (collectively, the User Data). Client and EFS shall jointly own and have rights to all User Data  collected hereunder provided, however, that EFS shall only use the User Data in strict accordance with the Privacy Policy and,  subject to the remainder of this Section 5, solely in connection with the Playboy Commerce Business. EFS shall gather, retain in its  records, and take all necessary measures (which may include disclosure in the Privacy Policy and/or an opt-in mechanism) in  order to provide such User Data to Client, as well as information on usage and viewing of the Websites and such additional  information as Client may reasonably request. EFS warrants that it has implemented and will maintain during the Term of this  Agreement an information security program that is reasonably designed to: (a) ensure the security, integrity and confidentiality of  User Data collected hereunder; (b) protect against anticipated threats or hazards to the security or integrity of User Data; and (c)  protect against unauthorized access to or use of User Data. EFS agrees that included in EFS' information security program are  policies and administrative and technical measures specifically prohibiting and preventing the placement of User Data in or on any  form of mobile media (e.g., CD's or flash drives and other external storage media). EFS shall notify Client immediately in the  event EFS believes that User Data collected hereunder has been or potentially could have been accessed by an unauthorized  individual and shall cooperate with Client and indemnify Client regarding any investigation or response to a security breach,  including any claims, notifications or protection of Client's employees related therewith.     5.3. Existing User Data. Client holds certain customer data relating to the Playboy Commerce Business (Existing  Customer Data) and hereby grants to EFS a non-exclusive, limited, non-sublicensable, non-transferable, revocable license to  store and use such Existing Customer Data solely for purposes of the operation and promotion of the Playboy Commerce

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   Business. To the extent that EFS makes available to Client any customer data previously collected by EFS and permitted to be  disclosed to Client (EFS Customer Data), EFS shall retain ownership of such EFS Customer Data and Client shall have the  right to use such user data solely in connection with the Websites. Existing Customer Data shall be deemed User Data for  purposes of this Agreement; provided, however, that notwithstanding anything to the contrary in Section 5.2, Existing Customer  Data shall be owned solely by Client.      5.4. Reporting and Use of User Data. Upon request from Client, EFS agrees to provide to Client any and all User Data  generated hereunder and such reports as reasonably requested by Client from time to time relating to User Data. EFS shall use  User Data solely for purposes of the operation and promotion of the Playboy Commerce Business, and except as specifically  approved in advance in writing by Client, shall not use such User Data to market any other EFS or third-party products or  services to users or otherwise use, transfer or sell any User Data collected hereunder. Notwithstanding the foregoing, EFS may  use and exchange User Data in accordance with standard DMA practices for purposes of customer prospecting solely in order to  grow the Playboy Commerce Business. EFS shall not cross-market between the PLAYBOY-branded Catalog and Website and  the BUNNY SHOP-branded Catalog and Website. Client may use User Data free of charge and in any manner (including, to the  extent permitted by applicable Laws, sharing such data with its affiliates and partners). Client reserves the right to periodically  audit EFS' customer lists to ensure compliance with this Section 5.4 provided, however, that any such audit shall be performed at  the offices of EFS (or at such other location(s) as EFS' customer lists may be held) and conducted in such a manner so as to  preserve EFS' customer lists as a trade secret. In no event shall Client be permitted to copy, possess, or use EFS' confidential  customer data other than to ensure compliance with this Section 5.4.     5.5. Opt-In List. EFS shall be permitted to offer customers who visit the Websites the option to receive emails from EFS  concerning the Merchandise as well as offers by EFS or third-parties with which EFS has an established relationship and which  have been approved in advance in writing by Client. Any customers who do not specifically opt-in to receiving email  communications from EFS shall be excluded from such communications.     5.6. Demographic Data. EFS shall be permitted to collect demographic data from customers that visit the Websites,  which shall include: IP address, geographic information regarding the location of the customer (i.e., zip code, area code, city, state  and country), age, and gender (Demographic Data). Client and EFS shall jointly own and have rights to all Demographic Data  collected hereunder.     5.7. Analysis of User Data and Demographic Data. EFS shall have the right to analyze the User Data and Demographic  Data for a variety of purposes including, but not limited to, performing market studies, trend reporting, sales performance,  demographic studies and comparison/analysis with third party market data and consumer purchasing information (EFS  Analysis). EFS shall be permitted to combine the EFS Analyses with other EFS studies and, further, to share the EFS Analyses  with third parties provided that no proprietary information of Client or personally identifiable information of consumers is disclosed  to such third parties.     6. Payments and Fees.

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   6.1. Royalties. EFS shall pay a royalty (Royalty) to Client to be calculated and paid as follows: (a) the Royalty shall be  determined based upon the percentage applicable to the Merchandise Gross Margin (pursuant to the chart in Exhibit 10, attached  hereto and hereby incorporated by reference); (b) multiplied by the Net Merchandise Sales (as defined below) as applicable in  each case for the applicable Calendar Quarter or Year (each as defined below). The Royalty calculation period shall begin upon  the first order received by EFS via any order channel (e.g., on a Website, via mail, fax or telephone) and shall be paid to Client  within fifteen (15) days following the conclusion of each calendar quarter (Calendar Quarter) based on the calendar year  (Year), as calculated on the actual Merchandise Gross Margin and Net Merchandise Sales (each as defined below) for such  Calendar Quarter.    (a) For purposes of this Agreement, Merchandise Gross Margin shall be defined as the Net Merchandise Sales  through the Playboy Commerce Business during the applicable Calendar Quarter or Year, less (i) the actual unit cost of goods  sold paid by EFS for the manufacture of such goods, which shall not include expenses relating to overhead or allocations, (ii)  reductions for markdowns, discounts and allowances, and (iii) actual Merchandise inventory shrinkage during the same period,  which shall in no event exceed *****. The Merchandise Gross Margin scale for purposes of calculating the Royalty shall be  determined from Exhibit 10 based upon the Minimum Royalty (as defined in Section 6.2) set forth in Exhibit 10.    (b) For purpose of this Agreement, Net Merchandise Sales shall be defined as total Merchandise sales derived  through the Playboy Commerce Business via any order channel less applicable, actual Merchandise returns, if any, during the  applicable Calendar Quarter.    (c) Pursuant to Section 3.6, EFS shall pay a quarterly Royalty to Client calculated as set forth in Section 6.1  using separate Royalty percentages on a country-by-country basis based on product margins for each such country, as agreed  upon by the parties.    6.2. Minimum Royalty. Notwithstanding revenue actually generated by EFS in connection with the Playboy Commerce  Business hereunder, it is understood and agreed that the Royalty paid to Client in each Year of the Term shall not be less than the  amounts set forth in Exhibit 10 (the Minimum Royalty). In the event the Minimum Royalty is not achieved in any Year based on  the Royalty payments made in such Year, EFS shall pay the shortfall between the Royalty earned and the applicable Minimum  Royalty due, if any, within sixty (60) days of the end of such Year.    (a) In the event that the Minimum Royalty is met in any applicable Year, (i) EFS shall not be permitted to carry  over any overages into the next Year and (ii) EFS will not be eligible for any refund from any Minimum Royalty or Royalty  previously owed or paid to Client. In the event EFS does not meet the full amount of the Minimum Royalty during the applicable  Year in which such Minimum Royalty was owed to Client, EFS will not be permitted to offset the shortfall with any overages from  any previous or subsequent Year, and a new Minimum Royalty will be due as set forth in this Section 6.2. For the avoidance of  doubt, the Minimum Royalty is a minimum net sum from which no taxes or charges of any sort may be deducted.

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   (b) In the event that this Agreement is terminated prior to the end of the Initial Term, any portion of the Year 1  Minimum Royalty that has been spread across Years 2 through 5 of the Term pursuant to Exhibit 10 and which has not yet been  paid to Client, shall immediately become due and owing.    6.3. Royalty on Shipping Charges. In addition, Client shall be entitled to receive a royalty payment on the shipping and  handling charges paid by customers during the applicable Calendar Quarter (Shipping Royalty) equal to the Royalty percentage  multiplied by the shipping profit. For purposes of this Section 6.3, the shipping profit shall be calculated as the gross charges for  shipping less shipping materials, cost of freight and dunnage. The Shipping Royalties paid to Client shall be counted towards the  Minimum Royalty for the applicable Year. If there is no shipping profit, Client shall not be owed any Shipping Royalty, nor will  Client be impacted by any shipping losses.    6.4. Advertising Revenues. Client shall be entitled to receive an advertising fee of ***** of the Net Advertising Revenue  derived by EFS from Advertisements pursuant to Section 4.4 (Advertising Fee). Net Advertising Revenue shall be defined as  the gross revenue derived from the sale of Advertisements less: (a) all direct costs (i.e., commissions and ad-server related fees)  incurred by EFS and third party fees paid out by EFS for the execution, maintenance and ongoing facilitation of Advertisements  on the Websites and (b) ***** of gross revenue derived from the sale of Advertisements, which shall be reinvested by EFS for  online promotions and advertising (Advertising Marketing Allocation). Neither Net Advertising Revenue nor the Advertising Fee  shall be counted toward the Minimum Royalty obligation of EFS.     6.5. Payment of Royalties; Reports. Except as otherwise specifically set forth, all fees due to Client shall be due and

payable on or before the fifteenth (15t h) day following the applicable Calendar Quarter. EFS shall use commercially reasonable  efforts to provide within three (3) days, but in no event later than five (5) days, following such Calendar Quarter, regardless of  whether any payment is due, a report that includes at a minimum: (a) gross sales broken down by each Website, Catalog and  product, gross shipping charges and gross advertising revenue generated during such Calendar Quarter; (b) a detailed calculation  of Merchandise Gross Margin, Net Merchandise Sales, shipping profit and Net Advertising Revenue; (c) a detailed calculation of  the Royalty, Shipping Royalty and Advertising Fee payable to Client for such Calendar Quarter; (d) Client's aggregate Royalty,  Shipping Royalty and Advertising Fee earned and paid to date; and (e) such other information as may be requested by Client from  time to time. In addition, EFS shall provide to Client interim monthly reports.     6.6. Purchase of Product Inventory. Pursuant to Section 2.2, EFS shall pay Client a non-refundable purchase price of  ***** of the wholesale price (i.e., the Client's original cost) as determined as of forty-five (45) days after the Effective Date for  all Client Inventory. Such amount shall be paid Net ninety (90) days following entry of such Client Inventory into EFS' system;  provided, however, that EFS shall enter all such Client Inventory upon receipt or shall promptly notify Client in the event it is  unable to do so due to missing information (i.e. barcodes) or because any product is incomplete or otherwise in a condition not fit  for immediate resale.

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   6.7. Method of Payment. All payments required to be made by EFS hereunder shall be made by electronic transfer of  immediately available funds in United States Dollars through a bank designated by Client. In the event that EFS receives orders  through the Playboy Commerce Business or otherwise hereunder involving foreign currency, in order to determine the proper rate  of exchange to be applied to the payments due hereunder, it is agreed that EFS shall calculate such payments on a Calendar  Quarter basis in local currency (with each such quarter considered to be a separate accounting period for the purpose of  computing the payments) and that EFS shall compute a conversion of each such Calendar Quarter total into United States Dollars  utilizing the selling rate of exchange in effect on the last day of each relevant Calendar Quarter as quoted by Reuters in the Wall  Street Journal.     6.8. Costs and Expenses. Unless expressly stated otherwise in this Agreement or otherwise agreed in writing, each party  shall be responsible for any costs or expenses incurred by it in connection with its obligations under this Agreement.     6.9. Taxes. As between the parties, EFS shall be responsible for, without limitation, any tax, duty, levy, income, royalty,  withholding tax or charge required by any Law now in effect or hereafter enacted (other than Client's direct net income taxes)  including, without limitation, sales, use, value-added, property, royalty and excise or other similar taxes, licenses, import permits,  state, county, city or other taxes arising out of or relating to this Agreement. EFS will be responsible for the timely notification,  remittance, filing and reporting of all such taxes to the proper tax authorities at the rates required by Law.     6.10. Accounting Reports. EFS shall provide, at its sole expense:     (a) Client acknowledges that EFS is not currently able to provide a SAS 70 Type II Report. EFS will endeavor  to become SAS 70 compliant and once compliant, shall provide a SAS 70 Type II Report to Client or its affiliates. Until EFS  becomes compliant EFS may provide an alternative report acceptable to Client or its affiliates. Reports pursuant to this Section  6.10(a) shall be provided for the one-year period ending September 30th of each year by December 31st of each year of the  Term; and     (b) A copy of EFS' Independent Auditors' Report and audited balance sheet for each Year of the Term within  thirty (30) days of the close of such audit.     6.11. Verification of Information; Audit Right Generally. During the Term of this Agreement and for two (2) years  thereafter, (a) EFS shall maintain complete and accurate books and records relating to revenue generated under this Agreement;  and (b) Client and/or its authorized representative(s) shall have the right to examine, review, copy and audit EFS' books and  records relating to revenue generated under this Agreement to verify the accuracy of the payments and associated information  provided by EFS and to verify EFS' compliance with the terms and conditions of this Agreement. If the result of the audit reveals  deviations that indicate that Client was underpaid, EFS shall immediately pay the sum of such underpayment plus interest at a rate  of ***** from the date such payment was first due. If the result of the audit reveals deviations by ***** or more for any one year  of the Term, EFS shall pay the sum due plus interest as set out above and shall further bear the reasonable costs and expenses  associated with audit.

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   7. License Grants    7.1. Playboy Content. During the Term and subject to the terms, conditions, and limitations set forth in this Agreement,  Client grants EFS a limited, non-exclusive, non-transferable, non-assignable (without any right to sublicense), world-wide license  to use, modify, create derivative works of, publish, reproduce, broadcast, exhibit and display the Playboy Content solely in  connection with the design, publication, distribution, operation and promotion of the Playboy Commerce Business.    (a) In the event that EFS creates any modifications, alterations or other derivative works of any Playboy Content  (Derivative Works), EFS hereby irrevocably assigns to Client all right, title and interest in and to all of those Derivative Works,  including the copyrights and other proprietary rights therein. EFS further agrees to cooperate with Client's reasonable requests to  effect or perfect such assignment and hereby provides Client with an irrevocable power of attorney appointing Client as EFS'  irrevocable attorney-in-fact coupled with an interest to execute all such assignments on behalf of EFS. All Derivative Works are  hereby licensed back to EFS subject to the limitations that are applicable hereunder to the Playboy Content. EFS shall deliver to  Client all original versions of Derivative Works upon the request of Client.    7.2. Client Trademarks. During the Term and subject to the terms, conditions, and limitations set forth in this Agreement,  Client grants EFS a limited, non-exclusive, non-transferable, non-assignable (without any right to sublicense), world-wide license  to use the Client trademarks and/or service marks as set forth on Part A of Exhibit 1 (the Playboy Marks) solely in connection  with the design, publication, distribution, operation and promotion of the Playboy Commerce Business. Except in connection with  marketing obligations hereunder or as otherwise expressly permitted by Client in writing, EFS shall not use any Playboy Mark on  or in connection with, or to permit or facilitate any presentation or promotion of, any Internet website(s) other than the Websites  or any other catalog other than the Catalogs.    (a) Use of Playboy Marks. EFS recognizes and acknowledges that the Playboy Marks are internationally well- known by the general public and are associated in the public mind with Client's affiliate, Playboy Enterprises International, Inc.  (PEII), and are marks in which PEII has acquired considerable and valuable goodwill. EFS acknowledges that Client and PEII  have an interest in maintaining the worldwide goodwill, recognition and standards of the Playboy Marks. Consequently, with  respect to uses of the Playboy Marks in the normal course of business (i.e., for marketing and promotional purposes), EFS shall  submit representative samples of such uses to Client as soon as practicable for purposes of post-use audit. If as a result of any  post use audit, Client determines in its reasonable discretion that the use of a Playboy Mark is improper or inappropriate, Client  will notify EFS, and EFS shall correct the problem as soon as reasonably practicable. Any uses not in the ordinary course must be  approved in advance in writing by Client, and Client shall have the right to require EFS to make any changes and/or corrections  with regard to the Playboy Marks as Client may reasonably deem necessary to maintain the quality standards and the goodwill  associated with the Playboy Marks. EFS agrees to make and incorporate such changes or corrections promptly upon notice from  Client and at EFS' sole cost and expense.

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   (b) Modifications of Playboy Marks. EFS may modify or alter the Playboy Marks or combine the Playboy  Marks with any other words or symbols only if, and to the extent that, Client shall have authorized such modification or alteration  or combination specifically in advance in writing. Any such permitted modification/alteration and/or combination shall be referred  to herein as an Authorized Modification. No such authorization by Client shall constitute a representation or warranty that use of  the Authorized Modification(s) by EFS or by anyone else will not violate the rights of others in any jurisdiction or that such  Authorized Modification will constitute an enforceable trademark in any jurisdiction.     (c) Assignment of Authorized Modifications. EFS hereby irrevocably assigns, and Client hereby accepts, all right,  title and interest in and to each and every Authorized Modification, and EFS agrees to cooperate with all reasonable requests by  Client to effect or perfect such assignment. All Authorized Modifications (if any) are hereby licensed back to EFS subject to the  limitations applicable to the Playboy Marks hereunder.     (d) Goodwill. EFS will not obtain any right, title or interest in the Playboy Marks by virtue of their use of the  Playboy Marks under this Agreement and any additional goodwill associated with the Playboy Marks that is created through use  of the Playboy Marks shall inure solely to the benefit of PEII.     (e) Variations. During and after the Term, EFS will not apply for or use any domain names, trademarks or service  marks that include or are confusingly similar to any of the Licensed Domain Names (as defined in Section 7.3, below), Playboy  Marks or any other similar marks or variations thereto.     (f) Notices. EFS must display on the Websites and Catalogs such trademark and copyright notices as requested  by Client and/or as required by applicable Law. Except as expressly approved in writing by Client, neither the Playboy Marks nor  any notices associated therewith may be changed, manipulated or modified in appearance.     7.3. Domain Names. During the Term and subject to the terms, conditions and limitations of this Agreement, Client  hereby grants EFS, a limited, non-transferable, non-assignable (without any right to sublicense) world-wide license to use the  Internet location or resource designators (URLs, domain names, etc.) set forth in Part B of Exhibit 1 hereto, and/or to the extent  approved in advance in writing by Client, as the case may be, modifications thereof (the Licensed Domain Names), as the  domain name(s) and Internet locators/designators for the Websites during the Term. The Licensed Domain Names shall at all  times be owned by PEII as registrant. Client agrees that the registration for the Licensed Domain Names and for any successor  URL's shall be maintained and that EFS shall remain the technical contact for the duration of the Agreement. If EFS desires to use  any other domain names or Internet locators/designators in connection with the Websites, Micro Sites or otherwise utilizing  PLAYBOY- or PLAYBOY-related marks, EFS shall so notify Client, which may at its sole discretion, choose to register the  same at its expense. Any such additional domain names or Internet locators/designators shall be owned by PEII as registrant, and  EFS shall receive a limited license to use the same as Licensed Domain Names hereunder, solely in connection with the Websites  and/or Micro Sites during the Term. Unless otherwise agreed by the parties in

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   writing, the Licensed Domain Names shall at all times remain on PEII servers and will be redirected to the Websites.     7.4. Client Take-Down Rights. Despite conformity to the Guidelines and/or the terms and conditions of this Agreement  and/or the prior written approval by Client, Client shall be entitled to review all uses of the Playboy Marks and all utilizations of  the Playboy Content at any time and in its sole discretion. Client shall be entitled to require alteration or termination of any specific  use if it determines in its reasonable and good faith discretion that such action is necessary or appropriate and EFS shall promptly  comply with any such demand. Nothing in this Section 7.4 shall create any obligation on the part of Client to identify or prevent  improper uses of material or inclusion of improper material in connection with the Playboy Commerce Business, nor shall Client or  its affiliates have any liability for nonfeasance, negligence, or other conduct in such reviews or for failing to conduct any such  reviews.    7.5. Exclusions. Nothing in this Agreement shall restrict Client (or its affiliates) from the following commerce activities in  the Territory: any DVD commerce (rental or sales), sales by product Licensees via third-party commerce websites or mail order  sales or similar activities. In addition, EFS agrees that Client's location-based entertainment partners, as listed in Exhibit 11,  attached hereto and hereby incorporated by reference, which may be updated from time to time, may engage in limited e- commerce activities primarily, but not limited to, for co-branded products (e.g., Playboy at the Palms co-branded merchandise).    8. Confidentiality.    8.1. Confidential Information. EFS and Client each acknowledge that during the Term of this Agreement each party may  have access to the proprietary or trade secret information of the other concerning the other's business affairs, property, methods  of operation, processing system or other information provided by the disclosing party to the receiving party that is identified as, or  should reasonably be understood to be (given its content or the circumstance of its disclosure), proprietary (collectively, the  Confidential Information). Information shall not be considered Confidential Information under this Agreement that the recipient  can document: (a) is publicly known prior to or after disclosure hereunder other than through acts or omissions attributable to the  recipient or its employees or representatives; (b) is already known to the recipient at the time of disclosure hereunder without  reference to the disclosing party's Confidential Information; (c) is disclosed in good faith to the recipient by a third party having a  lawful right to do so; (d) is the subject of written consent of the party which supplied such information authorizing disclosure; or (e)  is independently developed by the receiving party without reference to Confidential Information of the disclosing party.    8.2. Obligations. EFS and Client each agree to use the Confidential Information of the other party solely to the extent  necessary to fulfill its obligations or exercise its rights hereunder, and not for any other purpose. Each party agrees (a) that it will  not disclose to any third party or use any Confidential Information disclosed to it by the other except as expressly permitted in this  Agreement and (b) that it will take all reasonable measures to maintain the confidentiality of all Confidential Information of the  other party using at least the degree of care and security as each uses to maintain the confidentiality of its own Confidential  Information. Notwithstanding the foregoing, each party may disclose Confidential Information (x) to their officers, directors,

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   employees, agents, attorneys and consultants who need to know such information and who are bound by restrictions regarding  disclosure and use of such information comparable to and no less restrictive than those set forth herein, (y) as required by  applicable Law, provided that in the case of any filing with a governmental authority that would result in public disclosure of the  terms hereof, the parties shall mutually cooperate to limit the scope of public disclosure to the greatest extent possible; and (z) to  the extent required by a court of competent jurisdiction or other governmental authority or otherwise as required by Law,  provided that the receiving party uses reasonable efforts to provide the disclosing party with prior notice of such obligation in  order to permit the disclosing party a reasonable opportunity to take legal action to prevent or limit the scope of such disclosure.    9. Ownership.    9.1. In General. Each party hereby reserves for itself all rights not specifically granted to the other party in this  Agreement. Each party will use good faith efforts to cooperate with the other party in the protection of their intellectual property  rights.    9.2. EFS. As between the parties, EFS retains ownership of, and all right, title and interest in and to any intellectual  property including trademark, trade name, patent, copyright, technology, trade secret, software, source code or know-how  created for or relating to the Playboy Commerce Business that was affixed to, used with or incorporated into the Playboy  Commerce Business by EFS, but specifically excluding the Client Property, as defined below (collectively, the EFS Property).  Nothing contained in this Agreement shall be deemed to transfer or convey to Client any ownership rights whatsoever in or to the  EFS Property or grant any license to the EFS Property other than in connection with the Playboy Commerce Business. To the  extent that Client is deemed to obtain any interest or ownership rights in the EFS Property, Client hereby assigns, transfers and  conveys to EFS, to the maximum extent permitted by applicable Law, all of Client's right, title and interest therein used by Client  under or in connection with this Agreement so that EFS will be the sole owner of all rights therein and further agrees to cooperate  with EFS during and after the Term to effect and perfect all assignments.    9.3. Client. As between the parties, Client retains ownership of, and all right, title and interest in and to any and all  Playboy Marks, Playboy Content, Derivative Works, Licensed Domain Names, User Data and any other materials provided by  or on behalf of Client to EFS hereunder, which are incorporated in or are otherwise related to the Playboy Commerce Business  (collectively, the Client Property). Nothing contained in this Agreement shall be deemed to transfer or convey to EFS any  ownership rights whatsoever in or to the Client Property. To the extent that EFS is deemed to obtain any interest or ownership  rights in the Client Property, EFS hereby assigns, transfers and conveys to Client, to the maximum extent permitted by applicable  Law, all of EFS' right, title and interest therein used or created by EFS under or in connection with this Agreement so that Client  will be the sole owner of all rights therein and further agrees to cooperate with Client during and after the Term to effect and  perfect all assignments.    10. Term and Termination.

