Document:

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                                                                    EXHIBIT 10.1

                            ASSET PURCHASE AGREEMENT

                                     BETWEEN

                                   BELK, INC.

                                       AND

                            THE BON-TON STORES, INC.

                          DATED AS OF OCTOBER 25, 2006

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                                TABLE OF CONTENTS

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                                                                            PAGE
                                                                            ----
<S>                                                                         <C>
ARTICLE I        DEFINITIONS.............................................     1
   Section 1.1   Definitions.............................................     1
   Section 1.2   Interpretation..........................................    11

ARTICLE II       PURCHASE AND SALE.......................................    12
   Section 2.1   Purchase and Sale of Assets.............................    12
   Section 2.2   Unassignable Contracts..................................    16
   Section 2.3   Assumption of Liabilities...............................    17
   Section 2.4   Leased Department Agreements and Equipment Lease
                 Agreements..............................................    20

ARTICLE III      PURCHASE PRICE..........................................    21
   Section 3.1   Purchase Price..........................................    21
   Section 3.2   Allocation of Purchase Price; Transfer Tax Valuation....    23

ARTICLE IV       CLOSING.................................................    23
   Section 4.1   Closing Date............................................    23
   Section 4.2   Payment on the Closing Date.............................    24
   Section 4.3   Buyer's Additional Closing Date Deliveries..............    24
   Section 4.4   Seller's Closing Date Deliveries........................    24

ARTICLE V        REPRESENTATIONS AND WARRANTIES OF SELLER................    25
   Section 5.1   Organization of Seller; Power and Authority of Seller...    26
   Section 5.2   Authority of Seller; Conflicts..........................    26
   Section 5.3   Financial Statements....................................    27
   Section 5.4   Operations Since Financial Statements Date..............    27
   Section 5.5   Taxes...................................................    29
   Section 5.6   Governmental Permits....................................    29
   Section 5.7   Real Property...........................................    29
   Section 5.8   Personal Property Leases................................    30
   Section 5.9   Intellectual Property...................................    30
   Section 5.10  Title to Property.......................................    32
   Section 5.11  No Violation, Litigation or Regulatory Action...........    32
   Section 5.12  [Intentionally Blank]...................................    33
   Section 5.13  Status of Contracts.....................................    33
   Section 5.14  ERISA...................................................    33
   Section 5.15  Environmental Compliance................................    34
   Section 5.16  Employee Relations and Agreements.......................    35
   Section 5.17  Sufficiency of Assets...................................    36
   Section 5.18  No Brokers..............................................    37
   Section 5.19  No Investigation by Buyer...............................    37

ARTICLE VI       REPRESENTATIONS AND WARRANTIES OF BUYER.................    37
   Section 6.1   Organization of Buyer...................................    37
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<S>                                                                         <C>
   Section 6.2   Authority of Buyer; Conflicts...........................    37
   Section 6.3   No Violation, Litigation or Regulatory Action...........    38
   Section 6.4   Financing...............................................    38
   Section 6.5   No Brokers..............................................    38

ARTICLE VII      ACTION PRIOR TO THE CLOSING DATE........................    39
   Section 7.1   Access to Information...................................    39
   Section 7.2   Notifications...........................................    39
   Section 7.3   Consents of Third Parties; Governmental Approvals.......    40
   Section 7.4   Operations Prior to the Closing Date....................    41
   Section 7.5   Ancillary Agreements....................................    43
   Section 7.6   Private Brands..........................................    43
   Section 7.7   Remittance of Cash Receipts.............................    44
   Section 7.8   Software Issues.........................................    44
   Section 7.9   No Solicitation.........................................    45

ARTICLE VIII     ADDITIONAL AGREEMENTS...................................    46
   Section 8.1   Use of Names............................................    46
   Section 8.2   Tax Matters.............................................    47
   Section 8.3   Employees and Employee Benefits.........................    49
   Section 8.4   Insurance; Risk of Loss.................................    53
   Section 8.5   Consents................................................    53
   Section 8.6   Fees and Expenses.......................................    54
   Section 8.7   Gift Cards, Etc; Return Policies........................    54
   Section 8.8   HIPAA Confidentiality...................................    56
   Section 8.9   Mortgages and Other Encumbrances........................    56
   Section 8.10  Lease Proration.........................................    57
   Section 8.11  Certain Litigation......................................    57

ARTICLE IX       CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER............    59
   Section 9.1   No Order................................................    59
   Section 9.2   Representations and Warranties..........................    59
   Section 9.3   Performance of Obligations..............................    59
   Section 9.4   Consents, Estoppels and Releases........................    60
   Section 9.5   Closing Certificate.....................................    60
   Section 9.6   Store Material Adverse Effect...........................    60
   Section 9.7   Partridge Creek Amendment...............................    60

ARTICLE X        CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER...........    60
   Section 10.1  No Order................................................    60
   Section 10.2  Representations and Warranties..........................    60
   Section 10.3  Performance of Obligations..............................    61
   Section 10.4  Closing Certificate.....................................    61
   Section 10.5  Partridge Creek Amendment...............................    61

ARTICLE XI       INDEMNIFICATION.........................................    61
   Section 11.1  Indemnification by Seller...............................    61
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<S>                                                                         <C>
   Section 11.2  Indemnification by Buyer................................    62
   Section 11.3  Notice of Claims........................................    64
   Section 11.4  Determination of Amount.................................    64
   Section 11.5  Third Person Claims.....................................    64
   Section 11.6  Limitations.............................................    66
   Section 11.7  Mitigation..............................................    66

ARTICLE XII      TERMINATION.............................................    67
   Section 12.1  Termination.............................................    67
   Section 12.2  Notice of Termination...................................    68
   Section 12.3  Effect of Termination...................................    68

ARTICLE XIII     MISCELLANEOUS...........................................    68
   Section 13.1  Survival of Representations and Warranties..............    68
   Section 13.2  Governing Law...........................................    68
   Section 13.3  No Public Announcement..................................    68
   Section 13.4  Notices.................................................    68
   Section 13.5  Successors and Assigns..................................    69
   Section 13.6  Access to Records after Closing.........................    69
   Section 13.7  Entire Agreement; Amendments............................    70
   Section 13.8  Interpretation..........................................    70
   Section 13.9  Waivers.................................................    71
   Section 13.10 Partial Invalidity......................................    71
   Section 13.11 Execution in Counterparts...............................    71
   Section 13.12 Further Assurances......................................    71
   Section 13.13 Disclaimer of Warranties................................    72
   Section 13.14 Specific Performance....................................    72
   Section 13.15 Waiver of Jury Trial....................................    72
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                                    EXHIBITS

A   Assignment and Assumption Agreement (Real Estate)
B   Bill of Sale, Assignment and Assumption Agreement
C   Seller Registered IP
D   Form of Warranty Deed
E   Contracts
F   Register Cash by Store
G   Store Employees
H   Owned Real Estate
I   Leased Real Estate
J   Intellectual Property Assets
K   Customer Information
L   Software
M   Excluded Contracts
N   Leased Department Agreements
O   Equipment Agreements
P   Form of Section 1445 Affidavit
Q   Transition Services Agreement
R   IP License Agreement
S   Private Brands Agreement
T   Retained Names and Marks
U   Inventory Valuation
V   Estoppel Letters

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                                    SCHEDULES

1.1(b)       Permitted Encumbrances
1.1(c)       Title Policies and Commitments
5.2          No Conflicts
5.3          Specified Store Financial Statements
5.4          Operations Since Financial Statements Date
5.6          Government Permits
5.7(a)(i)    Leased Real Estate
5.7(a)(ii)   Owned Real Estate
5.7(b)       Zoning and Condemnation Matters
5.7(c)       Real Estate Defaults
5.8          Personal Property Leases
5.9(a)       Registered Intellectual Property
5.9(b)       Software
5.9(c)       Intellectual Property Included in Assets
5.9(d)       Registrations of Registered Intellectual Property and Software
5.9(e)       Infringement of Intellectual Property
5.9(f)       Challenge to Registered Intellectual Property
5.11         Litigation
5.13         Status of Contracts
5.14(a)      Seller Plans
5.14(b)      Welfare and Benefit Plans
5.14(c)      Determination Letters for Qualified Plans
5.15         Environmental Compliance
5.16(a)      Store Employees
5.16(b)      Employee Compensation
5.16(c)      Employee Relations
5.16(d)      Unions
5.16(e)      Employment Agreements
5.17         Excluded Assets
7.1          Access Contracts
7.4          Material Changes
7.4(b)(xvi)  Private Brand Orders
7.8          Software
8.7          Gift Programs
9.4(a)       Estoppel Certificates
9.4(b)       Encumbrances

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                            ASSET PURCHASE AGREEMENT

          ASSET PURCHASE AGREEMENT, dated as of October 25, 2006 (this
"Agreement"), by and between Belk, Inc., a Delaware corporation ("Seller"), and
The Bon-Ton Stores, Inc., a Pennsylvania corporation ("Buyer").

                             PRELIMINARY STATEMENT:

          WHEREAS, Seller is engaged in the business of owning and operating
retail department stores; and

          WHEREAS, pursuant to a Stock Purchase Agreement, dated as of August 1,
2006 (the "Stock Purchase Agreement"), between Seller and Saks Incorporated, a
Tennessee corporation ("Saks"), Seller purchased from Saks, and Saks sold to
Seller, all of the capital stock of the Saks subsidiaries Parisian Stores, Inc.,
an Alabama corporation, Parisian Wholesalers, Inc., an Alabama corporation, and
Parisian Alabama, Inc., a Delaware corporation (each, a "Company" and,
collectively, the "Companies") (the "Saks Transaction"); and

          WHEREAS, the assets of the Companies acquired by Seller in the Saks
Transaction included the assets used in the operation of the following five
Parisian department stores (the "Stores"): Fairfield Commons, Beavercreek, Ohio;
Circle Center, Indianapolis, Indiana; Meadowbrook Mall, Rochester Hills,
Michigan; Laurel Park Place, Livonia, Michigan; and Partridge Creek Fashion
Park, Clinton Township, Michigan; and

          WHEREAS, immediately following the consummation of the Saks
Transaction, the Companies were merged with and into Seller, with Seller as the
surviving corporation; and

          WHEREAS, Seller desires to sell to Buyer, and Buyer desires to
purchase from Seller, certain assets used in the operation of the Stores, all on
the terms and subject to the conditions set forth herein.

          NOW, THEREFORE, in consideration of the mutual covenants and
agreements hereinafter set forth, it is hereby agreed between Seller and Buyer
as follows:

                                    ARTICLE I
                                   DEFINITIONS

     Section 1.1 Definitions. In this Agreement, the following terms have the
meanings specified or referred to in this Section 1.1.

          "ACCOUNTS" shall have the meaning specified in the Program Agreement.

          "AFFILIATE" means, with respect to any Person, any other Person who
directly or indirectly, through one or more intermediaries, controls, is
controlled by or is under common control with such Person. As used herein,
"control" means the power to direct the management or affairs of a Person, and
"ownership" means the beneficial ownership of more than 50% of the equity
securities of the Person.

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          "AGREEMENT" has the meaning specified in the first paragraph of this
Agreement.

          "ALLOCATION SCHEDULE" has the meaning specified in Section 3.2(a).

          "ARBITRATOR" has the meaning specified in Section 3.1(b).

          "ASSET ACQUISITION PROPOSAL" means any proposal or offer with respect
to any purchase, directly or indirectly, of all or any significant portion of
the Assets, whether by merger, consolidation, acquisition or otherwise (other
than any transaction with Buyer or its Affiliates).

          "ASSETS" has the meaning specified in Section 2.1(a).

          "ASSIGNMENT AND ASSUMPTION AGREEMENT (REAL ESTATE)" means the
Assignment and Assumption Agreement (Real Estate) in substantially the form of
Exhibit A, with such modifications thereto as may be necessary to conform to the
requirements of the applicable Leasehold Interest or Real Estate Agreement (but
which in any event shall expressly disclaim any representation or warranty by
Seller or its Affiliates (other than representations and warranties made in this
Agreement) as provided in Exhibit A), with separate instruments for each parcel
of Real Estate.

          "ASSUMED LIABILITIES" has the meaning specified in Section 2.3(a).

          "BILL OF SALE, ASSIGNMENT AND ASSUMPTION AGREEMENT" means the Bill of
Sale, Assignment and Assumption Agreement in substantially the form of Exhibit
B.

          "BOOKS AND RECORDS" has the meaning specified in Section 2.1(a)(xiii).

          "BUSINESS" means the Parisian Business as conducted at the Stores.

          "BUSINESS AGREEMENTS" has the meaning specified in Section 5.13.

          "BUYER" has the meaning specified in the first paragraph of this
Agreement.

          "BUYER ANCILLARY AGREEMENTS" means all agreements, instruments and
documents being or to be executed and delivered by Buyer under this Agreement or
in connection herewith.

          "BUYER GROUP MEMBER" means (a) Buyer and its Affiliates, (b)
directors, officers and employees of Buyer and its Affiliates and (c) the
successors and assigns of the foregoing.

          "BUYER'S DC PLAN" has the meaning specified in Section 8.3(j).

          "BUYER'S PLANS" has the meaning specified in Section 8.3(c)(ii).

          "BUYER POS DATE" means the date on which all point-of-sale systems in
the Stores shall have been converted to the Buyer's systems, which is expected
to occur in February 2007.

          "CHANGE IN LAW" means the adoption, promulgation, modification or
reinterpretation of any law, rule, regulation, ordinance or order or any other
Requirement of Law of any Governmental Body that occurs subsequent to the date
of this Agreement.

          "CLAIM NOTICE" has the meaning specified in Section 11.3.

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          "CLOSING" means the closing of the transfer of the Assets from Seller
and its Affiliates to Buyer or its permitted assignee.

          "CLOSING DATE" has the meaning specified in Section 4.1.

          "CLUB LIBBY LU AGREEMENT" means the Club Libby Lu Licensed Departments
Agreement dated October 2, 2006 between Saks and Seller as in effect on the date
hereof.

          "COBRA" has the meaning specified in Section 8.3(h).

          "CODE" means the Internal Revenue Code of 1986, as amended.

          "COMPANIES" has the meaning specified in the recitals.

          "CONFIDENTIAL INFORMATION" has the meaning specified in Section
8.13(a).

          "CONTRACTS" has the meaning specified in Section 2.1(a)(vii).

          "COURT ORDER" means any judgment, order, award or decree of any
foreign, federal, state, local or other court, agency or tribunal and any award
in any arbitration proceeding.

          "CREDIT CARD AGREEMENT" has the meaning specified in Section 7.5(d).

          "CUSTOMER INFORMATION" has the meaning specified in Section
2.1(a)(xii).

          "CUT-OFF DATE" has the meaning specified in Section 4.1.

          "DISCLOSING PARTY" has the meaning specified in Section 8.13(a).

          "EFFECTIVE TIME" has the meaning specified in Section 4.1.

          "EMPLOYMENT AGREEMENT" means any employment contract, termination or
severance agreement, change of control agreement or any other agreement
respecting the terms and conditions of employment or payment of compensation in
respect to any current or former officer or employee of the Stores.

          "ENCUMBRANCE" means any lien, charge, claim, restriction, security
interest, encumbrance, mortgage, pledge, easement, conditional sale or other
title retention agreement, title exception, defect in title or other restriction
of a similar kind.

          "ENVIRONMENTAL LAW" means all Requirements of Law relating to
protection of surface or ground water, drinking water supply, soil, surface or
subsurface strata or medium, ambient air, pollution control, health, chemical
use, safety or sanitation or the handling, storage or disposal of Hazardous
Materials.

          "ENVIRONMENTAL PERMITS" means all permits, licenses or authorizations
required pursuant to any Environmental Law.

          "EQUIPMENT" has the meaning specified in Section 2.1(a)(iii).

          "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.

          "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.

          "EXCLUDED ASSETS" has the meaning specified in Section 2.1(b).

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          "EXCLUDED CONTRACTS" means all agreements, arrangements and
understandings relating to the Excluded Liabilities.

          "EXCLUDED LIABILITIES" has the meaning specified in Section 2.3(b).

          "EXPENSES" means any and all reasonable out-of-pocket expenses
incurred in connection with defending or asserting any claim, action, suit or
proceeding hereunder (including court filing fees, court costs, arbitration fees
or costs, costs of investigation, witness fees and reasonable fees and
disbursements of legal counsel, expert witnesses, accountants and other
professionals).

          "FINANCIAL STATEMENTS DATE" means January 28, 2006.

          "FLSA" means the United States Fair Labor Standards Act, as amended,
and the rules and regulations promulgated thereunder.

          "FMLA" means the Family and Medical Leave Act, 29 U.S.C. Sections
2601-54.

          "GE MONEY BANK" means GE Money Bank, a federal savings bank.

          "GOVERNMENTAL BODY" means any foreign, federal, state, local or other
governmental authority or any court, administrative or regulatory agency,
department, instrumentality, body or commission.

          "GOVERNMENTAL PERMITS" has the meaning specified in Section 5.6.

          "GRANT DEEDS" means the warranty deeds in the form attached to Exhibit
D.

          "HAZARDOUS MATERIALS" means any waste, pollutant, contaminant,
hazardous substance, toxic, ignitable, reactive or corrosive substance,
hazardous waste, hazardous chemicals, petroleum or petroleum-derived substance
or waste or any constituent of any such substance or waste, the use, handling or
disposal of which is in any way governed by or subject to any applicable
Requirement of Law.

          "HIPAA" has the meaning specified in Section 8.8.

          "HSBC" has the meaning specified in Section 7.10.

          "INDEMNIFIED PARTY" has the meaning specified in Section 11.3.

          "INDEMNITOR" has the meaning specified in Section 11.3.

          "INTELLECTUAL PROPERTY" means any or all of the following and all
rights, arising out of or associated therewith: (i) all United States,
international and foreign patents and applications therefor and all reissues,
divisions, renewals, extensions, provisionals, continuations and
continuations-in-part thereof; (ii) all inventions (whether patentable or not),
improvements, technical data, Trade Secrets, and all documentation relating to
any of the foregoing throughout the world; (iii) all copyrights, copyright
registrations and applications therefor, and all other rights corresponding
thereto throughout the world; (iv) all industrial designs and any registrations
and applications therefor throughout the world; (v) all internet uniform
resource locators, domain names, trade names, logos, slogans, designs, common
law trademarks and service marks, trademark and service mark registrations and
applications therefor throughout the world; (vi) all databases and data
collections and all rights therein throughout the world; and (vii) any similar
or equivalent rights to any of the foregoing anywhere in the world.

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          "INVENTORY" has the meaning specified in Section 2.1(a)(v).

          "INVENTORY ADJUSTMENT" has the meaning specified in Section 3.1(b).

          "INVENTORY SCHEDULE" has the meaning specified in Section 3.1(b).

          "IP LICENSE AGREEMENT" has the meaning specified in Section 7.5(b).

          "KNOWLEDGE OF BUYER" means, as to a particular matter, the current
actual knowledge of the executive officers of Buyer (as the term "executive
officer" is defined in Rule 3b-7 under the Exchange Act).

          "KNOWLEDGE OF SELLER" means, as to a particular matter, the current
actual knowledge of the executive officers of Seller (as the term "executive
officer" is defined in Rule 3b-7 under the Exchange Act). As to representations
and warranties of Seller herein related to the Stores, the Assets, Saks and
Affiliates of Saks, the Parisian Business and the Business given as of the date
of the closing of the Saks Transaction or as of any date prior to the closing of
the Saks Transaction, the "Knowledge of Seller" is limited to information
obtained by or made available to Seller in connection with the Stock Purchase
Agreement (including the disclosure schedules of Seller related thereto and all
matters disclosed in or readily discernible from the materials, documents and
reports made available to Seller in the virtual data room maintained by Saks and
on the Chicago Title Insurance Company website).

          "LABOR LAWS" means all Requirements of Law concerning labor relations,
unions and collective bargaining, conditions of employment, employment
discrimination and harassment, wages, hours or occupational safety and health,
including ERISA, the United States Immigration Reform and Control Act of 1986,
the United States National Labor Relations Act, the United States Civil Rights
Acts of 1866 and 1964, the United States Equal Pay Act, the United States Age
Discrimination in Employment Act, the United States Americans with Disabilities
Act, the United States Family Medical Leave Act, the United States Worker
Adjustment and Retraining Notification Act, the United States Occupational
Safety and Health Act, the United States Davis Bacon Act, the United States
Walsh-Healy Act, the United States Service Contract Act, United States Executive
Order 11246, the United States Fair Labor Standards Act and the United States
Rehabilitation Act of 1973, as each such act is amended, and all rules and
regulations promulgated under such acts.

          "LEASE AGREEMENTS" has the meaning specified in Section 5.7(c).

          "LEASED REAL ESTATE" has the meaning specified in Section 2.1(a)(ii).

          "LEASEHOLD INTERESTS" has the meaning specified in Section 2.1(a)(ii).

          "LOSSES" means any and all liabilities, obligations, losses, costs,
settlement payments, awards, judgments, fines, penalties, damages, expenses,
deficiencies or other charges.

          "MATERIAL ADVERSE EFFECT" means any change or effect that, when taken
together with all other changes or effects, has or is reasonably likely to have
a material adverse effect on the assets, results of operations or financial
condition of the operation of the Stores, taken as a whole, other than any
change or effect resulting from or relating to (a) economic conditions, (b)
global financial or capital markets, (c) the retail department store industry,
(d) the public disclosure of the transactions contemplated by this Agreement,
(e) the consummation of the

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transactions contemplated by this Agreement or compliance with the terms of this
Agreement, (f) any Excluded Asset, Excluded Liability or other asset or property
of Seller or its Affiliates that is not being transferred pursuant to this
Agreement, (g) any Change In Law or (h) acts of terrorism or war (whether or not
declared); provided, however, that in the case of each of clauses (a), (b), (c),
(g) and (h), only to the extent that the material adverse effect on the Stores
is not materially disproportionate to the adverse effect on the retail
department store industry generally and the Parisian Business generally.

          "MICHIGAN STORES" means the Stores located in Meadowbrook Mall,
Rochester Hills, Michigan; Laurel Park Place, Livonia, Michigan; and Partridge
Creek Fashion Park, Clinton Township, Michigan.

          "MTO" means the 800 toll free number maintained by Seller for the sale
of Parisian merchandise in Parisian catalogs.

          "OWNED REAL ESTATE" has the meaning specified in Section 2.1(a)(i).

          "OUTSTANDING GIFT CARDS" has the meaning specified in Section 8.7(a).

          "PARISIAN AUDITED FINANCIAL STATEMENTS" has the meaning specified in
Section 5.3.

          "PARISIAN BUSINESS" means the business of owning and operating retail
department stores under the nameplate Parisian.

          "PARISIAN STORES" has the meaning specified in Section 5.3.

          "PARTRIDGE CREEK AMENDMENT" means an amendment to the Supplemental
Agreement dated July 2006 by and between Partridge Creek Fashion Park LLC and
Parisian Stores, Inc. in a form reasonably acceptable to Seller and Buyer.

          "PARTRIDGE CREEK CONTRIBUTIONS" means any funds required to be paid
(whether prior to, on or after the date of this Agreement) by Partridge Creek
Fashion Park LLC, Partridge Creek Land LLC or Partridge Creek LLC, or any of
their respective affiliates, successors or assigns, toward the costs that have
or may in the future be incurred for constructing, fixturing and equipping the
Store at The Mall at Partridge Creek, pursuant to Article 5 of that certain
Supplemental Agreement, by and between Partridge Creek Fashion Park LLC and
Parisian Stores, Inc., dated July 2006.

          "PENSION PLAN" means any pension plan, as defined in Section 3(2) of
ERISA, applied without regard to the exceptions from coverage contained in
Sections 4(b)(4) or 4(b)(5) thereof.

          "PERMITTED ENCUMBRANCES" means (a) liens for Taxes and other
governmental charges and assessments that are not yet due and payable or that
are being contested in good faith in accordance with applicable Requirements of
Law; (b) liens of landlords and liens of carriers, warehousemen, mechanics and
materialmen and other like liens arising in the ordinary course of business for
sums not yet due and payable; (c) Encumbrances identified in Schedule 1.1(b);
(d) source code escrow agreements for Software owned by Seller or any of its
Affiliates only to the extent listed in Exhibit E; (e) Encumbrances evidenced by
any security agreement, financing statement, purchase money agreement,
conditional sales contract, capital lease or operating lease,

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or by any license, coexistence agreement, undertaking, declaration, limitation
of use or consent to use, in each case that is described in Exhibit E; and (f)
other Encumbrances or imperfections on property that are not material in amount
or do not materially adversely affect the value, title, possession or existing
use of the property affected by such Encumbrance or imperfection.

          "PERMITTED REAL PROPERTY EXCEPTIONS" means, collectively, (a) liens,
charges, encumbrances and exceptions for Taxes and other governmental charges
and assessments (including special assessments) that are not yet due and
payable; (b) all Real Estate Agreements; (c) all matters and exceptions set
forth in the title insurance policies or commitments set forth in Schedule
1.1(c); (d) liens, charges, encumbrances or title exceptions or imperfections
with respect to the Owned Real Estate created by or resulting from the acts or
omissions of Buyer or any of its Affiliates, employees, officers, directors,
agents, representatives, contractors, invitees or licensees; (e) liens, charges,
encumbrances and/or title exceptions or imperfections created by any of the
documents to be executed in connection with the Closing or this Agreement
(including any reservations, easements, restrictions, covenants and other
matters set forth in the Grant Deeds) whether prior to, at or after the Closing;
(f) all matters that may be shown by a current, accurate survey or physical
inspection of the Owned Real Estate that is available to Buyer on or prior to
the date of this Agreement; (g) Requirements of Law, including building and
zoning laws, ordinances and regulations now or hereafter in effect relating to
the Owned Real Estate; (h) any and all service contracts and agreements
affecting the Owned Real Estate as of the date hereof, and any and all service
contracts and agreements entered into after the date of this Agreement in
accordance with the provisions of this Agreement, in each case, to the extent in
effect as of the Closing and made available to Buyer on or prior to the date of
this Agreement; (i) violations of laws, regulations, ordinances, orders or
requirements, if any, arising out of any Change in Law; (j) any Permitted
Encumbrance to the extent applicable or relating to, or otherwise affecting, the
Real Estate; and (k) easements, rights of way, restrictions, covenants or other
similar matters that are not material in amount or do not materially adversely
affect the value, title or existing use (or, with respect to the Partridge Creek
Fashion Park Store, proposed use) of the Real Estate affected by such easement,
right of way, restriction, covenant or other matter.

          "PERSON" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization or a Governmental Body, or any
department, agency or political subdivision thereof.

          "PRIVATE BRAND MERCHANDISE" means merchandise sold at the Stores
bearing the private label brands of Saks and other brands owned by third parties
licensed to Saks.

          "PROGRAM AGREEMENT" means that certain Credit Card Program Agreement
dated as of November 21, 2005 and as amended on each of January 18, 2006 and
September 29, 2006, by and among Belk, Inc., Belk Stores of Virginia LLC,
Belk-Simpson Company, Greenville, South Carolina, Belk Department Stores LP,
Belk Accounts Receivable LLC and GE Money Bank.

          "PURCHASE ORDERS" has the meaning specified in Section 2.1(a)(vi).

          "PURCHASE PRICE" has the meaning specified in Section 3.1(a).

                                       7

<PAGE>

          "REAL ESTATE" has the meaning specified in Section 2.1(a)(ii).

          "REAL ESTATE AGREEMENTS" has the meaning specified in Section
2.1(a)(ix).

          "RECEIVING PARTY" has the meaning specified in Section 8.13(a).

          "REGISTER CASH" means the "register" cash for each store of the
Business in the amount set forth on Exhibit F or vaults of the stores of the
Business, in the aggregate amounts as set forth in Exhibit F.

          "REGISTERED INTELLECTUAL PROPERTY" means all United States,
international and foreign: (i) patents and patent applications (including
provisional applications); (ii) registered trademarks and service marks,
applications to register trademarks and service marks, intent-to-use
applications or other registrations or applications related to trademarks and
service marks; (iii) registered copyrights and applications for copyright
registration; (iv) domain name registrations; and (v) any other Intellectual
Property that is the subject of an application, certificate, filing,
registration or other document issued, filed with or recorded with any federal,
state, local or foreign Governmental Body or other public body.

          "REQUIRED CONSENTS" has the meaning specified in Section 8.5.

          "REQUIREMENTS OF LAW" means any foreign, federal, state and local
laws, statutes, regulations, rules, codes or ordinances enacted, adopted, issued
or promulgated by any Governmental Body.

          "RETAINED NAMES AND MARKS" has the meaning specified in Section
8.1(a).

          "SAKS" has the meaning specified in the recitals.

          "SAKS GIFT PROGRAMS" has the meaning specified in Section 2.3(b)(vi).

          "SAKS PLAN" means any Pension Plan or Welfare Plan that is sponsored
by Saks in which any Store Employees are participating or under which any
current or former employees of the Stores have accrued any benefits while
employed by the Saks to which they remain entitled or with respect to which Saks
has any liability.

          "SAKS PRIVATE BRANDS AGREEMENT" means the Private Brands Agreement
dated October 2, 2006 between Saks and Seller.

          "SAKS RETURN POLICIES" has the meaning specified in Section
2.3(b)(vii).

          "SAKS SEVERANCE PAY PLAN" means the Saks Incorporated Amended and
Restated 2000 Change in Control and Material Transaction Severance Plan.

          "SAKS SOFTWARE LICENSE" means the License Agreement dated October 2,
2006, between Seller and Saks.

          "SAKS TRANSACTION" has the meaning specified in the recitals.

          "SAKS TRANSITION SERVICES AGREEMENT" means the Transition Services
Agreement dated October 2, 2006 between Saks and Seller.

          "SEC" means the United States Securities and Exchange Commission.

                                       8

<PAGE>

          "SELLER" has the meaning specified in the first paragraph of this
Agreement.

          "SELLER ANCILLARY AGREEMENTS" means all agreements, instruments and
documents being or to be executed and delivered by Seller under this Agreement
or in connection herewith.

          "SELLER DISCLOSURE SCHEDULE" means the disclosure schedule delivered
by Seller to Buyer concurrently with the execution of this Agreement.

          "SELLER GIFT PROGRAMS" has the meaning specified in Section
2.3(b)(vi).

          "SELLER GROUP MEMBER" means (a) Seller and its Affiliates, (b)
directors, officers and employees of Seller and its Affiliates and (c) the
successors and assigns of the foregoing.

          "SELLER INTELLECTUAL PROPERTY" means any Intellectual Property that is
owned by Seller or any of its Affiliates and used primarily or exclusively in
connection with the Stores, including the Seller Software.

          "SELLER PLAN" means any Pension Plan or Welfare Plan that is sponsored
by Seller or any of its Affiliates in which any employees of the Stores are
participating or under which any current or former employees of the Stores have
accrued any benefits while employed by Seller or any of its Affiliates to which
they remain entitled or with respect to which Seller or any of its Affiliates
has any liability.

          "SELLER REBRANDING DATE" means the date on which all of the Parisian
Stores (other than the Stores) and any other Parisian department stores not
operated by Seller and its Affiliates shall have been rebranded by Seller as
Belk stores, which is expected to occur in September 2007.

          "SELLER REGISTERED INTELLECTUAL PROPERTY" means all of the Registered
Intellectual Property owned by or filed in the name of Seller or any of its
Affiliates and used primarily or exclusively in connection with the Stores, and
which is identified in Exhibit C.

          "SELLER RETURN POLICIES" has the meaning specified in Section
2.3(b)(vii).

          "SELLER SOFTWARE" means all Software owned by Seller or any of its
Affiliates and used primarily or exclusively in connection with the Stores.

          "SELLER'S DC PLAN" has the meaning specified in Section 8.3(j).

          "SOFTWARE" means computer software programs and related documentation
and materials, whether in source code, object code or human readable form;
provided, however, that Software does not include software that is available
generally through retail stores, distribution networks or is otherwise subject
to "shrink-wrap" license or "click-through" agreements including any software
installed in the ordinary course of business as a standard part of hardware,
equipment or fixtures owned or operated by Seller or any of its Affiliates;
provided further, however, that in each such case the use by Buyer and its
Affiliates of such otherwise excluded software (other than Microsoft software
for which Seller shall not have any responsibility) does not require
expenditures, individually or in the aggregate, of $5,000 or more in any fiscal
year of Buyer.

                                       9

<PAGE>

          "SPECIFIED STORE FINANCIAL STATEMENTS" has the meaning specified in
Section 5.3.

          "STOCK PURCHASE AGREEMENT" has the meaning specified in the recitals.

          "STORE ACCOUNTS" has the meaning specified in Section 7.10.

          "STORE ACCOUNTS SALE" has the meaning specified in Section 7.10.

          "STORE ACCOUNTS SALE DATE" has the meaning specified in Section 7.10.

          "STORE EMPLOYEE" means each individual initially shown in Exhibit G to
this Agreement at location number 125 (Laurel Park), 151 (Rochester Hills), 126
(Beavercreek) and 137 (Circle Center), as an active employee on June 15, 2006,
as such schedule is updated to reflect employees at each such location as of the
Cut-Off Date and each individual shown as on a leave of absence under FMLA,
including the date that the twelve week FMLA leave period expires, with respect
to each such location on a list to be provided by Seller to Buyer at the Closing
in accordance with Section 8.3(a).

          "STORE FINANCIAL STATEMENTS" has the meaning specified in Section 5.3.

          "STORE MATERIAL ADVERSE EFFECT" means any change or effect that, when
taken together with all other changes or effects, has or is reasonably likely to
have a material adverse effect on the assets, results of operations or financial
condition of the operation of any of the Stores, individually, other than any
change or effect resulting from or relating to (a) economic conditions, (b)
global financial or capital markets, (c) the retail department store industry,
(d) the public disclosure of the transactions contemplated by this Agreement,
(e) the consummation of the transactions contemplated by this Agreement or
compliance with the terms of this Agreement, (f) any Excluded Asset, Excluded
Liability or other asset or property of Seller or its Affiliates that is not
being transferred pursuant to this Agreement, (g) any Change In Law or (h) acts
of terrorism or war (whether or not declared); provided, however, that in the
case of each of clauses (a), (b), (c), (g) and (h), only to the extent that the
material adverse effect on the Stores is not materially disproportionate to the
adverse effect on the retail department store industry generally and the
Parisian Business generally.

          "STORES" has the meaning specified in the recitals.

          "STRADDLE PERIOD" means any taxable year or period beginning before
and ending after the Cut-Off Date.

          "TAX" (and, with correlative meaning, "TAXES") means any federal,
state, local or foreign income, gross receipts, property, sales, use, license,
excise, franchise, employment, payroll, withholding, alternative or add-on
minimum, ad valorem, value added, transfer or excise tax, or any other tax,
custom, duty, governmental fee or other like assessment or charge of any kind
whatsoever, together with any interest or penalty, imposed by any Governmental
Body.

          "TAX RETURN" means any return, report or similar statement required to
be filed with respect to any Tax (including any attached schedules), including
any information return, claim for refund, amended return or declaration of
estimated Tax.

                                       10

<PAGE>

          "TRADE SECRETS" means confidential ideas, trade secrets, know-how,
concepts, methods, processes, formulae, reports, data, customer lists, mailing
lists, business plans and other proprietary information that provides the owner
with a competitive advantage.

          "TRANSFERRED EMPLOYEES" has the meaning specified in Section 8.3(a).

          "TRANSFER TAXES" has the meaning specified in Section 8.2(a)(iv).

          "TRANSITION SERVICES AGREEMENT" has the meaning specified in Section
7.5(a).

          "UNASSIGNED CONTRACT" has the meaning specified in Section 2.2(a).

          "WARN" means the United States Worker Adjustment and Retraining
Notification Act.

          "WARRANTIES" has the meaning specified in Section 2.1(a)(iv).

          "WELFARE PLAN" means any welfare plan, as defined in Section 3(1) of
ERISA, applied without regard to the exceptions from coverage contained in
Sections 4(b)(4) or 4(b)(5) thereof.

     Section 1.2 Interpretation. In this Agreement (including the exhibits and
schedules to this Agreement):

          (a) words denoting the singular include the plural and vice versa, and
words denoting any gender include all genders;

          (b) "including" means "including without limitation;"

          (c) "business day" means any day other than a Saturday, a Sunday or a
day that is a statutory holiday under the laws of the United States or the State
of New York;

          (d) when calculating the period of time within which or following
which any act is to be done or step taken, the date that is the reference day in
calculating such period shall be excluded and, if the last day of such period is
not a business day, the period shall end on the next day that is a business day;

          (e) all dollar amounts are expressed in United States dollars, and all
amounts payable hereunder shall be paid in United States dollars;

          (f) money shall be tendered by wire transfer of immediately available
federal funds to the account designated in writing by the party that is to
receive such money;

          (g) references herein to articles, sections, exhibits and schedules
mean the articles and sections of, and the exhibits and schedules attached to,
this Agreement; and

          (h) the words "hereof," "hereby," "herein," "hereunder" and similar
terms in this Agreement refer to this Agreement as a whole and not only to a
particular section in which such words appear.

                                       11

<PAGE>

                                   ARTICLE II
                                PURCHASE AND SALE

     Section 2.1 Purchase and Sale of Assets.

          (a) Generally. On the terms and subject to the conditions of this
Agreement, Seller agrees to, and to cause its Affiliates to, assign, sell,
transfer, convey and deliver to Buyer, and Buyer agrees to purchase from Seller
and its Affiliates, all of Seller's and its Affiliates' right, title and
interest as of the Effective Time in the following property and assets
(collectively, the "Assets"):

               (i) the real property listed on Exhibit H, together with the
     buildings, structures, installations, fixtures, trade fixtures and other
     improvements situated thereon and all easements, rights of way and other
     rights, interests and appurtenances of Seller and its Affiliates therein or
     thereunto pertaining (collectively, "Owned Real Estate");

               (ii) the leasehold and subleasehold interests of Seller and its
     Affiliates in all real property listed on Exhibit I (collectively, "Leased
     Real Estate" and, together with the Owned Real Estate, the "Real Estate"),
     together with all interests of Seller and its Affiliates in the leases,
     subleases, licenses, occupancy agreements, and other documents or
     agreements related thereto and any and all interests of Seller and its
     Affiliates in the buildings, structures, installations, fixtures, trade
     fixtures and other improvements situated thereon and all easements, rights
     of way and other rights, interests and appurtenances of Seller and its
     Affiliates therein or thereunto pertaining (collectively with the Leased
     Real Estate, the "Leasehold Interests");

               (iii) the machinery, equipment, furniture, tools, computer
     hardware and network infrastructure and spare parts related to the
     operation of the Stores and located on the Real Estate as of the Effective
     Time (exclusive of Inventory (which is defined in, and subject to, Section
     2.1(a)(v)) (collectively, "Equipment")) and all motor vehicles primarily or
     exclusively for use by Store Employees to the extent primarily or
     exclusively related to the operation of the Stores;

               (iv) all warranties or guarantees by any manufacturer, supplier
     or other vendor to the extent primarily or exclusively related to any of
     the Assets ("Warranties");

               (v) the inventory, packaging materials and supplies, in each case
     to the extent primarily or exclusively related to the operation of the
     Stores and located on the Real Estate as of the Effective Time, and
     inventory, packaging materials and supplies on order or in transit as of
     the Effective Time, in each case to the extent primarily or exclusively
     related to the operation of the Stores (collectively, the "Inventory");

               (vi) all purchase orders that were assumed by Seller in the Saks
     Transaction or issued by Seller or any of its Affiliates in the ordinary
     course to the extent primarily or exclusively related to the operation of
     the Stores ("Purchase Orders");

                                       12

<PAGE>

               (vii) all contracts, guarantees, leases, licenses (including
     those relating to concessions or licensed departments), Software licenses,
     commitments and other agreements, in each case to the extent listed on
     Exhibit E and solely related to the operation of the Stores (exclusive of
     Leasehold Interests and Real Estate Agreements, which are subject to
     Section 2.1(a)(ii) and Section 2.1(a)(ix), respectively, exclusive of the
     equipment lease agreements which are subject to Section 2.1(a)(viii), and
     exclusive of the Excluded Contracts, which are Excluded Assets)
     ("Contracts");

               (viii) all equipment lease agreements identified on Exhibit O to
     the extent assumed by Buyer pursuant to Section 2.4(b);

               (ix) all reciprocal easement and operating agreements, agreements
     supplemental thereto, easements, Seller's and each of its Affiliate's
     interests as landlord under any leases or subleases, purchase and
     lease-termination options, rights of first refusal or first offer,
     subordination, non-disturbance and attornment agreements, and other
     agreements that run with the land and in each case are appurtenant to the
     Real Estate and other agreements (other than Leasehold Interests) that
     relate solely to the occupancy or operation of the Real Estate
     (collectively, "Real Estate Agreements");

               (x) the Intellectual Property identified on Exhibit J;

               (xi) the Governmental Permits to the extent solely related to the
     operation of the Stores;

               (xii) the information described on Exhibit K ("Customer
     Information"); provided, that if Buyer requests that Seller provide any
     Customer Information in any format that differs from the format in which
     Seller or any of its Affiliates maintains such Customer Information, at the
     Closing, Buyer shall pay Seller for any out-of-pocket costs of Seller or
     any Affiliate of Seller associated with producing such Customer Information
     in such format. Buyer understands and agrees that neither Seller nor any of
     its Affiliates will produce any information that would violate any
     contractual obligation, violate any Requirement of Law or cause Seller or
     any of its Affiliates to become a "consumer reporting agency" as defined in
     the Federal Fair Credit Reporting Act. Seller agrees to, and to cause its
     Affiliates to, retain information regarding customers of the Stores in
     accordance with its existing retention policies and procedures;

               (xiii) all sales records, accounting records, purchase records,
     supplier lists, advertising and promotional records, real estate and
     engineering data, blueprints and other property records, in each case to
     the extent solely related to the operation of the Stores; personnel,
     benefits, payroll, medical and other records of all Transferred Employees,
     to the extent permitted by Requirements of Law; and all other material
     books and records to the extent solely related to the operation of the
     Stores, exclusive of Excluded Customer Information (collectively, "Books
     and Records"); provided that Seller and its Affiliates shall have the right
     to keep and use a copy of all Books and Records where necessary to comply
     with any Requirements of Law or necessary for use in connection with the
     business of Seller or any of its Affiliates, including the preparation

                                       13

<PAGE>

     of Tax Returns, the administration of Seller Plans, the preparation of the
     financial statements of Seller or any of its Affiliates, or in connection
     with investigations or litigation; and provided, further, that Seller shall
     have the right to make such Books and Records available to Saks as required
     by the Stock Purchase Agreement. If any Books and Records contain
     information not related to the Stores, Seller may, before delivering such
     Books and Records to Buyer, redact all information and data therefrom that
     relate to businesses of Seller or any of its Affiliates or the businesses
     of Saks and its Affiliates other than the operation of the Stores;

               (xiv) Register Cash (and cash, check and bank draft receipts on
     or after the Cut-Off Date);

               (xv) all rights of Seller or any Company under any refunds,
     deposits (other than customer deposits), claims, causes of action, rights
     of set off and rights of recoupment, in each case to the extent solely
     related to the operation of the Stores (except to the extent that any
     claims, causes of action or rights of set off are specifically related to
     any Excluded Liability);

               (xvi) the Company Software (including intellectual property
     rights related thereto) and all databases and compilations, including any
     and all data and collections of data, whether machine readable or otherwise
     listed on Exhibit L, and all telephone numbers, domain names and URL
     addresses, in each case to the extent solely related to the operation of
     the Stores or the Assets, including those listed on Exhibit L;

               (xvii) all goodwill of the Business to the extent solely related
     to the operation of the Stores;

               (xviii) the Private Brand Merchandise to the extent located at
     the Stores or on order for the Stores at the Effective Time; provided that
     with respect to On Order Products (as such term is defined in the Private
     Brands Agreement), Seller shall not have any liability for any failure or
     refusal of a vendor of any such On Order Product to deliver such On Order
     Product to Buyer; and

               (xix) all other assets (other than Excluded Assets) of the nature
     of the assets reflected above to the extent solely related to the operation
     of the Stores.

