Document:

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                                                                    Exhibit 10.2

                           INTERIM SERVICING AGREEMENT

                                  BY AND AMONG

                            THE BON-TON STORES, INC.

                                       AND

                             HSBC BANK NEVADA, N.A.

                            DATED AS OF JUNE 20, 2005

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                           INTERIM SERVICING AGREEMENT

This Interim Servicing Agreement (this "Agreement") is made and entered into as
of June 20, 2005, by and among HSBC BANK NEVADA, N.A., a national banking
association ("Bank"), and THE BON-TON STORES, INC. ("Servicer").

Servicer has entered into a Purchase and Sale Agreement with Bank dated June 20,
2005 (the "Purchase Agreement"), pursuant to which Servicer has agreed to sell
and Bank has agreed to purchase the consumer private label credit card accounts
and related receivables.

                            ARTICLE I -- DEFINITIONS

1.01 Certain Definitions. Capitalized terms contained in this Agreement that are
not otherwise defined in this Agreement shall have the respective meanings
assigned to such terms in the Purchase Agreement.

1.02 Construction. Unless the context otherwise clearly indicates, words used in
the singular include the plural and words used in the plural include the
singular. The Recitals and the headings of Articles and Sections of this
Agreement are solely for the purpose of reference, are not part of the agreement
of the parties and shall not affect the meaning or interpretation of this
Agreement.

                      ARTICLE II -- SERVICES AND PROCEDURES

2.01 Services after Closing Date.

(a)   Subject to the terms of this Agreement the term of this Agreement shall
      commence on the Closing Date and terminate on November 1, 2005; provided,
      however, that the term of this Agreement may be pursuant to Section 2.06,
      terminated by Bank upon no less than fifteen days prior written notice to
      Servicer if Bank completes its conversion of the Accounts by a date prior
      to the termination date otherwise then in effect (the last day of the term
      of this Agreement is hereinafter referred to as the "Conversion Date").
      During the term of this Agreement, Servicer shall provide, except as
      otherwise noted herein, directly, or indirectly through its Affiliates or
      third-party service providers, all of the services that were rendered
      prior to the Closing by Servicer in connection with the authorization,
      servicing, processing, collection and administration of the Account
      Portfolio Assets (the "Services"), including, without limitation, the
      Services specified in Exhibits 2.01 (a).

(b)   Servicing Obligations after Closing Date. From and after the Closing Date,
      Servicer shall, in addition to the Services specified in Exhibit 2.01(a),
      also perform Services specified in Exhibit 2.01 (b).

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(c)   Servicing Obligations after Conversion Date. From and after the Conversion
      Date, Servicer shall have no obligations under this Agreement except as
      set forth in Sections 3.04 and 6.01 and Article VII.

2.02 Servicing Standards. Servicer or its Affiliates shall perform the Services
in all material respects in accordance with the policies and procedures of
Servicer relating to the Account Portfolio Assets ("Servicer's Policies and
Procedures") and in substantially the same manner Servicer performed such
services prior to the execution date hereof, with the exception of the
additional Services set forth in Exhibit 2.01(b)(1), which Servicer shall
perform in a commercially reasonable manner; provided, however, that Servicer
shall answer telephone calls in accordance with the standards set forth in
Exhibit 2.01(b)(2) and further provided that notwithstanding anything to the
contrary in this Agreement, Servicer shall have no liability for performing the
Services in conformity with or pursuant to any request or direction of Bank, as
long as such performance is done in a commercially reasonable manner, and
Servicer may rely and shall be protected in acting or refraining from acting
upon any statement, instrument, report, notice, request or document believed by
it to be genuine and to have been signed or presented by the proper parties.

2.03 Reports by Servicer. Until the Conversion Date, Servicer shall prepare or
cause to be prepared and transmit to Bank the following reports:

(a)   a Daily Settlement Sheet, which Servicer shall deliver to Bank by 5:00
      p.m., C.T., on the Business Day following the day covered by the report
      (in the form of Exhibit 2.03(i)); and

(b)   the reports listed on Exhibit 2.03(ii), which Servicer shall deliver to
      Bank within the time frames specified in Exhibit 2.03(ii). Servicer shall
      provide copies of the Masterfile in tape form to Bank following the final
      billing cycle date in each month from the Closing Date to the Conversion
      Date on or before the fifth Business Day of the following calendar month.
      Servicer shall prepare or cause to be prepared and transmit to Bank such
      additional reports as Bank shall reasonably request and as are currently
      available from Servicer's accounts receivable system.

2.04 Servicer's Policies and Procedures and Manuals. Until the Conversion Date,
Servicer shall make available for Bank's review Servicer's existing manuals in
which the Servicer's Policies and Procedures are reflected.

2.05 Access to System and Premises.

(a)   Subject to reasonable security and confidentiality procedures and the
      approval of the appropriate service provider, until the Conversion Date,
      and upon reasonable prior notice, Servicer will provide Bank, at Bank's
      sole expense, with:

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      (i)   reasonable access during normal business hours to the appropriate
            operating location of Servicer;

      (ii)  reasonable access to employees of Servicer providing Services; and

      (iii) reasonable access to all of Servicer's facilities, data, applicable
            software, records, files and Account Documentation relating to the
            Account Portfolio Assets; provided, however, that such access shall
            not unreasonably interfere with Servicer's normal operations.

(b)   Until the Conversion Date and subject to reasonable security and
      confidentiality procedures, and upon reasonable prior notice, Servicer
      shall:

      (i)   cause its personnel to provide Bank assistance and reasonable access
            during normal business hours to Servicer's premises in its
            investigation of such matters as Bank may reasonably request,
            provided, however, that such investigation shall be conducted in a
            manner which does not unreasonably interfere with Servicer's normal
            operations;

      (ii)  subject to provisions of any applicable licensing agreements,
            provide Bank with reasonable access during normal business hours to,
            or screen prints of, the parameters utilized by the various
            operating systems currently in use by Servicer to manage the
            Accounts;

      (iii) Consult with Bank regarding material decisions in the transfer of
            Accounts.

2.06 Assistance with Conversion. Bank and Servicer shall cause the Conversion
Date to occur as soon as practicable but no later than November 1, 2005 (the
"Conversion Date"), unless such delay is outside the Bank's or Servicer's
reasonable control. Both Bank and Servicer shall keep each other informed, on a
regular basis, as to the progress of its conversion efforts. Upon Bank's
reasonable request, Servicer shall provide to Bank, assistance in connection
with conversion of the Accounts to the Bank's processing and servicing system;
provided that such reasonable assistance does not interfere with Servicer's
normal operations. In addition, Servicer agrees that it shall provide in a
timely fashion such deconversion tapes and other materials necessary for
deconversion from its system to the Bank's processing and servicing system. The
form and format of such deconversion tapes shall be mutually agreed upon by Bank
and Servicer. Bank and Servicer shall each bear its own conversion expenses;
provided, however, that Bank shall bear the costs and expenses associated with
the conversion onto its processing and servicing system. To facilitate
Servicer's preparation for deconversion, Bank shall assign resources with prior
conversion experience to the conversion team and supply Servicer as soon as
practicable with a prioritized list of materials that will be

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required to effect a seamless conversion including, but not limited to, any
cardholder or applicant communications.

2.07 Ownership of Accounts; Changes to Terms. Subject to the terms of the Credit
Card Program Agreement, all Cardholder transactions and borrowings during the
term of this Agreement in connection with the Accounts shall create a
relationship of debtor and creditor between each Cardholder and Bank,
respectively; and Bank shall be the owner and holder of all Accounts and the
outstanding balances owed thereunder and shall have all obligations with respect
thereto as such owner and holder. Subject to the terms of the Credit Card
Program Agreement, Servicer acknowledges and agrees that after the Closing Date
it has (i) no right, title or interest in or to any Accounts, outstanding
balances on Accounts or payments made by Cardholders with respect to the
Accounts, and (ii) no right, privilege or power to establish or modify any terms
or conditions of the Cardholder Agreements or other instruments relating to the
Accounts, including, without limitation, the periodic finance charge or any fee
applicable to the Accounts (other than as provided in this Agreement, in the
Credit Card Program Agreement or on an individual account basis in accordance
with past practice and the Servicer's Policies and Procedures). Servicer shall
allow Bank to insert a change of ownership and terms forms, at Bank's expense
(other than ordinary postage costs incurred in mailing statements), in
statements to the Cardholders mailed after the Closing Date and shall mail a
change of ownership and terms forms, at Bank's expense, to zero balance
Cardholders after the Closing Date. Unless otherwise agreed to by the Parties,
Bank agrees that no change of terms, except as required by law, shall become
effective before the Conversion Date. In any case, Bank will cooperate with
Servicer to ensure that any communication with Cardholders regarding a change in
terms or ownership is executed in a manner that minimizes confusion to both
Cardholders and Servicer's employees. Bank shall be responsible for providing
Services with any change of terms notices.

2.08 Insurance Assumption. Bank shall take all actions necessary or advisable to
transfer from Servicer to Bank and assume all obligations in connection with any
credit insurance coverage available to Cardholders prior to the Conversion Date
such that such insurance coverage will be available to Cardholders subsequent to
the Conversion Date.

2.09 Account Documentation. The parties acknowledge that the Purchase Agreement
shall govern the parties' responsibilities with respect to delivery of Account
Documentation.

2.10 Compliance With Laws.

(a)   By Servicer. From the Closing Date until the Conversion Date, Servicer
      shall comply in all material respects with all federal and state laws and
      regulations applicable to Servicer give notice to Services of any
      applicable change in law or regulations and shall provide Servicer, at

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      Bank's expense, with training in respect of compliance with such laws and
      regulations.

(b)   By Bank. Bank shall comply in all material respects with all applicable
      federal and state laws and regulations. Bank shall also notify Servicer of
      any changes in applicable laws and regulations, which impact the provision
      of the Services and shall provide Servicer, at Bank's expense, with
      training in respect of compliance with such laws and regulations.

2.11 Negative Covenants.

(a)   Legal Action. Servicer shall not initiate any legal action with respect to
      any Account without Bank's prior written consent, including, without
      limitation, any repossessions or bankruptcy contests.

(b)   Other Actions. Except as may be required by law, and except as permitted
      by this Agreement or the Credit Card Program Agreement, Servicer shall not
      intentionally take any action or fail to take any action under this
      Agreement with respect to the Accounts which, in the reasonable judgment
      of Servicer, will impair any material rights of Bank, and Servicer shall
      not intentionally amend, terminate, or otherwise modify or prejudice any
      of Bank's rights with respect to any terms or conditions of any Cardholder
      Agreement, in each case, other than on an individual Account basis in
      accordance with the Servicer's Policies and Procedures.

(c)   Change in Servicer's Policies and Procedures. Prior to the Conversion
      Date, Servicer shall not make any material change in the Servicer's
      Policies and Procedures that would have an adverse effect on the Accounts,
      except as may be required by this Agreement or law. Servicer shall provide
      Bank with written notice prior to making any material change to the
      Servicer's Policies and Procedures.

2.12 Affirmative Covenants. Servicer shall continue to use throughout the term
of this Agreement the contingency procedures used by Servicer as of the Closing,
including contingency procedures for data processing, telecommunications,
payment processing and off-site maintenance and retention of Accounts and
Account Documentation.

                  ARTICLE III -- FEES, PAYMENTS AND SETTLEMENT

3.01 Servicing Fees.

(a)   Compensation for Services. Bank shall pay Servicer a monthly fee
      ("Servicing Fee") of 0.375% (4.50% annualized) of the aggregate Cardholder
      Indebtedness at the end of any given Month for servicing the upcoming full
      Month. If the Conversion Date occurs prior to the end of a Month, Servicer
      shall return to Bank within 10 days of the Conversion

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      Date, a prorata refund of the previously paid monthly Servicing Fee from
      the Conversion Date until the end of the Month.

(b)   Payment Terms. Servicer shall provide an invoice with supporting
      documentation to Bank on or before the tenth day of each Month with
      respect to amounts due under Section 3.01(a) for the immediately preceding
      Month. Bank shall pay Servicer, within ten (10) days after receipt of the
      invoice (such invoice to be e-mailed to Bank), all amounts set forth in
      such invoice. All payments under this Agreement shall be made by wire
      transfer of immediately available funds to the bank accounts designated by
      the respective Parties.

(c)   Payment Obligations. Notwithstanding anything to the contrary contained
      herein, neither Party shall refuse to make any payment required of it
      under this Agreement as a result of a breach or alleged breach by the
      other Party of any of its obligations under this Agreement or any other
      agreement; provided, however, any payment hereunder shall not constitute a
      waiver by such Party of any rights it may have under this Agreement, the
      Purchase Agreement, the Credit Card Program Agreement or law.

3.02 Settlement. Bank and Servicer each shall designate a bank account into
which settlement funds due from the other Party to this Agreement shall be
wired. From the Closing Date until the Conversion Date, Servicer shall provide
Bank with a Daily Settlement Sheet in accordance with Section 2.03. Bank or
Servicer, as the case may be, shall pay the net amount due on the Daily
Settlement Sheet each day by wire transfer to the designated settlement account
by initiating such wire transfer by 3:00 p.m., Eastern time on the same day on
which the Daily Settlement Sheet is provided, provided that in the case of Bank,
the Daily Settlement Sheet shall be received by 11:00 a.m. Eastern Time on that
day. If the Daily Settlement Sheet is not received by Bank by 11:00 a.m. Eastern
Time, the net amount due Servicer on such Daily Settlement Sheet shall be wired
by 3:00 p.m. Eastern Time on the following Business Day. In addition to any
other rights and remedies available to a Party under this Agreement, in the
event Servicer or Bank fails to make any such settlement payment by the time
required herein, and such delay results in the receiving Party being unable to
invest such funds overnight, the amount due from Servicer or Bank, as the case
may be, for such day's settlement shall be accompanied by interest on such
amount, calculated on the basis of an interest rate equal to the Federal Funds
Rate plus two percent, divided by three hundred and sixty five (365) for each
day such amount is overdue.

3.03 Payments. All payments on Accounts that are received by Servicer in
connection with its obligations under this Agreement will be processed and
credited within one (1) Business Day and in accordance with Regulation Z;
provided, however, that, as permitted by Regulation Z, Servicer may process and
credit within five (5) days after receipt any payment that does not conform to
the

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payment requirements disclosed on the Account periodic statement. All payments
received by Servicer shall be credited to Account Debtors' Accounts as of the
date of receipt. Servicer agrees that all payments received by Servicer will be
deemed to be held in trust for Bank until settled in accordance with Section
3.02. Bank shall have the right at Bank's sole cost to conduct on-site audit of
the payment processing process during normal business hours; provided, however,
that prior written notice of the audit is provided to Servicer and such audit
does not unreasonably interfere with Servicer's normal operations.

3.04 Funds Received by Servicer After Conversion Date. Following the Conversion
Date, Servicer shall use commercially reasonable efforts to forward, or cause to
be forwarded to Bank within three (3) Business Days after receipt by Servicer,
all funds received by or credited to Servicer under the Account Portfolio Assets
and, within ten (10) Business Days after receipt by Servicer, all correspondence
from Cardholders received with respect to the Account Portfolio Assets. Servicer
shall provide to Bank, via facsimile, a daily settlement sheet which shall
contain a summary of such funds received and forwarded. In the event that Bank
receives funds or correspondence relating to any account not included in the
Account Portfolio Assets, Bank shall use commercially reasonable efforts to,
within three (3) Business Days after receipt, forward, or cause to be forwarded,
to Servicer all such funds and, within ten (10) Business Days after receipt, all
such correspondence. All such funds and correspondence shall be sent by Servicer
or Bank, as applicable, by overnight mail or courier service (in each case, at
Bank's expense). The obligation to transmit funds shall continue for a period of
one year following the Conversion Date. Effective on the Conversion Date,
Servicer hereby appoints and empowers Bank as its true and lawful
attorney-in-fact solely to endorse any check or instrument made payable to
Servicer and submitted as payment on any outstanding balance of any Account and
Bank hereby appoints and empowers Servicer as its true and lawful
attorney-in-fact solely to endorse any check or instrument made payable to Bank
and submitted as payment on any outstanding balance of any Account.

                      ARTICLE IV -- TERMINATION OF SERVICES

4.01 Termination of Services.

(a)   Early Termination of Services. Either Party to this Agreement may
      terminate the Services reserving all other remedies and rights hereunder
      in whole or in part as follows:

            Event of Default. Upon the occurrence of an Event of Default caused
            by a Party, the other Party may terminate this Agreement by giving
            to the defaulting Party no less than ten (10) Business Days' prior
            written notice of its intent to terminate. Such written notice shall
            describe in detail the Event of Default. For purposes of this
            Agreement, an "Event of Default" hereunder shall occur in the event
            a Party fails to make a payment in accordance with Article III

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            (other than pursuant to a bona fide dispute over the amount which is
            payable) or materially defaults in the performance of any of its
            other duties or obligations under this Agreement. If the defaulting
            Party makes the payment required in accordance with Article III
            within ten (10) Business Days from the date of receipt of written
            notice from the other Party, or, in all other cases, corrects the
            condition which resulted in the Event of Default within twenty (20)
            Business Days from the date of notice from the other Party, the
            Services shall not terminate.

(b)   Effect of Termination of Services. The termination of this Agreement shall
      not terminate, affect, or impair any rights, obligations, or liabilities
      of either Party hereto which may accrue prior to such termination or
      which, under the terms of this Agreement, continue after the termination
      of this Agreement.