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   10.1. Term. This Agreement shall commence as of the Effective Date and, unless earlier terminated as provided under  this Agreement, shall terminate five (5) years following the date of launch of the first Website, but in no event later than February  28, 2013 (the Initial Term). This Agreement shall automatically renew for an additional period of three (3) years (such renewal  and each subsequent renewal shall be defined as a Renewal Term) provided that EFS achieves Net Merchandise Sales of at  least ***** during the fourth year following launch of the first Website. In such event, the annual Minimum Royalty during the  Renewal Term, if any, shall be equal to the greater of: (a) ***** of the actual Royalty paid to Client in Year 5; and (b) *****.  The Initial Term and any and all Renewal Terms shall be collectively referred to as the Term.    10.2. Termination for Breach. Each party shall have the right to terminate this Agreement, in whole or in part, if the other  party materially breaches this Agreement and such breach is not cured within thirty (30) days' written notice from the non- breaching party.    10.3. Termination for Bankruptcy. Each party shall have the right to immediately terminate this Agreement if the other  party (a) is involuntarily made subject to any bankruptcy or insolvency proceedings and such proceedings are not dismissed within  sixty (60) days of the filing of such proceedings or (b) voluntarily institutes any bankruptcy or insolvency proceedings, corporate  reorganization, liquidation, assignment for the benefit of creditors, or appointment of a receiver or trustee.    10.4. Effects of Termination. Upon and after the termination of this Agreement (the Termination Date):     (a) All accrued and unpaid amounts shall become immediately due and payable, including the pro rata amount of  the annual Minimum Royalty for the applicable Year based upon the Termination Date;     (b) All licenses granted pursuant to this Agreement shall immediately terminate;     (c) EFS shall cease the display and use of the Playboy Content, Derivative Works, Playboy Marks, Authorized  Modifications, Licensed Domain Names in any manner;     (d) EFS shall return any and all Playboy Content and Derivative Works to Client within five (5) business days of  the Termination Date;     (e) Each party will promptly, at the direction of the other party, return or destroy any and all Confidential  Information of the other party in any medium and all copies thereof;     (f) EFS shall discontinue the use of any User Data collected hereunder, and subject to applicable Laws, shall  promptly deliver and assign all User Data to Client per Client's instructions; and

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     (g) If so requested by Client in connection with a planned or potential continuation of the business, EFS shall  cooperate with Client and its affiliates in order to transfer any remaining operations to them or any other entity that Client may so  designate without interruption of the Playboy Commerce Business' availability.    10.5. Outstanding Orders. As of the Termination Date, EFS shall not process any new orders placed through the  Playboy Commerce Business. Notwithstanding the foregoing, EFS may fulfill any outstanding orders placed through the Playboy  Commerce Business prior to the Termination Date and may continue collection activities related thereto, which shall be subject to  Section 6 hereof.    10.6. Survival. Sections 6.11, 7.5, 8, 9, 10.4, 10.5, 10.6, 11.4, and 12 through 14 shall survive any expiration or  termination of this Agreement. In addition, Sections 6.1 through 6.10 shall survive any termination of this Agreement until all  amounts due in connection with activities during the Term are paid and all reports provided.    11. Warranties and Disclaimers.    11.1. By Both Parties. Each party represents and warrants that (a) it has the full right and authority to enter into this  Agreement, perform its obligations and grant the rights and licenses granted hereunder; and (b) its execution, delivery and  performance of this Agreement will not result in a breach of any material agreement or understanding to which it is a party or by  which it or any of its material properties may be bound.    11.2. By EFS. EFS further represents and warrants that (a) the Websites and the Catalogs and all content contained  therein (but specifically excluding the Playboy Marks and Playboy Content) do not and will not infringe any intellectual property  right of any third party; (b) it has all necessary intellectual property rights in and to the Merchandise to be offered for sale through  the Playboy Commerce Business; (c) it will at all times abide by and comply with the Privacy Policy and all other Laws applicable  to operation of the Playboy Commerce Business, including, but not limited to the CANSPAM Act of 2003 and those related to  privacy; (d) it (i) shall use its best efforts to ensure that all performers featured in any content and/or Merchandise offered for sale  through the Catalogs and/or the Websites were at least eighteen (18) years of age at the time of production and (ii) shall comply  with all record keeping, labeling and other requirements pursuant to Section 2257, as the same may be amended from time to  time; (e) it will at all times take commercially reasonable steps to ensure the accuracy of all information contained on the Websites  and in the Catalogs; and (f) the Playboy Commerce Business, including, without limitation, the Catalogs and Websites and all  aspects thereof, will be operated in a workmanlike, timely and professional manner consistent with industry standards and EFS'  operation of other third-party branded commerce offerings.    11.3. By Client. Client further represents and warrants that it has the full right and authority to grant the rights and licenses  to the Playboy Marks, the Licensed Domain Names and Playboy Content set forth herein.

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   11.4. Disclaimer. Except as expressly set forth in this Agreement, and to the extent permitted by Law, each party  expressly disclaims all warranties and representations, whether express, implied or statutory, including any implied warranty of  merchantability, non-infringement or fitness for a particular purpose. Client does not warrant that the Playboy Content will be  error-free or will meet EFS' specific needs. Client makes no warranty whatsoever regarding the accuracy of the information  contained in the Playboy Content.    12. Indemnification.    12.1. By EFS. EFS shall indemnify, defend and hold Client, its parent, subsidiaries and affiliates and the directors,  officers, shareholders, employees and agents of each harmless against any claims, suits, losses, liabilities, injuries or damages  (including, without limitation, reasonable attorneys' fees and litigation expenses) arising out of any third party claim relating to (a)  the Playboy Commerce Business, including, the marketing and operation thereof; (b) the Privacy Policy; (c) EFS' use of any  Client Property not permitted by or inconsistent with this Agreement; (d) any claims brought by users, service providers or others  in connection with this Agreement; (e) the User Data, including the collection, storage and/or use thereof; (f) any alleged action or  failure to act whatsoever in regard to EFS' performance of its obligations and duties under this Agreement; (g) the EFS Sites,  including, but not limited to, the operation of the EFS Sites and content contained thereon; (h) any breach by EFS of any of its  representations and warranties set forth above; (i) the sale or availability through the Catalogs and/or Websites of any content  and/or Merchandise, which includes any performer who was less than eighteen (18) years of age at the time of production; (j) any  EFS Produced Merchandise; (k) any alleged non-conformity to or non-compliance with any Law, including, but not limited to,  pertaining to the content, design or quality of any portion of the Playboy Commerce Business; or (l) any claim or allegation by a  third party claiming rights (including, but not limited to, any copyright, trademark or patent rights) in or to EFS Property, the  Derivative Works (to the extent caused by EFS), the Merchandise available for sale via the Playboy Commerce Business or the  operation of the Playboy Commerce Business.    12.2. By Client. Client will indemnify, defend and hold EFS, its parent, subsidiaries and affiliates and the directors,  officers, shareholders, employees and agents of each harmless against any claims, suits, losses, liabilities, injuries or damages  (including, without limitation, reasonable attorneys' fees and litigation expenses) arising out of any third party claim relating to (a)  the authorized use by EFS in compliance with this Agreement of the Client Property in connection with Playboy Commerce  Business; (b) any alleged action or failure to act whatsoever in regard to Client's performance of its obligations and duties under  this Agreement; (c) any breach by Client of any of its representations and warranties set forth above; (d) any alleged non- conformity to or non-compliance with any Law, including, but not limited to, pertaining to the content, design or quality of any  portion of the Client Property; or (e) any claim or allegation by a third party claiming rights in or to Client Property.    12.3. Procedure. If a claim is made against an indemnified party, such party will promptly notify the indemnifying party of  such claim. Failure to so notify the indemnifying party will not relieve the indemnifying party of any liability which the indemnifying  party might have, except to the extent that such failure materially prejudices the indemnifying party's legal

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   rights. The indemnified party shall cooperate with the indemnifying party in the defense and/or settlement of the claims at the  expense of the indemnifying party; provided however, the indemnifying party shall assume control of the defense of such claim.  The indemnified party may participate in the defense of the claim at its own cost. Notwithstanding anything contained herein, (a)  the indemnified party shall not enter into any settlement or compromise that provides for any remedy of the claim without the prior  written approval of the indemnifying party, which approval will not be unreasonably withheld; and (b) EFS may not enter into any  settlement or compromise that involves or affects any Playboy Mark, Licensed Domain Name, Playboy Content, Derivative  Work or Authorized Modification without Client's prior written approval.    13. Limitation of Liability. EXCEPT IN THE EVENT OF A BREACH OF SECTION 8 (CONFIDENTIALITY) OR  LIABILITY ARISING UNDER A PARTY'S INDEMNIFICATION OBLIGATIONS UNDER SECTION 12, IN NO  EVENT SHALL EITHER PARTY BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE OR  CONSEQUENTIAL DAMAGES ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS AGREEMENT OR  ANY MATTER RELATED HERETO, INCLUDING WITHOUT LIMITATION, LOST BUSINESS OR LOST PROFITS,  EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.    14. Miscellaneous.    14.1. Independent Contractors. The rights and powers herein granted to EFS are those rights and powers of an  independent contractor only, and this Agreement shall not, and is not intended to, create any other relationship nor make,  constitute or appoint EFS an agent or employee of Client. It is expressly understood and agreed that Client shall not under any  circumstances be liable to EFS for all or any part of any losses EFS may sustain. EFS shall have no power to obligate or bind  Client in any manner whatsoever.    14.2. Severability. Each provision of this Agreement shall be severable. If, for any reason, any provision herein is finally  determined to be invalid and contrary to, or in conflict with, any existing or future law or regulation by a court or agency having  valid jurisdiction, such determination shall not impair the operation or affect the remaining provisions of this Agreement, and such  remaining provisions will continue to be given full force and effect and bind the parties hereto. Each invalid provision shall be  curtailed only to the extent necessary to bring it within the requirements of such law or regulation.     14.3. Assignment. This Agreement shall be binding upon and inure to the benefit of the parties named herein and their  respective heirs, legal representatives, successors and permitted assigns. Notwithstanding the foregoing, this Agreement and all  rights and duties hereunder shall not, without the prior written consent of Client, in any manner be assigned, mortgaged, licensed,  or otherwise transferred or encumbered by EFS or by operation of law; provided, however, that EFS may assign this Agreement  to an acquirer of all or substantially all of its assets without Client's consent, but only in the event that in Client's reasonable  determination (a) key EFS management (as defined by Client at the time of acquisition) will remain indefinitely with EFS or  replacement management is reasonably acceptable to Client and no less experienced than those in place as of the Effective Date  hereof; (b) the acquirer can demonstrate to Client's reasonable satisfaction the availability of financial resources, and the ability  and intention, to

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   adequately invest in growing the Playboy Commerce Business (by way of example, the acquirer shall have a minimum net worth  equal to or above that of EFS as of the Effective Date hereof); (c) such assignment will not have a detrimental impact on the  Playboy Commerce Business or Client's other businesses; and (d) the acquirer is otherwise able to honor all financial terms and  assume all obligations of EFS hereunder. In addition, EFS may not assign this Agreement without Client's consent to a competitor  of Client or any of Client's businesses. Client's consent to any proposed assignment hereunder shall not be unreasonably withheld  or delayed. Any purported transaction not specifically permitted under this Section 14.3 shall be null and void ab initio.     14.4. Entire Agreement; Counterparts. This Agreement constitutes the entire agreement between the parties and  supersedes any prior understandings, agreements or representations by or among the parties, written or oral, to the extent they  relate to the subject matter hereof. This Agreement may be executed in any number of counterparts, each of which shall be  deemed an original, but all of which together shall constitute one and the same instrument.     14.5. No Waiver; No Third Party Beneficiary. None of the terms of this Agreement may be waived or modified except  by an express agreement in writing signed by the parties. There are no representations, promises, warranties, covenants or  undertakings other than those contained in this Agreement. No custom or practice of the parties hereto at variance with the terms  hereof shall constitute a waiver of either party's right to demand exact compliance with any of the terms herein at any time. The  failure of either party hereto to enforce, or the delay by either party hereto in enforcing, any or all of its rights under this Agreement  shall not be deemed as constituting a waiver or a modification thereof, and either party hereto may, within the time provided by  applicable Law, commence appropriate proceedings to enforce any or all of such rights. Except as expressly provided in this  Agreement, no individual or entity other than EFS and Client shall be deemed to have acquired any rights by reason of anything  contained in this Agreement.     14.6. Headings. The headings used herein are for convenience only and shall not be deemed to define, limit or construe  the contents of any provision of this Agreement. The wording of this Agreement will be deemed to be the wording chosen by the  parties hereto to express their mutual intent, and no rule of strict construction will be applied against any such party. Time is the  essence of this Agreement.     14.7. Force Majeure. Neither party to this Agreement shall be liable for its failure to perform any of its obligations  hereunder during any period in which such performance is delayed by circumstances beyond its reasonable control (each a Force  Majeure Event), including but not limited to: fire, act of nature, embargo, riot, or the intervention of any government authority;  provided, however, that as soon as reasonably practicable prior to any such circumstance, and in any event promptly thereafter,  the affected party (a) has so notified the other in writing; (b) takes reasonable measures to avoid or limit the effect or duration of  such circumstances; and (c) cooperates with the other party to reasonably alter its obligations hereunder and/or resume  performance under this Agreement as soon as reasonably practicable. If any such circumstance persists for longer than ninety (90)  days, Client may terminate this Agreement immediately upon written notice without penalty.

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   14.8. Notices. All notices, demands, claims, requests, undertakings, consents and other communications which may or  are required to be given hereunder shall be in writing and shall be deemed to be properly given when personally delivered to the  party entitled to receive the notice or when sent via confirmed email or facsimile, or by United States or International mail, postage  prepaid, properly addressed to the respective parties as follows:    If to Client:    Playboy.com, Inc.  730 Fifth Avenue  New York, NY 10019  Attn: Executive Vice President, Business Development    With a copy to:    Playboy Enterprises International, Inc.  680 North Lake Shore Drive  Chicago, IL 60611  Attn: General Counsel    If to EFS:    eFashion Solutions, LLC  80 Enterprise Avenue South  Secaucus, NJ 07094  Attn: Edward Foy, Jr., CEO    With a copy to:    OlenderFeldman, LLP  2840 Morris Avenue  Union, NJ 07083  Attn: Kurt D. Olender, Esq.    14.9. Governing Law and Jurisdiction. This Agreement shall be governed by and construed in accordance with the laws  of the Illinois without giving effect to its conflict of laws principles.

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   IN WITNESS WHEREOF, the parties hereto, intending this Agreement to be effective as of the Effective Date, have  caused this Agreement to be executed by a duly authorized representative of each.



PLAYBOY.COM, INC. EFASHION SOLUTIONS, LLC  By: /s/ Jeremy S. Westin By: /s/ Edward Foy  Name: Jeremy S. Westin Name: Edward Foy  Title: EVP, Business Development Title: CEO

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   Exhibit 1  Playboy Marks & Licensed Domain Names

  * THE GIRLS NEXT DOOR & RABBIT HEAD DESIGN mark may be used in advertising Merchandise bearing the mark only. It  should not be used to advertise other goods, such as PLAYBOY goods. If a cast member of The Girls Next Door models  PLAYBOY clothing for the Playboy Commerce Business or wears PLAYBOY clothing on the show, an informational reference to  that may be made, but THE GIRLS NEXT DOOR & RABBIT HEAD DESIGN mark should not be used in connection with such  informational reference. Examples of acceptable informational references include As seen on The Girls Next Door and Modeled  by the stars of The Girls Next Door.



A. Playboy Marks:  · PLAYBOY  · PLAYBOY.COM  · PLAYBOY STORE  · SHOPTHEBUNNY.COM  · BUNNY  · BUNNY SHOP  · BUNNY(RABBIT HEAD DESIGN)SHOP  · BUNNY(SILHOUETTE)SHOP  · BUNNY COSTUME  · RABBIT HEAD DESIGN  · THE GIRLS NEXT DOOR *  · THE GIRLS NEXT DOOR & RABBIT HEAD DESIGN *  · FEMLIN  · FEMLIN DESIGN  · CYBER GIRL  · CYBER CLUB  · CENTERFOLD  · PLAYBOY CENTERFOLD  · CLASSIC CENTERFOLD  · PLAYMATE  · PLAYMATE OF THE MONTH  · PLAYMATE OF THE YEAR  · PMOY  · INNER VIXEN  · HMH  · HUGH M. HEFNER  · MISS (MONTH)

B. Licensed Domain Names:  · www.playboystore.com  · www.playboycatalog.com  · www.shopthebunny.com  · www.bunnyshopcatalog.com  · www.bunnyshopcatalog.net  · www.bunnyshopstore.com  · Other URLs as may be approved in advance by Client in writing on a case by case basis, including mutually agreed  upon Micro Sites

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   Exhibit 2    Powered by eFashionSolutions Creative



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Source: PLAYBOY ENTERPRISES INC, 10-Q/A, 2/20/2009





   Exhibit 3  Fulfillment Services      Fulfillment Services shall be handled by EFS as follows:    (a) Substantially all Catalog and Website orders, including, without limitation, regular phone, mail direct and online orders,  received by the end of a Business Day will be processed, picked, packed and shipped on the same day received, and in no event  later than the end of the next Business Day. Saturday and Sunday orders will be processed with Monday orders. For purposes of  this Exhibit, Business Day shall mean any day other than a Saturday, Sunday or other day on which commercial banks in the  State of New Jersey for the USA or the applicable country of the Territory are authorized or required by law or executive order  to close and shall begin at 9:00 AM and end at 6:00 PM (Eastern Time).    (b) Substantially all expedited (next day and 2-day delivery) orders, regardless of channel, received in time for the Monday  through Friday 2:00 PM ET cutoff will be picked, packed and shipped that same day. Exceptions: Credit card irregularities, which  cannot be resolved same day, will ship the following Business Day with notification to the customer. In the event of system  problems that prevent turnover to shipper by last pickup, customers will be notified and packages will be shipped expedited the  next Business Day.    (c) Substantially all customer returns will be processed within two (2) Business Days of dock receipt.    (d) Websites order confirmations or back order or cancellation notices to customers will be provided within one (1) Business Day  of receipt. Direct order letters will be produced the next Business Day and substantially all will be mailed that same day.    (e) Exact Merchandise ordered at the price(s) specified will be shipped unless the customer approves a substitution.    (f) Orders will be packed in professional packaging material including appropriate filler to prevent damage while in transit.    Customer Service shall consist of the following:    (a) Telephone-based order processing Monday through Friday, 7:00am to 9:00pm, Saturday and Sunday, 9:00am to 5:00pm  (Eastern Time).    (b) Telephonic and online (e-mail) customer service Monday through Friday, 8:00am to 7:00pm, Saturday, 9:00am to 5:00pm  (Eastern Time).    (c) Customer service shall address inquiries and complaints with respect to any Merchandise, gift certificates, Catalog orders,  Website orders, etc.

34

Source: PLAYBOY ENTERPRISES INC, 10-Q/A, 2/20/2009





   (d) All costs in connection with postage, printing and stationary expenses incurred by EFS in furtherance of its customer service  obligations hereunder shall be borne solely by EFS.    Order Processing shall consist of the following:    • Mail order processing and data entry  • Phone order processing and data entry  • Fax order processing and data entry  • Check verification processing  • Gift certificate processing and support  • Deposit preparation  • Held order processing for fraud review/AVS  • Customer Service

35

Source: PLAYBOY ENTERPRISES INC, 10-Q/A, 2/20/2009





  Exhibit 4  Photography Costs *      Costs per day for a typical photo shoot (based on a 7-day shoot):    Photographer & Assistants: *****    Equipment & Rentals: *****    Set Design: *****    Styling: *****    Make Up Artist: *****    Playmates/Models: *****    Travel & Hotel: *****    Catering: *****    Estimate: *****

* The information set forth in this Exhibit 4 is provided only as an example and estimate of costs associated a typical  photo shoot. Nothing herein shall be deemed or interpreted as a guarantee of costs or expenses that may be encountered  by EFS.

36

Source: PLAYBOY ENTERPRISES INC, 10-Q/A, 2/20/2009





  Exhibit 5  Guidelines      A. PURPOSE OF GUIDELINES GENERALLY    The purpose of these Guidelines is to help ensure, among other things, that:    1) The Playboy Commerce Business meets the standards of excellence in content, graphic appeal and other qualities that Client and  its affiliates seek to maintain;    2) The Playboy Marks are associated only with material of the type and quality generally associated therewith;    3) The validity and effectiveness of the Playboy Marks and the Playboy Commerce Business and the rights and value therein are  fully protected; and    4) EFS and its affiliates conduct their activities, both relating to the Playboy Commerce Business and otherwise, in a way that does  not jeopardize the Playboy Marks or the reputation and image of any Playboy entity or activity.    B. CONTENT GUIDELINES    *****    C. LANGUAGE    *****    D. PROHIBITED ADVERTISING CONTENT     *****

37

Source: PLAYBOY ENTERPRISES INC, 10-Q/A, 2/20/2009





   Exhibit 6  Staffing





A. Organizational Chart        *****

B. Client Employees to be Hired by EFS        *****

38

Source: PLAYBOY ENTERPRISES INC, 10-Q/A, 2/20/2009





  Exhibit 7  Licensee Exclusives Restricting EFS Produced Merchandise    *****

39

Source: PLAYBOY ENTERPRISES INC, 10-Q/A, 2/20/2009





  Exhibit 9  EFS Produced Merchandise Approval Process



1. EFS understands and agrees that any and all EFS Produced Merchandise and any other items bearing the Playboy Marks or  intended for use in connection with the Merchandise (hereinafter collectively referred to as the Materials) must be approved  in advance in writing by Client through Client's online approval submission system. The Materials include, but are not limited  to, photography, cartons, containers, labels, wrappers, packaging and other inner and outer packaging materials, fixtures,  displays, artwork and printing, advertising, sales, marketing and promotional materials. EFS shall, at its own expense, submit  to Client or its designee for written approval, samples of any EFS Produced Merchandise and the Materials at each stage of  development thereof, which shall include, but not be limited to: (i) an initial sketch or photograph prior to any manufacture  thereof; (ii) a sample prototype or equivalent acceptable to Client; and (iii) two final production-quality samples of that which  will be mass produced or manufactured. EFS must obtain Client's written approval of each stage of development before  proceeding to the next stage, and in no event shall EFS commence or permit the mass manufacture, advertising, promotion,  sale or distribution of any EFS Produced Merchandise or Materials unless and until EFS has received Client's written  approval of the samples provided pursuant to (iii) of this Section 1. In the event Client fails to provide its approval or  disapproval of any or all things submitted to Client pursuant to this Section 1 within ***** of Client's receipt thereof, EFS  may send written notice to Client advising no response was received. If Client does not respond within ***** of Client's  receipt thereof, then Client shall be deemed to have given disapproval.    2. To ensure that EFS Produced Merchandise and the Materials are constantly maintained in conformance with the previously  approved samples pursuant to Section 1 of this Exhibit 9 above, EFS shall, within ten (10) days of receipt of a request from  Client, send or cause to be sent to Client at EFS' expense: (i) such actual samples requested by Client of the EFS Produced  Merchandise and the Materials EFS is using, manufacturing, selling, distributing or otherwise disposing of; and (ii) a listing or  revised listing of each location where any of the EFS Produced Merchandise and the Materials or either thereof are designed,  manufactured, stored or otherwise dealt with, except to the extent such listing or revised listing duplicates currently accurate  information previously provided. Client and its nominees, employees, agents and representatives shall have the right to enter  upon and inspect, at all reasonable hours of the day, any and all such location(s) and to take, without payment, individual  samples of any of the EFS Produced Merchandise and the Materials as Client reasonably requires for the purposes of such  inspection.    3. If any of the EFS Produced Merchandise or Materials sent or taken pursuant to Section 2 of this Exhibit 9 above or that  otherwise come to the attention of Client does or do not conform in Client's sole opinion to the previously approved samples,  Client shall so notify EFS, in writing, specifying in what respect such of the EFS Produced Merchandise or Materials is or are  unacceptable. Immediately upon receipt of such notice, EFS shall suspend all manufacture, sale and distribution of all such  EFS Produced Merchandise and Materials and shall not resume the manufacture, sale or distribution thereof unless and until  EFS has made

42

Source: PLAYBOY ENTERPRISES INC, 10-Q/A, 2/20/2009









    all necessary changes to the satisfaction of Client and has received Client's written re-approval of each of such EFS  Produced Merchandise and Materials.    4. Except as otherwise specifically provided in this Agreement, all EFS Produced Merchandise and/or Materials that are not  approved by Client or that are determined by Client to be non-conforming or unacceptable shall not be sold, distributed or  otherwise dealt with by EFS. All such EFS Produced Merchandise and Materials shall be destroyed by EFS with, if Client so  requests, an appropriate certificate of destruction furnished to Client.    5. Any and all sales, distribution or use by EFS of unapproved, non-conforming or unacceptable EFS Produced Merchandise  or Materials shall not only constitute an incurable default under the terms of this Agreement, but such EFS Produced  Merchandise or Materials also shall be considered unlicensed and an infringement of Client's proprietary rights, and Client  shall have the right to bring legal action against EFS for any and all remedies available to Client in addition to the remedies  available under this Agreement. EFS acknowledges and agrees that to the extent EFS has followed the approval process as  outlined in this Exhibit 9 with respect to EFS Produced Merchandise, EFS shall have had notice of any non-approval, non- conformance and/or unacceptability thereof.    6. Client shall have final approval with respect to the following elements of the Products: (i) selection of Client's images for use  on such Merchandise; (ii) manipulation and adaptation of the Playboy Marks for reproduction on such Merchandise; (iii)  approval of strike offs or other pre-production samples as the parties may agree; and (iv) approval of actual materials to be  used for manufacture of such Merchandise.    7. It is specifically agreed by EFS that there shall be no approval by default. No product may be manufactured unless there is a  written approval by Client.