          (b) Excluded Assets. Seller and its Affiliates are not selling, and
Buyer is not purchasing, any property or assets not described in Section 2.1(a)
(the "Excluded Assets"). Without limiting the generality of the foregoing, the
following property and assets of Seller and its Affiliates constitute Excluded
Assets, notwithstanding anything to the contrary provided in Section 2.1(a):

               (i) cash (except as provided in Section 2.1(a)(xiv), and
     receivables from third-party credit card or debit card sales transactions
     before the Cut-Off Date (regardless of when posted); proceeds from checks
     and bank drafts accepted before the Cut-Off Date (regardless of when
     cleared); payments (including by check or bank draft,

                                       14

<PAGE>

     regardless of when cleared) on Accounts or related receivables received by
     Seller or any of its Affiliates before the Cut-Off Date; customer deposits;
     amounts in bank accounts and certificates of deposit, together with all
     other cash equivalents, securities (whether or not marketable) and
     investments;

               (ii) all Employment Agreements;

               (iii) all unpaid accounts, notes and other miscellaneous account
     receivables in favor of Seller or any of its Affiliates with respect to the
     Stores, together with all collateral security therefor;

               (iv) all rights of Seller or any of its Affiliates under any
     letters of credit, guaranties, performance or surety bonds or cash
     collateral posted by Seller or any of its Affiliates or Saks or any of its
     Affiliates and to any refunds (or credits) of Taxes to which Seller is
     entitled under Section 8.2 or otherwise with respect to Excluded Assets;

               (v) all Excluded Contracts, including: Seller's or any of its
     Affiliate's rights under the contracts, guarantees, licenses, personal
     property leases, commitments and other agreements, warranties and purchase
     orders listed on Exhibit M; Seller's or any of its Affiliate's rights under
     the contracts, guarantees, licenses, personal property leases, commitments
     and other agreements, warranties and purchase orders that relate both to
     the business conducted at the Stores and any other business of Seller or
     any of its Affiliates conducted at any other location;

               (vi) Seller's or any of its Affiliate's rights under any policies
     of insurance purchased by Seller or any of its Affiliates or Saks or any of
     its Affiliates, or any benefits, proceeds or premium refunds payable or
     paid thereunder or with respect thereto (except as provided in Section
     8.4);

               (vii) the corporate charter, qualifications to conduct business
     as a foreign corporation, arrangements with registered agents relating to
     foreign qualifications, taxpayer and other identification numbers, Tax
     Returns and other Tax records, seals, minute books, stock transfer books
     and similar documents of Seller or any of its Affiliates or Saks or any of
     its Affiliates;

               (viii) the rights of Seller or any of its Affiliates under this
     Agreement or any other agreement between Seller or any of its Affiliates
     and Buyer or any of its Affiliates entered into prior to, on or after the
     date of this Agreement;

               (ix) all websites, website content and web images and all
     computer software related thereto (including intellectual property rights
     related thereto) and all books and records related thereto, in each such
     case to the extent not solely related to the business conducted at the
     Stores;

                                       15
<PAGE>

               (x) the Governmental Permits that are not transferable without
     the consent of a Governmental Body and with respect to which the required
     consent is not obtained;

               (xi) any trademark or service mark that uses in whole or in part
     any of the items set forth on Exhibit T or any derivative or diminutive
     form of expansion thereof, whether or not stylized, and any trade dress
     that is used by Seller or any of its Affiliates in any business including
     the Parisian Business;

               (xii) all assets (whether or not located on the Real Estate)
     solely used in connection with the provision of services in respect of
     accounting, legal, human resource, payroll, treasury, insurance,
     transportation, tax or other general and administrative services supplied
     by Seller or any of its Affiliates or Saks or any of its Affiliates unless
     such services relate solely to the operation of the Stores;

               (xiii) all information regarding customers of the Stores other
     than the Customer Information;

               (xiv) the inventory, trade fixtures and other property of
     concessionaires, business partners, licensees, lessors or lessees of Seller
     or any of its Affiliates that are not owned by Seller or any of its
     Affiliates;

               (xv) all equity interests of the subsidiaries of Seller;

               (xvi) prepaid expenses (including prepaid advertising expenses);

               (xvii) any other assets relating to the operation of the Stores
     that prior to the closing of the Saks Transaction were owned by Saks or one
     of its Affiliates but as to which neither Seller nor any of its Affiliates
     has any rights following the Saks Transaction;

               (xviii) any agreements, arrangements or understandings relating
     to the Business between Saks or its Affiliates and Seller and its
     Affiliates, including the Stock Purchase Agreement, the Saks Private Brands
     Agreement, the Saks Transition Services Agreement, the Club Libby Lu
     Agreement and the Saks Software License; and

               (xix) the Accounts and Seller's rights under the Program
     Agreement.

     Section 2.2 Unassignable Contracts.

          (a) Notwithstanding anything to the contrary stated in this Agreement,
if (i) any Contract, Warranty or Purchase Order is not capable of being sold,
assigned, transferred or conveyed in the absence of the approval, consent or
waiver of any other Person without conflicting with, violating, constituting a
default under or breaching such Contract, Warranty or Purchase Order, and (ii)
all necessary approvals, consents and waivers of all parties to such Contract,
Warranty or Purchase Order have not been obtained at or prior to the Closing,
then the performance obligations of Seller and its Affiliates under each such
Contract, Warranty or

                                       16

<PAGE>

Purchase Order (each, an "Unassigned Contract") shall be deemed to be subleased
or subcontracted to Buyer (to the maximum extent permitted by Requirements of
Law or any applicable agreement) until such Unassigned Contract has been
assigned or novated. All claims, rights and benefits of Seller or any of its
Affiliates arising under such Unassigned Contract or resulting therefrom after
the Cut-Off Date (but not such Unassigned Contract itself) shall (to the maximum
extent permitted by Requirements of Law or any applicable agreement) be included
in the Assets transferred to Buyer hereunder (and any such payments or other
benefits received by Seller or any of its Affiliates therefrom after the Cut-Off
Date shall immediately be transferred by Seller or any such Affiliate to Buyer).
Following the Closing, Seller shall, and Seller shall cause its Affiliates to,
and Buyer shall, use commercially reasonable efforts to obtain the necessary
approvals, consents and waivers (provided that neither Buyer nor Seller or any
of their respective Affiliates shall be required to make any payments or offer
or grant any accommodation (financial or otherwise) to any third party to obtain
any approval, consent or waiver), and shall promptly execute all documents
necessary to complete the transfer of such Unassigned Contract to Buyer if such
approvals, consents and waivers are obtained. Buyer shall not have any
obligation to indemnify Seller or any of its Affiliates pursuant to the terms of
this Agreement, and shall have no obligations whatsoever, with respect to any
Unassigned Contract for which Buyer cannot receive all the benefits of such
Unassigned Contract; provided that to the extent that Buyer receives any benefit
under an Unassigned Contract prior to the transfer of such Unassigned Contract
to Buyer, Buyer shall be responsible for any obligation under such Unassigned
Contract that arises in respect of such benefit received by Buyer.

          (b) Following the Effective Time, (i) Seller shall, and Seller shall
cause its Affiliates to, use commercially reasonable efforts to take actions
that are necessary to allow Buyer to exercise any right of Seller arising from
any Unassigned Contract (including the right to elect to terminate such
Unassigned Contract in accordance with the terms thereof) and (ii) neither
Seller nor any of its Affiliates shall take any action under any Unassigned
Contract that would reasonably be expected to limit, restrict or terminate the
benefits to Buyer of such Unassigned Contract unless, in good faith and after
prior written notice to Buyer, Seller or any of its Affiliates is (A) ordered
orally or in writing to do so by a Governmental Body of competent jurisdiction,
or (B) otherwise required to do so by Requirements of Law; provided, however,
that if any such order is appealable, Seller shall, or Seller shall cause its
Affiliates to, at Buyer's cost and expense, take such actions as are reasonably
requested by Buyer to file and pursue such appeal and to obtain a stay of such
order; provided further that Seller and its Affiliates shall not be required to
make any payments or offer or grant any accommodation (financial or otherwise)
to any third party with respect to clause (i) or (ii) of this Section 2.2(b)
except to the extent Buyer agrees to reimburse Seller for any such payment made
by Seller at the request of Buyer; provided further that if Saks is a party to
any Unassigned Contract, Seller shall not have any liability to Buyer for any
action required to be taken by Seller with respect to such Unassigned Contract
pursuant to the Stock Purchase Agreement.

     Section 2.3 Assumption of Liabilities.

          (a) Assumed Liabilities. In partial consideration for the sale,
assignment, transfer and delivery of the Assets, Buyer shall assume, and hereby
agrees to pay, perform and observe fully and timely, effective as of the
Effective Time, (i) all liabilities and obligations of

                                       17

<PAGE>

Seller and its Affiliates arising after the Effective Time under or in respect
of the Real Estate, Real Estate Agreements, Leasehold Interests, Equipment,
Inventory, Contracts, Warranties and Purchase Orders, (ii) all liabilities and
obligations arising after the Effective Time with respect to Transferred
Employees, and (iii) all liabilities and obligations with respect to Taxes for
which Buyer is liable under Section 8.2 (collectively, the liabilities and
obligations so assumed being referred to as the "Assumed Liabilities"). To the
extent that Seller or any of its Affiliates pays any Assumed Liability following
the Cut-Off Date in the ordinary course of business, Buyer shall reimburse
Seller for any amount so paid immediately upon demand and upon receipt of
reasonable documentation in support of such demand; provided that if any such
payment is not made in the ordinary course, Buyer shall reimburse Seller for
such amount when such payment would have been made if such payment had been made
in the ordinary course. To the extent that Buyer pays any Excluded Liability
from and after the Cut-Off Date in the ordinary course of business, Seller shall
reimburse Buyer for any amount so paid immediately upon demand and receipt of
reasonable documentation supporting such demand; provided that if any such
payment is not made in the ordinary course, Seller shall reimburse Buyer for
such amount when such payment would have been made if such payment had been made
in the ordinary course.

          (b) Liabilities Not Assumed by Buyer. Anything in this Agreement to
the contrary notwithstanding, Seller shall be responsible for all of its
liabilities and obligations not hereby expressly assumed by Buyer and Buyer
shall not assume, or in any way be liable or responsible for, any liabilities or
obligations of Seller except as specifically provided in Section 2.3(a)
(collectively, the liabilities and obligations that are not assumed being
referred to as the "Excluded Liabilities"). Without limiting the generality of
the foregoing, Buyer shall not assume the following:

               (i) all liabilities and obligations of Seller or Saks or any of
     their Affiliates arising on or prior to the Effective Time under or in
     respect of the Real Estate, Real Estate Agreements, Leasehold Interests,
     Equipment, Inventory, Contracts, Warranties and Purchase Orders, including
     all liabilities and obligations due to a breach of any of the foregoing on
     or prior to the Effective Time;

               (ii) all unpaid accounts payable of Seller or Saks or any of
     their Affiliates and all accrued expenses of Seller or Saks or any of their
     Affiliates;

               (iii) except as expressly assumed by Buyer pursuant to Section
     8.3, all liabilities and obligations with respect to Store Employees,
     Seller Plans, Saks Plans or other employee benefit policies and practices
     of Seller, Saks or any of their Affiliates, including liabilities and
     obligations under the Saks' Severance Pay Plan, retention bonuses called
     for under the retention arrangements described in Schedule 5.16(e) of the
     Seller Disclosure Schedule or otherwise, any entitlements under COBRA with
     respect to termination of employment of any Store Employee by Seller, Saks
     or any of their respective Affiliates and compensation and benefits under
     any state workers' compensation or similar law payable following the
     Effective Time to or with respect to any Transferred Employee, or to any
     former employee of the Stores, who in either case was employed at the
     Stores on any date, on or prior to the Effective Time, that the claim arose
     or the incident on which the claim is based occurred;

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<PAGE>

               (iv) all payment obligations relating to compensation and
     commissions that have been earned but have not been paid as of the
     Effective Time to Transferred Employees;

               (v) all liabilities and obligations arising from litigation,
     arbitration, administrative or other proceedings to the extent related to
     the Assets or the Stores or the operation of the Parisian Business
     generally on or prior to the Closing Date (other than the obligations of
     Buyer pursuant to Section 8.11), including, without limitation, any
     customer liability claims, and all performance obligations under any
     product recall or any non-financial settlement obligation to the extent
     related to the operation of the Stores on or prior to the Closing Date;

               (vi) all liabilities and obligations arising from all gift
     certificate, gift card, merchandise voucher, coupon, refund or other
     loyalty, frequent shopper or similar program of Saks (collectively, the
     "Saks Gift Programs") or Seller (collectively, the "Seller Gift Programs")
     reward redemptions submitted by customers of the Stores for gift
     certificates, gift cards, merchandise vouchers, coupons, refunds or other
     loyalty, frequent shopper or similar program rewards purchased, issued or
     earned in connection with the Stores on or prior to the Cut-Off Date except
     to the extent assumed by Buyer pursuant to Section 8.7;

               (vii) all liabilities and obligations arising from all return
     policies of Saks (the "Saks Return Policies") or Seller (the "Seller Return
     Policies") for merchandise purchased in the Stores on or prior to the
     Cut-Off Date except to the extent assumed by Buyer pursuant to Section 8.7;

               (viii) any claims (including product-liability and infringement
     claims) relating to goods sold or services provided at the Stores on or
     prior to the Cut-Off Date (other than the obligations of Buyer pursuant to
     Section 8.11);

               (ix) any claims asserted by Store Employees or by dependents of
     such Store Employees, for acts or omissions occurring on or prior to the
     Cut-Off Date (other than claims of Transferred Employees expressly assumed
     by Buyer pursuant to Section 8.3);

               (x) all liabilities and obligations relating to the ownership or
     condition of the Assets (including environmental conditions) on or prior to
     the Cut-Off Date;

               (xi) all liabilities and obligations with respect to Taxes for
     which Seller is liable under Section 8.2;

               (xii) any liability or obligation for money borrowed (it being
     understood that the liabilities and obligations under any capital lease set
     forth in Exhibit E is an Assumed Liability);

                                       19

<PAGE>

               (xiii) any liability or obligation for costs and expenses (other
     than Transfer Taxes as set forth in Section 8.2 and as set forth in Section
     8.6 or as otherwise expressly set forth in this Agreement) in connection
     with the negotiation and execution of this Agreement or the consummation of
     the transactions contemplated hereby;

               (xiv) any liability or obligation of Seller under this Agreement
     or under any other agreement between Seller or any of its Affiliates, on
     the one hand, and Buyer or any of its Affiliates, on the other hand,
     entered into on or after the date of this Agreement in accordance with the
     terms hereof;

               (xv) any liability or obligation to the extent related to the
     Excluded Assets (except as provided in Section 2.2 or 2.4) or any other
     assets not transferred to and not purchased by Buyer; and

               (xvi) any liability or obligation relating to, resulting from or
     arising out of any former operations or properties of Saks or any of its
     Affiliates or of Seller or any of its Affiliates that have been
     discontinued or disposed of prior to the Cut-Off Date.

          Seller shall, or shall cause its Affiliates to, pay, perform and fully
observe all Excluded Liabilities.

     Section 2.4 Leased Department Agreements and Equipment Lease Agreements.

          (a) Exhibit N sets forth each leased department agreement relating to
the Stores. Buyer agrees to use commercially reasonable efforts to enter into
new leased department agreements with the parties identified in Exhibit N that
relate exclusively to the Stores. If such new leased department agreements are
not in effect as of the Effective Time, Buyer agrees that, to the maximum extent
permitted by Requirements of Law or any applicable leased department agreement,
the performance obligations of Seller and its Affiliates thereunder after the
Cut-Off Date shall be deemed to be subleased or subcontracted to Buyer until
such new leased department agreement is in effect. In consideration thereof,
Buyer shall receive all claims, benefits and rights under each such leased
department agreement to the extent related to the Stores. Each party agrees to
use commercially reasonable efforts to effect the foregoing (provided that
neither Buyer nor Seller or any of their respective Affiliates shall be required
to make any payments or offer or grant any accommodation (financial or
otherwise)). Buyer shall not have any obligation to indemnify Seller or any of
its Affiliates pursuant to the terms of this Agreement, and shall have no
obligations whatsoever, with respect to any leased department agreements for
which Buyer cannot receive all the benefits of such leased department
agreements; provided that to the extent that Buyer receives any claim, benefit
or right under any such leased department agreement prior to the execution of a
new leased department agreement with the parties identified in Exhibit N that
relates exclusively to the Stores, Buyer shall be responsible for any obligation
under any such leased department agreement that arises in respect of such claim,
benefit or right received by Buyer. In respect of the Club Libby Lu Agreement,
Seller agrees that so long as the Club Libby Lu departments are operated in the
Stores, Buyer will receive the benefits of the Club Libby Lu Agreement as to the
Stores and Buyer agrees that Buyer will be responsible for the obligations of
Seller under the Club Libby Lu Agreement in

                                       20

<PAGE>

respect of the Stores. In the event that Buyer elects to terminate the Club
Libby Lu department in any Store, Buyer shall give written notice to Seller.
Upon receipt of such notice, Seller shall promptly exercise such rights as are
available to Seller under the Club Libby Lu Agreement to terminate the Club
Libby Lu Agreement as to such Store or Stores as may be designated in Buyer's
termination notice. Buyer shall remain liable for all of its obligations under
the Club Libby Lu Agreement until the effective termination date of the Club
Libby Lu Agreement as to any such Store or Stores. Following termination of the
Club Libby Lu Agreement as to any Store or Stores or in its entirety, as
applicable, Buyer shall remain liable for any accrued but unpaid obligation of
Buyer as of the effective termination date of the Club Libby Lu Agreement in
respect of such Store or Stores and shall be responsible for and shall indemnify
Seller against any costs or expenses incurred by Seller in respect of the
cessation of operation of the Club Libby Lu department in such Store or Stores
and the removal of any equipment, fixtures or other improvements from such Store
or Stores to the extent required by the Club Libby Lu Agreement.

          (b) Exhibit O sets forth equipment lease agreements relating to the
Stores. The parties agree to use commercially reasonable efforts to obtain the
necessary approvals, consents and waivers to assign to Buyer that portion of the
equipment lease agreements (and any applicable schedules thereto) that relate
exclusively to the Stores; provided, however, that neither Buyer nor Seller or
any of their respective Affiliates shall be required to make any payments or
offer or grant any accommodation (financial or otherwise) to any third party to
obtain any approval, consent or waiver. If, prior to the Closing, all necessary
approvals, consents and waivers are not obtained with respect to any equipment
lease agreement, then (to the maximum extent permitted by Requirements of Law or
any applicable equipment lease agreement) to the extent related to the Stores,
the performance obligations of Seller and its Affiliates thereunder after the
Cut-Off Date shall be deemed to be subleased or subcontracted to Buyer until
such equipment lease agreement is assigned or novated. In consideration thereof,
Buyer shall receive the claims, rights and benefits of Seller or any of its
Affiliates arising under such equipment lease agreement or resulting therefrom
after the Cut-Off Date (but not such equipment lease agreement itself). Buyer
shall not have any obligation to indemnify Seller or any of its Affiliates
pursuant to the terms of this Agreement, and shall have no obligations
whatsoever, with respect to any equipment lease agreement for which Buyer cannot
receive all the benefits of such equipment lease agreement; provided that to the
extent that Buyer receives any claim, benefit or right under any such equipment
lease agreement prior to the assignment of that portion of such equipment lease
agreement (and any applicable schedules thereto) that relates exclusively to the
Stores, Buyer shall be responsible for any obligation under any such equipment
lease agreement that arises in respect of such claim, benefit or right received
by Buyer.

                                   ARTICLE III
                                 PURCHASE PRICE

     Section 3.1 Purchase Price.

          (a) The purchase price for the Assets shall be equal to (x) Twenty Two
Million Dollars ($22,000,000.00) (y) less the amount of any Partridge Creek
Contribution received by or credited to Seller or Saks or any of their
respective Affiliates prior to the Cut-Off Date, and (z) plus or minus any
Inventory Adjustment (the "Purchase Price"). The parties agree

                                       21

<PAGE>

that the Twenty Two Million Dollars ($22,000,000.00) included in the Purchase
Price pursuant to clause (x) of the preceding sentence has already been adjusted
to reflect a credit to Seller pursuant to the Partridge Creek Amendment of Three
Million Dollars ($3,000,000) against the Partridge Creek Contribution in the
aggregate amount of Ten Million Dollars ($10,000,000) and that no further
adjustment shall be made to the Purchase Price with respect to such credit
pursuant to clause (y) of the preceding sentence. The Purchase Price may be
further adjusted pursuant to paragraph (c) below. The Purchase Price shall be
paid by Buyer pursuant to Section 4.2.

          (b) Not later than two (2) Business Days prior to the Closing, Seller
shall deliver to Buyer a schedule (the "Inventory Schedule") that contains the
value of the inventory of the Business as of the date of the closing of the Saks
Transaction, using the inventory data used by Saks to determine the value of the
inventory of the Parisian Business for purposes of the calculation of "Final
Working Capital" under the Stock Purchase Agreement. The value of the inventory
as of the Cut-Off Date shall be determined by Seller in accordance with the
principles set forth in Exhibit U. If Buyer has not given Seller written notice
of its objection to the value of the inventory shown in the Inventory Schedule,
which specifies the basis of Buyer's objection, within ten (10) Business Days
after the Closing, then the value of the inventory shown in the Inventory
Schedule shall be final and binding between the parties. If Buyer timely gives
Seller a written notice of objection and the parties cannot resolve such
objection within ten (10) Business Days of Seller's receipt of Buyer's notice of
objection, then the issues in dispute shall be submitted for resolution to an
independent certified public accounting firm agreed to by Buyer and Seller that
does not have a relationship with Buyer or Seller (the "Arbitrator"). If issues
in dispute are submitted to the Arbitrator for resolution: (i) the only issues
for resolution by the Arbitrator shall be whether the specific objection or
objections stated by the Buyer in its notice of objection to Seller should
result in a change in the value of the inventory from the value shown on the
Inventory Schedule; (ii) each party shall furnish to the Arbitrator such
documents and information relating to the disputed issues as the Arbitrator may
request and are available to that party and shall be afforded the opportunity to
present to the Arbitrator any material relating to the determination and to
discuss the determination with the Arbitrator; (iii) the determination by the
Arbitrator, as set forth in a written notice delivered to both parties by the
Arbitrator, shall be binding and conclusive on the parties; and (iv) the fees of
the Arbitrator for such determination shall be borne 50% by Buyer and 50% by
Seller. If the value of the inventory is finally determined to differ from that
value used in calculating the Inventory Adjustment, then promptly after such
final determination, but in no event more than two (2) Business Days thereafter,
Seller shall pay to Buyer the amount, if any, by which the inventory value used
in the Inventory Adjustment as of the Closing exceeds the final inventory value
determination, or Buyer shall pay to Seller the amount, if any, by which the
final inventory value determination exceeds the inventory value used in the
Inventory Adjustment as of the Closing, in each case plus interest from the
Closing to the date of payment at the prime rate as reported on the Closing Date
by the Wall Street Journal. The amount of any adjustment to the Purchase Price
in accordance with this Section 3.1(b) is referred to herein as the "Inventory
Adjustment".

          (c) In the event that Buyer elects not to purchase one or more of the
Stores in accordance with the provisions of Section 9.6, then the Purchase Price
shall be reduced by Five

                                       22

<PAGE>

Million Dollars ($5,000,000.00) for each Store that is not acquired by Buyer
plus or minus the Inventory Adjustment in respect of such Store; provided,
however, that such adjustment shall be Two Million Dollars ($2,000,000.00) plus
the amount specified in clause (y) of Section 3.1(a) with respect to the Store
located at Partridge Creek Fashion Park, Clinton Township, Michigan.

     Section 3.2 Allocation of Purchase Price; Transfer Tax Valuation.

          (a) During the 60 days following the Closing Date, Seller and Buyer
shall use reasonable commercial efforts to draft a schedule (the "Allocation
Schedule") allocating the Purchase Price (increased to take into account the
Assumed Liabilities) among the Assets. The Allocation Schedule shall be prepared
in accordance with Section 1060 of the Code and the regulations thereunder.
Seller and Buyer each agrees that promptly upon agreement, if any, upon such
Allocation Schedule it shall return an executed copy thereof to the other party.
If Seller and Buyer agree upon the Allocation Schedule, then Seller and Buyer
each agrees to file Internal Revenue Service Form 8594, and all federal, state,
local and foreign Tax Returns, in accordance with the Allocation Schedule.
Seller and Buyer each agrees to provide the other promptly with any other
information required to complete Form 8594.

          (b) Prior to or promptly following the Closing Date, Seller and Buyer
shall jointly agree on the valuation of the Real Estate, Real Estate Agreements
and other Assets to the extent that valuations are needed for purposes of
determining the amount of Transfer Taxes. If a party disagrees with respect to a
proposed valuation, the parties shall negotiate in good faith to resolve the
issue. If they cannot resolve the issue prior to or promptly following the
Closing Date, it shall be resolved by an accounting or appraisal firm chosen by
and mutually acceptable to both parties after Closing. If payment of a Transfer
Tax is due prior to any such resolution, payment shall be made in accordance
with Section 8.2(a)(iv) based on Buyer's reasonable valuation and, upon
resolution, the party responsible for filing the Tax Return with respect to such
Tax shall make such corrective filings with the appropriate Governmental Body.
Any additional Transfer Tax payable in connection with such corrective filings,
and any refund of any Transfer Tax resulting from such corrective filings, shall
be allocated to Buyer and Seller under Section 8.2(a)(iv).

                                   ARTICLE IV
                                     CLOSING

     Section 4.1 Closing Date. The Closing shall be held at the offices of King
& Spalding LLP, 1180 Peachtree Street, Atlanta, Georgia 30309, at 10:00 a.m.,
New York time, on October 30, 2006 (or, if the conditions set forth in Articles
IX and X have not been satisfied or waived (other than those conditions that are
intended to be satisfied at the Closing, by the appropriate party by such date,
subject to the provisions of Article XII, at 10:00 a.m., New York time, on the
first Monday that is a business day to occur following the date on which all of
the conditions to Closing set forth in Articles IX and X shall have been so
satisfied or waived (other than those conditions that are intended to be
satisfied at the Closing), or at such other place, time and day as shall be
agreed upon by Buyer and Seller. The date on which the Closing is actually held
is referred to herein as the "Closing Date," although the transfer of Assets and
the assumption of

                                       23

<PAGE>

the Assumed Liabilities shall be effective as of 12:01 a.m., New York time (the
"Effective Time") on the Sunday immediately preceding the Closing Date (the
"Cut-Off Date").

     Section 4.2 Payment on the Closing Date. Subject to fulfillment or waiver
(where permissible) of the conditions set forth in Articles IX and X, at the
Closing Buyer shall pay Seller an amount equal to the Purchase Price by wire
transfer of immediately available funds to the bank account or accounts
specified by Seller at least three business days prior to Closing.

     Section 4.3 Buyer's Additional Closing Date Deliveries. Subject to
fulfillment or waiver (where permissible) of the conditions set forth in
Articles IX and X, at the Closing Buyer shall deliver to Seller all of the
following:

          (a) certificate of the secretary or an assistant secretary of Buyer,
dated the Closing Date, in form and substance reasonably satisfactory to Seller,
as to (i) no amendments to the certificate of incorporation of Buyer since a
specified date; (ii) the bylaws of Buyer; (iii) the resolutions of the Board of
Directors of Buyer authorizing the execution and performance of this Agreement,
the Buyer Ancillary Agreements and the transactions contemplated hereby and
thereby; and (iv) incumbency and signatures of the officers of Buyer executing
this Agreement or any Buyer Ancillary Agreement;

          (b) the certificate contemplated by Section 10.4, duly executed by a
duly authorized officer of Buyer;

          (c) the IP License Agreement, the Transition Services Agreement and
the Private Brands Agreement, in each case duly executed on behalf of Buyer;

          (d) the Bill of Sale, Assignment and Assumption Agreement and the
Assignment and Assumption Agreement (Real Estate) for each Store that is
included in the Leased Real Estate (which shall be modified to conform to the
particular requirements of the jurisdictions in which the Real Estate is
located), in each case duly executed on behalf of Buyer; and

          (e) any real estate transfer Tax declarations required to be executed
or filed in connection with the transfer of the Real Estate.

     Section 4.4 Seller's Closing Date Deliveries. Subject to fulfillment or
waiver (where permissible) of the conditions set forth in Articles IX and X, at
the Closing Seller shall deliver to Buyer all of the following:

          (a) certificate of the secretary or an assistant secretary of Seller,
dated the Closing Date, in form and substance reasonably satisfactory to Buyer,
as to (i) no amendments to the amended and restated charter of Seller since a
specified date; (ii) the amended and restated bylaws of Seller; (iii) the
resolutions of the Board of Directors of Seller authorizing the execution and
performance of this Agreement, the Seller Ancillary Agreements and the
transactions contemplated hereby and thereby; and (iv) incumbency and signatures
of the officers of Seller executing this Agreement or any Seller Ancillary
Agreement;

                                       24

<PAGE>

          (b) certificate of an executive officer of Seller, dated the Closing
Date, in form and substance reasonably acceptable to Buyer, as to the amount of
the Partridge Creek Contributions received by or credited to Saks or Seller or
any of their Affiliates prior to the Cut-Off Date;

          (c) the certificate contemplated by Section 9.5, duly executed by a
duly authorized officer of Seller;

          (d) the IP License Agreement, the Transition Services Agreement and
the Private Brands Agreement, in each case duly executed on behalf of Seller;

          (e) the Bill of Sale, Assignment and Assumption Agreement, Grant Deeds
(with respect to the Owned Real Estate and which shall be modified to conform to
the particular requirements of the jurisdictions in which the Owned Real Estate
is located) and the Assignment and Assumption Agreement (Real Estate) for each
Store that is included in the Leased Real Estate (which shall be modified to
conform to the particular requirements of the jurisdictions in which the Real
Estate is located), in each case duly executed on behalf of Seller or one or
more of its Affiliates;

          (f) any other assignments and endorsements, without recourse or
representation (other than as set forth herein), that may be reasonably
necessary to transfer the Assets to Buyer in proper form and suitable for filing
with the appropriate Governmental Body;

          (g) any real estate transfer Tax declarations required to be executed
or filed in connection with the transfer of the Real Estate;

          (h) real estate estoppel letters in substantially the form of Exhibit
V from the landlords of the Leased Real Estate described therein;

          (i) such other certificates, documents and instruments as Buyer
reasonably requests related to the transactions contemplated hereby; and

          (j) an affidavit, substantially in the form of Exhibit P, made under
penalties of perjury and duly executed by Seller that provides Seller's United
States taxpayer identification number and states that Seller is not a foreign
person for purposes of Section 1445 of the Code.

                                    ARTICLE V
                    REPRESENTATIONS AND WARRANTIES OF SELLER

          As an inducement to Buyer to enter into this Agreement and to
consummate the transactions contemplated hereby, Seller represents and warrants
to Buyer as follows (it being understood that Seller makes no representation or
warranty regarding matters that do not arise out of or relate to the Parisian
Business or the Business, as the case may be (other than with respect to
Seller's organization, power and authority in Section 5.1 and 5.2 and other than
with respect to tax matters to the extent set forth in Section 5.5), and that to
the extent that any such representation or warranty made by Seller relates to
Saks or any of its Affiliates or the operation

                                       25

<PAGE>

of the Stores or the Parisian Business or the Business on or prior to October 2,
2006, such representation or warranty shall be deemed to be made on October 2,
2006:

     Section 5.1 Organization of Seller; Power and Authority of Seller. Seller
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. Seller is duly qualified to transact business and
is in good standing in each jurisdiction where the character of its properties
owned or held under lease or the nature of its activities makes such
qualifications necessary, except where the failure to be so qualified or in good
standing would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect. Seller has the corporate power and authority to
own or lease and operate its assets and to carry on its business in the manner
that it was conducted immediately prior to the date of this Agreement.

     Section 5.2 Authority of Seller; Conflicts.

          (a) Seller has all requisite corporate power to enter into this
Agreement and the Seller Ancillary Agreements and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this Agreement
and the Seller Ancillary Agreements by Seller and the consummation by Seller of
the transactions contemplated hereby and thereby have been duly authorized by
all necessary corporate action on the part of Seller (no stockholder approval
being required). This Agreement has been duly executed and delivered by Seller
and (assuming the valid authorization, execution and delivery of this Agreement
by Buyer and the validity and binding effect of this Agreement on Buyer)
constitutes the valid and binding obligation of Seller enforceable against
Seller in accordance with its terms, and each of the Seller Ancillary
Agreements, upon execution and delivery by Seller will be (assuming the valid
authorization, execution and delivery by Buyer, where Buyer is a party, and any
other party or parties thereto) a legal, valid and binding obligation of Seller
enforceable in accordance with its terms, subject, in the case of this Agreement
and each of the Seller Ancillary Agreements, to bankruptcy, insolvency,
reorganization, moratorium and similar laws of general application relating to
or affecting creditors' rights and to general equity principles.

          (b) Except as set forth in Schedule 5.2, the execution and delivery of
this Agreement or any of the Seller Ancillary Agreements by Seller, the
consummation of any of the transactions contemplated hereby or thereby by Seller
or compliance with or fulfillment of the terms, conditions and provisions hereof
or thereof by Seller will not:

               (i) assuming the receipt of all necessary consents and approvals
     and the filing of all necessary documents as described in Section
     5.2(b)(ii), result in a breach of the terms, conditions or provisions of,
     or constitute a default, an event of default or an event creating rights of
     acceleration, termination or cancellation or a loss of rights under, or
     result in the creation or imposition of any Encumbrance upon any of the
     Assets, under (1) the charter, bylaws or similar organizational documents
     of Seller, (2) any Contract, Real Estate Agreement, Warranty, Purchase
     Order or other Business Agreement, (3) any Court Order to which Seller is a
     party or by which Seller or any Asset is bound or (4) any Requirements of
     Law affecting Seller or any Asset, other than, in the case of clauses (2),
     (3) and (4) above, any such breaches, defaults, rights, loss of rights or
     Encumbrances that

                                       26

<PAGE>

     would not, individually or in the aggregate, reasonably be expected to have
     a Material Adverse Effect or would not prevent the consummation of any of
     the transactions contemplated hereby, or

               (ii) require the approval, consent, authorization or act of, or
     the making by Seller or any of its Affiliates of any declaration, filing or
     registration with, any Governmental Body, except (1) the filing with the
     SEC of such reports under the Exchange Act as may be required in connection
     with this Agreement and the transactions contemplated hereby, (2) such
     consents, approvals, filings and notices as may be required under any
     Requirements of Law with respect to environmental matters pertaining to any
     notification, disclosure or required approval triggered by the transactions
     contemplated by this Agreement, (3) such filings as may be required in
     connection with the Taxes described in Section 8.2(a)(iv), and (4) such
     approvals, consents, authorizations, declarations, filings or registrations
     the failure of which to be obtained or made would not, individually or in
     the aggregate, reasonably be expected to have a Material Adverse Effect or
     would not prevent the consummation of any of the transactions contemplated
     hereby.

          Except as provided in Section 5.2(b)(ii), no representation or
warranty is made as to whether any new approvals, consents, licenses, permits,
orders, authorizations, declarations, filings or registrations will be required
as a result of the sale of the Assets to Buyer in order for Buyer to continue to
own the Assets and operate the Stores following the Cut-Off Date in the manner
in which the Assets were owned and the Stores were operated on or before the
Cut-Off Date.

     Section 5.3 Financial Statements. Seller has reviewed the unaudited profit
and loss statements for the 2005 fiscal year for the Parisian stores acquired by
Seller in the Saks Transaction (the "Parisian Stores") that were prepared by
Saks and provided to Seller in connection with the Saks Transaction
(collectively, the "Store Financial Statements"). Seller has also reviewed the
audited statement of income for the Parisian Business for the 2005 fiscal year
that was prepared by Saks and provided to Seller in connection with the Saks
Transaction ("Parisian Audited Financial Statement"), which includes the results
of operations of the Parisian Stores for such fiscal year. Seller has tracked
the "store profit" as reflected in the Store Financial Statements for the 2005
fiscal year to the Parisian Audited Financial Statement and believes that the
"store profit" reflected in the Parisian Audited Financial Statements for the
2005 fiscal year are consistent in all material respects with the aggregate
store profit of the Parisian Stores as reflected in the Store Financial
Statements. Schedule 5.3 of the Seller Disclosure Schedule contains the
unaudited profit and loss statements for the 2003, 2004 and 2005 fiscal years
for the Circle Center, Meadowbrook Mall and Laurel Place Stores and the
unaudited profit and loss statement for the 2005 fiscal year for the Fairfield
Commons, Beavercreek Store (collectively, the "Specified Store Financial
Statements"). Seller has no Knowledge of any material inaccuracies in the
Specified Store Financial Statements.

     Section 5.4 Operations Since Financial Statements Date. Except as set forth
in Schedule 5.4 of the Seller Disclosure Schedule, since the Financial
Statements Date, there has been no Material Adverse Effect. Except as set forth
in Schedule 5.4 of the Seller Disclosure

                                       27

<PAGE>

Schedule, to the Knowledge of Seller, since the Financial Statements Date, the
Business has been conducted in the ordinary course substantially consistent with
past practice. Without limiting the generality of the preceding sentence, to the
Knowledge of Seller, since the Financial Statements Date through the closing of
the Saks Transaction, neither Saks nor its Affiliates, and since the closing of
the Saks Transaction, neither Seller nor any of its Affiliates have:

          (a) made any material change in the Business or its operations,
except such changes as may be required to comply with any applicable
Requirements of Law;

          (b) purchased or otherwise acquired any assets or made any capital
expenditures, in each case that are material, individually or in the aggregate,
to the Business (other than (i) purchases of inventory in the ordinary course of
business consistent with past practice, (ii) capital expenditures in the
ordinary course of business consistent with past practice or as contemplated by
the fiscal 2006 capital budget of the Parisian Business and (iii) capital
expenditures required under any Real Estate Agreement or Lease Agreement for
capital improvements that are not controlled exclusively by Saks or Seller or
their respective Affiliates);

          (c) granted to any Transferred Employee any material increase in
compensation or other benefit (excluding any retention agreements that do not
involve payments by Buyer to any such employee after the Closing) except as may
be required under existing agreements or in the ordinary course of business
consistent with past practice;

          (d) acquired by merging or consolidating with, or by purchasing a
substantial portion of the stock or assets of, any business or any corporation,
partnership, association or other business organization or division thereof;

          (e) sold or otherwise disposed of any assets of the Business
(including by transfer or other disposition of other portions of the Business)
that are material, either individually or in the aggregate, to the Parisian
Business prior to October 2, 2006 or to the Business thereafter (other than
sales of inventory in the ordinary course of business consistent with past
practice);

          (f) materially adversely modified, amended or terminated any Contract,
Real Estate Agreement, Warranty, Purchase Order or other Business Agreement;

          (g) granted any Encumbrance with respect to the assets of the
Business, in each case other than Permitted Encumbrances or Permitted Real
Property Exceptions;

          (h) waived or released any rights of any material value of or with
respect to the Business;

          (i) suffered any damage, destruction, loss or casualty with a value in
excess of $50,000 to property or assets of the Business; or

          (j) other than the Stock Purchase Agreement and this Agreement, agreed
to do any of the foregoing.

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<PAGE>

     Section 5.5 Taxes. To the Knowledge of Seller:

          (a) Seller and its Affiliates have filed all material Tax Returns
required to have been filed by them on or before the date hereof that relate to
the Assets or the Business.

          (b) All Taxes due and owing by Seller and its Affiliates on or before
the date hereof (whether or not shown to be due on the Tax Returns referred to
in clause (a)) that related to the Assets or the Business have been timely paid.

          (c) None of Seller or any of its Affiliates waived in writing any
statute of limitations in respect of Taxes of Seller or any of its Affiliates
that relate to the Assets or the Business which waiver is currently in effect.

          (d) No material issues that have been raised in writing by the
relevant taxing authority in connection with the examination of the Tax Returns
referred to in clause (a) are currently pending.

          (e) All deficiencies asserted in writing or assessments made in
writing as a result of any examination of the Tax Returns referred to in clause
(a) by a taxing authority have been paid in full.

          (f) Each of Seller and its Affiliates withheld and paid all material
Taxes required to have been withheld and paid in connection with any amounts
paid or owing with respect to the Business and the Assets to any employee,
independent contractor, creditor or other third party.

          (g) As of the date hereof, no federal, state, local or non-U.S. Tax
audits or administrative or judicial Tax proceedings are being conducted with
respect to Seller or any of its Affiliates in connection with the Business or
the Assets.

     Section 5.6 Governmental Permits. Except as set forth in Schedule 5.6, to
the Knowledge of Seller, Seller and its Affiliates own, hold or possess all
licenses, franchises, permits, privileges, immunities, approvals and other
authorizations from a Governmental Body that are necessary to entitle them to
own or lease, operate and use their assets and to carry on and conduct the
Business substantially as conducted immediately prior to the date of this
Agreement (collectively, "Governmental Permits"), except for such Governmental
Permits as to which the failure to so own, hold or possess would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. To the Knowledge of Seller, Seller and its Affiliates have
complied with all terms and conditions of the Governmental Permits, other than
those instances of noncompliance that would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.

     Section 5.7 Real Property.

          (a) Schedules 5.7(a)(i) and 5.7(a)(ii) of the Seller Disclosure
Schedule set forth a complete and accurate list by property or project name,
city and state of all Leased Real

                                       29

<PAGE>

Estate and Owned Real Estate, respectively. Each of the entities identified in
Schedule 5.7(a)(ii) of the Seller Disclosure Schedule owns fee simple title to
such Owned Real Estate, subject only to Permitted Real Property Exceptions.

          (b) Except as set forth in Schedule 5.7(b) of the Seller Disclosure
Schedule, (i) within the immediately preceding 12-month period, there have not
been actual or threatened (in writing), or imminent changes in the zoning of any
of the Real Estate or any part thereof materially and adversely affecting the
current use, occupancy or value thereof and (ii) there is no pending or, to the
Knowledge of Seller, threatened (in writing), condemnation, expropriation,
requisition (temporary or permanent) or similar proceeding with respect to any
Real Estate or any part thereof, that would materially detract from the value of
the Real Estate or materially impair the existing use thereof.

          (c) Except as set forth in Schedule 5.7(c) of the Seller Disclosure
Schedule, each tenant lease and other agreement for the use and occupancy by the
Seller and its Affiliates of the Leased Real Estate (collectively, the "Lease
Agreements") and each Real Estate Agreement is in full force and effect, other
than those Lease Agreements and Real Estate Agreements the failure of which to
be in full force and effect would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. None of Seller or any
of its Affiliates is in, or, to the Knowledge of Seller, is alleged to be in,
breach or default under any Lease Agreement or Real Estate Agreement other than
those breaches or defaults that would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect, and there is no event
that, but for the passage of time or the giving of notice or both would
constitute or result in any such breach or default, other than those breaches or
defaults that would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. Seller has made available to Buyer
true, complete and correct copies in all material respects of any and all: (i)
Lease Agreements (and all guaranties relating thereto) and (ii) Real Estate
Agreements.

          (d) No payments, setoffs or other credits of any kind have been
received by Saks, Seller or any of their respective Affiliates that have not
been reflected in clause (y) of Section 3.1(a) in respect of the Partridge Creek
Contributions.

     Section 5.8 Personal Property Leases. To the Knowledge of Seller, Schedule
5.8 of the Seller Disclosure Schedule contains as of the date of this Agreement
a list of each material lease or other agreement or right under which Seller or
any of its Affiliates is lessee of, or holds or operates, any machinery,
equipment, vehicle or other tangible personal property owned by a third Person,
except those that are Excluded Contracts or that are terminable by Seller and
its Affiliates without penalty on 90 days' or less notice or that provide for
annual rental payments of less than $350,000 (or in the case of such leases or
other agreements entered into by Seller or any of its Affiliates on or after the
closing of the Saks Transaction that provide for annual rental payments of less
than $50,000).