                   ARTICLE V -- REPRESENTATIONS AND WARRANTIES

5.01 Representations and Warranties of Servicer. Servicer represents and
warrants to Bank as follows:

(a)   Organization. Servicer is a corporation validly existing and in good
      standing under the laws of the Commonwealth of Pennsylvania.

(b)   Capacity; Authority; Validity. Servicer has all necessary corporate power
      and authority to enter into this Agreement and to perform all of the
      obligations to be performed by it under this Agreement. This Agreement and
      the performance by Servicer of its obligations hereunder have been duly
      and validly authorized by all necessary corporate action of Servicer, and
      this Agreement has been duly executed and delivered by Servicer and,
      assuming the due authorization, execution and delivery hereof by Bank,
      constitutes the valid and binding obligation of Servicer, enforceable
      against Servicer in accordance with its terms (except as such enforcement
      may be limited by bankruptcy, insolvency, reorganization, moratorium,
      receivership, conservatorship, and other laws relating to or affecting
      creditors' rights generally and by general equity principles.)

(c)   Conflicts; Defaults. Neither the execution and delivery of this Agreement
      by Servicer nor the performance by Servicer of its obligations hereunder
      will (i) conflict with, result in the breach of, constitute an event which
      would, or with the lapse of time or action by a third party or both would,
      result in a default under, or accelerate the performance required by, the
      terms of any material contract, instrument or commitment to which Servicer
      is a party or by which it is bound, (ii) violate the articles of
      incorporation or by-laws of Servicer, (iii) result in the creation of any
      lien, charge or encumbrance upon any of the Account Portfolio Assets, or
      (iv) require any consent or approval under any judgment, order, writ,
      decree,

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      permit or license, to which Servicer is a party or bound, or to which any
      of the Account Portfolio Assets are subject.

(d)   Consents. Except as contemplated by the Purchase Agreement, no consent,
      authorization or approval of, or exemption by, or filing with, any
      governmental authority or regulatory agency or any other person is
      required to be obtained by Servicer in connection with the execution and
      delivery by Servicer of this Agreement or Servicer's performance of its
      obligations hereunder.

(e)   Compliance with Laws. Except to the extent that Servicer's performance
      hereunder requires application of Bank's policies and procedures,
      Servicer's execution and delivery of this Agreement and Servicer's
      performance hereunder will comply in all material respects with federal
      and state laws and regulations.

5.02 Representations and Warranties of Bank. Bank represents and warrants to
Servicer as follows:

(a)   Organization. HSBC Bank Nevada, N.A. is a national banking association,
      validly existing and in good standing under the laws of the United States
      of America.

(b)   Capacity; Authority; Validity. Bank has all necessary corporate power and
      authority to enter into this Agreement and to perform all of the
      obligations to be performed by it under this Agreement. This Agreement and
      the performance by Bank of its obligations hereunder have been duly and
      validly authorized by all necessary corporate action of Bank, and this
      Agreement has been duly executed and delivered by Bank and, assuming the
      due authorization, execution and delivery hereof by Servicer, constitutes
      the valid and binding obligation of Bank, enforceable against Bank in
      accordance with its terms (except as such enforcement may be limited to
      bankruptcy, insolvency, reorganization, moratorium, receivership,
      conservatorship, the rights and obligations of receivers and conservators
      of insured depository institutions under 12 U.S.C. Sections 1821(d) and
      (e) and other laws relating to or affecting creditors' rights generally
      and by general equity principles.)

(c)   Conflicts; Defaults; Etc. Neither the execution and delivery of this
      Agreement by Bank nor the performance by Bank of its obligations hereunder
      will: (i) conflict with, result in the breach of, constitute an event
      which would, or with the lapse of time or action by a third party or both
      would, result in a default under, or accelerate the performance required
      by, the terms of any material contract, instrument or commitment to which
      Bank is a party or by which it is bound, (ii) violate the articles of
      incorporation or by-laws, or any other equivalent organizational document,
      of Bank, (iii) result in the creation of any lien, charge or encumbrance

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      upon any of the Account Portfolio Assets, or (iv) require any consent or
      approval under any judgment, order, writ, decree, permit or license, to
      which Bank is a party or bound, or to which any of the Account Portfolio
      Assets are subject.

(d)   Consents. Except as contemplated by the Purchase Agreement, no consent,
      authorization or approval of, or exemption by, or filing with, any
      governmental authority or regulatory agency or any other person is
      required to be obtained by Bank in connection with the execution and
      delivery by Bank of this Agreement or Bank's performance of its
      obligations hereunder.

(e)   Compliance with Laws. Bank's execution and delivery of this Agreement and
      Bank's performance hereunder will comply in all material respects with
      applicable federal and state laws and regulations.

             ARTICLE VI - - CONFIDENTIALITY AND INFORMATION SECURITY

6.01 Confidential Information. Except as specifically provided herein, the
provisions with respect to Confidential Information shall be the same as the
provisions set forth in Section 6.5 of the Purchase Agreement, which provisions
shall be incorporated herein by reference in their entirety including the
survival provisions therein.

6.02 Information Security. Bank and Servicer represent and warrant that they
have developed and implemented and will maintain effective information security
policies and procedures that include administrative, technical and physical
safeguards designed to 1) ensure the security and confidentiality of
Confidential Information provided to the other hereunder, 2) protect against
anticipated threats or hazards to the security or integrity of such Confidential
Information, and 3) protect against unauthorized access or use of such
Confidential Information. All Bank and Servicer personnel handling such
Confidential Information have been appropriately trained in the implementation
of the Party's information security policies and procedures. The Parties
regularly audit and review their information security policies and procedures to
ensure their continued effectiveness and determine whether adjustments are
necessary in light of circumstances including, without limitation, changes in
technology, customer information systems or threats or hazards to Confidential
Information.

                         ARTICLE VII -- INDEMNIFICATION

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7.01 Indemnification.

(a)   By Servicer. Servicer shall indemnify and hold harmless Bank and its
      Affiliates and their respective officers, directors and employees, from
      and against, any and all liability, damages, costs and expenses,
      including, without limitation, any attorneys' fees, disbursements and
      court costs ("Losses") incurred by reason of: (i) the inaccuracy of any
      representation prior to, or the breach of any warranty of Servicer
      contained in this Agreement occurring earlier than, one (1) year from the
      Conversion Date; or (ii) the failure to perform any covenant of Servicer
      hereunder, including the covenant to materially perform any Services in
      accordance with the terms of this Agreement.

(b)   By Bank. Bank shall indemnify and hold harmless Servicer and its
      Affiliates and their respective officers, directors, employees,
      subcontractors and permitted assigns, from and against, any and all Losses
      incurred by reason of: (i) the inaccuracy of any representation or the
      breach of any warranty of Bank contained in this Agreement; or (ii) the
      failure to materially perform any covenant of Bank hereunder.

(c)   Indemnification Procedures. Except as otherwise expressly provided herein,
      the procedures to be followed as to notice of claims, selection of
      counsel, settlement of claims and subrogation with respect to the
      indemnifications set forth in Sections 7.01(a) and 7.01(b) shall be the
      same as set forth in the Purchase Agreement in Article 7 thereof.

(d)   Survival of Indemnification. The provisions of this Article VII shall
      survive for a period of three (3) years after the Conversion Date with
      respect to all claims.

(e)   Limitation on Indemnification. In no event shall any Party be indemnified
      for any special, incidental, punitive or consequential damages incurred by
      such Party except to the extent that such damages are recovered by a
      non-party to this Agreement..

                          ARTICLE VIII -- MISCELLANEOUS

8.01 Cooperation. Bank shall furnish or cause to be furnished to Servicer all
powers of attorney and other documents necessary or appropriate to enable
Servicer to carry out its servicing duties hereunder. Each Party shall provide
such reasonable cooperation and assistance to the other Party as may be
necessary to enable Servicer to perform the servicing obligations hereunder and
to enable Bank to monitor the Accounts and the servicing obligations of
Servicer.

8.02 Notices. Except as otherwise provided in this Agreement, all notices
permitted or required by this Agreement shall be in writing and shall be deemed
to have been duly gien (a) upon personal delivery (whether by messenger,
overnight delivery, or otherwise), (b) upon facsimile transmission (receipt of

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which has been orally confirmed by the recipient), or (c) five (5) Business Days
after deposit, postage prepaid, in the United States mail, if sent by certified
or registered mail, return receipt requested, and addressed:

If to Servicer:

      The Bon Ton Stores, Inc.
      2801 East Market Street
      York, Pennsylvania 17402
      Attention: Treasurer
      Facsimile: 717-751-3087

with a copy to

      Wolf, Block, Schorr and Solis-Cohen LLP
      250 Park Avenue
      New York, New York 10177
      Attention: Herbert Henryson II
      Facsimile: 212-672-1192

If to Bank:

      HSBC Bank Nevada, N.A.
      1111 Town Center Drive
      Las Vegas, NV 89144
      Attn: President
      Facsimile:(702)243-1260

copy to:
      HSBC Retail Services Legal Department
      2700 Sanders Road
      Prospect Heights, IL 60070
      Attn: General Counsel
      Facsimile: (847) 564-6001

or in accordance with such other address information as the party to receive
notice may provide in writing to the other party in accordance with the above
notice provisions. Any notice given by any other method will be deemed to have
been duly given upon receipt thereof.

8.03 Assignment. Except as otherwise provided herein, this Agreement shall not
be assigned or transferred by either party; provided, however, that Servicer may
delegate all or part of its servicing obligations under this Agreement to any
Affiliate or any third party; provided further, that no such delegation shall
relieve Servicer of its obligations hereunder.

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8.04 Severability. If any provision or portion thereof of this Agreement is held
invalid, illegal, void or unenforceable by reason of any rule of law,
administrative or judicial provision, or public policy, such provision shall be
ineffective only to the extent invalid, illegal, void, or unenforceable, and the
remainder of such provision and all other provisions of this Agreement shall
nevertheless remain in full force and effect.

8.05 Entire Agreement; Amendments. This Agreement, together with the Exhibits
and Schedules hereto (which are hereby incorporated into and made a part
hereof), constitute the entire agreement between the parties relating to the
subject matter herein. This Agreement may be amended only by a written document
signed by each of the parties. In the course of the planning and coordination of
this Agreement, written documents have been exchanged between the Parties. Such
written documents shall not be deemed to amend or supplement this Agreement.
This Agreement and the rights and obligations created hereunder shall be binding
upon and inure solely to the benefit of the parties hereto and their respective
successors and permitted assigns, and no other person shall acquire or have any
right under or by virtue of this Agreement.

8.06 Waivers. One Party hereto may, with the prior written consent of the other
Party hereto: (a) extend the time for the performance of any of the obligations
or other actions of the other Party under this Agreement; (b) waive any
inaccuracies in the representations or warranties of the other Party contained
in this Agreement or in any document delivered pursuant to this Agreement; (c)
waive compliance with any of the conditions or covenants of the other Party
contained in this Agreement; or (d) waive or modify performance of any of the
obligations of the other Party under this Agreement. Except as provided in the
preceding sentence, no action taken pursuant to this Agreement, including
without limitation, any investigation by or on behalf of one Party, shall be
deemed to constitute a waiver by such Party of compliance with any of the
representations, warranties, covenants, conditions or agreements contained in
this Agreement. The waiver by one Party hereto of a breach of any provision of
this Agreement shall not operate or be construed as a waiver of any subsequent
breach.

8.07 Governing Law; Jurisdiction; Waiver of Trial by Jury. This Agreement shall
be governed by, and construed in accordance with, the laws of the State of
Delaware without regard to its conflict of laws rules. With respect to any
action, suit or proceedings relating to this Agreement or arising in connection
with the transaction contemplated hereby, the parties irrevocably shall submit
to the jurisdiction of the Federal and State courts of Delaware, waive any
objection to the laying of venue of any such action, suit or proceeding in any
such court, waive any claim that any such action, suit or proceeding has been
brought in an inconvenient forum, and waive the right to object that such court
does not have jurisdiction over the parties. The parties further irrevocably
waive the right to trial by jury in any action, suit or proceeding of any kind
or nature in any court to which it may be a party.

                                       14
<PAGE>

8.08 Account Documentation. Until the Conversion Date, and for any period
required by applicable law, each Party shall maintain books and records, in
accordance with standard accounting practices and procedures, of all
transactions arising in connection with its obligations pursuant to this
Agreement.

8.09 Expenses. Except as otherwise expressly set forth herein, any costs,
expenses, or other charges incurred by either of the Parties hereto shall be
borne by the party incurring such cost, expense or charge.

8.10 Relationship of the Parties. The Parties hereto agree that in performing
their responsibilities pursuant to this Agreement, they are in the position of
independent contractors. This Agreement is not intended to create, nor does it
create, and shall not be construed to create, a relationship of partner or joint
venture or any association for profit between Servicer and Bank. Servicer and
Bank acknowledge that this Agreement is being entered into by Servicer as an
incident to the Purchase Agreement for a limited transitional period as an
accommodation to Bank and that Servicer does not intend to, and shall not be
required to act or serve as a fiduciary of Bank, segregate Bank's funds, or
satisfy regulatory or statutory requirements applicable to Bank.

8.11 Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be an original, but together shall constitute one and the
same instrument.

            IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement on the day and year first above written.

THE BON TON STORES, INC., SERVICER

By: /s/ H. Todd Dissinger
   ________________________________

Title: Vice President and Treasurer
      _____________________________

HSBC BANK NEVADA, N.A., BANK

By: /s/ Asin Majeed
   ________________________________

Title: Executive Vice President
      _____________________________

                                       15<PAGE>
                                                                    Exhibit 10.3

                          CREDIT CARD PROGRAM AGREEMENT

                                     BETWEEN

                            THE BON-TON STORES, INC.

                                       AND

                             HSBC BANK NEVADA, N.A.

                            DATED AS OF JUNE 20, 2005

                                       1
<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<S>                                                                                                         <C>
ARTICLE 1 - DEFINITIONS.................................................................................     5
         Section 1.1 Definitions........................................................................     5

ARTICLE 2 - ESTABLISHMENT OF PROGRAM AND PROGRAM ECONOMICS..............................................     8
         Section 2.1 Establishment of Program and Operating Committee...................................     8
         Section 2.2 Operating Committee................................................................     9
         Section 2.3 Program Launch Payment.............................................................    12
         Section 2.4 Revenue Participation Payment......................................................    12
         Section 2.5 Prepaid Program Payment............................................................    12
         Section 2.6 Incentive Participation Payment....................................................    12
         Section 2.7 Marketing and Program Resources....................................................    12
         Section 2.8 In-store Payments on Accounts......................................................    14
         Section 2.9 Credit Review; Ownership of Accounts...............................................    14
         Section 2.10 Exclusive Relationship............................................................    15
         Section 2.11 Sales, Gross Receipts and Privilege Tax Refunds, Deductions and Credits...........    15
         Section 2.12 Debt Cancellation.................................................................    15
         Section 2.13 Promotional Credit Plans..........................................................    15
         Section 2.14 Bon-Ton Rewards Program...........................................................    16
         Section 2.15 Cardholder Data...................................................................    16
         Section 2.16 Bon-Ton Shopper Data..............................................................    18

ARTICLE 3 - MARKETING...................................................................................    18
         Section 3.1 Promotion of Program...............................................................    18
         Section 3.2 Card Promotions, Ancillary Products, Services and Enhancements.....................    19
         Section 3.3 Web Sites..........................................................................    19

ARTICLE 4 - ACCOUNT TERMS...............................................................................    19
         Section 4.1 Cardholder Agreement Terms and Conditions..........................................    19

ARTICLE 5 - OPERATIONAL RESPONSIBILITIES................................................................    19
         Section 5.1 Consumer Transactions..............................................................    19
         Section 5.2 Surcharges and Differential Treatment..............................................    19
         Section 5.3 Forms and Cards....................................................................    20
         Section 5.4 Applications.......................................................................    20
         Section 5.5 Sales Slips........................................................................    21
         Section 5.6 Credit Slips.......................................................................    21
         Section 5.7 Acceptance, Offset and Funding.....................................................    22
         Section 5.8 Cardholder Payments and Endorsement................................................    23
         Section 5.9 Written Complaints.................................................................    24
         Section 5.10 Operating Instructions............................................................    24
         Section 5.11 Facsimile and E-Mail Communication................................................    24
         Section 5.12 Bon-Ton Business Practices........................................................    24
</TABLE>

                                       2
<PAGE>

<TABLE>
<S>                                                                                                         <C>
         Section 5.13 Presentation of Sales Slip or Credit Slips........................................    24

ARTICLE 6 - CHARGEBACKS TO Bon-Ton......................................................................    25
         Section 6.1 Right to Chargeback................................................................    25
         Section 6.2 Resolution and Payment.............................................................    26

ARTICLE 7 - TRANSMISSION AND RECORDS....................................................................    26
         Section 7.1 Transmission of Data...............................................................    26
         Section 7.2 Receipt of Transmission............................................................    26
         Section 7.3 Records............................................................................    26

ARTICLE 8 - BANK REPRESENTATIONS AND WARRANTIES.........................................................    27
         Section 8.1  General Representations and Warranties............................................    27

ARTICLE 9 - Bon-Ton REPRESENTATIONS AND WARRANTIES......................................................    27
         Section 9.1 General Representations and Warranties.............................................    27
         Section 9.2 Representations and Warranties Regarding Card Sales and Applications...............    28

ARTICLE 10 - INDEMNIFICATION............................................................................    28
         Section 10.1 Indemnification by Bon-Ton........................................................    28
         Section 10.2 Indemnification by Bank...........................................................    28
         Section 10.3 Notice of Claim...................................................................    29