43

Source: PLAYBOY ENTERPRISES INC, 10-Q/A, 2/20/2009





  Exhibit 10  Payments and Fees    *****

44

Source: PLAYBOY ENTERPRISES INC, 10-Q/A, 2/20/2009





   Exhibit 11  Location-Based Entertainment Partners      Playboy Club at the Palms Casino Resort  Playboy Mansion at Macao Studio City

45

Source: PLAYBOY ENTERPRISES INC, 10-Q/A, 2/20/2009





   Exhibit 12  Time & Action Calendar





EFS Transition Key Dates  Date  Contract Signing 1/15/2008  Shipping & Receiving  IRI to Prepare Inventory for Shipment Week of 1/21/2008  3 Stages  60 Days + Week of 1/28/2008  Majority of Inventory Week of 2/11/2008  Final Shipment Week of 3/1/2008  EFS to Receive Inventory

Customer Service  Transfer of 800 numbers 2/15/2008  Test Orders 2/18/2008-2/23/2008  Create Live Chat 2/15/2008  Turn on phone Lines 3/1/2008  IRI terminates taking returns 6/1/2008  Turn off IRI CS Lines 6/1/2008

Site Development  Recreation of current store design 1/1/2008-2/15/2008  Site Testing 2/23/2008  Change DNS from current Host 2/1/2008  Point DNS to new EFS IP 2/27/2008  Go Live 3/1/2008

Other IT  Abacus/Epsilon Integration 1/1/2008-2/15/2008

PLAYBOY/BUNNY SHOP Summer Catalog 2008  START END  PRODUCTION SCHEDULE  Style Out 11/27/2007 Merchandiser  Samples due Final 12/5/2007  Photography 12/10/2007 12/14/2007 Complete  tabletop pre pro 12/7/2007  TableTop Photography 12/10/2007 12/17/2007 Creative  Page Building 12/12/2007 12/25/2007 Creative  Selects Review 1/3/2008 Mktng/Merch/Crtve  Proof One 1/7/2008 1/11/2008 Mktng/Merch  Proof one Revisions 1/14/2008 1/16/2008 Creative  Proof Two 1/16/2008 1/23/2008 Mktng/Merch  Final Proof 1/28/2008 2/1/2008 Mktng/Merch  Release Pages 2/4/2008 2/8/2008 Separator

46

Source: PLAYBOY ENTERPRISES INC, 10-Q/A, 2/20/2009







          47

Proof Separations 2/11/2008 2/15/2008 Creative/Separator  Files DUE to Printer 2/21/2008 Separator  Printer Proofs DUE 2/22/2008 Printer  Correction Due to Printer 2/22/2008 Creative  ON PRESS 2/25/2008 Printer  PRINTING SCHEDULES  Paper DUE (40 Days Prior) 2/20/2008 Creative  Print Order/Distrib. info Due 2/17/2008 Creative/Mktng  Process Tapes DUE 2/21/2008 Marketing  Postal DUE 3/6/2008 Marketing  Order Form DUE 2/19/2008 Creative  Begin Bindery 2/26/2006 3/2/2006 Printer  DROP 1-IN HOME 3/19/2008 3/21/2008 Printer  DROP 2-IN HOME 4/23/2008 4/25/2008 Printer  DROP 3-IN HOME 5/21/2008 5/23/2008

Source: PLAYBOY ENTERPRISES INC, 10-Q/A, 2/20/2009

A: Highlight the parts (if any) of this contract related to Insurance that should be reviewed by a lawyer. Details: Is there a requirement for insurance that must be maintained by one party for the benefit of the counterparty?
****
Q: EXHIBIT 99.3 Case 18-10248- MFW Doc 632-1 Filed 04/18/18 Page 2 of 60

AGENCY AGREEMENT This Agency Agreement (Agreement) is made as of April 18, 2018, by and between The Bon-Ton Stores, Inc. and its associated chapter 11 debtors in possession (collectively, Merchant),1 on the one hand, and (a) a contractual joint venture comprised of GA Retail, Inc. (GA) and Tiger Capital Group, LLC (Tiger and collectively with GA, the Agent) and (b) Wilmington Savings Fund Society, FSB, as the indenture agent and collateral trustee for the 8.00% second-lien senior secured notes due 2021 (the Second-Lien Notes) issued by BTDS, on the other hand (in such capacities, the Notes Trustee and collectively with Agent, Purchaser). Purchaser and Merchant are collectively the Parties.

Section 1. Recitals

WHEREAS, on February 4, 2018, the entities comprising Merchant commenced ten voluntary chapter 11 bankruptcy cases (the Bankruptcy Cases) in the United States Bankruptcy Court for the District of Delaware (the Bankruptcy Court).

WHEREAS, pursuant to an order of the Bankruptcy Court entered on February 6, 2018 [D.I. 105], the Bankruptcy Cases are being jointly administered under the caption In re The Bon-Ton Stores, Inc., et al., Lead Case No. 18-10248-MFW (Bankr. D. Del.).

WHEREAS, on March 12, 2018, the Bankruptcy Court entered an order (the Bidding Procedures Order) [D.I. 348] that, among other relief, approved bidding procedures (the Bidding Procedures) for and scheduled a hearing (the Sale Approval Hearing) on the approval of the sale of all or substantially of Merchant's assets.

WHEREAS, on March 12, 2018, the Bankruptcy Court entered an order (the Final DIP Order) [D.I. 352] authorizing Merchant to obtain postpetition secured debtor-in-possession financing on a final basis.

WHEREAS, an ad hoc group of holders of $251,325,000 in principal amount of the Second-Lien Notes (the Second Lien Noteholders) has issued a direction to the Notes Trustee to credit bid (the Credit Bid) $125,000,000 of its claims under the indenture governing the Second-Lien Notes (the Notes Claims) as consideration under this Agreement and the Notes Trustee has made the Credit Bid.

WHEREAS, Merchant operates retail stores and desires that the Agent act as Merchant's exclusive agent for the purposes of:

(a) selling all of the Merchandise (as hereinafter defined) from Merchant's retail store locations identified on Exhibit 1(a)(1) attached hereto (each a Store and collectively the Stores) and distribution centers (including e-commerce

1 Merchant consists of The Bon-Ton Stores, Inc.; The Bon-Ton Department Stores, Inc. (BTDS); The Bon-Ton Giftco, LLC; Carson Pirie Scott II, Inc.; Bon- Ton Distribution, LLC; McRIL, LLC; Bonstores Holdings One, LLC; Bonstores Realty One, LLC; Bonstores Holdings Two, LLC; and Bonstores Realty Two, LLC.





Case 18-10248- MFW Doc 632-1 Filed 04/18/18 Page 3 of 60

facilities) identified on Exhibit 1(a)(2) attached hereto (each a Distribution Center and collectively, the Distribution Centers) by means of a going out of business, store closing, sale on everything, everything must go, or similar sale as described further below (the GOB Sale), with the nature and manner of advertising the GOB Sale being in Agent's sole discretion, subject to the terms and conditions of this Agreement and the Sale Guidelines and Approval Order (each as defined below);

(b) marketing and selling, or otherwise designating the purchasers of, the furniture, furnishings, trade fixtures, machinery, equipment, office supplies, Supplies (as defined below), conveyor systems, racking, rolling stock, and other tangible personal property (collectively, FF&E) owned by Merchant, wherever located (Owned FF&E);

(c) designating the assignees of any or all of Merchant's unexpired leases of non-residential real property (together with all amendments, extensions, modifications, and other material documents related thereto, each a Lease and all such Leases collectively, the Leases) and executory contracts (together with all amendments, extensions, modifications, and other material documents related thereto, each a Contract and all such Contracts collectively, the Contracts), in each case excluding any Leases or Contracts that may be rejected as permitted and in accordance with the procedures under the Approval Order (defined below) and subject to the assumption and assignment procedures to be incorporated into the Approval Order;

(d) marketing and selling, and/or otherwise designating the purchasers and/or assignees of any or all real property owned by Merchant (the Owned Real Estate), including but not limited to the real property identified on Exhibit 1(d) annexed hereto;

(e) marketing and selling, and/or otherwise designating the purchasers, assignees, and/or licensees of any or all intellectual property owned by Merchant (the Intellectual Property), including but not limited to the intellectual property identified on Exhibit 1(e) annexed hereto, provided that, the disposition of any Intellectual Property that would result in the sale or lease of personally identifiable information (as such term is defined in section 101(41A) of the Bankruptcy Code) shall be subject to a determination made by a consumer privacy ombudsman appointed in Merchant's chapter 11 cases; and

(f) marketing and selling, and/or otherwise designating the purchasers, licensees, and/or assignees of any or all of Merchant's other real and tangible and intangible personal property (the Other Assets and, collectively with the Merchandise, the Owned FF&E, all Leases, all Contracts, the Owned Real Estate, and the Intellectual Property, the Assets). For the avoidance of doubt, the Other Assets include but are not limited to all cash on hand and in the Debtors' retail store locations, cash in transit, cash in bank accounts, Merchant's interest in and rights with respect to cash posted as collateral for letters of credit, receivables (including

2





Case 18-10248- MFW Doc 632-1 Filed 04/18/18 Page 4 of 60 credit card receivables), deposits, security deposits, credit card processing float, proceeds of retail sales in all of the Debtors' retail store locations from and after the date of this Agreement to the extent not used to pay down the DIP Obligations (as defined in the Final DIP Order), claims and causes of action arising under chapter 5 of the Bankruptcy Code and similar state law (Avoidance Actions), and all other claims and causes of action, including but not limited to commercial tort claims, based on facts and circumstances existing as of the Closing, whether or not theretofore discovered or asserted (Other Causes of Action). Notwithstanding the foregoing, the Assets shall not include (a) the Consulting Agreement by and between Merchant and a joint venture comprised of Hilco Merchant Resources, LLC and Gordon Brothers Retail Partners, LLC (the Phase 1 Consultant), dated January 29, 2018 (the Phase 1 Liquidation Agreement), which shall not be subject to the Lease/Contract Designation Rights (as defined below) or otherwise assumed by Purchaser or (b) the proceeds from the sale of Additional Agent Goods (as defined in the Phase 1 Liquidation Agreement) pursuant to the Phase 1 Liquidation Agreement, other than the Additional Agent Goods Fee due to Merchant under the Phase 1 Liquidation Agreement. Merchant shall not reject or amend the Phase 1 Liquidation Agreement without the express written consent of Purchaser. For the avoidance of doubt, all Net Proceeds, less the Consulting Fee, plus the Additional Agent Goods Fee (each as defined in the Phase 1 Liquidation Agreement) shall constitute Assets under this Agreement and shall be remitted to Purchaser pursuant to the terms hereof.

WHEREAS, the Official Committee of Unsecured Creditors appointed in the Bankruptcy Cases (the Committee) filed an adversary proceeding (the Adversary Proceeding) on March 29, 2018 seeking, among other relief, to avoid certain liens securing the Notes Claims.

NOW, THEREFORE, in consideration of the Purchase Price (defined below) and the mutual covenants and agreements set forth in this Agreement, the Parties hereby agree as follows:

Section 2. Appointment of Agent/Approval Order. Consistent with the Bidding Procedures and as soon as practicable after full execution of this Agreement, Merchant shall file in the Bankruptcy Cases a proposed form of order (the Approval Order) in a form reasonably satisfactory to Merchant and Purchaser. At the Sale Approval Hearing, Merchant shall seek entry of the Approval Order as the Sale Order, as that term is used in the Bidding Procedures Order. The Approval Order shall, among other things:

(a) find that:

(i) this Agreement is in the best interest of Merchant, its estate and creditors, and other parties in interest

(ii) the Parties entered into this Agreement in good faith pursuant to Section 363(m) of the Bankruptcy Code and without collusion as described in Section 363(n) of the Bankruptcy Code;

3





Case 18-10248- MFW Doc 632-1 Filed 04/18/18 Page 5 of 60

(iii) time is of the essence in effectuating this Agreement and proceeding with the GOB Sale at the Stores uninterrupted;

(iv) Merchant's decisions to (a) enter into this Agreement and (b) perform its obligations under this Agreement are a reasonable exercise of Merchant's sound business judgment consistent with its fiduciary duties and is in the best interests of Merchant, its estate, its creditors, and other parties in interest; and

(v) this Agreement was negotiated in good faith and at arms' length and Purchaser is entitled to the protection of section 363(m) and 364(e) of the Bankruptcy Code; and

(b) order, adjudge, and decree that:

(i) this Agreement and all of the transactions contemplated hereby are approved in their entirety;

(ii) the Parties are authorized to continue to take any and all actions as may be necessary or desirable to implement this Agreement and each of the transactions contemplated hereby;

(iii) following the occurrence of the closing under this Agreement, which shall occur no later than April 19, 2018 (the Closing), subject to payment of the Cash Purchase Price (as defined below) and Purchaser's compliance with its other obligations hereunder, Agent shall have the exclusive right to market and sell, and/or otherwise designate the purchasers, licensees, and/or assignees of, any or all of the Assets free and clear of all liens, claims, and encumbrances thereon without further order of the Bankruptcy Court;

(iv) the sale, license, transfer, or other conveyance of any Assets (other than the Assets being sold pursuant to the GOB Sale, as to which no further notice shall be required) reflected in notices filed in the Bankruptcy Cases from time to time by the Agent, substantially in the form annexed hereto as Exhibit 2(b)(iv) (each an Asset Designation Notice), shall be automatically effective on the date reflected in the applicable Asset Designation Notice and subject to the satisfaction of any closing conditions reflected therein, and the sale or other conveyance of such Assets shall be free and clear of all liens, claims, and encumbrances without further order of the Bankruptcy Court, provided, however, that nothing in the Approval Order shall inhibit the ability of Agent to seek other or further orders of the Court in connection with the sale or other disposition of any Assets;

(v) the form of Asset Designation Notice is approved;

4





Case 18-10248- MFW Doc 632-1 Filed 04/18/18 Page 6 of 60

(vi) subject to Agent's compliance with its payment obligations under this Agreement and the Approval Order, Agent is authorized to execute, in the name of and as agent for Merchant, any and all deeds, bills of sale, and other instruments or documents necessary to effectuate the sale, transfer, or other conveyance of any of the Assets;

(vii) following the payment of the Cash Purchase Price but subject to Agent's obligation to pay Expenses and fund the Wind-Down Payment pursuant to the Wind-Down Budget (as defined below), all proceeds (cash or otherwise) of any of the Assets except as otherwise set forth in this Agreement (Proceeds), including but not limited to all Proceeds arising from the sale, lease, licensing, assignment, or other disposition of any of the Assets, shall be the sole property of Purchaser, and Purchaser shall be entitled to retain all Proceeds for its own account, subject to further distribution among the entities comprising Purchaser pursuant to any agreements between the entities comprising Purchaser and the Second Lien Noteholders;

(viii) the Wind-Down / Expense Advance shall be deemed held in escrow for the exclusive purpose of paying (1) Expenses (as defined below) and (2) administrative expenses and other amounts pursuant to and solely as reflected in the Wind-Down Budget (provided that such payments may be made from the Wind-Down / Expense Advance as and when due without further order of the Court or action by any Party), and shall not be used for any other purpose without the express written consent of Agent in its sole discretion;

(ix) following the occurrence of the Closing, subject to Agent's obligation to pay Expenses and fund the Wind-Down Payment, Merchant and any trustee appointed in the Bankruptcy Cases or any successor cases thereto shall hold the Assets (other than the Assets being sold through the GOB Sale and the Wind-Down / Expense Advance) strictly in trust for the benefit of Purchaser and, as such, the Assets shall not constitute property of Merchant's bankruptcy estate pursuant to and consistent with 11 U.S.C. § 541(b)(1) at any time following the Closing;

(x) following the payment of the Cash Purchase Price but subject to Agent's obligation to pay Expenses and fund the Wind-Down Payment, any Proceeds received by, or otherwise in the possession of, Merchant at any time shall be segregated and held strictly in trust for the benefit of Purchaser, shall not be commingled with Merchant's own assets, and, as such, shall not become property of Merchant's bankruptcy estate pursuant to and consistent with 11 U.S.C. §541(b)(1), and shall be paid over to Purchaser immediately;

(xi) upon the payment of the Cash Purchase Price, and solely to the extent that any Assets or Proceeds are, notwithstanding the Approval Order,

5





Case 18-10248- MFW Doc 632-1 Filed 04/18/18 Page 7 of 60

subsequently determined to constitute property of Merchant's estate, but subject to Agent's obligation to pay Expenses and fund the Wind-Down Payment, Purchaser shall have a senior lien on such Assets and all Proceeds thereof, which lien is deemed automatically perfected, provided that nothing in the Approval Order shall inhibit Purchaser's ability, and the Approval Order shall expressly authorize Purchaser, to take any action Purchaser deems appropriate to perfect and enforce such lien;

(xii) upon the payment of the Cash Purchase Price and subject to Agent's obligation to pay Expenses and fund the Wind-Down Payment, until all Assets have been sold or otherwise disposed of, and solely to the extent that any Assets or Proceeds are, notwithstanding the Approval Order, subsequently determined to constitute property of Merchant's estate, Purchaser shall have a superpriority administrative expense claim against Merchant to the extent of any amounts owing from Merchant to Purchaser in connection with this Agreement, including as a result of any breach of this Agreement and/or as a result of any Proceeds being in Merchant's possession;

(xiii) the Lease/Contract Designation Rights are approved, and Purchaser is authorized to designate the assignees of any or all of the Contracts and Leases pursuant thereto;

(xiv) at any time (i) with respect to any unexpired real estate Lease under which Merchant is lessee, prior to the earlier to occur of (1) September 2, 2018 and (2) expiration of such Lease by its terms or the rejection thereof, and (ii) with respect to all other Contracts and Leases, prior to the earlier to occur of (1) December 31, 2018, and (2) rejection thereof (the shortest of the foregoing periods applicable to a particular Contract or Lease is the Designation Rights Period applicable to that Contract or Lease), Purchaser shall have the exclusive right, which right may be exercised at any time and from time to time, to file a notice in the Bankruptcy Cases (each such notice, a Lease/Contract Assumption Notice) substantially in the form annexed hereto as Exhibit 2(b)(xiii) designating the assignee of any one or more Leases and/or Contracts and setting forth the proposed cure amount due pursuant to section 365 of the Bankruptcy Code (each a Cure Amount);

(xv) the counterparties to the Leases or Contracts identified in any Lease/Contract Assumption Notice shall have twenty-one days to object to the proposed assumption and assignment;

(xvi) if no objection to the proposed assumption and assignment of a Lease or Contract is timely received, such Lease or Contract shall, upon payment of the applicable cure payment, if any, to the applicable

6





Case 18-10248- MFW Doc 632-1 Filed 04/18/18 Page 8 of 60

counterparty, automatically be deemed assigned to and assumed by the assignee identified in the Lease/Contract Assumption Notice pursuant to section 365 of the Bankruptcy Code, without further order of the Bankruptcy Court or further action by any person or entity;

(xvii) if an objection to the proposed assumption and assignment of a Lease or Contract is timely received, such Lease or Contract shall not be assumed or assigned until such objection is resolved by agreement of the applicable counterparty or order of the Bankruptcy Court;

(xviii) the designee under any Lease/Contract Assumption Notice shall be required, if requested by the applicable counterparty, to provide adequate assurance of future performance with respect to such Lease or Contract if the applicable counterparty so requests;

(xix) pursuant to section 365(k) of the Bankruptcy Code, neither Merchant nor any other Party shall have any further obligation under any Lease or Contract after assumption and assignment thereof pursuant to the Lease/Contract Designation Rights;

(xx) in addition to the Lease/Contract Designation Rights, Purchaser shall have the right, upon written notice to Merchant and as reflected in notices filed in the Bankruptcy Cases from time to time, direct Merchant to reject any Lease or Contract as specified by Purchaser;

(xxi) at the Closing, all funds held in escrow by Wilmington Trust, National Association (WT) pursuant to that certain Escrow Agreement dated as of March 5, 2018 by and among the members of Agent, the Second Lien Noteholders, and WT shall be released at the Closing for application to the Cash Purchase Price;

(xxii) Agent shall have the exclusive right to use the Stores and all other Assets for the purpose of conducting the GOB Sale, free of any interference from any entity or person, subject to compliance with the Sale Guidelines (as defined below) and Approval Order;

(xxiii) Agent, as the exclusive agent for Merchant, is authorized to conduct, advertise, post signs, utilize sign-walkers, and otherwise promote the GOB Sale as a going out of business, store closing, sale on everything, everything must go, or similar themed sale, in accordance with the Sale Guidelines (as the same may be modified and approved by the Bankruptcy Court), subject to compliance with the Sale Guidelines, the Approval Order, and all applicable federal, state, and local laws, regulations and ordinances, including, without limitation, all laws and regulations relating to advertising, privacy, consumer protection, occupational health and safety and the environment, together with all applicable statutes, rules, regulations and

7





Case 18-10248- MFW Doc 632-1 Filed 04/18/18 Page 9 of 60 orders of, and applicable restrictions imposed by, governmental authorities (collectively, the Applicable General Laws), other than all applicable laws, rules and regulations in respect of going out of business, store closing or similar-themed sales and permitting (collectively, the Liquidation Sale Laws);

(xxiv) Agent is authorized to conduct the GOB Sale notwithstanding any Liquidation Sale Laws;

(xxv) so long as the GOB Sale is conducted in accordance with the Sale Guidelines and the Approval Order and in a safe and professional manner, Purchaser shall be deemed to be in compliance with any Applicable General Laws;

(xxvi) Agent is granted a limited license and right to use all Intellectual Property for purposes of conducting the GOB Sale and otherwise marketing any or all of the Assets;

(xxvii) unless otherwise ordered by the Bankruptcy Court, all newspapers and other advertising media in which the GOB Sale is advertised shall be directed to accept the Approval Order as binding and to allow the Parties to consummate the transactions provided for in this Agreement, including, without limitation, conducting and advertising the GOB Sale in the manner contemplated by this Agreement;

(xxviii) unless otherwise ordered by the Bankruptcy Court, all utilities, landlords, creditors, and other interested parties and all persons acting for or on their behalf shall not interfere with or otherwise impede the conduct of the GOB Sale, or institute any action in any forum other than the Bankruptcy Court that in any way directly or indirectly interferes with or obstructs or impedes the conduct of the GOB Sale;

(xxix) the Bankruptcy Court retains exclusive jurisdiction over the enforcement and interpretation of, and over and all matters arising from, this Agreement;

(xxx) Merchant is directed to provide weekly reporting to Agent of all amounts expended for Expenses and pursuant to the Wind-Down Budget;

(xxxi) Merchant shall make its books and records available to Purchaser at all times;

(xxxii) Purchaser shall not be liable for any claims against Merchant except as expressly provided for in this Agreement;

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(xxxiii) all payments made by Merchant from the Wind-Down Payment shall be made pursuant to, and solely in accordance with, the Wind-Down Budget;

(xxxiv) Purchaser shall neither have nor incur any obligation to advance or fund any amounts to or for Merchant except as set forth in this Agreement and the Wind-Down Budget;

(xxxv) any amendment to or other modification of the Wind-Down Budget shall only be effective upon approval by Purchaser in its sole discretion;

(xxxvi) Agent is authorized to sell the Additional Agent Merchandise on the terms set forth herein, subject to the Sale Guidelines;

(xxxvii) following the occurrence of the Closing, the Adversary Proceeding is deemed dismissed with prejudice;

(xxxviii) following the occurrence of the Closing, neither the Debtor nor any other entity acting on its behalf or as its successor (including but not limited to the Committee and any chapter 7 or 11 trustee) may recover from the Notes Trustee or any holders of Second- Lien Notes any costs or expenses of preserving, or disposing of, any of the collateral securing Merchant's obligations under the Indenture and the Second-Lien Notes pursuant to section 506(c) of the Bankruptcy Code;

(xxxix) Purchaser and its designees are granted derivative standing to pursue the Avoidance Actions (subject to section 11.2(f) below) and Other Causes of Action in the name of and/or on behalf of Merchant;

(xl) in the event any of the provisions of the Approval Order are modified, amended or vacated by a subsequent order of the Bankruptcy Court or any other court, Purchaser shall be entitled to the protections provided in Bankruptcy Code sections 363(m) and 364(e) and, no such appeal, modification, amendment or vacatur shall affect the validity and enforceability of the GOB Sale or the liens or priority authorized or created under this Agreement or the Approval Order;

(xli) neither Purchaser nor any entity comprising Purchaser is or shall be a mere continuation of Merchant or otherwise subject to successor liability in connection with any of the Assets;

(xlii) upon receipt by the DIP Administrative Agent (as defined in the Final DIP Order) and certain other persons as directed in the Payoff Letter (as defined below) of the DIP Payoff (as defined below) pursuant to Section 3.1(a) of this Agreement, all ongoing commitments under the DIP Credit Agreement (as defined in the Final DIP Order) shall be canceled and terminated;

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(xliii) to the extent Purchaser has not designated the purchaser or other assignee of any Assets (the Residual Assets) as of December 31, 2018 (as may be extended by written agreement of the Parties, the Designation Rights Termination Date), (1) ownership of all cash (on hand, in the bank, in transit, or otherwise), credit card processing float, accounts receivable, notes receivable, credit card receivables, other receivables, deposits, security deposits, proceeds of retail sales in all of the Debtors' retail store locations, rights to refunds, other rights to payment, and Intellectual Property comprising Residual Assets shall vest in Purchaser or its nominee and (2) ownership of all other Residual Assets shall revert to the Debtors' estates, each on the Designation Rights Termination Date; and

(xliv) this Agreement, the Approval Order, and all provisions hereof and thereof are binding on any successor to Merchant, including but not limited to any chapter 7 or chapter 11 trustee, and subject to Agent's obligation to pay Expenses and fund the Wind- Down Payment, any such successor shall continue to hold all Assets and Proceeds strictly in trust for the benefit of Purchaser.

Section 3. Consideration to Merchant and Agent.

3.1 Purchase Price. The aggregate consideration being provided to Merchant in exchange for Purchaser's rights and Merchant's obligations under this Agreement is as follows (collectively, the Purchase Price), which shall be allocated among the Assets in accordance with Purchaser's bid letter dated April 4, 2018:

(a) Cash Purchase Price. At the Closing and subject to the receipt of a payoff letter (the Payoff Letter) in form and substance satisfactory to the DIP Administrative Agent, Agent shall (i) pay to the DIP Administrative Agent, for the benefit of the DIP Lenders, and certain other persons as directed in the Payoff Letter, the amount in cash (the DIP Payoff) necessary to (1) indefeasibly pay the Pay-Off Amount (plus any Per Diem Interest) (as each such term is defined in the Payoff Letter), which amount shall include all DIP Obligations, including, without limitation, all outstanding principal, accrued interest, fees (including, without limitation, the outstanding Pre-Petition Tranche A Prepayment Premium and the Pre-Petition Specified Tranche A-1 Prepayment Premium (as each such term is defined in the DIP Credit Agreement)), costs and expenses (including, without limitation, all attorneys' fees, costs and expenses), (2) cash collateralize outstanding letters of credit in accordance with the DIP Credit Agreement, and (3) fund the DIP Indemnity Account in accordance with Paragraph 36 of the Final DIP Order, (ii) fund the Carve Out Account in the amount of $15,800,000 in accordance with the last two sentences of Paragraph 39(c) of the Final DIP Order to be held in escrow in the trust account of Young Conaway Stargatt & Taylor LLP, all as set forth in the Payoff Letter, and (iii) pay $3,000,000 to Merchant to provide liquidity for outstanding checks. Together, items (i), (ii), and (iii) are the Cash Purchase Price. The Payoff Letter shall contain a release from each of the Merchant, the Agent and the Prepetition Second Lien Parties in favor of the DIP Lenders. Each capitalized term used but not defined in this Section 3.1(a) shall have the meaning set forth in the Final DIP Order.

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(b) Credit Bid. At the Closing, pursuant to the Credit Bid and as provided in the Approval Order, $125,000,000 of Notes Claims shall be deemed offset and exchanged for Purchaser's rights and Merchant's obligations under this Agreement.