     Section 5.9 Intellectual Property.

                                       30
<PAGE>

          (a) To the Knowledge of Seller, Schedule 5.9(a) of the Seller
Disclosure Schedule contains a list of all Registered Intellectual Property,
each item of which is either owned or licensed by Seller or one of its
Affiliates and which is material to the conduct of the Business as currently
conducted.

          (b) To the Knowledge of Seller, Schedule 5.9(b) of the Seller
Disclosure Schedule contains a list of all Software owned or licensed by Seller
or any of its Affiliates that is material to the conduct of the Business as
currently conducted.

          (c) To the Knowledge of Seller, except as disclosed in Schedule 5.9(c)
of the Seller Disclosure Schedule or as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect, Seller or
one of its Affiliates either: (i) own the entire right, title and interest in
and to the Registered Intellectual Property and Software listed in Schedules
5.9(a) and 5.9(b) of the Seller Disclosure Schedule, free and clear of any
Encumbrance (other than Permitted Encumbrances); or (ii) have a valid
contractual right or license to use the same in the conduct of the Business as
currently conducted. Except as disclosed in Schedule 5.9(c), the Registered
Intellectual Property and Software listed in Schedules 5.9(a) and 5.9(b) are
included in the Assets.

          (d) To the Knowledge of Seller, except as disclosed in Schedule 5.9(d)
of the Seller Disclosure Schedule or as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect: (i) all
patents and registrations for Registered Intellectual Property identified in
Schedule 5.9(a) as being owned by Seller or one of its Affiliates are in force,
and all applications to patent or register any unregistered item of Registered
Intellectual Property owned by Seller or one of its Affiliates so identified are
pending and in good standing, all without challenge of any kind; and (ii) Seller
or one of its Affiliates has the right to bring actions for infringement or
unauthorized use of such Registered Intellectual Property identified in Schedule
5.9(a) and Software identified in Schedule 5.9(b) as being owned by Seller or
one of its Affiliates.

          (e) Except as disclosed in Schedule 5.9(e) of the Seller Disclosure
Schedule or as would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect, since January 1, 2003, (i) to the
Knowledge of Seller, no infringement or misappropriation by Saks or any of its
Affiliates of any Intellectual Property or Software of any other Person occurred
or resulted in any way from the conduct of the Parisian Business prior to the
closing of the Saks Transaction (and, without qualification as to the Knowledge
of Seller, no infringement or misappropriation by Seller or any of its
Affiliates of any Intellectual Property or Software of any other Person has
occurred or resulted in any way from the conduct of the Business since the
closing of the Saks Transaction) and (ii) to the Knowledge of Seller, no written
notice of a claim of any infringement or misappropriation of any Intellectual
Property or Software of any other Person has been made or asserted in respect of
the conduct of the Parisian Business as conducted by Saks and its Affiliates
prior to the closing of the Saks Transaction (and, without qualification as to
the Knowledge of Seller, no written notice of a claim of any infringement or
misappropriation of any Intellectual Property or Software of any other Person
has been made or asserted in respect of the conduct of the Business as currently
conducted since the closing of the Saks Transaction). To the Knowledge of
Seller, no Person has infringed or

                                       31

<PAGE>

misappropriated, or is infringing or misappropriating, any item of Intellectual
Property that is either owned or licensed by Seller or any of its Affiliates,
except for such infringement or misappropriation as would not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect.

          (f) To the Knowledge of Seller, except as disclosed in Schedule 5.9(f)
of the Seller Disclosure Schedule, no material proceedings are pending or
threatened against the Business that (i) restrict in any manner the use,
transfer or licensing of or (ii) challenge the use, enforceability, validity or
ownership of any Registered Intellectual Property identified in Schedule 5.9(a)
as being owned by Seller and its Affiliates.

          (g) To the Knowledge of Seller, Saks and its Affiliates took prior to
the closing of the Saks Transaction commercially reasonable steps to protect the
Trade Secrets used in the Parisian Business and any Trade Secrets or
confidential information of third parties used in the Parisian Business and
Seller and its Affiliates have taken since the closing of the Saks Transaction
commercially reasonable steps to protect the Trade Secrets used in the Business
and any Trade Secrets or confidential information of third parties used in the
Business.

     Section 5.10 Title to Property. Except for assets disposed of in the
ordinary course of business, Seller or one of its Affiliates has valid title to
each item of equipment and other tangible personal property that is included in
the Assets or a valid leasehold interest or other right to use or operate any
equipment and other tangible personal property that is included in the Assets
and is owned by a third Person, free and clear of all Encumbrances, except for
Permitted Encumbrances.

     Section 5.11 No Violation, Litigation or Regulatory Action. To the
Knowledge of Seller, except as disclosed in Schedule 5.11:

          (a) Saks and its Affiliates complied with all applicable Requirements
of Law and Court Orders in respect of the Parisian Business prior to the closing
of the Saks Transaction and Seller and its Affiliates have complied with all
applicable Requirements of Law and Court Orders in respect of the Business since
the closing of the Saks Transaction, other than (i) those instances of
noncompliance that would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect and (ii) matters relating to Taxes or
compliance with Environmental Laws or Environmental Permits, all representations
with respect to which are the subject of Sections 5.5 and 5.15, respectively;

          (b) there are no actions, suits, proceedings or investigations pending
(with respect to which Seller or any of its Affiliates has been served or
notified) or threatened against Seller or any of its Affiliates or the Business,
including lawsuits, claims, suits, proceedings or investigations by or on behalf
of any current or former Store Employees or service provider of the Business
that would, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect;

                                       32

<PAGE>

          (c) there is no action, suit or proceeding pending or threatened that
questions the legality of the transactions contemplated by this Agreement or any
of the Seller Ancillary Agreements; and

          (d) there are no outstanding consent orders, unsatisfied judgments or
decrees in respect of the Business.

     Section 5.12 [Intentionally Blank]

     Section 5.13 Status of Contracts. Except as set forth in Schedule 5.13 of
the Seller Disclosure Schedule or in any other Schedule in the Seller Disclosure
Schedule, to the Knowledge of Seller, each of the Real Estate Agreements, the
Contracts and the leases listed in Schedule 5.8 of the Seller Disclosure
Schedule (collectively, the "Business Agreements") is in full force and effect,
other than those Business Agreements the failure of which to be in full force
and effect would not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect. To the Knowledge of Seller, except as set
forth in Schedule 5.13, neither Seller nor any of its Affiliates is in, or is
alleged to be in, breach or default under any of the Business Agreements, other
than those breaches or defaults that would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect, and there
is no event that, but for the passage of time or the giving of notice or both
would constitute or result in any such breach or default, other than those
breaches or defaults that would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. To the Knowledge of
Seller, Seller has made available in all material respects true, complete and
correct copies of all Business Agreements to Buyer.

     Section 5.14 ERISA.

          (a) To the Knowledge of Seller, each Welfare Plan and Pension Plan
maintained in connection with the Business or in which at least one Store
Employee participates (each, a "Seller Plan") and any other material employee
benefits relating to the Business that are in effect as of the Cut-Off Date or
the "Cut-Off Date" with respect to the Saks Transaction, such as any bonus,
incentive or annual profit sharing programs, any fringe benefits described in
Section 132 of the Code, any education assistance plans under Section 127 of the
Code and any dependent care assistance plans under Section 129 of the Code, is
listed on Schedule 5.14(a) of the Seller Disclosure Schedule, and Seller has
made available to Buyer either a true and correct copy of each such plan or a
summary plan description used in connection with such plan.

          (b) Except as set forth in Schedule 5.14(b) of the Seller Disclosure
Schedule, to the Knowledge of Seller, with respect to each Welfare Plan and
Pension Plan listed on Schedule 5.14(a) of the Seller Disclosure Schedule, (i)
each such plan has been maintained and operated in compliance in all material
respects with its terms and the applicable requirements of the Code and ERISA
and the regulations issued thereunder and (ii) no material litigation or
asserted claims against Seller or any of its Affiliates exist with respect to
any such plan other than routine claims for benefits in the normal course of
business.

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<PAGE>

          (c) Except as set forth in Schedule 5.14(c) of the Seller Disclosure
Schedule, to the Knowledge of Seller, each Pension Plan listed in Schedule
5.14(a) that is intended to be "qualified" within the meaning of Section 401(a)
of the Code has received a favorable determination letter from the Internal
Revenue Service as to its qualification under the Code, and Seller has no
Knowledge of an occurrence of an event since the date of such determination
letter that would reasonably be expected to materially adversely affect such
qualification.

          (d) To the Knowledge of Seller, no Store Employee is a participant in
the Saks Incorporated Amended and Restated 2000 Change in Control and Material
Transaction Severance Plan (the "Severance Pay Plan").

          (e) To the Knowledge of Seller, no Seller Plan and no other agreement,
contract or arrangement includes any provision that could result, separately or
in combination with any other event, in the payment, acceleration or enhancement
of any benefit being regarded as an "excess parachute payment" within the
meaning of Section 280G of the Code as a result of the transactions contemplated
by this Agreement.

     Section 5.15 Environmental Compliance.

          (a) Except as set forth in Schedule 5.15, and other than those matters
that would not, individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect, to the Knowledge of Seller: (i) the operation of the
Business and each Store is in compliance with all applicable Environmental Laws
and Environmental Permits and Seller and its Affiliates possess all permits and
approvals required under all Environmental Laws with respect to the Business;
(ii) there are no actions or proceedings pending or threatened against Seller or
any of its Affiliates in respect of the Business or the Assets alleging
noncompliance with or liability under any Environmental Law and neither Saks nor
any of its Affiliates during the five (5) years prior to the closing of the Saks
Transaction were, and neither Seller nor any of its Affiliates are, subject to
any administrative or judicial proceeding pursuant to applicable Environmental
Laws in respect of the Business; (iii) Saks and its Affiliates in respect of the
Business stored, used, operated, transported, treated or disposed of Hazardous
Materials in compliance with all Environmental Laws during the five (5) years
prior to the closing of the Saks Transaction and Seller and its Affiliates in
respect of the Business store, use, operate, transport, treat or dispose of
Hazardous Materials in compliance with all Environmental Laws; and (iv) neither
Saks nor any of its Affiliates received any notice during the five (5) years
prior to the closing of the Saks Transaction that Saks or any such Affiliate is
liable under Environmental Laws relating to the off-site disposal of Hazardous
Materials generated by the operations of the Business, and since the closing of
the Saks Transaction neither Seller nor any of its Affiliates have received any
such notice in respect of the Business.

          (b) Except as set forth in Schedule 5.15, to the Knowledge of Seller,
no Real Estate, improvement or equipment included in the Assets contains any
Hazardous Materials, asbestos, asbestos-containing materials, polychlorinated
biphenyls, underground storage tanks, above-ground storage tanks, radon,
radioactive materials, urea formaldehyde foam insulation, petroleum and
petroleum products, methane, hazardous wastes, hazardous chemicals, or sumps on
or under any asset, in each case, that requires corrective action under
Environmental Laws.

                                       34

<PAGE>

          (c) To the Knowledge of Seller, Seller has heretofore made available
to Buyer true, correct and complete copies of all material reports,
correspondence and memoranda relating to the existence, or possible existence,
of any of the materials enumerated in Section 5.15(b) on the Real Estate or
within the Stores.

     Section 5.16 Employee Relations and Agreements.

          (a) To the Knowledge of Seller, Schedule 5.16(a) of the Seller
Disclosure Schedule contains a true and complete listing (excluding names and
any other personally identifying information) of the position, status as exempt
or non-exempt from overtime pay under the FLSA, annual salary or hourly wage
rate, base rate of bonus opportunity, date of hire, and work location of all of
the Store Employees (whether full-time, part-time, or otherwise). Such list
shall be updated as of the Cut-Off Date and shall be revised so as to include
the names of all Store Employees on the Cut-Off Date. Such updated and revised
list shall be delivered by Seller to Buyer at the Closing. Such updated and
revised list may be supplemented by Seller promptly following the Closing Date
to add the names of any Store Employees who were unintentionally omitted from
the list delivered by Seller to Buyer at the Closing. To the Knowledge of
Seller, Seller has provided to Buyer true, correct, and complete copies of all
Employment Agreements, personnel policies, and employee handbooks relating to
the Store Employees. To the Knowledge of Seller, neither Saks nor any of its
Affiliates received prior to the closing of the Saks Transaction (in respect of
the Parisian Business) a claim from any Governmental Body to the effect that it
has improperly classified as an independent contractor any Person named in
Schedule 5.16(a) and since the closing of the Saks Transaction neither Seller
nor any of its Affiliates have received (in respect of the Business) any such
notice.

          (b) Except as disclosed on Schedule 5.16(b) of the Seller Disclosure
Schedule or as has occurred in the ordinary course of business consistent with
past practices, to the Knowledge of Seller, from the Financial Statements Date
to the closing of the Saks Transaction, neither Saks nor any of its Affiliates,
and since the closing of the Saks Transaction, neither Seller nor any of its
Affiliates has: (i) increased in any material respect the compensation payable
or to become payable to or for the benefit of any Store Employees, (ii) provided
any Store Employees with any material increase in security or tenure of
employment, (iii) increased in any material respect the amount payable to any
Store Employees upon the termination of such persons' employment, or (iv)
increased, augmented or improved in any material respect the benefits granted to
or for the benefit of any Store Employee under any bonus, profit sharing,
pension, retirement, deferred compensation, insurance or other direct or
indirect benefit plan or arrangement, in each case, except as may be required
under existing agreements.

          (c) During the three-year period preceding the date of this Agreement,
except as disclosed in Schedule 5.16(c), to the Knowledge of Seller::

               (i) none of the Store Employees has been, or is currently,
     represented by a labor organization or group that was either certified or
     voluntarily recognized as an exclusive bargaining representative by any
     Governmental Body, including the National Labor Relations Board, and
     neither Saks nor any of its Affiliates was, and neither Seller nor any of
     its Affiliates has been or is, a signatory to a collective bargaining
     agreement

                                       35

<PAGE>

     with any trade union, labor organization, or labor group related to the
     operations of the Business;

               (ii) no labor dispute, walk out strike, slowdown, hand billing,
     picketing, or work stoppage (sympathized or otherwise) involving Store
     Employees has occurred, is in progress, or has been threatened;

               (iii) neither Saks nor any of its Affiliates was, and neither
     Seller nor any of its Affiliates has been or is, (in respect of the
     Business) a state or federal contractor obligated to develop and maintain
     an affirmative action plan; and

               (iv) Saks and its Affiliates were, and Seller and its Affiliates
     are, in compliance in all material respects with all Labor Laws applicable
     to the operations of the Business.

          (d) Except as set forth in Schedule 5.16(d) of the Seller Disclosure
Schedule, to the Knowledge of Seller, no union or similar organization
represents any Store Employees and no such organization is attempting to
organize such employees.

          (e) To the Knowledge of Seller, except as set forth in Schedule
5.16(e) of the Seller Disclosure Schedule, no Store Employee is a party to any
employment or other agreement with Seller or any of its Affiliates that entitles
him or her to material compensation or other material consideration (other than
any retention agreements that do not involve payments by Buyer to any such Store
Employee after the Closing).

     Section 5.17 Sufficiency of Assets. The Assets constitute all of the assets
necessary and sufficient to operate the Business as conducted by Seller and its
Affiliates as of the date of this Agreement and by Saks and its Affiliates at
the closing of the Saks Transaction other than (a) assets that, individually and
in the aggregate, are not material to the Business, (b) assets, properties and
rights that are used by Saks to provide services pursuant to the Saks Transition
Services Agreement, (c) assets, properties and rights that are used by Seller to
provide services pursuant to the Transition Services Agreement, (d) Software
subject to the Saks Software License Agreement, (e) trademarks and service marks
subject to the IP License Agreement, (f) assets, properties or rights that are
used by Saks to perform its obligations under the Saks Private Brands Agreement,
(g) assets, properties or rights that are used by Seller to perform its
obligations under the Private Brands Agreement, (h) the merchandise, fixtures,
furniture, equipment and other assets owned by the "Licensee" (as such term is
defined in the Club Libby Lu Agreement) and used in connection with the Club
Libby Lu departments in the Stores; (i) the shared contracts, agreements and
arrangements identified by category in Schedule 5.17; and (j) those Excluded
Assets listed in subparagraphs (i) through (xix) of Section 2.1(b). Nothing in
this Section 5.17 constitutes an additional representation or warranty with
respect to title to or the condition of any assets or properties (whether real
or personal, tangible or intangible, owned, leased or held under license), any
and all representations or warranties with respect to which are set forth in
other sections of this Article V.

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<PAGE>

     Section 5.18 No Brokers. No broker, investment banker or other Person is
entitled to any broker's, finder's or other similar fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Seller.

     Section 5.19 No Investigation by Buyer. Notwithstanding anything to the
contrary in this Agreement, no investigation by Buyer or its agents or
representatives shall affect the representations and warranties of Seller under
this Agreement or contained in any other writing to be furnished to Buyer in
connection with the transactions contemplated hereunder.

                                   ARTICLE VI
                     REPRESENTATIONS AND WARRANTIES OF BUYER

          As an inducement to Seller to enter into this Agreement and to
consummate the transactions contemplated hereby, Buyer hereby represents and
warrants to Seller as follows:

     Section 6.1 Organization of Buyer. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the Commonwealth of
Pennsylvania. Buyer has the corporate power and corporate authority to own or
lease and operate its assets and to carry on its businesses in the manner that
they were conducted immediately prior to the date of this Agreement.

     Section 6.2 Authority of Buyer; Conflicts.

          (a) Buyer has the corporate power and corporate authority to execute,
deliver and perform this Agreement and each of the Buyer Ancillary Agreements.
The execution, delivery and performance of this Agreement and the Buyer
Ancillary Agreements by Buyer have been duly authorized and approved by Buyer's
board of directors and do not require any further authorization or consent of
Buyer or its stockholders. This Agreement has been duly authorized, executed and
delivered by Buyer and (assuming the valid authorization, execution and delivery
of this Agreement by Seller) is the legal, valid and binding agreement of Buyer
enforceable in accordance with its terms, and each of the Buyer Ancillary
Agreements has been duly authorized by Buyer and upon execution and delivery by
Buyer will be (assuming the valid authorization, execution and delivery by
Seller, where Seller is a party, and any other party or parties thereto) a
legal, valid and binding obligation of Buyer enforceable in accordance with its
terms, subject, in the case of this Agreement and each of the Buyer Ancillary
Agreements, to bankruptcy, insolvency, reorganization, moratorium and similar
laws of general application relating to or affecting creditors' rights and to
general equity principles.

          (b) The execution and delivery of this Agreement or any of the Buyer
Ancillary Agreements by Buyer, the consummation of any of the transactions
contemplated hereby or thereby by Buyer and compliance with or fulfillment of
the terms, conditions and provisions hereof or thereof by Buyer will not:

               (i) assuming the receipt of all necessary consents and approvals
     and the filing of all necessary documents as described in Section
     6.2(b)(ii), result in a breach of the terms, conditions or provisions of,
     or constitute a default, an event of default or an event creating rights of
     acceleration, termination or cancellation or a loss of rights under

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<PAGE>

     (1) the Certificate of Incorporation or bylaws of Buyer, (2) any note,
     instrument, contract, agreement, mortgage, lease, franchise or financial
     obligation to which Buyer is a party or any of its properties is subject or
     by which Buyer is bound, (3) any Court Order to which Buyer is a party or
     by which it is bound or (4) any Requirements of Law affecting Buyer, other
     than, in the case of clauses (2), (3) and (4) above, any such breaches,
     defaults, rights or loss of rights that, individually or in the aggregate,
     would not materially impair the ability of Buyer to perform its obligations
     hereunder or prevent the consummation of any of the transactions
     contemplated hereby, or

               (ii) require the approval, consent, authorization or act of, or
     the making by Buyer of any declaration, filing or registration with, any
     Governmental Body, except for (1) the filing with the SEC of such reports
     under the Exchange Act as may be required in connection with this Agreement
     and the transactions contemplated by this Agreement, (2) such consents,
     approvals, filings and notices as may be required under any Requirements of
     Law with respect to environmental matters pertaining to any notification,
     disclosure or required approval triggered by the transactions contemplated
     by this Agreement, (3) such filings as may be required in connection with
     the Taxes described in Section 8.2(a)(iv) and (4) such approvals, consents,
     authorizations, declarations, filings or registrations the failure of which
     to be obtained or made would not, individually or in the aggregate,
     materially impair the ability of Buyer to perform its obligations hereunder
     or prevent the consummation of any of the transactions contemplated hereby.

     Section 6.3 No Violation, Litigation or Regulatory Action.

          (a) There are no lawsuits, claims, suits, proceedings or
investigations pending (with respect to which Buyer has been served or otherwise
notified) or, to the Knowledge of Buyer, threatened against Buyer or its
subsidiaries that would, individually or in the aggregate, materially impair the
ability of Buyer to perform its obligations hereunder or prevent the
consummation of any of the transactions contemplated hereby.

          (b) There is no action, suit or proceeding pending or, to the
Knowledge of Buyer, threatened that questions the legality of the transactions
contemplated by this Agreement or any of the Buyer Ancillary Agreements.

          (c) There are no outstanding consent orders, unsatisfied judgments or
decrees that would, individually or in the aggregate, materially impair the
ability of Buyer to perform its obligations hereunder or prevent the
consummation of any of the transactions contemplated hereby.

     Section 6.4 Financing. Buyer has (or will have at Closing) sufficient funds
available for it to pay the Purchase Price.

     Section 6.5 No Brokers. No broker, investment banker or other Person is
entitled to any broker's, finder's or other similar fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Buyer.

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                                   ARTICLE VII
                        ACTION PRIOR TO THE CLOSING DATE

          The respective parties hereto covenant and agree to take the following
actions between the date hereof and the Closing Date:

     Section 7.1 Access to Information. Subject to Section 8.8, Seller shall
afford to the officers, employees and authorized representatives of Buyer
(including independent public accountants and attorneys) reasonable access
during normal business hours, upon reasonable advance notice, to the offices,
properties and business and financial records (including computer files,
retrieval programs and similar documentation) relating to the Stores to the
extent reasonably necessary for Buyer to operate the Stores after the Effective
Time and shall furnish to Buyer or its authorized representatives such
additional information relating to the Stores as shall be reasonably requested;
provided, however, that neither Buyer nor any of its officers, employees, agents
or representatives shall have access to any personnel of the Stores or any other
businesses of Seller or any of their Affiliates other than the persons
identified in Schedule 7.1 without Seller's prior written consent, which shall
not be unreasonably withheld or delayed. Buyer agrees that such investigation
shall be conducted in such a manner as not to interfere unreasonably with the
operations of Seller or its Affiliates.

     Section 7.2 Notifications. Each of Buyer and Seller shall notify the other
promptly after it has Knowledge of:

          (a) any action, suit or proceeding that shall be instituted or
threatened against such party to restrain, prohibit or otherwise challenge the
legality of any transaction contemplated by this Agreement;

          (b) any lawsuit, claim, proceeding or investigation that may be
threatened, brought, asserted or commenced against any of Seller or its
Affiliates or the Assets, the Stores or Buyer, as the case may be, that would
have been listed in the Seller Disclosure Schedule (without giving effect to any
materiality or Material Adverse Effect qualifiers therein) if such lawsuit,
claim, proceeding or investigation had arisen prior to the date hereof;

          (c) any changes or events relating to the Stores that, individually or
in the aggregate, have a Material Adverse Effect;

          (d) any notice or other communication from any Person alleging that
the consent of such Person is or may be required in connection with the
transactions contemplated by this Agreement; and

          (e) the damage or destruction by fire or other casualty of any
material portion of the Assets or in the event that any material portion of the
Assets becomes the subject of any proceeding or, to the Knowledge of Seller or
Buyer, as the case may be, threatened proceeding for the taking thereof or of
any right relating thereto by condemnation, eminent domain or other similar
governmental action;

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<PAGE>

provided, however, that if a party fails to notify the other party under this
Section 7.2, (x) such non-breaching party shall only be entitled to seek
indemnification for breach of this Section 7.2 if and to the extent such
non-breaching party is otherwise entitled to indemnification pursuant to Section
11.1(a)(i) for breach of a representation and warranty and the limits set forth
in Section 11.1(a) shall apply to any such indemnification and (y) a failure to
comply with this Section 7.2 shall not cause the failure of any condition set
forth in Articles IX or X to be satisfied unless the underlying change, event or
development would independently result in the failure of a condition set forth
in Articles IX or X to be satisfied. Each party acknowledges that the other
party does not and will not waive any rights it may have under this Agreement as
a result of receiving such notifications.

     Section 7.3 Consents of Third Parties; Governmental Approvals.

          (a) During the period prior to the Closing Date, subject to Section
7.6(b), Buyer shall act diligently and reasonably, and Seller, upon the request
of Buyer, shall use its commercially reasonable efforts to obtain, and to
cooperate with Buyer to obtain, any consents, waivers and approvals of any third
party (including any Governmental Body) required to be obtained to consummate
the transactions contemplated by this Agreement; provided, however, that
notwithstanding anything to the contrary in this Agreement, such action shall
not include any requirement of Seller or Buyer or any of their respective
Affiliates to pay money to any third party, commence or participate in any
litigation, offer or grant any accommodation or undertake any obligation or
liability (in each case financial or otherwise) to any third party (including
any Governmental Body); provided, further, that prior to Closing neither Buyer
nor its officers, employees or authorized representatives may contact any
customer, supplier, lessor or other third party (other than any Governmental
Body) in connection with any such consent without providing Seller with advance
notice and a commercially reasonable opportunity to participate in any such
contact.

          (b) Upon the terms and subject to the conditions set forth in this
Agreement, each of the parties agrees to use reasonable best efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, and to assist
and cooperate with the other party in doing all things necessary, proper or
advisable to consummate, in the most expeditious manner practicable, the
transactions contemplated by this Agreement, including: (i) obtaining all
necessary actions or non-actions, waivers, consents and approvals from all
Governmental Bodies and making all necessary registrations and filings
(including filings with Governmental Bodies) and taking all steps as may be
necessary to obtain an approval or waiver from, or to avoid an action or
proceeding by, any Governmental Body, (ii) defending any lawsuits or other
legal proceedings, whether judicial or administrative, challenging this
Agreement or the consummation of the transactions contemplated hereby, including
seeking to have any stay or temporary restraining order entered into by any
court or other Governmental Body vacated or reversed, (iii) keeping the other
party informed in all material respects of any material communication received
by such party from, or given by such party to, any Governmental Body and of any
material communication received or given in connection with any proceeding by a
private party relating to the transactions contemplated by this Agreement, in
each case regarding any of the transactions contemplated hereby, (iv) permitting
the other party to review any material

                                       40

<PAGE>

communication delivered to, and consulting with the other party in advance of
any meeting or conference with, any Governmental Body relating to the
transactions contemplated by this Agreement or in connection with any proceeding
by a private party, and giving the other party the opportunity to attend and
participate in such meetings and conferences (to the extent permitted by such
Governmental Body or private party), and (v) executing and delivering any
additional instruments necessary to consummate the transactions contemplated by
this Agreement. No party to this Agreement shall consent to any voluntary delay
of the consummation of the transactions contemplated hereby at the behest of any
Governmental Body without the consent of the other party to this Agreement,
which consent will not be unreasonably withheld or delayed.

     Section 7.4 Operations Prior to the Closing Date.

          (a) Seller shall use its commercially reasonable efforts to, and to
cause its Affiliates to, operate and carry on the Business in the ordinary
course and substantially as operated immediately prior to the date of this
Agreement. Consistent with the foregoing, Seller shall use its commercially
reasonable efforts to, and shall cause its Affiliates to, use their commercially
reasonable efforts consistent with good business practice to, preserve the
goodwill of the suppliers, contractors, licensors, employees, customers,
distributors and others having business relations with the Business.

          (b) Notwithstanding Section 7.4(a), except as set forth in Schedule
7.4 of the Seller Disclosure Schedule, except as contemplated by this Agreement
or except with the express written approval of Buyer (which Buyer agrees shall
not be unreasonably withheld or delayed), Seller shall not, and shall cause its
Affiliates not to, with respect to the Business and the conduct and occupancy of
the Stores:

               (i) make any material change in the Business or the operations of
     the Business, except such changes as may be required to comply with any
     applicable Requirements of Law;

               (ii) purchase or otherwise acquire any assets or make any capital
     expenditures, in each case that are material, individually or in the
     aggregate, to the Business (other than (A) purchases of inventory in the
     ordinary course of business consistent with past practice, (B) capital
     expenditures contemplated by the fiscal 2006 capital budget for the
     Business made available to Buyer, (C) capital expenditures required under
     any Real Estate Agreement or Lease Agreement for capital improvements that
     are not controlled exclusively by Seller or its Affiliates, (D) capital
     expenditures required by any Governmental Body and (E) such capital
     expenditures not covered by clauses (A) through (D) above that do not
     exceed $10,000 in the aggregate);

               (iii) exercise any option to extend a lease listed on Schedule
     5.7(a)(i);

               (iv) grant any Encumbrance with respect to any assets of the
     Business, in each case other than Permitted Encumbrances and Permitted Real
     Property Exceptions;

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<PAGE>

               (v) transfer any material assets (other than cash in excess of
     that required by Section 2.1(a)(xiv) prior to the Effective Time) of the
     Business to any other part of the Parisian Business or any other Person;

               (vi) institute any material increase in the benefits available
     under any profit-sharing, bonus, incentive, deferred compensation,
     insurance, pension, retirement, medical, hospital, disability, welfare or
     other employee benefit plan with respect to any Store Employees, other than
     as expressly required by the terms of any such plan as in effect on the
     date of this Agreement or Requirements of Law;

               (vii) grant to any Store Employee any material increase in
     compensation or other benefits (excluding any retention agreements that do
     not involve payments by Buyer to any such Store Employee after the Closing)
     except as may be required under existing agreements or in the ordinary
     course of business consistent with past practice;

               (viii) enter into or amend any collective bargaining agreement;

               (ix) acquire by merging or consolidating with, or by purchasing a
     substantial portion of the stock or assets of, any business or any
     corporation, partnership, association or other business organization or
     division thereof (other than Seller's purchase of the stock of the
     Companies and the subsequent merger of one or more of the Companies with
     and into Seller);

               (x) sell or otherwise dispose of any assets (including any
     transfer or other disposition of assets to any other portions of the
     Parisian Business) that are material, either individually or in the
     aggregate, to the Business (other than sales of inventory in the ordinary
     course of business consistent with past practice);

               (xi) materially adversely modify or amend any Business Agreement
     (other than the Partridge Creek Amendment);

               (xii) intentionally waive in writing any right of any material
     value of or with respect to the Business;

               (xiii) enter into any material agreement, contract or arrangement
     with any of its Affiliates relating to the Business (other than the
     Partridge Creek Amendment) unless such agreement terminates as of the
     Closing Date;

               (xiv) create any new gift certificate, gift card, merchandise
     voucher, coupon or refund program for the Business or amend in any material
     respect the Seller Gift Programs, in each case, other than in the ordinary
     course of business consistent with past practice;

               (xv) create any new return policy for merchandise purchased from
     the Business or amend in any material respect the Seller Return Policies;

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<PAGE>

               (xvi) except as permitted by Schedule 7.4(b)(xvi) or as permitted
     by the Private Brands Agreement, on behalf of the Business (A) place any
     orders (other than fill-in or replenishment orders) for products bearing a
     Private Brand (as defined in the Private Brands Agreement) or (B) place any
     fill-in or replenishment orders for products bearing a Private Brand (as
     defined in the Private Brands Agreement); or

               (xvii) agree to do any of the foregoing.

          (c) Without the prior written consent of Buyer, which consent will not
be unreasonably withheld, Seller shall not amend, supplement or otherwise modify
the Stock Purchase Agreement in any manner that would reasonably be expected to
have an adverse effect on the Business, the Assets or the Assumed Liabilities.

     Section 7.5 Ancillary Agreements.

          (a) At the Closing, Buyer shall enter into an agreement with Seller
substantially in the form of Exhibit Q providing for certain transition services
by Seller and its Affiliates for Buyer and its Affiliates after the Effective
Time (the "Transition Services Agreement").

          (b) At the Closing, Buyer and Seller shall enter into an agreement
substantially in the form of Exhibit R providing for Seller's license of certain
trademarks and service marks to Buyer after the Effective Time (the "IP License
Agreement").

          (c) At the Closing, Buyer shall enter into an agreement with Seller
substantially in the form of Exhibit S, providing for the purchase by Buyer of
private brands after the Effective Time (the "Private Brands Agreement").

          (d) At the Closing, Buyer shall enter into an agreement with GE Money
Bank, in a form reasonably satisfactory to Buyer, Seller and GE Money Bank,
providing for the use of the Parisian credit card at the Effective Time (the
"Credit Card Agreement").

     Section 7.6 Private Brands.

          (a) During the period prior to the Effective Time, Seller shall
cooperate in good faith with Buyer in Buyer's efforts to obtain consents from
owners or licensors of Private Brands (as defined in the Private Brands
Agreement) in connection with the transactions contemplated by the Private
Brands Agreement; provided, however, that Seller and its Affiliates shall not
have any obligation to pay money or grant any accommodation to any third party
in order to obtain such consents.

          (b) Prior to the Closing, Seller shall cooperate in good faith with
Buyer in Buyer's effort to obtain such agreements with third-party vendors as
are necessary to enable Seller to deliver Products (as defined in the Private
Brands Agreement) to Buyer; provided, however, that Seller and its Affiliates
shall not have any obligation to pay money or grant any accommodation to any
third party in order to enter into such agreements.

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<PAGE>

          (c) Buyer acknowledges that a draft of Schedule 1 of the Private
Brands Agreement will be delivered within two (2) days of the date hereof based
on information then readily available to Seller. Prior to the Closing Date or as
promptly as practicable thereafter, Schedule 1 of the Private Brands Agreement
will be finalized by Seller to reflect new order and fill-in orders placed (in
each case, subject to Section 6.4(xvi)), goods received, new information
obtained and other adjustments made in the ordinary course of business between
the date Schedule 1 was originally prepared and the date Schedule 1 is finalized
(regardless of expected delivery date).

     Section 7.7 Remittance of Cash Receipts.

          (a) Notwithstanding anything to the contrary in this Agreement, all
receipts by Seller or any of its Affiliates before the Cut-Off Date, including
cash (excluding Register Cash and Partridge Creek Contributions), checks and
bank drafts (whether cleared before or after the Effective Time), and proceeds
from third-party credit card or debit card transactions (whether posted before
or after the Effective Time) shall be excluded from the transactions
contemplated hereby, and to the extent received by Buyer, Buyer shall cause
payment in an aggregate amount equal to such receipts to be made to Seller
promptly after Seller makes demand therefor; provided, however, that (i) this
Section 7.7 shall not affect Accounts and account receivables owned by GE Money
Bank and (ii) Seller shall cause Buyer to be in possession of the Register Cash
at the opening of the Stores as of the Cut-Off Date.

          (b) Buyer and Seller acknowledge that the Stores may have cash, checks
and bank drafts on hand greater or less than Register Cash as of the Effective
Time. Seller will determine as soon as practicable in accordance with its
standard cash accounting procedures the actual amount of cash, checks and bank
drafts in the Stores as of the Effective Time and provide Buyer notice of such
amounts. Without in any way limiting Seller's or Buyer's rights under Section
7.7(a), Buyer and Seller will settle via wire transfer of immediately available
funds within two business days after such notice (including documentation to
support Seller's determination) is given by Seller to Buyer any variance from
the Register Cash.

     Section 7.8 Software Issues. Prior to the Closing, Seller and Buyer shall
use commercially reasonable efforts to cooperate to obtain written consents and
acknowledgements from each third-party licensor of each piece of Software that
may be required in order to evidence that Buyer has or will have by the Closing
either a license with such third-party licensor or a sublicense under the
Transition Services Agreement sufficient to allow Buyer to use such Software
during the term set forth in the Transition Services Agreement and, with respect
to the Software identified in Schedule 7.8, to allow Seller and its Affiliates
to sell, transfer, convey and deliver to Buyer all Equipment upon which such
Software is loaded without obligating Seller or its Affiliates to remove such
Software from such Equipment prior to the sale, transfer, conveyance and
delivery thereof; provided, however, that neither Buyer, Seller nor any of their
respective Affiliates shall have any obligation to pay money or grant any
accommodation to any third party in order to obtain any such consents and
acknowledgements. With respect to any item identified in Schedule 7.8 for which
the applicable third-party licensor would not provide such consents and
acknowledgements prior to the Closing, Seller and its Affiliates shall have the
right to remove such identified Software from Equipment prior to the Closing
Date; provided,

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<PAGE>

however, that, subject to the proviso in the preceding sentence, Seller and its
Affiliates shall use commercially reasonable efforts to make the benefits of
such Software license agreements available to Buyer. To the extent that Buyer
receives any benefit under any such Software license agreement prior to the
execution of a new Software license agreement with the applicable third-party
licensor that relates exclusively to the Stores, Buyer shall be responsible for
any obligation under any such Software license agreement that arises in respect
of such benefit received by Buyer.

     Section 7.9 No Solicitation. After the date hereof and prior to the earlier
of the Closing and the date on which this Agreement is terminated, Seller shall
not, nor shall it authorize or permit any of its Affiliates, advisors or agents,
directly or indirectly, to (a) knowingly solicit, initiate or encourage or
facilitate the making of any Asset Acquisition Proposal or (b) participate in,
engage in, knowingly encourage or facilitate any discussion or negotiation
regarding, or furnish to any Person any information with respect to, or
knowingly take any other action to assist or facilitate any inquiries or the
making of, any proposal that constitutes, or could reasonably be expected to
lead to, any Asset Acquisition Proposal.

     Section 7.10 Credit Cards. Buyer acknowledges and agrees that until the
Store Accounts Sale Date GE Money Bank shall own all Accounts and related
receivables and account documentation with respect to the Stores (other than the
Customer Information) (collectively, the "Store Accounts") under the terms of
the Program Agreement. As promptly as practicable after the Cut-Off Date, Buyer
shall enter into the Credit Card Agreement with GE Money Bank to govern the
terms of use of Store Accounts with respect to the Stores until the date of
consummation of the sale of the Accounts to HSBC Bank Nevada, N.A. ("HSBC") or
another third party (the date of such sale is referred to herein as the "Store
Accounts Sale Date"), or such other date as may be agreed by Seller, Buyer and
GE Money Bank. As promptly as practicable after the Cut-Off Date, Buyer shall
use its commercially reasonable efforts to cause HSBC to enter into an agreement
to purchase the Store Accounts from GE Money Bank on such terms as shall be
agreed between HSBC and GE Money Bank and that are acceptable to Buyer (the
"Store Accounts Sale"), with a closing of the Store Accounts Sale to occur as
promptly as practicable after the Buyer POS Date. In the event that HSBC does
not enter into a binding commitment to purchase the Accounts on or before
December 31, 2006, then Buyer shall, by written notice to Seller within ten (10)
days after December 31, 2006, elect to either (x) purchase the Store Accounts
from GE Money Bank for a purchase price to be agreed between Buyer and GE Money
Bank, (y) arrange for the sale of the Store Accounts to another third party on
terms acceptable to GE Money Bank or (z) notify Seller that it will not
purchase, or arrange for a third party to purchase, the Store Accounts. If Buyer
fails to deliver such notice by such date, Buyer shall be deemed to have made
the election provided in clause (z) of the preceding sentence. If the Accounts
are purchased by HSBC, Buyer or any third party other than HSBC, Buyer shall pay
or cause to be paid to Seller on the Store Accounts Sale Date or, if the Store
Accounts are purchased by Buyer, on the closing date of such purchase, an amount
to be agreed between Buyer and Seller prior to November 30, 2006. Buyer agrees
that in the event that Buyer and Seller fail to agree on the amount of the
additional payment contemplated by the preceding sentence on or before November
30, 2006, Buyer shall be deemed to have made the election provided in clause (z)
of the second preceding sentence. Buyer and Seller agree to negotiate in

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<PAGE>

good faith to reach agreement on the amount of such additional payment on or
before November 30, 2006.

     Section 7.11 Completion of Transition Services Agreement Annexes. The
parties will negotiate in good faith to reach agreement as promptly as
practicable after the date hereof, and prior to the Cut-Off Date, on the final
form of Annex A and Annex B to the Transition Services Agreement.

     Section 7.12 Completion of Grant Deed. The parties will negotiate in good
faith to reach agreement as promptly as practicable, but prior to the Cut-Off
Date, on the final form of the Grant Deed for the Owned Real Estate.

                                  ARTICLE VIII
                              ADDITIONAL AGREEMENTS

     Section 8.1 Use of Names.

          (a) Except as contemplated by the IP License Agreement, Seller is not
conveying ownership rights or granting Buyer a license to use any of the
tradenames, service marks or trademarks of Seller or any Affiliate of Seller
(collectively, the "Retained Names and Marks") and, after the Closing, Buyer
shall not use in any manner the names or marks of Seller or any Affiliate of
Seller or any word that is similar in sound or appearance to such names or
marks, except as provided in this Section 8.1 or in the IP License Agreement. In
the event Buyer or any Affiliate of Buyer violates any of its obligations under
this Section 8.1 or the IP License Agreement, Seller and its Affiliates may
proceed against it in law or in equity for such damages or other relief as a
court may deem appropriate. Buyer acknowledges that a violation of this Section
8.1 may cause Seller and its Affiliates irreparable harm which may not be
adequately compensated for by money damages. Buyer therefore agrees that in the
event of any actual or threatened violation of this Section 8.1, Seller and each
of its Affiliates shall be entitled, in addition to other remedies that they may
have, to a temporary restraining order and to preliminary and final injunctive
relief against Buyer or such Affiliate of Buyer to prevent any violations of
this Section 8.1 or the IP License Agreement, without the necessity of posting a
bond.

          (b) [Intentionally Blank]

          (c) [Intentionally Blank]

          (d) Buyer shall have the right to exhaust all inventories of finished
products included in the Assets that contain as part of the physical products
themselves (e.g., embroidered on a shirt or a label on a shirt, but not product
packaging covered by clause (c) above) any of the Retained Names and Marks,
provided that Buyer shall use all commercially reasonable efforts to dispose of
such finished products promptly after the Cut-Off Date, except as otherwise
contemplated by the IP License Agreement.

                                       46
<PAGE>

          (e) Other than as permitted in clause (d) above, and except as set
forth in the IP License Agreement, Buyer shall not use, without the prior
written consent of Seller, any of the Retained Names and Marks (or anything
confusingly similar thereto) in any manner whatsoever.

     Section 8.2 Tax Matters.

          (a) Liability for Taxes.

               (i) Seller shall be liable for and pay, and agrees to indemnify
     and hold harmless each Buyer Group Member from and against, any and all
     Taxes imposed with respect to the Stores, the Assets, the Business and the
     Assumed Liabilities for any taxable year or period that ends on or before
     the Cut-Off Date and, with respect to any Straddle Period, the portion of
     such Straddle Period ending on and including the Cut-Off Date. Seller shall
     be entitled to any refund of (or credit for) Taxes for which it is liable
     under this Agreement.

               (ii) Buyer shall be liable for and pay, and agrees to indemnify
     and hold harmless each Seller Group Member from and against, any and all
     Taxes imposed with respect to the Stores, the Assets, the Business and the
     Assumed Liabilities for any taxable year or period that begins after the
     Cut-Off Date and, with respect to any Straddle Period, the portion of such
     Straddle Period beginning immediately after the Cut-Off Date. Buyer shall
     be entitled to any refund of (or credit for) Taxes for which it is liable
     under this Agreement.