ARTICLE 11 - TERM AND TERMINATION.......................................................................    29
         Section 11.1 Term..............................................................................    29
         Section 11.2 Termination.......................................................................    29
         Section 11.3 Effects of Termination............................................................    30
         Section 11.4 Holdback..........................................................................    32
         Section 11.5 Survival..........................................................................    31

ARTICLE 12 -  RETAIL PORTFOLIO ACQUISITIONS.............................................................    32
         12.1 Retailer that Operates a Credit Card Business.............................................    32
         12.2 Retailer that has a Credit Card with Another Issuer.......................................    32
         12.3 Conversion of Purchased Accounts .........................................................    32

ARTICLE 13 -  MISCELLANEOUS.............................................................................    33
         Section 13.1 Bon-Ton Financial Information.....................................................    33
         Section 13.2 Securitization....................................................................    33
         Section 13.3 Limited License...................................................................    34
         Section 13.4 Material Inducement...............................................................    34
         Section 13.5 Confidentiality...................................................................    34
         Section 13.6 Information Security..............................................................    35
</TABLE>

                                       3
<PAGE>

<TABLE>
<S>                                                                                                         <C>
         Section 13.7 Privacy...........................................................................    35
         Section 13.8 Reports; Examination Rights.......................................................    35
         Section 13.9 OCC Examinations..................................................................    35
         Section 13.10 Bon-Ton's Agents.................................................................    36
         Section 13.11..................................................................................    36
         Section 13.12 Nonwaiver........................................................................    36
         Section 13.13 Status of the Parties............................................................    36
         Section 13.14 Force Majeure....................................................................    36
         Section 13.15 Additional Products and Services.................................................    37
         Section 13.16 Notices..........................................................................    37
         Section 13.17 Amendments and Supplementary Documents...........................................    37
         Section 13.18 Assignment.......................................................................    37
         Section 13.19 Nonwaiver and Extensions.........................................................    37
         Section 13.20 Rights of Persons Not a Party....................................................    38
         Section 13.21 Section Headings.................................................................    38
         Section 13.22 Integrations.....................................................................    38
         Section 13.23 Governing Law/Severability.......................................................    38
         Section 13.24 Jurisdiction.....................................................................    38
         Section 13.25 WAIVER OF JURY TRIAL.............................................................    38
</TABLE>

                                       4
<PAGE>

                          CREDIT CARD PROGRAM AGREEMENT

This Credit Card Program Agreement ("Agreement") is made and entered into as of
the 20th day of June, 2005 ("Effective Date"), by and between HSBC BANK NEVADA,
N.A. (herein "Bank"), with its principal place of business at 1111 Town Center
Drive, Las Vegas, NV 89144 and THE BONTON STORES, INC. a Pennsylvania
corporation ("Bon-Ton"), with its principal place of business at 2801 East
Market Street, York, Pennsylvania 17402.

In consideration of the mutual promises, covenants, and agreements set forth
below and for other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Bon-Ton and Bank agree as follows:

                             ARTICLE 1 - DEFINITIONS

SECTION 1.1 DEFINITIONS.

In addition to the words and phrases defined above, the following words and
phrases shall have the following meanings:

(a)   "Account" or "Private Label Account" means a private label revolving
      credit card account established by Bank for the Cardholder to be used by
      the Cardholder to finance the purchase of Goods from Bon-Ton pursuant to
      the terms of the Cardholder Agreement.

(b)   "Affiliate" means any entity that is owned by, owns, or is under common
      control with, a party or its ultimate parent.

(c)   "Applicable Law" means collectively or individually any applicable law,
      rule, regulation or judicial, governmental or administrative order,
      decree, ruling, opinion or interpretation.

(d)   "APR" means annual percentage rate.

(e)   "Authorization" means permission from Bank to Bon-Ton authorizing a Card
      Sale.

(f)   "Authorization Center" means the facility designated by Bank as the
      facility to provide Authorization to Bon-Ton to make Card Sales.

(g)   "Average Promotional Credit Plan Receivables" means for any Calendar Year,
      the twelve-month daily average of the Billed Cardholder Debt under
      Promotional Credit Plans (other than CCCS Accounts and Payment Plan
      Accounts for which a payment plan was instituted in connection with the
      servicing and collection thereof).

(h)   "Average Private Label Receivables" means for any Calendar Year, the
      twelve-month daily average of Billed Cardholder Debt under Private Label
      Accounts (other than CCCS Accounts and Payment Plan Accounts for which a
      payment plan was instituted in connection with the servicing and
      collection thereof).

(i)   "Billed Cardholder Debt" means (i) all amounts charged and owing to Bank
      by Cardholders that were billed with respect to the Accounts (including
      principal balances from outstanding Card Sales (including, without
      limitation, pursuant to Promotional Credit Plans), Card Sales for
      Ancillary Products, finance charges, NSF fees, late charges, pay-by-phone
      fees and any other fees and charges), that are billed, less (ii) the
      amount of any credit balances owing by Bank to such Cardholders, including
      in respect of any payments and any credits associated with returns of
      Goods and other credits and adjustments, in each case, that were reflected
      in the billing statement with respect to the Account that are billed.

(j)   "Business Day" means any day except Saturday or Sunday or a day on which
      banks are closed in the State of Nevada or the Commonwealth of
      Pennsylvania.

                                       5
<PAGE>

(k)   "Calendar Year" means January 1 through December 31 for any given year.

(l)   "Card" means the private label credit card issued by Bank for the Program.

(m)   "Cardholder" means (i) the person in whose name an Account is opened, and
      (ii) any other authorized users of the Account and Card.

(n)   "Cardholder Agreement" means as to any Account, the related agreement
      between the Cardholder and Bank, governing the terms and conditions of
      such Account, as such agreement may be amended from time to time by Bank.

(o)   "Cardholder Data" means all information about a Cardholder obtained by
      Bank, including, (a) (i) any credit bureau report obtained by or on behalf
      of Bank pertaining to a Cardholder, and (ii) any credit scoring and
      decision information and analyses of credit quality and credit risk, in
      each case, prepared by or on behalf of Bank, (b) any information collected
      from a Cardholder in response to items in a Cardholder's application for
      or use of a Card or Account, including Cardholder's name, date of birth,
      social security number, address, previous addresses, telephone number,
      email address, employment information, document identification information
      (including passport number and drivers license number), and all updates to
      any such information, and (c) Cardholder transaction and experience data
      collected by or on behalf of Bank with regard to each Card Sale by a
      Cardholder using a Card.

(p)   "Cardholder Indebtedness" means all amounts charged and owing to Bank by
      Cardholders with respect to Accounts (including principal balances from
      outstanding Card Sales, Card Sales for Ancillary Products, finance
      charges, NSF fees, late charges, pay-by-phone fees and any other fees and
      charges), whether or not billed, less the amount of any credit balances
      owing by Bank to Cardholders, including in respect of any payments and any
      credits associated with returns of Goods and other credits and
      adjustments, whether or not billed.

(q)   "Card Sale" means any sale of Goods that Bon-Ton makes to a Cardholder
      pursuant to this Agreement and the Cardholder Agreement that is charged to
      an Account.

(r)   "Chargeback" means the return to Bon-Ton and reimbursement to Bank
      pursuant to Article 6 of a Sales Slip or Card Sale for which Bon-Ton was
      previously paid.

(s)   "Closing Date" shall have the meaning set forth as defined in the Purchase
      and Sale Agreement dated June 20, 2005 by and between Bank and Bon-Ton.

(t)   "Commencement Date" means the first date that Bank funds a Card Sale.

(u)   "Competing Retail Programs" means from time to time major retailer card
      programs that are comparable to the Program in terms of program size,
      public profile and brand image, other than the Program, including those
      listed on Schedule 2.1(b).

(v)   "Confidential Information" of a party means any confidential or
      proprietary information of that party with respect to that party, the
      Accounts, the Cardholder Data, the Program, the Bon-Ton Shopper Data or
      this Agreement, in any form.

(w)   "Credit Slip" means evidence of a credit to an Account in a paper or
      electronic form relating to a return, exchange or cancellation of Goods
      purchased from Bon-Ton.

(x)   "Cut-Off Time" shall have the meaning set forth as defined in the Purchase
      and Sale Agreement dated June 20, 2005 by and between Bank and Bon-Ton.

(y)   "Effective Date" means the Closing Date.

(z)   "Existing Portfolio" means the existing accounts currently offered by
      Bon-Ton to its cardholders, accounts receivable, other receivables,
      contract rights, choses in action, general intangibles, chattel paper,
      instruments, documents, notes and proceeds thereof (as each of those terms
      is defined in the applicable Uniform Commercial Code), whether now owned
      or hereafter acquired under a credit agreement by Bon-Ton or certain of
      its Affiliates, wherever located, arising out of a sale to an existing
      account debtor pursuant to such credit agreement, and all rights related
      thereto.

                                       6
<PAGE>

(aa)  "Goods" means products and related services sold by Bon-Ton and its
      Affiliates in the ordinary course of Bon-Ton's business to individual
      consumers for personal, family or household purposes, and certain
      warranties expressly authorized by Bank.

(bb)  "High Collar" means, with respect to the dollar amount of the Average
      Promotional Credit Plan Receivables as a percentage of the Average Private
      Label Receivables, 8%.

(cc)  "Incentive Participation Payment" shall have the meaning provided in
      Section 2.6.

(dd)  "Low Collar" means, with respect to the dollar amount of the Average
      Promotional Credit Plan Receivables as a percentage of the Average Private
      Label Receivables, 4%.

(ee)  "Marketing Fund Contribution" has the meaning set forth in Section 2.7(a).

(ff)  "Month" means, as applicable, calendar or fiscal month unless used in
      connection with a Credit Promotion period.

(gg)  "Net Credit Sales" means gross Card Sales, minus Normal Business Returns
      and Chargebacks, during the specified period of time.

(hh)  "Net Monthly Card Sales" means gross Card Sales, minus Normal Business
      Returns and Chargebacks, for a given Month.

(ii)  "Net Yield" means, with respect to any Calendar Year, the dollar amount
      equal to (a) the sum of assessed finance charges under the Program during
      such Calendar Year, minus (b) the sum of all concessions, reversals and
      write-offs of such finance charges during such Calendar Year minus (c) the
      aggregate amount of all other Billed Cardholder Debt (other than that
      referred to in clause (b)) written-off during such Calendar Year, net of
      all recoveries of Billed Cardholder Debt during such Calendar Year.

(jj)  "No Interest / No Payment Deferred Plan" means a no interest and no
      payment credit promotion without required minimum monthly payments during
      the applicable promotion period.

(kk)  "No Interest / Monthly Payment Plan" means a no interest credit promotion
      with required minimum monthly payments during the applicable promotion
      period.

(ll)  "Normal Business Return" means a full refund (i.e., price plus original
      tax, and shipping and handling if applicable) given in the ordinary course
      of business by Bon-Ton for (i) a returned product, (ii) a damaged or
      defective product (iii) a package that is returned marked "undeliverable",
      or (iv) a cancellation of services.

(mm)  "Operating Instructions" means the regulatory guidelines and operating
      instructions and/or procedures designated by the Operating Committee from
      time to time concerning the Program.

(nn)  "Prepaid Program Payment" shall have the meaning provided in Schedule 2.5

(oo)  "Prime Rate" means the highest rate of interest designated as the Prime
      Rate as published in The Wall Street Journal "Money Rates" section on the
      first or last Business Day of a Month.

(pp)  "Program" means the private label revolving credit card program associated
      with Bon-Ton whereby Accounts will be established and maintained by Bank,
      Cards issued by Bank to qualified consumers purchasing Bon-Ton's Goods,
      and Card Sales funded all pursuant to the terms of this Agreement.

(qq)  "Program Launch Payment" shall have the meaning provided in Schedule 2.3.

(rr)  "Program Year" means any consecutive twelve (12) Month period beginning on
      the Commencement Date after the Effective Date and each subsequent twelve
      (12) Month period.

(ss)  "Promotional Credit Plans" means No Interest / No Payment Deferred Plans,
      No Interest / Monthly Payment Plans and other promotional credit plans set
      forth in the Cardholder Agreement.

(tt)  "Proprietary Designations" means name, logo, trademarks, servicemarks and
      any other proprietary designations.

(uu)  "Retail Store" means any Store that is not a location that processes only
      mail order, telephone or Internet sales of Goods.

(vv)  "Revenue Participation Payment" has the meaning set forth in Section 2.4.

                                       7
<PAGE>

(ww)  "Sales Slip" means evidence of a Card Sale in paper or electronic form for
      Goods purchased from Bon-Ton.

(xx)  "Store" means, at any time, the retail stores then operated by Bon-Ton or
      its Affiliates as of the Commencement Date, together with any other stores
      operated by Bon-Ton or its Affiliates that are added to the Program.
      "Store" shall also include: (i) any location or operation which sells by
      mail order or over the telephone or Internet (including any third party
      Internet portals to which the aforementioned retail stores or other stores
      operated by Bon-Ton are linked using one or more Bon-Ton Proprietary
      Designations and (ii) any department within a Store location operated by
      an unrelated party pursuant to a license from Bon-Ton or its Affiliates.

(yy)  "Terminal" means an electronic terminal or computer capable of
      communicating by means of an on-line or dial-up electronic link with an
      Authorization Center.

(zz)  "Year End Settlement Sheet" has the meaning set forth in Section 2.13

           ARTICLE 2 - ESTABLISHMENT OF PROGRAM AND PROGRAM ECONOMICS

SECTION 2.1 ESTABLISHMENT OF PROGRAM AND OPERATING COMMITTEE.

(a) General Parameters. Bon-Ton desires to make financing available to consumers
purchasing Goods from Bon-Ton Stores and to participate in the Program in
accordance with the terms and conditions set forth in this Agreement. Bank, a
credit card bank in the business of providing revolving credit financing
pursuant to a credit card, has agreed to provide such financing under the
Program to individual qualified consumers purchasing Bon-Ton's Goods pursuant to
the terms and conditions set forth in this Agreement. Both parties agree that
the Program will encompass Stores and other business channels (i.e. telesales
and Internet, if applicable) owned and operated by Bon-Ton and its Affiliates.

Bank will provide funding, customer service, application processing, credit
authorizations, full color statement production and mailing, collections, fraud
prevention and recovery operations, marketing campaign strategies, and relevant,
segmented personalized messages as more fully and specifically described in this
Agreement and the Operating Instructions. Bank will assume all costs of
servicing the Program and Bon-Ton will not be responsible for reimbursing Bank
for servicing costs unless expressly provided herein.

(b) Program Competitiveness, Goodwill, and Cardholder Satisfaction. Bank will
use all commercially reasonable efforts to maintain a competitive private label
credit card program in terms of features and functionality based on a comparison
to Competing Retail Programs (to the extent the information is publicly
available or allowed by Bank's agreements with such other card programs).

Bank will use all commercially reasonable efforts to manage the Program in a
manner that will preserve and enhance goodwill of the Cardholders.

Bank will use all commercially reasonable efforts to monitor Cardholder
satisfaction with the Program. As part of this monitoring effort, Bank agrees to
fund per Schedule 2.1(b)(i) and complete, on an annual basis, a formal survey of
Cardholder satisfaction. The annual survey will be jointly developed by the
Program Managers and conducted either by Bank or by an agreed-upon third party
with demonstrated expertise in conducting such surveys. The survey will be
designed in a manner that allows for comparison to other card programs offered
by Bank (to the extent the information is publicly available or allowed by
Bank's agreements with such other card programs) and by Competing Retail
Programs.

                                       8
<PAGE>

(c) Program Transition. Both parties will agree to a mutually acceptable
transition plan that contemplates a seamless and timely transition of Program
servicing from Bon-Ton's servicing platform to Bank's servicing platform. The
transition plan will include the designation of transition team members from
both parties, setting mutually agreed-upon milestones and completion dates,
assigning project management resources, developing a contingency planning
process, developing a customer and a Store communication plan, and identifying a
prioritized set of Program enhancements. Both parties will use all commercially
reasonable efforts to minimize any adverse impact on Bon-Ton's business as a
result of the timing of the transition efforts, existing and planned retail
promotional campaigns and any changes in the Cardholder terms and conditions.

Both parties will also attempt to minimize costs that may arise in transitioning
the Program servicing from Bon-Ton to Bank including but not limited to the
termination or assumption of third-party contracts and other obligations.

(d) Existing Portfolio. Bank shall work in good faith with Bon-Ton to purchase
the Existing Portfolio by June 20, 2005, or upon such other date as agreed upon
by the parties, subject to the execution of a Purchase and Sale Agreement.

SECTION 2.2 OPERATING COMMITTEE.

(a) Establishment of the Operating Committee.

Bon-Ton and Bank shall establish an Operating Committee, responsible for setting
the strategic direction of the Program, consisting of such number of members as
shall be agreed by the Operating Committee from time to time, one-half of such
members to be designated by Bon-Ton and one-half of such members to be
designated by Bank. Initially, the Operating Committee shall consist of six (6)
members, three (3) to be designated by Bon-Ton and three (3) to be designated by
Bank. The names of the initial designees will be named within thirty (30) days
following the Effective Date.

Each of Bon-Ton and Bank shall at all times have as one of its designees a
person with overall responsibility for the performance of the Program (each, a
"Program Manager") within his or her respective direct responsibilities. Bon-Ton
and Bank may each substitute its designees to the Operating Committee from time
to time so long as their designees continue to satisfy the above requirement,
provided that Bon-Ton and Bank shall provide the other with as much prior notice
of any such substitution as is reasonably practicable under the circumstances.
The Program Managers will have day-to-day responsibilities for the Program and
will execute the annual operating plan as approved by the Operating Committee.