(c) Wind-Down Funding. Subject to the occurrence of the Closing, in addition to the Cash Purchase Price and the Credit Bid, Agent shall pay cash from the Proceeds of the Assets (or, solely to the extent the Proceeds are not available, funds provided by Agent) to Merchant from time to time after the Closing (the Wind-Down Payment), in the amount of $93,800,000 (the Wind-Down Cap) for the purpose of paying certain administrative expenses of Merchant's bankruptcy estate as set forth in the Wind-Down Budget (as defined below). Payments from the Wind-Down Payment for Wind-Down Services are subject to and to be used solely as set forth in the budget and schedule attached as Exhibit 3.1(c) hereto (as may be amended from time to time by agreement of the Parties, subject to approval by Purchaser in its sole discretion and, solely with respect to compensation of the Committee's professionals, 503(b)(9) Claims, and Stub Rent Claims (each as defined below), subject to approval by the Committee, the Wind-Down Budget). Merchant shall provide Purchaser with a register of all checks and ACH/wire transfers Merchant intends to issue pursuant to the Wind-Down Budget at least one business day before issuance, which register shall identify the payees, amounts, and expense categories of such payments. If so requested by Purchaser, Merchant shall, to the extent commercially feasible, (i) establish separate bank accounts for specific categories of expenses identified in the Wind-Down Budget (the Wind-Down Accounts), (ii) deposit the portions of the Wind-Down Payment allocable to categories for which Wind-Down Accounts have been established into such accounts, and (iii) not pay from any Wind-Down Account any amounts other than the administrative expenses reflected in the Wind-Down Budget for the applicable category. Any portion of the Wind-Down Payment that has not been expended by Merchant as of the Designation Rights Termination Date shall revert and be returned to Purchaser upon the dismissal or conversion of Merchant's chapter 11 bankruptcy cases or the effective date of a plan of liquidation of Merchant. Any costs incurred by Merchant in connection with providing the Wind-Down Services (as defined below) shall be subject to the Wind-Down Budget and subject to the Wind-Down Cap and Merchant shall have no obligation to provide such Wind-Down Services unless the cost to do so is included in the Wind-Down Budget or provided for as an Expense.

(d) Wind-Down / Expense Advance. As necessary from time to time on or before April 28, 2018, Agent shall advance (including through retention of Proceeds by Merchant) to Merchant the aggregate sum of $50,000,000 (the Wind-Down / Expense Advance) solely for payment of (i) Expenses (as defined below) and (ii) administrative expenses reflected in the Wind-Down Budget, as and when due. Any payment from the Wind-Down / Expense Advance (a) of expenses reflected in the Wind-Down Budget shall be credited against the Wind-Down Payment and (b) of Expenses shall constitute a payment of Expenses by Agent. The Wind-Down / Expense Advance shall, to the extent commercially feasible, be held in a segregated account and shall not be used for payment of any amounts other than as set forth in this paragraph 3.1(d).

(e) Expenses. After the Closing, Agent shall be responsible for the payment of all Expenses pursuant to Section 4.1 below.

(f) Assumption of Certain Claims.

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(i) Upon the occurrence of the Closing, Agent shall assume the obligation to pay (a) $2,000,000 (the 503(b)(9) Cap) on account of claims against Merchant under section 503(b)(9) of the Bankruptcy Code (503(b)(9) Claims) and (b) $8,000,000 (the Stub Rent Cap) on account of claims against Merchant on account of stub rent (Stub Rent). An amount equal to the sum of the 503(b)(9) Cap and the Stub Rent Cap shall be placed into a segregated account established by Agent to be held in trust for the benefit of holders of 503(b)(9) Claims and Stub Rent Claims. To the extent the sum of all allowed Stub Rent Claims or 503(b)(9) Claims, as the case may be, exceeds the Stub Rent Cap or the 503(b)(9) Cap, as applicable, such claims shall be paid pro rata up to, and subject to, the Stub Rent Cap or the 503(b)(9) Cap, as applicable. All payments by Agent on account of Stub Rent Claims and 503(b)(9) Claims shall be paid directly to the applicable claimants and shall be credited against the Wind-Down Payment.

(ii) Within ten days after entry of the Approval Order, Merchant shall file and serve upon each known trade creditor and landlord identified in Merchant's books and records as holding a 503(b)(9) Claim and/or a Stub Rent Claim a notice identifying such entity's respective 503(b)(9) Claim or Stub Rent Claim (the Creditor Notice). Each recipient of a Creditor Notice shall have twenty days to file with the Bankruptcy Court and serve upon Merchant, Purchaser, and the Committee a response to such Creditor Notice identifying with specificity any dispute regarding such entity's 503(b)(9) Claim and/or Stub Rent Claim. If no response is timely filed by a recipient of a Creditor Notice, the amount and priority of the 503(b)(9) Claim and/or Stub Rent Claim identified on such Creditor Notice shall be binding and conclusive upon the holder thereof, and such holder shall thereafter be barred from objecting to such amount and priority. If a recipient of a Creditor Notice timely files a response thereto, Merchant and Agent, in consultation with the Committee, shall use best efforts to resolve the dispute asserted therein, provided that disputes that cannot be resolved within ten days shall be resolved by the Bankruptcy Court at the next scheduled omnibus hearing thereafter. The actual out-of-pocket costs of preparing, filing, and serving the Creditor Notice shall be paid by Agent as an Expense. Within sixty days after the entry of the Approval Order, Merchant shall provide Agent with a reconciliation of all of the allowed 503(b)(9) Claims and allowed Stub Rent Claims. Purchaser shall have no obligation to investigate, assess, object to, or contest the merits of any 503(b)(9) Claims or Stub Rent Claims and is entitled to rely on the amounts included on such reconciliation.

(iii) This paragraph 3.1(f) shall survive termination of this Agreement for any reason.

3.2 Consideration to Purchaser.

(a) Proceeds. Upon the payment of the Cash Purchase Price but subject to Agent's obligations to pay the Expenses and the Wind-Down Payment, all Proceeds shall be the exclusive property of Purchaser, subject to further distribution among the entities comprising Purchaser pursuant to any agreements between the entities comprising Purchaser and the Second Lien Noteholders.

(b) Assets and Proceeds Held in Trust. Subject to Section 3.2(a), Merchant shall hold all of the Assets in trust for the benefit of Purchaser. Subject to Section 3.2(a), any

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Proceeds received by, or otherwise in the possession of, Merchant at any time shall be segregated and held strictly in trust for the benefit of Purchaser, shall not be commingled with Merchant's own assets, shall not become property of Merchant's bankruptcy estate, and shall be paid over to Purchaser immediately. For the avoidance of doubt, the costs associated with maintaining the Assets available for sale pursuant to this Agreement shall be borne by Purchaser either as Expenses (as defined below) or through the Wind-Down Payment.

(c) Merchant and Purchaser further agree that if at any time, Merchant holds any amounts due to Purchaser under this Agreement, Merchant may, in its discretion, offset such amounts being held by Merchant against any undisputed amounts due and owing by, or required to be paid by, Purchaser or Agent hereunder.

(d) Remaining Merchandise. To the extent that there is Merchandise remaining at the Sale Termination Date (the Remaining Merchandise), such Remaining Merchandise shall be deemed automatically transferred to Agent free and clear of all liens, claims, and encumbrances. Agent and its affiliates shall be authorized to sell or otherwise dispose of the Remaining Merchandise with all logos, brand names, and other Intellectual Property intact, and shall be authorized to advertise the sale of the Remaining Merchandise using the Intellectual Property.

3.3 Proceeds of GOB Sales.

(a) Following the payment of the Cash Purchase Price but subject to Agent's obligation to pay Expenses and fund the Wind-Down Payment, Agent may (but shall not be required to) establish its own accounts (including without limitation credit card accounts and systems), dedicated solely for the deposit of the Proceeds of the GOB Sales (the GOB Sale Proceeds) and the disbursement of amounts payable to Agent in connection with the GOB Sales (the Agency Accounts), and Merchant shall promptly, upon Agent's reasonable request, execute and deliver all necessary documents to open and maintain the Agency Accounts; provided, however, Agent shall have the right, in its sole and absolute discretion, to continue to use Merchant's Designated Deposit Accounts (as defined below) as the Agency Accounts in which case Merchant's Designated Deposit Accounts shall be deemed to be Agency Accounts. Agent shall exercise sole signatory authority and control with respect to the Agency Accounts. The Agency Accounts shall be dedicated solely to the deposit of GOB Sale Proceeds and other amounts contemplated by this Agreement in connection with the GOB Sale and the distribution of amounts payable hereunder in connection with the GOB Sale. Merchant shall not be responsible for, and Agent shall pay as an Expense hereunder, all bank fees and charges, including wire transfer charges, related to the GOB Sale and the Agency Accounts. Upon Agent's notice to Merchant of Agent's designation of the Agency Accounts (other than Merchant's Designated Deposit Accounts), all GOB Sale Proceeds (including credit card GOB Sale Proceeds) shall be deposited into the Agency Accounts.

(b) Agent shall have the right to use Merchant's credit card facilities, including Merchant's credit card terminals and processor(s), credit card processor coding, Merchant's identification number(s) and existing bank accounts for credit card transactions relating solely to the GOB Sale. In the event that Agent elects to use Merchant's credit card facilities, Merchant shall process credit card transactions on behalf of Agent and for Agent's account, applying

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customary practices and procedures. Without limiting the foregoing, Merchant shall cooperate with Agent to download data from all credit card terminals each day during the Sale Term to effect settlement with Merchant's credit card processor(s), and shall take such other actions necessary to process credit card transactions on behalf of Agent under Merchant's identification number(s). At Agent's request, Merchant shall cooperate with Agent to establish Merchant's identification numbers under Agent's name to enable Agent to process all such credit card GOB Sale Proceeds for Agent's account. Merchant shall not be responsible for, and Agent shall pay as an Expense hereunder, all credit card fees, charges, and chargebacks related to the GOB Sale, whether received during or after the Sale Term. Agent shall not be responsible for, as an Expense or otherwise, any credit card fees, charges, or chargebacks relating to periods prior to the Closing.

(c) Unless and until Agent establishes its own Agency Accounts (other than Merchant's Designated Deposit Accounts), all GOB Sale Proceeds and other amounts contemplated by this Agreement (including credit card GOB Sale Proceeds), shall be collected by Merchant and deposited on a daily basis into depository accounts designated by, and owned and in the name of, Merchant for the Stores, which accounts shall be designated solely for the deposit of GOB Sale Proceeds and other amounts contemplated by this Agreement (including credit card GOB Sale Proceeds), and the disbursement of amounts payable to or by Agent hereunder (the Designated Deposit Accounts). All funds in the Designated Deposit Accounts shall at all times be held in trust for the benefit of Purchaser, subject to Agent's obligation to pay Expenses and fund the Wind-Down Payment. The Designated Deposit Accounts shall be cash collateral accounts, with all cash, credit card payments, checks and similar items of payment, deposits and any other amounts in such accounts being GOB Sale Proceeds or other amounts contemplated hereunder, and Merchant hereby grants to Purchaser, subject to Agent's obligation hereunder to fund the Wind-Down Payment and Expenses, a first priority senior security interest in each Designated Deposit Account and all funds on deposit in such accounts from and after the Closing.

(d) Merchant shall take all actions necessary to designate Agent as an authorized signer on all Designated Deposit Accounts and to grant Agent the ability to initiate wire transfers from such Designated Deposit Accounts, provided that Purchaser's interest in the Designated Deposit Accounts shall be subject to Agent's obligation to pay Expenses and fund the Wind-Down Payment.

(e) On each business day to the extent practicable, Merchant shall promptly pay to Agent by wire funds transfer all funds in the Designated Deposit Accounts (including, without limitation, GOB Sale Proceeds, GOB Sale Proceeds from credit card sales, and all other amounts) deposited into the Designated Deposit Accounts for the prior day(s), subject to Section 3.2(c) above.

Section 4. Expenses.

4.1 Subject to and only upon entry of the Approval Order, in addition to and not subject to the Wind-Down Payment or Wind-Down Cap, Agent shall be unconditionally responsible for all Expenses, which shall be paid by Agent in accordance with Section 4.2

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below. As used herein, Expenses shall mean the Store-level operating expenses that arise during the Sale Term, limited to the following:

(a) actual payroll with respect to all Retained Employees used in connection with conducting the GOB Sale for actual days/hours worked at a Store during the Sale Term as well as payroll for any temporary labor engaged for the GOB Sale during the Sale Term;

(b) any amounts payable by Merchant for benefits for Retained Employees (including FICA, unemployment taxes, workers' compensation and healthcare insurance, but excluding Excluded Payroll Benefits) for Retained Employees used in the GOB Sale, in an amount not to exceed 23% of the base payroll for all Retained Employees (the Payroll Benefits Cap);

(c) subject to Section 6.1, the actual Occupancy Expenses categorized on Exhibit 4.1(c) in all cases limited on a per Store, per diem basis not to exceed the respective aggregate monthly amounts shown on Exhibit 4.1(c);

(d) Retention Bonuses for Retained Employees, as provided for in Section 9.4 below;

(e) advertising and direct mailings relating to the GOB Sale, Store interior and exterior signage and banners, and sign-walkers, in each case relating to the GOB Sale, including the amounts set forth in section 15.1;

(f) credit card fees, bank card fees, and chargebacks and credit/bank card discounts with respect to Merchandise sold in the GOB Sale;

(g) bank service charges (for Store, corporate accounts, and Agency Accounts), check guarantee fees, and bad check expenses to the extent attributable to the GOB Sale;

(h) costs for additional Supplies at the Stores necessary to conduct the GOB Sale as and to the extent requested by Agent;

(i) all fees and charges required to comply with applicable laws in connection with the GOB Sale as and to the extent agreed to by Agent;

(j) Store cash theft and other store cash shortfalls in the registers;

(k) all actual costs and expenses associated with Agent's on-site supervision of the Stores and Distribution Centers, including (but not limited to) any and all fees, wages, taxes, third party payroll costs and expenses, and deferred compensation of Agent's field personnel, travel to, from or between the Stores and Distribution Centers, and out-of-pocket and commercially reasonable expenses relating thereto (including reasonable and documented corporate travel to monitor and manage the GOB Sale);

(l) postage, courier and overnight mail charges requested by Agent to the extent relating to the GOB Sale;

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(m) third party payroll processing expenses associated with the GOB Sale;

(n) costs of transfers initiated by Agent of Merchandise and Additional Agent Merchandise between and among the Stores and Distribution Centers during the Sale Term, including delivery and freight costs, it being understood that Agent shall be responsible for coordinating such transfer of Merchandise;

(o) retention payments for Merchant's corporate employees in an amount not to exceed $300,000 in the aggregate, subject to agreement of Merchant and Purchaser in their respective discretion;

(p) to the extent Agent elects to use Merchant's e-commerce site and related sales platform (E-Commerce Platform), costs of operating the E- Commerce Platform equal to (i) actual expenses to operate the E-Commerce Platform in an amount equal to $300,000 per week (prorated for partial weeks), plus (ii) the actual costs of shipping Online Merchandise to customers who purchase such Online Merchandise through the E-Commerce Platform from the Sale Commencement Date through and including the date that is seven (7) days after Agent provides Merchant with notice of Agent's intention to discontinue using the E-Commerce Platform as a sales platform to fulfill customer orders, plus (iii) actual marketing expenses related to the E-Commerce Platform specifically requested by Agent in writing (including by email) such as, but not limited to, paid search and external advertising; and

(q) compensation of a consumer privacy ombudsman, if one is appointed by the United States Trustee, subject to approval of such compensation by the Bankruptcy Court.

Notwithstanding anything herein to the contrary, to the extent that any Expense category listed in section 4.1 is also included on Exhibit 4.1(c), Exhibit 4.1(c) shall control and such Expenses shall not be double counted. There will be no double counting or payment of Expenses to the extent that Expenses appear or are contained in more than one Expense category.

As used herein, the following terms have the following respective meanings:

(i) Central Service Expenses means costs and expenses for Merchant's central administrative services necessary for the GOB Sale, including, but not limited to, internal payroll processing, MIS services, cash and inventory reconciliation, data processing and reporting, information technology updates, functionality, and maintenance, and accounting (collectively, Central Services).

(ii) Excluded Payroll Benefits means (i) the following benefits arising, accruing or attributable to the period prior to, during, or after the Sale Term: (w) vacation days or vacation pay, (x) sick days or sick leave or any other form of paid time off, (y) maternity leave or other leaves of absence and (z) ERISA coverage and similar contributions and/or (ii) any other benefits in excess of the Payroll Benefits Cap, including, without limitation, any payments due under the WARN Act.

(iii) Occupancy Expenses means, with respect to the Stores, base rent, percentage rent, HVAC, utilities, CAM, storage costs, real estate and use taxes, Merchant's association dues and expenses, utilities expenses, cash register maintenance, routine repairs,

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building maintenance, trash and snow removal, housekeeping and cleaning expenses, local and long-distance telephone and internet/wifi expenses, security (including, without limitation, security systems, courier and guard service, building alarm service and alarm service maintenance), and rental for furniture, fixtures and equipment.

(iv) Third Party means, with reference to any Expenses to be paid to a Third Party, a party which is not affiliated with or related to Merchant.

(v) Notwithstanding any other provision of this Agreement to the contrary, Expenses shall not include: (i) Excluded Payroll Benefits; (ii) Central Service Expenses, (iii) Occupancy Expenses or any occupancy-related expenses of any kind or nature in excess of the respective per Store occupancy- related amounts expressly provided for as an Expense under Section 4.1(c) above; (iv) any expenses of any kind relating to or arising from Merchant's home office, and/or (v) any other costs, expenses or liabilities payable by Merchant not provided for herein, all of which shall be paid solely by Merchant (including from the Wind-Down Payment, to the extent provided in the Wind-Down Budget).

4.2 Payment of Expenses.

Subject to and only upon entry of the Approval Order, Agent shall be responsible for the payment of all Expenses out of Proceeds (or from Agent's own accounts if and to the extent there are insufficient Proceeds). All Expenses incurred during each week of the GOB Sale (i.e. Sunday through Saturday) shall be paid by Agent to or on behalf of Merchant, or paid by Merchant and thereafter reimbursed by Agent as provided for herein; provided, however, in the event that the actual amount of an Expense is unavailable on the date of the reconciliation (such as payroll), Merchant and Agent shall agree to an estimate of such amounts, which amounts will be reconciled once the actual amount of such Expense becomes available. Agent and/or Merchant may review or audit the Expenses at any time.

4.3 Distribution Center Expenses

Agent shall be responsible for allocating and designating the shipment of Merchandise from Merchant's Distribution Centers to the Stores. All costs and expenses of operating the Distribution Centers, including, but not limited to, use and occupancy expenses, Distribution Center employee payroll and other obligations, and/or processing, transferring, consolidating, shipping, and/or delivering goods within or from the Distribution Centers (the Distribution Center Expenses), shall be borne by Agent as an Expense except to the extent provided for in the Wind-Down Budget.

Section 5. Merchandise.

5.1 Merchandise Subject to This Agreement.

(a) Excluded Goods means all (1) goods that are not owned by Merchant, including but not limited to goods that belong to sublessees, licensees, department lessees, or concessionaires of Merchant and (2) goods held by Merchant on memo, on consignment (except to the extent otherwise agreed by the applicable consignor), or as bailee. Merchant shall be

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solely responsible for the disposition and/or abandonment of all Excluded Goods and all costs, expenses, and obligations associated therewith. Purchaser shall incur no cost, expense, or obligation in connection with any Excluded Goods.

(b) Merchandise means all goods owned by Merchant for resale as of the occurrence of the Closing, other than Excluded Goods.

(c) On-line Merchandise means all inventory that is both (i) designated for sale through the E-Commerce Platform as of the Sale Commencement Date and (ii) located in Merchant's West Jefferson Distribution Center as of the Sale Commencement Date.

5.2 Distribution Center Allocation. Allocation and designation of Merchandise located in the Distribution Centers to the Stores shall be in Agent's sole discretion, subject to the Wind-Down Budget.

Section 6. Sale Term.

6.1 Term. Subject to satisfaction of the conditions precedent set forth in Section 10 hereof, the GOB Sale shall commence at each Store on a date determined by Agent in its sole discretion after the occurrence of the Closing (the Sale Commencement Date) and shall end at each Store no later than August 31, 2018 (the Sale Termination Date, and the period from the Sale Commencement Date to the Sale Termination Date as to each Store being the Sale Term), provided that the Sale Commencement Date shall occur no later than April 19, 2018. Agent may, in its discretion, earlier terminate the GOB Sale on a Store-by- Store basis upon not less than seven (7) days' prior written notice (a Vacate Notice) to Merchant (the Vacate Date), provided, that it being understood that Agent's obligations to pay all Expenses, including Occupancy Expenses, for each Store subject to a Vacate Notice shall continue until the applicable Vacate Date, provided, however, that, with respect to Occupancy Expenses, Agent's obligations to pay all Occupancy Expenses for each Store shall continue until the last day of the calendar month in which the Vacate Date occurs for such Store.

6.2 Vacating the Stores. At the conclusion of the GOB Sale, Agent agrees to leave each Store in broom clean condition, ordinary wear and tear excepted, except for unsold items of Owned FF&E which may be abandoned by Agent in place in a neat and orderly manner pursuant to Section 7 below. Agent shall vacate each Store on or before the Sale Termination Date as provided for herein, at which time Agent shall surrender and deliver the Store premises, and Store keys, to Merchant unless the applicable Lease is being conveyed pursuant to the Lease/Contract Designation Rights. Agent's obligations to pay all Expenses for the Stores shall continue as provided for in Section 6.1.

Section 7. FF&E.

7.1 Abandonment of FF&E. Agent shall be authorized to abandon any and all FF&E, whether owned or not by Merchant, in place without any cost or liability to Agent. For the avoidance of doubt, Agent shall have no responsibility whatsoever with respect to FF&E that is not owned by Merchant, provided that nothing in this Section 7 shall limit Agent's rights with

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respect to Owned FF&E under the Asset Designation Rights or with respect to leased FF&E under the Lease/Contract Designation Rights.

Section 8. Conduct of the GOB Sale.

8.1 Rights of Agent. Subject to entry of the Approval Order, in addition to any other rights granted to Agent elsewhere in this Agreement, Agent shall be permitted to conduct the GOB Sale as a going out of business, store closing, sale on everything, everything must go, or similar themed sale throughout the Sale Term without compliance with any Liquidation Sale Laws. The Agent shall conduct the GOB Sale in the name of and on behalf of Merchant in a commercially reasonable manner and in compliance with the terms of this Agreement and subject to the Approval Order. Agent shall conduct the GOB Sale in accordance with the sale guidelines attached hereto as Exhibit 8.1(the Sale Guidelines). In addition to any other rights granted to Agent hereunder in conducting the GOB Sale the Agent, in the exercise of its reasonable discretion shall have the right:

(a) to establish Sale prices and discounts and Store hours;

(b) except as otherwise expressly included as an Expense, to use without charge during the Sale Term all FF&E, computer hardware and software, existing Supplies, intangible assets (including Merchant's name, logo and tax identification numbers), Store keys, case keys, security codes and safe and lock combinations required to gain access to and operate the Stores, and any other assets of Merchant located at the Stores (whether owned, leased, or licensed);

(c) (i) consistent with the Wind-Down Budget, to be provided by Merchant with central office facilities, central administrative services and personnel to process and perform Central Services and provide other central office services reasonably necessary for the GOB Sale; (ii) to use reasonably sized offices located at Merchant's central office facility to effect the GOB Sale; and (iii) to use all customer lists, mailing lists, email lists, and web and social networking sites utilized by Merchant in connection with its business (to the extent such items can be segregated to the Stores and solely in connection with the GOB Sale and pursuant to such reasonable restrictions requested by Merchant in order for Merchant to comply with its privacy policy and applicable laws governing the use and dissemination of confidential consumer personal data);

(d) to establish and implement advertising, signage and promotion programs consistent with the going out of business, store closing, sale on everything, everything must go, or similar themed sale, including without limitation by means of media advertising, and similar interior and exterior signs and banners, and the use of sign walkers, each at Agent's expense; and

(e) to transfer Merchandise between and among the Stores and Distribution Centers at Agent's expense.

8.2 Terms of Sales to Customers; Final/As Is Sales. All sales of Merchandise will be final sales and as is, and appropriate signage and sales receipts will reflect the same. Agent

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shall not warrant the Merchandise in any manner, but will, to the extent legally permissible, pass on all manufacturers' warranties to customers. All sales will be made only for cash or nationally recognized bank credit cards. Upon entry of the Approval Order, Agent shall not accept or honor coupons during the Sale Term. The Agent shall clearly mark all receipts for the Merchandise sold at the Stores during the Sale Term so as to distinguish such Merchandise from the goods sold prior to the Sale Commencement Date. Unless otherwise agreed between Agent and the issuer of Merchant's private-label credit cards (PLCCs), Agent shall not accept PLCCs as a form of payment during the Sale.

8.3 Sales Taxes.

(a) During the Sale Term, all sales, excise, gross receipts and other taxes attributable to sales of Merchandise and Additional Agent Merchandise, as indicated on Merchant's point of sale equipment (other than taxes on income) payable to any taxing authority having jurisdiction (collectively, Sales Taxes) shall be added to the sales price of Merchandise and Additional Agent Merchandise and collected by Agent, on Merchant's behalf, at the time of sale. All Sales Taxes shall be deposited into a segregated account designated by Merchant and Agent solely for the deposit of such Sales Taxes (the Sales Taxes Account). Merchant shall prepare and file all applicable reports and documents required by the applicable taxing authorities, and Merchant shall promptly pay all Sales Taxes from the Sales Taxes Account. Merchant will be given access to the computation of gross receipts for verification of all such tax collections. Provided that Agent performs its responsibilities in accordance with this Section 8.3, Agent shall have no further obligation to Merchant, any taxing authority, or any other party, and Merchant shall indemnify and hold harmless Agent from and against any and all costs, including, but not limited to, reasonable attorneys' fees, assessments, fines or penalties which Agent sustains or incurs as a result or consequence of the failure by Merchant to promptly pay such taxes to the proper taxing authorities and/or the failure by Merchant to promptly file with such taxing authorities all reports and other documents required by applicable law to be filed with or delivered to such taxing authorities. If Agent fails to perform its responsibilities in accordance with this Section 8.3, and provided Merchant complies with its obligations hereunder, Agent shall indemnify and hold harmless Merchant from and against any and all costs, including, but not limited to, reasonable attorneys' fees, assessments, fines or penalties which Merchant sustains or incurs as a result or consequence of the failure by Agent to collect Sales Taxes and/or the failure by Agent to promptly deliver any and all reports and other documents required to enable Merchant to file any requisite returns with such taxing authorities.