               (iii) For purposes of Sections 8.2(a)(i) and (ii), any Straddle
     Period shall be treated on a "closing of the books" basis as two partial
     periods, one ending on the Cut-Off Date and the other beginning immediately
     after the Cut-Off Date; provided, however, that Taxes imposed on a periodic
     basis shall be allocated pro rata on a daily basis. Notwithstanding the
     preceding sentence, if the transactions contemplated by this Agreement
     result in the reassessment of the value of any of the Assets for property
     Tax purposes, or the imposition of any property Taxes on such Assets at a
     rate that is different than the rate that would have been imposed if such
     transactions had not occurred taking account of any changes in rate arising
     from consummation of the Saks Transaction, then (y) the portion of such
     property Taxes for the portion of such Straddle Period ending on the
     Cut-Off Date shall be allocated pro rata on a daily basis, using the
     assessed value and Tax rate that would have applied had such transactions
     not occurred, and (z) the portion of such property Taxes for the portion of
     such Straddle Period beginning immediately after the Cut-Off Date shall be
     the total property Taxes for such Straddle Period minus the amount
     described in clause (y).

               (iv) Notwithstanding anything herein to the contrary, Buyer
     agrees to pay, and agrees to indemnify and hold harmless each Seller Group
     Member from and against, 50% of any and all real property transfer or gains
     Taxes, sales Taxes, use Taxes, stamp Taxes, stock transfer Taxes or other
     similar Taxes imposed on the transactions contemplated by this Agreement
     (collectively, "Transfer Taxes") and Seller agrees to

                                       47

<PAGE>

     pay, and agrees to indemnify and hold harmless each Buyer Group Member from
     and against 50% of any and all Transfer Taxes.

          (b) Tax Returns.

               (i) Seller shall timely file or cause to be timely filed when due
     (taking into account all extensions properly obtained) all Tax Returns that
     are required to be filed by or with respect to the Stores and the Assets
     for periods (or portions thereof) ending on or before the Closing Date and
     Seller shall remit, or cause to be remitted, any Taxes shown to be due in
     respect of such Tax Returns. Buyer shall timely file or cause to be timely
     filed when due (taking into account all extensions properly obtained) all
     other Tax Returns that are required to be filed by or with respect to the
     Stores and the Assets, and Buyer shall remit, or cause to be remitted, any
     Taxes due in respect of such Tax Returns. Buyer shall reimburse Seller for
     those federal and applicable state income taxes actually paid by Seller
     with respect to items of income, gain, loss, deduction and credit with
     respect to the Business and the Assets realized during the period between
     the Cut-Off Date and the Closing. Seller or Buyer shall pay the other party
     for the Taxes for which Seller or Buyer, respectively, is liable pursuant
     to Section 8.2(a) but which are payable with any Tax Return to be filed by
     the other party pursuant to this Section 8.2(b) upon the written request of
     the party entitled to payment, setting forth in reasonable detail the
     computation of the amount owed by Seller or Buyer, as the case may be, but
     in no event earlier than 10 business days prior to the due date for paying
     such Taxes.

               (ii) None of Buyer or any Affiliate of Buyer shall amend, refile
     or otherwise modify (or grant an extension of any statute of limitation
     with respect to) any Tax Return relating in whole or in part to the Stores,
     the Business or the Assets for any period ending on or prior to the Cut-Off
     Date (or with respect to any Straddle Period) without the prior written
     consent of Seller, which consent may not be unreasonably withheld,
     conditioned or delayed.

          (c) Bulk Sales Laws. Buyer hereby waives compliance by Seller, in
connection with the transactions contemplated hereby, with the provisions of any
applicable bulk transfer laws; provided, however, that Seller shall indemnify
and hold harmless Buyer and all other Buyer Group Members from any Losses
arising out of or relating to the failure to comply with provisions of any
applicable bulk transfer laws.

          (d) Assistance and Cooperation. After the Closing Date, each of Seller
and Buyer shall (and cause their respective Affiliates to):

               (i) assist the other party in preparing any Tax Returns which
     such other party is responsible for preparing and filing in accordance with
     Section 8.2(b);

               (ii) cooperate fully in preparing for any audits of, or disputes
     with taxing authorities regarding, any Tax Returns that are required to be
     filed by or with respect to the Stores or the Assets;

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               (iii) make available to the other and to any taxing authority as
     reasonably requested all information, records and documents relating to
     Taxes imposed with respect to the Stores, the Assets or the Assumed
     Liabilities;

               (iv) provide timely notice to the other in writing of any pending
     or threatened Tax audits or assessments relating to Taxes for which the
     other may have a liability under this Section 8.2;

               (v) furnish the other with copies of all correspondence received
     from any taxing authority in connection with any Tax audit or information
     request with respect to any such Tax;

               (vi) timely sign and deliver such certificates or forms as may be
     necessary or appropriate to establish an exemption from (or otherwise
     reduce), or file Tax Returns or other reports with respect to, Taxes
     described in Section 8.2(a)(iv) (relating to sales, transfer and similar
     Taxes); and

               (vii) timely provide to the other party powers of attorney or
     similar authorizations necessary to carry out the purposes of this Section
     8.2.

     Section 8.3 Employees and Employee Benefits.

          (a) Offers of Employment. The employment of all Store Employees, other
than those on medical, disability, family or other leave of absence
(collectively, the "On Leave Employees"), will be terminated by Seller effective
immediately prior to the Effective Time. Buyer will offer employment effective
as of the Effective Time to all such Store Employees. In addition, any On Leave
Employee who reports to work and is capable of performing the essential
functions of his or her employment functions will be offered employment by Buyer
effective as of the time such On Leave Employee reports to work if he or she
reports to work on or prior to the end of the period through which Seller would
be required under applicable law to offer to re-employ such On Leave Employee.
Within two (2) business days after the date hereof, Seller will provide to Buyer
a list showing the names of each then Store Employee who as of the latest date
such information is readily available is on leave of absence, and such list
shall be updated as of the Closing Date. The offers of employment to be made by
Buyer effective as of the Effective Time to each Store Employee shall in each
case include base wages and a job description which are at least comparable to
his or her base wages and job description immediately before the Effective Time.
The employees who accept such offers of employment are referred to as
"Transferred Employees." Nothing in this Section 8.3(a) shall obligate Buyer to
continue the employment of any such Transferred Employee for any specific period
or at any specific level of compensation or responsibilities.

          (b) Retention Bonuses. The parties acknowledge and agree that Buyer
shall not assume any obligation or responsibility of Seller or any Affiliates of
Seller to pay any retention bonus called for under Schedule 5.16(e) of the
Seller Disclosure Schedule or otherwise with respect to Store Employees.

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          (c) Buyer's Employee Benefit Plans Generally.

               (i) As of the Effective Time, Buyer shall make available to each
     Transferred Employee benefits that Buyer reasonably determines are at least
     comparable, in the aggregate, to the benefits that Buyer makes available to
     employees of Buyer who perform comparable services or undertake comparable
     responsibilities for Buyer.

               (ii) After the Effective Time, except as otherwise expressly
     provided in this subsections of this Section 8.3, Buyer shall give each
     Transferred Employee service credit under Buyer's Pension Plans and Welfare
     Plans (collectively, "Buyer's Plans") and personnel policies that cover the
     Transferred Employee, including any vacation, sick leave and severance
     policies, for purposes of eligibility, vesting and entitlement to vacation,
     sick leave and severance benefits for the Transferred Employee's service
     with Saks and Seller and their Affiliates prior to the Effective Time on
     the same basis as Buyer credits service for its own employees and, with
     respect to Buyer's Welfare Plans, to the extent permitted by Buyer's
     Welfare Plans, shall allow such Transferred Employees to participate in
     each such Welfare Plan of Buyer without regard to preexisting-condition
     limitations, waiting periods, evidence of insurability or other exclusions
     or limitations not imposed on the Transferred Employee by the corresponding
     Welfare Plans of Seller in which such Transferred Employee was a
     participant immediately prior to the Effective Time. To the extent any
     Transferred Employee or eligible dependent of any Transferred Employee is
     hospitalized as of the Effective Time under any Seller Plan providing
     medical benefits, such person will continue to be covered under the medical
     coverage provided by such Seller Plan until the date such Transferred
     Employee or such eligible dependent is released from the hospital.

               (iii) Except as provided in paragraph (i) below, no portion of
     the assets of any trust or other fund maintained by Seller for the purpose
     of paying benefits under any Seller Plans will be transferred to Buyer or
     any Buyer's Plan.

          (d) Severance Benefits. If any Transferred Employee is involuntarily
terminated by Buyer in the Seller's fiscal year that includes the Cut-Off Date,
Buyer will provide to the Transferred Employee severance under a Buyer's Plan in
an amount that is at least equal to the severance pay and other benefits
specified in Schedule 8.3(d) of the Seller Disclosure Schedule. Buyer and Seller
agree that, with respect to any Store Employee terminated by Seller pursuant to
Section 8.3(a), Seller will be responsible for severance for such employee under
Section 8.3(d)(i) unless Buyer's offer of employment does not satisfy the
requirements of Section 8.3(a), in which event Buyer will be obligated to pay
any severance with respect to such Store Employee as a result of such
termination by Seller.

          (e) Vacation Pay and Holidays. Buyer shall credit to each Transferred
Employee all unpaid vacation and holiday pay for calendar year 2006 that the
Transferred Employee is entitled to use for calendar year 2006 but has not used
as of the Effective Time and shall assume all Seller's liability to each
Transferred Employee with respect to such unpaid vacation and holiday pay;
provided, however, that no credit under this Section 8.3(e) shall duplicate
credit under Section 8.3(c); provided, further, however, that if the Cut-Off
Date occurs

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<PAGE>

on or after October 28, 2006, then Buyer shall not credit any unpaid vacation
pay for calendar year 2006. Buyer and Seller acknowledge and agree that in
accordance with Buyer's policies, no Store Employees shall be entitled to use
any accrued vacation time during the months of November and December and that
any unused vacation time will be forfeited, and Buyer shall have no obligation
to make any payment in respect thereof, at the end of the calendar year.

          (f) Post-Leave Employment. (i) As between Buyer and Seller, Seller and
the Seller Plans shall retain the liability for all long-term disability
benefits payable to any Store Employee who is receiving or is entitled to
receive long-term disability benefits under the terms of any Seller Plan at the
Effective Time and shall continue to provide such benefits in accordance with
the terms of such plan until the Store Employee is no longer eligible for such
benefits, (ii) Buyer or a Buyer's Plan shall provide short-term disability
benefits to any Store Employee who is receiving or is eligible for such benefits
under a Seller Plan at the Effective Time until the date such Transferred
Employee would no longer be eligible for such benefits under such Seller Plan or
the date on which the Transferred Employee qualifies for long-term disability
benefits under a Seller Plan, whichever comes first, and, if such a Transferred
Employee qualifies for long-term disability benefits under a Seller Plan, Buyer
shall provide such long-term disability benefits to such Transferred Employee
under Buyer's Plans and (iii) Buyer's Plans will govern the determination of
what, if any, short-term and long-term disability benefits will be paid to any
Transferred Employee whose disability occurs after the Effective Time (or which
reoccurs after the Effective Time). If any Transferred Employee is on any form
of leave of absence on the Effective Time (including any leave subject to the
Family and Medical Leave Act of 1993 or comparable state law), Buyer shall
reinstate such Transferred Employee to active employment upon the expiration of
the leave to the extent such reinstatement is required by any applicable law or
regulation or by Buyer's personnel policies and shall satisfy any other
obligation with respect to such Transferred Employee as required under any
applicable law or regulation or Buyer's personnel policies.

          (g) Medical and Dental Plan Liabilities. Seller shall, or shall cause
the applicable Seller Plan to, pay any benefits or expenses covered by the group
medical and dental plans included within such Seller Plan that were incurred
with respect to services performed for any Transferred Employee or any dependent
of any Transferred Employee prior to the effective time of such Transferred
Employee's employment with Buyer but have not been paid by such Seller Plan
prior to such effective time. Buyer shall, or cause the applicable Buyer's Plan
to, assume and pay any medical or dental benefits covered under the applicable
Buyer Plan that are incurred with respect to services performed for any
Transferred Employee or any Transferred Employee's dependents after the
effective time of such Transferred Employee's employment by Buyer.

          (h) COBRA Coverage. Effective as of the Effective Time, Buyer shall
provide (or cause a Buyer's Plan to provide) all entitlements under Code Section
4980B, Part 6 or 7 of Title I of ERISA or any similar state law (collectively,
"COBRA") to Transferred Employees and eligible dependents of Transferred
Employees with respect to any event that requires the provision of such
entitlements and which occurs after the Effective Time. Seller shall provide (or
cause the applicable Seller Plan to provide) all entitlements under COBRA to
Store Employees and eligible dependents of Store Employees with respect to any
event which

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<PAGE>

requires the provision of such entitlements and which occurs on or before the
Effective Time, including termination of employment as contemplated by the first
sentence of Section 8.3(a). Buyer and Seller agree that, with respect to COBRA,
Buyer is not a successor employer, and all COBRA obligations arising prior to or
as of the Closing Date with respect to Store Employees shall be, as between
Buyer and Seller, the responsibility of Seller, and continuation of group health
coverage as may be required under COBRA shall be provided under one or more
Seller Plans.

          (i) Flexible Spending Accounts. Buyer will credit each Transferred
Employee (collectively the "Flex Participants") under a health care and
dependent care flexible spending account plan or plans maintained by Buyer
("Buyer's Flex Plans") with a balance (positive or negative) as of the Cut-Off
Date equal to the balance credited to the individual under Seller's applicable
health care and dependent care flexible spending account plans ("Seller's Flex
Plans") as of the Cut-Off Date ("Aggregate Flex Plan Balances"), and will
reimburse each such individual for expenses incurred during the current plan
year of such Seller's Flex Plans (whether incurred before or after the Cut-Off
Date) that had not been reimbursed under such Seller's Flex Plan prior to the
Cut-Off Date (to the same extent such eligible expense would have been
reimbursable under such Seller's Flex Plan). As soon as reasonably practicable
following the Cut-Off Date, Seller shall transfer assets to Buyer's Flex Plan
equal to the Aggregate Flex Plan Balances and Buyer and Seller will treat the
arrangement described in this Section 8.3(i) as a spin-off of the applicable
portions of the Seller's Flex Plans and a merger of such portions into Buyer's
Flex Plans.

          (j) Retirement and 401(k) Plans. Buyer currently maintains one or more
qualified defined contribution plans ("Buyer's DC Plan") that contains all
provisions necessary for the acceptance of direct rollovers (in the form of cash
and notes relating to plan participant loans not in default) of "eligible
rollover distributions" as defined in the Code and applicable regulations that
Transferred Employees are eligible to receive from Seller's qualified defined
contribution plan ("Seller's DC Plan"). Buyer's DC Plan will contain provisions
to permit any such direct rollover to include the promissory note or notes
representing any plan loans outstanding and not in default to the Transferred
Employee under Seller's DC Plan on the date of the direct rollover, and Buyer
and Seller will cooperate with each other to enable such direct rollovers to
occur before such loans become defaulted. Seller agrees not to place any such
loans in default for at least 90 days following the Cut-Off Date.

          (k) Workers' Compensation Liabilities. Seller shall be responsible for
the cost and expense of all workers' compensation claims arising out of an
injury sustained by any Store Employees prior to the Effective Time or with
respect to injuries which relate to an event or circumstance or events or
circumstances that straddles or straddle the Effective Time,, and Buyer shall be
responsible for the cost and expense of all workers' compensation claims arising
out of any injury sustained by any Transferred Employees on or after the
Effective Time.

          (l) No Third Party Beneficiaries. Without limiting the generality of
Section 13.5(b), none of the preceding subsections of this Section 8.3 shall
confer any rights or remedies upon any employee or former employee of Seller,
the Companies or Buyer, or any of their

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<PAGE>

dependents, or upon any other Person other than the parties hereto and their
respective successors and assigns.

     Section 8.4 Insurance; Risk of Loss. All proceeds of insurance payable that
may be collected by Seller (in excess of any deductible, retention or
self-insurance amount) in respect of any event that occurs on or before the
Cut-Off Date, to the extent that the proceeds are for damaged properties or
assets that constitute Assets, shall be (a) retained by Seller to the extent
that Seller has repaired, restored or paid for such damage or (b) paid to Buyer
at or following the Closing to the extent that Seller has not repaired, restored
or paid for such damage. To the extent that after the Closing Seller requires
any information regarding claim data, payroll or other information in order to
make any filing required with insurance carriers or self insurance regulators,
Buyer will promptly supply such information.

     Section 8.5 Consents. Buyer acknowledges that (i) certain consents
(including consents contingent on the fulfillment of certain conditions),
approvals, waivers, agreements, or actions of, or (with or without lapse of
time) notice to, third parties relating to the transactions contemplated by this
Agreement may be required under instruments, contracts, commitments, agreements
or arrangements (including the Leasehold Interests and Real Estate Agreements)
(the "Required Consents"), which Required Consents have not been obtained or are
themselves subject to conditions not fulfilled as of the Closing, and (ii)
certain governmental franchises, approvals, permits, licenses, orders,
registrations, certificates, variances and similar rights may be required in
order for Buyer to operate the Stores and own the Assets following the Cut-Off
Date in the same manner in which the Stores were operated and the Assets were
owned prior to the Cut-Off Date. Except as otherwise expressly provided in
Section 2.2 or this Section 8.5 and subject to compliance with Sections 2.2 and
7.3 and this Section 8.5, Seller and its Affiliates shall not have any liability
whatsoever to Buyer arising out of or relating to the failure to obtain any
Required Consents or any such governmental franchises, approvals, permits,
licenses, orders, registrations, certificates, variances or similar rights that
may be required. Subject to Seller's compliance with Sections 2.2 and 7.3 and
this Section 8.5, no representation, warranty or covenant of Seller contained
herein shall be breached or deemed breached, and no condition shall be deemed
not satisfied, based on (A) the failure to obtain any such Required Consents or
any such governmental franchises, approvals, permits, licenses, orders,
registrations, certificates, variances or similar rights or (B) any lawsuit,
action, claim, proceeding or investigation commenced or threatened by or on
behalf of any Person arising out of or relating to the failure to obtain any
such Required Consents or any such governmental franchises, approvals, permits,
licenses, orders, registrations, certificates, variances or similar rights;
provided, however, that nothing stated herein shall supersede the conditions set
forth in Sections 9.1, 9.2, 9.4, 10.1 and 10.2 or the obligations of Seller
under Section 2.2 or 7.3 or this Section 8.5. At the request of Buyer, subject
to Section 7.6, Seller shall use its commercially reasonable efforts to obtain,
and cooperate with Buyer in any reasonable manner in connection with Buyer
obtaining, any Required Consents and any governmental franchises, approvals,
permits, licenses, orders, registrations, certificates, variances or similar
rights; provided, however, that such action shall not include any requirement of
Seller or any of its Affiliates to commence or participate in any litigation,
make any payments or offer or grant any accommodation or undertake any liability
or obligation (in each case financial or otherwise) to any third party
(including any Governmental

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<PAGE>

Body) unless in the case of any cost or expense incurred by Seller or any of its
Affiliates, Buyer agrees to reimburse Seller for such cost or expense arising
from any action by Seller or such Affiliate requested by Buyer.

     Section 8.6 Fees and Expenses. Except as otherwise expressly set forth in
this Agreement, whether or not the transactions contemplated hereby are
consummated, all costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby, including the fees and disbursements
of counsel, financial advisors and accountants, shall be paid by the party
incurring such costs and expenses.

     Section 8.7 Gift Cards, Etc; Return Policies.

          (a) Following the Cut-Off Date, Buyer shall honor during the ninety
(90) days after the Cut-Off Date all Parisian gift cards (excluding certificates
described in Section 8.7(d) below) issued by Saks or Seller prior to the Cut-Off
Date (the "Outstanding Gift Cards"). Seller shall refund to Buyer the amount
redeemed on any Outstanding Gift Card honored by Buyer at a Store during such
period; provided that if the Store Account Sale does not occur prior to the date
which is one hundred twenty (120) days after the Cut-Off Date, Buyer shall,
promptly upon demand of Seller, refund to Seller all amounts paid by Seller to
Buyer in respect of Outstanding Gift Cards. Seller shall have no obligation to
refund to Buyer the amount of any Outstanding Gift Card honored by Buyer at any
time after ninety (90) days after the Cut-Off Date and Buyer shall have no
obligation to honor any Outstanding Gift Card at any time after ninety (90) days
after the Cut-Off Date.

          (b) Following the Cut-Off Date, Buyer shall not have any obligation to
honor any Parisian gift card (excluding certificates described in Section 8.7(d)
below) issued by Seller on or after the Cut-Off Date. To the extent that Buyer
honors at any Store during the period from and after the Cut-Off Date through
December 31, 2007 any Parisian gift card issued by Seller on or after the
Cut-Off Date, Seller shall refund to Buyer the amount redeemed on such Parisian
gift card.

          (c) Following the Cut-Off Date, Seller shall not have any obligation
to honor any Parisian gift card issued by Buyer on or after the Cut-Off Date. To
the extent that Seller honors at any Parisian Store during the period from and
after the Cut-Off Date through December 31, 2007 any Parisian gift card issued
by Buyer on or after the Cut-Off Date, Buyer shall refund to Seller the amount
redeemed on such Parisian gift card.

          (d) Following the Cut-Off Date, Buyer shall honor, in accordance with
their respective terms, all reward certificates issued by Saks or Seller
pursuant to the Parisian Signature Rewards Program which are earned by Parisian
customers through the end of the calendar quarter that includes the Buyer POS
Date. The Signature Reward Program shall apply to the Stores in the same manner
as the Signature Reward program applies to the Parisian Stores. Buyer shall not
be obligated to honor any reward certificate issued by Seller pursuant to the
Parisian Signature Rewards Program which is earned by a Parisian customer in
respect of any calendar quarter after the calendar quarter that includes the
Buyer POS Date. Seller shall have

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<PAGE>

no obligation to refund to Buyer the amount of any reward certificate issued
pursuant to the Parisian Signature Rewards Program which is honored by Buyer at
a Store.

          (e) Following the Cut-Off Date, Buyer shall not have any obligation to
honor any merchandise voucher purchased, issued or earned pursuant to a Saks
Gift Program or Seller Gift Program. To the extent that Buyer honors any such
merchandise voucher, Seller shall have no obligation to refund to Buyer the
amount of any such merchandise voucher or any costs or expenses incurred by
Buyer in honoring such merchandise voucher.

          (f) Following the Cut-Off Date, Seller shall not have any obligation
to honor any loyalty program award, frequent shopper award, gift certificate or
merchandise voucher purchased, issued or earned on or after the Cut-Off Date
pursuant to a Buyer Gift Program. To the extent that Seller honors any such
loyalty program award, frequent shopper award, gift certificate or merchandise
voucher, Buyer shall have no obligation to refund to Seller the amount of any
such loyalty program award, frequent shopper award, gift certificate or
merchandise voucher or any costs or expenses incurred by Seller in honoring such
loyalty program award, frequent shopper award, gift certificate or merchandise
voucher.

          (g) Following the Cut-Off Date and until Buyer no longer acquires any
marketing services from Seller pursuant to the Transition Services Agreement,
Buyer shall honor, in accordance with their respective terms, all coupons,
discounts and merchandise offers issued by Seller as part of its marketing
program for the Parisian Stores and the Stores. During such period, Seller shall
have no obligation to reimburse Buyer for any markdowns arising from the use of
coupons, discounts or merchandise offers to acquire merchandise in the Stores.
During such period, customers shall be entitled to use such coupons, discounts
and merchandise offers at the Stores in the same manner as they may be used at
the Parisian Stores. After Buyer ceases to acquire marketing services for the
Stores pursuant to the Transition Services Agreement, Buyer shall not have any
obligation to honor any coupons, discounts or merchandise offers issued by
Seller as part of its marketing program for the Parisian Stores. After Buyer
ceases to acquire marketing services for the Stores pursuant to the Transition
Services Agreement, Buyer shall not advertise or promote as Parisian Stores any
Stores operating under the Parisian name in any print, electronic or other media
in markets outside the Detroit Area (as defined in the IP License Agreement).
Seller shall not have any obligation to honor any coupons, discounts or
merchandise offers issued by Buyer as part of its marketing program for the
Stores or the Business.

          (h) As promptly as practicable after Cut-Off Date, all of the Buyer
Gift Programs with respect to loyalty program awards, frequent shopper awards,
gift certificates, gift cards and merchandise vouchers purchased, issued or
earned in connection with the Business shall be issued in Buyer's name or shall
be co-branded with Buyer's name. Buyer's name or co-brand shall be printed on
the front of each loyalty program award, frequent shopper award, gift
certificate, gift card, merchandise voucher and coupon. From and after the
Account Sale Date, all credit cards, credit card statements and other credit
card materials issued in connection with the Business shall be issued in Buyer's
name or shall be co-branded with Buyer's name. From and after the Buyer POS
Date, all receipts issued in the Stores shall be issued in Buyer's name or shall
be co-branded with Buyer's name.

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          (i) Following the Cut-Off Date, Buyer shall not have any obligation to
honor any Saks Return Policies or Seller Return Policies with respect to
products sold prior to the Cut-Off Date at any Parisian Store (including the
Stores). To the extent that Buyer honors any such Saks Return Policy or Seller
Return Policy, Seller shall have no obligation to refund to Buyer any costs or
expenses incurred by Buyer in honoring the Saks Return Policies or the Seller
Return Policies.

          (j) Following the Cut-Off Date, Seller shall not have any obligation
to honor any Buyer Return Policies with respect to products sold on or after the
Cut-Off Date at any Store. To the extent that Seller honors any such Buyer
Return Policy, Buyer shall have no obligation to refund to Seller any costs or
expenses incurred by Seller in honoring the Buyer Return Policies.

          (k) Following the Cut-Off Date, all sales of products on Parisian.com
or by MTO shall credited to Seller.

          (l) If following the Cut-Off Date Buyer sells any merchandise at a
Store that is the subject of a customer deposit that was made by a customer
prior to the Cut-Off Date, Buyer shall promptly notify Seller and shall provide
Seller with evidence reasonably satisfactory to Seller of the customer deposit
that related to such sale. Upon receipt of such notice and evidence from Buyer,
Seller shall promptly pay to Buyer the amount of the customer deposit relating
to such sale. If following the Cut-Off Date Buyer refunds any customer deposit
that was made by a customer prior to the Cut-Off Date, Buyer shall promptly
notify Seller and shall provide Seller with evidence reasonably satisfactory to
Seller of the refund of the customer deposit. Upon receipt of such notice and
evidence from Buyer, Seller shall promptly refund to Buyer the amount of such
customer deposit.

          (m) Prior to the Account Sale Date, Buyer shall not use any Customer
Information provided by Seller to Buyer hereunder or pursuant to any Seller
Ancillary Agreement to solicit balance transfers by any customers of the Stores
from Parisian Accounts to accounts opened with Buyer.

     Section 8.8 HIPAA Confidentiality. Buyer shall enter into such
confidentiality agreements with respect to all Books and Records relating to the
Transferred Employees as may be required under the Health Insurance Portability
and Accountability Act of 1996, as amended, and the rules and regulations
promulgated thereunder ("HIPAA"). Seller may withhold from Buyer any portions of
such Books and Records that contain protected health information on Transferred
Employees or their dependents to the extent Seller reasonably determines based
on advice of counsel that disclosure of such information to Buyer would violate
HIPAA or to the extent that Saks withholds any such Books and Records pursuant
to the Stock Purchase Agreement. Seller will cooperate with Buyer to the extent
that, in connection with making offers of employment to Store Employees, Buyer
seeks any release of records from any Store Employee as may be required by
HIPAA.

     Section 8.9 Mortgages and Other Encumbrances. Prior to Closing, Seller
shall exercise its rights under the Stock Purchase Agreement to cause Saks to
obtain either a release or discharge of (or obtain the commitment of a title
insurance company to provide title insurance

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<PAGE>

over) any mortgage, deed of trust or deed to secure debt granted by Saks and
encumbering Saks' interest in the Owned Real Estate. Prior to the Closing,
Seller shall exercise its rights under the Stock Purchase Agreement to cause
Saks to use commercially reasonable efforts to cooperate with Seller to obtain
the release of (or obtain the commitment of a title insurance company to provide
title insurance over) any judgment liens on Real Estate reflected in the current
title commitments set forth on Schedule 1.1(c). Prior to the Closing, Seller
shall exercise its rights under the Stock Purchase Agreement to cause Saks to
cooperate with Seller to sign the necessary releases to obtain the release of
any other Encumbrances on the Assets. Notwithstanding anything to the contrary
contained herein, the failure to obtain any release, discharge or commitment
pursuant to this Section 8.9 shall not be a condition to Buyer's obligation to
consummate the transactions contemplated by this Agreement; provided, however,
that nothing stated herein shall supersede the conditions set forth in Sections
9.1, 9.2, 9.4, 10.1 and 10.2 or the obligations of Seller under Section 2.2 or
7.3 or this Section 8.9.

     Section 8.10 Lease Proration. The following shall be apportioned with
respect to the Leased Real Estate as of the Cut-Off Date:

          (a) rents, as and when paid (the term "rents" as used in this Section
8.10(a) includes all payments payable by tenants under the Lease Agreements);

          (b) taxes and assessments payable under the Lease Agreements;
provided, however, that the percentage rent apportionment will be made at the
time percentage rent is payable under each Lease Agreement, and Seller shall
reimburse Buyer for the amount of percentage rent payable under each Lease
Agreement multiplied by the fraction having as a numerator the amount of sales
made at the Store as to which such Lease Agreement applies during the applicable
lease year to and including the Cut-Off Date and as a denominator the amount of
sales during the entire lease year.

          (c) gas, electricity and other utility charges for which tenant is
liable under the Lease Agreements, if any, such charges to be apportioned as of
the Effective Time on the basis of the most recent meter reading occurring prior
to the Effective Time or, if unmetered, on the basis of a current bill for each
such utility; and

          (d) any other operating expenses or other items pertaining to the
Leased Real Estate that are customarily prorated between a purchaser and a
seller of lease interests in the area in which the Leased Real Estate is
located,

     Section 8.11 Certain Litigation. Following the Closing, Buyer shall comply
with the obligations set forth in item 2 of Schedule 5.11 of the Seller
Disclosure Schedule.

     Section 8.12 Cooperation. Buyer shall, at Seller's request, cooperate with
Seller (including making its employees available at reasonable times to respond
to inquiries or to provide testimony to the extent applicable) as may be
reasonably required in connection with the investigation and defense of any
suit, claim, action, proceeding or investigation relating to the Business that
is pending at Closing or is brought by a third party other than Buyer or an
Affiliate of Buyer against Seller or any of its Affiliates at any time after the
Closing; provided, however,

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<PAGE>

that Seller shall reimburse Buyer promptly for all reasonable costs and expenses
incurred by Buyer arising out of Buyer taking action that Buyer reasonably
determines is necessary to respond to any such request, including fees and
expenses of legal counsel engaged in connection therewith.

     Section 8.13 Confidentiality.

          (a) General. Pursuant to the terms of this Agreement, each party (in
such capacity, the "Disclosing Party") has disclosed and will be disclosing to
the other party, and to the officers, directors, employees, agents and/or
representatives of each (in such capacity, the "Receiving Party") certain
secret, confidential or proprietary data, Trade Secrets, know-how, intellectual
property and related information, including without limitation operating methods
and procedures, marketing, manufacturing, distribution and sales methods and
systems, sales figures, pricing policies and price lists and other business
information ("Confidential Information"). The Receiving Party shall make no use
of any Confidential Information of the Disclosing Party except in the exercise
of its rights and the performance of its obligations set forth in this Agreement
or the other agreements executed in connection herewith. The Receiving Party (i)
shall keep and hold as confidential, and shall cause its officers, directors,
employees, agents and representatives to keep and hold as confidential, all
Confidential Information of the Disclosing Party, and (ii) shall not disclose,
and shall cause its officers, directors, employees, agents and representatives
not to disclose, any Confidential Information of the Disclosing Party.
Confidential Information disclosed by the Disclosing Party shall remain the sole
and absolute property of the Disclosing Party, subject to the rights granted in
this Agreement or the Ancillary Agreements.

          (b) Exceptions Confidential Information shall not include any
information which (i) is already known to the Receiving Party at the time of
disclosure by the Disclosing Party, as demonstrated by competent proof (other
than as a result of prior disclosure under any agreement between the Parties
with respect to confidentiality), (ii) is or becomes generally available to the
public other than through any act or omission of the Receiving Party in breach
of this Agreement or any of the other agreements executed in connection
herewith, (iii) is acquired by the Receiving Party from a third party who is not
known to the Receiving Party to be, directly or indirectly, under an obligation
of confidentiality to the Disclosing Party with respect to same, or (iv) is
developed independently by the Receiving Party without use, direct or indirect,
of information that is required to be held confidential under this Agreement or
any of the other agreements executed in connection herewith. In addition,
nothing in this Section 8.13 shall be interpreted to limit the ability of either
party to disclose its own Confidential Information to any other person on such
terms and subject to such conditions as it deems advisable or appropriate.

          (c) Permitted Disclosures It shall not be a breach of Section 8.13 if
a Receiving Party discloses Confidential Information of a Disclosing Party (i)
pursuant to applicable law to any Governmental Body, or (ii) in a judicial,
administrative or arbitration proceeding to enforce such Party's rights under
this Agreement; provided, however, the Receiving Party may only make such
disclosure if (A) it provides the Disclosing Party with as much advance written
notice as possible of the required disclosure, (B) reasonably cooperates

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with the Disclosing Party in any attempt to prevent or limit the disclosure, and
(C) limits the disclosure, if any, to the specific purpose at issue.

          (d) Confidential Terms Each party acknowledges and agrees that this
Agreement and the terms and conditions of this Agreement shall be considered
Confidential Information of each party and shall be treated accordingly.
Notwithstanding the foregoing, each party acknowledges and agrees that the other
may be required to disclose this Agreement and some or all of the information
included in this Agreement in order to comply with its obligations under
securities laws, and hereby consents to such disclosure to the extent deemed
advisable or appropriate by its respective counsel (but only after consulting
with the other to the extent practicable).

          (e) Equitable Remedies Each party specifically recognizes that any
breach by it of this Section 8.13 may cause irreparable injury to the other
parties and that actual damages may be difficult to ascertain, and in any event,
may be inadequate. Accordingly (and without limiting the availability of legal
or equitable, including injunctive, remedies under any other provisions of this
Agreement), each party agrees that in the event of any such breach, the other
party shall be entitled to seek, by way of private litigation in the first
instance, injunctive relief and such other legal and equitable remedies as may
be available.

                                   ARTICLE IX
                  CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER

          The obligations of Buyer under this Agreement shall, at the option of
Buyer (to the extent permissible under applicable law), be subject to the
satisfaction, on or prior to the Closing Date, of the following conditions:

     Section 9.1 No Order. No court or other Governmental Body having
jurisdiction over Buyer or Seller shall have issued any order, decree or ruling
which is then in effect and has the effect of restraining or prohibiting the
purchase and sale of any material portion of the Assets.

     Section 9.2 Representations and Warranties. The representations and
warranties of Seller contained in this Agreement, when read without any
exception or qualification for materiality or Material Adverse Effect, shall be
true and correct in all materials respects on the Closing Date as though made on
the Closing Date (or on the date when made in the case of any representation or
warranty which specifically relates to an earlier date), except for (a) changes
therein specifically permitted by this Agreement or resulting from any
transaction expressly consented to in writing by Buyer or any transaction
contemplated by this Agreement and (b) failures of representations and
warranties to be true and correct that, individually or in the aggregate, are
not reasonably expected to have a Material Adverse Effect.

     Section 9.3 Performance of Obligations. Seller shall have performed in all
material respects all of its material covenants and agreements required by this
Agreement to be performed at or prior to the Closing, including the delivery of
the items listed in Section 4.4.

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     Section 9.4 Consents, Estoppels and Releases. Buyer shall have obtained
each consent, estoppel, waiver and approval identified in Schedule 9.4(a). All
Encumbrances on the Assets identified in Schedule 9.4(b) shall have been
released to the reasonable satisfaction of Buyer.

     Section 9.5 Closing Certificate. There shall have been delivered to Buyer a
certificate dated the Closing Date, signed on behalf of Seller by a duly
authorized officer of Seller, confirming the satisfaction of the conditions set
forth in Sections 9.2 and 9.3.

     Section 9.6 Store Material Adverse Effect. If a Store Material Adverse
Effect occurs with respect to any Store, Buyer may elect, by written notice to
Seller on or before the Closing Date, to terminate its obligation to purchase
the Assets related to such Store and to assume the Assumed Liabilities related
to such Store, and to proceed with the Closing with respect to all other Stores;
provided, that if Buyer elects to proceed with the purchase of any Michigan
Store, Buyer shall be obligated to purchase all Michigan Stores. If any Store is
excluded pursuant to this Section 9.6, the Purchase Price shall be reduced as
provided in Section 3.1(c).

     Section 9.7 Partridge Creek Amendment. The Partridge Creek Amendment shall
have been executed in a form reasonably acceptable to Buyer.

     Section 9.8 Transition Services Agreement Annexes. Buyer and Seller shall
have agreed on the final form of Annex A and Annex B to the Transition Services
Agreement.

     Section 9.9 Title Insurance. Buyer shall have obtained a title insurance
policy on the Owned Real Estate from Chicago Title Insurance Company
substantially similar to the title commitment issued by Chicago Title Insurance
Company on the Owned Real Estate.

                                    ARTICLE X
                  CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER

          The obligations of Seller under this Agreement shall, at the option of
Seller (to the extent permissible under applicable law), be subject to the
satisfaction, on or prior to the Closing Date, of the following conditions:

     Section 10.1 No Order. No court or other Governmental Body having
jurisdiction over Buyer or Seller shall have issued any order, decree or ruling
which is then in effect and has the effect of restraining or prohibiting the
purchase and sale of any material portion of the Assets.

     Section 10.2 Representations and Warranties. The representations and
warranties of Buyer contained in this Agreement, when read without any exception
or qualification for materiality, shall be true and correct in all material
respects on the Closing Date as though made on the Closing Date, except for
changes therein specifically permitted by this Agreement or resulting from any
transaction expressly consented to in writing by Seller or any transaction
permitted by this Agreement.

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     Section 10.3 Performance of Obligations. Buyer shall have performed in all
material respects all of its material covenants and agreements required by this
Agreement to be performed at or prior to the Closing, including the delivery of
the items listed in Section 4.3.

     Section 10.4 Closing Certificate. There shall have been delivered to Seller
a certificate dated the Closing Date, signed on behalf of Buyer by a duly
authorized officer of Buyer, confirming the satisfaction of the conditions set
forth in Sections 10.2 and 10.3.

     Section 10.5 Partridge Creek Amendment. The Partridge Creek Amendment shall
have been executed in a form reasonably acceptable to Seller.

     Section 10.6 Transition Services Agreement Annexes. Buyer and Seller shall
have agreed on the final form of Annex A and Annex B to the Transition Services
Agreement.

                                   ARTICLE XI
                                 INDEMNIFICATION

     Section 11.1 Indemnification by Seller.

          (a) From and after the Closing, Seller agrees to indemnify and hold
harmless each Buyer Group Member from and against any and all Losses and
Expenses incurred by such Buyer Group Member in connection with or arising from:

               (i) any breach of any warranty or the inaccuracy of any
     representation of Seller contained in this Agreement or the certificate
     delivered by or on behalf of Seller pursuant to Section 9.5 (for purposes
     of this Section 11.1(a)(i) such representations and warranties shall be
     read without reference to qualifications as to materiality, including the
     words "material" and "Material Adverse Effect" set forth therein;

               (ii) any breach by Seller of, or failure by Seller to perform,
     any of its covenants or obligations contained in this Agreement;

               (iii) the Excluded Liabilities; and

               (iv) any Partridge Creek Contribution received by or credited to
     Seller or Saks or any of their respective Affiliates prior to the Cut-Off
     Date that did not cause a reduction in the Purchase Price paid at the
     Closing pursuant to clause (y) of Section 3.1(a);

provided, however, that Seller shall be required to indemnify and hold harmless
under Section 11.1(a)(i) with respect to Losses and Expenses incurred by Buyer
Group Members only to the extent that:

          (x) the amount of Loss and Expense suffered by Buyer Group Members
related to each individual claim exceeds $10,000 (in which event, subject to
clauses (y) and (z) below, Seller shall indemnify Buyer for the full amount of
such Loss and Expense (including the initial $10,000));

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<PAGE>

          (y) the aggregate amount of such Losses and Expenses (other than
Losses and Expenses excluded by clause (x) above) exceeds $100,000 (in which
case, subject to clause (z) below, Seller shall indemnify Buyer only for all
Losses and Expenses in excess of $100,000); and

          (z) the aggregate amount required to be paid by Seller pursuant to
Section 11.1(a)(i) shall not exceed $15,000,000.

Notwithstanding the foregoing, none of the limitations set forth in clauses (x),
(y) and (z) above shall apply with respect to Seller's indemnification
obligations relating to Section 5.2(a).

          (b) The indemnification provided for in Section 11.1(a) (except for
the indemnification provided for in Sections 11.1(a)(iii), 8.2(c), 13.3 and
13.12 which shall survive indefinitely) shall terminate 12 months after the
Closing Date (and no claims shall be made by any Buyer Group Member under
Section 11.1(a)(i) thereafter), except that the indemnification by Seller shall
continue as to:

               (i) the covenants of Seller set forth in Section 13.6, which
     shall survive for 180 days following the period of time set forth therein;

               (ii) the representation set forth in Section 5.2(a) and the
     covenants of Seller set forth in Articles II and III and Sections 7.10,
     8.2, 8.3, 8.4, 8.5, 8.6, 8.7, 8.8, 8.9, 8.10, 8.13 and 13.12, which shall
     survive until the expiration of the relevant statutory period of
     limitations applicable to the underlying claim, giving effect to any
     waiver, mitigation or extension thereof; and

               (iii) any Losses or Expenses of which any Buyer Group Member has
     validly given a Claim Notice to Seller in accordance with the requirements
     of Section 11.3 on or prior to the date such indemnification would
     otherwise terminate in accordance with this Section 11.1(b), as to which
     the obligation of Seller shall continue solely with respect to the specific
     matters in such Claim Notice until the liability of Seller shall have been
     determined pursuant to this Article XI, and Seller shall have reimbursed
     all Buyer Group Members for the full amount of such Losses and Expenses
     that are payable with respect to such Claim Notice in accordance with this
     Article XI.

     Section 11.2 Indemnification by Buyer.

          (a) From and after the Closing, Buyer agrees to indemnify and hold
harmless each Seller Group Member from and against any and all Losses and
Expenses incurred by such Seller Group Member in connection with or arising
from:

               (i) any breach of any warranty or the inaccuracy of any
     representation of Buyer contained in this Agreement or the certificate
     delivered by or on behalf of Buyer pursuant to Section 10.4;

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               (ii) any breach by Buyer of, or failure by Buyer to perform, any
     of its covenants and obligations contained in this Agreement; and

               (iii) any Assumed Liability;

provided, however, that Buyer shall be required to indemnify and hold harmless
under Section 11.2(a)(i) with respect to Losses and Expenses incurred by Seller
Group Members only to the extent that:

          (x) the amount of Loss and Expense suffered by Seller Group Members
related to each individual claim exceeds $10,000 (in which event, subject to
clauses (y) and (z) below, Buyer shall indemnify Seller for the full amount of
such Loss and Expense (including the initial $10,000));

          (y) the aggregate amount of such Losses and Expenses (other than
Losses and Expenses excluded by clause (x) above) exceeds $100,000 (in which
case, subject to clause (z) below, Buyer shall indemnify Seller only for all
Losses and Expenses in excess of $100,000); and

          (z) the aggregate amount required to be paid by Buyer pursuant to
Section 11.2(a)(i) shall not exceed $15,000,000.

Notwithstanding the foregoing, none of the limitations set forth in clauses (x),
(y) and (z) above shall apply with respect to Buyer's indemnification
obligations relating to Section 6.2(a) or Section 11.2(a)(iv).