(b) Functions of the Operating Committee

      Unless a proposed change to any component of the Program is required by
Applicable Law (in which case Bank or Bon-Ton shall be allowed to execute such
change unilaterally upon notice to the other party), the Operating Committee
shall be responsible for managing the business and affairs of the Program,
including, without limitation, the following:

      (1)   Be responsible for the overall Program management and formation of
            the annual operating plan including review of the Cardholder rewards
            program;

      (2)   Develop and approve the initial marketing plan and subsequent
            marketing plans including the use of Incentive Participation
            Payments;

                                       9
<PAGE>

      (3)   Review the marketing/CRM activities and marketing performance for
            the Program;

      (4)   Approve Program documentation, changes to Cardholder Agreement terms
            and conditions, solicitation materials and the actual card
            (plastics) design;

      (5)   Approve all value enhancing Program modifications including new
            product introduction and in-market testing in order to ascertain
            market appeal and acceptance;

      (6)   Monitor and discuss the Operating Instructions and operating
            performance of the Program; and

      (7)   Discuss and review such other tasks as are assigned to it by this
            Agreement or jointly by the parties.

(c) Operating Committee Meetings.

The Operating Committee will meet from time to time as its members consider
necessary, but in no event less than once per calendar quarter. The first
meeting must be held within fifteen (15) days of the Effective Date for the
purpose of developing or confirming the initial marketing plan and transition
plan. The Operating Committee will then determine when it will meet after that
date to conduct other business required by this Agreement. Meetings may be held
in person or wholly or partly by way of telephone or video conference, provided
however at least one meeting will be in person every six months.

(d) Proceedings in Operating Committee Meetings.

All decisions of the Operating Committee must be unanimous decisions of the
members present who decide a particular matter. A quorum of the Operating
Committee will be made up of at least one representative of Bon-Ton and one
representative of Bank.

If for a period of ten (10) Business Days the Operating Committee fails to agree
on a material element of a marketing plan, annual budget or any other matter of
material significance to the Program, then executive officers of Bon-Ton and
Bank, with decision making authority, who are not members of the Operating
Committee shall in good faith attempt to resolve the dispute or difference. If
after ten (10) Business Days such dispute or difference remains unresolved, the
disagreement shall constitute a deadlock. In the event of a deadlock, the final
decision shall rest with Bon-Ton, in respect matters set forth in Section
2.2(g), or Bank, in respect of matters set forth in Section 2.2(h). If the
matter that is the subject of a deadlock is not set forth in Section 2.2(g) or
(h), then the matter shall be deemed rejected by the Operating Committee.

(e) Procedural Matters.

The Operating Committee must determine the frequency, place and agenda for its
meetings, the manner in which meetings will be called and all procedural
matters. Any procedural or other matter specified in this Article concerning the
Operating Committee is subject to amendment in writing by the Operating
Committee.

                                       10
<PAGE>

(f) Risk Management Policy and Servicing and Collection Policy.

Bank and Bon-Ton shall mutually agree on the initial risk management policy,
customer service policy and the collection policy (the "Policies") in place as
of the Effective Date. These initial Policies shall each govern all aspects of
the Program that are addressed in such policies. Subsequently, each party may
propose amendments to, or modifications of, any provision of the Policies. At
the Operating Committee meetings, the Operating Committee shall review all
amendments or modifications of the Policies proposed during the preceding month
and shall suggest that the relevant Policies be updated to reflect any such
changes that are approved. Notwithstanding the foregoing, each of Bank and
Bon-Ton reserves the right to make changes to the Policies, without approval by
the Operating Committee when required by Applicable Law.

(g) Bon-Ton shall have ultimate decision-making authority over the provisions of
the Policies with respect to the following issues:

            (1)   Card design and collateral aesthetics (provided the cost of
                  providing such card design and collateral aesthetics is
                  consistent with historical cost levels);

            (2)   Look, feel and design of solicitation materials, applications,
                  and billing statements (except for content that is dictated by
                  Applicable Law);

            (3)   Marketing plans and promotion of the Program (other than
                  marketing plans that require funding by both parties or solely
                  by Bank in which case the Operating Committee shall direct the
                  use of such funds);

            (4)   Capital expenditures for maintenance of, and improvements to,
                  Bon-Ton's existing systems;

            (5)   Communications and/or contacts with Cardholders (other than as
                  required to maintain and service the accounts or otherwise
                  provided in this Agreement or Applicable Law) including
                  plastics, welcome kits, billing statement messages, return
                  envelopes, bangtails, statement inserts, web site design,
                  marketing collateral, in-store signage, customer service voice
                  response unit scripts, and other Cardholder interfaces;

            (6)   Changes to the Cardholder rewards program, provided that such
                  changes do not cause such rewards program to be less valuable
                  to Cardholders in the aggregate than the program in place as
                  of the Effective Date;

            (7)   Changes to the initial Cardholder Agreement as of the
                  Effective Date not required by Applicable Law;

            (8)   Approval of any value enhancing Program modifications
                  including new product introductions and ancillary products;

            (9)   Any materials bearing only Bon-Ton Proprietary Designations or
                  other intellectual property; and

            (10)  Outsourcing of any Program functions that involve contact with
                  Cardholders to any third party other than a U.S. Affiliate of
                  Bank.

(h) Bank shall have ultimate decision-making authority over the provisions of
the Policies with respect to the following issues:

            (1)   Subject to Applicable Law and / or the provisions of Section
                  2.1(b), content of Cardholder terms and conditions, including:
                  minimum payment, grace period, and late fees;

            (2)   Credit underwriting criteria;

            (3)   Risk and account management policies;

                                       11
<PAGE>

            (4)   Capital expenditures by Bank for systems improvements and/or
                  upgrades and new interfaces;

            (5)   Content of solicitation materials;

            (6)   Content of applications;

            (7)   Content of billing statements; and

            (8)   Any materials bearing only Bank Proprietary Designations or
                  other intellectual property.

Each of Bank and Bon-Ton shall always retain the ability to make changes to the
above components of the Program identified in Sections 2.2(g) and (h) to the
extent dictated by Applicable Law.

SECTION 2.3 PROGRAM LAUNCH PAYMENT.

Each party shall be responsible for their own costs associated with the launch
activities as identified in Schedule 2.3. Bank shall pay Bon-Ton the Program
Launch Payment on the Commencement Date to support Bon-Ton's expenses associated
with launching the Program.

SECTION 2.4 REVENUE PARTICIPATION PAYMENT.

Bank shall pay to Bon-Ton a Revenue Participation Payment per Schedule 2.4.

SECTION 2.5 PREPAID PROGRAM PAYMENT

On the Closing Date, Bank shall pay Bon-Ton the Prepaid Program Payment.

If on the first and any subsequent anniversary of the Effective Date for the
Initial Term, the sum of (i) Bon-Ton's net retail sales for the immediately
preceding twelve (12) months plus (ii) any Unused Credits are 80% or less than
the Effective Date Sales, Bank shall be entitled to recover and Bon-Ton agrees
to pay Bank an amount equal to the product of (i) 1/7th of the Prepaid Program
Payment multiplied by (ii) the difference of (A) 1 minus (B) the quotient of the
sum of Bon-Ton's net retail sales for the immediately preceding twelve (12)
months plus Unused Credits, such sum divided by the Effective Date Sales. The
term "Effective Date Sales" means Bon-Ton's net retail sales for the twelve (12)
months preceding the Effective Date. The term "Unused Credits" means the
aggregate amount, if any, that on the first and any subsequent anniversary of
the Effective Date for the Initial Term that Bon-Ton's net retail sales for the
immediately preceding twelve (12) months exceeds 110% of the Effective Date
Sales, less any amounts used pursuant to this Section 2.5(ii).

SECTION 2.6 INCENTIVE PARTICIPATION PAYMENT.

Bank shall pay to Bon-Ton an Incentive Participation Payment per Schedule 2.6.

SECTION 2.7 MARKETING AND PROGRAM RESOURCES.

(a) Bank will pay to Bon-Ton a Marketing Fund Contribution per Schedule 2.7(a).
The Marketing Fund Contribution will be paid to an account designated by Bon-Ton
and will be used by Bon-Ton as directed by the Operating Committee to fund
marketing efforts related to the Program including cardholder-exclusive events.
In addition to the Marketing Fund Contribution, and to further support the
marketing of the Program, Bank will provide, at no cost to Bon-Ton, a Marketing
and Customer Relationship Manager described below in Section 2.7(c).
Expenditures in respect of the Marketing

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<PAGE>

Fund Contribution shall be consistent with the marketing plan approved by the
Operating Committee and shall require no further approvals of the Operating
Committee.

(b) Both parties will, prior to the Effective Date, designate a fully dedicated
Program Manager who will work together to: (i) manage the day-to-day
responsibilities of the Program and (ii) execute any plans or projects as
approved by the Operating Committee. The Program Managers will collaborate to
determine regular meeting dates, portfolio reporting templates, management
processes, and critical business issues that should be addressed by the
Operating Committee. Both parties will seek to provide stability and continuity
with respect to its designees as Program Managers.

(c) In addition to designating a fully dedicated Program Manager, Bank shall
designate, no later than 30 days after the Commencement Date, (i) a primary
Marketing and Customer Relationship Manager based at Bank's headquarters
responsible for coordinating the overall marketing/CRM strategies, Program data
mining and analytics to support the Program (i.e., helping Bon-Ton better
understand its existing customers and develop strategies to attract new
customers, developing strategies to improve acquisition, usage and retention;
including Banks robust databases and analytical tools); and, (ii) a dedicated
Store Development Manager based at Bank's headquarters who will work in
conjunction with Bon-Ton's Program and Store management teams and be responsible
for training with respect to Store operations to promote the Program.

(d) Program Re-Launch. The Bank will provide program re-launch economic support
as described in Schedule 2.7(d), in accordance with the transition plan, to
support the re-launch of the Bon-Ton private label credit card Program which
will include:

            (i)   issuing new plastics to all Cardholders who have any account
                  activity at any time during the 24 months prior to the
                  Effective Date;

            (ii)  design and production of store signage;

            (iii) design and production of store training materials;

            (iv)  design and production of Cardholder notices;

            (v)   design and production of Cardholder applications; and,

            (vi)  other efforts to ensure an orderly Program transition from
                  Bon-Ton to Bank.

(e) Bank will provide to Bon-Ton, at no additional cost, all appropriate and
necessary training materials, training manuals, and other materials necessary to
properly train the Bon-Ton employees who have responsibilities relating to the
Program. Bank and Bon-Ton will work together in good faith to develop programs
to properly train Bon-Ton employees on the Program strategy, Bank brand related
strategies, Program values and components, service level expectations, and other
Program-related matters. Bank will be responsible to ensure all training
material is in compliance with Applicable Law as it relates to the Program.

(f) Bank will provide to Bon-Ton, at no additional costs, full color billing
statements inclusive of relevant personalized messages, bangtails on remittance
envelopes and other marketing support per Schedule 2.7(f).

(g) Program Reporting. Bank will provide reports based on the performance of the
Program according to the attached Schedule 2.7(g) and such additional reports as
may be agreed from time to time.

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<PAGE>

SECTION 2.8 IN-STORE PAYMENTS ON ACCOUNTS

Bank shall pay Bon-Ton the compensation for services rendered with respect to
the Program as set forth in Schedule 2.8.

Bon-Ton will accept in-store payments on Accounts at substantially all point of
sale locations from the Closing Date until the termination of the Program and
any such in-store payment will result, to the extent applicable based on each
Cardholder's then current Account balance, in an increase in the particular
Cardholder's open-to-buy. As promptly as practicable following the Closing Date,
Bank shall use commercially reasonable efforts to complete the necessary systems
modifications and testing necessary to use the same or similar functionality
that existed prior to the Effective Date which specifically allows for immediate
account posting so that an in-store payment will result, to the extent
applicable based on each Cardholder's then current Account balance, in an
increase in the particular Cardholder's open-to-buy. Further obligations
regarding in-store payments are set forth below in Section 5.8.

SECTION 2.9 CREDIT REVIEW; OWNERSHIP OF ACCOUNTS.

(a) All completed applications for Accounts submitted by Bon-Ton to Bank,
whether telephoned or electronically transmitted, will be processed and approved
or declined in accordance with the risk management Policies, credit criteria and
procedures established as of the date transmitted, with Bank having and
retaining all rights to reject or accept such applications. Bank will only
accept applications for revolving credit pursuant to the credit card it issues
for individual, personal, family or household use. Bank shall develop and
maintain risk management Policies for the Program in a process consistent with
those developed and maintained for its other private label programs.

(b) It is in the best interests of both parties to optimize both approval rates
and credit lines that are equal to or better than those experienced by Bon-Ton
as of the Effective Date. As such, Bank will use all commercially reasonable
efforts to maintain or improve the (i) approval rates for applications submitted
at the point of sale; (ii) initial and ongoing credit lines for Cardholders; and
(iii) Bon-Ton application decisioning process and practices relating to
applicants with limited credit histories ("thin-file") or no credit history
("no-hit") experienced by Bon-Ton prior to the Effective Date by utilizing a
combination of industry tools. Bank's obligations under this Section 2.9(b) are
expressly conditioned upon a substantially similar applicant and Cardholder
population and quality including but not limited to similar through the door
application distribution credit quality and Bon-Ton's continued internal
employee / Store management support for the Program as of and prior to the
Effective Date and as more specifically defined in this Agreement.

(c) Bank or its Affiliates shall own the Accounts, as well as the information
associated with the Accounts, including names, mailing addresses, and e-mail
addresses, and shall bear the credit risk for such Accounts. Bank shall fully
share such information with Bon-Ton to the extent allowed by Applicable Law and
as more fully described herein. Bank shall not be obligated to accept
applications for a Card or to approve any Card Sale for consumers who do not
have their principal residence and billing address in the United States or
Canada. Subject to the Chargeback provisions herein, Bank agrees that it will
own the Accounts on a non-recourse basis meaning that Bon-Ton will bear no
credit losses throughout the term of the Agreement.

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<PAGE>

SECTION 2.10 EXCLUSIVE RELATIONSHIP.

(a) Both parties agree that Bank will be the sole and exclusive Bon-Ton private
label credit card provider during the term of this Agreement. Bon-Ton shall not
issue, arrange to issue, or accept any other private label credit card or
co-branded credit card other than the Card under any of Bon-Ton's Proprietary
Designations except as specifically provided for in Section 2.10(b).
Notwithstanding the foregoing, Bon-Ton will not be restricted from accepting any
other payment type for Goods including but not limited to prepaid cards, debit
cards, general purpose credit cards (i.e, Visa, Mastercard, Discover, American
Express).

(b) Following the Commencement Date, Bon-Ton may only offer a co-branded credit
card (i.e., Visa, Mastercard, Discover, American Express or other general
purpose credit card with any Bon-Ton Proprietary Designation) provided Bon-Ton
first solicits and considers Bank's offer to issue a Bon-Ton co-branded card,
which Bank must submit to Bon-Ton within 60 days of Bon-Ton's written Request
for Proposal. Bank's offer to issue a Bon-Ton co-branded credit card will
consider factors such as the product offering, cardholder terms, compensation
from Bank to Bon-Ton, and marketing support for the co-branded program. Bon-Ton
shall not be permitted to issue a co-branded card with any issuer who does not
provide terms, conditions and capabilities that in the aggregate are determined
by Bon-Ton, in its sole discretion, to be superior to the offer, if any, made by
Bank in response to the Request for Proposal.

SECTION 2.11 SALES, GROSS RECEIPTS AND PRIVILEGE TAX REFUNDS, DEDUCTIONS AND
CREDITS.

Bank and Bon-Ton agree to pursue sales, gross receipts and privilege tax
refunds, deductions, and credits pursuant to the attached Schedule 2.11.

SECTION 2.12 DEBT CANCELLATION.

Bank will offer a debt cancellation product to Cardholders as set forth in
Schedule 2.12.

SECTION 2.13 PROMOTIONAL CREDIT PLANS.

Bank shall offer and support Bon-Ton's existing Promotional Credit Plans as of
the Effective Date in accordance with this Agreement and, subject to the
limitations set forth in this Section 2.13, the cost of maintaining such
Promotional Credit Plans shall be borne by Bank. Such Promotional Credit Plans
offered shall have terms, duration, and conditions that are at least as
favorable to Cardholders as those offered by Bon-Ton prior to the Effective
Date. The Year End Settlement Sheet for each Calendar Year shall set forth (i)
Average Private Label Receivables, (ii) Average Promotional Credit Plan
Receivables, and (iii) the Net Yield for such Calendar Year calculated on all
Billed Cardholder Debt.

If the dollar amount of the Average Promotional Credit Plan Receivables as a
percentage of the Average Private Label Receivables for such Calendar Year
exceeds the High Collar, there shall be included on the Year End Settlement
Sheet for such Calendar Year (and Bon-Ton shall pay to Bank within one Month
subsequent to such Calendar Year) an amount equal to the product of (a) the
ratio of Net Yield to all Billed Cardholder Debt multiplied by (b) the dollar
amount by which Average Promotional Credit Plan Receivables for such Calendar
Year exceeded the High Collar.

                                       15
<PAGE>

If the dollar amount of the Average Promotional Credit Plan Receivables as a
percentage of the Average Private Label Receivables for such Calendar Year is
less than the Low Collar, there shall be included on the Year End Settlement
Sheet for such Calendar Year (and Bank shall pay to Bon-Ton within one Month
subsequent to such Calendar Year) an amount equal to the product of (a) the
ratio of Net Yield to all Billed Cardholder Debt multiplied by (b) the dollar
amount by which Average Promotional Credit Plan Receivables for such Calendar
Year were less than the Low Collar.