(b) Without limiting the generality of Section 8.3(a) hereof, it is hereby agreed that, as Agent is conducting the GOB Sale solely as agent for Merchant, various payments that this Agreement contemplates that one party may make to the other party (including the payment by Agent of the Guaranteed Amount) do not represent the sale of tangible personal property and, accordingly, are not subject to Sales Taxes.

8.4 Supplies. Agent shall have the right to use, without charge, all existing supplies located at the Stores, Distribution Centers and corporate office(s), including, without limitation, boxes, bags, paper, twine and similar sales materials (collectively, Supplies). In the event that additional Supplies are required in any of the Stores during the GOB Sale, Merchant agrees to

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promptly provide the same to Agent, if available, for which Agent shall reimburse Merchant at Merchant's cost therefor.

8.5 Returns of Merchandise. Agent shall accept returns of goods sold by Merchant prior to the Closing for a period of ten days from and including the Sale Commencement Date. Thereafter, Agent shall have no obligation to accept returns of goods sold by Merchant prior to the Closing. Agent's acceptance of returns shall not impact the Wind-Down Budget or the Wind-Down Cap.

8.6 Gift Certificates & Credits. Agent shall accept Merchant's gift certificates, gift cards, store credits, return credits, or similar merchandise credits issued by Merchant (collectively, Gift Certificates) for a period of ten days from and including the Sale Commencement Date. Thereafter, Agent shall have no obligation to accept Gift Certificates. Agent's acceptance of Gift Certificates shall not impact the Wind-Down Budget or the Wind-Down Cap.

8.7 Right to Monitor. Merchant shall have the right to monitor the GOB Sale and activities attendant thereto and to be present in the Stores during the hours when the Stores are open for business; provided that Merchant's presence does not unreasonably disrupt the conduct of the Sale. Merchant shall also have a right of access to the Stores at any time in the event of an emergency situation and shall promptly notify Agent of such emergency.

8.8 Sale Reconciliation. On each Wednesday during the Sale Term, Agent and Merchant shall cooperate to reconcile Expenses, make payments/setoffs on account of the GOB Sale Proceeds and reconcile such other GOB Sale-related items as either party shall reasonably request, in each case for the prior week or partial week (i.e. Sunday through Saturday), all pursuant to procedures agreed upon by Merchant and Agent (the Weekly Sale Reconciliation). Within thirty (30) days after the end of the Sale Term, or as soon as practicable thereafter, Agent and Merchant shall complete a final reconciliation of the Sale (the Final Reconciliation), the written results of which shall be certified by representatives of each of the Merchant and Purchaser as a final settlement of accounts between the Merchant and Purchaser with respect to the GOB Sale. Within five (5) days after the completion of the Final Reconciliation and execution of a settlement letter including an appropriate mutual release for the benefit of Merchant and Purchaser, Agent shall pay to Merchant, or Merchant shall pay to Agent, as the case may be, any and all amounts due the other pursuant to the Final Reconciliation. The Approval Order shall provide that the Final Reconciliation, once agreed to by Merchant and Purchaser, shall be automatically deemed approved pursuant to Bankruptcy Code section 105(a) and Rule 9019 of the Federal Rules of Bankruptcy Procedure without further order of the Bankruptcy Court or action by any party. During the Sale Term, and thereafter until all of Merchant's and Purchaser's and Agent's obligations under this Agreement have been satisfied, Merchant and Purchaser shall have reasonable access to Merchant's and Purchaser's records with respect to the GOB Sale (including, but not limited to Merchandise, GOB Sale Proceeds, and Expenses) to review and audit such records.

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8.9 Additional Agent Merchandise.

(a) Agent shall be entitled to include in the Sale additional merchandise procured by Agent which is of like kind as, and no lesser quality to, the Merchandise located in the Stores (Additional Agent Merchandise). Agent shall be responsible for payment of all costs associated with any Additional Agent Merchandise. All proceeds of the sale of Additional Agent Merchandise shall remain the exclusive property of Agent.

(b) The Additional Agent Merchandise shall be at all times subject to the control of Agent. If requested by Agent, Merchant shall, at Agent's expense, insure the Additional Agent Merchandise and, if required, promptly file any proofs of loss with regard to same with Merchant's insurers.

(c) Any transactions relating to the Additional Agent Merchandise are, and shall be construed as, a true consignment from Agent to Merchant. Merchant acknowledges, and the Approval Order (as and when applicable) shall provide, that the Additional Agent Merchandise shall be consigned to Merchant as a true consignment under Article 9 of the Uniform Commercial Code in effect in the State of Delaware (the UCC). Agent is hereby, and shall be through the Approval Order, granted a first priority security interest in (i) the Additional Agent Merchandise and (ii) the Additional Agent Merchandise Proceeds, which security interest shall be deemed perfected pursuant to the Approval Order without the requirement of filing UCC financing statements or providing notifications to any prior secured parties (provided that Agent is hereby authorized to deliver any notices and file any financing statements and amendments thereof under the applicable UCC identifying Agent's interest in the Additional Agent Merchandise and any proceeds from the sale thereof as consigned goods thereunder and Merchant as the consignee therefor, and Agent's security interest in such Additional Agent Merchandise and Additional Agent Merchandise proceeds.

(d) Agent shall provide signage in the Stores notifying customers that the Additional Agent Merchandise has been included in the Sale.

8.10 E-Commerce Platform. Subject to the Wind-Down Budget and payment of Expenses, Agent shall use the E-Commerce Platform in connection with the GOB Sale to fulfill customer orders made during the GOB Sale Term and otherwise promote the GOB Sale (in Agent's capacity as Agent hereunder), provided that Agent shall have the option, in its sole discretion, to terminate the use of the E-Commerce Platform at any time after four weeks of use. During the use of the E-Commerce Platform, and consistent with the Wind-Down Budget (i) Merchant shall continue to provide for the operation and maintenance of the E-Commerce Platform, including information technology and E-Commerce Platform updates, and provide Agent with all assistance with respect to the functionality of the E-Commerce Platform, fulfillment of orders, and promotion of the GOB Sale and (ii) Agent shall pay as an Expense those amounts reflected in Section 4.1(p) through and including the date that is seven (7) days after Agent provides Merchant with notice of Agent's intention to discontinue using the E-Commerce Platform as a sales platform to fulfill customer orders (the LDOB Date); provided, however, that, if Agent continues the Sale at the Stores after the LDOB Date, Merchant shall, as a Central Service and at no cost or expense to Agent (other than as provided in the Wind-Down Budget), maintain the E-Commerce Platform with limited functionality for the limited purposes

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of advertising and promoting the Sale at the Stores, periodically updating such advertising and promotions, and maintaining and updating the Store locator function at no cost or expense to Agent. With respect to the E-Commerce Platform, (i) Agent shall be authorized to sell Additional Agent Goods through the E- Commerce Platform and (ii) the Parties may implement such other processes, procedures, and agreements as may be necessary or appropriate for the efficient and continued operation of the E-Commerce Platform. In the event Agent elects to discontinue using the E-Commerce Platform as a sales platform to fulfill customer orders, Merchant agrees that neither Merchant nor any other person or entity shall complete any sale of goods for Merchant's or any other person's or entity's account utilizing the E-Commerce Platform during the GOB Sale Term, Merchant shall otherwise comply with Merchant's obligations under this Agreement in respect of the E-Commerce Platform, and Merchant shall, as a Central Service and at no cost or expense to Agent (other than as provided in the Wind-Down Budget), maintain the E-Commerce Platform with limited functionality for the limited purposes of advertising and promoting the GOB Sale at the Stores, periodically updating such advertising and promotions, and maintaining and updating the Store locator function. As part of the Allocation Schedule, Merchant and Agent shall mutually agree upon an allocation of certain On-line Merchandise to be promptly delivered to the Stores and not sold through the E-Commerce Platform (the Designated On-line Merchandise). In the event Agent ceases using the E-Commerce Platform as a sales platform prior to the Sale Termination Date, Merchant shall be responsible for processing and ticketing all Merchandise not sold through the E-Commerce Platform for sale in the Stores and delivering any remaining On-line Merchandise (the Remaining On-line Merchandise) to the Stores according to a mutually agreed upon allocation schedule.

Section 9. Employee Matters.

9.1 Merchant's Employees. Subject to the Wind-Down Budget and payment of Expenses, Agent may use Merchant's employees in the conduct of the Sale to the extent Agent deems necessary for the Sale, and Agent may select and schedule the number and type of Merchant's employees required for the Sale. Agent shall identify any such employees to be used in connection with the Sale (each such employee, a Retained Employee). Notwithstanding the foregoing, Merchant's employees shall at all times remain employees of Merchant. Agent's selection and scheduling of Merchant's employees shall at all times comply with all applicable laws and regulations. Merchant and Agent agree that, except to the extent that wages and benefits of Retained Employees constitute Expenses hereunder, nothing contained in this Agreement and none of Agent's actions taken in respect of the Sale shall be deemed to constitute an assumption by Agent of any of Merchant's obligations relating to any of Merchant's employees including, without limitation, Excluded Payroll Benefits, Worker Adjustment Retraining Notification Act (WARN Act) claims and other termination type claims and obligations, or any other amounts required to be paid by statute or law; nor shall Agent become liable under any employment agreement, collective bargaining agreement, or be deemed a joint or successor employer with respect to such employees. For the avoidance of doubt, Merchant shall be responsible for providing any required notice under the WARN Act with respect to its employees and otherwise comply with the WARN Act with respect to any plant closing or mass layoff' (as defined in the WARN Act) or group termination or similar event affecting the employees, whether before or after the date of this Agreement. Merchant shall not, without the prior consent of Agent, raise the salary or wages or increase the benefits for, or pay any bonuses

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or other extraordinary payments to, any Store or Distribution Center employees prior to the Sale Termination Date. Merchant shall not transfer any employee in anticipation of the Sale nor any Retained Employee during the Sale Term, in each case without Agent's prior consent. To the extent reasonably requested by Agent, and at Agent's expense, Merchant shall use commercially reasonable efforts to hire additional temporary employees to facilitate the GOB Sale, which employees shall constitute Retained Employees for purposes of this Agreement.

9.2 Termination of Employees. Agent may in its discretion stop using any Retained Employee at any time during the Sale, subject to the conditions provided for herein. In the event that Agent desires to cease using any Retained Employee, Agent shall notify Merchant at least seven (7) days prior thereto; provided, however, that, in the event that Agent determines to cease using an employee for cause (such as dishonesty, fraud or breach of employee duties), the seven (7) day notice period shall not apply; provided, further, however, that Agent shall immediately notify Merchant of the basis for such cause. From and after the date of this Agreement and until the Sale Termination Date, Merchant shall not transfer or dismiss employees of the Stores or Distribution Centers except for cause without Agent's prior consent. Notwithstanding the foregoing, Agent shall not have the right to terminate the actual employment of any employee, but rather may only cease using such employee in the Sale and paying any Expenses with respect to such employee (and all decisions relating to the termination or non-termination of such employees shall at all times rest solely with Merchant).

9.3 Payroll Matters. During the Sale Term, Merchant shall process the payroll for all Retained Employees and any former employees and temporary labor engaged for the Sale. Each Wednesday (or such other date as may be reasonably requested by Merchant to permit the funding of the payroll accounts before such payroll is due and payable) during the Sale Term, Agent shall transfer to Merchant's payroll accounts an amount equal to the base payroll for Retained Employees plus related payroll taxes, workers' compensation and benefits for such week, to the extent such amount constitutes Expenses hereunder.

9.4 Employee Retention Bonuses. Subject to approval by the Bankruptcy Court, Agent may pay, as an Expense, retention bonuses and/or severance pay (Retention Bonuses) (which bonuses shall be inclusive of payroll taxes, but as to which no benefits shall be payable), up to a maximum of $7,400,000 in the aggregate, to such Retained Employees who do not voluntarily leave employment, are not otherwise entitled to receive severance pay, and are not terminated for cause, as Agent may determine in its discretion. Subject to approval by the Bankruptcy Court, the amount of such Retention Bonuses shall be in an amount to be determined by Agent, in its discretion, and shall be payable within thirty (30) days after the Sale Termination Date, and shall be processed through Merchant's payroll system.

Section 10. Conditions Precedent and Subsequent.

(a) The willingness of Purchaser to enter into the transactions contemplated under this Agreement, and the occurrence of the Closing, are directly conditioned upon the satisfaction of the following conditions at the time or during the time periods indicated, unless specifically waived in writing by Purchaser in its sole discretion:

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(i) Entry of the Approval Order shall have occurred no later than April 18, 2018;

(ii) All representations and warranties of Merchant hereunder shall be true and correct in all material respects as of the Closing, and Merchant shall have in all material respects performed the obligations and complied with the covenants required by this Agreement to be performed or complied with by it prior to the Closing; and

(iii) All of the Parties shall have executed this Agreement.

(b) The willingness of Merchant to enter into the transactions contemplated under this Agreement, and the occurrence of the Closing, are directly conditioned upon the satisfaction of the following conditions at the time or during the time periods indicated, unless specifically waived in writing by Merchant:

(i) The Bankruptcy Court shall have entered the Approval Order no later than April 18, 2018;

(ii) All representations and warranties of Purchaser hereunder shall be true and correct in all material respects as of the Closing, and Purchaser shall have in all material respects performed the obligations and complied with the covenants required by this Agreement to be performed or complied with by it prior to the Closing; and

(iii) All of the Parties shall have executed this Agreement.

Section 11. Representations, Warranties and Covenants.

11.1 Merchant's Representations, Warranties and Covenants. Merchant hereby represents, warrants and covenants in favor of Purchaser as follows:

(a) As of the date of this Agreement and at the Closing, Merchant (i) is duly organized, validly existing and in good standing under the laws of State of Delaware; (ii) has all requisite corporate power and authority to own, lease and operate the Assets and to carry on its business as presently conducted; (iii) is, and during the Sale Term will continue to be, duly authorized and qualified to do business and in good standing in each jurisdiction where the nature of its business or properties requires such qualification, including all jurisdictions in which the Stores are located, except, in each case, to the extent that the failure to be in good standing or so qualified could not reasonably be expected to have a material adverse effect on the ability of Merchant to execute and deliver this Agreement and perform fully its obligations hereunder; and (iv) has paid when due, and until the sale or other disposition of all of the Assets, will continue to pay when due, all United States Trustee fees.

(b) Subject only to entry of the Approval Order, Merchant, as of the date of this Agreement and at the Closing, has the right, power and authority to execute and deliver this Agreement and each other document and agreement contemplated hereby (collectively, together with this Agreement, the Agency Documents) and to perform fully its obligations thereunder. Merchant has taken all necessary actions required to authorize the execution, delivery and performance of the Agency Documents, and no further consent or approval is required for

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Merchant to enter into and deliver the Agency Documents, to perform its obligations thereunder and to consummate the Sale, except for any such consent the failure of which to be obtained could not reasonably be expected to prevent or materially delay or impair the ability of Merchant to execute and deliver this Agreement and perform fully its obligations hereunder. Each of the Agency Documents has been duly executed and delivered by Merchant and, upon the due authorization, counter-execution, and delivery of this Agreement by Purchaser, constitutes the legal, valid and binding obligation of Merchant enforceable in accordance with its terms.

(c) The Cash Purchase Price determined pursuant to Section 3.1(a) above shall not exceed $574,831,000 as of April 19, 2018.

(d) Merchant, as of the date of this Agreement and at the Closing, owns good and marketable title to all of the Assets, free and clear of all security interests, liens, claims and encumbrances of any nature other than the security interests securing the DIP Obligations (as defined in the Final DIP Order) and the Second-Lien Notes. Merchant shall not create, incur, assume or suffer to exist any security interest, lien or other charge or encumbrance upon or with respect to any of the Assets. From and after the Closing, subject to the Wind-Down Budget, Merchant shall perform such tasks and services as are necessary to maintain all of the Assets in salable condition, to preserve the Assets and the economic value thereof, and to maintain good, clear, and marketable title to all of the Assets at all times until all Assets have been sold or otherwise disposed of, and such tasks and services as Purchaser may otherwise reasonably request in connection with the Assets, including but not limited to paying all ad valorem taxes and utilities when due, performing all routine maintenance, cooperating with Purchaser to obtain the refund of all deposits and security deposits, and renewing all necessary licenses and registrations (collectively, all of the foregoing are the Wind-Down Services).

(e) Merchant has maintained its pricing files in the ordinary course of business, and prices charged to the public for goods are the same in all material respects as set forth in such pricing files for the periods indicated therein, all pricing files and records are true and accurate in all material respects as to the actual cost to Merchant for purchasing the goods referred to therein and as to the selling price to the public for such goods without consideration of any point of sale discounts, as of the dates and for the periods indicated therein. Merchant represents that (i) the ticketed prices of all items of Merchandise do not and shall not include any Sales Taxes and (ii) all registers located at the Stores are programmed to correctly compute all Sales Taxes required to be paid by the customer under applicable law, as such calculations have been identified to Merchant by its retained service provider.

(f) Through the Sale Commencement Date, Merchant has ticketed or marked, and shall continue to ticket or mark, all items of inventory received at the Stores in a manner consistent with similar Merchandise located at the Stores, and in accordance with Merchant's ordinary course past practices and policies relative to pricing and marking inventory.

(g) Since March 1, 2018, Merchant has not, and through the Sale Commencement Date Merchant shall not, purchase for or transfer to or from the Stores any merchandise or goods outside the ordinary course.

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(h) To Merchant's knowledge after reasonable inquiry, all Merchandise is in compliance with all applicable federal, state and local product safety laws, rules and standards. Merchant shall provide Agent with its historic policies and practices, if any, regarding product recalls prior to the Sale Commencement Date.

(i) Subject to the Wind-Down Budget, Merchant shall, throughout the Sale Term, maintain in good working order, condition, and repair all cash registers, heating systems, air conditioning systems, elevators, escalators and all other mechanical devices necessary or appropriate for the conduct of the Sale at the Stores. Except as otherwise restricted by the Bankruptcy Code upon filing of the Bankruptcy Case or the Wind-Down Budget, and absent a bona fide dispute, throughout the Sale Term, Merchant shall remain current on all expenses and payables necessary or appropriate for the conduct of the GOB Sale.

(j) Subject the Wind-Down Budget, payment of Expenses by Agent, and approval by the Bankruptcy Court, Merchant has paid, and will continue to pay throughout the Sale Term, all self-insured or Merchant-funded employee benefit programs for Store employees, including health and medical benefits and insurance and all proper claims made or to be made in accordance with such programs.

(k) Since March 1, 2018, Merchant has not taken, and shall not throughout the Sale Term take, any actions with the intent of increasing the Expenses of the Sale, including without limitation increasing salaries or other amounts payable to employees; except to the extent an employee was due an annual raise in the ordinary course.

(l) Prior to the execution of this Agreement, Merchant has provided Agent reasonable access to all pricing and cost files, computer hardware, software and data files, inter-Stores transfer logs, markdown schedules, invoices, style runs and all other documents relative to the price, mix and quantities of inventory located at the Stores and the Distribution Centers or on order or in transit.

(m) To Merchant's knowledge after reasonable inquiry, all documents, information and supplements provided by Merchant to Agent in connection with Agent's due diligence and the negotiation of this Agreement were true and accurate in all material respects at the time provided.

(n) Other than filing the Bankruptcy Case, no action, arbitration, suit, notice, or legal, administrative or other proceeding before any court or governmental body has been instituted by or against Merchant, or has been settled or resolved, or to Merchant's knowledge, is threatened against or affects Merchant, relative to Merchant's business or properties, or which questions the validity of this Agreement, or that if adversely determined, would adversely affect the conduct of the Sale.

The representations set forth in Sections 11.1(e), (f), (g), and (h) shall not survive the Closing.

11.2 Purchaser's Representations, Warranties and Covenants. Purchaser hereby represents, warrants and covenants in favor of Merchant as follows:

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(a) Each member comprising Purchaser: (i) is duly and validly existing and in good standing under the laws of the State of its organization; (ii) has all requisite power and authority to carry on its business as presently conducted and to consummate the transactions contemplated hereby; (iii) is duly authorized and qualified to do business and in good standing in each jurisdiction where the nature of its business or properties requires such qualification, including, in the case of the entities comprising Agent, all jurisdictions in which the Stores are located, except, in each case, to the extent that the failure to be in good standing or so qualified could not reasonably be expected to have a material adverse effect on the ability of such member to execute and deliver this Agreement and perform fully its obligations hereunder.

(b) To the extent permitted and authorized under the Indenture, (i) each member comprising Purchaser has the right, power and authority to execute and deliver each of the Agency Documents to which it is a party and to perform fully its obligations thereunder; (ii) each member comprising Purchaser has taken all necessary actions required to authorize the execution, delivery and performance of the Agency Documents, and no further consent or approval is required on the part of such member for such member to enter into and deliver the Agency Documents, to perform its obligations thereunder and to consummate the transactions contemplated thereby, and (iii) each of the Agency Documents has been duly executed and delivered by the members of Purchaser party thereto and, assuming the due authorization, execution, and delivery of this Agreement by Merchant, constitutes the legal, valid and binding obligation of such member enforceable in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium, and similar laws affecting the rights of creditors generally and by general principles of equity. No court order or decree of any federal, state or local governmental authority or regulatory body is in effect that would prevent or impair, or is required for, Purchaser's consummation of the transactions contemplated by this Agreement, and no consent of any third party which has not been obtained is required therefor, other than as provided herein. No contract or other agreement to which Purchaser is a party or by which Purchaser is otherwise bound will prevent or impair the consummation of the transactions contemplated by this Agreement.

(c) No action, arbitration, suit, notice or legal administrative or other proceeding before any court or governmental body has been instituted by or against Purchaser, or has been settled or resolved or, to Purchaser's knowledge, has been threatened against or affects Purchaser, which questions the validity of this Agreement or any action taken or to be taken by Purchaser in connection with this Agreement or which, if adversely determined, would have a material adverse effect upon Purchaser's ability to perform its obligations under this Agreement.

(d) The GOB Sale shall be conducted in compliance with all applicable state and local laws, rules and regulations and Merchant's leases and other agreements, except as otherwise provided for in the Sale Guidelines and Approval Order.

(e) Absent prior consent by Merchant, Purchaser will not cause any non-emergency repairs or maintenance (emergency repairs are repairs necessary to preserve the security of a Store premise or to ensure customer safety) to be conducted at the Stores.

(f) Purchaser shall not prosecute, or otherwise use offensively or defensively, Avoidance Actions against any of Merchant's (1) non-insider trade vendors or landlords,

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(2) employees and officers with respect to retention payments received pursuant to Retention Agreements in 2017, or (3) directors with respect to directors' fees received, and such Avoidance Actions shall be released as of the Closing. This paragraph 11.2(f) shall survive any termination of this Agreement for any reason.

Section 12. Insurance.

12.1 Merchant's Liability Insurance. Until the Designation Rights Termination Date or as otherwise directed by Purchaser or set forth in this Agreement, Merchant shall continue to maintain, subject to the Wind-Down Budget and the Wind-Down Cap, in such amounts as it currently has in effect, all of its liability insurance policies, including but not limited to commercial general liability, products liability, comprehensive public liability, auto liability and umbrella liability insurance, covering injuries to persons and property in, or in connection with, the Assets and/or Merchant's operation of its business and the Store and Distribution Centers; and Merchant shall cause Purchaser to be named as an additional named insured (as its interest may appear) with respect to all such policies. Merchant shall deliver to Purchaser certificates evidencing such insurance setting forth the duration thereof and naming Purchaser as an additional named insured, in form reasonably satisfactory to Purchaser. All such policies shall require at least thirty (30) days' prior notice to Purchaser of cancellation, non- renewal or material change. In the event of a claim under any such policies, Merchant shall be responsible for the payment of all deductibles, retentions or self- insured amounts thereunder (which may be reimbursed as an Expense and/or pursuant to the Wind-Down Payment, subject to the Wind-Down Budget and the Wind-Down Cap), unless it is determined that liability arose by reason of the willful misconduct or grossly negligent acts or omissions of Purchaser, or Purchaser's employees, independent contractors or agents. Merchant shall not make any change in the amount of any deductibles or self-insurance amounts on or after the date of this Agreement without Purchaser's prior written consent.

12.2 Merchant's Casualty Insurance. Until the Designation Rights Termination Date or as otherwise directed by Purchaser or set forth in this Agreement, Merchant shall continue to maintain, subject to the Wind-Down Budget and the Wind-Down Cap, all of its presently existing property casualty coverage related to the Assets (including but not limited to fire, flood, wind, hail, natural disaster, theft, and extended coverage casualty insurance) until the sale or other disposition of all Assets covered by such policies. From and after the date of this Agreement, all such policies will also name Purchaser as an additional named insured or loss payee, as applicable (as its interest may appear). In the event of a loss to the Assets on or after the date of this Agreement, all proceeds of such insurance shall constitute Proceeds hereunder. Merchant shall deliver to Purchaser certificates evidencing such insurance, setting forth the duration thereof and naming Purchaser as an additional insured or loss payee, as applicable, in form and substance reasonably satisfactory to Purchaser. All such policies shall require at least thirty (30) days' prior notice to Purchaser of cancellation, non-renewal or material change. Merchant shall not make any change in the amount of any deductibles or self-insurance amounts on or after the date of this Agreement without Purchaser's prior written consent. Upon the sale, conveyance, or other disposition of any Asset specifically identified in any of Merchant's casualty insurance policies, Merchant, if reasonably requested by Purchaser, shall cancel the casualty coverage specifically applicable to such Asset.