          (b) The indemnification provided for in Section 11.2(a) (excluding the
indemnification provided for in Sections 11.2(a)(iii), 11.2(a)(iv), 13.3 and
13.12 which shall survive indefinitely) shall terminate 12 months after the
Closing Date (and no claims shall be made by any Seller Group Member under
Section 11.2(a) thereafter), except that the indemnification by Buyer shall
continue as to:

               (i) the covenants of Buyer set forth in Section 13.6, which shall
     survive for 180 days following the period of time set forth therein;

               (ii) the representation set forth in Section 6.2(a), the
     covenants of Buyer set forth in Articles II and III and Sections 7.6, 7.10,
     8.1, 8.2, 8.3 8.5, 8.6, 8.7, 8.8, 8.10, 8.11, 8.13 and 13.12, which shall
     survive until the expiration of the relevant statutory period of
     limitations applicable to the underlying claim, giving effect to any
     waiver, mitigation or extension thereof; and

               (iii) any Losses or Expenses of which any Seller Group Member has
     validly given a Claim Notice to Buyer in accordance with the requirements
     of Section 11.3 on or prior to the date such indemnification would
     otherwise terminate in accordance with this Section 11.2(b), as to which
     the obligation of Buyer shall continue solely with respect to the specific
     matters in such Claim Notice until the liability of Buyer shall have been
     determined pursuant to this Article XI, and Buyer shall have reimbursed

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     all Seller Group Members for the full amount of such Losses and Expenses
     that are payable with respect to such Claim Notice in accordance with this
     Article XI.

     Section 11.3 Notice of Claims. Any Buyer Group Member or Seller Group
Member seeking indemnification hereunder (the "Indemnified Party") shall give
promptly to the party obligated to provide indemnification to such Indemnified
Party (the "Indemnitor") a notice (a "Claim Notice") describing in reasonable
detail the facts giving rise to the claim for indemnification hereunder and
shall include in such Claim Notice (if then known) the amount or the method of
computation of the amount of such claim, and a reference to the provision of
this Agreement or any other agreement, document or instrument executed hereunder
or in connection herewith upon which such claim is based; provided, however,
that a Claim Notice in respect of any action at law or suit in equity by or
against a third Person as to which indemnification will be sought shall be given
promptly after the action or suit is commenced. The failure to give notice as
provided in this Section 11.3 shall not relieve the Indemnitor of its
obligations hereunder except to the extent it shall have been materially
prejudiced by such failure.

     Section 11.4 Determination of Amount.

          (a) In calculating any Loss or Expense there shall be deducted any
insurance recovery in respect thereof (and no right of subrogation shall accrue
hereunder to any insurer). Each party agrees to use commercially reasonable
efforts to make any such insurance recovery. Buyer and Seller agree that, for
purposes of computing the amount of any indemnification payment under this
Article XI, any such indemnification payment shall be treated as an adjustment
to the Purchase Price for all Tax purposes. If Seller is required to indemnify a
Buyer Group Member pursuant to the provisions of Section 11.1, and the cost,
expense or liability for which the indemnification is sought under Section 11.1
has provided any Buyer Group Member with a Tax benefit actually saved or
recovered, the amount of such Tax benefit that has been realized or received,
after taking into consideration all costs and expenses incurred in obtaining
such Tax savings, shall reduce Seller's liability to indemnify a Buyer Group
Member under Section 11.1.

          (b) After the giving of any Claim Notice pursuant to Section 11.3, the
amount of indemnification to which an Indemnified Party shall be entitled under
this Article XI shall be determined: (i) by the written agreement between the
Indemnified Party and the Indemnitor; (ii) by a final judgment or decree of any
court of competent jurisdiction; or (iii) by any other means to which the
Indemnified Party and the Indemnitor shall agree. The judgment or decree of a
court shall be deemed final when the time for appeal, if any, shall have expired
and no appeal shall have been taken or when all appeals taken shall have been
finally determined. The Indemnified Party shall have the burden of proof in
establishing the amount of Losses and Expenses suffered by it.

     Section 11.5 Third Person Claims.

          (a) Any party seeking indemnification provided for under this
Agreement in respect of, arising out of or involving a claim or demand made by
any third Person against the Indemnified Party shall notify the Indemnitor in
writing, and in reasonable detail, of the third

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Person claim within five business days after receipt by such Indemnified Party
of written notice of the third Person claim. Thereafter, the Indemnified Party
shall deliver to the Indemnitor, within 10 business days after the Indemnified
Party's receipt thereof, copies of all notices and documents (including court
papers) received by the Indemnitor relating to the third Person claim.
Notwithstanding the foregoing, should a party be physically served with a
complaint with regard to a third Person claim, the Indemnified Party shall
notify the Indemnitor with a copy of the complaint within five business days
after receipt thereof and shall deliver to the Indemnitor within 10 business
days after the receipt of such complaint copies of notices and documents
(including court papers) received by the Indemnified Party relating to the third
Person claim. The failure to give notice as provided in this Section 11.5 shall
not relieve the Indemnitor of its obligations hereunder except to the extent it
shall have been materially prejudiced by such failure.

          (b) In the event any legal proceeding shall be threatened or
instituted or any claim or demand shall be asserted by any Person in respect of
which payment may be sought by one party hereto from the other party under the
provisions of this Article XI, the Indemnified Party shall promptly cause
written notice of the assertion of any such claim of which it has knowledge
which is covered by this indemnity to be forwarded to the Indemnitor. Any notice
of a claim by reason of any of the representations, warranties or covenants
contained in this Agreement shall contain a reference to the provision of this
Agreement or any other agreement, document or instrument executed hereunder or
in connection herewith upon which such claim is based, the facts giving rise to
an alleged basis for the claim and (if then known) the amount of the liability
asserted against the Indemnitor by reason of the claim. In the event of the
initiation of any legal proceeding against the Indemnified Party by a third
Person, the Indemnitor shall have the sole and absolute right after the receipt
of notice, at its option and at its own expense, to be represented by counsel of
its choice and to control, defend against, negotiate, settle or otherwise deal
with any proceeding, claim or demand which relates to any loss, liability or
damage indemnified against hereunder; provided, however, that the Indemnified
Party may participate in any such proceeding with counsel of its choice and at
its expense. The parties hereto agree to cooperate fully with each other in
connection with the defense, negotiation or settlement of any such legal
proceeding, claim or demand. To the extent the Indemnitor elects not to defend
such proceeding, claim or demand (or fails to assume the defense of such
proceeding, claim or demand within a reasonable time period), and the
Indemnified Party defends against or otherwise deals with any such proceeding,
claim or demand, the Indemnified Party may retain counsel of its choice, at the
expense of the Indemnitor, and control the defense of such proceeding. Neither
the Indemnitor nor the Indemnified Party may settle any such proceeding which
settlement obligates the other party to pay money, to perform obligations or to
admit liability without the consent of the other party, such consent not to be
unreasonably withheld; provided that if the Indemnitor wishes to settle any such
proceeding, the proposed settlement involves only the payment of money and the
Indemnified Party does not consent to such settlement, the Indemnitor shall not
have any liability or obligation in excess of the proposed settlement amount
plus all Expenses incurred on or prior to the date that the written consent is
requested by the Indemnified Party. After any final judgment or award shall have
been rendered by a court, arbitration board or administrative agency of
competent jurisdiction and the time in which to appeal therefrom has expired, or
a settlement shall have been

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consummated, or the Indemnified Party and the Indemnitor shall arrive at a
mutually binding agreement with respect to each separate matter alleged to be
indemnified by the Indemnitor hereunder, the Indemnified Party shall forward to
the Indemnitor notice of any sums due and owing by it with respect to such
matter and the Indemnitor shall pay all of the sums so owing to the Indemnified
Party by wire transfer, certified or bank cashier's check within 10 business
days after the date of such notice.

     Section 11.6 Limitations.

          (a) In any case where an Indemnified Party recovers from third Persons
any amount in respect of a matter with respect to which an Indemnitor has
indemnified it pursuant to this Article XI, such Indemnified Party shall
promptly pay over to the Indemnitor the amount so recovered (after deducting
therefrom the full amount of the expenses incurred by it in procuring such
recovery), but not in excess of the sum of (i) any amount previously so paid by
the Indemnitor to or on behalf of the Indemnified Party in respect of such
matter and (ii) any amount expended by the Indemnitor in pursuing or defending
any claim arising out of such matter.

          (b) EXCEPT IN CONNECTION WITH THIRD-PERSON CLAIMS, IN NO EVENT SHALL
ANY PARTY BE LIABLE FOR ANY SPECIAL, INCIDENTAL, CONSEQUENTIAL (INCLUDING LOSS
OF REVENUES OR PROFITS), EXEMPLARY OR PUNITIVE DAMAGES ARISING UNDER ANY LEGAL
OR EQUITABLE THEORY OR ARISING UNDER OR IN CONNECTION WITH THIS AGREEMENT, ALL
OF WHICH ARE HEREBY EXCLUDED BY AGREEMENT OF THE PARTIES REGARDLESS OF WHETHER
OR NOT ANY PARTY TO THIS AGREEMENT HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES.

          (c) Except for remedies that cannot be waived as a matter of law and
injunctive and provisional relief (including specific performance and including
injunctive relief pursuant to Section 8.13), if the Closing occurs, this Article
XI shall be the exclusive remedy of the parties hereto for breaches of this
Agreement (including any covenant, obligation, representation or warranty
contained in this Agreement or in any certificate delivered pursuant to this
Agreement) or otherwise in respect of the sale of the Assets contemplated
hereby. In furtherance of the foregoing, each party hereto hereby waives, to the
fullest extent permitted under applicable law, any and all rights, claims and
causes of action of such party against the other party arising under this
Agreement or under any certificate delivered pursuant to this Agreement as a
matter of equity or under or based upon any federal, state, provincial, local or
foreign statute, law, ordinance, rule or regulation (including those relating to
Environmental Laws) or arising under or based upon common law or otherwise,
except that this Section 11.6(c) shall not limit the remedies of a party with
respect to a claim based on fraud. This Section 11.6(c) shall not affect the
right of a party to pursue any remedy expressly permitted by any Seller
Ancillary Agreement or Buyer Ancillary Agreement.

     Section 11.7 Mitigation. Each of the parties agrees to take all reasonable
steps to mitigate their respective Losses and Expenses upon and after becoming
aware of any event or condition which could reasonably be expected to give rise
to any Losses and Expenses that are indemnifiable hereunder.

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     Section 11.8 Knowledge. No party shall have any liability for any
inaccuracy in or breach of any representation, warranty or agreement by such
party if the executive officers of the other party had actual knowledge on or
before the Closing Date of the facts as a result of which such representation,
warranty or agreement was inaccurate or breached. Buyer shall be deemed to have
actual Knowledge of all information that was made available to Buyer in the
virtual data room maintained by Saks and on the Chicago Title Insurance Company
website.

                                   ARTICLE XII
                                   TERMINATION

     Section 12.1 Termination. Anything contained in this Agreement to the
contrary notwithstanding, this Agreement may be terminated at any time prior to
the Closing:

          (a) by the mutual written consent of Buyer and Seller;

          (b) by Seller upon 10 business days' notice to Buyer if any of the
conditions in Article X shall have become incapable of fulfillment at the
Closing and shall not have been waived in writing by Seller, provided that
Seller's right to terminate this Agreement pursuant to this Section 12.1(b)
shall not be available to Seller if Seller's failure to fulfill any of its
obligations contained in this Agreement has been the cause of, or resulted in,
the failure of the conditions of Article X to be capable of fulfillment at the
Closing;

          (c) by Buyer upon 10 business days' notice to Seller if any of the
conditions in Article IX shall have become incapable of fulfillment at the
Closing and shall not have been waived in writing by Buyer, provided that
Buyer's right to terminate this Agreement pursuant to this Section 12.1(c) shall
not be available to Buyer if Buyer's failure to fulfill any of its obligations
contained in this Agreement has been the cause of, or resulted in, the failure
of the conditions of Article IX to be capable of fulfillment at the Closing;

          (d) by Buyer or Seller if any court or other Governmental Body having
jurisdiction over Buyer or Seller shall have issued a final and non-appealable
order, decree or ruling permanently restraining, enjoining or otherwise
prohibiting the purchase and sale of any material portion of the Assets;

          (e) by Buyer or Seller if the Closing shall not have occurred on or
before October 30, 2006 (or such later date as may be agreed to in writing to
Buyer and Seller); provided, however, that the right to terminate this Agreement
pursuant to this Section 12.1(e) shall not be available to any party whose
failure to fulfill any of its obligations contained in this Agreement has been
the cause of, or resulted in, the failure of the Closing to have occurred on or
prior to the aforesaid dates; or

          (f) by Buyer if a Store Material Adverse Effect occurs with respect to
any Michigan Store or any two (2) or more Stores.

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     Section 12.2 Notice of Termination. Any party desiring to terminate this
Agreement pursuant to Section 12.1 shall give written notice of such termination
to the other party to this Agreement.

     Section 12.3 Effect of Termination. If this Agreement is terminated
pursuant to this Article XII, all further obligations of the parties under this
Agreement (other than this Section 12.3 (Effect of Termination), Section 8.6
(Fees and Expenses), and Article XIII (Miscellaneous), which provisions shall
each survive such termination) shall terminate; provided, however, that nothing
in this Section 12.3 shall relieve any party from any liability for a willful
breach of this Agreement.

                                  ARTICLE XIII
                                  MISCELLANEOUS

     Section 13.1 Survival of Representations and Warranties. The
representations and warranties contained in this Agreement shall survive the
Closing only for the period during which an indemnification claim is permitted
to be made pursuant to Article XI, after which time such representations and
warranties shall terminate and the parties shall have no rights or remedies
thereafter with respect to any breach of such representations or warranties.

     Section 13.2 Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws (as opposed to the conflicts of
law provisions) of the State of New York.

     Section 13.3 No Public Announcement. Neither Buyer nor Seller shall,
without the approval of the other, make any press release or other public
announcement concerning the transactions contemplated by this Agreement, except
as and to the extent that any such party shall be so obligated by law, in which
case the other party shall be advised and the parties shall use their
commercially reasonable efforts to cause a mutually agreeable release or
announcement to be issued; provided, however, that the foregoing shall not
preclude communications or disclosures necessary to implement the provisions of
this Agreement or to comply with SEC disclosure obligations or the rules of any
United States or foreign stock exchange.

     Section 13.4 Notices. All notices or other communications required or
permitted hereunder shall be in writing and shall be delivered personally, by
facsimile or sent by private courier or by registered or certified mail, and
shall be deemed given when so delivered personally, by facsimile or by private
courier or, if mailed, two business days after the mailing, as follows:

          If to Seller, to:

               Belk, Inc.
               2801 West Tyvola Road
               Charlotte, North Carolina 28217
               Facsimile: (704) 357-1883
               Attention: Ralph A. Pitts

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          with a copy to:

               King & Spalding LLP
               1180 Peachtree Street
               Atlanta, Georgia 30309
               Facsimile: (404) 572-5100
               Attention: John D. Capers, Jr.

          If to Buyer, to:

               The Bon-Ton Stores, Inc.
               2801 East Market Street
               York, Pennsylvania 17402
               Facsimile: (717) 751-3008
               Attention: Vice President and General Counsel

          with a copy to:

               Wolf, Block, Schorr and Solis-Cohen LLP
               1650 Arch Street, 22nd Floor
               Philadelphia, Pennsylvania 19103
               Facsimile: (215) 977-2334
               Attention: Henry Miller, Esq.

or to such other address as such party may indicate by a notice delivered to the
other party hereto.

     Section 13.5 Successors and Assigns.

          (a) The rights of either party under this Agreement shall not be
assignable by such party hereto prior to the Closing without the prior written
consent of the other party; provided, however, that Buyer may assign its rights
under this Agreement to any direct or indirect wholly owned subsidiary of Buyer;
provided, further, that no such assignment shall relieve Buyer of any of its
obligations herunder.

          (b) Following the Closing, neither party may assign any of its rights
hereunder to any third Person without the prior written consent of the other
party, except that either party may assign its rights hereunder to an Affiliate.
Any assignment hereunder (whether before or after the Closing) shall not relieve
the assigning party of its obligations hereunder. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their successors
and permitted assigns. Nothing in this Agreement, expressed or implied, is
intended or shall be construed to confer upon any Person other than the parties
and successors and assigns permitted by this Section 13.5 any right, remedy or
claim under or by reason of this Agreement.

     Section 13.6 Access to Records after Closing.

          (a) For a period of six years after the Closing Date, Seller and its
representatives shall have reasonable access to all of the books and records of
the Stores to the extent that such access may reasonably be required by Seller
in connection with matters relating

                                       69

<PAGE>

to or affected by the operations of the Stores prior to the Cut-Off Date. Such
access shall be afforded by Buyer upon receipt of reasonable advance notice and
during normal business hours. Seller shall be solely responsible for any costs
or expenses incurred by it pursuant to this Section 13.6(a). If Buyer shall
desire to dispose of any of such books and records prior to the expiration of
such six-year period, Buyer shall, prior to such disposition, give Seller a
reasonable opportunity, at Seller's expense, to segregate and remove such books
and records as Seller may select. Buyer shall also afford Saks and its
representatives access to the books and records of the Stores to the extent that
Saks has a right to such access under the Stock Purchase Agreement.

          (b) For a period of six years after the Closing Date, Buyer and its
representatives shall have reasonable access to all of the books and records
relating to the Stores which Seller or any of its Affiliates may retain after
the Closing Date. Such access shall be afforded by Seller and its Affiliates
upon receipt of reasonable advance notice and during normal business hours.
Buyer shall be solely responsible for any costs and expenses incurred by it
pursuant to this Section 13.6(b). If Seller or any of its Affiliates shall
desire to dispose of any of such books and records prior to the expiration of
such six-year period, Seller shall, prior to such disposition, give Buyer a
reasonable opportunity, at Buyer's expense, to segregate and remove such books
and records as Buyer may select. With regard to any of such books and records
relating to the Stores as to which Seller has any rights pursuant to the Stock
Purchase Agreement, Seller shall consult with and, if Seller decides to permit
the disposition of such books and records, take direction from Buyer with regard
to the disposition of such books and records.

     Section 13.7 Entire Agreement; Amendments. This Agreement, the exhibits and
schedules referred to herein, the documents delivered pursuant hereto contain
the entire understanding of the parties hereto with regard to the subject matter
contained herein or therein, and supersede all other prior representations,
warranties, agreements, understandings or letters of intent between or among any
of the parties hereto. This Agreement shall not be amended, modified or
supplemented except by a written instrument signed by an authorized
representative of each of the parties hereto.

     Section 13.8 Interpretation. Articles, titles and headings to sections
herein are inserted for convenience of reference only and are not intended to be
a part of or to affect the meaning or interpretation of this Agreement. The
schedules and exhibits referred to herein shall be construed with and as an
integral part of this Agreement to the same extent as if they were set forth
verbatim herein. Disclosure of any fact or item in any schedule hereto
referenced by a particular section in this Agreement shall be deemed to have
been disclosed with respect to every other section in this Agreement if it is
reasonably apparent from the disclosure that the disclosure should apply to
other sections in this Agreement. Neither the specification of any dollar amount
in any representation or warranty contained in this Agreement nor the inclusion
of any specific item in any schedule hereto is intended to imply that such
amount, or higher or lower amounts, or the item so included or other items, are
or are not material, and no party shall use the fact of the setting forth of any
such amount or the inclusion of any such item in any dispute or controversy
between the parties as to whether any obligation, item or matter not described
herein or included in any schedule is or is not material for purposes of this
Agreement. Unless this Agreement specifically provides otherwise, neither the
specification of any item or matter in any

                                       70

<PAGE>

representation or warranty contained in this Agreement nor the inclusion of any
specific item in any schedule hereto is intended to imply that such item or
matter, or other items or matters, are or are not in the ordinary course of
business, and no party shall use the fact of the setting forth or the inclusion
of any such item or matter in any dispute or controversy between the parties as
to whether any obligation, item or matter not described herein or included in
any schedule is or is not in the ordinary course of business for purposes of
this Agreement. To the extent Saks supplements, amends or creates any schedule
to the Stock Purchase Agreement in order to add information or correct
previously supplied information, Seller shall provide a copy of such supplement
or amendment or such additional schedule to Buyer and may, from time to time
prior to or at the Closing, by notice in accordance with the terms of this
Agreement, supplement, amend or create any schedule of Seller to this Agreement,
in order to add information or correct previously supplied information. No such
supplement or amendment or additional schedule shall be evidence, in and of
itself, that the representations and warranties in the corresponding section are
no longer true and correct in all material respects. It is specifically agreed
that such schedules may be amended to add immaterial, as well as material, items
thereto. No such supplemental, amended or additional schedule shall be deemed to
cure any breach for purposes of Sections 9.2, 11.1(a)(i) or 11.2(a)(i).

     Section 13.9 Waivers. Any term or provision of this Agreement may be
waived, or the time for its performance may be extended, by the party or parties
entitled to the benefit thereof. Any such waiver shall be validly and
sufficiently authorized for the purposes of this Agreement if, as to any party,
it is authorized in writing by an authorized representative of such party. The
failure of any party hereto to enforce at any time any provision of this
Agreement shall not be construed to be a waiver of such provision, nor in any
way to affect the validity of this Agreement or any part hereof or the right of
any party thereafter to enforce each and every such provision. No waiver of any
breach of this Agreement shall be held to constitute a waiver of any other or
subsequent breach.

     Section 13.10 Partial Invalidity. Wherever possible, each provision hereof
shall be interpreted in such manner as to be effective and valid under
applicable law, but in case any one or more of the provisions contained herein
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, such provision shall be ineffective to the extent, but only to the
extent, of such invalidity, illegality or unenforceability without invalidating
the remainder of such invalid, illegal or unenforceable provision or provisions
or any other provisions hereof, unless such a construction would be
unreasonable.

     Section 13.11 Execution in Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall be considered an original
instrument, but all of which shall be considered one and the same agreement, and
shall become binding when one or more counterparts have been signed by each of
the parties hereto and delivered to Seller and Buyer.

     Section 13.12 Further Assurances. From time to time following the Closing,
Seller shall execute and deliver, or cause to be executed and delivered, to
Buyer such other instruments of conveyance and transfer as Buyer may reasonably
request or as may be otherwise necessary to more effectively convey and transfer
to, and vest in, Buyer and put Buyer in possession of, any

                                       71

<PAGE>

part of the Assets in accordance with this Agreement; provided, however, that
Section 2.2 shall govern with respect to approvals, consents and waivers
required in connection with the transfer of Contracts, Warranties and Purchase
Orders. From time to time following the Closing, Buyer shall execute and
deliver, or cause to be executed and delivered, to Seller such other instruments
of assumption as Seller may reasonably request or as may be otherwise necessary
to evidence the assumption by Buyer of the Assumed Liabilities.

     Section 13.13 Disclaimer of Warranties. Seller makes no representations or
warranties with respect to any projections, forecasts or forward-looking
information provided to Buyer. There is no assurance that any projected or
forecasted results will be achieved. EXCEPT AS TO THOSE MATTERS EXPRESSLY
COVERED BY THE REPRESENTATIONS AND WARRANTIES IN THIS AGREEMENT AND THE
CERTIFICATES DELIVERED BY SELLER PURSUANT TO SECTION 4.4, SELLER IS SELLING THE
ASSETS ON AN "AS IS, WHERE IS" BASIS AND SELLER DISCLAIMS ALL OTHER WARRANTIES,
REPRESENTATIONS AND GUARANTEES WHETHER EXPRESS OR IMPLIED. SELLER MAKES NO
REPRESENTATION OR WARRANTY AS TO FITNESS, NONINFRINGEMENT, MERCHANTABILITY OR
FITNESS FOR ANY PARTICULAR PURPOSE AND NO IMPLIED WARRANTIES WHATSOEVER. Buyer
acknowledges that neither Seller nor any of its representatives or any other
Person has made any representation or warranty, express or implied, as to the
accuracy or completeness of any memoranda, charts or summaries heretofore made
available by Seller or its representatives to Buyer or any other information
which is not included in this Agreement or the Schedules hereto, and neither
Seller nor any of its representatives or any other Person will have or be
subject to any liability to Buyer, any Affiliate of Buyer or any other Person
resulting from the distribution of any such information to, or use of any such
information by, Buyer, any Affiliate of Buyer or any of their agents,
consultants, accountants, counsel or other representatives.

     Section 13.14 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity.

     Section 13.15 Waiver of Jury Trial. Each party hereto waives the right to a
trial by jury in any litigation, proceeding or other legal action in connection
with or relating to this Agreement, any Seller Ancillary Agreement or any Buyer
Ancillary Agreement or the transactions contemplated hereby or thereby.

                     [REMAINDER OF PAGE INTENTIONALLY BLANK]

                                       72

<PAGE>

          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the day and year first above written.

                                        BELK, INC.

                                        By: /s/ Ralph A. Pitts
                                            ------------------------------------
                                        Name: Ralph A. Pitts
                                        Title: Executive Vice President and
                                               General Counsel

                                        THE BON-TON STORES, INC.

                                        By: /s/ Keith E. Plowman
                                            ------------------------------------
                                        Name: Keith E. Plowman
                                        Title: Executive Vice President and
                                               Chief Financial Officer<PAGE>

                                                                    EXHIBIT 10.1

================================================================================

                      AMENDED AND RESTATED CREDIT AGREEMENT

                          Dated as of October 25, 2006

                                      among

                          DELPHI FINANCIAL GROUP, INC.
                                as the Borrower,

                             BANK OF AMERICA, N.A.,

                            as Administrative Agent,

                      WACHOVIA BANK, NATIONAL ASSOCIATION,
                             as Co-Syndication Agent

                      HSBC BANK USA, NATIONAL ASSOCIATION,
                           as Co-Documentation Agent,

                         U.S. BANK NATIONAL ASSOCIATION,
                           as Co-Documentation Agent,

                          KEYBANK NATIONAL ASSOCIATION,
                            as Co-Documentation Agent

                                       and

                         The Other Lenders Party Hereto

               WACHOVIA CAPITAL MARKETS, LLC, Joint Lead Arranger

                         BANC OF AMERICA SECURITIES LLC,

                    Joint Lead Arranger and Sole Book Manager

================================================================================

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                            PAGE
                                                                            ----
<S>                                                                         <C>
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS...............................     1
   1.01  Defined Terms...................................................     1
   1.02  Other Interpretive Provisions...................................    20
   1.03  Accounting Terms................................................    21
   1.04  Rounding........................................................    21
   1.05  References to Agreements and Laws...............................    21
   1.06  Times of Day....................................................    21

ARTICLE II THE COMMITMENTS AND LOANS.....................................    21
   2.01  Loans...........................................................    21
   2.02  Borrowings, Conversions and Continuations of Loans..............    22
   2.03  Prepayments.....................................................    23
   2.04  Termination or Reduction of Commitments.........................    24
   2.05  Repayment of Loans..............................................    24
   2.06  Interest........................................................    24
   2.07  Fees............................................................    25
   2.08  Computation of Interest and Fees................................    25
   2.09  Evidence of Debt................................................    25
   2.10  Payments Generally; Administrative Agent's Clawback.............    26
   2.11  Sharing of Payments by Lenders..................................    27
   2.12  Increase in Commitments.........................................    28

ARTICLE III TAXES, YIELD PROTECTION AND ILLEGALITY.......................    29
   3.01  Taxes...........................................................    29
   3.02  Illegality......................................................    31
   3.03  Inability to Determine Rates....................................    31
   3.04  Increased Costs.................................................    32
   3.05  Compensation for Losses.........................................    33
   3.06  Mitigation Obligations; Replacement of Lenders..................    34
   3.07  Survival........................................................    34

ARTICLE IV CONDITIONS PRECEDENT TO LOANS.................................    34
   4.01  Conditions of Initial Loan......................................    34
   4.02  Conditions to all Loans.........................................    36

ARTICLE V REPRESENTATIONS AND WARRANTIES.................................    36
   5.01  Existence, Qualification and Power; Compliance with Laws........    36
   5.02  Authorization; No Contravention.................................    36
   5.03  Governmental Authorization; Other Consents......................    37
   5.04  Binding Effect..................................................    37
   5.05  Financial Statements; No Material Adverse Effect................    37
   5.06  Litigation and Guarantees.......................................    39
   5.07  No Default......................................................    39
</TABLE>

                                       -i-

<PAGE>

                                TABLE OF CONTENTS
                                   (continued)

<TABLE>
<CAPTION>
                                                                            PAGE
                                                                            ----
<S>                                                                         <C>
   5.08  Ownership of Property; Liens....................................    39
   5.09  Environmental Compliance........................................    39
   5.10  Taxes...........................................................    39
   5.11  ERISA Compliance................................................    39
   5.12  Subsidiaries....................................................    40
   5.13  Margin Regulations; Investment Company Act......................    40
   5.14  Disclosure......................................................    40
   5.15  Compliance with Laws............................................    41
   5.16  Proceeds........................................................    41
   5.17  Insurance.......................................................    41
   5.18  Governmental Authorizations.....................................    41
   5.19  Solvency........................................................    41
   5.20  Insurance Licenses..............................................    41
   5.21  No Default......................................................    41
   5.22  Securities Laws.................................................    42
   5.23  Replacement of Schedules........................................    42

ARTICLE VI AFFIRMATIVE COVENANTS.........................................    42
   6.01  Reports, Certificates and Other Information.....................    42
   6.02  Payment of Obligations..........................................    46
   6.03  Preservation of Existence, etc..................................    46
   6.04  Maintenance of Properties.......................................    47
   6.05  Maintenance of Insurance........................................    47
   6.06  Compliance with Laws; Material Contractual Obligations..........    47
   6.07  Books and Records...............................................    47
   6.08  Inspection Rights...............................................    47

ARTICLE VII NEGATIVE COVENANTS...........................................    47
   7.01  Liens...........................................................    48
   7.02  Consolidation, Merger, etc......................................    49
   7.03  Asset Disposition, etc..........................................    49
   7.04  Dividends, etc..................................................    50
   7.05  Investments.....................................................    50
   7.06  Take or Pay Contracts...........................................    51
   7.07  Regulation U....................................................    51
   7.08  Subsidiaries....................................................    51
   7.09  Other Agreements................................................    51
   7.10  Business Activities.............................................    52
   7.11  Transactions with Affiliates....................................    52
   7.12  Ownership of RSL and Safety National............................    52
   7.13  Consolidated Net Worth..........................................    52
   7.14  Debt to Capital.................................................    52
   7.15  Risk-Based Capital Ratio........................................    52
</TABLE>

                                      -ii-

<PAGE>

                                TABLE OF CONTENTS
                                   (continued)

<TABLE>
<CAPTION>
                                                                            PAGE
                                                                            ----
<S>                                                                         <C>
   7.16  Pro Forma Risk-Based Capital....................................    52
   7.17  Subsidiary Indebtedness.........................................    53

ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES..............................    53
   8.01  Events of Default...............................................    53
   8.02  Remedies Upon Event of Default..................................    55
   8.03  Application of Funds............................................    55

ARTICLE IX ADMINISTRATIVE AGENT..........................................    56
   9.01  Appointment and Authority.......................................    56
   9.02  Rights as a Lender..............................................    56
   9.03  Exculpatory Provisions..........................................    56
   9.04  Reliance by Administrative Agent................................    57
   9.05  Delegation of Duties............................................    57
   9.06  Resignation of Administrative Agent.............................    57
   9.07  Non-Reliance on Administrative Agent and Other Lenders..........    58
   9.08  No Other Duties, Etc............................................    58
   9.09  Administrative Agent May File Proofs of Claim...................    58

ARTICLE X MISCELLANEOUS..................................................    59
   10.01 Amendments, Etc.................................................    59
   10.02 Notices; Effectiveness; Electronic Communication................    60
   10.03 No Waiver; Cumulative Remedies..................................    62
   10.04 Expenses; Indemnity; Damage Waiver..............................    62
   10.05 Payments Set Aside..............................................    64
   10.06 Successors and Assigns..........................................    64
   10.07 Treatment of Certain Information; Confidentiality and Non-Use...    67
   10.08 Right of Setoff.................................................    68
   10.09 Interest Rate Limitation........................................    68
   10.10 Counterparts; Integration; Effectiveness........................    69
   10.11 Survival of Representations and Warranties......................    69
   10.12 Severability....................................................    69
   10.13 Replacement of Lenders..........................................    69
   10.14 No Advisory or Fiduciary Responsibility.........................    70
   10.15 Governing Law; Jurisdiction; etc................................    71
   10.16 Waiver of Jury Trial............................................    72
   10.17 USA PATRIOT Act Notice..........................................    72
</TABLE>

                                      -iii-

<PAGE>

SCHEDULES

2.01  Commitments and Applicable Percentages
5.05  Dividends
5.06  Litigation
5.12  Subsidiaries
7.01  Existing Liens
10.02 Administrative Agent's Office, Certain Addresses for Notices

EXHIBITS
Form of

A     Loan Notice
B     Note
C     Compliance Certificate
D     Assignment and Assumption
E     Opinion

                                        1
<PAGE>

                      AMENDED AND RESTATED CREDIT AGREEMENT

     This AMENDED AND RESTATED CREDIT AGREEMENT (this "Agreement") is entered
into as of October 25, 2006 among DELPHI FINANCIAL GROUP, INC., a Delaware
corporation (the "Borrower"), each lender from time to time party hereto (each a
"Lender" and collectively the "Lenders") and BANK OF AMERICA, N.A., as
Administrative Agent.

     WHEREAS, the Borrower, certain lenders and Bank of America, N.A., as
Administrative Agent, are parties to a Credit Agreement dated as of May 26, 2005
(the "Existing Credit Agreement");

     WHEREAS, the Borrower has requested certain amendments to the Existing
Credit Agreement;

     WHEREAS, the Lenders and the Administrative Agent are willing to agree to
such amendments, as hereinafter set forth;

     NOW THEREFORE, in consideration of the mutual agreements herein contained,
the parties hereto agree that the Existing Credit Agreement is hereby amended to
state in its entirety as follows:

                                    ARTICLE I
                        DEFINITIONS AND ACCOUNTING TERMS

     1.01 DEFINED TERMS. As used in this Agreement, the following terms shall
have the meanings set forth below:

     "2005 Annual Statements" - see Section 5.05(a)(ii).

     "2006 Quarterly Statements" - see Section 5.05(a)(ii).

     "Acquired Person" shall mean any Person acquired upon the consummation of
an Acquisition permitted by the terms of this Agreement.

     "Acquisition" shall mean any transaction or series of transactions for the
purpose of or resulting, directly or indirectly, in (a) the acquisition of all
or substantially all of the assets of a Person, or of any business or division
of a Person, (b) the acquisition of in excess of 50% of the capital stock,
partnership interests, membership interests or equity securities (or warrants,
options, or other rights to acquire any of the foregoing) of any Person, or
otherwise causing any Person to become a Subsidiary of the Borrower, or (c) a
merger or consolidation or any other combination of the Borrower or one of its
Subsidiaries with another Person (other than a Person that is a Subsidiary of
the Borrower immediately prior to such merger or consolidation); provided that
the Borrower or such Subsidiary is the surviving entity, in each case subject to
and to the extent permitted by the terms of this Agreement.

     "Adjusted Capital" shall mean, as to any of the Reliance Standard Insurance
Companies as of any date, the total amount shown on line 29, page 23, column 1
of the Annual Statement of each of the Reliance Standard Insurance Companies
and, as to Safety National as of any date, the

<PAGE>

total amount shown on line 27, page 18, column 1 of the Annual Statement of
Safety National, or, in each case, an amount determined in a consistent manner
for any date other than one as of which an Annual Statement is prepared.

     "Administrative Agent" shall mean Bank of America in its capacity as
administrative agent under any of the Loan Documents, or any successor
administrative agent.

     "Administrative Agent's Office" shall mean the Administrative Agent's
address and, as appropriate, account as set forth on Schedule 10.02, or such
other address or account as the Administrative Agent may from time to time
specify to the Borrower and the Lenders.

     "Administrative Questionnaire" shall mean an Administrative Questionnaire
in a form supplied by the Administrative Agent.

     "Affiliate" shall mean, with respect to any Person, another Person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with such Person. "Control" shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the ability
to exercise voting power, by contract or otherwise. "Controlling" and
"Controlled" have meanings correlative thereto. Without limiting the generality
of the foregoing, a Person shall be deemed to be Controlled by another Person if
such other Person possesses, directly or indirectly, power to vote 10% or more
of the securities having ordinary voting power for the election of directors,
managing general partners or the equivalent.

     "Agent-Related Persons" shall mean the Administrative Agent, together with
its Affiliates (including, in the case of Bank of America in its capacity as the
Administrative Agent, the Arranger), and the officers, directors, employees,
agents and attorneys-in-fact of such Persons and Affiliates.

     "Aggregate Commitments" shall mean aggregate amount of the Commitments of
all the Lenders.

     "Agreement" - see the introductory paragraph.

     "Annual Statement" shall mean, as to any insurance company, the annual
financial statement of such insurance company as required to be filed with the
Department, together with all exhibits or schedules filed therewith, prepared in
conformity with SAP. References to amounts on particular exhibits, schedules,
lines, pages and columns of the Annual Statement are based on the format
promulgated by the NAIC for 2005 Life, Accident and Health Insurance Company
Annual Statements or 2005 Property and Casualty Insurance Company Annual
Statements, as applicable. If such format is changed in future years so that
different information is contained in such items or they no longer exist, it is
understood that the reference is to information consistent with that reported in
the referenced item in the 2005 Annual Statement of such insurance company.

     "Applicable Insurance Codes" shall mean, as to any insurance company, the
insurance code of any state where such insurance company is domiciled or doing
insurance business and any successor statute of similar import, together with
the regulations thereunder, as amended or

                                       2

<PAGE>

otherwise modified and in effect from time to time. References to sections of
the Applicable Insurance Code shall be construed to also refer to successor
sections.

     "Applicable Percentage" shall mean with respect to any Lender at any time,
the percentage (carried out to the ninth decimal place) of the Aggregate
Commitments represented by such Lender's Commitment at such time. If the
commitment of each Lender to make Loans has been terminated pursuant to Section
8.02 or if the Aggregate Commitments have expired, then the Applicable
Percentage of each Lender shall be determined based on the Applicable Percentage
of such Lender most recently in effect, giving effect to any subsequent
assignments. The initial Applicable Percentage of each Lender is set forth
opposite the name of such Lender on Schedule 2.01 or in the Assignment and
Assumption pursuant to which such Lender becomes a party hereto, as applicable.

     "Applicable Rate" means, from time to time, the following percentages per
annum, based upon the Debt Rating as set forth below:

                                 APPLICABLE RATE

<TABLE>
<CAPTION>
                     DEBT RATINGS                        EURODOLLAR RATE
PRICING LEVEL        S&P/MOODY'S        COMMITMENT FEE       LOAN
-------------   ---------------------   --------------   ---------------
<S>             <C>                     <C>              <C>
      1            A-/A3 or better           0.080            0.400
      2               BBB+/Baa1              0.100            0.500
      3                BBB/Baa2              0.125            0.625
      4               BBB-/Baa3              0.175            0.750
      5         Less than or equal to        0.250            1.000
                       BB+/Ba1
</TABLE>

          "Debt Rating" shall mean, as of any date of determination, the rating
     as determined by either S&P or Moody's (collectively, the "Debt Ratings")
     of the Borrower's non-credit-enhanced, senior unsecured long-term debt;
     provided that if a Debt Rating is issued by each of S&P and Moody's, then
     the higher of such Debt Ratings shall apply (with the Debt Rating for
     Pricing Level 1 being the highest and the Debt Rating for Pricing Level 5
     being the lowest), unless there is a split in Debt Ratings of more than one
     level, in which case the Pricing Level that is one level lower than the
     Pricing Level of the higher Debt Rating shall apply. If no Debt Rating is
     in effect, Pricing Level 5 shall apply.

Initially, the Applicable Rate shall be determined based upon the Debt Rating
specified in the certificate delivered pursuant to Section 4.01(a)(vii).
Thereafter, each change in the Applicable Rate resulting from a publicly
announced change in the Debt Rating shall be effective during the period
commencing on the date of the public announcement thereof and ending on the date
immediately preceding the effective date of the next such change.

     "Approved Fund" shall mean any Fund that is administered or managed by (a)
a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an
entity that administers or manages a Lender.

     "Arranger" shall mean Banc of America Securities LLC, in its capacity as
joint lead arranger and sole book manager.

                                       3

<PAGE>

     "Assignee Group" shall mean two or more assignees that are Affiliates of
one another or two or more Approved Funds managed by the same investment
advisor.

     "Assignment and Assumption" means an assignment and assumption entered into
by a Lender and an assignee (with the consent of any party whose consent is
required by Section 10.06(b), and accepted by the Administrative Agent, in
substantially the form of Exhibit D or any other form approved by the
Administrative Agent.

     "Attorney Costs" shall mean and include all reasonable fees and
disbursements of any law firm or other external counsel and the nonduplicative
allocated cost of internal legal services and disbursements of internal counsel.

     "Attributable Indebtedness" shall mean, on any date, (a) in respect of any
capital lease of any Person, the capitalized amount thereof that would appear on
a balance sheet of such Person prepared as of such date in accordance with GAAP,
and (b) in respect of any Synthetic Lease Obligation, the capitalized amount of
the remaining lease payments under the relevant lease that would appear on a
balance sheet of such Person prepared as of such date in accordance with GAAP if
such lease were accounted for as a capital lease.

     "Audited Financial Statements" see Section 5.05(b).

     "Availability Period" shall mean the period from and including the Closing
Date to the earliest of (a) the Maturity Date, (b) the date of termination of
the Aggregate Commitments pursuant to Section 2.04 and (c) the date of
termination of the commitment of each Lender to make Loans pursuant to Section
8.02(a).

     "Bank of America" shall mean Bank of America, N.A. and its successors.

     "Base Rate" shall mean for any day a fluctuating rate per annum equal to
the higher of (a) the Federal Funds Rate plus 0.5% and (b) the rate of interest
in effect for such day as publicly announced from time to time by Bank of
America as its "prime rate." The "prime rate" is a rate set by Bank of America
based upon various factors, including Bank of America's costs and desired
return, general economic conditions and other factors, and is used as a
reference point for pricing some loans, which may be priced at, above or below
such announced rate. Any change in such rate announced by Bank of America shall
take effect at the opening of business on the day specified in the public
announcement of such change.

     "Base Rate Loan" shall mean a Loan that bears interest based on the Base
Rate.

     "Borrower" - see the introductory paragraph.

     "Borrower Materials" - see Section 6.01.

     "Borrowing" shall mean a borrowing consisting of simultaneous Loans of the
same Type and, in the case of Eurodollar Rate Loans, having the same Interest
Period made by each of the Lenders pursuant to Section 2.01.

                                       4

<PAGE>

     "Business Day" shall mean any day other than a Saturday, Sunday or other
day on which commercial banks are authorized to close under the Laws of, or are
in fact closed in, the state where the Administrative Agent's Office is located
and, if such day relates to any Eurodollar Rate Loan, means any such day on
which dealings in Dollar deposits are conducted by and between banks in the
London interbank eurodollar market.

     "Calculation Period" shall mean, with respect to any ratio or calculation,
the period for which such ratio or calculation is being calculated.

     "Capital Securities" shall mean the 9.31% Capital Securities, Series A of
Delphi Funding L.L.C., the Floating Rate Capital Securities of Delphi Financial
Statutory Trust I and any other capital securities or other securities
constituting Hybrid Capital issued by (a) the Borrower or (b) a limited
liability company, business trust or similar entity, all of the common
securities (or equivalent thereof) of which are owned directly or indirectly by
the Borrower and which is formed solely for the purpose of issuing such capital
securities and investing the net proceeds of such issuance in debt securities of
the Borrower; provided that the Borrower's repayment obligations under such debt
securities relating to any such other capital securities or Hybrid Capital shall
be subordinated to the Obligations; and provided further that such capital
securities shall not have any maturities prior to the Maturity Date.