SECTION 2.14 BON-TON REWARDS PROGRAM

Bank agrees to operationally and systemically support Bon-Ton's rewards program
that is associated with the Bon-Ton private label credit card as of the
Effective Date and as may be modified by the Operating Committee pursuant to
Section 2.2, including Section 2.2(g)(6). Within 120 days of the Effective Date,
Bank will assist Bon-Ton in identifying potential enhancements to the Bon-Ton
rewards program available on Bank's systems. Subject to Section 2.2, Bon-Ton
agrees to continue offering Cardholders throughout the term of this Agreement, a
Cardholder rewards program with rewards and benefits that are similar or are
more valuable to the Cardholders as the rewards and benefits in place as of the
Effective Date.

SECTION 2.15 CARDHOLDER DATA

      (a) As between Bank and Bon-Ton, subject to Section 2.16, the Cardholder
Data shall be the property of and exclusively owned by Bank. Bon-Ton
acknowledges and agrees that it has no proprietary interest in the Cardholder
Data. Bank shall not use, or permit to be used, Cardholder Data, except in
compliance with this Agreement, Applicable Law and the privacy policy adopted by
Bon-Ton and Bank for the Program ("Program Privacy Policy"). Bank has no rights
to use the Cardholder Data for marketing purposes except as expressly provided
herein.

      (b) Bank shall not, directly or indirectly, sell or otherwise transfer any
right in or to the Cardholder Data. Bank may disclose the Cardholder Data in
compliance with Applicable Law and the Program Privacy Policy solely:

            (i) to its subcontractors in connection with a permitted use of such
Cardholder Data, provided that each such subcontractor agrees to be bound by
this Section 2.15, or a comparable contractual commitment with the same effect;

            (ii) to its Affiliates and its Affiliates' employees, agents,
attorneys and accountants with a need to know such Cardholder Data in connection
with a permitted use of such Cardholder Data under this Section; provided that
(A) any such Person is bound by terms substantially similar to this Section as a
condition of employment or of access to Cardholder Data or by professional
obligations imposing comparable terms; and (B) Bank shall be responsible for the
compliance of each such Person with the terms of this Section; or

            (iii) to any governmental authority with authority over Bank (A) in
connection with an examination of Bank; or (B) pursuant to a specific
requirement to provide such Cardholder Data or pursuant to compulsory legal
process; provided that Bank seeks the protection of confidential treatment for
any disclosed Cardholder Data to the fullest extent available under Applicable
Law.

      (c) Subject to Applicable Law and the Program Privacy Policy, Bank shall
report to Bon-Ton on a Monthly basis, or such shorter period as reflected on
Schedule 2.7(g) in a format agreed to by the parties in advance:

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<PAGE>

            (i) for any customer who has applied for a Card, regardless of the
marketing channel of such application, the customer's name, address, email
address (if applicable), telephone number, social security number and all other
commercially reasonable information supplied on the application or prescreened
response submitted by the customer; and

            (ii) for any Cardholder, (1) the Cardholder's name, address, email
address, telephone number, social security number and Account number; (2) any
reported change to any of the foregoing information; (3) Cardholder transaction
and experience data; and (4) any such other Cardholder Data and other data
regarding the Cardholder in Bank's possession as Bon-Ton may request.

      (d) Bank shall cooperate with Bon-Ton to provide Bon-Ton the maximum
ability permissible under Applicable Law to use and disclose Cardholder Data,
including, as necessary or appropriate, through use of consents and opt-out
provisions, to the extent requested by Bon-Ton.

      (e) Bon-Ton shall only use, or permit to be used, Cardholder Data in
compliance with Applicable Law (i) for purposes of promoting the Program or
promoting Bon Ton Goods and Services, (ii) as otherwise necessary to carry out
its obligations under this Agreement, and (iii) as otherwise permitted by
Applicable Law.

      (f) Bon-Ton shall not disclose, or permit to be disclosed, the Cardholder
Data, except that Bon-Ton may disclose the Cardholder Data in compliance with
Applicable Law and the Program Privacy Policy solely:

            (i) to its subcontractors in connection with a permitted use of such
Cardholder Data under this Section 2.15, provided that each such subcontractor
agrees to be bound by this Section 2.15, or a comparable contractual commitment
with the same effect;

            (ii) to its Affiliates and its Affiliates' employees, agents,
attorneys and accountants with a need to know such Cardholder Data in connection
with a permitted use of such Cardholder Data under this Section; provided that
(A) any such person is bound by terms substantially similar to this Section as a
condition of employment or of access to Cardholder Data or by professional
obligations imposing comparable terms; and (B) Bon-Ton shall be responsible for
the compliance of each such person with the terms of this Section; or

            (iii) to any governmental authority with authority over Bon-Ton (A)
in connection with an examination of Bon-Ton; or (B) pursuant to a specific
requirement to provide for such Cardholder Data by such Governmental Authority
or pursuant to compulsory legal process; provided that Bon-Ton seeks the full
protection of confidential treatment for any disclosed Cardholder Data to the
extent available under Applicable Law.

                                       17
<PAGE>

      (g) The provisions of this Section 2.15 shall survive termination of this
Agreement; provided that if Bon-Ton exercises its rights to cause the purchase
of the Accounts upon termination of this Agreement, Bank shall transfer its
right, title and interest in the Cardholder Data to Bon-Ton or its Nominated
Purchaser as part of such transaction, and Bank's right to use and disclose the
Cardholder Data shall terminate upon the purchase of the portfolio. Should
Bon-Ton not exercise its right to purchase the Accounts, Bank shall be permitted
to use the Cardholder Data as necessary in order to own and service the Accounts
in conjunction with other partners and Affiliates of Bank that do not compete
with Bon-Ton; provided, however, that in no event shall Bank knowingly use
Cardholder Data which would create an adverse impact on Bon-Ton or its
Affiliates.

SECTION 2.16 BON-TON SHOPPER DATA

      (a) Bank acknowledges that Bon-Ton gathers information about purchasers of
Goods and that Bon-Ton has rights to use and disclose such information
independent of whether such information also constitutes Cardholder Data,
including data as described in Section 2.15(c), (all of such independent
information will be referred to as "Bon-Ton Shopper Data".) Bank shall cooperate
in Bon-Ton's maintenance of such Bon-Ton Shopper Data, including by
incorporating in the Program Privacy Policy, Card application and Cardholder
Agreement mutually agreed provisions pursuant to which applicants and
Cardholders will agree that they are providing their identifying information
(including name, address, telephone number, email address and social security
number) and all updates thereto to both Bank and Bon-Ton. To the extent Bank is
the direct recipient of such data, Bank shall provide such data to Bon-Ton in
such format and at such times as Bon-Ton shall reasonably request. As between
Bon-Ton and Bank, all Bon-Ton Shopper Data will be owned exclusively by Bon-Ton.
Bank acknowledges and agrees that it has no proprietary interest in the Bon-Ton
Shopper Data.

      (b) Bank shall not use, or permit to be used, directly or indirectly, the
Bon-Ton Shopper Data except to transfer such data to Bon-Ton to the extent it is
received by Bank or as directed by Bon-Ton. Bank shall not disclose or permit to
be disclosed the Bon-Ton Shopper Data, except that it may disclose the Bon-Ton
Shopper Data for the same purposes for which Bon-Ton may disclose Cardholder
Data as set forth in Section 2.15(f).

      (c) To the extent Bank has access to Bon-Ton Shopper Data, such access
shall terminate upon termination of the Agreement.

ARTICLE 3 - MARKETING

SECTION 3.1 PROMOTION OF PROGRAM.

Bon-Ton shall actively and consistently promote, participate in and support the
Program throughout the term of this Agreement. As of the Effective Date, the
Program shall be marketed in a manner similar to the manner Bon-Ton marketed its
program prior to the Effective Date and, in the future as determined by the
Operating Committee from time to time in writing.

In addition to the provisions in Section 2.6, Bon-Ton shall prominently and
consistently display at each of its Store locations and on its websites when
applicable, advertising and promotional materials relating to the Card in a
manner consistent with those in effect as of the Effective Date and as modified
from time to time by the Operating Committee and use or display such materials
in accordance with any specifications mutually agreed to by Bank and Bon-Ton.
Such materials shall be used only for the purpose of soliciting accounts for the
Program. Any solicitation, written material, advertising or the like relating to
the credit terms and credit products offered pursuant to the

                                       18
<PAGE>

Program shall receive Bank's prior review and written approval. Such review and
approval by Bank shall be limited to the review and approval of the credit terms
and credit products and shall not be construed as review or approval of any
advertising or solicitation materials for any other purpose or for compliance
with any provisions of any local, state or federal advertising laws not related
to credit terms or credit products.

SECTION 3.2 CARD PROMOTIONS, ANCILLARY PRODUCTS, SERVICES AND ENHANCEMENTS.

(a) Bank and Bon-Ton may from time to time mutually agree to offer to existing
or potential Cardholders additional credit promotions, ancillary products,
services and/or enhancements. The terms of such promotions, products, services
and enhancements shall be mutually agreed upon by Bank and Bon-Ton in accordance
with the provisions of Section 2.2.

(b) Bon-Ton shall have the right to: (i) place inserts in Cardholder statements
(whether electronic or print); (ii) place messages on statements; (iii) utilize
bangtails; and, (iv) utilize return envelopes to promote Bon-Ton's Goods as well
as other products and services deemed appropriate by Bon-Ton. Bank reserves the
right to include any insert, message or other items in Cardholder statements,
statement message windows, bangtails, and return envelopes to the extent
required by Applicable Law. Should a Bon-Ton sponsored insert, message,
bangtail, or return envelope item request cause the postage rate to increase
above the standard rate, Bon-Ton shall either pay the difference between the
actual postage rate and the standard rate or Bon-Ton will allow Bank to reduce
the number of items in an appropriate manner so as to reduce the postage to the
standard rate.

SECTION 3.3 WEB SITES.

When the parties agree to implement functionality to allow Cardholders to apply
for the Card via the Internet, Bon-Ton shall include a link on its web site to
the Bank web site, and include language approved by Bank notifying visitors that
they may complete an application for a Card via the Internet by clicking on such
link. All costs associated with developing and implementing the credit
functionality via the Internet maintained on the Bank's systems, shall be borne
by Bank. If approval rates of applications for Cards do not exceed minimum
targets established by the Operating Committee, the application shall be
promptly discontinued unless the Operating Committee affirmatively and
unanimously elects to continue with the application.

ARTICLE 4 - ACCOUNT TERMS

SECTION 4.1 CARDHOLDER AGREEMENT TERMS AND CONDITIONS.

The Cardholder Agreement Terms and Conditions are set forth on Schedule 4.1.

ARTICLE 5 - OPERATIONAL RESPONSIBILITIES

SECTION 5.1 CONSUMER TRANSACTIONS.

Bon-Ton shall honor all valid Cards without discrimination, when properly
presented by Cardholders for payment of Goods wherever and in whatever capacity
Bon-Ton or its agents, lessees, subsidiaries, or affiliates offers Goods.

SECTION 5.2 SURCHARGES AND DIFFERENTIAL TREATMENT.

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<PAGE>

Bon-Ton shall not require, through an increase in price or otherwise, any
Cardholder to pay any surcharge at the time of sale or pay any part of any
charge imposed by Bank on Bon-Ton. Bon-Ton shall not provide any discounts to
customers for using cash or any other tender or credit device that is also not
provided to customers using the Card.

SECTION 5.3 FORMS AND CARDS.

Bank shall provide, and Bon-Ton shall only use, the applications and Cardholder
Agreements as are provided by Bank and not use any applications and Cardholder
Agreements provided by Bank other than in connection with an application for a
Card or a Card transaction. When provided by Bank with a new edition of forms
with the instruction to replace the previous editions with the new editions by a
certain date, Bon-Ton shall do so in accordance with the instructions.

Bank and Bon-Ton shall work together in good faith to design Program materials
and collateral, including plastics, applications, statements, and other
collateral materials that promote the Bon-Ton brand and the Program. Bank shall
be responsible for card production and issuance, statements, and Applications.

SECTION 5.4 APPLICATIONS.

Bon-Ton shall, with respect to applications that it accepts in its Retail Store
locations:

(a)   make sure all information reasonably necessary to process an application
      is obtained;

(b)   obtain the signature on the application (or electronic capture device) of
      each person whose name will appear on the Account or will be responsible
      for the Account.

(c)   give the applicant the initial disclosures at the time of signing the
      application or agreement prior to the first transaction under the Account;

(d)   obtain and provide verification of the applicant's identity and current
      address by (i) witnessing the signature on the application of each person
      whose name will appear on the Account or who will be responsible for the
      Account; and (ii) reviewing one of the following: a current drivers
      license containing the applicant's photo, a current government issued
      identification card containing the applicant's photo, a valid US
      Government issued military identification containing the applicant's
      photo, a valid United States Passport containing the applicant's photo, a
      valid United States Alien Registration Card (Green Card) containing the
      applicant's photo and confirming that the photo on such identification
      reasonably matches the applicant; and (iii) capture electronically or
      record on the application where designated the drivers license number or
      the ID type, place of issuance, and, if any, date of issuance and
      expiration date of such identification, as well as the address if the
      address differs from the address in (ii) above;

(e)   provide all information reasonably required by Bank for approval of
      applications and print an electronic receipt or legibly include the
      Account number and approval number on the application in the designated
      area; and

(f)   provide Bank with access to Bon-Ton's electronic applications files to
      permit Bank to retain copies.

Bon-Ton shall, when applicable, with respect to applications submitted to it by
telephone or through the Internet:

(g)   request all information required by Bank for such applications; and

(h)   provide all information required by Bank, through a mode of transmission
      mutually agreed upon by both parties, for approval of such application.

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<PAGE>

Subject to Bon-Ton's compliance with the application procedures set forth in
this Agreement, Bank shall instantly provide available credit and issue an
account number to approved applicants that may be used by the Cardholder for
Retail Store purchases immediately upon approval.

SECTION 5.5 SALES SLIPS.

Bon-Ton shall, with respect to Sales Slips:

(a)   enter legibly or capture electronically on a single Sales Slip (prior to
      obtaining the Cardholder's signature for in Store sales) (i) a description
      of all Goods purchased in the same transaction in detail sufficient to
      identify the transaction; (ii) the date of the transaction; (iii) the
      Authorization number; (iv) the entire amount due for the transaction
      (including any applicable taxes); (v) if applicable, the Promotional
      Credit Plan and promotional period; (vi) Account number (except that
      Bon-Ton shall not print more than the last 5 digits of the Account number
      on any Sales Slip provided to the Cardholder at the point of sale or
      transaction if the Sales Slip is electronically printed, provided that the
      full account number may be so printed if the sole means of recording the
      Account number is by handwriting or by an imprint or copy of the Card);
      and (vii) Bon-Ton's name and Store address. If the Promotional Credit Plan
      and promotional period cannot be entered on the Sales Slip, Bon-Ton shall
      provide the Cardholder with the Sales Slip, as well as a handout or flyer
      explaining the promotional credit plan and the promotional period;

(b)   Request Authorization from bank's Authorization Center under all
      circumstances. (Bank may refuse to accept or fund any Sales Slip that is
      presented to Bank for payment more than thirty days after the date of
      Authorization of the Card Sale). If Authorization is granted,
      electronically capture or legibly record the Authorization number in the
      designated area on the Sales Slip;

(c)   if applicable, imprint legibly on the Sales Slip the embossed legends from
      the Card or if the transaction is to be completed electronically or
      otherwise without a Card imprint, then capture on the Sales Slip
      sufficient information to identify the Cardholder and Bon-Ton, including
      at least, Bon-Ton's name and Store address, the Cardholder's name, Account
      number and the effective date, if any, on the Card. Bon-Ton shall be
      deemed to warrant that the signature of the Cardholder on the Sales Slip
      matches the signature on the Card;

(d)   for in Store sales, obtain the signature of the Cardholder on the Sales
      Slip, compare the signature on the Sales Slip with the signature panel of
      the Card, and if identification is uncertain or if Bon-Ton otherwise
      questions the validity of the Card, contact Bank's Authorization Center
      for instructions. For telephone orders (TO), (and when applicable, mail
      orders (MO), or Internet Order (IO)), the Sales Slip may be completed
      without the Cardholder's signature.

(e)   be responsible for taking reasonable efforts to verify the identification
      of the Cardholder including matching of the signature on the Sales Slip
      and the signature on the Card;

(f)   not present the Sales Slip to Bank for funding until all arrangements are
      made to the Cardholder's reasonable satisfaction for the delivery or
      pickup of Goods;

(g)   enter the Card Sale into the Terminal; and,

(h)   except with respect to telephone orders (mail orders and Internet orders
      when applicable), deliver a true and completed copy of the Sales Slip to
      the Cardholder at the time of the Card Sale and upon delivery of the
      Goods.

SECTION 5.6 CREDIT SLIPS.

Bon-Ton shall not make any cash refund but shall complete and deliver promptly
to Bank a Credit Slip evidencing a refund or adjustment and deliver to the
Cardholder a true and complete copy of the Credit Slip at the time the refund or
adjustment is made if Goods are returned or cancelled, any Card Sale is
terminated or canceled, or Bon-Ton allows any price adjustment. Bon-Ton shall
date

                                       21
<PAGE>

each Credit Slip and include thereon a brief description of the Goods returned,
Card Sale terminated or canceled, or adjustment made, the date of the original
Card Sale, Authorization number, Cardholder's Account number, and the date and
amount of the credit, all in sufficient detail to identify the transaction. The
amount of the Credit Slip cannot exceed the amount of the original transaction
as reflected on the Sales Slip. Bon-Ton shall issue Credit Slips only in
connection with previous bona fide Card Sales and only as permitted hereunder.