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12.3 Agent's Insurance. Agent shall maintain, at Agent's cost (as an Expense) and in such amounts as Agent currently has in effect, commercial general liability policies covering injuries to persons and property in or in connection with Agent's agency at the Stores and shall cause Merchant to be named as an additional insured with respect to such policies. Agent shall deliver to Merchant certificates evidencing such insurance policies setting forth the duration thereof and naming Merchant as an additional insured, in form and substance reasonably satisfactory to Merchant. In the event of a claim under any such policies, Agent shall be responsible for the payment of all deductibles, retentions or self-insured amounts thereunder, unless it is determined that liability arose by reason of the willful misconduct or grossly negligent acts or omissions of Merchant or Merchant's employees, independent contractors or agents (other than Agent or Agent's employees, agents or independent contractors). Agent shall not make any change in the amount of any deductibles or self-insurance amounts prior to the Sale Termination Date without Merchant's prior written consent.

12.4 Worker's Compensation Insurance. Merchant shall, at all times while any employees are in its employ, maintain in full force and effect workers' compensation insurance (including employer liability insurance) in compliance with all statutory requirements.

Section 13. Purchaser's Security Interest.

Subject to Agent's obligation to pay Expenses and fund the Wind-Down Payment:

(a) Upon the occurrence of the Closing, and solely to the extent that any Assets or Proceeds are, notwithstanding the Approval Order, subsequently determined to constitute property of Merchant's estate, Purchaser shall have a senior lien on all Assets and Proceeds, which lien shall be deemed by the Approval Order to be automatically perfected. The Approval Order shall grant Purchaser relief from the automatic stay, and nothing in the Approval Order shall inhibit Purchaser's ability, to take any action Purchaser deems appropriate to perfect such lien.

(b) Upon the occurrence of the Closing and until all Assets have been sold or otherwise disposed of, and solely to the extent that any Assets or Proceeds are, notwithstanding the Approval Order, subsequently determined to constitute property of Merchant's estate, Purchaser shall have a superpriority administrative expense claim against Merchant to the extent of any amounts owing from Merchant to Purchaser in connection with this Agreement, including as a result of any breach of this Agreement.

Section 14. Designation Rights.

14.1 Lease/Contract Designation Rights.

(a) Upon the occurrence of the Closing and until the earlier to occur of (i) the end of the Designation Rights Period applicable to a particular Lease or Contract and (ii) the Designation Rights Termination Date, Purchaser shall have the exclusive right to designate the assignees of Merchant's right, title, and interest in and to any or all of the Leases and Contracts (the Lease/Contract Designation Rights) upon the terms and conditions agreed upon between Purchaser and such designee.

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(b) Merchant shall cooperate reasonably with Purchaser to arrange for the sale and assignment of the Leases and Contracts, with such sale and assignment to be on such terms as Purchaser deems acceptable in its sole and absolute discretion. Without limiting the generality of the foregoing, Merchant agrees (1) to provide Purchaser with all due diligence materials and information as Purchaser shall reasonably request in connection with its efforts to market and attempt to sell the Leases and Contracts (including complete copies thereof and any abstracts prepared with respect thereto, and all communications with the counterparties thereunder, all property surveys, all environmental reports and tax and utility records), with Purchaser to bear all reasonable third party out-of- pocket costs and expenses relating thereto, in all cases to the extent reasonably available to Merchant, and (2) to cooperate with Purchaser, its agents, and any potential purchasers of any of the Leases and/or Contracts.

(c) Solely to the extent requested by Purchaser, Merchant shall exercise renewal and/or extension options under the Leases and Contracts.

(d) At any time prior to the earlier to occur of (i) the end of the Designation Rights Period applicable to a particular Lease or Contract and (ii) the Designation Rights Termination Date, Purchaser shall have the right, which right may be exercised at any time and from time to time, to file a Lease/Contract Assumption Notice in the Bankruptcy Cases designating the assignee (which may in certain circumstances be Purchaser, any of the entities comprising Purchaser, any of their respective affiliates, and/or a new entity created by any of the foregoing) of one or more Leases and/or Contracts (which may occur without further order of the Bankruptcy Court pursuant to the Approval Order) and setting forth the proposed cure amount due pursuant to section 365 of the Bankruptcy Code. The Approval Order shall provide that (a) the counterparties to the Leases or Contracts identified in any Lease/Contract Assumption Notice shall have twenty-one days to object to the proposed assumption and assignment, (b) if no objection to the proposed assumption and assignment of a Lease or Contract is timely received, such Lease or Contract shall, upon payment of the applicable cure payment, if any, to the applicable counterparty, automatically be deemed assumed by Merchant and assigned to the assignee identified in the Lease/Contract Assumption Notice pursuant to section 365 of the Bankruptcy Code, without further order of the Bankruptcy Court or further action by any person or entity, and (c) if an objection to the proposed assumption and assignment of a Lease or Contract is timely received, such Lease or Contract shall not be assumed or assigned until such objection is resolved by agreement of the applicable counterparty or order of the Bankruptcy Court.

(e) The designee under any Lease/Contract Assumption Notice shall be required, if requested by the applicable counterparty, to provide adequate assurance of future performance with respect to such Lease or Contract if the applicable counterparty so requests.

(f) Merchant shall have no responsibility for any cure amounts with respect to any Lease or Contract assumption and assignment.

14.2 Asset Designation Rights.

(a) Upon the occurrence of the Closing, Agent shall have the exclusive right to market and sell, and/or otherwise designate the purchasers, licensees, transferees, and/or

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Case 18-10248- MFW Doc 632-1 Filed 04/18/18 Page 33 of 60

assignees of (which may in certain circumstances be Purchaser, any of the entities comprising Purchaser, any of their respective affiliates, and/or a new entity created by any of the foregoing), any or all of the Assets free and clear of all liens, claims, and encumbrances thereon, without further order of the Bankruptcy Court (the Asset Designation Rights). Subject to Agent's payment obligations hereunder, Agent is authorized to execute, in the name of and as agent for Merchant, any and all deeds, bills of sale, and other instruments or documents necessary to effectuate the sale, transfer, or other conveyance of any of the Assets.

(b) Pursuant to the Approval Order, the sale or other conveyance of any Assets reflected in Asset Designation Notices filed in the Bankruptcy Cases from time to time by the Agent shall be automatically effective on the date reflected in the applicable Asset Designation Notice and subject to the satisfaction of any closing conditions reflected therein, and the sale, license, transfer, or other conveyance of such Assets shall be free and clear of all liens, claims, and encumbrances without further order of the Bankruptcy Court, provided, however, that nothing in the Approval Order shall inhibit the ability of Agent to seek other or further orders of the Court in connection with the sale or other disposition of any Assets.

(c) Except to the extent provided for by the Wind-Down Budget, the costs of maintaining the Assets available for marketing and sale shall constitute Expenses. All costs of effectuating assumption and assignment shall be deemed an Expense hereunder.

Section 15. Miscellaneous.

15.1 Signage. On April 5, 2018, the Merchant purchased the signage, exclusive of freight, required for the Sale as set forth on Exhibit 15 directly from the sign vendor. The signage shall be delivered to the Stores so as to be received in accordance with Agent's instructions on or before the Sale Commencement Date. Upon entry of the Approval Order and simultaneous with the funding of the Cash Purchase Price, the Agent shall reimburse Merchant for one hundred percent (100%) of Merchant's actual (without mark-up or lift) documented out of pocket costs in an amount not to exceed $3,000,000 and shall directly pay as an Expense the freight costs associated with shipping such signage to the Stores.

15.2 Notices. All notices and communications provided for pursuant to this Agreement shall be in writing and sent by electronic mail, as follows:

If to Merchant: The Bon-Ton Stores, Inc. 2801 East Market Street York, PA 17402 Attention:

With copies (which shall not constitute notice) to:

Malfitano Partners Joseph A. Malfitano, PLLC 747 Third Ave., 2nd Floor

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Case 18-10248- MFW Doc 632-1 Filed 04/18/18 Page 34 of 60

New York, NY 10017 Attn: Joseph A. Malfitano (jm@malfitanopartners.com) If to Purchaser: GA Retail, Inc. Attn: Scott Carpenter (scarpenter@greatamerican.com) Alan Forman (aforman@brileyfin.com) and Tiger Capital Group, LLC Attn: Christopher Huber (chuber@tigergroup.com) Mark Naughton (mnaughton@tigergroup.com) and Wilmington Savings Fund Society, FSB Attn: Patrick J. Healy (phealy@wsfsbank.com) With copies (which shall not constitute notice) to: Lowenstein Sandler LLP Counsel to Great American Group WF LLC Attn: Kenneth A. Rosen (krosen@lowenstein.com) Andrew Behlmann (abehlmann@lowenstein.com) and Kilpatrick Townsend & Stockton LLP Counsel to WSFS Attn: David Posner (dposner@kilpatricktownsend.com) and Jones Day Counsel to Second Lien Noteholders Attn: Sidney P. Levinson (slevinson@jonesday.com) Joshua M. Mester (jmester@jonesday.com) John Kane (jkkane@jonesday.com)

15.3 Governing Law/Exclusive Jurisdiction. This Agreement shall be governed by and interpreted in accordance with the laws of the State of Delaware without reference to any conflict of laws provisions thereof, except where governed by the Bankruptcy Code. Each of the Parties irrevocably and unconditionally submits, for itself and its properties, to the exclusive jurisdiction of the Bankruptcy Court, in any action or proceeding arising out of or relating to this Agreement.

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Case 18-10248- MFW Doc 632-1 Filed 04/18/18 Page 35 of 60

15.4 Amendments. This Agreement may not be modified except in a written instrument executed by all of the Parties, provided that any amendment or modification to Section 3.1(f) or 11.2(f) shall require the consent of the Committee.

15.5 No Waiver. No consent or waiver by any Party, express or implied, to or of any breach or default by the other in the performance of its obligations hereunder shall be deemed or construed to be a consent or waiver to or of any other breach or default in the performance by such other Party of the same or any other obligation of such Party. Failure on the part of any Party to complain of any act or failure to act by the other Party or to declare the other Party in default, irrespective of how long such failure continues, shall not constitute a waiver by such Party of its rights hereunder.

15.6 Currency. All reference to dollars in this Agreement and all schedules, exhibits, and ancillary documents related to this Agreement shall refer to U.S. dollars.

15.7 Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the Parties and their respective successors and assigns, including, but not limited to, any chapter 11 or chapter 7 trustee; provided, however, that this Agreement may not be assigned by any of the Parties without the prior written consent of the other, provided further that notwithstanding the foregoing, GA and Tiger may each collaterally assign this Agreement and their rights thereunder to their respective lenders.

15.8 Execution in Counterparts. This Agreement may be executed in one or more counterparts. Each such counterpart shall be deemed an original but all such counterparts together shall constitute one and the same agreement. This Agreement, to the extent signed and delivered by means of a facsimile machine, electronic mail, or other electronic transmission in which the actual signature is evident, shall be treated in all manner and respects as an original agreement or instrument and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person. At the request of any Party, each other Party shall re-execute original forms hereof and deliver them to all other Parties. No Party shall raise the use of a facsimile machine, electronic mail, or other electronic transmission in which the actual signature is evident to deliver a signature or the fact that any signature or agreement or instrument was transmitted or communicated through the use of a facsimile machine, electronic mail or other electronic transmission in which the actual signature is evident as a defense to the formation of a contract and each Party forever waives such defense. In proving this Agreement, it shall not be necessary to produce or account for more than one such counterpart signed by the Party against which enforcement is sought.

15.9 Section Headings. The headings of sections of this Agreement are inserted for convenience only and shall not be considered for the purpose of determining the meaning or legal effect of any provisions hereof.

15.10 Wiring of Funds. All amounts required to be paid under any provision of this Agreement shall be made by wire transfer of immediately available funds no later as 2:00 p.m. (Eastern Time) on the date that such payment is due, so long as all information necessary to complete the wire transfer has been received by the payor by 10:00 a.m. (Eastern Time) on the

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Case 18- 10248-MFW Doc 632-1 Filed 04/18/18 Page 36 of 60

date that such payment is due. In the event that the date on which any such payment is due is not a business day, then such payment shall be made by wire transfer on the next business day.

15.11 Deposit. Pursuant to the Bidding Procedures, Agent has provided a cash deposit in the amount of $32,700,000 (the Deposit), which is being held in escrow by co-counsel to Merchant, Young Conaway Stargatt & Taylor, LLP (the Escrow Agent). At the closing, the Deposit shall be released from escrow by the Escrow Agent and applied to the Cash Purchase Price. In the event the Closing fails to occur, then, only upon entry of a final and non-appealable order of the Bankruptcy Court determining that such failure was the result of Purchaser's sole, material, non-excusable breach of this Agreement, then Merchant shall be entitled to retain the Deposit as liquidated damages as Merchant's sole remedy for such breach.

15.12 Nature of Remedies. No failure to exercise and no delay in exercising, on the part of the Agent, any right, remedy, power, privilege or adjustment hereunder, shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power, privilege, or adjustment hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power, privilege, or adjustment.

15.13 Entire Agreement. This Agreement contains the entire agreement between the Parties with respect to the transactions contemplated hereby and supersedes and cancels all prior agreements, including, but not limited to, all proposals, letters of intent or representations, written or oral, with respect thereto

15.14 Agent/Purchaser. Each party hereto acknowledges and agrees that any payment obligation of Purchaser and Agent hereunder is binding upon both the Agent and Purchaser and they shall be jointly and severally responsible therefor. Any action permitted under this Agreement to be taken by Purchaser may be undertaken by Agent on behalf of all entities comprising Purchaser, subject to any agreements between or among the entities comprising Purchaser, the Second Lien Noteholders, or any of them.

[ signature page follows ]

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Case 18-10248- MFW Doc 632-1 Filed 04/18/18 Page 37 of 60

IN WITNESS WHEREOF, the Parties hereby execute this Agreement by their respective duly authorized representatives as a sealed instrument as of the day and year first written above.

GA RETAIL, INC. By: Name: Its:

TIGER CAPITAL GROUP, LLC By: Name: Its:

WILMINGTON SAVINGS FUND SOCIETY, FSB As Successor Trustee and Collateral Agent for the Second-Lien Notes By: Name: Its:

THE BON-TON STORES, INC., on behalf of itself and the other entities comprising Merchant By: Name: Its:





Case 18-10248- MFW Doc 632-1 Filed 04/18/18 Page 38 of 60 List of Exhibits

Exhibit 1(a)(1) Stores Exhibit 1(a)(2) Distribution Centers Exhibit 1(d) Owned Real Estate Exhibit 1(e) Intellectual Property Exhibit 2(b)(iv) Form of Asset Designation Notice Exhibit 2(b)(xiii) Form of Lease/Contract Assumption Notice Exhibit 3.1(c) Wind-Down Budget Exhibit 4.1(c) Per Store, Per Diem Occupancy Expenses. Exhibit 8.1 Sale Guidelines





Case 18-10248- MFW Doc 632-1 Filed 04/18/18 Page 39 of 60

The Bon-Ton Stores, Inc. Exhibit 1 (a) (1) Full Company Liquidation Stores Closing List

Store List Store # Store Name Address City State Zip Selling Sq Ft 2 Hanover 400 Eisenhower Drive Hanover PA 17331 71,636 4 Lewistown 111 East Market Street Lewistown PA 17044 46,660 5 Martinsburg 800 Foxcroft Avenue Martinsburg WV 25401 65,780 6 Chambersburg 100 Chambersburg Mall Chambersburg PA 17201 55,621 7 Park City Furn 870 Plaza Boulevard Lancaster PA 17601 32,000 8 Park City 600 Park City Center Lancaster PA 17601 178,967 12 Cumberland 1262 Vocke Rd LaVale MD 21502 75,134 14 Galleria 2899 Wh teford Road, Ste 282 York PA 17402 131,915 15 Uniontown 1800 Mall Run Road Uniontown PA 15401 80,511 17 Indiana 2334 Oakland Avenue Suite 35 Indiana PA 15701 60,465 18 Warren 4000 Market Street Warren PA 16365 50,070 19 Wilton 3065 Route 50 Saratoga Springs NY 12866 71,740 21 Oil C ty 6945 US 322 Cranberry PA 16319 45,168 22 Br ck 80 Brick Plaza Brick NJ 08723 53,500 25 Binghamton 601-635 Harry L Dr. Johnson City NY 13790 81,112 27 Williamsport 300 Lycoming Mall Circle Pennsdale PA 17756 60,952 28 Bloomsburg 225 Columbia Mall Drive Bloomsburg PA 17815 46,060 29 Queensgate 2081 Springwood Road York PA 17403 114,608 31 Camp Hill 3525 Gettysburg Road Camp Hill PA 17011 145,200 32 Colonial Park 4600 Jonestown Road Harrisburg PA 17109 136,540 35 Reading 1665 State Hill Road Wyomissing PA 19610 159,368 36 Greensburg 5256 Rt 30 Greensburg PA 15601 100,003 37 Washington 1500 W. Chestnut Street Washington PA 15301 78,129 38 Midway 1066 Wyoming Avenue Wyoming PA 18644 66,026 39 Wilkes-Barre 14 Wyoming Valley Mall Wilkes-Barre PA 18702 159,454 43 Newburgh 1401 Route 300 Ste 139 Newburgh NY 12550 61,785 44 Ithaca 40 Catherwood Road Ithaca NY 14850 62,225 46 Jamestown 318 E. Fairmount Avenue Lakewood NY 14750 59,860 48 Westfield 443 E. Main Street Westfield MA 01085 74,939 62 Eastern Hills 4545 Transit Road Williamsville NY 14221 151,208 63 Sheridan 1706 Sheridan Drive Buffalo NY 14223 124,284 64 Southgate 1090 Union Road West Seneca NY 14224 100,500 65 McKinley 3701 McKinley Parkway Blasdell NY 14219 97,204 67 Lockport 5737 S. Transit Road Lockport NY 14094 82,000 68 Olean 402 N. Union Street Olean NY 14760 73,017 69 Niagara 6929 Williams Road Niagara Falls NY 14303 88,128 72 Bethlehem 2524 Schoenersville Road Bethlehem PA 18017 108,650 73 S. Allentown 3300 Lehigh Street Allentown PA 18103 101,841 76 Easton 146 Palmer Park Mall Easton PA 18045 115,062 78 Quakertown 751 SW End Blvd. Quakertown PA 18951 88,126 81 Doylestown 456 North Main Street Doylestown PA 18901 61,915 84 Elmira 3300 Chambers Road South, Ste. 50 Horseheads NY 14845 74,752 94 Camillus 5301 W. Genesee Street Camillus NY 13031 64,700 101 Dayton Mall 2700 St. Rt. 725 Dayton OH 45459 212,000 107 Huber Heights 8221 Old Troy Pike Huber Heights OH 45424 101,840 115 Beavercreek 2727 Fairfield Commons Beavercreek OH 45431 151,740 117 Piqua 987 E. Ash Street Piqua OH 45356 60,000 118 Athens 1004 E. State Street Athens OH 45701 42,253 119 New Philadelphia 400 Mill Avenue, Ste. C3 New Philadelphia OH 44663 73,310 121 Kettering 2050 E. Dorothy Lane Dayton OH 45420 87,317 125 Lancaster 1730 River Valley Circle S. Lancaster OH 43130 52,725 126 Heath 771 S. 30th Street Newark OH 43056 73,185 128 Zanesville 3575 Maple Avenue Zanesville OH 43701 70,847 129 Marion 1475 Marion Waldo Road Marion OH 43302 75,673 130 Chillicothe 1080 N. Br dge Street Chillicothe OH 45601 55,940 132 Richmond 601 East Main St. R chmond IN 47374 100,000 137 Sandusky 4314 Milan Road Sandusky OH 44870 80,398





Case 18-10248- MFW Doc 632-1 Filed 04/18/18 Page 40 of 60 The Bon-Ton Stores, Inc. Exhibit 1 (a) (1) Full Company Liquidation Stores Closing List

Store List Store # Store Name Address City State Zip Selling Sq Ft 138 Plover 1780 Plover Road Plover WI 54467 54,564 140 Kohler 4030 Hwy #28 Sheboygan Falls WI 53085 54,541 142 West Bend 1291 W. Paradise Road West Bend WI 53095 61,011 143 Coldwater 373 N. Willowbrook Rd. Suite Z Coldwater MI 49036 54,146 144 Alliance Carnation Mall, 2500 W. State Street Alliance OH 44601 55,552 147 Wooster 4095 Burbank Road Wooster OH 44691 53,446 148 Morgantown 9550 Mall Road Morgantown WV 26501 71,032 150 Warsaw 2856 Frontage Road Warsaw IN 46580 80,320 151 Frankfort 202 Limestone Drive Frankfort KY 40601 53,954 152 Findlay 1800 Tiffin Avenue Findlay OH 45840 74,841 153 Bowling Green 1234 N Main Street Bowling Green OH 43402 40,000 154 Howell 3599 E. Grand River Avenue Howell MI 48843 72,873 155 Westgate 3311 Secor Road Toledo OH 43606 154,000 159 Monroe 2121 Monroe Street Monroe MI 48161 99,363 161 Midland 6830 Eastman Avenue M dland MI 48642 64,141 163 Jackson 1826 W. Michigan Avenue Jackson MI 49202 70,425 173 Muscatine 1903 Park Avenue Muscatine IA 52761 43,906 175 Mattoon 700 Broadway Avenue E Mattoon IL 61938 54,266 178 Jasper 3875 Newton Street Jasper IN 47546 55,238 179 Terre Haute 3401 US Hwy 41 S Terre Haute IN 47802 70,380 182 Muncie 3501 N. Granville Avenue Muncie IN 47303 80,000 184 Kokomo 1156 South 17th Street Kokomo IN 46902 60,135 186 Green Bay Furn 201 Bay Park Square Green Bay WI 54304 53,265 189 Southtown 2400 State Route 725 Dayton OH 45459 54,848 199 Fort Wayne 4201 Coldwater Road Fort Wayne IN 46805 122,000 203 Clarksburg 2700 Meadowbrook Mall Bridgeport WV 26330 124,285 205 Ashland 10699 US Route 60 Ashland KY 41102 70,000 206 Kanawha 5700 MacCorkle Avenue SE Charleston WV 25304 80,000 209 Winfield 200 Liberty Sq. Shopping Center Hurricane WV 25526 70,476 310 St Cloud 600 W St. Germain St. St. Cloud MN 56301 93,900 311 Virginia 1440 S 12th Avenue Virginia MN 55792 66,582 312 Rice Lake 2900 South Main R ce Lake WI 54868 54,661 313 Fergus Falls 2001 West Lincoln Avenue Ste. 2 Fergus Falls MN 56537 39,536 314 New Ulm 110 N Minnesota Street New Ulm MN 56073 47,277 315 Watertown 1300 9th Avenue SE Watertown SD 57201 40,320 316 Alexandria 3015 Hwy 29 S Ste. 4037 Alexandria MN 56308 70,314 317 Havre 1753 Highway 2 NW Havre M T 59501 47,161 318 LaCrosse 4000 State Road 16 LaCrosse WI 54601 41,344 319 Albert Lea 2440 Bridge Avenue Albert Lea MN 56007 64,436 320 Moorhead 420 Center Ave, Ste. 1 Moorhead MN 56560 106,150 321 Bismarck 641 Kirkwood Mall Bismarck ND 58506 92,500 323 Brainerd 14136 Baxter Drive Ste. 1 Baxter MN 56425 82,879 325 Billings 300 S 24th Street W, Ste. E100 Billlings M T 59102 60,224 326 Ottumwa 1110 Quincy Ave Ottumwa IA 52501 55,282 327 Great Falls 1200 10th Avenue South Great Falls M T 59405 70,000 328 Rap d City 2200 N Maple Avenue Rapid C ty SD 57701 88,977 329 Rock Springs 2445 Foothill Blvd. Rock Springs WY 82901 60,018 330 Dickinson Prairie Hills Mall Dickinson ND 58601 42,980 331 Minot 2400 10th Street SW Minot ND 58701 52,468 332 Willmar 1605 S. 1st. Street Willmar MN 56201 88,701 334 Norfolk 1700 Market Lane Norfolk NE 68701 77,365 335 Hastings 3001 W 12th Ste. 4 Hastings NE 68901 52,950 336 North Platte 1100 South Dewey North Platte NE 69101 43,500 338 Kearney 4915 2nd Avenue Kearney NE 68847 87,500 339 Scottsbluff 2302 Frontage Road Box 29 Scottsbluff NE 69361 72,699 340 Kalispell 20 North Main Kalispell M T 59901 80,000 341 Blaine 301 Northtown Dr. Blaine MN 55434 130,722





Case 18-10248- MFW Doc 632-1 Filed 04/18/18 Page 41 of 60 The Bon-Ton Stores, Inc. Exhibit 1 (a) (1) Full Company Liquidation Stores Closing List