     "Capital Securities Amount" shall mean the aggregate amount of the
obligations reflected on the consolidated balance sheet of the Borrower and its
Subsidiaries, calculated on a consolidated basis in accordance with GAAP,
relating to (i) debt securities which underlie Capital Securities and (ii) debt
securities which constitute Capital Securities.

     "Cash Equivalents" shall mean (a) securities with maturities of six (6)
months or less from the date of acquisition issued or fully guaranteed or
insured by the United States Government or any agency thereof, (b) certificates
of deposit, eurodollar time deposits, overnight bank deposits, bankers'
acceptances and repurchase agreements of any Lender or any other commercial bank
whose unsecured long-term debt obligations are rated at least BBB- by Standard &
Poor's or Baa3 by Moody's having maturities of six (6) months or less from the
date of acquisition, and (c) commercial paper rated at least "A-2" by Standard &
Poor's or "P-2" by Moody's, or carrying an equivalent rating by a nationally
recognized rating agency, if both of the two named rating agencies cease
publishing ratings of investments.

     "Change in Control" shall be deemed to have occurred at such times as: (a)
the Borrower ceases to own, directly or indirectly, free and clear of all Liens,
at least 100% of the outstanding shares of voting stock and voting power of
Safety National and RSL on a fully diluted basis; (b) except for the Persons
referenced in clause (c) of this definition, any Person, or two or more Persons,
acting in concert, acquire beneficial ownership (within the meaning of Rule
13d-3 of the Securities and Exchange Commission under the Securities Exchange
Act of 1934, as amended) of 40% or more of the voting power of the outstanding
voting stock of the Borrower on a fully diluted basis, (c) the Parent and Robert
Rosenkranz, together with their respective Affiliates, cease to beneficially own
(within the meaning of Rule 13d-3 of the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as amended) at least 33-1/3% of the
voting power of the outstanding voting stock of the Borrower on a fully diluted
basis; or (d) individuals who as of the Effective Date constitute the Borrower's
Board of Directors (together with any new director whose election by the
Borrower's Board of Directors or whose nomination

                                       5

<PAGE>

for election by the Borrower's stockholders was approved by a vote of at least
two-thirds of the directors then still in office who either were directors at
the beginning of such period or whose election or nomination for election was
previously so approved), for any reason, cease to constitute a majority of the
directors at any time then in office.

     "Change in Law" shall mean the occurrence, after the date of this
Agreement, of any of the following: (a) the adoption or taking effect of any
law, rule, regulation or treaty, (b) any change in any law, rule, regulation or
treaty or in the administration, interpretation or application thereof by any
Governmental Authority or (c) the making or issuance of any request, guideline
or directive (whether or not having the force of law) by any Governmental
Authority.

     "Closing Date" shall mean the first date on which all conditions precedent
in Section 4.01 are satisfied or waived (or, in the case of Section 4.01(b),
waived by the Person entitled to receive the applicable payment).

     "Co-Arranger" shall mean Wachovia Securities, Inc., in its capacity as
joint lead arranger.

     "Code" shall mean the Internal Revenue Code of 1986.

     "Commitment" shall mean, as to each Lender, its obligation to (a) make
Loans to the Borrower pursuant to Section 2.01, in an aggregate principal amount
at any time outstanding not to exceed the amount set forth opposite such
Lender's name on Schedule 2.01 or in the Assignment and Assumption pursuant to
which such Lender becomes a party hereto, as applicable, as such amount may be
adjusted from time to time in accordance with this Agreement.

     "Compliance Certificate" shall mean a certificate substantially in the form
of Exhibit C.

     "Consolidated Equity" shall mean, with respect to the Borrower, the sum of
(a) stockholders' equity of the Borrower and its Subsidiaries calculated on a
consolidated basis in accordance with GAAP, but excluding accumulated other
comprehensive income, plus (b) the Capital Securities Amount, to the extent that
such amount does not exceed 15% of the sum of (x) Consolidated Funded Debt (but
not including any of the Capital Securities Amount), plus (y) Consolidated Net
Worth, plus (z) the entire Capital Securities Amount.

     "Consolidated Funded Debt" shall mean, without duplication, the sum of (a)
all Borrowings hereunder, (b) Indebtedness as defined under clauses (a) and (b)
of the definition thereof, and (c) Guarantees of Indebtedness as defined in
clauses (a) and (b) of the definition of "Indebtedness", all as calculated on a
consolidated basis in accordance with GAAP, but excluding the Capital Securities
Amount, to the extent that such amount would be included in Consolidated Equity
pursuant to the operation of the definition thereof.

     "Consolidated Net Worth" shall mean, with respect to the Borrower, the
stockholders' equity of the Borrower and its Subsidiaries calculated on a
consolidated basis in accordance with GAAP, but excluding accumulated other
comprehensive income.

                                       6

<PAGE>

     "Contractual Obligation" shall mean, as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.

     "Control" - see the definition of "Affiliate."

     "Debt to Capital Ratio" shall mean, at any date of determination, the ratio
of (a) Consolidated Funded Debt to (b)(i) Consolidated Funded Debt, plus (ii)
Consolidated Equity of the Borrower.

     "Debtor Relief Laws" shall mean the Bankruptcy Code of the United States,
and all other liquidation, conservatorship, bankruptcy, assignment for the
benefit of creditors, moratorium, rearrangement, receivership, insolvency,
reorganization, or similar debtor relief Laws of the United States or other
applicable jurisdictions from time to time in effect and affecting the rights of
creditors generally.

     "Default" shall mean any event or condition that has not been cured or
waived and constitutes an Event of Default or that, with the giving of any
notice, the passage of time or both, would be an Event of Default.

     "Default Rate" shall mean an interest rate per annum equal to (a) in the
case of any Eurodollar Rate Loan, the interest rate otherwise applicable thereto
plus 2%; and (b) in the case of any other Obligation, the sum of (i) the Base
Rate plus (ii) 2%; provided that the interest rate applicable to any Obligation
shall not at any time exceed the highest rate permitted by applicable Law.

     "Defaulting Lender" shall mean any Lender that (a) has failed to fund any
portion of the Loans required to be funded by it hereunder within one Business
Day of the date required to be funded by it hereunder unless such failure has
been cured at the relevant time, (b) has otherwise failed to pay over to the
Administrative Agent or any other Lender any other amount required to be paid by
it hereunder within one Business Day of the date when due, unless the subject of
a good faith dispute or unless such failure has been cured at the relevant time,
or (c) has been deemed insolvent or become the subject of a bankruptcy or
insolvency proceeding.

     "Department" - see Section 5.05(a)(i).

     "Dollar" and "$" shall mean lawful money of the United States.

     "Eligible Assignee" shall mean any Person that meets the requirements to be
an assignee under Section 10.06(b)(iii), (v) and (vi) (subject to such consents,
if any, as may be required under Section 10.06(b)(iii)).

     "Environmental Laws" shall mean any and all Federal, state, local and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
governmental restrictions relating to pollution and the protection of the
environment or the release of any materials into the environment, including
those related to hazardous substances or wastes, air emissions and discharges to
waste or public systems.

                                       7

<PAGE>

     "Environmental Liability" shall mean any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of the Borrower or any of its Subsidiaries directly
or indirectly resulting from or based upon (a) violation of any Environmental
Law, (b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials,
(d) the release or threatened release of any Hazardous Materials into the
environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.

     "ERISA" shall mean the Employee Retirement Income Security Act of 1974.

     "ERISA Affiliate" shall mean any trade or business (whether or not
incorporated) under common control with the Borrower within the meaning of
Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for
purposes of provisions relating to Section 412 of the Code).

     "ERISA Event" shall mean (a) a Reportable Event with respect to a Pension
Plan; (b) a withdrawal by the Borrower or any ERISA Affiliate from a Pension
Plan subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation
of operations that is treated as such a withdrawal under Section 4062(e) of
ERISA; (c) a complete or partial withdrawal by the Borrower or any ERISA
Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is
in reorganization; (d) the filing of a notice of intent to terminate, the
treatment of a Plan amendment as a termination under Sections 4041 or 4041A of
ERISA, or the commencement of proceedings by the PBGC to terminate a Pension
Plan or Multiemployer Plan; (e) an event or condition which constitutes grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Pension Plan or Multiemployer Plan; or (f) the
imposition of any liability under Title IV of ERISA, other than for PBGC
premiums due but not delinquent under Section 4007 of ERISA, upon the Borrower
or any ERISA Affiliate.

     "Eurodollar Base Rate" - see the definition of "Eurodollar Rate."

     "Eurodollar Rate" shall mean for any Interest Period with respect to any
Eurodollar Rate Loan, a rate per annum determined by the Administrative Agent
pursuant to the following formula:

                          Eurodollar Base Rate
Eurodollar Rate = ------------------------------------
                  1.00 - Eurodollar Reserve Percentage

     Where,

          "Eurodollar Base Rate" shall mean, for such Interest Period, the rate
     per annum equal to the British Bankers Association LIBOR Rate ("BBA
     LIBOR"), as published by Reuters (or other commercially available source
     providing quotations of BBA LIBOR as designated by the Administrative Agent
     from time to time) at approximately 11:00 a.m., London time, two Business
     Days prior to the commencement of such Interest Period, for Dollar deposits
     (for delivery on the first day of such Interest Period) with a term

                                       8

<PAGE>

     equivalent to such Interest Period. If such rate is not available at such
     time for any reason, then the "Eurodollar Base Rate" for such Interest
     Period shall be the rate per annum determined by the Administrative Agent
     to be the rate at which deposits in Dollars for delivery on the first day
     of such Interest Period in same day funds in the approximate amount of the
     Eurodollar Rate Loan being made, continued or converted by Bank of America
     and with a term equivalent to such Interest Period would be offered by Bank
     of America's London Branch to major banks in the London interbank
     eurodollar market at their request at approximately 11:00 a.m. (London
     time) two Business Days prior to the commencement of such Interest Period.

          "Eurodollar Reserve Percentage" shall mean, for any day during any
     Interest Period, the reserve percentage (expressed as a decimal, carried
     out to five decimal places) in effect on such day, whether or not
     applicable to any Lender, under regulations issued from time to time by the
     FRB for determining the maximum reserve requirement (including any
     emergency, supplemental or other marginal reserve requirement) with respect
     to Eurocurrency funding (currently referred to as "Eurocurrency
     liabilities"). The Eurodollar Rate for each outstanding Eurodollar Rate
     Loan shall be adjusted automatically as of the effective date of any change
     in the Eurodollar Reserve Percentage.

     "Eurodollar Rate Loan" shall mean a Loan that bears interest at a rate
based on the Eurodollar Rate.

     "Event of Default" - see Section 8.01.

     "Excluded Taxes" shall mean, with respect to the Administrative Agent, any
Lender or any other recipient of any payment to be made by or on account of any
obligation of the Borrower hereunder, (a) taxes imposed on or measured by its
overall net income (however denominated), and franchise taxes imposed on it (in
lieu of net income taxes), by the jurisdiction (or any political subdivision
thereof) under the laws of which such recipient is organized or in which its
principal office is located or, in the case of any Lender, in which its
applicable Lending Office is located, (b) any branch profits taxes imposed by
the United States or any similar tax imposed by any other jurisdiction in which
the Borrower is located and (c) in the case of a Foreign Lender (other than an
assignee pursuant to a request by the Borrower under Section 10.13), any
withholding tax that is imposed on amounts payable to such Foreign Lender at the
time such Foreign Lender becomes a party hereto (or designates a new Lending
Office) or is attributable to such Foreign Lender's failure or inability (other
than as a result of a Change in Law) to comply with Section 3.01(e), except to
the extent that such Foreign Lender (or its assignor, if any) was entitled, at
the time of designation of a new Lending Office (or assignment), to receive
additional amounts from the Borrower with respect to such withholding tax
pursuant to Section 3.01(a).

     "Existing Credit Agreement" - see the recitals.

     "Federal Funds Rate" shall mean, for any day, the rate per annum equal to
the weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank on the Business Day next
succeeding such day; provided that (a) if such day is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions on

                                       9

<PAGE>

the next preceding Business Day as so published on the next succeeding Business
Day, and (b) if no such rate is so published on such next succeeding Business
Day, the Federal Funds Rate for such day shall be the average rate (rounded
upward, if necessary, to a whole multiple of 1/100 of 1%) charged to Bank of
America on such day on such transactions as determined by the Administrative
Agent.

     "Fee Letter" shall mean the letter agreement dated August 29, 2006 among
the Borrower, the Administrative Agent and the Arranger.

     "Fiscal Quarter" or "FQ" shall mean any fiscal quarter of a Fiscal Year.

     "Fiscal Year" or "FY" shall mean any period of twelve consecutive calendar
months ending on December 31; references to a Fiscal Year with a number
corresponding to any calendar year (e.g., the "2006 Fiscal Year") refer to the
Fiscal Year ending on December 31 occurring during such calendar year.

     "Foreign Lender" shall mean any Lender that is organized under the laws of
a jurisdiction other than that in which the Borrower is resident for tax
purposes. For purposes of this definition, the United States, each State thereof
and the District of Columbia shall be deemed to constitute a single
jurisdiction.

     "FRB" shall mean the Board of Governors of the Federal Reserve System of
the United States.

     "FRSL" shall mean First Reliance Standard Life Insurance Company, a New
York insurance company.

     "Fund" shall mean any Person (other than a natural person) that is (or will
be) engaged in making, purchasing, holding or otherwise investing in commercial
loans and similar extensions of credit in the ordinary course of its business.

     "GAAP" shall mean generally accepted accounting principles in the United
States set forth in the opinions and pronouncements of the Accounting Principles
Board and the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board or such other
principles as may be approved by a significant segment of the accounting
profession in the United States, that are applicable to the circumstances as of
the date of determination, consistently applied.

     "Governmental Authority" shall mean the government of the United States or
any other nation, or of any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government (including any supra-national bodies such as the European Union or
the European Central Bank).

     "Guarantee" shall mean, as to any Person, any (a) any obligation,
contingent or otherwise, of such Person guaranteeing or having the economic
effect of guaranteeing any Indebtedness or other obligation payable or
performable by another Person (the "primary

                                       10

<PAGE>

obligor") in any manner, whether directly or indirectly, and including any
obligation of such Person, direct or indirect, (i) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness or
other obligation, (ii) to purchase or lease property, securities or services for
the purpose of assuring the obligee in respect of such Indebtedness or other
obligation of the payment or performance of such Indebtedness or other
obligation, (iii) to maintain working capital, equity capital or any other
financial statement condition or liquidity or level of income or cash flow of
the primary obligor so as to enable the primary obligor to pay such Indebtedness
or other obligation, or (iv) entered into for the purpose of assuring in any
other manner the obligee in respect of such Indebtedness or other obligation of
the payment or performance thereof or to protect such obligee against loss in
respect thereof (in whole or in part), or (b) any Lien on any assets of such
Person securing any Indebtedness or other obligation of any other Person,
whether or not such Indebtedness or other obligation is assumed by such Person.
The amount of any Guarantee shall be deemed to be an amount equal to the stated
or determinable amount of the related primary obligation, or portion thereof, in
respect of which such Guarantee is made or, if not stated or determinable, the
maximum reasonably anticipated liability in respect thereof as determined by the
guaranteeing Person in good faith. The term "Guarantee" as a verb has a
corresponding meaning.

     "Hazardous Materials" shall mean all explosive or radioactive substances or
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos-containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law.

     "Hybrid Capital" shall mean securities treated as hybrid capital by S&P,
Moody's or AM Best Company.

     "Indebtedness" shall mean, as to any Person at a particular time, without
duplication, all of the following, whether or not included as indebtedness or
liabilities in accordance with GAAP:

     (a) all obligations of such Person for borrowed money and all obligations
of such Person evidenced by bonds, debentures, notes, loan agreements or other
similar instruments;

     (b) all direct obligations of such Person arising under letters of credit
(including standby and commercial), bankers' acceptances, bank guaranties, and
similar instruments;

     (c) net obligations of such Person under any Swap Contract;

     (d) all obligations of such Person to pay the deferred purchase price of
property or services (other than trade accounts payable in the ordinary course
of business);

     (e) indebtedness (excluding prepaid interest thereon) secured by a Lien on
property owned or being purchased by such Person (including indebtedness arising
under conditional sales or other title retention agreements), whether or not
such indebtedness shall have been assumed by such Person or is limited in
recourse;

     (f) obligations under capital leases and Synthetic Lease Obligations; and

                                       11

<PAGE>

     (g) all Guarantees of such Person in respect of any of the foregoing.

     For all purposes hereof, the Indebtedness of any Person shall include the
Indebtedness of any partnership or joint venture (other than a joint venture
that is itself a corporation or limited liability company) in which such Person
is a general partner or a joint venturer, unless such Indebtedness is expressly
made non-recourse to such Person. The amount of any net obligation under any
Swap Contract on any date shall be deemed to be the Swap Termination Value
thereof as of such date. The amount of any capital lease or Synthetic Lease
Obligation as of any date shall be deemed to be the amount of Attributable
Indebtedness in respect thereof as of such date. Indebtedness of a Person shall
not include Permitted Transactions of the Person.

     "Indemnified Taxes" shall mean Taxes other than Excluded Taxes.

     "Indemnitees" - see Section 10.04(b).

     "Information" - see Section 10.07.

     "Interest Payment Date" shall mean (a) as to any Eurodollar Rate Loan, the
last day of each Interest Period applicable to such Loan and the Maturity Date;
provided, however, that if any Interest Period for a Eurodollar Rate Loan
exceeds three months, the respective dates that fall every three months after
the beginning of such Interest Period shall also be Interest Payment Dates; and
(b) as to any Base Rate Loan, the last Business Day of each March, June,
September and December and the Maturity Date.

     "Interest Period" means as to each Eurodollar Rate Loan, the period
commencing on the date such Eurodollar Rate Loan is disbursed or (in the case of
any Eurodollar Rate Loan) converted to or continued as a Eurodollar Rate Loan
and ending on the date one, two, three or six months or, if available to the
Lenders, nine months or, if acceptable to the Lenders, twelve months, as
selected by the Borrower in its Loan Notice provided that:

          (i) any Interest Period that would otherwise end on a day that is not
     a Business Day shall be extended to the next succeeding Business Day unless
     such Business Day falls in another calendar month, in which case such
     Interest Period shall end on the next preceding Business Day;

          (ii) any Interest Period that begins on the last Business Day of a
     calendar month (or on a day for which there is no numerically corresponding
     day in the calendar month at the end of such Interest Period) shall end on
     the last Business Day of the calendar month at the end of such Interest
     Period; and

          (iii) no Interest Period shall extend beyond the Maturity Date.

     "Investment" shall mean, as to any Person, any direct or indirect
acquisition or investment by such Person, whether by means of (a) the purchase
or other acquisition of capital stock or other securities of another Person, or
(b) a loan, advance or capital contribution to, Guarantee or assumption of debt
of, deposit with or purchase or other acquisition of any other debt or equity
participation or interest in, another Person, including any partnership or joint
venture interest in such other Person, other than, in either case, pursuant to
an Acquisition. For

                                       12

<PAGE>

purposes of covenant compliance, the amount of any Investment shall be the
amount actually invested, without adjustment for subsequent increases or
decreases in the value of such Investment.

     "Investment Grade Securities" shall mean non-equity securities which are
rated at least "NAIC 2" by the NAIC, "BBB-" by Standard & Poor's, "Baa3" by
Moody's, "BBB-" by Fitch Investor Services, Inc., or carrying an equivalent
rating by a nationally recognized rating agency, if each of the named rating
agencies cease publishing ratings of investments.

     "IRS" shall mean the United States Internal Revenue Service. ---

     "Laws" shall mean, collectively, all international, foreign, Federal, state
and local statutes, treaties, rules, guidelines, regulations, ordinances, codes
and administrative or judicial precedents or authorities, including the
interpretation or administration thereof by any Governmental Authority charged
with the enforcement, interpretation or administration thereof, and all
applicable administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental Authority,
in each case whether or not having the force of law.

     "Lender" - see the introductory paragraph hereto.

     "Lending Office" shall mean, as to any Lender, the office or offices of
such Lender described as such in such Lender's Administrative Questionnaire, or
such other office or offices as a Lender may from time to time specify in
writing to the Borrower and the Administrative Agent.

     "Licenses" - see Section 5.20; individually, a "License".

     "Lien" shall mean any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge, preference,
priority or other security interest or preferential arrangement of any kind or
nature whatsoever (including any conditional sale or other title retention
agreement and any financing lease having substantially the same economic effect
as any of the foregoing, but excluding the interest of a lessor under an
operating lease).

     "Litigation" shall mean any litigation (including, without limitation, any
governmental proceeding or arbitration proceeding), tax audit or investigative
proceeding, claim, lawsuit, and/or investigation pending or threatened against
or involving the Borrower, any of its Subsidiaries or other Affiliates or any of
its or their businesses or operations.

     "Loan" - see Section 2.01.

     "Loan Documents" shall mean this Agreement, each Note and the Fee Letter.

     "Loan Notice" shall mean a notice of (a) a borrowing of Loans, (b) a
conversion of Loans from one Type to the other, or (c) a continuation of
Eurodollar Rate Loans, pursuant to Section 2.02(a), which, if in writing, shall
be substantially in the form of Exhibit A.

                                       13

<PAGE>

     "Material Adverse Change" or "Material Adverse Effect" shall mean any
change, event, action, condition or effect which individually or in the
aggregate (a) impairs the validity or enforceability of this Agreement, the
Notes, if any, or any other Related Document, or (b) materially and adversely
affects the consolidated business, assets, liabilities (actual or contingent),
condition (financial or otherwise), operations or prospects of the Borrower and
its Subsidiaries taken as a whole, or (d) impairs the ability of the Borrower or
any of its Subsidiaries to perform their respective obligations under this
Agreement or any of the Related Documents.

     "Material Litigation" or "Material Litigation Development" shall mean any
Litigation, or development in any Litigation, as the case may be (a) which
involves this Agreement, any Related Document or other transactions contemplated
hereby or thereby, or (b) which could reasonably be expected to have a Material
Adverse Effect.

     "Material Subsidiary" means, a Subsidiary whose (a) consolidated assets
exceed 5% of the consolidated assets of the Borrower and its Subsidiaries or (b)
whose consolidated revenues exceed 5% of the consolidated revenues of the
Borrower and its Subsidiaries, as of the end of or for the most recent Fiscal
Quarter for which financial statements have been delivered pursuant to Section
6.01(a) or (b).

     "Maturity Date" shall mean October 25, 2011; provided, however, that if
such date is not a Business Day, the Maturity Date shall be the next preceding
Business Day.

     "Moody's" shall mean Moody's Investors Service, Inc. and any successor
thereto.

     "Multiemployer Plan" shall mean any employee benefit plan of the type
described in Section 4001(a)(3) of ERISA to which the Borrower or any ERISA
Affiliate makes or is obligated to make, or during the preceding five plan years
has made or been obligated to make, contributions.

     "NAIC" shall mean the National Association of Insurance Commissioners, or
any successor organization.

     "Net Income" shall mean, for any Person for any Calculation Period, the net
income (or loss) of such Person for such Calculation Period as determined in
accordance with GAAP.

     "Non-Insurance Subsidiary" shall mean a Subsidiary of the Borrower that is
not engaged in the business of assuming insurance or reinsurance risk, and as of
the date hereof, shall include all Subsidiaries of the Borrower other than the
Reliance Standard Insurance Companies, Safety National, Safety First and Safety
National Re.

     "Note" shall mean a promissory note made by the Borrower in favor of a
Lender evidencing Loans made by such Lender, substantially in the form of
Exhibit B.

     "Obligations" shall mean all advances to, and debts, liabilities,
obligations, covenants and duties of, the Borrower arising under any Loan
Document or otherwise with respect to any Loan, whether direct or indirect
(including those acquired by assumption), absolute or contingent, due or to
become due, now existing or hereafter arising and including interest and fees
that accrue after the commencement by or against the Borrower or any Affiliate
thereof of any proceeding

                                       14

<PAGE>

under any Debtor Relief Laws naming such Person as the debtor in such
proceeding, regardless of whether such interest and fees are allowed claims in
such proceeding.

     "Organization Documents" shall mean, (a) with respect to any corporation,
the certificate or articles of incorporation and the bylaws (or equivalent or
comparable constitutive documents with respect to any non-U.S. jurisdiction);
(b) with respect to any limited liability company, the certificate or articles
of formation or organization and operating agreement; and (c) with respect to
any partnership, joint venture, trust or other form of business entity, the
partnership, joint venture or other applicable agreement of formation or
organization and any agreement, instrument, filing or notice with respect
thereto filed in connection with its formation or organization with the
applicable Governmental Authority in the jurisdiction of its formation or
organization and, if applicable, any certificate or articles of formation or
organization of such entity.

     "Other Taxes" shall mean all present or future stamp or documentary taxes
or any other excise or property taxes, charges or similar levies arising from
any payment made hereunder or under any other Loan Document or from the
execution, delivery or enforcement of, or otherwise with respect to, this
Agreement or any other Loan Document.

     "Outstanding Amount" shall mean, on any date, the aggregate outstanding
principal amount of Loans after giving effect to any borrowings and payments
occurring on such date.

     "Parent" shall mean Rosenkranz & Company, a Delaware limited partnership.

     "Participant" - see Section 10.06(d).

     "PBGC" shall mean the Pension Benefit Guaranty Corporation.

     "Pension Plan" means any "employee pension benefit plan" (as defined in
Section 3(2) of ERISA), other than a Multiemployer Plan, that is subject to
Title IV of ERISA and is sponsored or maintained by the Borrower or any ERISA
Affiliate or to which the Borrower or any ERISA Affiliate contributes or has an
obligation to contribute, or in the case of a multiple employer or other plan
described in Section 4064(a) of ERISA, has made contributions at any time during
the immediately preceding five plan years.

     "Permitted Liens" - see Section 7.01.

     "Permitted Transactions" shall mean (a) transactions in which an investor
sells U.S. Government Securities or mortgage-backed securities, including,
without limitation, securities issued by the Government National Mortgage
Association and the Federal Home Loan Mortgage Corporation, while simultaneously
contracting to repurchase the same or "substantially the same" (as determined by
the Public Securities Association and in accordance with GAAP) securities for a
later settlement, (b) transactions in which an investor lends cash to a primary
dealer and the primary dealer collateralizes the borrowing of the cash with
certain securities, (c) transactions in which an investor lends securities to a
primary dealer and the primary dealer collateralizes the borrowing of the
securities with cash collateral, and (d) transactions in which an investor makes
loans of securities to a broker dealer under an agreement requiring such loans
to be continuously secured by cash collateral or U.S. Government Securities.

                                       15

<PAGE>

     "Person" shall mean any natural person, corporation, limited liability
company, trust, joint venture, association, company, partnership, Governmental
Authority or other entity.

     "Plan" shall mean any "employee benefit plan" (as such term is defined in
Section 3(3) of ERISA) established by the Borrower or, with respect to any such
plan that is subject to Section 412 of the Code or Title IV of ERISA, any ERISA
Affiliate.

     "Platform" - see Section 6.01.

     "Qualification" shall mean, with respect to any certificate covering any
financial statements, a qualification to such certificate or financial
statements (such as a "subject to" or "except for" statement therein) (a)
resulting from a limitation on the scope of examination of such financial
statements or the underlying data, (b) as to the capability of the Person whose
financial statements are certified to continue operations as a going concern, or
(c) which could be eliminated by changes in financial statements or notes
thereto covered by such certificate (such as by the creation of or increase in a
reserve or a decrease in the carrying value of assets) and which if so
eliminated by the making of any such change and after giving effect thereto
would occasion a Default; provided, that neither of the following shall
constitute a Qualification: (i) a consistency exception relating to a change in
accounting principles with which the independent public accountants for the
Person whose financial statements are being certified have concurred; or (ii) a
qualification relating to the outcome or disposition of threatened Litigation,
pending Litigation being contested in good faith, pending or threatened claims
or contingencies which cannot be determined with sufficient certainty to permit
such financial statements to be unqualified.

     "Reference Departments" shall mean the Department of the State of Illinois,
in the case of RSL, the State of Missouri, in the case of Safety National, the
State of New York, in the case of FRSL and the State of Texas, in the case of
RSL-Texas.

     "Register" - see Section 10.06(c).

     "Reinsurance Agreements" shall mean any agreement, contract, treaty,
certificate or other arrangement by which any of the Reliance Standard Insurance
Companies or Safety National agrees to transfer or cede to another insurer all
or part of the liability assumed or assets held by any one of the Reliance
Standard Insurance Companies or Safety National under a policy or policies of
insurance or under a reinsurance agreement assumed by any one of the Reliance
Standard Insurance Companies. Reinsurance Agreements shall include, but not be
limited to, any agreement, contract, treaty, certificate or other arrangement
which is treated as such by the applicable Department or Reference Department.

     "Related Documents" shall mean the Notes, if any, and any and all other
documents or instruments furnished or required to be furnished pursuant to
Article IV, as the same may be amended or modified from time to time.

     "Related Parties" means, with respect to any Person, such Person's
Affiliates and the partners, directors, officers, employees, agents and advisors
of such Person and of such Person's Affiliates.

                                       16

<PAGE>

     "Reliance Standard Insurance Companies" shall mean RSL-Texas, RSL and FRSL.

     "Reportable Event" shall mean any of the events set forth in Section
4043(c) of ERISA, other than events for which the 30 day notice period has been
waived.

     "Representatives" - see Section 10.07.

     "Required Lenders" shall mean, as of any date of determination, Lenders
having more than 50% of the Aggregate Commitments or, if the Commitments have
been terminated, Lenders holding in the aggregate more than 50% of the Total
Outstandings; provided that the Commitment of, and the portion of the Total
Outstandings held or deemed held by, any Defaulting Lender shall be excluded for
purposes of making a determination of Required Lenders.

     "Responsible Officer" shall mean the chief executive officer, president,
chief financial officer, executive vice president, treasurer or assistant
treasurer of the Borrower. Any document delivered hereunder that is signed by a
Responsible Officer shall be conclusively presumed to have been authorized by
all necessary corporate, partnership and/or other action on the part of the
Borrower and such Responsible Officer shall be conclusively presumed to have
acted on behalf of the Borrower.

     "Risk-Based Capital Ratio" shall mean, with respect to any insurance
company, the ratio of Adjusted Capital of such insurance company to the Company
Action Level of such insurance company (as determined by the NAIC or the
applicable Reference Department). In the event that there is a conflict between
the Risk-Based Capital formulas adopted by the NAIC and the applicable Reference
Department, the calculation of the Reference Department shall govern.

     "RSL" shall mean Reliance Standard Life Insurance Company, an Illinois
insurance company.

     "RSL-Texas" shall mean Reliance Standard Life Insurance Company of Texas, a
Texas insurance company.

     "S&P" means Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc. and any successor thereto.

     "Safety First" shall mean Safety First Insurance Company, an Illinois
insurance company.

     "Safety National" shall mean Safety National Casualty Corporation, a
Missouri insurance corporation.

     "Safety National Re" shall mean Safety National Re SPC, a Cayman Islands
insurance corporation.

     "SAP" shall mean, as to any insurance company, the statutory accounting
practices prescribed or permitted by the Reference Department.

                                       17

<PAGE>

     "SEC" shall mean the Securities and Exchange Commission, or any
Governmental Authority succeeding to any of its principal functions.

     "Solvent", as to any Person on a particular date, shall mean that on such
date (a) the fair value of the property of such Person is greater than the total
amount of liabilities, including, without limitation, contingent liabilities, of
such Person, (b) the present fair salable value of the assets of such Person is
not less than the amount that will be required to pay the probable liabilities
of such Person and its debts as they become absolute and matured, (c) such
Person is able to realize upon its assets and pay its debts and other
obligations, Guarantees and other commitments as they mature in the normal
course of business, (d) such Person does not intend to, and does not believe
that it will, incur debts or liabilities beyond such Person's ability to pay as
such debts and liabilities mature, (e) such Person is not engaged in business or
a transaction, and is not about to engage in business or a transaction, for
which such Person's property would constitute unreasonably small capital after
giving due consideration to the prevailing practice in the industry in which
such Person is engaged and (f) such Person has not made any transfer or incurred
any obligation, with the intent to hinder, delay or defraud either present or
future creditors of such Person. For the purposes of this definition, in
computing the amount of any Guarantee at any time, it is intended that such
Guarantee will be computed at the amount which, in light of all the facts and
circumstances existing at such time, represents the amount that can reasonably
be expected to become an actual or matured liability.

     "Statutory Financial Statements" - see Section 5.05(a)(i).

     "Statutory Liabilities" shall mean, as to any of the Reliance Standard
Insurance Companies as of any date, the amount reported on line 26, page 3,
column 1 of the Annual Statement of each of the Reliance Standard Insurance
Companies and, as to Safety National as of any date, the amount reported on line
26, page 3, column 1 of the Annual Statement of Safety National, or, in each
case, an amount determined in a consistent manner for any date other than one as
of which an Annual Statement is prepared.

     "Structured Notes" shall mean the Secured Portfolio Notes, Series 1998-1B
issued in 1998 by Bankers Trust Corporation (formerly Bankers Trust New York
Corporation) to certain Subsidiaries of the Borrower and any structured notes
hereafter acquired by the Borrower or any of its Subsidiaries, the return with
respect to which is linked, in whole or in part, to the performance of an
Investment portfolio, the underlying components of which, if treated for
purposes of Section 7.05(c)(ii) of this Agreement as direct Investments of the
Borrower or the applicable Subsidiary to the extent of their proportionate
interests therein, would not cause any violation of such Section.

     "Subsidiary" of a Person shall mean a corporation, partnership, joint
venture, limited liability company or other business entity of which a majority
of the shares of securities or other interests having ordinary voting power for
the election of members of the board of directors or other governing body (other
than securities or interests having such power only by reason of the happening
of a contingency) are at the time beneficially owned, or the management of which
is otherwise controlled, directly, or indirectly through one or more
intermediaries, or both, by such Person. Unless otherwise specified, all
references herein to a "Subsidiary" or to "Subsidiaries" shall refer to a
Subsidiary or Subsidiaries of the Borrower; provided, however, that the term

                                       18

<PAGE>

"Subsidiary" shall not refer to any Person where equity interests are held
solely by separate accounts of the Reliance Standard Insurance Companies in the
ordinary course of business.

     "Subsidiary Indebtedness" shall mean (a) a Subsidiary's obligations (other
than to the Borrower or another Subsidiary) for borrowed money that are
evidenced by bonds, debentures, notes or bank credit agreements, other than
obligations in respect of (i) advances from a Federal Home Loan Bank or funding
agreement backed note programs and (ii) securities constituting Hybrid Capital
which are issued by a limited liability company, business trust or similar
entity, all of the common securities of which are owned, directly or indirectly,
by the Borrower and which is formed solely for the purpose of issuing such
securities; (b) Guarantees by a Subsidiary of obligations for borrowed money so
evidenced of another Person (other than the Borrower or a Subsidiary); (c)
Indebtedness owing by a Subsidiary to the Borrower, another Subsidiary or any
other Person incurred in support of obligations of a Subsidiary or such other
Person in connection with Hybrid Capital; and (d) Guarantees by a Subsidiary in
respect of obligations of another Subsidiary or any other Person incurred in
support of obligations of a Subsidiary or such other Person in connection with
Hybrid Capital.

     "Swap Contract" shall mean (a) any and all rate swap transactions, basis
swaps, credit derivative transactions, forward rate transactions, commodity
swaps, commodity options, forward commodity contracts, equity or equity index
swaps or options, bond or bond price or bond index swaps or options or forward
bond or forward bond price or forward bond index transactions, interest rate
options, forward foreign exchange transactions, cap transactions, floor
transactions, collar transactions, currency swap transactions, cross-currency
rate swap transactions, currency options, spot contracts, or any other similar
transactions or any combination of any of the foregoing (including any options
to enter into any of the foregoing), whether or not any such transaction is
governed by or subject to any master agreement, and (b) any and all transactions
of any kind, and the related confirmations, which are subject to the terms and
conditions of, or governed by, any form of master agreement published by the
International Swaps and Derivatives Association, Inc., any International Foreign
Exchange Master Agreement, or any other master agreement (any such master
agreement, together with any related schedules, a "Master Agreement"), including
any such obligations or liabilities under any Master Agreement.

     "Swap Termination Value" shall mean, in respect of any one or more Swap
Contracts, after taking into account the effect of any legally enforceable
netting agreement relating to such Swap Contracts, (a) for any date on or after
the date such Swap Contracts have been closed out and termination value(s)
determined in accordance therewith, such termination value(s), and (b) for any
date prior to the date referenced in clause (a), the amount(s) determined as the
mark-to-market value(s) for such Swap Contracts, as determined based upon one or
more mid-market or other readily available quotations provided by any recognized
dealer in such Swap Contracts (which may include a Lender or any Affiliate of a
Lender).

     "Synthetic Lease Obligation" shall mean the monetary obligation of a Person
under (a) a so-called synthetic, off-balance sheet or tax retention lease, or
(b) an agreement for the use or possession of property creating obligations that
do not appear on the balance sheet of such Person but which, upon the insolvency
or bankruptcy of such Person, would be characterized as the indebtedness of such
Person (without regard to accounting treatment).

                                       19

<PAGE>

     "Tax Claim" - see Section 6.01(n).

     "Tax Returns and Reports" shall mean all returns, reports and information
required to be filed with any Governmental Authority with regard to taxes.

     "Taxes" shall mean all present or future taxes, levies, imposts, duties,
deductions, withholdings, assessments, fees or other charges imposed by any
Governmental Authority, including any interest, additions to tax or penalties
applicable thereto.

     "Tersk Investment" shall mean the Investment by the Borrower and certain
Subsidiaries of the Borrower in equity interests and notes of Tersk LLC, a
Delaware limited liability company.

     "Threshold Amount" shall mean $20,000,000.

     "Total Outstandings" shall mean the aggregate Outstanding Amount of all
Loans.

     "Type" shall mean, with respect to a Loan, its character as a Base Rate
Loan or a Eurodollar Rate Loan.

     "Unfunded Pension Liability" shall mean the excess of a Pension Plan's
benefit liabilities under Section 4001(a)(16) of ERISA, over the current value
of that Pension Plan's assets, determined in accordance with the assumptions
used for funding the Pension Plan pursuant to Section 412 of the Code for the
applicable plan year.

     "United States" and "U.S." shall mean the United States of America.

     "U.S. Government Securities" shall mean obligations of, or obligations
guaranteed as to principal and interest by, the United States Government or any
agency or instrumentality thereof.

     1.02 OTHER INTERPRETIVE PROVISIONS. With reference to this Agreement and
each other Loan Document, unless otherwise specified herein or in such other
Loan Document:

     (a) The meanings of defined terms are equally applicable to the singular
and plural forms of the defined terms.

     (b) (i) The words "herein," "hereto," "hereof" and "hereunder" and words of
similar import when used in any Loan Document shall refer to such Loan Document
as a whole and not to any particular provision thereof.

          (ii) Article, Section, Exhibit and Schedule references are to the Loan
     Document in which such reference appears.

          (iii) The term "including" is by way of example and not limitation.
     The term "documents" includes any and all instruments, documents,
     agreements, certificates, notices, reports, financial statements and other
     writings, however evidenced, whether in physical or electronic form.

                                       20
<PAGE>

     (c) In the computation of periods of time from a specified date to a later
specified date, the word "from" means "from and including;" the words "to" and
"until" each mean "to but excluding;" and the word "through" means "to and
including."

     (d) Section headings herein and in the other Loan Documents are included
for convenience of reference only and shall not affect the interpretation of
this Agreement or any other Loan Document.

     1.03 ACCOUNTING TERMS. (a) All accounting terms not specifically or
completely defined herein shall be construed in conformity with, and all
financial data (including financial ratios and other financial calculations)
required to be submitted pursuant to this Agreement shall be prepared in
conformity with, GAAP or SAP, as applicable, applied on a consistent basis, as
in effect from time to time, applied in a manner consistent with that used in
preparing the Audited Financial Statements, except as otherwise specifically
prescribed herein.

     (b) If at any time any change in GAAP or SAP would affect the computation
of any financial ratio or requirement or the application of any provision set
forth in any Loan Document, and either the Borrower or the Required Lenders
shall so request, the Administrative Agent, the Lenders and the Borrower shall
negotiate in good faith to amend such ratio, requirement or provision to
preserve the original intent thereof in light of such change in GAAP or SAP
(subject to the approval of the Required Lenders); provided that, until so
amended, such ratio, requirement or provision shall continue to be computed or
applied in accordance with GAAP or SAP, as applicable, prior to such change
therein and the Borrower shall provide to the Administrative Agent and the
Lenders financial statements and other documents required under this Agreement
or as reasonably requested hereunder setting forth a reconciliation between
calculations of such ratio or requirement made before and after giving effect to
such change in GAAP or SAP.

     1.04 ROUNDING. Any financial ratio required to be maintained by the
Borrower pursuant to this Agreement shall be calculated by dividing the
appropriate component by the other component, carrying the result to one place
more than the number of places by which such ratio is expressed herein and
rounding the result up or down to the nearest number (with a rounding-up if
there is no nearest number).

     1.05 REFERENCES TO AGREEMENTS AND LAWS. Unless otherwise expressly provided
herein, references to Organization Documents, agreements (including the Loan
Documents) and other contractual instruments shall be deemed to include all
subsequent amendments, restatements, extensions, supplements and other
modifications thereto, but only to the extent that such amendments,
restatements, extensions, supplements and other modifications are not prohibited
by any Loan Document; and references to any Law shall include all statutory and
regulatory provisions consolidating, amending, replacing, supplementing or
interpreting such Law.

     1.06 TIMES OF DAY. Unless otherwise specified, all references herein to
times of day shall be references to Eastern time (daylight or standard, as
applicable).

                                   ARTICLE II
                            THE COMMITMENTS AND LOANS

                                       21

<PAGE>

     2.01 LOANS. Subject to the terms and conditions set forth herein, each
Lender severally agrees to make loans (each such loan, a "Loan") to the Borrower
from time to time, on any Business Day during the Availability Period, in an
aggregate amount not to exceed at any time outstanding the amount of such
Lender's Commitment; provided, however, that after giving effect to any
Borrowing, (i) the Total Outstandings shall not exceed the Commitments, and (ii)
the aggregate Outstanding Amount of the Loans of any Lender shall not exceed
such Lender's Commitment. Subject to the foregoing limits and the other terms
and conditions hereof, the Borrower may borrow under this Section 2.01, prepay
under Section 2.03, and reborrow under this Section 2.01. Loans may be Base Rate
Loans or Eurodollar Rate Loans, as further provided herein.

     2.02 BORROWINGS, CONVERSIONS AND CONTINUATIONS OF LOANS.

     (a) Each Borrowing, each conversion of Loans from one Type to the other,
and each continuation of Eurodollar Rate Loans shall be made upon the Borrower's
irrevocable notice to the Administrative Agent, which may be given by telephone
or email. Each such notice must be received by the Administrative Agent not
later than 11:00 a.m. (i) three Business Days prior to the requested date of any
Borrowing of, conversion to or continuation of Eurodollar Rate Loans or of any
conversion of Eurodollar Rate Loans to Base Rate Loans, and (ii) on the
requested date of any Borrowing of Base Rate Loans; provided, however, that if
the Borrower wishes to request Eurodollar Rate Loans having an Interest Period
other than one, two, three or six months in duration as provided in the
definition of "Interest Period", the applicable notice must be received by the
Administrative Agent not later than 11:00 a.m. four Business Days prior to the
requested date of such Borrowing, conversion or continuation, whereupon the
Administrative Agent shall give prompt notice to the Lenders of such request and
determine whether the requested Interest Period is acceptable to all of them.
Not later than 11:00 a.m., three Business Days before the requested date of such
Borrowing, conversion or continuation, the Administrative Agent shall notify the
Borrower (which notice may be by telephone) whether or not the requested
Interest Period has been consented to by all the Lenders. Each telephonic or
email notice by the Borrower pursuant to this Section 2.02(a) must be confirmed
promptly by delivery to the Administrative Agent of a written Loan Notice,
appropriately completed and signed by a Responsible Officer of the Borrower.
Each Borrowing of, conversion to or continuation of Eurodollar Rate Loans shall
be in a principal amount of $1,000,000 or a whole multiple of $1,000,000 in
excess thereof. Each Borrowing of or conversion to Base Rate Loans shall be in a
principal amount of $500,000 or a whole multiple of $100,000 in excess thereof.
Each Loan Notice (whether telephonic, email or written) shall specify (i)
whether the Borrower is requesting a Borrowing, a conversion of Loans from one
Type to the other, or a continuation of Eurodollar Rate Loans, (ii) the
requested date of the Borrowing, conversion or continuation, as the case may be
(which shall be a Business Day), (iii) the principal amount of Loans to be
borrowed, converted or continued, (iv) the Type of Loans to be borrowed or
continued or to which existing Loans are to be converted, and (v) if applicable,
the duration of the Interest Period with respect thereto. If the Borrower fails
to specify a Type of Loan in a Loan Notice or if the Borrower fails to give a
timely notice requesting a conversion or continuation, then the applicable Loans
shall be made as, or converted to, Base Rate Loans. Any such automatic
conversion to Base Rate Loans shall be effective as of the last day of the
Interest Period then in effect with respect to the applicable Eurodollar Rate
Loans. If the Borrower requests a Borrowing of, conversion to, or

                                       22

<PAGE>

continuation of Eurodollar Rate Loans in any such Loan Notice, but fails to
specify an Interest Period, it will be deemed to have specified an Interest
Period of one month.