SECTION 5.7 ACCEPTANCE, OFFSET AND FUNDING.

Subject to the terms, conditions, warranties and representations in this
Agreement and provided that Bon-Ton has satisfied all of the conditions set
forth in this Agreement, Bank agrees to pay to Bon-Ton the amount of each valid
and authorized Sales Slip or Card Sale including the full amount of the purchase
price which may consist of the merchandise price, sales tax, delivery charges,
and any other services charges or fees and including the additional amounts
referred to as the Revenue Participation Payment and the Incentive Participation
Payment in Sections 2.4 and 2.6, presented to Bank during the term of this
Agreement, less the amount of the fees, charges, and discounts described below,
outstanding Account balances for Sales Slips subject to Chargeback,
reimbursements, refunds, customer credits and any other amounts owed to Bank by
Bon-Ton under this Agreement.

Any amounts owed by Bon-Ton to Bank that cannot be paid by the aforesaid means
shall be due and payable by Bon-Ton. If Bon-Ton fails to pay any material
amounts owed to Bank under this Agreement that are not subject to a bona fide
dispute within 15 days after Bank's written invoice with respect thereto, Bank
reserves the right to terminate this Agreement pursuant to Section 11.2((b). Any
payment made by Bank to Bon-Ton shall not be final but shall be subject to
subsequent reasonable review and verification by Bank for a period of twenty
(20) Business Days following such payment. Bank's liability to Bon-Ton with
respect to the funding or processing of any Card Sale, Sales Slip or Credit Slip
shall not exceed the amount on the Sales Slip or Credit Slip in connection with
such transaction unless otherwise provided herein. In no event shall Bank be
liable for any incidental or consequential damages except to the extent arising
from Bank's gross negligence or willful misconduct.

Bank will fund all Sales Slips and/or Card Sales by payment to Bon-Ton, in
accordance with this Agreement, via wire transfer to a designated account, by
5:00 p.m., New York City time, for any credit sales volume data that is received
by Bank by 7:00 a.m., New York City time, that day. Bank agrees to provide
funding on all non-Bank holidays.

Bon-Ton acknowledges and agrees (i) that Bank is paying Bon-Ton for Sales Slips
in advance before Bank can determine whether such Sales Slips are subject to
Chargeback, (ii) as a result, Bank's payment to Bon-Ton is conditioned upon, and
reliance on, Bon-Ton's agreement to permit Bank to recoup Chargebacks and other
overpayments from fundings payable to Bon-Ton under this Agreement for
subsequently presented Sale Slips, and (iii) due to the ongoing reconciliation
process implemented under this Agreement, the reduction of current fundings by
the amount of Chargebacks and other amounts owing by Bon-Ton to Bank constitutes
a single integrated transaction. The Operating Committee shall establish
procedures that address reporting requirements to provide details regarding any
amounts in dispute and procedures to resolve disagreements regarding same
between the parties.

                                       22
<PAGE>

SECTION 5.8 CARDHOLDER PAYMENTS AND ENDORSEMENT.

Bon-Ton agrees that Bank has the sole right to receive payments on any Sales
Slip funded by Bank. Notwithstanding the foregoing, if certain Cardholders
choose to make a payment on their Accounts while visiting a Bon-Ton Store
location, the following provisions shall apply.

(a)   Bon-Ton agrees to hold in trust for Bank and deliver to Bank, within five
      (5) Business Days of receipt, any such payment that is received by
      Bon-Ton, together with the Cardholder's name, Account number, and any
      correspondence accompanying the payment. In addition, Bon-Ton may not
      accept the coin and paper money of the United States or of any other
      country that is designated as legal tender ("Cash") payments from any
      customer that exceed in the aggregate three thousand dollars ($3,000) per
      day, whether those payments are made in one Store, multiple Stores, or
      otherwise. If a customer wishes to make Cash payments totaling greater
      than three thousand dollars ($3,000), Bon-Ton must request a form of
      payment other than Cash for the amount over three thousand dollars.
      Personal checks are not considered Cash. Bon-Ton further agrees that it
      shall: (i) upon request by Bank to furnish information regarding specific
      Cash payments, provide to Bank within five (5) calendar days the
      information requested; and (ii) provide any training to its Store
      employees related to Cash transactions deemed necessary by Bank. Bon-Ton
      agrees that Bon-Ton shall be deemed to have endorsed to Bank any Sales
      Slip, Credit Slip, or Cardholder payments by check, money order, or other
      instrument made payable to Bon-Ton, and Bon-Ton hereby authorizes Bank to
      supply such necessary endorsements on behalf of Bon-Ton. Should Bon-Ton
      retain any Cardholder payment for its own benefit, Bank shall be entitled
      to deduct the amount of any such payments against any and all monies owed
      to Bon-Ton under this Agreement.

(b)   From time to time during the term of this Agreement, upon reasonable
      notice by Bank or the Office of the Comptroller of Currency ("OCC"),
      Bon-Ton shall allow Bank, or a third party selected by Bank or the OCC, to
      perform at times and in a manner that do not unreasonably disrupt the
      operations of Bon-Ton, an audit to review Bon-Ton's handling of in-store
      Cash payments accepted on behalf of Bank, including but not limited to, a
      determination of whether Bon-Ton is in compliance with all of its
      obligations related to in-store Cash payments contained in this Agreement.
      Bon-Ton shall cause its personnel to provide Bank and/or the OCC
      reasonable assistance in its investigation of such matters as Bank or the
      OCC may reasonably request.

(c)   The parties acknowledge and agree that in the event Bon-Ton fails to fully
      comply with Bank and/or the OCC's right to conduct an audit pursuant to
      this Section 5.8, an audit discloses irregularities and/or noncompliance
      with this Agreement, or Bon-Ton fails to comply with its obligations with
      respect to the acceptance of in-store Cash payments. Bank in its sole
      discretion shall have the right to immediately suspend or terminate
      Bon-Ton's acceptance of in-store Cash payments on Bank's behalf.

(d)   Bon-Ton agrees to work with Bank to develop and implement technical
      enhancements and functionality between the parties' computer systems which
      will allow electronic reporting within twenty-four (24) hours of receipt
      of all in-store Cash payments received by Bon-Ton. Such reporting shall
      include payment type (Cash or check) and amount, and such additional
      information as agreed by the parties, and be electronically delivered to
      Bank by Bon-Ton within twenty-four (24) hours of receipt of a Cash payment
      by Bon-Ton.

                                       23
<PAGE>

SECTION 5.9 WRITTEN COMPLAINTS.

Bon-Ton shall promptly (but in no event more than ten (10) Business Days) of
receipt by Bon-Ton's corporate offices provide Bank with a copy of any written
complaint received by Bon-Ton from any Cardholder concerning an Account.

Bank shall promptly (but in no event more than ten (10) Business Days following
the end of each Month), provide Bon-Ton with a summary report of Cardholder
complaints received by Bank and upon request by Bon-Ton, promptly provide
Bon-Ton with details regarding any such complaints, including copies of any
written complaints.

SECTION 5.10 OPERATING INSTRUCTIONS.

Bon-Ton and Bank shall mutually agree and institute Operating Instructions that
are similar to those in place as of the Effective Date and which shall become a
part of this Agreement by reference. Each party shall satisfy their respective
requirements designated in the Operating Instructions, including, but not
limited to, procedures and guidelines relating to cash transactions. Bank shall
provide Bon-Ton reasonable prior notice if there are any changes in the
Operating Instructions that Bank requires by Applicable Law.

Notwithstanding Bank's ability to change the Operating Instructions as provided
in Section 2.2, both parties agree that Bank's customer service voice response
unit and its Internet account access system (Ecare) will be available, subject
to maintenance requirements, at all times.

SECTION 5.11 FACSIMILE AND E-MAIL COMMUNICATION.

Both parties agree to accept announcements, changes in Operating Instructions,
and any other type of written material at any time during the term of this
Agreement via facsimile or e-mail transmission, provided that any material
announcements outside of the ordinary course of business shall be promptly
followed by written communication in a non-electronic format. In addition, the
parties acknowledge and agree that the preferred means of communicating material
matters regarding this Agreement and the transactions contemplated hereby shall
be by discussion between Program Managers.

SECTION 5.12 BON-TON BUSINESS PRACTICES.

Bon-Ton agrees to provide adequate services in connection with each Card Sale
pursuant to standard customs and trade practices and any applicable
manufacturer's warranties, and to provide such repairs, service and replacements
and take such other corrective action as may be required by Applicable Law or
any applicable warranty.

SECTION 5.13 PRESENTATION OF SALES SLIP OR CREDIT SLIPS

Bon-Ton shall present each Sales Slip or Credit Slip to Bank or such other
entity designated by Bank as promptly as practicable (but in no event more than
ten (10) Business Days) after the date of the respective sale or credit
transaction.

                                       24
<PAGE>

SECTION 5.14 SERVICE LEVEL STANDARDS

Bank will provide service levels consistent with Schedule 5.14.

SECTION 5.15 OUTSOURCING

After converting to Bank's systems, Bank will service the Program from its own
facilities using its own employees from locations within the United States of
America subject only to the exceptions contained herein. The Program's primary
servicing site will be New Castle, Delaware. Any decision to outsource or use a
non-United States based facility to execute any customer-facing function must be
approved by the Operating Committee as set forth in Section 2.2, including
Section 2.2(g)(10). Bon-Ton recognizes that Bank utilizes both outsourced and
non-United States based resources and employees for non customer-facing
functions including but not limited to data entry, remittance processing,
information technology, and printing. Bank may continue to use and may use both
outsourced and non-United States based resources for these non customer-facing
functions.

ARTICLE 6 - CHARGEBACKS TO BON-TON

SECTION 6.1 RIGHT TO CHARGEBACK.

Bank shall have the right to charge back to Bon-Ton the amount of any Cardholder
Indebtedness, including Cardholder Indebtedness incurred prior to the Effective
Date in the Existing Portfolio under one or more of the following circumstances:

(a) The Cardholder refuses to pay the charge based on a dispute regarding the
quality or delivery of Goods representing a valid defense to payment consistent
with Applicable Law; provided that any such refusal constitutes a bona fide
claim presented by the Cardholder in good faith in the reasonable opinion of
Bank, after consultation with Bon-Ton;

(b) The Cardholder refuses to pay the charge based on a claim of unauthorized
use of the Card; in a retail Store owned or operated by Bon-Ton or its
Affiliates provided that any such refusal constitutes a bona fide claim
presented by the Cardholder in good faith in the reasonable opinion of Bank,
after consultation with Bon-Ton, and Bon-Ton did not comply with the procedures
set forth in Section 5.4, Section 5.5,and Section 5.6 with regard to the
disputed charge;

(c) The Card Sale was not for a bona fide sale or delivery of Goods;

(d) The Sales Slip is a duplicate of a charge slip previously paid;

(e) The price of Goods shown on the Sales Slip differs from the amount shown on
the Cardholder's copy of the Sales Slip;

(f) The Card Sale or Account arose from fraud of any Bon-Ton employee or agent
in a retail Store owned or operated by Bon-Ton or its Affiliates;

(g) The Cardholder refuses to pay the Card Sale based on (i) a dispute regarding
accuracy of the amount set forth on the Sales Slip and Bon-Ton is not able to
validate such amount or (ii) the Sales Slip is illegible or is missing
information in any material respect; or,

                                       25
<PAGE>

(h) Bon-Ton fails to deliver to Bank the Sales Slip, Credit Slip, application or
other records of the Card transaction within the time periods required under
this Agreement provided that Bon-Ton's failure is not attributable to acts or
failures to act of Bank.

Bank shall be entitled to process chargebacks for one (1) year past the date of
the applicable transaction or, with respect to Promotional Credit Plans, one (1)
year past the date on which the first payment is due on the applicable Card
Sale.

SECTION 6.2 RESOLUTION AND PAYMENT.

Bon-Ton is required to resolve any dispute or other of the circumstances
described above in Section 6.1 to Bank's reasonable satisfaction within twenty
one (21) days of notice of Chargeback or Bon-Ton shall pay to Bank the full
amount of each such Sales Slip or Card Sale subject to Chargeback or the portion
thereof designated by Bank, as the case may be, the Revenue Participation
Payment and Incentive Participation Payment.

Upon Chargeback to Bon-Ton of a Sales Slip or Card Sale, Bon-Ton shall bear all
liability and risk of loss associated with such Sales Slip or Account, or the
applicable portion thereof, without warranty by, or recourse or liability to
Bank.

ARTICLE 7 - TRANSMISSION AND RECORDS

SECTION 7.1 TRANSMISSION OF DATA.

Bon-Ton shall transmit to Bank, Sales Slips and Credit Slips by electronic
transmission all data required by this Agreement to appear on Sales Slips and
Credit Slips. All data transmitted shall be in a medium, form and format
mutually agreed to by Bank and Bon-Ton. Both parties shall support the
establishment of required transmission protocols, data feeds and other technical
needs as part of the transition plan.

SECTION 7.2 RECEIPT OF TRANSMISSION.

Upon successful receipt of any transmission, Bank shall accept such transmission
and pay Bon-Ton in accordance with this Agreement, subject to subsequent review
and verification by Bank and to all other rights of Bank and obligations of
Bon-Ton as set forth in this Agreement. Bank and Bon-Ton shall establish
protocols for confirming receipt of data transmissions.

SECTION 7.3 RECORDS.

Bon-Ton shall maintain the Sales Slips, Credit Slips, and other records
pertaining to any transaction covered by this Agreement for such time and in
such manner as Bank or any law or regulation may require, but in no event less
than twenty-five (25) months. Within fifteen (15) days, or such earlier time as
may be required by Bank, of receipt of Bank's request, Bon-Ton shall provide to
Bank copies of the actual Sales Slips, Credit Slips or other transaction
records, any other documentary evidence available to Bon-Ton and reasonably
requested by Bank to meet its obligations under law (including its obligations
under the Fair Credit Billing act) or otherwise to respond to questions,
complaints, lawsuits, counterclaims or claims concerning Accounts or requests
from Cardholders, or to enforce any rights Bank may have against a Cardholder,
including, without limitation, litigation by or against Bank, collection efforts
and bankruptcy proceedings, or for any other reason. In the event Bon-Ton fails
to comply in any respect with the provisions of this Section, Bank may process a
Chargeback for each

                                       26
<PAGE>

Card Sale involved pursuant to Article 6 above. Upon termination of this
Agreement, Bon-Ton will provide Bank with any information Bank reasonably
requests in order to comply with Applicable Law or any Bank obligation.

Bank shall maintain Program data necessary to comply with its obligations under
this Agreement and as required by Applicable Law.

ARTICLE 8 - BANK REPRESENTATIONS AND WARRANTIES

SECTION 8.1 GENERAL REPRESENTATIONS AND WARRANTIES.

Bank represents and warrants to Bon-Ton as of the Effective Date and throughout
the term of this Agreement the following:

(a)   It has full corporate or other power and authority to enter into this
      Agreement; that all corporate or other action required under any
      organization documents to make this Agreement binding and valid upon Bank
      according to its terms has been taken; and that this Agreement is and will
      be binding, valid and enforceable upon Bank according to its terms.

(b)   Neither (i) the execution, delivery and performance of this Agreement, nor
      (ii) the consummation of the transactions contemplated hereby will
      constitute a violation of law or a violation or default by Bank under its
      articles of incorporation, bylaws or any organization documents, or any
      material agreement or contract, and no authorization of any governmental
      authority is required in connection with the performance by Bank of its
      obligations hereunder.

(c)   It has and will retain all licenses required by local or state law to
      conduct its business and to perform its obligations under this Agreement

(d)   It will comply with all Applicable Law.

ARTICLE 9 - BON-TON REPRESENTATIONS AND WARRANTIES

SECTION 9.1 GENERAL REPRESENTATIONS AND WARRANTIES.

Bon-Ton represents and warrants to Bank as of the Effective Date and throughout
the term of this Agreement the following:

(a)   It has full corporate or other power and authority to enter into this
      Agreement; that all corporate or other action required under any
      organization documents to make this Agreement binding and valid upon
      Bon-Ton according to its terms has been taken; and that this Agreement is
      and will be binding, valid and enforceable upon Bon-Ton according to its
      terms.

(b)   Neither (i) the execution, delivery and performance of this Agreement, nor
      (ii) the consummation of the transactions contemplated hereby will
      constitute a violation of law or a violation or default by Bon-Ton under
      its articles of incorporation, bylaws or any organization documents, or
      any material agreement or contract, and no authorization of any
      governmental authority is required in connection with the performance by
      Bon-Ton of its obligations hereunder.

(c)   It has and will retain all licenses required by local or state law to
      conduct its business and to perform its obligations under this Agreement.

(d)   It will comply with all Applicable Law.

                                       27
<PAGE>

SECTION 9.2 REPRESENTATIONS AND WARRANTIES REGARDING CARD SALES AND
            APPLICATIONS.

Bon-Ton represents and warrants to Bank as of the Effective Date and throughout
the term of this Agreement the following:

(a)   Each Card Sale will arise out of a bona fide sale of Goods by Bon-Ton and
      will not involve the use of the Card for any other purpose.

(b)   Each Card Sale will, to the best of Bon-Ton's knowledge, be to a consumer
      for personal, family, or household purposes.