Store List Store # Store Name Address City State Zip Selling Sq Ft 342 Stillwater 2001 Washington Avenue Stillwater MN 55082 95,360 343 Aberdeen 3315 6th Avenue Southeast Ste. 2 Aberdeen SD 57401 79,668 344 Grand Junction 2424 US Highway 6 & 50 Grand Junct on CO 81505 72,279 345 Mankato 1850 Adams Street Mankato MN 56001 71,046 348 Bemidji 1401 Paul Bunyan Drive NW Bemidji MN 56601 56,392 349 Butte 3100 Harrison Avenue Ste. 5 Butte M T 59701 65,000 351 Missoula 2901 Brooks Avenue Missoula M T 59801 45,167 352 Fargo 3902 13th Avenue South Fargo ND 58103 103,200 353 Rosedale 1675 West Highway 36 Roseville MN 55113 149,908 354 Midway 1400 University Avenue West St. Paul MN 55104 124,136 355 Southtown 7831 Southtown Center Bloomington MN 55431 133,103 356 Edina 300 Southdale Center Edina MN 55435 143,608 357 Rochester 1201 SW 12th Street Rochester MN 55902 78,130 401 Ames 2801 N Grand Ave Ames IA 50010 49,888 402 Mason C ty 102 S Delaware Avenue Mason City IA 50401 59,500 403 Fort Dodge 217 S. 25th St., Ste 33 Fort Dodge IA 50501 54,179 404 Marshalltown 2500 S Center Street Marshalltown IA 50158 42,142 406 Oak View 3201 S 144th Street Omaha NE 68144 149,326 408 Waterloo 2060 Crossroads Blvd. Waterloo IA 50702 86,781 409 Austin 1405 18th Avenue NW Austin MN 55912 45,277 410 Merle Hay 3800 Merle Hay Road Ste. 100 Des Moines IA 50310 165,000 412 Coralville 1421 Coral Ridge Avenue Coralville IA 52241 98,458 413 Lindale Plaza 4444 1st Avenue NE Cedar Rapids IA 52404 100,000 414 Jordan Creek 101 Jordan Creek Parkway, #6000 West Des Moines IA 50265 159,673 418 Dubuque 555 John F. Kennedy Road Dubuque IA 52002 126,839 419 Westroads 707 N 102nd Omaha NE 68114 171,800 421 Davenport 320 W Kimberly Road Davenport IA 52806 104,913 422 Moline 4600 16th Street Moline IL 61265 107,145 423 Southridge 1111 E Army Post Road, Ste. 2003 Des Moines IA 50315 105,183 424 Sioux Falls 3500 W Empire Mall Sioux Falls SD 57106 105,292 429 Southern Hills 4380 Sergeant Road Sioux C ty IA 51106 92,695 430 West Burlington 550 S Gear Avenue West Burlington IA 52655 66,705 432 Eau Claire 4850 Golf Road Eau Claire WI 54701 102,000 437 Valley West 1551 Valley West Drive Ste. 200 West Des Moines IA 50266 205,248 438 Muskegon 5580 Harvey Street Muskegon MI 49444 106,131 439 Sturgeon Bay 58 N 3rd Avenue Sturgeon Bay WI 54235 60,000 440 Grandville 3668 Rivertown Parkway Grandville MI 49418 150,081 443 Traverse City 1776 Garfield Road Traverse C ty MI 49684 49,666 445 Lansing 5220 W Saginaw Highway Lansing MI 48917 103,000 447 Lincoln 3 Gateway Mall Lincoln NE 68505 100,000 448 Marshfield 503 E Ives Street Marshfield WI 54449 48,295 449 Duluth 1600 Miller Trunk Highway Duluth MN 55811 140,999 451 Grand Island 3404 W 13th Street Grand Island NE 68801 60,081 457 Bay Park 101 Bay Park Square Green Bay WI 54304 145,672 463 Holland 12331 James Street Holland MI 49424 69,148 464 Okemos 1982 W Grand River Avenue Okemos MI 48864 168,757 465 Port Huron 4450 24th Avenue Fort Gratiot MI 48060 70,536 475 Bay City 4131 E Wilder Road Bay C ty MI 48706 110,536 501 Bloomington 1601 Empire St. Bloomington IL 61701 131,606 502 LaSalle Peru 3940 Route 251 Ste 01 Peru IL 61354 87,500 503 Pekin 3536 Court St. Pekin IL 61554 82,100 504 Champaign 2000 North Neil St. Champaign IL 61820 154,302 505 Galesburg 1150 W. Carl Sandburg Dr. Galesburg IL 61401 84,894 507 Quincy 3347 Broadway Quincy IL 62301 106,400 508 Forsyth 1005 Hickory Point Mall Forsyth IL 62535 125,455 510 Janesville 2500 Milton Avenue Janesville WI 53545 96,000 511 Sterling 2900 E. Lincolnway Sterling IL 61081 60,000





Case 18-10248- MFW Doc 632-1 Filed 04/18/18 Page 42 of 60 The Bon-Ton Stores, Inc. Exhibit 1 (a) (1) Full Company Liquidation Stores Closing List

Store List Store # Store Name Address City State Zip Selling Sq Ft 512 Cherryvale 7200 Harrison Avenue Rockford IL 61112 128,330 515 Joliet 3340 Mall Loop Drive Joliet IL 60435 128,000 516 Spring Hill 4000 Spring Hill Ring Rd Dundee IL 60118 128,000 517 Randhurst 1025 Center Dr. Mount Prospect IL 60056 205,056 518 White Oaks 2501 W. Wabash Springfield IL 62704 125,000 519 Milwaukee Grand Ave 331 W Wisconsin Avenue Milwaukee WI 53203 124,055 520 Bayshore 5701 N Lydell Avenue Glendale WI 53217 167,606 521 Racine 5500 Durand Avenue Racine WI 53406 106,157 522 Brookfield 15875 W Bluemound Road Brookfield WI 53005 218,705 523 Southridge 5300 S 76th Street Greendale WI 53129 221,000 526 East Towne 53 East Towne Mall Madison WI 53704 138,755 527 Mayfair 2400 N Mayfair Road Wauwatosa WI 53226 210,713 528 West Towne 36 West Towne Mall Madison WI 53719 139,580 529 Brookfield Furniture 18615 W Bluemound Road Brookfield WI 53045 55,000 530 Evergreen 9700 S Western Ave Evergreen Park IL 60805 120,000 531 Yorktown 230 Yorktown Shopping Center Lombard IL 60148 217,887 532 Woodmar 6600 Indianapolis Blvd. Hammond IN 46320 111,080 533 Edens Plaza 3200 Lake Avenue Wilmette IL 60091 160,578 535 Stratford Square 4 Stratford Square Bloomingdale IL 60108 147,116 538 Chicago Ridge 9800 S Ridgeland Ave Ch cago Ridge IL 60415 154,241 539 Harlem Irving 4200 N Harlem Avenue Norridge IL 60706 168,058 541 North Riverside 7505 W Cermak Road North Riverside IL 60546 180,550 542 Southlake 1995 Southlake Mall Merrillville IN 46410 144,123 543 Orland Square 4 Orland Square Orland Park IL 60462 163,370 546 Yorktown Furniture 2 Yorktown Mall Drive Lombard IL 60148 45,708 547 Edens Furniture 3232 Lake Avenue Wilmette IL 60091 34,830 548 Schaumburg Furn ture 830 E Golf Road Schaumburg IL 60173 58,525 549 Michigan City 305 W US Highway 20 M chigan City IN 46360 81,420 550 Hawthorn 3 Hawthorne Center Vernon Hills IL 60061 112,121 551 Ford City 7601 S Cicero Avenue Ch cago IL 60652 155,513 552 Lincolnwood 3333 Touhy Avenue Lincolnwood IL 60712 122,650 553 Bradley 1602 N State IL- 50 Bourbonnais IL 60914 142,200 554 St Charles 3850 E Main Street St. Charles IL 60174 141,808 555 Hawthorn Furniture 480 East Ring Road Vernon Hills IL 60540 46,290 556 Fox Valley 3 Fox Valley Center Aurora IL 60505 131,267 561 Orland Park Furniture 66 Orland Square Drive Orland Park IL 60462 71,783 563 Grand Prairie 5203 W. War Memorial Drive Peoria IL 61615 181,238 571 Laurel Park 17624 Newburgh Rd Livonia MI 48152 148,800 572 Rochester Hills 400 N.Adams St. Rochester Hills MI 48309 121,380 573 Partridge Creek 17480 Hall Rd. Clinton Township MI 48038 116,254 579 Naperville Frn Clear. 1835 W. Jefferson Naperville IL 60540 30,000 Count: 212





Case 18-10248- MFW Doc 632-1 Filed 04/18/18 Page 43 of 60

The Bon-Ton Stores, Inc. Exhibit 1 (a) (2) Distribution Centers

Store List Store # Store Name Address City State Zip Selling Sq Ft 50 Whitehall - DC 3585 South Church St Whitehall PA 18052 n/a 198 Fairborn - DC 1340 E Dayton Yellow Springs Rd Fairborn OH 45324 n/a 460 West Jefferson - DC 115 Enterprise Parkway West Jefferson OH 43162 n/a 950 Rockford - DC 4650 Shepherd Trail Rockford IL 61103 n/a Count: 4





Case 18-10248- MFW Doc 632-1 Filed 04/18/18 Page 44 of 60

The Bon-Ton Stores, Inc. Exhibit 1 (d) Owned Real Estate

Store List

Store # Banner Store Name Address City State Zip Selling Sq Ft 4 Bon-Ton Lewistown 111 East Market Street Lewistown PA 17044 50,000 31 Bon-Ton Camp Hill 3525 Gettysburg Road Camp Hill PA 17011 145,375 36 Bon-Ton Greensburg Westmoreland Mall, 5256 Route 30 Greensburg PA 15601 99,800 67 Bon-Ton Lockport 5737 South Transit Road Lockport NY 14094 81,431 128 Elder-Beerman Zanesville 3575 Maple Avenue Zanesville OH 43701 70,847 132 Elder-Beerman Richmond 601 East Main Street Richmond IN 47301 111,350 310 Herberger's St. Cloud 600 West Saint Germain Street St. Cloud MN 56301 168,755 327 Herberger's Great Falls 1200 10th Avenue South Great Falls M T 59405 81,969 354 Herberger's Midway 1400 University Avenue St. Paul MN 55104 124,136 410 Younkers Merle Hay 3800 Merle Hay Road, Su te 100 Des Moines IA 50310 165,000 412 Younkers Coralville 1421 Coral Ridge Avenue Coralville IA 52241 98,458 432 Younkers Eau Claire 4850 Golf Road Eau Claire WI 54701 102,000 438 Younkers Muskegon 5580 Harvey Street Muskegon MI 49444 106,131 440 Younkers Grandville 3668 Rivertown Parkway Grandville MI 49418 150,081 449 Younkers Duluth 1600 Miller Trunk Highway Duluth MN 55811 140,999 501 Bergner's Bloomington 1601 Empire Street Bloomington IL 61701 131,616 503 Bergner's Pekin 3500 Court Street Pekin IL 61553 82,100 508 Bergner's Forsyth 1005 Hickory Point Mall Forsyth IL 62535 126,056 514 Carson's Aurora Northgate 970 North Lake Street Aurora IL 60506 119,000 516 Carson's Spring Hill 4000 Spring Hill Mall Dundee IL 60118 128,000 518 Bergner's Wh te Oaks 2501 West Wabash Springfield IL 62704 125,000 521 Boston Store Racine 5500 Durand Avenue Racine WI 53406 106,157 533 Carson's Edens Plaza 3200 Lake Avenue Wilmette IL 60091 155,000 549 Carson's Michigan City 305 West US Highway 20 Michigan C ty IN 46360 76,121 550 Carson's Hawthorn 3 Hawthorne Center Vernon Hills IL 60061 112,121 556 Carson's Fox Valley 3 Fox Valley Center Drive Aurora IL 60504 120,000 572 Carson's Rochester Hills 400 North Adams Road Rochester Hills MI 48309 61,233 573 Carson's Partridge Creek 17480 Hall Road Clinton MI 48038 120,000 590 Carson's Rockford D.C. 4650 Shepherd Trail Rockford -Owned IL 61103 520,000 Quincy Property Quincy IL Count: 30





Case 18-10248- MFW Doc 632-1 Filed 04/18/18 Page 45 of 60

The Bon-Ton Stores, Inc. Exhibit 1 (e) Intellectual Property

BON TON ENTITIES TRADEMARKS Reg Number Serial Number Name Mark 966580 72435362 BRECKENRIDGE 1143734 73159353 CARSON PIRIE SCOTT 1395289 73471798 CARSONS 1332638 73495705 ELDER-BEERMAN 1392446 73543142 BON-TON STORES, INC., THE STUART HUGHES 1397712 73543145 THE BON-TON DEPARTMENT STORES, INC. SUSQUEHANNA TRAIL OUTFITTERS

1526191 73663359 PIZZA STRADA 1680687 74078995 THE BON-TON 1661242 74097054 THE BON-TON 1795407 74340081 YOUNKERS 1869666 74355074 CEZANI 2006730 74552885 Bon-Ton Trade Corp., The ANDREA VICCARO 2006731 74552975 JENNY BUCHANAN 2001829 74553100 CUDDLE BEAR 1935197 74580597 CARSON PIRIE SCOTT II, INC. (F/K/A MCRAE'S, INC.) MCRAE'S

2021357 74638895 COME TO THE RIGHT PLACE 2217957 75023572 CARSON PIRIE SCOTT II, INC. (F/K/A MCRAE'S, INC.) NATIONAL BANK OF THE GREAT LAKES

2015874 75045762 JENNY BUCHANAN 2635572 75348627 (RELATIVITY) 2385966 75348885 LIVING QUARTERS 2278878 75410193 HERBERGER'S 2278879 75410395 THE BON-TON DEPARTMENT STORES, INC. HERBERGER'S

2407600 75441794 STUDIO WORKS 2493154 75654658 LIVING QUARTERS 2412363 75857375 CHARGE AGAINST BREAST CANCER 2384258 75979374 RELATIVITY 2363348 75979521 CONSENSUS 76232809 BON-TON DEPARTMENT STORES, INC. MADISON & MAX 3447275 76467824 CARSON PIRIE SCOTT II, INC. (F/K/A MCRAE'S, INC.) SHE SHE LA LÀ

2856632 76975745 THE BON-TON DEPARTMENT STORES, INC. MADISON & MAX

3292860 77035952 PARADISE COLLECTION 3436925 77055123 KENNETH ROBERTS PLATINUM 3483180 77183901 INTIMATE ESSENTIALS 3528518 77227149 EXERTEK 3709384 77359862 LITTLE MISS ATTITUDE 77364016 THE BON-TON DEPARTMENT STORES, INC. AUTHENTIC U

3632950 77520071 CELEBRATIONS REGISTRY FOR VERY SPECIAL OCCASIONS 3628605 77520170 CELEBRATIONS REGISTRY FOR VERY SPECIAL OCCASIONS 3570064 77553578 STUDIO WORKS 3666012 77577377 BOSTON STORE 3848434 77630455 MISS ATTITUDE 3842899 77814203 BT JEWELED 3881265 77836970 KENNETH ROBERTS 3909131 77881965 LIVING QUARTERS 3892546 77969650 CARSON PIRIE SCOTT II, INC. BERGNER'S 2765740 78116121 CARSON PIRIE SCOTT II, INC. (RELATIVITY) DESIGN LAB 2934000 78191055 MISS ATTITUDE 78292100 CARSON PIRIE SCOTT II, INC. (F/K/A MCRAE'S, INC.)

PERFECT PIMA

78560181 MARKET STREET EAST 3217597 78867113 THE BON-TON TRADE, LLC SUSQUEHANNA TRAIL OUTFITTERS 3022152 78976395 BRECKENRIDGE 3069447 78976644 CHANTEUSE 85108157 THE BON-TON DEPARTMENT STORES, INC. CUSTOMER FIRST

4143662 85194375 4139987 85225140 KENNETH ROBERTS 4143891 85247954 JB 85476397 THE BON-TON STORES, INC. AFFINITY





4259055 85495083 THE BON-TON DEPARTMENT STORES, INC. ZOE&BELLA@BT

4552374 85715679 THE BON-TON DEPARTMENT STORES, INC. CUDDLE BEAR

4357088 85733613 ZOE&BELLA @BT 4361044 85772207 CARSON PIRIE SCOTT II, INC. PARADISE COLLECTION 4507524 85850871 STYLE ON THE STREET 4998553 85920357 DESIGN DISTRICT 4496279 85929876 TRENDÉVOUS 4532638 86044801 4626285 86144251 BEAUTY STATION 4736593 86261094 4991097 86433458 BEAUTY STATION 5191722 86532617 CHEF'S QUARTERS 5396972 86898865 ZOE&BELLA @BT 5005143 86979074 CHEF'S QUARTERS 5135982 87019592 SANTA'S PANTRY 87063073 LOVESTYLEREWARDS 87063086 THE BON-TON DEPARTMENT STORES INC. STYLEREWARDS

87368531 YULETIDE FARMS 87416731 DRESSOBSESSED 87418738 CLOSE TO HOME 87471882 THE BIG GRILL 87488334 MEYEWEAR 87492351 MEYEWEAR 87495174 FASHION TO GO 87495186 STYLE TO GO 87497118 STYLE 2 GO 87498911 FASHION 2 GO 87498969 TRAVEL QUARTERS 87505353 CUDDLE BEAR 87528193 LIVING QUARTERS 87535628 BETTER BRANDS. BIGGER SAVINGS. 87537827 ZOE&BELLA@BT 87626265 ZOE&BELLA@BT





Case 18-10248- MFW Doc 632-1 Filed 04/18/18 Page 46 of 60

Reg Number Serial Number Name Mark 87667636 EO 87697689 BUZZWORX 87706897 ZOE&BELLA@BT 87748141 MATTI & MAX 87762369 MATTI & MAX

BON TON ENTITIES COPYRIGHTS Registration Number Title Type TX4880277 Doing a good business: 100 years at the Bon-Ton Literary Work

TX1896055 Elder-Beerman Stores Corporation: a tradition of success Literary Work TX5900922 A tale from Flurryville: the Berg's big surprise Literary Work TX5744198 Wow! what a cow: a tale from funky Literary Work TX5638101 A tale from Flurryville: Arctic Bart finds his happy heart Literary Work TX5658257 Holiday celebrations with recipes from Younkers Literary Work TX6497902 Baxter shares his bear Literary Work TX2217381 Parisian celebrating a century of service Literary Work TX3196448 Presentation - a manual of standards and guidelines Literary Work VA239074 Riverchase Galleria Parisian grand opening Visual Arts VA81949 Made in Wisconsin Visual Arts VA6480 Cratchits' Christmas dinner Visual Arts





Case 18-10248- MFW Doc 632-1 Filed 04/18/18 Page 47 of 60

Exhibit 2(b)(iv) Form of Asset Designation Notice

IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE

In re: THE BON-TON STORES, INC., et al.,1 Debtor.

Chapter 11 Case No. 18-10248 (MFW) Jointly Administered

NOTICE OF DESIGNATION OF ASSET PURCHASER

PLEASE TAKE NOTICE that pursuant to the Order Approving Debtors' Entry Into Agency Agreement and Consummation of the Transactions Contemplated Thereby (the Approval Order) [D.I. ____],2 Purchaser hereby designates the entity identified on Schedule A (Designee) annexed hereto as the assignee of the Assets identified on Schedule A (the Designated Assets) pursuant to the agreement between Purchaser, as agent for the Debtors, and Designee, an abstract of which is annexed hereto as Exhibit A (the Purchase Agreement). PLEASE TAKE FURTHER NOTICE that pursuant to the Approval Order, upon the closing of the transaction pursuant to the Purchase Agreement, the Designated Assets shall be deemed conveyed to Designee by the Debtors free and clear of all liens, claims, encumbrances, and other interests of any kind.

1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor's federal tax identification number, are: The Bon-Ton Stores, Inc. (5229); The Bon-Ton Department Stores, Inc. (9309); The Bon-Ton Giftco, LLC (2805); Carson Pirie Scott II, Inc. (2140); Bon-Ton Distribution, LLC (5855); McRIL, LLC (5548); Bonstores Holdings One, LLC (8574); Bonstores Realty One, LLC (8931); Bonstores Holdings Two, LLC (8775); and Bonstores Realty Two, LLC (9075). The headquarters for the above-captioned Debtors is 2801 East Market Street, Bldg. E, York, Pennsylvania 17402. 2 Capitalized terms used but not defined in this Notice have the meanings given thereto in the Approval Order.





Case 18-10248- MFW Doc 632-1 Filed 04/18/18 Page 48 of 60 Dated: [_], 2018 [COUNSEL TO PURCHASER] Wilmington, Delaware

_____________________________





Case 18-10248- MFW Doc 632-1 Filed 04/18/18 Page 49 of 60 Exhibit 2(b)(iv) Form of Asset Designation Notice Schedule A

Designated Assets Designee





Case 18-10248- MFW Doc 632-1 Filed 04/18/18 Page 50 of 60 Exhibit 2(b)(xiii) Form of Lease/Contract Assumption Notice

IN THE UNITED STATES BANKRUPTCY COURT  FOR THE DISTRICT OF DELAWARE

In re: THE BON-TON STORES, INC., et al.,1 Debtor.

Chapter 11 Case No. 18-10248 (MFW) Jointly Administered

NOTICE OF ASSUMPTION AND ASSIGNMENT OF [LEASES] / [CONTRACTS]

PLEASE TAKE NOTICE that pursuant to the Order Approving Debtors' Entry Into Agency Agreement and Consummation of the Transactions Contemplated Thereby (the Approval Order) [D.I.___],2 Purchaser hereby designates the entities identified on Schedule A annexed hereto as the assignees of the corresponding Leases and/or Contracts. PLEASE TAKE FURTHER NOTICE that the cure amounts for the Leases and/or Contracts to be assigned pursuant to this Notice and the Approval Order are set forth on Schedule A. PLEASE TAKE FURTHER NOTICE that objections, if any, to the assumption and assignment of any Lease or Contract must be filed with the Bankruptcy Court and served on counsel for Purchaser at the addresses (including e-mail addresses) set forth in the signature block of this Notice on or before [_], 2018.3 If no timely objection to the assumption and assignment of a Lease or Contract is received, the assumption and assignment of such Lease or Contract will become effective automatically pursuant to the Approval Order on the date

1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor's federal tax identification number, are: The Bon-Ton Stores, Inc. (5229); The Bon-Ton Department Stores, Inc. (9309); The Bon-Ton Giftco, LLC (2805); Carson Pirie Scott II, Inc. (2140); Bon-Ton Distribution, LLC (5855); McRIL, LLC (5548); Bonstores Holdings One, LLC (8574); Bonstores Realty One, LLC (8931); Bonstores Holdings Two, LLC (8775); and Bonstores Realty Two, LLC (9075). The headquarters for the above-captioned Debtors is 2801 East Market Street, Bldg. E, York, Pennsylvania 17402. 2 Capitalized terms used but not defined in this Notice have the meanings given thereto in the Approval Order. 3 [First business day that is at least 15 days from notice date]





Case 18-10248- MFW Doc 632-1 Filed 04/18/18 Page 51 of 60

identified on Schedule A. If a timely objection to the assumption and assignment of a Lease or Contract is timely filed and served by an entity with appropriate standing, such assignment shall not become effective until agreed to by the parties or ordered by the Court. Dated: [_], 2018 [COUNSEL TO PURCHASER] Wilmington, Delaware

_____________________________





Case 18-10248- MFW Doc 632-1 Filed 04/18/18 Page 52 of 60 Exhibit 2(b)(xiii) Form of Lease/Contract Assumption Notice

Schedule A

Description Counterparty Name and Address Assignee Name and Address Cure Amount Effective Date of Assignment





Case 18-10248- MFW Doc 632-1 Filed 04/18/18 Page 53 of 60 Exhibit 3.1(c) Wind Down Payment Budget

Budget Expense Vendors $ 16.2 Payroll 35.5 Severance 3.4 Retention - IBNR 4.0 Sales Tax 7.91 Interest - Professional Fees 15.82 Contingency 1.0 Stub Rent & Free Rent 8.0 503(b)(9) 2.0 Other - Total $ 93.8 Plus: Severance and Retention in Agent's Expenses 5.7 Total After Severance and Retention in Agent's Expenses $ 99.5

1 Reduced to account for the fact that $6 million of sales taxes are already included in the DIP Obligations per email from J. Guglielmo dated April 17, 2018. 2 For the avoidance of doubt, the Professional Fees shall be paid, without duplication, either as part of the payoff of the DIP Obligations or as part of the Wind Down Payment.