     (b) Following receipt of a Loan Notice, the Administrative Agent shall
promptly notify each Lender of the amount of its Applicable Percentage of the
applicable Loans, and if no timely notice of a conversion or continuation is
provided by the Borrower, the Administrative Agent shall notify each Lender of
the details of any automatic conversion to Base Rate Loans described in the
preceding subsection. In the case of a Borrowing, each Lender shall make the
amount of its Loan available to the Administrative Agent in immediately
available funds at the Administrative Agent's Office not later than 1:00 p.m. on
the Business Day specified in the applicable Loan Notice. Upon satisfaction of
the applicable conditions set forth in Section 4.02 (and, if such Borrowing is
the initial Loan, Section 4.01), the Administrative Agent shall make all funds
so received available to the Borrower in like funds as received by the
Administrative Agent either by (i) crediting the account of the Borrower on the
books of Bank of America with the amount of such funds or (ii) wire transfer of
such funds, in each case in accordance with instructions provided to (and
reasonably acceptable to) the Administrative Agent by the Borrower.

     (c) Except as otherwise provided herein, a Eurodollar Rate Loan may be
continued or converted only on the last day of an Interest Period for such
Eurodollar Rate Loan. During the existence of a Default, no Loans may be
requested as, converted to or continued as Eurodollar Rate Loans without the
consent of the Required Lenders.

     (d) The Administrative Agent shall promptly notify the Borrower and the
Lenders of the interest rate applicable to any Interest Period for Eurodollar
Rate Loans upon determination of such interest rate. At any time that Base Rate
Loans are outstanding, the Administrative Agent shall notify the Borrower and
the Lenders of any change in Bank of America's prime rate used in determining
the Base Rate promptly following the public announcement of such change.

     (e) After giving effect to all Borrowings, all conversions of Loans from
one Type to the other, and all continuations of Loans as the same Type, there
shall not be more than ten Interest Periods in effect with respect to Loans.

     2.03 PREPAYMENTS. The Borrower may, upon notice to the Administrative
Agent, from time to time voluntarily prepay Loans in whole or in part without
premium or penalty; provided that (i) such notice must be received by the
Administrative Agent not later than 11:00 a.m. (A) three Business Days prior to
any date of prepayment of Eurodollar Rate Loans and (B) on the date of
prepayment of Base Rate Loans; (ii) any prepayment of Eurodollar Rate Loans
shall be in a principal amount of $1,000,000 or a higher integral multiple of
$1,000,000; and (ii) any prepayment of Base Rate Loans shall be in a principal
amount of $500,000 or a higher integral multiple of $100,000 (or the entire
principal amount thereof then outstanding). Each such notice shall specify the
date and amount of such prepayment and the Type(s) of Loans to be prepaid. The
Administrative Agent will promptly notify each Lender of its receipt of each
such notice, and of the amount of such Lender's Applicable Percentage of the
applicable prepayment. If such a notice is given by the Borrower, the payment
amount specified in such notice shall be due and payable on the date specified
therein. Any prepayment of a Eurodollar Rate Loan shall be accompanied by all
accrued interest thereon, together with any additional amounts required

                                       23

<PAGE>

pursuant to Section 3.05. Each such prepayment shall be applied to the Loans of
the Lenders in accordance with their respective Applicable Percentage.

     2.04 TERMINATION OR REDUCTION OF COMMITMENTS. The Borrower may, upon notice
to the Administrative Agent, terminate the Aggregate Commitments, or from time
to time permanently reduce the Aggregate Commitments; provided that (i) any such
notice shall be received by the Administrative Agent not later than 11:00 a.m.
five Business Days prior to the date of termination or reduction, (ii) any such
partial reduction shall be in an aggregate amount of $5,000,000 or any whole
multiple of $1,000,000 in excess thereof, and (iii) the Borrower shall not
terminate or reduce the Aggregate Commitments if, after giving effect thereto
and to any concurrent prepayments hereunder, the Total Outstandings would exceed
the Aggregate Commitments. The Administrative Agent will promptly notify the
Lenders of any such notice of termination or reduction of the Aggregate
Commitments. Any reduction of the Aggregate Commitments shall be applied to the
Commitment of each Lender according to its Applicable Percentage. All fees
accrued until the effective date of any termination of the Aggregate Commitments
shall be paid on the effective date of such termination.

     2.05 REPAYMENT OF LOANS. The Borrower shall repay to the Lenders on the
Maturity Date the aggregate principal amount of Loans outstanding on such date.

     2.06 INTEREST.

     (a) Subject to the provisions of subsection (b) below, (i) each Eurodollar
Rate Loan shall bear interest on the outstanding principal amount thereof for
each Interest Period at a rate per annum equal to the Eurodollar Rate for such
Interest Period plus the Applicable Rate; and (ii) each Base Rate Loan shall
bear interest on the outstanding principal amount thereof from the applicable
borrowing date at a rate per annum equal to the Base Rate.

     (b) (i) If any amount of principal of any Loan is not paid when due
(without regard to any applicable grace periods), whether at stated maturity, by
acceleration or otherwise, such amount shall thereafter bear interest at a
fluctuating interest rate per annum at all times equal to the Default Rate to
the fullest extent permitted by applicable Laws.

          (ii) If any amount (other than principal of any Loan) payable by the
     Borrower under any Loan Document is not paid when due (without regard to
     any applicable grace periods), whether at stated maturity, by acceleration
     or otherwise, then upon the request of the Required Lenders, such amount
     shall thereafter bear interest at a fluctuating interest rate per annum at
     all times equal to the Default Rate to the fullest extent permitted by
     applicable Laws.

          (iii) Upon the request of the Required Lenders, while any Event of
     Default exists, the Borrower shall pay interest on the principal amount of
     all outstanding Obligations hereunder at a fluctuating interest rate per
     annum at all times equal to the Default Rate to the fullest extent
     permitted by applicable Laws.

          (iv) Accrued and unpaid interest on past due amounts (including
     interest on past due interest) shall be due and payable upon demand.

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<PAGE>

     (c) Interest on each Loan shall be due and payable in arrears on each
Interest Payment Date applicable thereto and at such other times as may be
specified herein. Interest hereunder shall be due and payable in accordance with
the terms hereof before and after judgment, and before and after the
commencement of any proceeding under any Debtor Relief Law.

     2.07 FEES.

     (a) Commitment Fee. The Borrower shall pay to the Administrative Agent for
the account of each Lender in accordance with its Applicable Percentage, a
commitment fee equal to the Applicable Rate times the actual daily amount by
which the Aggregate Commitments exceed the Outstanding Amount of Loans. The
commitment fee shall accrue at all times during the Availability Period,
including at any time during which one or more of the conditions in Article IV
is not met, and shall be due and payable quarterly in arrears on the last
Business Day of each March, June, September and December, commencing with the
first such date to occur after the Closing Date, and on the Maturity Date. The
commitment fee shall be calculated quarterly in arrears, and if there is any
change in the Applicable Rate during any quarter, the actual daily amount shall
be computed and multiplied by the Applicable Rate separately for each period
during such quarter that such Applicable Rate was in effect.

     (b) Existing Credit Agreement. The Borrower shall pay to the Administrative
Agent for the account of the lenders under the Existing Credit Agreement all
accrued and unpaid commitment fees and utilization fees on the Closing Date.

     (c) Other Fees. (i) The Borrower shall pay to the Arranger and the
Administrative Agent for their own respective accounts fees in the amounts and
at the times specified in the Fee Letter. Such fees shall be fully earned when
paid and shall not be refundable for any reason whatsoever.

          (ii) The Borrower shall pay to the Lenders such fees as shall have
     been separately agreed upon in writing in the amounts and at the times so
     specified. Such fees shall be fully earned when paid and shall not be
     refundable for any reason whatsoever.

     2.08 COMPUTATION OF INTEREST AND FEES. All computations of interest for
Base Rate Loans when the Base Rate is determined by Bank of America's "prime
rate" shall be made on the basis of a year of 365 or 366 days, as the case may
be, and actual days elapsed. All other computations of fees and interest shall
be made on the basis of a 360-day year and actual days elapsed (which results in
more fees or interest, as applicable, being paid than if computed on the basis
of a 365-day year). Interest shall accrue on each Loan for the day on which the
Loan is made, and shall not accrue on a Loan, or any portion thereof, for the
day on which the Loan or such portion is paid, provided that any Loan that is
repaid on the same day on which it is made shall, subject to Section 2.10(a),
bear interest for one day. Each determination by the Administrative Agent of an
interest rate or fee hereunder shall be conclusive and binding for all purposes,
absent manifest error.

     2.09 EVIDENCE OF DEBT. The Loans made by each Lender shall be evidenced by
one or more accounts or records maintained by such Lender and by the
Administrative Agent in the ordinary course of business. The accounts or records
maintained by the Administrative Agent

                                       25

<PAGE>

and each Lender shall be conclusive absent manifest error of the amount of the
Loans made by the Lenders to the Borrower and the interest and payments thereon.
Any failure to so record or any error in doing so shall not, however, limit or
otherwise affect the obligation of the Borrower hereunder to pay any amount
owing with respect to the Obligations. In the event of any conflict between the
accounts and records maintained by any Lender and the accounts and records of
the Administrative Agent in respect of such matters, the accounts and records of
the Administrative Agent shall control in the absence of manifest error. Upon
the request of any Lender made through the Administrative Agent, the Borrower
shall execute and deliver to such Lender (through the Administrative Agent) a
Note, which shall evidence such Lender's Loans in addition to such accounts or
records. Each Lender may attach schedules to its Note and endorse thereon the
date, Type (if applicable), amount and maturity of its Loans and payments with
respect thereto.

     2.10 PAYMENTS GENERALLY; ADMINISTRATIVE AGENT'S CLAWBACK.

     (a) General. All payments to be made by the Borrower shall be made without
condition or deduction for any counterclaim, defense, recoupment or setoff.
Except as otherwise expressly provided herein, all payments by the Borrower
hereunder shall be made to the Administrative Agent, for the account of the
respective Lenders to which such payment is owed, at the Administrative Agent's
Office in Dollars and in immediately available funds not later than 2:00 p.m. on
the date specified herein. The Administrative Agent will promptly distribute to
each Lender its Applicable Percentage (or other applicable share as provided
herein) of such payment in like funds as received by wire transfer to such
Lender's Lending Office. All payments received by the Administrative Agent after
2:00 p.m. shall be deemed received on the next succeeding Business Day and any
applicable interest or fee shall continue to accrue. If any payment to be made
by the Borrower shall come due on a day other than a Business Day, payment shall
be made on the next following Business Day, and such extension of time shall be
reflected in computing interest or fees, as the case may be.

     (b) (i) Funding by Lenders; Presumption by Administrative Agent. Unless the
Administrative Agent shall have received notice from a Lender prior to the
proposed date of any Borrowing of Eurodollar Rate Loans (or, in the case of any
Borrowing of Base Rate Loans, prior to 12:00 noon on the date of such Borrowing)
that such Lender will not make available to the Administrative Agent such
Lender's share of such Borrowing, the Administrative Agent may assume that such
Lender has made such share available on such date in accordance with Section
2.02 (or, in the case of a Borrowing of Base Rate Loans, that such Lender has
made such share available in accordance with and at the time required by Section
2.02) and may, in reliance upon such assumption, make available to the Borrower
a corresponding amount. In such event, if a Lender has not in fact made its
share of the applicable Borrowing available to the Administrative Agent, then
the applicable Lender and the Borrower severally agree to pay to the
Administrative Agent forthwith on demand such corresponding amount in
immediately available funds with interest thereon, for each day from and
including the date such amount is made available to the Borrower to but
excluding the date of payment to the Administrative Agent, at (A) in the case of
a payment to be made by such Lender, the greater of the Federal Funds Rate and a
rate determined by the Administrative Agent in accordance with banking industry
rules on interbank compensation and (B) in the case of a payment to be made by
the Borrower, the interest rate applicable to Base Rate Loans. If the Borrower
and such Lender shall pay such interest to the

                                       26

<PAGE>

Administrative Agent for the same or an overlapping period, the Administrative
Agent shall promptly remit to the Borrower the amount of such interest paid by
the Borrower for such period. If such Lender pays its share of the applicable
Borrowing to the Administrative Agent, then the amount so paid shall constitute
such Lender's Loan included in such Borrowing. Any payment by the Borrower shall
be without prejudice to any claim the Borrower may have against a Lender that
shall have failed to make such payment to the Administrative Agent.

          (ii) Payments by Borrower; Presumptions by Administrative Agent.
     Unless the Administrative Agent shall have received notice from the
     Borrower prior to the date on which any payment is due to the
     Administrative Agent for the account of the Lenders hereunder that the
     Borrower will not make such payment, the Administrative Agent may assume
     that the Borrower has made such payment on such date in accordance herewith
     and may, in reliance upon such assumption, distribute to the Lenders the
     amount due. In such event, if the Borrower has not in fact made such
     payment, then each of the Lenders severally agrees to repay to the
     Administrative Agent forthwith on demand the amount so distributed to such
     Lender, in immediately available funds with interest thereon, for each day
     from and including the date such amount is distributed to it to but
     excluding the date of payment to the Administrative Agent, at the greater
     of the Federal Funds Rate and a rate determined by the Administrative Agent
     in accordance with banking industry rules on interbank compensation.

     A notice of the Administrative Agent to any Lender or the Borrower with
respect to any amount owing under this subsection (b) shall be conclusive,
absent manifest error.

     (c) Failure to Satisfy Conditions Precedent. If any Lender makes available
to the Administrative Agent funds for any Loan to be made by such Lender as
provided in the foregoing provisions of this Article II, and such funds are not
made available to the Borrower by the Administrative Agent because the
conditions to the applicable Loan set forth in Article IV are not satisfied or
waived in accordance with the terms hereof, the Administrative Agent shall
return such funds (in like funds as received from such Lender) to such Lender,
without interest.

     (d) Obligations of Lenders Several. The obligations of the Lenders
hereunder to make Loans, and to make payments pursuant to Section 10.04(c) are
several and not joint. The failure of any Lender to make any Loan or to make any
payment under Section 10.04(c) on any date required hereunder shall not relieve
any other Lender of its corresponding obligation to do so on such date, and no
Lender shall be responsible for the failure of any other Lender to so make its
Loan or to make its payment under Section 10.04(c).

     (e) Funding Source. Nothing herein shall be deemed to obligate any Lender
to obtain the funds for any Loan in any particular place or manner or to
constitute a representation by any Lender that it has obtained or will obtain
the funds for any Loan in any particular place or manner.

     2.11 SHARING OF PAYMENTS BY LENDERS. If any Lender shall, by exercising any
right of setoff or counterclaim or otherwise, obtain payment in respect of any
principal of or interest on any of the Loans made by it, and accrued interest
thereon greater than its pro rata share thereof as provided herein, then the
Lender receiving such greater proportion shall (a) notify the Administrative
Agent of such fact, and (b) purchase (for cash at face value) participations in
the

                                       27

<PAGE>

Loans, or make such other adjustments as shall be equitable, so that the benefit
of all such payments shall be shared by the Lenders ratably in accordance with
the aggregate amount of principal of and accrued interest on their respective
Loans and other amounts owing them, provided that:

          (i) if any such participations are purchased and all or any portion of
     the payment giving rise thereto is recovered, such participations shall be
     rescinded and the purchase price restored to the extent of such recovery,
     without interest; and

          (ii) the provisions of this Section shall not be construed to apply to
     (x) any payment made by the Borrower pursuant to and in accordance with the
     express terms of this Agreement or (y) any payment obtained by a Lender as
     consideration for the assignment of any of its Loans other than to the
     Borrower or any Subsidiary thereof (as to which the provisions of this
     Section shall apply).

     The Borrower consents to the foregoing and agrees, to the extent it may
effectively do so under applicable law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against the
Borrower rights of setoff and counterclaim with respect to such participation as
fully as if such Lender were a direct creditor of the Borrower in the amount of
such participation.

     2.12 INCREASE IN COMMITMENTS.

     (a) Request for Increase. Provided there exists no Default, upon notice to
the Administrative Agent (which shall promptly notify the Lenders), the Borrower
may from time to time, request an increase in the Aggregate Commitments by an
amount (for all such requests) not exceeding $100,000,000; provided that [(i)]
any such request for an increase shall be in a minimum amount of $5,000,000, and
(ii) the Borrower may make a maximum of four such requests. At the time of
sending such notice, the Borrower (in consultation with the Administrative
Agent) shall specify the time period within which each Lender is requested to
respond (which shall in no event be less than ten Business Days from the date of
delivery of such notice to the Lenders).

     (b) Lender Elections to Increase. Each Lender shall notify the
Administrative Agent within such time period whether or not it agrees to
increase its Commitment and, if so, whether by an amount equal to, greater than,
or less than its Applicable Percentage of such requested increase. Any Lender
not responding within such time period shall be deemed to have declined to
increase its Commitment.

     (c) Notification by Administrative Agent; Additional Lenders. The
Administrative Agent shall promptly notify the Borrower and each Lender of the
Lenders' responses to each request made hereunder. To achieve the full amount of
a requested increase and subject to the approval of the Administrative Agent
(which approval shall not be unreasonably withheld), the Borrower may also
invite additional Eligible Assignees to become Lenders pursuant to a joinder
agreement in form and substance satisfactory to the Administrative Agent and its
counsel.

     (d) Effective Date and Allocations. If the Aggregate Commitments are
increased in accordance with this Section, the Administrative Agent and the
Borrower shall determine the

                                       28

<PAGE>

effective date (the "Increase Effective Date") and the final allocation of such
increase. The Administrative Agent shall promptly notify the Borrower and the
Lenders of the final allocation of such increase and the Increase Effective
Date.

     (e) Conditions to Effectiveness of Increase. As a condition precedent to
such increase, the Borrower shall deliver to the Administrative Agent its
certificate dated as of the Increase Effective Date (in sufficient copies for
each Lender) signed by a Responsible Officer of the Borrower (i) certifying and
attaching the resolutions adopted by the Borrower approving or consenting to
such increase, and (ii) certifying that, before and after giving effect to such
increase, (A) the representations and warranties contained in Article V and the
other Loan Documents are true and correct on and as of the Increase Effective
Date, except to the extent that such representations and warranties specifically
refer to an earlier date, in which case they are true and correct as of such
earlier date, and except that for purposes of this Section 2.12, the
representations and warranties contained in subsections (a)(i) and (b)(i) of
Section 5.05 shall be deemed to refer to the most recent statements furnished
pursuant to clauses (d) and (a), respectively, of Section 6.01, and (B) no
Default exists. The Borrower shall borrow and/or prepay any Loans outstanding on
the Increase Effective Date (and pay any additional amounts required pursuant to
Section 3.05) to the extent necessary to keep the outstanding Loans ratable with
any revised Applicable Percentages arising from any nonratable increase in the
Commitments under this Section.

     (f) Conflicting Provisions. This Section shall supersede any provisions in
Section 2.11 to the contrary.

                                   ARTICLE III
                     TAXES, YIELD PROTECTION AND ILLEGALITY

     3.01 TAXES.

     (a) Payments Free of Taxes. Any and all payments by or on account of any
obligation of the Borrower hereunder or under any other Loan Document shall be
made free and clear of and without reduction or withholding for any Indemnified
Taxes or Other Taxes, provided that if the Borrower shall be required by
applicable law to deduct any Indemnified Taxes (including any Other Taxes) from
such payments, then, except in the case of any payment to a Lender as to which
such requirement is attributable to such Lender's failure to comply with the
requirements of subsection (e) of this Section 3.01, (i) the sum payable shall
be increased as necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section)
the Administrative Agent or Lender or, as the case may be, receives an amount
equal to the sum it would have received had no such deductions been made, (ii)
the Borrower shall make such deductions and (iii) the Borrower shall timely pay
the full amount deducted to the relevant Governmental Authority in accordance
with applicable law.

     (b) Payment of Other Taxes by the Borrower. Without limiting the provisions
of subsection (a) above, the Borrower shall timely pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.

                                       29

<PAGE>

     (c) Indemnification by the Borrower. The Borrower shall indemnify the
Administrative Agent and each Lender within 30 days after demand therefor, for
the full amount of any Indemnified Taxes or Other Taxes (including Indemnified
Taxes or Other Taxes imposed or asserted on or attributable to amounts payable
under this Section) paid by the Administrative Agent or such Lender, as the case
may be, and any penalties, interest and reasonable expenses arising therefrom or
with respect thereto, whether or not such Indemnified Taxes or Other Taxes were
correctly or legally imposed or asserted by the relevant Governmental Authority.
A certificate as to the amount of such payment or liability delivered to the
Borrower by a Lender (with a copy to the Administrative Agent), or by the
Administrative Agent on its own behalf or on behalf of a Lender, shall be
conclusive absent manifest error.

     (d) Evidence of Payments. As soon as practicable after any payment of
Indemnified Taxes or Other Taxes by the Borrower to a Governmental Authority,
the Borrower shall deliver to the Administrative Agent the original or a
certified copy of a receipt issued by such Governmental Authority evidencing
such payment, a copy of the return reporting such payment or other evidence of
such payment reasonably satisfactory to the Administrative Agent.

     (e) Status of Lenders. Any Foreign Lender that is entitled to an exemption
from or reduction of withholding tax under the law of the jurisdiction in which
the Borrower is resident for tax purposes, or any treaty to which such
jurisdiction is a party, with respect to payments hereunder or under any other
Loan Document shall deliver to the Borrower (with a copy to the Administrative
Agent), at the time or times prescribed by applicable law or reasonably
requested by the Borrower or the Administrative Agent, such properly completed
and executed documentation prescribed by applicable law as will permit such
payments to be made without withholding or at a reduced rate of withholding. In
addition, any Lender, if requested by the Borrower or the Administrative Agent,
shall deliver such other documentation prescribed by applicable law or
reasonably requested by the Borrower or the Administrative Agent as will enable
the Borrower or the Administrative Agent to determine whether or not such Lender
is subject to backup withholding or information reporting requirements.

     Without limiting the generality of the foregoing, any Foreign Lender shall
deliver to the Borrower and the Administrative Agent (in such number of copies
as shall be requested by the recipient) on or prior to the date on which such
Foreign Lender becomes a Lender under this Agreement (and from time to time
thereafter upon the request of the Borrower or the Administrative Agent, but
only if such Foreign Lender is legally entitled to do so), whichever of the
following is applicable:

          (i) duly completed copies of Internal Revenue Service Form W-8BEN
     claiming eligibility for benefits of an income tax treaty to which the
     United States is a party,

          (ii) duly completed copies of Internal Revenue Service Form W-8ECI,

          (iii) in the case of a Foreign Lender claiming the benefits of the
     exemption for portfolio interest under section 881(c) of the Code, (x) a
     certificate to the effect that such Foreign Lender is not (A) a "bank"
     within the meaning of section 881(c)(3)(A) of the Code, (B) a "10 percent
     shareholder" of the Borrower within the meaning of section 881(c)(3)(B) of
     the Code, or (C) a "controlled foreign corporation" described in section

                                       30

<PAGE>

     881(c)(3)(C) of the Code and (y) duly completed copies of Internal Revenue
     Service Form W-8BEN, or

          (iv) any other form prescribed by applicable law as a basis for
     claiming exemption from or a reduction in United States Federal withholding
     tax duly completed together with such supplementary documentation as may be
     prescribed by applicable law to permit the Borrower to determine the
     withholding or deduction required to be made.

     (f) Treatment of Certain Refunds. If the Administrative Agent or any Lender
determines, in its reasonable discretion, that it has received a refund of any
Taxes or Other Taxes as to which it has been indemnified by the Borrower or with
respect to which the Borrower has paid additional amounts pursuant to this
Section, it shall pay to the Borrower an amount equal to such refund (but only
to the extent of indemnity payments made, or additional amounts paid, by the
Borrower under this Section with respect to the Taxes or Other Taxes giving rise
to such refund), net of all reasonable out-of-pocket expenses of the
Administrative Agent or such Lender, as the case may be, and without interest
(other than any interest paid by the relevant Governmental Authority with
respect to such refund), provided that the Borrower, upon the request of the
Administrative Agent or such Lender, agrees to repay the amount paid over to the
Borrower (plus any penalties, interest or other charges imposed by the relevant
Governmental Authority) to the Administrative Agent or such Lender in the event
the Administrative Agent or such Lender is required to repay such refund to such
Governmental Authority. This subsection shall not be construed to require the
Administrative Agent or any Lender to make available its tax returns (or any
other information relating to its taxes that it deems confidential) to the
Borrower or any other Person.

     3.02 ILLEGALITY. If any Lender determines that any Law has made it
unlawful, or that any Governmental Authority has asserted that it is unlawful,
for any Lender or its applicable Lending Office to make, maintain or fund
Eurodollar Rate Loans, or to determine or charge interest rates based upon the
Eurodollar Rate, or any Governmental Authority has imposed material restrictions
on the authority of such Lender to purchase or sell, or to take deposits of,
Dollars in the London interbank market, then, on notice thereof by such Lender
to the Borrower through the Administrative Agent, any obligation of such Lender
to make or continue Eurodollar Rate Loans or to convert Base Rate Loans to
Eurodollar Rate Loans shall be suspended until such Lender notifies the
Administrative Agent and the Borrower that the circumstances giving rise to such
determination no longer exist. Upon receipt of such notice, the Borrower shall,
upon demand from such Lender (with a copy to the Administrative Agent), prepay
or, if applicable, convert all Eurodollar Rate Loans of such Lender to Base Rate
Loans, either on the last day of the Interest Period therefor, if such Lender
may lawfully continue to maintain such Eurodollar Rate Loans to such day, or
immediately, if such Lender may not lawfully continue to maintain such
Eurodollar Rate Loans. Upon any such prepayment or conversion, the Borrower
shall also pay accrued interest on the amount so prepaid or converted. Each of
the initial Lenders represents and warrants that it has not, as of the date of
this Agreement, made any determination of the type referenced in the first
sentence of this Section 3.02, and is not aware of any basis for such a
determination, and each Eligible Assignee who subsequently becomes a Lender
pursuant to Section 10.06 shall be deemed to have made a representation and
warranty to such effect, as of the effective date of the applicable assignment.

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<PAGE>

     3.03 INABILITY TO DETERMINE RATES. If the Required Lenders in good faith
determine that for any reason in connection with any request for a Eurodollar
Rate Loan or a conversion to or continuation thereof that (a) Dollar deposits
are not being offered to banks in the London interbank eurodollar market for the
applicable amount and Interest Period of such Eurodollar Rate Loan, (b) adequate
and reasonable means do not exist for determining the Eurodollar Base Rate for
any requested Interest Period with respect to a proposed Eurodollar Rate Loan,
or (c) the Eurodollar Base Rate for any requested Interest Period with respect
to a proposed Eurodollar Rate Loan does not adequately and fairly reflect the
cost to such Lenders of funding such Loan, the Administrative Agent will
promptly so notify the Borrower and each Lender. Thereafter, the obligation of
the Lenders to make or maintain Eurodollar Rate Loans shall be suspended until
the Administrative Agent (upon the instruction of the Required Lenders) revokes
such notice. Upon receipt of such notice, the Borrower may revoke any pending
request for a Borrowing of, conversion to or continuation of Eurodollar Rate
Loans or, failing that, will be deemed to have converted such request into a
request for a Borrowing of Base Rate Loans in the amount specified therein.

     3.04 INCREASED COSTS.

     (a) Increased Costs Generally. If any Change in Law shall:

          (i) impose, modify deem applicable any reserve, special deposit,
     compulsory loan, insurance charge or similar requirement against assets of,
     deposits with or for the account of, or credit extended or participated in
     by, any Lender (except any reserve requirement reflected in the Eurodollar
     Rate);

          (ii) subject any Lender to any tax of any kind whatsoever with respect
     to this Agreement, or any Eurodollar Rate Loan made by it, or change the
     basis of taxation of payments to such Lender in respect thereof (except for
     Indemnified Taxes or Other Taxes covered by Section 3.01 and the imposition
     of, or any change in the rate of, any Excluded Tax payable by such Lender);
     or

          (iii) impose on any Lender or the London interbank market any other
     condition, cost or expense affecting this Agreement or Eurodollar Rate
     Loans made by such Lender;

and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurodollar Rate Loan (or of maintaining its
obligation to make any such Loan), or to reduce the amount of any sum received
or receivable by such Lender hereunder (whether of principal, interest or any
other amount) then, upon request of such Lender, the Borrower will pay to such
Lender such additional amount or amounts as will compensate such Lender for such
additional costs incurred or reduction suffered.

     (b) Capital Requirements. If any Lender in good faith determines that any
Change in Law affecting such Lender or any Lending Office of such Lender or such
Lender's holding company, if any, regarding capital requirements has or would
have the effect of reducing the rate of return on such Lender's capital or on
the capital of such Lender's holding company, if any, as a consequence of this
Agreement, the Commitments of such Lender or the Loans made by such Lender, to a
level below that which such Lender or such Lender's holding company could have

                                       32

<PAGE>

achieved but for such Change in Law (taking into consideration such Lender's
policies and the policies of such Lender's holding company with respect to
capital adequacy), then from time to time the Borrower will pay to such Lender
such additional amount or amounts as will compensate such Lender or such
Lender's holding company for any such reduction suffered.

     (c) Certificates for Reimbursement. A certificate of a Lender setting forth
the amount or amounts necessary to compensate such Lender or its holding
company, as the case may be, as specified in subsection (a) or (b) of this
Section and delivered to the Borrower shall be conclusive absent manifest error.
The Borrower shall pay such Lender the amount shown as due on any such
certificate within 30 days after receipt thereof.

     (d) Delay in Requests. Failure or delay on the part of any Lender to demand
compensation pursuant to the foregoing provisions of this Section shall not
constitute a waiver of such Lender's right to demand such compensation, provided
that the Borrower shall not be required to compensate a Lender pursuant to the
foregoing provisions of this Section for any increased costs incurred or
reductions suffered more than six months prior to the date that such Lender
notifies the Borrower of the Change in Law giving rise to such increased costs
or reductions and of such Lender's intention to claim compensation therefor
(except that, if the Change in Law giving rise to such increased costs or
reductions is retroactive, then the six-month period referred to above shall be
extended to include the period of retroactive effect thereof).

     3.05 COMPENSATION FOR LOSSES. Upon demand of any Lender (with a copy to the
Administrative Agent) from time to time, the Borrower shall promptly compensate
such Lender for and hold such Lender harmless from any loss, cost or expense
incurred by it as a result of:

     (a) any continuation, conversion, payment or prepayment of any Loan other
than a Base Rate Loan on a day other than the last day of the Interest Period
for such Loan (whether voluntary, mandatory, automatic, by reason of
acceleration, or otherwise);

     (b) any failure by the Borrower (for a reason other than the failure of
such Lender to make a Loan) to prepay, borrow, continue or convert any Loan
other than a Base Rate Loan on the date or in the amount notified by the
Borrower; or

     (c) any assignment of a Eurodollar Rate Loan on a day other than the last
day of the Interest Period therefor as a result of a request by the Borrower
pursuant to Section 10.13;

including any loss or expense arising from the liquidation or reemployment of
funds obtained by it to maintain such Loan or from fees payable to terminate the
deposits from which such funds were obtained. The Borrower shall also pay any
customary administrative fees charged by such Lender in connection with the
foregoing.

For purposes of calculating amounts payable by the Borrower to the Lenders under
this Section 3.05, each Lender shall be deemed to have funded each Eurodollar
Rate Loan made by it at the Eurodollar Base Rate used in determining the
Eurodollar Rate for such Loan by a matching deposit or other borrowing in the
London interbank eurodollar market for a comparable amount and for a comparable
period, whether or not such Eurodollar Rate Loan was in fact so funded.

                                       33

<PAGE>

     3.06 MITIGATION OBLIGATIONS; REPLACEMENT OF LENDERS.

     (a) Designation of a Different Lending Office. If any Lender requests
compensation under Section 3.04, or the Borrower is required to pay any
additional amount to any Lender or any Governmental Authority for the account of
any Lender pursuant to Section 3.01, or if any Lender gives a notice pursuant to
Section 3.02, then such Lender shall use reasonable efforts to designate a
different Lending Office for funding or booking its Loans hereunder or to assign
its rights and obligations hereunder to another of its offices, branches or
affiliates, if, in the reasonable judgment of such Lender, such designation or
assignment (i) would eliminate or reduce amounts payable pursuant to Section
3.01 or 3.04, as the case may be, in the future, or eliminate the need for the
notice pursuant to Section 3.02, as applicable, and (ii) in each case, would not
subject such Lender to any unreimbursed cost or expense and would not otherwise
be disadvantageous to such Lender. The Borrower hereby agrees to pay all
reasonable costs and expenses incurred by any Lender in connection with any such
designation or assignment.

     (b) Replacement of Lenders. If any Lender requests compensation under
Section 3.04, or if the Borrower is required to pay any additional amount to any
Lender or any Governmental Authority for the account of any Lender pursuant to
Section 3.01, the Borrower may replace such Lender in accordance with Section
10.13.

     3.07 SURVIVAL. All of the Borrower's obligations under this Article III
shall survive termination of the Aggregate Commitments and repayment of all
other Obligations hereunder.

                                   ARTICLE IV
                          CONDITIONS PRECEDENT TO LOANS

     4.01 CONDITIONS OF INITIAL LOAN. The amendment and restatement of the
Existing Credit Agreement and the obligation of each Lender to make its initial
Loan hereunder is subject to satisfaction of the following conditions precedent:

     (a) The Administrative Agent's receipt of the following, each of which
shall be originals or telecopies (followed promptly by originals) unless
otherwise specified, each properly executed by a Responsible Officer, each dated
the Closing Date (or, in the case of certificates of governmental officials, a
recent date before the Closing Date) and each in form and substance satisfactory
to the Administrative Agent and each of the Lenders:

          (i) executed counterparts of this Agreement, sufficient in number for
     distribution to the Administrative Agent, each Lender and the Borrower;

          (ii) a Note executed by the Borrower in favor of each Lender
     requesting a Note;

          (iii) such certificates of resolutions or other action, incumbency
     certificates and/or other certificates of Responsible Officers as the
     Administrative Agent may require evidencing the identity, authority and
     capacity of each Responsible Officer thereof authorized to act as a
     Responsible Officer in connection with this Agreement and the other Loan
     Documents;

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<PAGE>

          (iv) such documents and certifications as the Administrative Agent may
     reasonably require to evidence that the Borrower is duly organized or
     formed, and that the Borrower is validly existing, in good standing and
     qualified to engage in business in each jurisdiction where its ownership,
     lease or operation of properties or the conduct of its business requires
     such qualification, except to the extent that failure to do so could not
     reasonably be expected to have a Material Adverse Effect;

          (v) a favorable opinion of Chad W. Coulter, counsel to the Borrower
     addressed to the Administrative Agent and each Lender, as to the matters
     set forth in Exhibit E and such other matters concerning the Borrower and
     the Loan Documents as the Required Lenders may reasonably request;

          (vi) a certificate of a Responsible Officer of the Borrower either (A)
     attaching copies of all consents, licenses and approvals required in
     connection with the execution, delivery and performance by the Borrower and
     the validity against the Borrower of the Loan Documents to which it is a
     party, and such consents, licenses and approvals shall be in full force and
     effect, or (B) stating that no such consents, licenses or approvals are so
     required;

          (vii) a certificate signed by a Responsible Officer of the Borrower
     certifying (A) that the conditions specified in Sections 4.02(a) and (b)
     have been satisfied, (B) that there has been no event or circumstance since
     the date of the Audited Financial Statements that has had or could be
     reasonably expected to have, either individually or in the aggregate, a
     Material Adverse Effect; and (C) the current Debt Ratings; and

          (viii) such other assurances, certificates, documents, consents or
     opinions as the Administrative Agent or the Required Lenders reasonably may
     require.

     (b) Any fees required to be paid on or before the Closing Date shall have
been paid.

     (c) The amounts outstanding under the Existing Credit Agreement shall have
been paid.

     (d) Unless waived by the Administrative Agent, the Borrower shall have paid
all fees, charges and disbursements of counsel to the Administrative Agent to
the extent invoiced prior to or on the Closing Date, plus such additional
amounts of such fees, charges and disbursements as shall constitute its
reasonable estimate of such fees, charges and disbursements incurred or to be
incurred by it through the closing proceedings (provided that such estimate
shall not thereafter preclude a final settling of accounts between the Borrower
and the Administrative Agent).

     (e) The Closing Date shall have occurred on or before November 15, 2006.

     Without limiting the generality of the provisions of Section 9.04, for
purposes of determining compliance with the conditions specified in this Section
4.01, each Lender that has signed this Agreement shall be deemed to have
consented to, approved or accepted or to be satisfied with, each document or
other matter required thereunder to be consented to or approved by or acceptable
or satisfactory to a Lender unless the Administrative Agent shall have received
notice from such Lender prior to the proposed Closing Date specifying its
objection thereto.

                                       35

<PAGE>

     4.02 CONDITIONS TO ALL LOANS. The obligation of each Lender to honor any
Loan Notice (other than a Loan Notice requesting only a conversion of Loans to
the other Type, or a continuation of Eurodollar Rate Loans) is subject to the
following conditions precedent:

     (a) The representations and warranties of the Borrower contained in Article
V or any other Loan Document, or which are contained in any document furnished
at any time under or in connection herewith or therewith, shall be true and
correct in all material respects on and as of the date of such Loan, except for,
in the case of all Loans other than the initial Loan, the representation set
forth in Section 5.05(c) and except to the extent that such representations and
warranties specifically refer to an earlier date, in which case they shall be
true and correct as of such earlier date.

     (b) No Default shall exist, or would result from such proposed Loan or from
the application of the proceeds thereof.

     (c) The Administrative Agent shall have received a Loan Notice in
accordance with the requirements hereof.

     Each Loan Notice (other than a Loan Notice requesting only a conversion of
Loans to the other Type or a continuation of Eurodollar Rate Loans) submitted by
the Borrower shall be deemed to be a representation and warranty that the
conditions specified in Sections 4.02(a) and (b) have been satisfied on and as
of the date of the applicable Loan.

                                    ARTICLE V
                         REPRESENTATIONS AND WARRANTIES

     The Borrower represents and warrants to the Administrative Agent and the
Lenders that:

     5.01 EXISTENCE, QUALIFICATION AND POWER; COMPLIANCE WITH LAWS. The Borrower
is duly organized or formed, validly existing and, as applicable, in good
standing under the Laws of the jurisdiction of its organization or formation,
has all requisite power and authority and all requisite governmental licenses,
authorizations, consents and approvals to own its assets and carry on its
business substantially as now conducted and execute, deliver and perform its
obligations under the Loan Documents, is duly qualified and is licensed and, as
applicable, in good standing under the Laws of each jurisdiction where its
ownership, lease or operation of properties or the conduct of its business
requires such qualification or license and is in compliance with all Laws
except, in each case referred to in clause (b)(i), (c) or (d), to the extent
that failure to do so could not reasonably be expected to have a Material
Adverse Effect.

     5.02 AUTHORIZATION; NO CONTRAVENTION. The execution, delivery and
performance by the Borrower of each Loan Document have been duly authorized by
all necessary organizational action on the part of such Person and do not and
will not contravene the terms of any of such Person's Organization Documents;
conflict with or result in any breach or contravention of, or result in or
require the creation or imposition of any Lien under, any Contractual Obligation
to which such Person is a party or any order, injunction, writ or decree of any
Governmental Authority or any arbitral award to which such Person or its
property is subject; or violate any Law.

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<PAGE>

     5.03 GOVERNMENTAL AUTHORIZATION; OTHER CONSENTS. No approval, consent,
exemption, authorization or other action by, or notice to, or filing with, any
Governmental Authority or any other Person is necessary or required in
connection with the execution, delivery or performance by, or enforcement
against, the Borrower of this Agreement or any other Loan Document.

     5.04 BINDING EFFECT. This Agreement has been, and each other Loan Document,
when delivered hereunder, will have been, duly executed and delivered by the
Borrower. This Agreement constitutes, and each other Loan Document when so
delivered will constitute, a legal, valid and binding obligation of the Borrower
that is a party thereto, enforceable against the Borrower in accordance with its
terms.

     5.05 FINANCIAL STATEMENTS; NO MATERIAL ADVERSE EFFECT.

     (a) Statutory Financial Statements.

          (i) The Annual Statements, or the quarterly statements, as the case
     may be, of each of the Reliance Standard Insurance Companies and Safety
     National including, without limitation, the provisions made therein for
     investments and the valuation thereof, reserves, policy and contract claims
     and Statutory Liabilities, in each case as filed with the appropriate
     Governmental Authority of its state of domicile (the "Department") and
     delivered to each Lender prior to the execution and delivery of this
     Agreement, as of, and for the 2005 Fiscal Year, and as of the end of, and
     for, the Fiscal Quarter ended June 30, 2006 (collectively, the "Statutory
     Financial Statements"), have been prepared in accordance with SAP applied
     on a consistent basis. Each such Statutory Financial Statement was in
     compliance in all material respects with applicable law when filed. The
     Statutory Financial Statements fairly present the financial condition, the
     results of operations, changes in equity and changes in financial position
     of each of the Reliance Standard Insurance Companies and Safety National as
     of and for the respective dates and periods indicated therein in accordance
     with SAP applied on a consistent basis. Except for liabilities and
     obligations, including, without limitation, reserves, policy and contract
     claims and Statutory Liabilities (all of which have been computed in
     accordance with SAP), disclosed or provided for in the Statutory Financial
     Statements, the Reliance Standard Insurance Companies and Safety National
     did not have, as of the respective dates of each of such financial
     statements any liabilities or obligations (whether absolute or contingent
     and whether due or to become due) which, in conformity with SAP, applied on
     a consistent basis, would have been required to be or should be disclosed
     or provided for in such financial statements. All books of account of the
     Reliance Standard Insurance Companies and Safety National fully and fairly
     disclose, in all material respects, all of the transactions, properties,
     assets, investments, liabilities and obligations of the Reliance Standard
     Insurance Companies and Safety National and all of such books of account
     are in the possession of each of the Reliance Standard Insurance Companies
     and Safety National and are true, correct and complete in all material
     respects.

          (ii) The investments of each of the Reliance Standard Insurance
     Companies and Safety National reflected in the Annual Statements filed with
     the Department with respect to each of the Reliance Standard Insurance
     Companies' and Safety National's 2005 Fiscal Year (the "2005 Annual
     Statements"), as updated through the June 30, 2006

                                       37

<PAGE>

     quarterly statements (the "2006 Quarterly Statements"), comply in all
     material respects with all applicable requirements of the applicable
     Department as to investments which may be made by such Reliance Standard
     Insurance Company and Safety National.