(c)   Cardholder applications will be available to the public (i) without regard
      to race, color, religion, national origin, sex, marital status, disability
      or age (provided the applicant has the capacity to enter into a binding
      contract) and (ii) not in any manner which would discriminate against an
      applicant or discourage an applicant from applying for the Card.

ARTICLE 10 - INDEMNIFICATION

SECTION 10.1 INDEMNIFICATION BY BON-TON.

Bon-Ton shall indemnify Bank, its Affiliates, and their respective officers,
employees, agents and directors (collectively, the "Bank Indemnified Parties")
and hold the Bank Indemnified Parties harmless, from any losses, damages, costs,
expenses (including reasonable attorneys fees), liabilities, judgments, demands,
offsets, defenses, counterclaims, actions, proceedings, claims or complaints
incurred by any of the Bank Indemnified Parties, regardless of the person,
entity, or instrumentality making such assertion, arising out of: (i) Bon-Ton's
failure to comply with this Agreement; (ii) any acts or failures to act by
Bon-Ton in connection with Card Sales, Card transactions or credits; (iii) any
acts or failures to act by Bon-Ton in connection with the furnishing of any
Goods purchased by Cardholders; (iv) the death or injury to any person or the
loss, destruction or damage to any property arising out of any acts or failures
to act by Bon-Ton in connection with the design, manufacture or furnishing by
Bon-Ton of any Goods purchased by Cardholders; (v) Bon-Ton's advertisements and
promotions relating to the Card, credit terms or credit products which have not
been approved by Bank; (vi) any actual or alleged illegal or improper conduct of
Bon-Ton or its employees or agents in connection with any of the transactions
contemplated by this Agreement; and (vii) any violation, or claimed violation,
by Bon-Ton of the Equal Credit Opportunity Act, Truth in Lending Act, or any
other Applicable Laws.

SECTION 10.2 INDEMNIFICATION BY BANK.

Bank shall be liable to and shall indemnify and hold harmless Bon-Ton, its
Affiliates, and their respective officers, employees, agents and directors (the
"Bon-Ton Indemnified Parties") from any losses, damages, costs, expenses
(including reasonable attorneys fees), liabilities, judgments, demands, offsets,
defenses, counterclaims, actions, proceedings, claims or complaints incurred by
any of the Bon-Ton Indemnified Parties, regardless of the person, entity, or
instrumentality making such assertion, arising out of (i) Bank's failure to
comply with this Agreement; (ii) any acts or failures to act by Bank in
connection with such Cardholder's Account; (iii) any actual or alleged illegal
or improper conduct of Bank, or its employees or agents with respect to the
Card, a Card Sale, an Account or any other matters relating to the Program or
contemplated by this Agreement; (iv) any violation, or claimed violation, by
Bank, with respect to the application or agreement, or the Equal Credit
Opportunity Act, Truth in Lending Act or any other Applicable Laws; and (v) the

                                       28
<PAGE>

advertisements and promotions prepared by or on behalf of Bank relating to the
Card, credit terms or credit products.

SECTION 10.3 NOTICE OF CLAIM.

In the event that Bank or Bon-Ton know of any facts which would lead to a claim
or demand, receive a claim or demand, or be subject to any suit or proceeding,
of which a claim may be made against the other under this Section (other than a
claim, demand, suit or proceeding by a party to this Agreement against the other
party to this Agreement that has not been initiated), the indemnified party
shall give prompt written notice thereof to the indemnifying party and the
indemnifying party will be entitled to participate in the settlement or defense
thereof with counsel satisfactory to indemnified party at the indemnifying
party's expense. In any case, the indemnifying party and the indemnified party
shall cooperate (at no cost to the indemnified party) in the settlement or
defense of any such claim, demand, suit, or proceeding.

ARTICLE 11 - TERM AND TERMINATION

SECTION 11.1 TERM.

This Agreement shall be effective as of the Effective Date when executed by
authorized officers of each of the parties. It shall remain in effect through
June 20, 2012 ("Initial Term"), and shall thereafter be automatically renewed
for successive 3 year terms (each a "Renewal Term") unless and until terminated
as provided herein. The termination of this Agreement shall not affect the
rights and obligations of the parties with respect to transactions and
occurrences that take place prior to the effective date of termination, except
as otherwise provided herein.

SECTION 11.2 TERMINATION.

This Agreement may be terminated:

(a)   effective at the end of the Initial Term or any Renewal Term, by Bank or
      Bon-Ton upon not less than 180 days' prior written notice to the other
      prior to the end of such term;

(b)   by Bank or Bon-Ton upon written notice to the other in the event the other
      party (i) shall elect to wind up or dissolve its operation or is wound up
      and dissolved; (ii) becomes insolvent or repeatedly fails to pay its debts
      as they become due; (iii) makes an assignment for the benefit of
      creditors; (iv) files a voluntary petition in bankruptcy, or for
      reorganization or is adjudicated as bankrupt or insolvent; (v) has a
      liquidator or trustee appointed over its affairs; (vi) suffers a material
      adverse change in its financial condition (other than any such change
      affecting the economy generally or the department store industry
      generally); (vii) suspends or goes out of business or substantially
      reduces its business operations or sends a notice of a proposed bulk sale
      of all or part of its business; or (viii) materially breaches its
      obligations or any warranty or representation under this Agreement
      (subject to a reasonable cure within 60 days after written notice of such
      breach); and

(c)   by Bon-Ton if Bank fails to meet any Service Level Standards set forth in
      Schedule 5.14 for three months in any consecutive six-month period
      (whether the same or different Service Level Standards are not met in such
      three month period). Bon-Ton's remedy under this subsection can only be
      exercised following Bank's failure to remedy any deficiency in the Service
      Level Standards within 60 days following notice to Bank that the Service
      Level Standards have not been met for such three (3) month period or any
      deficiency in any of the Service Level Standards for a period of six (6)
      consecutive Months following any such cure.

                                       29
<PAGE>

SECTION 11.3 EFFECTS OF TERMINATION

(a)   Upon termination of this Agreement, Bon-Ton shall promptly submit to Bank
      all Card Sales, Sales Slips, Credit Slips and other transaction documents
      or data made through the date of termination. In addition, Bon-Ton shall
      promptly return all computer hardware and software, remote data entry
      terminals and peripherals and other equipment provided by Bank in good
      working order and Bon-Ton shall de-install from its operating system any
      program files provided by Bank to Bon-Ton. Bank is not liable to Bon-Ton
      for any direct or consequential damages that Bon-Ton may suffer as a
      result of Bank's termination of this Agreement in accordance with the
      terms hereof.

(b)   Upon termination of this Agreement, Bank agrees to work in conjunction
      with Bon-Ton regarding any reasonable request that Bon-Ton may have with
      respect to Bank's destruction or return to Bon-Ton of any proprietary,
      confidential or other information provided that Bank will be permitted to
      retain all Program data as required by Applicable Law and as necessary to
      collect, service, and maintain the Program portfolio following
      termination.

(c)   Upon termination of this Agreement by Bank pursuant to Section 11.2(b),
      Bon-Ton shall return to Bank a pro rata portion of the Prepaid Program
      Payment paid to Bon-Ton in the Purchase and Sale Agreement executed
      concurrent with this Agreement equal to 1/84th of the Prepaid Program
      Payment for each Month, which would have otherwise been remaining in the
      Initial Term but for the termination of this Agreement.

(d)   All acceptance of Applications, solicitations, marketing and advertising
      of the Program shall cease upon the expiration or termination of this
      Agreement, except as the Parties may otherwise mutually agree, provided
      that the parties shall continue to operate the Program in accordance with
      the terms of this Agreement and service the Accounts in good faith and in
      the ordinary course of their respective businesses, subject to the terms
      of this Agreement, until the provisions of Sections 11.3(d) are satisfied
      (the "Post Termination Transition Period"). The parties shall cooperate to
      ensure the orderly wind-down or transfer of the Program. Upon the
      satisfaction of the provisions of Section 11.3(d), all obligations of the
      Parties under this Agreement shall cease.

(e)   Bon-Ton's Option to Purchase the Program Accounts.

      (1) If this Agreement expires or is terminated by either Party for
whatever reason, Bon-Ton has the option to purchase, or arrange the purchase by
a third party nominated by Bon-Ton (a "Nominated Purchaser"), of the Program
Assets from Bank.

      (2) The purchase option given by Section 11.3(d)(1) is exercisable by
Bon-Ton or the Nominated Purchaser by serving notice on Bank no later than
ninety (90) days after the receipt of the information with respect to the
Program Assets necessary for Bon-Ton or the Nominated Purchaser to conduct
reasonable due diligence to determined whether they wish to purchase the
Accounts; provided, however, that Bon-Ton shall request such information within
sixty (60) days following the date any party receives written notice of the
exercise of the other party's termination rights pursuant to this Agreement.

      (3) If such purchase option is exercised, Bon-Ton or the Nominated
Purchaser must complete the purchase of the Accounts within 90 days after the
notice has been given pursuant to Section 11.3(d)(2).

                                       30
<PAGE>

      (4) The purchase price for the Accounts acquired shall be (x) with respect
to Cardholder Indebtedness that did not exist as of the Effective Date, 100% of
such Cardholder Indebtedness as of the date the Accounts are purchased pursuant
to the purchase option exercise (the "Option Purchase Date"), plus, to the
extent not included in such Cardholder Indebtedness, any interest accruing on
such Cardholder Indebtedness between the last Account billing date prior to the
Option Purchase Date and the Option Purchase Date and fees from such last
billing date through the Option Purchase Date and (y) with respect to Cardholder
Indebtedness that did exist as of the Effective Date, the Fair Market Value of
such Cardholder Indebtedness (including accrued interest and fees) determined as
follows: (i) Bank and Bon-Ton (or its Nominated Purchaser) shall attempt to
mutually determine the fair market value of such Accounts; or, (ii) if the
parties cannot reach such agreement, each party shall nominate an appraiser who
together shall select a third appraiser to value such Accounts. All three (3)
appraisers will value such Accounts. Following these appraisals, the Fair Market
Value shall be the average of the two closest valuations provided by the
appraisers; provided, however, if the median valuation is equal to the mean of
the three valuations, the Fair Market Value shall be such median/mean value. For
purposes of this paragraph (4), all Cardholder payments after the Effective Date
in respect of Accounts that exist as of the Effective Date shall be credited
first against Cardholder Indebtedness, including accrued interest and fees, that
exists as of the Effective Date until all such Cardholder Indebtedness is paid
in full.

      (5) Rights of Bank if Purchase Option Not Exercised.

            (i) If this Agreement expires or is terminated and Bon-Ton does not
exercise its purchase option referred to above or otherwise fails to exercise
their option within the time period specified above, Bon-Ton shall have no
further rights to the Accounts. In such event, Bank shall have the right on or
after the expiration or termination of this Agreement to issue to Cardholders a
replacement or substitute credit card (which card must not bear any Proprietary
Designations of Bon-Ton or any of its Affiliates or any other design features
confusingly similar to the Proprietary Designations) with such characteristics
as Bank considers appropriate (the cost of card re-design and re-issue being
borne by Bank). Subject to Applicable Law, Bank shall also have the right to
notify Cardholders that Bank shall cease providing credit under the Accounts and
require repayment of all amounts outstanding on all Accounts until all Accounts
have been repaid. Bank shall also have the right to sell the Accounts to a third
party purchaser other than any person or entity that directly or indirectly
competes with the business of Bon-Ton and its Affiliates.

            (ii) Following the termination of this Agreement for any reason, and
the Post Termination Transition Period, without the prior written consent of
Bon-Ton, Bank shall no longer use any of the Proprietary Designations of Bon-Ton
or its Affiliates; provided that thereafter Bank may continue to use the Bon-Ton
Proprietary Designations solely to the extent necessary to identify the Accounts
in connection with the servicing, billing and collection thereof and as
otherwise required by Applicable Law.

SECTION 11.4 HOLDBACK

Upon any Notice of Termination, and for the sole purpose of settlement of
Chargebacks, the parties agree that Bank is authorized to holdback from amounts
owed to Bon-Ton hereunder (as specified in a written notice delivered by Bank to
Bon-Ton at the time of the holdback), an aggregate amount equal to six (6) times
the average Monthly Chargeback volume during the twelve Months preceding such
termination (the "Holdback Amount"). Bank's right to holdback the Holdback
Amount is only exercisable upon written notice delivered by Bank promptly upon
the delivery of a notice of termination

                                       31
<PAGE>

(provided that if the Agreement is not terminated within six Months following
the delivery of such notice of termination, Bank shall promptly remit the
remaining Holdback Amount in full.) The Holdback Amount shall be held in trust
by Bank for Bon-Ton except to the extent Bank is permitted to setoff amounts due
by Bon-Ton to Bank for Chargebacks against the Holdback Amount. Bank shall be
permitted to setoff amounts due by Bon-Ton to Bank against the Holdback Amount
only to the extent (i) such setoff amounts are amounts of unresolved Chargebacks
and (ii) Bon-Ton has not otherwise remitted such Chargeback amounts as required
by the terms and conditions of this Agreement. The parties further agree that
the Holdback Amount less amounts applied by Bank as stated above shall be paid
to Bon-Ton within twelve (12) Months after the effective date of termination.

SECTION 11.5 SURVIVAL.

The terms and provisions of Article 10 and Sections 2.11, 2.15, 2.16, 5.8(a),
5.11, 6.1, 6.2, 7.3, 11.3, 11.4, 12.3, 13.2, 13.5, 13.6, 13.7, 13.8, 13.13,
13.14, 13.16, 13.17, 13.18, 13.19, 13.20, 13.21, 13.22 13.23, 13.24, and 13.25
shall survive termination of this Agreement.

ARTICLE 12 - RETAIL PORTFOLIO ACQUISITIONS

12.1 RETAILER THAT OPERATES A CREDIT CARD BUSINESS. If Bon-Ton or any of its
Affiliates acquires or otherwise combines with (including by merger,
consolidation or other business combination) a retail department store business
that directly or through an Affiliate issues a credit card in the United States,
Bank shall have a right of first offer to acquire the related credit card
business if offered for sale by such retailer in connection with Bon-Ton's or
its Affiliate's acquisition of the retail department store business (such credit
card business accounts, the "New Portfolio") as follows. If such credit card
business is offered for sale, then prior to or promptly following the
consummation of the acquisition, Bon-Ton shall provide notice to Bank indicating
its intention to engage in, or the consummation of, as the case may be, such
acquisition and shall provide Bank with a reasonable opportunity to conduct due
diligence, and for this purpose Bon-Ton shall provide Bank and its
representatives with reasonable access to the records and accounts (including
the master file) relating to such New Portfolio, subject to the execution of a
confidentiality agreement reasonably satisfactory to Bon-Ton. Not later than the
20th day following receipt by Bank of due diligence information reasonably
requested by Bank and available to Bon-Ton, Bank may make an offer to Bon-Ton
with respect to the purchase of such New Portfolio, which offer shall be
required to remain open for a period of not less than forty-five (45) days.
Bon-Ton shall be under no obligation to accept such offer. Bon-Ton may elect to
(A) accept the offer made by Bank or (B) offer such New Portfolio for sale to a
third party; provided that Bon-Ton shall not sell such New Portfolio to a third
party unless such sale is made on terms that Bon-Ton, in its sole discretion,
determines to be more favorable, in the aggregate, to Bon-Ton and its Affiliates
than the offer, if any, made by Bank or (C) not sell the New Portfolio.

12.2 RETAILER THAT HAS A CREDIT CARD WITH ANOTHER ISSUER. If Bon-Ton or any of
its Affiliates acquires or otherwise combines with (including by merger,
consolidation or other business combination) a retail department store business
that through an unaffiliated Person (other than Bank or any of its Affiliates)
issues a Credit Card in the United States, Bank agrees that it shall negotiate
in good faith for the purchase of the retailer's Credit Card portfolio from such
unaffiliated issuer associated with the retail assets being acquired. Prior to
or promptly following the consummation of the acquisition, Bon-Ton shall provide
notice to Bank indicating its intention to engage in, or the consummation of, as
the case may be, such transaction and shall cooperate to the extent

                                       32
<PAGE>

practicable to provide Bank with a reasonable opportunity to conduct due
diligence and provide proposals.

12.3 CONVERSION OF PURCHASED ACCOUNTS.

(a) If Bank acquires any credit card portfolio pursuant to Section 12.1 or 12.2,
or if Bank or its Affiliates issues a Credit Card in the United States in
respect of a retail department store business otherwise subject to the
provisions of Section 12.2, Bon-Ton and Bank shall negotiate in good faith in
order to arrive at mutually agreeable terms pursuant to which the acquired
credit card portfolio would be integrated into the Program, it being understood
that, absent unique characteristics of the accounts acquired or impediments
under Applicable Law or the cardholder agreements applicable to the acquired
accounts, it is the mutual interest of the Parties that the acquired accounts be
integrated as follows: each store acquired shall become a Store for purposes of
this Agreement and each account shall become an Account for purposes of this
Agreement; provided, however, that if based on the foregoing principles and
pursuant to such good faith negotiations the parties determine that the terms of
this Agreement should not apply to such acquired assets, the acquired accounts
shall be governed by such other and/or additional terms as the parties shall
agree, subject to the private label credit card accounts being converted to
Accounts established under the Program, which converted Accounts shall be
subject to the same terms and conditions as the Accounts and to this Agreement,
and participate in the Program, as if they were originated under this Agreement.
Notwithstanding the foregoing, Bank agrees that to the extent Bank or its
Affiliates issues a Credit Card in the United States in respect of a retail
department store business otherwise subject to Section 12.2, Bon-Ton and Bank
shall negotiate in good faith in order to arrive at mutually agreeable terms
pursuant to which the acquired credit card portfolio would be integrated into
the Program.