Case 18-10248- MFW Doc 632-1 Filed 04/18/18 Page 54 of 60

The Bon-Ton Stores, Inc. Exhibit 4.1(c) - Occupancy - Per Diem Full Company Liquidation Store Closing List Excludes Distribution Centers

TOTAL - PER DIEM

Store # Store Name Base Rent

Common Area Maintenance / LL Property Insurance

Real Estate Taxes Insurance

Building Repair & Maint. Occupancy Other Security Communications Utilities Supplies Equip. Leases Eqiup. Maint Other Taxes Total 2 Hanover 1,162 89 362 27 117 20 11 54 194 42 5 4 - 2,087 4 Lewistown - - 62 23 78 21 11 41 133 42 5 4 - 419 5 Martinsburg 458 75 - 35 102 22 18 40 172 52 6 4 131 1,115 6 Chambersburg 581 92 95 22 80 18 10 48 194 43 6 4 - 1,193 7 Park City Furn 941 142 138 12 62 545 14 42 95 31 2 4 - 2,027 8 Park City 749 123 1,597 128 385 34 28 52 2,023 275 15 4 - 5,412 12 Cumberland 767 65 142 31 114 23 20 39 228 74 26 4 36 1,568 14 Galleria 2,918 146 171 69 279 108 19 54 390 105 12 4 35 4,308 15 Uniontown 893 111 170 35 121 46 11 44 384 87 10 4 29 1,944 17 Indiana 499 - 84 15 100 19 6 42 155 56 8 4 - 986 18 Warren 305 - - 21 111 21 10 42 158 37 6 4 - 714 19 Wilton 722 120 227 27 129 39 28 38 409 74 12 4 - 1,829 21 Oil City 693 38 23 24 113 20 7 50 142 41 6 4 - 1,162 22 Brick 2,118 651 507 33 159 59 34 42 254 67 8 4 - 3,936 25 Binghamton 776 - 1,222 32 126 21 14 41 247 59 7 4 - 2,550 27 Williamsport 606 101 151 24 95 18 8 44 196 41 5 4 - 1,294 28 Bloomsburg 455 - - 19 86 18 26 39 152 44 5 4 - 849 29 Queensgate 1,877 310 450 39 165 166 30 42 320 79 11 4 19 3,513 31 Camp Hill - - 415 62 461 206 15 52 513 130 10 6 2 1,872 32 Colonial Park 384 388 295 54 354 110 13 46 443 78 7 4 - 2,176 35 Reading 902 162 985 91 302 205 15 44 510 131 11 4 52 3,415 36 Greensburg - 126 401 42 262 20 20 50 320 79 9 4 11 1,344 37 Washington 319 - - 21 119 16 17 43 219 50 6 4 20 832 38 Midway 700 212 225 30 119 27 11 40 194 60 6 4 - 1,629 39 Wilkes-Barre 747 79 505 55 295 133 13 43 521 106 9 4 39 2,549 43 Newburgh 939 52 359 27 102 23 35 39 291 63 6 4 - 1,939 44 Ithaca 1,085 147 301 320 138 24 15 53 244 57 6 4 - 2,393 46 Jamestown 793 67 19 32 95 22 19 43 220 74 14 4 - 1,401 48 Westfield 1,832 534 801 57 128 48 16 44 397 94 13 4 5 3,973 62 Eastern Hills 1,320 54 - 53 336 269 26 38 319 99 10 4 - 2,528 63 Sheridan 715 104 78 47 197 235 38 43 300 85 7 4 - 1,851 64 Southgate 1,066 223 242 40 166 190 19 41 249 80 8 4 - 2,328 65 McKinley 1,038 177 95 41 145 143 23 44 203 82 6 4 - 2,000 67 Lockport - - 343 115 340 19 26 47 212 92 9 4 - 1,205 68 Olean 522 51 57 27 108 20 12 42 166 71 12 4 - 1,092 69 Niagara 772 314 - 31 139 118 19 37 262 64 7 4 - 1,766 72 Bethlehem 1,407 70 381 182 223 185 17 42 490 121 25 4 47 3,194 73 S. Allentown 1,191 300 317 61 186 27 14 40 535 98 12 4 47 2,830 76 Easton 560 42 299 45 162 68 13 44 400 88 10 4 26 1,759 78 Quakertown 420 349 296 41 116 164 12 46 324 89 10 4 1 1,873 81 Doylestown 1,668 234 139 52 125 23 30 43 230 174 17 4 1 2,739 84 Elmira 531 105 209 24 102 65 25 50 343 73 10 4 - 1,539 94 Camillus 674 100 375 31 109 21 15 39 172 71 6 4 - 1,618 101 Dayton Mall 9,393 343 605 116 320 35 29 48 692 206 17 4 - 11,808 107 Huber Heights 1,255 143 619 62 178 61 28 39 332 101 12 4 - 2,832 115 Beavercreek 2,496 232 838 165 276 168 31 107 559 140 18 4 - 5,034 117 Piqua 370 126 60 29 94 18 8 40 210 52 8 4 - 1,020 118 Athens 518 52 49 235 86 27 10 44 161 37 10 4 - 1,234 119 New Philadelphia 718 81 289 34 106 198 21 46 380 65 8 4 1 1,952

121 Kettering 622 122 423 51 182 24 40 36 358 82 9 4 - 1,955 125 Lancaster 420 58 241 29 83 19 10 41 311 51 5 4 - 1,272 126 Heath 990 82 240 33 103 134 18 39 285 57 7 4 - 1,992 128 Zanesville - 89 111 25 141 17 10 39 284 45 7 4 - 771 129 Marion 1,014 138 28 27 94 18 12 41 251 35 6 4 - 1,667 130 Chillicothe 936 125 189 34 102 22 17 59 426 61 7 4 - 1,983 132 Richmond - - 199 38 141 96 15 40 357 53 7 4 67 1,017





Case 18-10248- MFW Doc 632-1 Filed 04/18/18 Page 55 of 60

The Bon-Ton Stores, Inc. Exhibit 4.1(c) - Occupancy - Per Diem Full Company Liquidation Store Closing List Excludes Distribution Centers

TOTAL - PER DIEM

Store # Store Name Base Rent

Common Area Maintenance / LL Property Insurance

Real Estate Taxes Insurance

Building Repair & Maint. Occupancy Other Security Communications Utilities Supplies Equip. Leases Eqiup. Maint Other Taxes Total 137 Sandusky 817 632 80 22 142 29 13 36 508 54 7 4 2 2,346

138 Plover 1,439 185 320 35 91 28 12 43 181 71 19 4 17 2,443 140 Kohler 1,430 231 275 28 90 22 12 59 212 57 11 7 21 2,456 142 West Bend 1,451 151 286 31 101 33 19 48 270 72 18 4 29 2,512

143 Coldwater 1,375 84 156 24 107 18 9 41 204 60 5 9 26 2,116

144 Alliance 1,261 136 52 59 92 19 15 38 197 54 6 4 - 1,934 147 Wooster 1,042 179 262 32 114 21 17 57 227 53 5 4 - 2,013

148 Morgantown 900 80 170 31 117 27 9 40 261 58 13 4 189 1,899

150 Warsaw 1,541 - 182 42 150 79 12 56 366 83 12 4 51 2,580 151 Frankfort 1,326 48 162 27 88 23 14 37 228 62 11 4 76 2,105

152 Findlay 992 83 122 36 142 18 11 38 278 51 7 4 - 1,782 153 Bowling Green 505 84 13 21 85 18 8 43 186 46 8 4 - 1,022

154 Howell 1,430 199 226 36 129 28 24 53 265 84 7 4 18 2,503 155 Westgate 1,075 - 325 74 367 293 35 46 1,008 130 9 6 - 3,368

159 Monroe 1,654 379 302 38 106 380 24 46 431 69 6 4 41 3,482 161 Midland 640 63 510 46 140 29 21 46 316 73 9 4 43 1,939 163 Jackson 838 258 247 40 118 20 23 47 390 75 8 4 44 2,113 173 Muscatine 699 - - 21 80 19 13 45 159 40 5 4 - 1,085

175 Mattoon 524 76 14 22 94 26 9 47 194 34 14 4 - 1,059

178 Jasper 1,167 136 157 32 108 25 17 47 232 72 10 4 49 2,056 179 Terre Haute 725 147 249 42 111 23 23 40 356 50 6 4 71 1,847

182 Muncie 986 78 284 40 125 79 17 44 259 56 7 4 67 2,045 184 Kokomo 1,607 95 40 29 111 24 14 48 204 63 9 4 29 2,278

186 Green Bay Furn 665 - - 22 81 591 20 32 126 37 6 4 5 1,589

189 Southtown 443 - 417 34 126 623 32 112 311 23 4 4 - 2,129

199 Fort Wayne 2,338 171 491 47 166 106 17 46 585 117 7 3 158 4,251

203 Clarksburg 1,556 923 410 34 174 272 31 47 412 80 6 4 186 4,134

205 Ashland 832 98 39 26 104 15 10 50 301 50 7 4 62 1,598 206 Kanawha 1,144 78 169 35 113 23 26 47 303 66 12 4 188 2,209

209 Winfield 1,747 - 94 105 131 23 16 46 211 87 7 4 83 2,554

310 St Cloud 100 - 188 57 276 31 17 63 386 78 12 3 0 1,214 311 Virginia 908 251 109 43 129 35 19 48 381 100 8 3 1 2,033 312 Rice Lake 534 212 89 25 137 22 10 45 133 49 6 3 17 1,282

313 Fergus Falls 491 - - 23 93 19 3 43 158 49 5 3 1 888

314 New Ulm 592 - 79 27 159 19 17 44 181 45 6 3 1 1,172

315 Watertown 337 143 29 52 109 27 14 37 191 43 7 3 - 992

316 Alexandria 946 426 293 56 140 23 13 52 192 106 23 3 1 2,274

317 Havre 472 66 19 29 88 31 7 38 156 36 10 3 12 967 318 LaCrosse 1,085 93 172 31 200 114 31 51 216 123 9 3 25 2,153

319 Albert Lea 770 133 155 26 115 38 6 38 216 53 8 3 - 1,559

320 Moorhead 1,713 34 227 67 194 67 19 42 303 123 10 3 1 2,803

321 Bismarck 1,122 117 243 119 171 35 16 45 348 108 11 3 - 2,339

323 Brainerd 1,332 12 245 49 140 26 18 60 312 104 8 3 1 2,309

325 Billings 765 368 196 32 182 23 13 61 36 57 22 4 43 1,801 326 Ottumwa 613 176 55 24 126 25 7 43 226 59 6 3 - 1,362

327 Great Falls - - 169 48 114 21 9 40 227 68 7 3 45 751

328 Rapid City 1,576 137 270 56 153 22 14 44 534 76 9 3 - 2,894

329 Rock Springs 1,330 76 81 31 92 40 46 36 187 52 5 3 11 1,991

330 375 108 103 31 109 19 5 42 147 51 6 3 - 999





Dickinson 331 Minot 651 73 289 33 118 19 11 50 175 65 6 3 - 1,494 332 Willmar 1,496 261 226 51 178 33 13 66 335 94 9 3 1 2,766 334 Norfolk 1,116 281 163 35 126 24 17 39 239 50 5 3 5 2,103 335 Hastings 469 52 21 27 91 20 8 55 182 43 7 3 5 983

336 North Platte 598 294 108 25 85 18 5 40 145 44 7 3 3 1,375

338 Kearney 1,138 77 186 56 190 33 14 51 349 123 32 3 16 2,268

339 Scottsbluff 1,084 102 94 36 151 22 18 48 214 70 8 3 8 1,857





Case 18-10248- MFW Doc 632-1 Filed 04/18/18 Page 56 of 60

The Bon-Ton Stores, Inc. Exhibit 4.1(c) - Occupancy - Per Diem Full Company Liquidation Store Closing List Excludes Distribution Centers

TOTAL - PER DIEM

Store# Store Name Base Rent

Common Area Maintenance / LL Property Insurance

Real Estate Taxes Insurance

Building Repair & Maint. Occupancy Other Security Communications Utilities Supplies Equip. Leases Eqiup. Maint Other Taxes Total 340 Kalispell 1,177 151 31 64 122 43 20 44 173 84 7 3 19 1,937 341 Blaine 1,515 183 250 76 315 75 22 47 493 155 14 4 1 3,148 342 Stillwater 1,941 - 508 86 267 47 23 46 436 137 54 3 1 3,549 343 Aberdeen 990 167 117 80 107 28 9 43 225 83 7 3 - 1,861 344 Grand Junction 1,117 134 211 51 129 26 21 46 286 122 14 3 38 2,199 345 Mankato 1,004 119 313 48 146 28 27 47 256 94 14 3 1 2,101 348 Bemidji 722 79 96 35 122 24 10 48 202 59 8 3 1 1,410 349 Butte 808 100 134 55 102 26 13 43 203 68 5 3 15 1,576 351 Missoula 1,000 221 333 25 166 30 12 39 236 49 12 3 20 2,148 352 Fargo 1,698 952 247 78 262 87 31 58 707 153 10 4 - 4,286 353 Rosedale 1,795 1,023 708 112 375 136 36 51 722 219 28 3 - 5,207 354 Midway - 355 908 56 219 39 38 44 507 99 9 3 0 2,278 355 Southtown 2,298 1,038 1,707 83 312 104 17 62 552 202 19 3 2 6,399 356 Edina 2,514 152 613 62 324 33 22 39 791 129 9 3 1 4,692 357 Rochester 1,018 1 - 66 131 44 27 53 709 106 34 3 1 2,192 401 Ames 254 84 211 24 102 34 8 50 167 62 10 3 - 1,007 402 Mason City 708 196 23 31 144 31 19 70 266 64 6 3 - 1,560 403 Fort Dodge 600 54 20 27 108 41 12 72 170 76 10 3 - 1,195 404 Marshalltown 373 60 17 41 99 21 8 60 195 58 6 3 - 940 406 Oak View 1,926 192 476 81 199 36 16 79 650 198 11 4 22 3,890 408 Waterloo 646 36 122 35 174 21 14 44 292 84 8 4 5 1,483 409 Austin 255 45 - 24 116 17 9 45 389 43 6 3 1 953 410 Merle Hay - 231 496 62 252 329 19 53 266 111 7 3 - 1,828 412 Coralville - 142 604 59 361 44 17 49 275 141 8 3 - 1,704 413 Lindale Plaza 868 182 732 53 228 37 19 44 416 131 8 3 - 2,722 414 Jordan Creek 2,117 192 760 98 290 75 32 50 516 169 16 3 - 4,318 418 Dubuque 721 242 319 54 161 195 46 57 525 116 8 3 - 2,447 419 Westroads 118 1,064 520 129 330 56 45 77 689 263 18 3 45 3,356 421 Davenport 669 263 292 35 152 121 17 45 270 77 7 4 7 1,960 422 Moline 1,188 56 264 92 199 174 23 52 315 82 8 3 2 2,457 423 Southridge 539 - - 30 148 132 14 48 367 64 7 3 - 1,352 424 Sioux Falls 1,223 295 325 94 241 144 13 44 469 160 12 3 - 3,022 429 Southern Hills 1,012 270 667 114 241 63 23 51 284 113 10 3 - 2,853 430 West Burlington 779 168 101 27 97 42 26 65 300 56 10 3 - 1,674 432 Eau Claire - 187 396 53 173 309 21 52 372 94 10 3 38 1,707 437 Valley West 981 193 1,512 410 364 151 26 74 519 278 27 12 - 4,546 438 Muskegon - 196 305 69 124 27 20 32 550 154 27 3 49 1,558 439 Sturgeon Bay 452 - 102 29 148 197 19 146 184 43 6 3 13 1,343 440 Grandville - 275 589 95 249 44 40 62 775 185 28 3 85 2,431 443 Traverse City 524 116 - 35 86 21 10 48 385 49 10 3 14 1,301 445 Lansing 1,555 176 286 52 168 224 8 48 473 89 8 3 73 3,163 447 Lincoln 930 210 277 59 255 32 31 57 377 110 9 3 11 2,362 448 Marshfield 308 16 - 21 83 50 13 58 171 88 6 3 14 830 449 Duluth - 124 600 203 311 51 20 51 767 278 11 3 1 2,421 451 Grand Island 467 59 85 29 106 30 8 42 217 69 6 3 8 1,129 457 Bay Park 2,556 78 717 92 198 166 31 72 406 135 13 4 51 4,521 463 Holland 399 152 49 44 91 52 10 47 254 79 8 3 31 1,219 464 Okemos 4,083 293 943 74 238 329 29 42 826 172 9 3 82 7,120 465 Port Huron 791 - - 30 96 40 15 51 308 68 8 4 25 1,438 475 Bay City 1,836 170 101 57 136 390 23 50 481 138 8 3 20 3,414 501 Bloomington 287 885 377 65 264 122 25 63 412 147 11 3 - 2,661 502 LaSalle Peru 616 86 95 59 157 136 24 53 378 80 9 3 - 1,695 503 Pekin 384 115 144 37 139 19 33 49 241 73 8 3 - 1,244 504 Champaign 1,351 546 143 66 208 140 26 73 699 146 11 3 - 3,410 505 Galesburg 493 95 49 34 117 24 27 58 311 47 6 3 - 1,262 507 Quincy 112 226 232 63 150 92 41 123 365 91 11 4 - 1,511





Case 18-10248- MFW Doc 632-1 Filed 04/18/18 Page 57 of 60

The Bon-Ton Stores, Inc. Exhibit 4.1(c) - Occupancy - Per Diem Full Company Liquidation Store Closing List Excludes Distribution Centers

TOTAL - PER DIEM

Store # Store Name Base Rent

Common Area Maintenance / LL Property Insurance Real Estate Taxes Insurance

Building Repair & Maint. Occupancy Other Security Communications Utilities Supplies Equip. Leases Eqiup. Maint Other Taxes Total 508 Forsyth 92 280 251 42 185 112 24 58 298 74 7 3 - 1,427 510 Janesville 573 75 284 80 157 36 18 106 315 97 10 4 22 1,778 511 Sterling 837 168 10 27 107 21 17 116 206 63 7 3 - 1,582 512 Cherryvale 1,060 180 490 89 206 46 65 46 483 153 11 3 - 2,833

515 Joliet 1,895 108 229 71 185 96 29 113 589 153 12 4 6 3,487 516 Spring Hill - 207 325 68 178 32 21 135 416 127 11 4 0 1,523 517 Randhurst 1,385 352 2,216 119 312 99 41 68 511 288 28 3 2 5,423 518 White Oaks 324 41 390 65 210 138 23 59 673 123 11 3 - 2,059

519 Milwaukee Grand Ave 18 128 276 28 294 104 185 73 988 99 6 3 0 2,204

520 Bayshore 1,230 182 571 113 477 65 38 76 843 245 38 4 165 4,045 521 Racine 1 178 494 61 256 32 14 99 501 134 11 4 71 1,855 522 Brookfield 4,254 24 847 209 550 122 25 50 1,447 346 49 5 151 8,078 523 Southridge 3,575 682 901 113 451 234 33 87 927 222 23 4 195 7,446 526 East Towne 1,526 194 321 78 165 204 20 63 630 144 10 3 63 3,422

527 Mayfair 3,897 241 1,335 142 571 225 77 87 1,286 306 50 3 243 8,463 528 West Towne 3,016 195 420 105 281 96 21 73 558 212 34 4 103 5,119

529 Brookfield Furniture 2,334 - 270 43 157 1,223 8 65 171 41 10 3 8 4,333

530 Evergreen 2,395 93 92 106 356 122 44 119 635 204 34 4 2 4,206 531 Yorktown 2,358 519 755 175 561 123 48 147 736 365 20 4 - 5,810 532 Woodmar 629 258 1 53 299 64 20 108 399 147 10 3 94 2,084 533 Edens Plaza - 615 1,729 92 273 58 33 97 590 290 22 3 1 3,802

535 Stratford Square 1,347 369 342 69 237 95 33 69 381 135 11 3 7 3,099

538 Chicago Ridge 2,233 86 2,236 126 331 52 44 82 616 293 28 3 8 6,140

539 Harlem Irving 2,308 2,678 1,211 232 435 84 69 64 698 320 32 3 13 8,148

541 North Riverside 1,447 505 1,372 112 692 205 58 68 679 208 15 5 5 5,372

542 Southlake 1,068 194 624 93 266 51 29 58 783 207 11 4 111 3,498 543 Orland Square 1,603 68 1,960 170 356 73 40 82 650 448 51 3 2 5,506

546 Yorktown Furniture 1,542 205 505 35 74 996 18 72 119 29 5 3 - 3,602

547 Edens Furniture 2,007 59 911 29 81 915 18 53 106 34 5 3 1 4,221

548 Schaumburg Furniture

1,663 158 1,011 36 87 807 23 49 118 32 5 3 1 3,994

549 Michigan City 53 170 - 44 127 21 19 74 366 80 7 3 61 1,026

550 Hawthorn 450 378 207 64 212 41 39 91 583 146 8 3 2 2,223 551 Ford City 539 218 686 82 204 185 64 60 1,404 203 11 3 - 3,658 552 Lincolnwood 2,696 - 2,025 90 281 61 40 62 823 207 18 3 2 6,309

553 Bradley 2,311 63 430 63 161 147 67 67 431 120 10 3 2 3,873 554 St Charles 1,176 - - 49 194 119 43 67 740 130 10 3 - 2,532 555 Hawthorn Furniture Gallery

1,563 175 - - 72 462 11 - - - - 3 - 2,287

556 Fox Valley 660 387 349 163 436 29 35 66 676 125 8 4 - 2,938 561 Orland Park Furniture 2,186 72 - 57 81 1,267 15 52 155 36 4 4 1 3,929

563 Grand Prairie 2,588 257 835 122 276 33 29 66 503 232 15 4 0 4,961

571 Laurel Park 4,792 - 543 135 402 67 42 123 1,005 360 16 4 108 7,597

572 Rochester Hills 13 219 390 103 357 38 31 56 651 230 19 4 97 2,209

573 Partridge Creek 2,237 179 421 157 196 33 16 43 697 200 10 4 53 4,247

579 Naperville Frn Clear. 242 - 62 11 86 259 9 1 619 39 1 1 - 1,331

212 Total 230,444 39,426 73,743 12,953 39,000 22,497 4,725 11,540 82,672 22,322 2,419 779 4,513 547,032





Case 18-10248- MFW Doc 632-1 Filed 04/18/18 Page 58 of 60 EXHIBIT 8.1 SALE GUIDELINES

A. The Sale shall be conducted so that the Stores in which sales are to occur will remain open no longer than during the normal hours of operation provided for in the respective leases for the Stores.

B. The Sale shall be conducted in accordance with applicable state and local Blue Laws, where applicable, so that no Sale shall be conducted on Sunday unless the Merchant had been operating such Store on a Sunday.

C. On shopping center property, Agent shall not distribute handbills, leaflets or other written materials to customers outside of any Stores' premises, unless permitted by the lease or, if distribution is customary in the shopping center in which such Store is located; provided that Agent may solicit customers in the Stores themselves. On shopping center property, Agent shall not use any flashing lights or amplified sound to advertise the Sale or solicit customers, except as permitted under the applicable lease or agreed to by the landlord.

D. At the conclusion of the Sale or the Designation Rights Period, as applicable, Agent shall vacate the Stores in broom clean condition; provided that Agent may abandon any FF&E not sold in the Sale at the Stores, the Distribution Centers, the Headquarters, or Merchant's other corporate offices at the conclusion of the Sale or the Designation Rights Period, as applicable, without cost or liability of any kind to Agent. Any abandoned FF&E left in a Store or Distribution Center, the Headquarters, or Merchant's other corporate offices after a lease is rejected shall be deemed abandoned to the landlord having a right to dispose of the same as the landlord chooses without any liability whatsoever on the part of the landlord to any party and without waiver of any damage claims against the Merchant. For the avoidance of doubt, as of the Sale Termination Date or termination of the Designation Rights Period, as applicable, Agent may abandon, in place and without further responsibility or liability of any kind, any FF&E located at a Store or, Distribution Center, the Headquarters, or Merchant's other corporate offices.

E. Following, and subject to, the entry of the Approval Order, Agent may advertise the Sale as a store closing, sale on everything, everything must go or similar-themed sale, as dictated by the Approval Order.

F. Agent shall be permitted to utilize display, hanging signs, and interior banners in connection with the Sale; provided, however, that such display, hanging signs, and interior banners shall be professionally produced and hung in a professional manner. The Merchant and Agent shall not use neon or day-glo on its display, hanging signs, or interior banners. Furthermore, with respect to enclosed mall locations, no exterior signs or signs in common areas of a mall shall be used unless otherwise expressly permitted in these Sale Guidelines. In addition, the Merchant and Agent shall be permitted to utilize exterior banners at (i) non- enclosed mall Stores and (ii) enclosed mall Stores to the extent the entrance to the applicable Store does not require entry into the enclosed mall common area; provided, however, that such banners shall be located or hung so as to make clear that the Sale is being conducted only at the affected Store, shall not be wider than the storefront of the Store, and shall not be larger than 4 feet x 40 feet. In addition, the Merchant and Agent shall be permitted to utilize sign walkers in a safe and professional manner and in accordance with the terms of the Approval Order. Nothing contained in these Sale Guidelines shall be construed to create or impose upon Agent any additional restrictions not contained in the applicable lease agreement.





Case 18-10248- MFW Doc 632-1 Filed 04/18/18 Page 59 of 60

F. Conspicuous signs shall be posted in the cash register areas of each of the affected Stores to effect that all sales are final.

G. Except with respect to the hanging of exterior banners, Agent shall not make any alterations to the storefront or exterior walls of any Stores.

H. Agent shall not make any alterations to interior or exterior Store lighting. No property of the landlord of a Store shall be removed or sold during the Sale. The hanging of exterior banners or in- Store signage and banners shall not constitute an alteration to a Store.

I. Agent shall keep Store premises and surrounding areas clear and orderly consistent with present practices.

J. Subject to the provisions of the Agreement, Agent shall have the right to sell all Owned FF&E at the Closing Stores and the Distribution Centers, the Headquarters and (subject to any side letter between JV Agent and Purchaser, which shall not in any way affect Merchant's rights under the Agreement) and Purchaser shall have the right to sell all Owned FF&E at the Designation Rights Stores and the Nebraska Distribution Center. JV Agent may advertise the sale of the Owned FF&E in a manner consistent with these guidelines at the Closing Stores and the Indiana Distribution Center and Purchaser may advertise the sale of the Owned FF&E in a manner consistent with these guidelines at the Designation Rights Stores and the Nebraska Distribution Center. The purchasers of any Owned FF&E sold during the sale shall be permitted to remove the Owned FF&E either through the back shipping areas at any time, or through other areas after applicable business hours. For the avoidance of doubt, as of the Sale Termination Date or the termination of the Designation Rights Period, as applicable, Agent may abandon, in place and without further responsibility, any FF&E at the Stores, the Distribution Centers, the Headquarters, and Merchant's other corporate offices.

K. Agent shall be entitled to include Additional Agent Merchandise in the Sale in accordance with the terms of the Approval Order and the Agreement.

L. At the conclusion of the Sale at each Store, pending assumption or rejection of applicable leases, the landlords of the Stores shall have reasonable access to the Stores' premises as set forth in the applicable leases. The Merchant, Agent and their agents and representatives shall continue to have access to the Stores as provided for in the Agreement.

M. Post-petition rents shall be paid by the Merchant as required by the Bankruptcy Code until the rejection or assumption and assignment of each lease. Agent shall have no responsibility to the landlords therefor.

N. The rights of landlords against Merchant for any damages to a Store shall be reserved in accordance with the provisions of the applicable lease.

O. If and to the extent that the landlord of any Store affected hereby contends that Agent or Merchant is in breach of or default under these Sale Guidelines, such landlord shall email or deliver written notice by overnight delivery on the Merchant, JV Agent and Purchaser as follows:

If to Agent:

Great American Group, LLC Attn: Scott Carpenter (scarpenter@greatamerican.com)





Case 18-10248- MFW Doc 632-1 Filed 04/18/18 Page 60 of 60 Alan Forman (aforman@brileyfin.com)

and

Tiger Capital Group, LLC Attn: Christopher Huber (chuber@tigergroup.com) Mark Naughton (mnaughton@tigergroup.com)

and

Wilmington Savings Fund Society, FSB Attn: [_]

With copies (which shall not constitute notice) to:

Lowenstein Sandler LLP Counsel to Great American Group LLC Attn: Kenneth A. Rosen (krosen@lowenstein.com) Andrew Behlmann (abehlmann@lowenstein.com)

and

Kilpatrick Townsend & Stockton LLP Counsel to WSFS Attn: David Posner (dposner@kilpatricktownsend.com)

and

Jones Day Counsel to Second Lien Noteholders Attn: Sidney P. Levinson (slevinson@jonesday.com) Joshua M. Mester (jmester@jonesday.com) John Kane (jkkane@jonesday.com)

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

A:
Highlight the parts (if any) of this contract related to Insurance that should be reviewed by a lawyer. Details: Is there a requirement for insurance that must be maintained by one party for the benefit of the counterparty?
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