(b) Bank shall cover all costs related to conversions pursuant to this Section
12.3, including replacement of credit cards, notices to Cardholders and
complying with other requirements of Applicable Law.

ARTICLE 13 - MISCELLANEOUS

SECTION 13.1 BON-TON FINANCIAL INFORMATION.

Bank may annually review Bon-Ton's financial stability. To assist Bank in doing
this, Bon-Ton shall deliver to Bank, if not so publicly available, no later than
45 days after the end of each fiscal quarter and no more than 65 days following
the end of each fiscal year, a financial statement certified by a duly
authorized officer or representative of Bon-Ton with knowledge of the accuracy
of the information contained therein, including, without limitation, all
footnotes, and supporting materials with sufficient detail to accurately portray
the financial condition of Bon-Ton. Bon-Ton warrants and represents that its
financial statements submitted to Bank by or on behalf of Bon-Ton are true and
accurate and Bon-Ton agrees to supply such additional financial information as
Bank may reasonably request from time to time. Bon-Ton understands that Bank may
verify the information on any financial statement or other information provided
by Bon-Ton and, from time to time, may seek credit and other information
concerning Bon-Ton from others and may provide financial and other information
regarding the portfolio to its Affiliates or to others for purposes of its asset
securitizations and sales.

SECTION 13.2 SECURITIZATION.

Bank shall have the right to securitize the portfolio or any part thereof by
itself or as part of a larger offering at any time. Such a securitization shall
not affect Bon-Ton's rights or Bank's obligations with

                                       33
<PAGE>

respect to customer service, payment processing, and collections. However, Bank
shall not securitize the Accounts in any manner that may encumber Bon-Ton's, or
its third party designee's, right to purchase the Accounts upon termination.

SECTION 13.3 LIMITED LICENSE

Bon-Ton hereby authorizes Bank for purposes of this Agreement to use Bon-Ton's
Proprietary Designations on the Cards, applications, periodic statements,
billing statements, collection letters or documents, promotional or advertising
materials and otherwise in connection with the Program, subject to Bon-Ton's
periodic reasonable review of such use and to such reasonable specifications of
Bon-Ton. Bon-Ton represents and warrants that it has obtained appropriate
federal and state trademark registrations to protect its interest in the use and
ownership of its Proprietary Designations. Bon-Ton shall, indemnify, defend and
hold Bank harmless from any loss, damage, expense or liability arising from any
claims of alleged infringement of its Proprietary Designations (including
reasonable attorneys' fees and costs). Bon-Ton may not use any name or service
mark of Bank or any of its Affiliates in any manner without the prior written
consent of Bank.

SECTION 13.4 MATERIAL INDUCEMENT

Bon-Ton acknowledges and agrees that Bank is specifically relying on the
agreements, representations, warranties and waivers contained herein and that
such agreements, representations warranties and waivers constitute a material
inducement to Bank to accept this Agreement and to enter into the transactions
contemplated herein.

Bank acknowledges and agrees that Bon-Ton is specifically relying on the
agreements, representations, warranties and waivers contained herein and that
such agreements, representations warranties and waivers constitute a material
inducement to Bon-Ton to accept this Agreement and to enter into the
transactions contemplated herein.

SECTION 13.5 CONFIDENTIALITY

Except as otherwise specifically provided in this Agreement, including, without
limitation, Sections 2.15 and 2.16 hereof, each party will keep confidential and
not disclose to any person or entity (except to employees, officers, agents,
representatives, partners or directors of such party who are engaged in the
implementation and execution of the Program) any Confidential Information of the
other party and shall only use, or cause to be used, such Confidential
Information solely for the purposes of the performance of such party's
obligations under the terms of this Agreement. In the event Bank sells or
assigns the Accounts or any portion of the Accounts under the Program, unless
prohibited by law, Bank may disclose any Confidential Information under this
provision reasonably necessary or required to effectuate such sale or
assignment.

Bank acknowledges and agrees that Bon-Ton intends to file this Agreement with
the Securities and Exchange Commission and may also file this Agreement and
information contained in this Agreement, except as described below, with a stock
exchange, or other government or regulatory entity. Bon-Ton agrees to use its
commercially reasonable efforts to redact from any filing described herein and
agrees to keep confidential the schedules attached to this Agreement.

The confidentiality obligations set out herein do not apply to HSBC Holdings plc
("HSBC plc") nor any subsidiary or division thereof other than Bank, except to
the extent that HSBC plc staff or staff within such other subsidiary or division
receive Confidential Information pursuant to the terms of this

                                       34
<PAGE>

Agreement, in which such case the obligations set forth herein will upon and
from the date of such receipt be taken to apply to HSBC plc or any such other
subsidiary or division.

SECTION 13.6 INFORMATION SECURITY

Both parties have developed, implemented, and will maintain effective
information security policies and procedures that include administrative,
technical and physical safeguards designed to 1) ensure the security and
confidentiality of Confidential Information provided hereunder, 2) protect
against anticipated threats or hazards to the security or integrity of such
Confidential Information, 3) protect against unauthorized access or use of such
Confidential Information, and (4) ensure the proper disposal of Confidential
Information. All personnel handling such Confidential Information have been
appropriately trained in the implementation of its company's information
security policies and procedures. Both parties regularly audit and review their
information security policies and procedures to ensure their continued
effectiveness and determine whether adjustments are necessary in light of
circumstances including, without limitation, changes in technology, customer
information systems or threats or hazards to Confidential Information.

Both parties will share its information protection and disaster recovery
practices for the Program. The Operating Committee will approve any substantial
reductions in levels of protection unless allowed by Applicable Law. Both
parties represent that their information protection and disaster recovery
practices are periodically tested to ensure Program continuity, contingency
planning, and the proper safeguarding of Program and Cardholder data.

SECTION 13.7 PRIVACY.

Bon-Ton shall not make any unauthorized disclosure of or use any personal
information of individual consumers which it receives from Bank or on Bank's
behalf other than to carry out the purposes for which such information is
received, and Bon-Ton and Bank shall comply in all respects with all applicable
requirements of Title V of the Gramm-Leach-Bliley Act of 1999 and its
implementing regulations.

SECTION 13.8 REPORTS; EXAMINATION RIGHTS.

Both parties shall keep an accurate record of all transactions that occur under
this Agreement. Both parties or their agents may examine the books and records
of the other that are relevant to this Agreement. Any such examination will be
conducted during normal business hours upon no less than ten (10) days advance
written notice to the party being examined. Both parties will cooperate fully
with the other and/or their agents and allow inspection of its relevant books
and records in order to review and assess the performance of and compliance with
the terms of this Agreement including, without limitation, the sufficiency of
information security policies and procedures with respect to Confidential
Information. In evaluating the sufficiency of any information security policies
and procedures, the examining party shall be provided access to reports of
audits, tests and/or other evaluations of the other's information security
policies and procedures conducted in the ordinary course of its business.

SECTION 13.9 OCC EXAMINATIONS

Bon-Ton acknowledges that, pursuant to 12 U.S.C. Sections 1867(c), its
performance under this Agreement may be subject to examinations by the Office of
the Comptroller of Currency.

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<PAGE>

SECTION 13.10 BON-TON'S AGENTS.

In the event Bon-Ton desires that Bank provide a third party access to certain
Program information of Bank to which Bon-Ton is otherwise entitled in connection
with this Agreement, Bon-Ton shall direct and authorize Bank to do so, but
before Bank is obligated to do so, the following must occur: (a) Bon-Ton shall
enter into a written agreement with that third party pursuant to which that
third party shall agree to act as Bon-Ton's agent in receiving information
provided by Bank, to only use such information as Bon-Ton's agent in connection
with the Program and for no other reason, to use such information and to
otherwise act in compliance with applicable law, including, without limitation,
the Gramm-Leach Bliley Act of 1999 and its implementing regulation; (b) Bon-Ton
shall provide a copy of such agreement to Bank; (c) Bon-Ton shall cause such
agent to use any such information in accordance with the aforementioned
agreement; and (d) such agent shall be required to enter into an agreement with
Bank which contains confidentiality provisions and other terms governing the
provision of such information to that agent. Notwithstanding Bank's agreement
with such agent, Bon-Ton shall be responsible for the acts of that agent.

SECTION 13.11

[Intentionally Blank]

SECTION 13.12 NONWAIVER.

Bon-Ton's liability under this Agreement, including, without limitation, its
liability under Section 7 above, shall not be affected by any settlement,
extension, forbearance, or variation in terms that Bank may grant in connection
with any Sales Slip or Account or by the discharge or release of the obligations
of the Cardholder(s) or any other person by operation of law or otherwise.
Bon-Ton hereby waives any failure or delay on Bank's part in asserting or
enforcing any right that Bank may have at any time under this Agreement or under
any Account.

SECTION 13.13 STATUS OF THE PARTIES.

In performing their responsibilities pursuant to this Agreement, Bank and
Bon-Ton are in the position of independent contractors, and in no circumstances
shall either party be deemed to be the agent or employee of the other. This
Agreement is not intended to create, nor does it create and shall not be
construed to create, a relationship of principal and agent, partner or joint
venture or an association for profit between Bank or Bon-Ton. Any amounts ever
owing by Bon-Ton pursuant to this Agreement represent contractual obligations
only and are not a loan or debt.

SECTION 13.14 FORCE MAJEURE.

Neither party to this Agreement shall be liable to the other by reason of any
failure in performance of this Agreement in accordance with its terms if such
failure arises out of a cause beyond the control and without the fault or
negligence of such party. Such causes may include but are not limited to acts of
God, of the public enemy or of civil or military authority, unavailability of
energy resources, system or communication failure, delay in transportation,
fires, strikes, riots or war. In the event of any force majeure occurrence, the
disabled party shall use its best efforts to meet its obligations as set forth
in this Agreement.

                                       36
<PAGE>

SECTION 13.15 ADDITIONAL PRODUCTS AND SERVICES.

Bank and Bon-Ton may from time to time mutually agree to offer existing or
potential Cardholders credit promotions, loan products, additional services
and/or enhancements. The terms of such promotions, products, services and
enhancements, or discontinuance of same, shall be mutually agreed upon by Bank
and Bon-Ton. If Bon-Ton agrees per Section 2.2 to permit such offerings, such
offerings shall be permitted on terms agreed to by Bank and Bon-Ton, including
the compensation payable to Bon-Ton in connection therewith. For avoidance of
doubt, the intention is to equally split the economics / revenue.

SECTION 13.16 NOTICES.

All notices required or permitted by this Agreement shall be in writing and
shall be sent to the respective parties as follows: if to Bank, to the Attention
of President, (with a copy to the Attention of General Counsel, HSBC Retail
Services Law Department, 2700 Sanders Road, Prospect Heights, Illinois 60070);
if to Bon-Ton, to the Attention of the Treasurer, (with a copy to the Attention
of Wolf, Block, Schorr & Solis-Cohen LLP, 1650 Arch Street, 22nd Floor,
Philadelphia, Pennsylvania 19103, Attention Henry Miller, Esq.) at their
respective addresses set forth on page one of this Agreement or such other
addresses as each party may designate to the other by notice hereunder. Said
notices shall be deemed to be received when sent to the above addresses (i) upon
three (3) Business Days after deposit in the U.S. first class mail with postage
prepaid, (ii) upon personal delivery, or (iii) upon receipt by e-mail or
facsimile (subject to Section 5.11), or overnight/express courier service or
first class mail.

SECTION 13.17 AMENDMENTS AND SUPPLEMENTARY DOCUMENTS.

Reference herein to "this Agreement" shall include any schedules, appendices,
exhibits, and amendments hereto. Bank may amend this Agreement upon ten (10)
days' prior written notice to Bon-Ton if such modification is reasonably
determined by Bank to be required by any state or federal law, rule, regulation,
governmental or judicial order, opinion, interpretation or decision. Any
amendment or modification to this Agreement must be in writing and signed by a
duly authorized officer of Bank and Bon-Ton to be effective and binding upon the
parties; no oral amendments or modifications shall be binding upon the parties.

SECTION 13.18 ASSIGNMENT.

This Agreement is binding upon the parties and their successors and assigns.
Notwithstanding, neither party may assign this Agreement without the prior
written consent of the other. Any merger, consolidation, transfer of assets or
other transfer of control shall be deemed not to be an assignment prohibited by
this Section 13.18. Any purported assignment without such consent shall be void.
Bank may without Bon-Ton's consent assign this Agreement or any of the rights or
obligations hereunder to any Affiliate of Bank at any time. In the event of such
assignment, the assignee shall have the same rights, remedies and obligations as
Bank under this Agreement and Bank shall continue to be subject to its
obligations under this Agreement.

SECTION 13.19  NONWAIVER AND EXTENSIONS.

Neither Bank nor Bon-Ton shall, by any act, delay, omission, or otherwise be
deemed to have waived any rights or remedies hereunder. Each of Bon-Ton and Bank
agrees that the other's failure to enforce any of its rights under this
Agreement shall not affect any other right of Bank or Bon-Ton, as the case may
be, or the same right in any other instance.

                                       37
<PAGE>

SECTION 13.20 RIGHTS OF PERSONS NOT A PARTY.

This Agreement shall not create any rights on the part of any person or entity
not a party hereto, whether as a third party beneficiary or otherwise.

SECTION 13.21 CERTAIN CONSTRUCTION RULES.

The headings of the sections of this Agreement are for reference only, are not a
substantive part of this Agreement and are not to be used to affect the
validity, construction or interpretation of this Agreement or any of its
provisions. Whenever the context may require, any pronoun used in this Agreement
shall include the corresponding masculine, feminine or neuter forms, and the
singular form of nouns, pronouns, and verbs shall include the plural and vice
versa. In addition, as used in this Agreement, unless otherwise provided to the
contrary, any reference to a "Section," "Article," or "Schedule" shall be deemed
to refer to a section or article of this Agreement or a schedule attached to
this Agreement. The words "hereof," "herein," "hereunder," and words of similar
import referring to this Agreement refer to this Agreement as a whole and not to
any particular provision of this Agreement. Unless otherwise specifically
provided for herein, the term "or" shall not be deemed to be exclusive. The term
"including" shall mean "including without limitation."

SECTION 13.22 INTEGRATIONS.

This Agreement contains the entire agreement between the parties. There are
merged herein all prior oral or written agreements, amendments, representations,
promises and conditions in connection with the subject matter hereof. Any
representations, warranties, promises or conditions not expressly incorporated
herein shall not be binding on Bank.

SECTION 13.23 GOVERNING LAW/SEVERABILITY.

This Agreement shall be governed by and construed in accordance with the laws of
the State of Delaware, without regard to the conflicts of law principles of
Delaware. If any provision of this Agreement is contrary to Applicable Law, such
provision shall be deemed ineffective without invalidating the remaining
provisions hereof.

SECTION 13.24 JURISDICTION.

ANY SUIT, COUNTERCLAIM, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT MUST BE BROUGHT BY THE PARTIES SOLELY IN THE UNITED STATES DISTRICT
COURT FOR THE DISTRICT OF DELAWARE. BON-TON AND BANK HERBY IRREVOCABLY SUBMIT TO
THE EXCLUSIVE JURISDICTION OF SUCH COURT AND ANY APPELLATE COURTS THEREOF FOR
THE PURPOSE OF ANY SUCH SUIT, COUNTERCLAIM, ACTION, PROCEEDING OR JUDGMENT (IT
BEING UNDERSTOOD THAT SUCH CONSENT TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS
WAIVES ANY RIGHT TO SUBMIT ANY DISPUTES HEREUNDER TO ANY COURTS OTHER THAN THOSE
ABOVE).

SECTION 13.25 WAIVER OF JURY TRIAL.

BANK AND BON-TON HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT
TO A TRIAL BY JURY IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM CONCERNING
ANY RIGHTS UNDER THIS AGREEMENT, ANY RELATED DOCUMENT OR

                                       38
<PAGE>

UNDER ANY OTHER DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE
DELIVERED IN CONNECTION HEREWITH OR THEREWITH, OR ARISING FROM ANY RELATIONSHIP
EXISTING IN CONNECTION WITH THIS AGREEMENT, AND AGREE THAT ANY SUCH ACTION,
SUIT, PROCEEDING OR COUNTERCLAIM SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A
JURY; THIS PROVISION IS A MATERIAL INDUCEMENT FOR BANK AND Bon-Ton ENTERING INTO
THIS AGREEMENT.

IN WITNESS WHEREOF, Bank and Bon-Ton have caused their duly authorized
representatives to execute this Bon-Ton Agreement as of the date set forth
above.

HSBC BANK NEVADA, N.A.                      ATTESTED OR WITNESSED

By: /s/ Asin Majeed                         By: /s/ Daniel L. Montenaro
   ____________________________________        _________________________________

Name: Asin Majeed                           Name: Daniel L. Montenaro
     ______________________________              _______________________________

Title: Executive Vice President             Title: Counsel
      ______________________________              ______________________________

THE BON-TON STORES, INC.                    ATTESTED OR WITNESSED

By: /s/ H. Todd Dissinger                   By: /s/ Keith E. Plowman
   _________________________________           ________________________________

Print Name: H. Todd Dissinger               Name: Keith E. Plowman
           _________________________             _______________________________

Title: Vice President and Treasurer         Title: SVP and CFO
      ______________________________              ___________________________

The Bon-Ton Stores, Inc.'s Federal Tax ID #: 23-2835229
                                            ___________________________

                                       39

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