          (iii) The provisions made in the 2005 Annual Statements and in the
     2006 Quarterly Statements for reserves, policy and contract claims and
     Statutory Liabilities are in compliance in all material respects with the
     requirements of the applicable Department and have been computed in
     accordance with SAP.

          (iv) Marketable securities and short term investments reflected, with
     respect to the Reliance Standard Insurance Companies, in line 10, page 2,
     column 3 and, with respect to Safety National, in line 10, page 2, column
     3, of their respective 2005 Annual Statements and in the 2006 Quarterly
     Statements are valued at cost, amortized cost or market value, as noted on
     such Statutory Financial Statements and as required by applicable law.

          (v) Except as set forth on Schedule 5.05, no dividends or other
     distributions have been declared, paid or made upon any shares of capital
     stock of any of the Reliance Standard Insurance Companies or Safety
     National nor have any shares of capital stock of any of the Reliance
     Standard Insurance Companies or Safety National been redeemed, retired,
     purchased or otherwise acquired since December 31, 2005, other than as
     reflected in the balance sheets of the Reliance Standard Insurance
     Companies or Safety National.

     (b) GAAP Financial Statements.

          (i) The audited consolidated financial statements of the Borrower as
     of the end of, and for, the 2005 Fiscal Year (the "Audited Financial
     Statements"), and the unaudited consolidated financial statements of the
     Borrower as of the end of, and for, the Fiscal Quarter ended June 30, 2006,
     copies of which have been furnished to the Administrative Agent and each of
     the Lenders, have been prepared in conformity with GAAP applied on a
     consistent basis (except to the extent necessitated by changes in GAAP
     during the relevant periods), and accurately present the financial
     condition of the Borrower and each of its Subsidiaries as at such dates and
     the results of operations for the periods then ended.

          (ii) Except as set forth on Schedule 5.05, no dividends or other
     distributions have been declared, paid or made upon any shares of capital
     stock of the Borrower or any of its Subsidiaries, nor have any shares of
     capital stock of the Borrower or any of its Subsidiaries been redeemed,
     retired, purchased or otherwise acquired, since December 31, 2005.

          (iii) With respect to any representation and warranty which is deemed
     to be made after the date hereof by the Borrower, the balance sheet and
     statements of operations, of stockholders' equity and of cash flows, which
     as of such date shall most recently have been furnished by or on behalf of
     the Borrower to each Lender for the purposes of or in connection with this
     Agreement or any transaction contemplated hereby, shall have been prepared
     in accordance with GAAP consistently applied (except as disclosed therein),
     and shall present fairly (in a condensed manner) the consolidated

                                       38

<PAGE>

     financial condition of the corporations covered thereby as at the dates
     thereof and for the periods then ended, subject, in the case of quarterly
     financial statements, to normal year-end and audit adjustments.

     (c) Material Adverse Change. No Material Adverse Change has occurred since
December 31, 2005.

     5.06 LITIGATION AND GUARANTEES. No Material Litigation is pending or
threatened except as set forth (including estimates of the Dollar amounts
involved) in Schedule 5.06. The Borrower and its Subsidiaries have no material
Guarantees other than (a) as provided for or disclosed on Schedule 5.06 or in
the financial statements referred to in Section 5.05 or (b) any Guarantees
consisting of a guarantee by the Borrower with respect to any payment
obligations under Capital Securities.

     5.07 NO DEFAULT. Neither the Borrower nor any Subsidiary is in default
under or with respect to any Contractual Obligation that could, either
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. No Default has occurred and is continuing or would result from
the consummation of the transactions contemplated by this Agreement or any other
Loan Document.

     5.08 OWNERSHIP OF PROPERTY; LIENS. Each of the Borrower and each Subsidiary
has good record and marketable title in fee simple to, or valid leasehold
interests in, all real property necessary or used in the ordinary conduct of its
business, except for such defects in title as could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. The
property of the Borrower and its Subsidiaries is subject to no Liens, other than
Permitted Liens.

     5.09 ENVIRONMENTAL COMPLIANCE. There are no claims alleging potential
liability or responsibility for violation of any Environmental Law or any such
violation on the Borrower's and its Subsidiaries' respective businesses,
operations and properties, that could individually or in the aggregate
reasonably be expected to have a Material Adverse Effect.

     5.10 TAXES. The Borrower and its Subsidiaries have filed all Federal and
other material tax returns and reports required to be filed, and have paid all
Federal and other material taxes, assessments, fees and other governmental
charges levied or imposed upon them or their properties, income or assets
otherwise due and payable, except those which are being contested in good faith
by appropriate proceedings diligently conducted and for which adequate reserves
have been provided in accordance with GAAP. There is no proposed tax assessment
against the Borrower or any Subsidiary that would, if made, have a Material
Adverse Effect.

     5.11 ERISA COMPLIANCE.

     (a) Each Plan is in compliance in all material respects with the applicable
provisions of ERISA, the Code and other Federal and state Laws. Each Plan that
is intended to qualify under Section 401(a) of the Code has received a favorable
determination letter from the IRS or an application for such a letter is
currently being processed by the IRS with respect thereto and, to the best
knowledge of the Borrower, nothing has occurred which would prevent, or cause
the loss of, such qualification. The Borrower and each ERISA Affiliate have made
all required

                                       39

<PAGE>

contributions to each Plan subject to Section 412 of the Code, and no
application for a funding waiver or an extension of any amortization period
pursuant to Section 412 of the Code has been made with respect to any Plan.

     (b) There is no pending or, to the best knowledge of the Borrower,
threatened claim, action or lawsuit, or action by any Governmental Authority,
with respect to any Plan that could be reasonably be expected to have a Material
Adverse Effect. There has been no prohibited transaction or violation of the
fiduciary responsibility rules with respect to any Plan that has resulted or
could reasonably be expected to result in a Material Adverse Effect.

     (c) (i) No ERISA Event has occurred or is reasonably expected to occur that
could reasonably be expected to result in a liability in excess of $10,000,000;
no Pension Plan has any Unfunded Pension Liability in excess of $10,000,000 in
the aggregate for all Pension Plans; neither the Borrower nor any ERISA
Affiliate has incurred, or reasonably expects to incur, any liability under
Title IV of ERISA with respect to any Pension Plan (other than premiums due and
not delinquent under Section 4007 of ERISA) in excess of $10,000,000 in the
aggregate for all Pension Plans; neither the Borrower nor any ERISA Affiliate
has incurred, or reasonably expects to incur, any liability under Section 4201
or 4243 of ERISA with respect to a Multiemployer Plan (and no event has occurred
which, with the giving of notice under Section 4219 of ERISA, would result in
such liability) in excess of $10,000,000 in the aggregate; and neither the
Borrower nor any ERISA Affiliate has engaged in a transaction that could be
subject to Section 4069 or 4212(c) of ERISA that could reasonably be expected to
result in a liability in excess of $10,000,000.

     5.12 SUBSIDIARIES. As of the Closing Date, the Borrower has no Subsidiaries
other than those specifically disclosed in Schedule 5.12.

     5.13 MARGIN REGULATIONS; INVESTMENT COMPANY ACT.

     (a) The Borrower is not engaged and will not engage, principally or as one
of its important activities, in the business of purchasing or carrying margin
stock (within the meaning of Regulation U of the FRB) or extending credit for
the purpose of purchasing or carrying margin stock. Following the application of
the proceeds of each Borrowing not more than 25% of the value of the assets
(either of the Borrower only or of the Borrower and its Subsidiaries on a
consolidated basis) subject to the provisions of Section 7.01 or subject to any
restriction contained in any agreement or instrument between the Borrower and
any Lender or any Affiliate of any Lender relating to Indebtedness and within
the scope of Section 8.01(e) will be margin stock.

     (b) None of the Borrower, any Person Controlling the Borrower or any
Subsidiary is or is required to be registered as an "investment company" under
the Investment Company Act of 1940.

     5.14 DISCLOSURE. The Borrower has disclosed to the Administrative Agent and
the Lenders all agreements, instruments and corporate or other restrictions to
which it or any Subsidiary is subject, and all other matters known to it, that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect. No report, financial statement, certificate or other
information furnished (whether in writing or orally) by or on

                                       40

<PAGE>

behalf of the Borrower to the Administrative Agent or any Lender in connection
with the transactions contemplated hereby or delivered hereunder (as modified or
supplemented by other information so furnished) contains any material
misstatement of fact or omits to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided that, with respect to projected financial
information, the Borrower represents only that such information was prepared in
good faith based upon assumptions believed to be reasonable at the time.

     5.15 COMPLIANCE WITH LAWS. Each of the Borrower and each Subsidiary is in
compliance in all material respects with the requirements of all Laws and all
orders, writs, injunctions and decrees applicable to it or to its properties,
except in such instances in which (a) such requirement of Law or order, writ,
injunction or decree is being contested in good faith by appropriate proceedings
diligently conducted or (b) the failure to comply therewith, either individually
or in the aggregate with all other such failures, could not reasonably be
expected to have a Material Adverse Effect.

     5.16 PROCEEDS. The proceeds of the Loans will be used for general corporate
purposes.

     5.17 INSURANCE. The Borrower and its Subsidiaries are adequately insured
for their benefit under policies issued by insurers of recognized
responsibility. No notice of any pending or threatened cancellation or material
premium increase has been received by the Borrower or any of its Subsidiaries
with respect to any of such insurance policies. The Borrower and its
Subsidiaries are in compliance with all material conditions contained in such
insurance policies.

     5.18 GOVERNMENTAL AUTHORIZATIONS. The Borrower and its Subsidiaries have
all licenses, franchises, permits and other governmental authorizations
necessary for all businesses presently carried on by them (including ownership
and leasing of the real and personal property owned and leased by them), except
where failure to obtain such licenses, franchises, permits and other
governmental authorizations would not have a Material Adverse Effect.

     5.19 SOLVENCY. The Borrower and each of its Subsidiaries is, and after
consummation of this Agreement and after giving effect to all Indebtedness
incurred and Liens created by the Borrower and each of its Subsidiaries in
connection herewith and therewith and the application of proceeds therefrom will
be, Solvent.

     5.20 INSURANCE LICENSES. No license (including, without limitation, a
license or certificate of authority from an insurance department), permit or
authorization to transact insurance and reinsurance business (a "License") held
by any of the Reliance Standard Insurance Companies or Safety National, the loss
of which could reasonably be expected to have a Material Adverse Effect, is the
subject of a proceeding for suspension or revocation or any similar proceedings
and, to the best knowledge of the Borrower, there is no sustainable basis for
such a suspension or revocation and no such suspension or revocation is
threatened by any state insurance department.

     5.21 NO DEFAULT. Neither the Borrower nor any of its Subsidiaries is in
default under any agreement or instrument to which the Borrower or any of its
Subsidiaries is a party or by which any of their respective properties or assets
is bound or affected, which default could

                                       41

<PAGE>

reasonably be expected to materially and adversely affect the financial
condition or operations of the Borrower and its Subsidiaries taken as a whole.

     5.22 REPLACEMENT OF SCHEDULES. Any Schedule delivered to the Lenders under
this Article V may be amended and replaced with the consent of the Required
Lenders (such consent not to be unreasonably withheld) so that the
representations and warranties set forth in this Article V shall be true and
correct at the time made by the Borrower.

                                   ARTICLE VI
                              AFFIRMATIVE COVENANTS

     So long as any Lender shall have any Commitment hereunder, any Loan or
other Obligation hereunder shall remain unpaid or unsatisfied, the Borrower
shall, and shall (except in the case of Sections 6.01 and 6.02), cause each
Subsidiary to:

     6.01 REPORTS, CERTIFICATES AND OTHER INFORMATION. Unless otherwise provided
herein, furnish or cause to be furnished to the Administrative Agent and each
Lender:

     (a) Audit Report. As soon as available, but in any event within one hundred
(100) days after the end of each Fiscal Year of the Borrower, copies of the
audited consolidated balance sheet, statement of earnings, stockholders' equity
and cash flows of the Borrower as at the end of such Fiscal Year and an
unaudited consolidating balance sheet of the Borrower as of the end of such
Fiscal Year and the related statements of earnings for such Fiscal Year, in each
case setting forth the figures as of the end of, and for, the previous year,
prepared in reasonable detail and in accordance with GAAP applied consistently
throughout the periods reflected therein, certified (as to the consolidated
balance sheet, statement of earnings, stockholders' equity and cash flows only)
without Qualification by Ernst & Young (or such other independent certified
public accountants of recognized standing acceptable to the Required Lenders);

     (b) Quarterly Reports. As soon as available, but in any event within
fifty-two (52) days after the end of each Fiscal Quarter of each Fiscal Year of
the Borrower, copies of the unaudited consolidated balance sheet, statement of
earnings, stockholders' equity and cash flows of the Borrower as at the end of
and for such Fiscal Quarter and an unaudited consolidating balance sheet of the
Borrower as at the end of such Fiscal Quarter and the related unaudited
statements of earnings for such Fiscal Quarter and the portion of the Fiscal
Year through such Fiscal Quarter, and with respect to the consolidated balance
sheet, statement of earnings, stockholders' equity and cash flows setting forth
in comparative form the figures as of the end of, and for, the corresponding
periods of the previous Fiscal Year and the previous Fiscal Quarter, prepared in
reasonable detail and in accordance with GAAP applied consistently throughout
the periods reflected therein and certified by the chief financial officer of
the Borrower as presenting fairly the financial condition and results of
operations of the Borrower and its Subsidiaries (subject to normal year-end and
audit adjustments);

     (c) Tax Returns and Reports. If requested by the Administrative Agent or a
Lender, copies of all federal, state, local and foreign Tax Returns and Reports
filed by the Borrower and any of its Subsidiaries;

     (d) SAP Financial Statements.

                                       42
<PAGE>

          (i) As soon as possible, but in any event within seventy (70) days
     after the end of each Fiscal Year of each of the Reliance Standard
     Insurance Companies, Safety National, and, after the consummation of any
     other Acquisition permitted under this Agreement, each Acquired Person (to
     the extent applicable), a copy of the Annual Statement of such Reliance
     Standard Insurance Company, Safety National and such Acquired Person for
     such Fiscal Year prepared in accordance with SAP and accompanied by the
     certification of the chief financial officer of such Reliance Standard
     Insurance Company, Safety National and such Acquired Person that such
     financial statement presents fairly, in accordance with SAP, the financial
     condition and results of operations of such Reliance Standard Insurance
     Company, Safety National and such Acquired Person as of the end of, and
     for, the period then ended; and

          (ii) As soon as possible, but in any event within fifty-two (52) days
     after the end of each Fiscal Quarter of each Fiscal Year of each of the
     Reliance Standard Insurance Companies, Safety National, and, after the
     consummation of any other Acquisition permitted under this Agreement, each
     Acquired Person (to the extent applicable) a copy of the quarterly
     statement of such Reliance Standard Insurance Company, Safety National and
     such Acquired Person for such Fiscal Quarter, all prepared in accordance
     with SAP and accompanied by the certification of the chief financial
     officer of such Reliance Standard Insurance Company, Safety National and
     such Acquired Person that all such financial statements present fairly in
     accordance with SAP the financial condition and results of operations of
     such Reliance Standard Insurance Company, Safety National and such Acquired
     Person as of the end of, and for, the period then ended;

     (e) Compliance Certificate. Contemporaneously with the furnishing of a copy
of each set of the statements and reports provided for in Sections 6.01(a) and
(b), a duly completed certificate, substantially in the form of Exhibit C (the
"Compliance Certificate"), signed by the chief financial officer of the
Borrower, containing, among other things, a computation of, and showing
compliance with, each of the applicable financial ratios and restrictions
contained in Sections 7.13 through 7.17 and to the effect that as of such date,
to the best of Borrower's knowledge, no Default has occurred and is continuing,
or, if there is any such event, describing it and the steps, if any, being taken
to cure it;

     (f) Auditors' Materials. Promptly upon the reasonable request of the
Administrative Agent, copies of all management letters and reports regarding the
Borrower or any of its Subsidiaries submitted to the Borrower or its
Subsidiaries by independent public accountants in connection with each annual
audit report made by such accountants of the books of the Borrower or any of its
Subsidiaries;

     (g) Notice of Default, Litigation and License Matters. Promptly and without
delay upon learning of the occurrence of any of the following, written notice
thereof, describing the same and the steps being taken by the Borrower with
respect thereto:

          (i) the occurrence of a Default,

          (ii) the institution of any Material Litigation or the occurrence of
     any Material Litigation Development,

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<PAGE>

          (iii) the commencement of any dispute which might lead to the material
     modification, transfer, revocation, suspension or termination of this
     Agreement or any Related Document,

          (iv) any Material Adverse Change, or

          (v) any announcement by Standard & Poor's or Moody's or such other
     rating agency whose rating becomes applicable pursuant to the provisions of
     the definition of "Applicable Rate" of any change of any Debt Rating of the
     Borrower.

     (h) ERISA Liability. Promptly upon learning of the occurrence of an ERISA
Event, written notice thereof describing the same and the steps being taken by
Borrower with respect thereto;

     (i) Information Concerning the Parent and the Subsidiaries. Promptly upon
learning thereof, written notice of

          (i) the occurrence with respect to any of its Subsidiaries or the
     Parent of any of the events the occurrence of which in relation to the
     Borrower would constitute an Event of Default under Section 8.01(f);

          (ii) the execution of any agreement by any of its Subsidiaries to
     merge with or consolidate into or with, or purchase or otherwise acquire
     all or substantially all of the assets or stock of any class of, or any
     partnership or joint venture interest in, any other Person, or for the
     sale, transfer, lease or conveyance by any of its Subsidiaries of all or
     any substantial part of its assets or sale or assignment without recourse
     of any of its receivables; and

          (iii) any action which may reasonably be expected to result in a
     Change in Control;

     (j) Insurance Licenses. Within ten (10) Business Days of such notice,
notice of actual suspension, termination or revocation of any License or
material restriction thereon of any of the Reliance Standard Insurance
Companies, Safety National, and after consummation of any other Acquisition
permitted hereunder, each Acquired Person (to the extent applicable) by any
Governmental Authority that can reasonably be expected to have a Material
Adverse Effect;

     (k) Insurance Proceedings. Within ten (10) Business Days of such notice,
notice of any pending or threatened investigation or regulatory proceeding
(other than routine periodic investigations or reviews) by any Governmental
Authority concerning the business, practices or operations of any of the
Reliance Standard Insurance Companies, Safety National, and, after consummation
of any other Acquisition permitted under this Agreement, each Acquired Person
(to the extent applicable) including any agent or managing general agent
thereof, which could reasonably be expected to have a Material Adverse Effect;

     (l) Changes in Applicable Insurance Code. Promptly, upon knowledge of the
Borrower, any of the Reliance Standard Insurance Companies, Safety National, or,
after consummation of any other Acquisition permitted under this Agreement, each
Acquired Person

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<PAGE>

(to the extent applicable) to the Administrative Agent (who shall promptly
deliver such notice to the Lenders), notice of any actual or proposed material
changes in any Applicable Insurance Code which could reasonably be expected to
cause a Material Adverse Change;

     (m) Revenue Agent Notices. Promptly, and in any event within ten (10) days
of receipt, any revenue agent's reports or statutory notices of deficiency
related to the Borrower or any of its Subsidiaries which could reasonably be
expected to have a Material Adverse Effect;

     (n) Notice of Tax Claim. Prompt notice to the Administrative Agent of the
commencement of any claim, audit, examination, notice of deficiency, or other
change or adjustment by any Governmental Authority (a "Tax Claim"), or of the
extension of any statute of limitations regarding Taxes which could reasonably
be expected to have a Material Adverse Effect;

     (o) Other Tax Information. Upon request of the Administrative Agent or a
Lender, promptly to the Administrative Agent copies of all correspondence
(including without limitation, notices, requests, explanations, determinations,
schedules, charts and lists) delivered to any Governmental Authority in
connection with any Tax Claim or Taxes; and

     (p) Other Information. From time to time such other information and
certifications concerning the Borrower and any of its Subsidiaries as the
Administrative Agent or a Lender may reasonably request.

     Documents required to be delivered pursuant to Section 6.01(a), (b) or (d)
(to the extent any such documents are included in materials otherwise filed with
the SEC) may be delivered electronically and if so delivered, shall be deemed to
have been delivered on the date (i) on which the Borrower posts such documents,
or provides a link thereto on the Borrower's website on the Internet at the
website address listed on Schedule 10.02; or (ii) on which such documents are
posted on the Borrower's behalf on an Internet or intranet website, if any, to
which each Lender and the Administrative Agent have access (whether a
commercial, third-party website or whether sponsored by the Administrative
Agent); provided that: (i) the Borrower shall deliver paper copies of such
documents to the Administrative Agent or any Lender that requests the Borrower
to deliver such paper copies until a written request to cease delivering paper
copies is given by the Administrative Agent or such Lender and (ii) the Borrower
shall notify the Administrative Agent and each Lender (by telecopier or
electronic mail) of the posting of any such documents and provide to the
Administrative Agent by electronic mail electronic versions (i.e., soft copies)
of such documents. Notwithstanding anything contained herein, in every instance
the Borrower shall be required to provide paper copies of the Compliance
Certificates required by Section 6.01(e) to the Administrative Agent. Except for
such Compliance Certificates, the Administrative Agent shall have no obligation
to request the delivery or to maintain copies of the documents referred to
above, and in any event shall have no responsibility to monitor compliance by
the Borrower with any such request for delivery, and each Lender shall be solely
responsible for requesting delivery to it or maintaining its copies of such
documents.

     The Borrower hereby acknowledges that (a) the Administrative Agent and/or
the Arranger will make available to the Lenders materials and/or information
provided by or on behalf of the Borrower hereunder (collectively, "Borrower
Materials") by posting the Borrower Materials on IntraLinks or another similar
electronic system (the "Platform") and (b) certain of

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<PAGE>

the Lenders may be "public-side" Lenders (i.e., Lenders that do not wish to
receive material non-public information with respect to the Borrower or its
securities) (each, a "Public Lender"). The Borrower hereby agrees that so long
as the Borrower is the issuer of any outstanding debt or equity securities that
are registered or issued pursuant to a private offering or is actively
contemplating issuing any such securities (w) all Borrower Materials that are to
be made available to Public Lenders shall be clearly and conspicuously marked
"PUBLIC" which, at a minimum, shall mean that the word "PUBLIC" shall appear
prominently on the first page thereof; (x) by marking Borrower Materials
"PUBLIC," the Borrower shall be deemed to have authorized the Administrative
Agent, the Arranger and the Lenders to treat such Borrower Materials as not
containing any material non-public information with respect to the Borrower or
its securities for purposes of United States Federal and state securities laws
(provided, however, that to the extent such Borrower Materials constitute
Information, they shall be treated as set forth in Section 10.07); (y) all
Borrower Materials marked "PUBLIC" are permitted to be made available through a
portion of the Platform designated "Public Investor;" and (z) the Administrative
Agent and the Arranger shall be entitled to treat any Borrower Materials that
are not marked "PUBLIC" as being suitable only for posting on a portion of the
Platform not designated "Public Investor." Notwithstanding the foregoing, the
Borrower shall be under no obligation to mark any Borrower Materials "PUBLIC."

     6.02 PAYMENT OF OBLIGATIONS. Pay and discharge, as the same shall become
due and payable, all its material obligations and liabilities, including (a) all
material tax liabilities, assessments and governmental charges or levies upon it
or its properties or assets, (b) all lawful claims which, if unpaid, would by
law become a Lien upon its property; and (c) all material Indebtedness, as and
when due and payable, but subject to any subordination provisions contained in
any instrument or agreement evidencing such Indebtedness, unless any of the
foregoing is being contested in good faith by appropriate proceedings diligently
conducted and adequate reserves in accordance with GAAP or SAP, as the case may
be, are being maintained by the Borrower or such Subsidiary.

     6.03 PRESERVATION OF EXISTENCE, ETC. (a) Preserve, renew and maintain in
full force and effect its legal existence and good standing under the Laws of
the jurisdiction of its organization except in a transaction permitted by
Section 7.02; (b) take all reasonable action to maintain all rights, privileges,
permits, licenses and franchises necessary or desirable in the normal conduct of
its business, except to the extent that failure to do so could not reasonably be
expected to have a Material Adverse Effect; and (c) preserve or renew all of its
registered patents, trademarks, trade names and service marks, the
non-preservation of which could reasonably be expected to have a Material
Adverse Effect.

     6.04 MAINTENANCE OF PROPERTIES. (a) Maintain, preserve and protect all of
its material properties and equipment necessary in the operation of its business
in good working order and condition, ordinary wear and tear excepted; and (b)
make all necessary repairs thereto and renewals and replacements thereof except
where the failure to do so could not reasonably be expected to have a Material
Adverse Effect.

     6.05 MAINTENANCE OF INSURANCE. Maintain, with financially sound and
reputable insurance companies which are not Affiliates of the Borrower,
insurance with respect to its properties and business against loss or damage of
the kinds customarily insured against by

                                       46

<PAGE>

Persons engaged in the same or similar business, of such types and in such
amounts as are customarily carried under similar circumstances by such other
Persons.

     6.06 COMPLIANCE WITH LAWS; MATERIAL CONTRACTUAL OBLIGATIONS. Comply in all
material respects with (a) the requirements of all Laws (including ERISA and
Environmental Laws) and all orders, writs, injunctions and decrees applicable to
it or to its business or property, except in such instances in which (i) such
requirement of Law or order, writ, injunction or decree is being contested in
good faith by appropriate proceedings diligently conducted; or (ii) the failure
to comply therewith could not reasonably be expected to have a Material Adverse
Effect; and (b) all material Contractual Obligations, including Guarantees,
except in such instances in which (i) such material Contractual Obligation is
being contested in good faith by appropriate proceedings diligently conducted;
or (ii) the failure to comply therewith could not reasonably be expected to have
a Material Adverse Effect.

     6.07 BOOKS AND RECORDS. Maintain proper books of record and account, in
which full, true and correct entries sufficient to prepare financial statements
in conformity with GAAP or SAP, as the case may be, consistently applied shall
be made of all financial transactions and matters involving the assets and
business of the Borrower or such Subsidiary, as the case may be; and maintain
such books of record and account in material conformity with all applicable
requirements of any Governmental Authority having regulatory jurisdiction over
the Borrower or such Subsidiary, as the case may be.

     6.08 INSPECTION RIGHTS. Subject to the Administrative Agent's and the
Lenders' obligations under Section 10.07, permit the Representatives of the
Administrative Agent and each Lender to visit and inspect any of its properties,
to examine its corporate, financial and operating records, and make copies
thereof or abstracts therefrom, and to discuss its affairs, finances and
accounts with its directors, officers, and independent public accountants, all
at the expense of the Borrower and at such reasonable times during normal
business hours and as often as may be reasonably desired, upon reasonable
advance notice to the Borrower; provided that when an Event of Default exists
the Administrative Agent or any Lender (or any of their respective
representatives or independent contractors) may do any of the foregoing at the
expense of the Borrower at any time during normal business hours and without
advance notice.

                                   ARTICLE VII
                               NEGATIVE COVENANTS

     So long as any Lender shall have any Commitment hereunder or any Loan or
other Obligation hereunder shall remain unpaid or unsatisfied, the Borrower
shall:

     7.01 LIENS. Not, and not permit any Subsidiary to create, incur, assume or
suffer to exist any Lien upon any of its property, assets or revenues, whether
now owned or hereafter acquired, other than the following (which shall be
referred to as "Permitted Liens"):

     (a) Liens for current Taxes not delinquent or for Taxes being contested in
good faith and by appropriate proceedings and with respect to which adequate
reserves are being maintained in accordance with GAAP;

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<PAGE>

     (b) Liens in connection with the acquisition or leasing of fixed or capital
assets after the date hereof attaching only to the property being acquired,
provided the Indebtedness secured thereby does not exceed ninety percent (90%)
of the fair market value of such property at the time of acquisition thereof;

     (c) Liens shown on Schedule 7.01;

     (d) Liens incurred in the ordinary course of business in connection with
workers' compensation, unemployment insurance or other forms of governmental
insurance or benefits or to secure performance of tenders, statutory
obligations, leases and contracts (other than for borrowed money) entered into
in the ordinary course of business or to secure obligations on surety or appeal
bonds;

     (e) Liens of mechanics, carriers, materialmen and other like Liens arising
in the ordinary course of business in respect of obligations which are not
delinquent or which are being contested in good faith and by appropriate
proceedings and with respect to which adequate reserves are being maintained in
accordance with GAAP;

     (f) Liens arising in the ordinary course of business for sums being
contested in good faith and by appropriate proceedings and with respect to which
adequate reserves are being maintained in accordance with GAAP, or for sums not
due, and in either case not involving any deposits or advances for borrowed
money or the deferred purchase price of property or services;

     (g) Liens in favor of any Federal Home Loan Bank;

     (h) Liens incurred in connection with the acquisition of Investments
permitted by this Agreement;

     (i) Liens arising in connection with reverse repurchase agreements,
securities lending and Swap Contracts entered into in the ordinary course of
business;

     (j) Liens pursuant to trust or other security arrangements in connection
with reinsurance agreements under which insurance liabilities are ceded to any
of the Reliance Standard Insurance Companies, Safety National, Safety First or
Safety National Re;

     (k) easements, rights-of-way, restrictions and other similar encumbrances
incurred in the ordinary course of business which, in the aggregate, are not
substantial in amount, and which do not in any case materially detract from the
value of the property subject thereto or interfere with the ordinary conduct of
the businesses of the Borrower and its Subsidiaries;

     (l) Liens arising solely by virtue of any statutory or common Law provision
relating to banker's liens, rights of set-off or similar rights and remedies as
to deposit accounts or other funds maintained with a creditor depository
institution; provided, that (i) such deposit account is not a dedicated cash
collateral account and is not subject to restrictions against access by the
Borrower in excess of those set forth by regulations promulgated by the FRB, and
(ii) such deposit account is not intended by the Borrower or any Subsidiary to
provide collateral to the depository institution;

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<PAGE>

     (m) Liens consisting of deposits made by any Subsidiary of the Borrower
(other than a Non-Insurance Subsidiary) with the insurance regulatory authority
in its jurisdiction of domicile or other statutory Liens or Liens or claims
imposed or required by applicable insurance Law or regulation against the assets
of such Subsidiary, in each case in favor of all policyholders of such
Subsidiary and in the ordinary course of such Subsidiary's business;

     (n) Liens securing obligations owed to the Borrower by a Subsidiary or owed
by any Subsidiary of the Borrower to any of its other Subsidiaries; and

     (o) Other Liens of any type or nature, so long as the aggregate amount of
the obligations at any one time outstanding which are secured by Liens permitted
by this subsection (o) does not exceed $20,000,000.

     7.02 CONSOLIDATION, MERGER, ETC. Not, and not permit any of its
Subsidiaries to, liquidate or dissolve, consolidate with, or merge into or with,
any other Person, or make any Acquisition except:

     (a) any Subsidiary of the Borrower may liquidate or dissolve voluntarily
into, and may merge with and into, the Borrower or any other Subsidiary of the
Borrower; provided that with respect to any merger between Subsidiaries of the
Borrower the percentage of the equity and voting power of the surviving
Subsidiary owned by the Borrower immediately after such merger shall not be less
than the greatest percentage of the equity and voting power owned by the
Borrower in any Subsidiary party to such merger immediately prior thereto;

     (b) so long as no Default has occurred and is continuing or would occur
after giving effect thereto and so long as after giving effect thereto, the
Borrower shall be in pro forma compliance with the requirements of this
Agreement, the Borrower and its Subsidiaries may make an Acquisition, through
merger, consolidation, or purchase of all or substantially all of the assets or
capital stock of a Person; and

     (c) any Subsidiary (other than any of the Reliance Standard Insurance
Companies and Safety National) engaged primarily in investing in securities may
voluntarily dissolve or liquidate so long as its net assets are distributed in
accordance with the proportionate equity interests of its shareholders, partners
or other beneficial owners.

     7.03 ASSET DISPOSITION, ETC. Not, and not permit any of its Subsidiaries
to, sell, or assign, lease, transfer, contribute, convey or otherwise dispose
of, or grant options, warrants or other rights with respect to, any of its
assets to any Person, unless:

     (a) such sale, assignment, transfer, lease, contribution, conveyance or
other disposition is in the ordinary course of its business;

     (b) the book value of such assets net of related liabilities, together with
the net book value of all other assets sold, transferred, leased, contributed or
conveyed otherwise than in the ordinary course of business by the Borrower or
any of its Subsidiaries pursuant to this clause since December 31, 2005, does
not exceed $50,000,000;

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<PAGE>

     (c) such sale, transfer, lease, contribution, conveyance or other
disposition has been consented to in writing by the Required Lenders (it being
understood such Required Lenders shall have no obligation to so consent); or

     (d) such sale, transfer, contribution or conveyance is in connection with
any liquidation, dissolution, consolidation or merger permitted under Section
7.02.

     7.04 DIVIDENDS, ETC. Not declare, pay or make any dividend or distribution
(in cash, property or obligations) on any shares of any class of capital stock
(now or hereafter outstanding) of the Borrower or on any warrants, options or
other rights with respect to any shares of any class of capital stock (now or
hereafter outstanding) of the Borrower (other than dividends or distributions
payable in its common stock or warrants to purchase its common stock or splitups
or reclassifications of its stock into additional or other shares of its common
stock) or apply, or permit any of its Subsidiaries to apply, any of its funds,
property or assets to the purchase, redemption, sinking fund or other retirement
of any shares of any class of capital stock (now or hereafter outstanding) of
the Borrower or any option, warrant or other right to acquire shares of the
Borrower's capital stock (other than any such payment pursuant to stock
appreciation rights granted and exercised in accordance with applicable rules
and regulations of the Securities and Exchange Commission); or make any deposit
for any of the foregoing purposes, unless, after giving effect thereto, no
Default shall have occurred and be continuing and the Borrower shall be in pro
forma compliance with the requirements of this Agreement.

     7.05 INVESTMENTS. Not, and not permit any of its Subsidiaries to, make,
incur, assume or suffer to exist any Investment in any other Person, except:

     (a) Investments in cash and Cash Equivalents;

     (b) in the ordinary course of business, Investments by the Borrower in any
of its Subsidiaries, or by any such Subsidiary in any of its or the Borrower's
Subsidiaries or the Borrower, by way of contributions to capital or loans or
advances; and

     (c) other Investments by any of the Borrower and its Subsidiaries which
shall not violate any of the following guidelines:

          (i) All Investments by the Reliance Standard Insurance Companies,
     Safety National and any Acquired Person (if an insurance company) shall be
     in compliance with the Applicable Insurance Code(s) of each Reliance
     Standard Insurance Company's, Safety National's and such Acquired Person's
     state of domicile or approved by the applicable Department; and

          (ii) Investments by the Borrower and its Subsidiaries in securities of
     a single issuer (other than (A) U.S. Government Securities; (B) overnight
     investments in securities rated at least A-2 by Standard & Poor's or P-2 by
     Moody's which are purchased through short-term asset management accounts
     offered by any commercial banks organized under the laws of the United
     States which are Lenders or which have a combined capital and surplus in
     excess of $500,000,000; (C) repurchase agreements collateralized by any of
     the securities referenced in clauses (A) and (B), above or clause (2)
     below; and (D) investments in the Borrower or any of its Affiliates) shall
     not exceed

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<PAGE>

     (1) except as to securities covered by clause (2) below, the lesser of 3%
     of the consolidated total assets of the Borrower and its Subsidiaries or
     20% of Consolidated Equity of the Borrower; or (2) as to asset-backed
     securities backed by a single pool of assets that are Investment Grade
     Securities, 5% of the consolidated total assets of the Borrower and its
     Subsidiaries; provided that for the purposes of determining compliance with
     this Section 7.05(c)(ii), (1) the Tersk Investment shall not be considered
     as an Investment in a single issuer; instead, the Investments of Tersk LLC,
     to the extent of the Borrower's and its Subsidiaries' proportionate
     interests therein, shall be deemed to be Investments of the Borrower and
     its Subsidiaries (but not to exceed in the aggregate for such purpose,
     however, the amount of the Tersk Investment), and (2) Investments of the
     Borrower and its Subsidiaries in the Structured Notes shall not be
     considered as Investments in a single issuer;

provided, however, that for purposes of applying Section 7.05(c), Investments by
Subsidiaries of the Borrower which are not wholly-owned Subsidiaries shall only
be taken into account to the extent that the Borrower's direct or indirect
proportionate equity interest of such Subsidiary is taken into account in
calculating Consolidated Equity of the Borrower.

     7.06 TAKE OR PAY CONTRACTS. Not, and not permit any of its Subsidiaries to,
enter into or be a party to any arrangement for the purchase of materials,
supplies, other property or services if such arrangement by its express terms
requires that payment be made by the Borrower or such Subsidiary regardless of
whether such materials, supplies, other property or services are delivered or
furnished to it.

     7.07 REGULATION U. Not, and not permit any of its Subsidiaries to, use or
permit any proceeds of the Loans to be used, either directly or indirectly, for
the purpose, whether immediate, incidental or ultimate, of "purchasing or
carrying margin stock" within the meaning of Regulation U.

     7.08 SUBSIDIARIES. Notwithstanding any provision of this Agreement to the
contrary, not, and not permit any of its Subsidiaries to, create or permit to
exist any Subsidiary other than the Subsidiaries listed on Schedule 5.12 unless
the Administrative Agent and the Lenders are promptly notified of the creation
or existence of any such Subsidiary.

     7.09 OTHER AGREEMENTS. Not, and not permit any of its Subsidiaries to,
enter into any agreement containing any provision which (a) would be violated or
breached by the performance of its obligations hereunder or under any instrument
or document delivered or to be delivered by it hereunder or in connection
herewith, (b) prohibits or restricts the creation or assumption of any Lien
(other than Permitted Liens) upon its properties, revenues or assets (whether
now owned or hereafter acquired) as security for the Liabilities hereunder, (c)
prohibits or restricts the ability of any of its Subsidiaries to make dividends
or advances or payments to the Borrower, or (d) constitutes an agreement to a
limitation or restriction of the type described in clauses (a) through (c) with
respect to any other Indebtedness.

     7.10 BUSINESS ACTIVITIES. Not, and not permit any of its Subsidiaries to,
engage in any type of business except (a) the businesses in which the Borrower
and its Subsidiaries are engaged as of the date hereof, (b) insurance and
insurance-related businesses and insurance services of all types, (c) investment
management services for Persons other than the Borrower and its

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<PAGE>

Subsidiaries and (d) the acquisition or origination of financial assets,
including but not limited to mortgage, automobile and other consumer finance
loans, and the origination of securitizations based on such financial assets.

     7.11 TRANSACTIONS WITH AFFILIATES. Not, and not permit any of its
Subsidiaries to, enter into, or cause, suffer or permit to exist any
arrangement, Reinsurance Agreement, contract with or investment in any of its
other Affiliates which is not a directly or indirectly wholly-owned Subsidiary
of the Borrower unless such arrangement (a) is fair and equitable to the
Borrower or such Subsidiary, (b) is of a sort which would be entered into by a
prudent Person in the position of the Borrower or such Subsidiary with a Person
which is not one of its Affiliates, and (c) is on terms which are not less
favorable to the Borrower or such Subsidiary than are obtainable from a Person
which is not one of its Affiliates.

     7.12 OWNERSHIP OF RSL AND SAFETY NATIONAL. Not cease to own, directly or
indirectly, free and clear of all Liens, (a) 100% of the outstanding shares of
voting stock of RSL on a fully diluted basis and (b) 100% of the outstanding
shares of voting stock and voting power of Safety National on a fully diluted
basis.

     7.13 CONSOLIDATED NET WORTH. Not permit Consolidated Net Worth to be less
than the sum of (a) $732,851,000 plus (b) 50% of consolidated Net Income (if
positive) for each Fiscal Quarter commencing after June 30, 2006 plus (c) 50% of
net equity proceeds received after June 30, 2006. For purposes of calculating
Consolidated Net Worth, any Capital Securities Amount shall be included therein
to the same extent that such amount would be included in Consolidated Equity
pursuant to the definition thereof.

     7.14 DEBT TO CAPITAL. Not permit the Debt to Capital Ratio to exceed 0.30:1
at any time.

     7.15 RISK-BASED CAPITAL RATIO. Not permit the Risk-Based Capital Ratio of
RSL to fall below 200% and not permit the Risk-Based Capital Ratio of Safety
National to fall below 110%. This ratio shall be measured as of the end of each
Fiscal Year for the Fiscal Year then ended.

     7.16 PRO FORMA RISK-BASED CAPITAL. Not permit the Risk-Based Capital Ratio
of Safety National (calculated as if Safety National's excess workers'
compensation premiums were reported under the workers' compensation line of
business for purposes of calculating Safety National's Risk Based Capital Ratio)
to fall below 200%. This ratio shall be measured as of the end of each Fiscal
Year for the Fiscal Year then ended.

     7.17 SUBSIDIARY INDEBTEDNESS. Not permit any Subsidiary to incur any
Subsidiary Indebtedness except Subsidiary Indebtedness in an aggregate principal
amount for all Subsidiaries of not more than $20,000,000 at any one time
outstanding.

                                  ARTICLE VIII
                         EVENTS OF DEFAULT AND REMEDIES

     8.01 EVENTS OF DEFAULT. Any of the following shall constitute an Event of
Default:

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<PAGE>

     (a) Non-Payment. The Borrower fails to pay when and as required to be paid
herein, any amount of principal of any Loan, or within three days after the same
becomes due, any interest on any Loan, or any commitment, utilization or other
fee due hereunder, or (iii) within five days after the same becomes due, any
other amount payable hereunder or under any other Loan Document; or

     (b) Specific Covenants. The Borrower fails to perform or observe any term,
covenant or agreement contained in any of Section 6.01(i), or Article VII (other
than Sections 7.05, 7.06, 7.08 or 7.11 which shall be governed by Section
8.01(c)); or

     (c) Other Defaults. The Borrower fails to perform or observe any other
covenant or agreement (not specified in clause (a) or (b) above) contained in
any Loan Document on its part to be performed or observed and such failure
continues for 30 days; or

     (d) Representations and Warranties. Any representation, warranty,
certification or statement of fact made or deemed made by or on behalf of the
Borrower herein, in any other Loan Document, or in any document delivered in
connection herewith or therewith shall be incorrect or misleading in any
material respect when made or deemed made; or

     (e) Cross-Default. (A) The Borrower or any Material Subsidiary (A) fails to
make any payment when due (whether by scheduled maturity, required prepayment,
acceleration, demand, or otherwise) in respect of any Indebtedness or Guarantee
(other than Indebtedness hereunder and Indebtedness under Swap Contracts) having
an aggregate principal amount (including undrawn committed or available amounts
and including amounts owing to all creditors under any combined or syndicated
credit arrangement) of more than the Threshold Amount, or fails to observe or
perform any other agreement or condition relating to any such Indebtedness or
Guarantee or contained in any instrument or agreement evidencing, securing or
relating thereto, or any other event occurs, the effect of which default or
other event is to cause, or to permit the holder or holders of such Indebtedness
or the beneficiary or beneficiaries of such Guarantee (or a trustee or agent on
behalf of such holder or holders or beneficiary or beneficiaries) to cause, with
the giving of notice if required, such Indebtedness to be demanded or to become
due or to be repurchased, prepaid, defeased or redeemed (automatically or
otherwise), or an offer to repurchase, prepay, defease or redeem such
Indebtedness to be made, prior to its stated maturity, or such Guarantee to
become payable or cash collateral in respect thereof to be demanded; or there
occurs under any Swap Contract an Early Termination Date (as defined in such
Swap Contract) resulting from (C) any event of default under such Swap Contract
as to which the Borrower or any Material Subsidiary is the Defaulting Party (as
defined in such Swap Contract) or (D) any Termination Event (as so defined)
under such Swap Contract as to which the Borrower or any Material Subsidiary is
an Affected Party (as so defined) and, in either event, the Swap Termination
Value owed by the Borrower or such Material Subsidiary as a result thereof is
greater than the Threshold Amount and the amount owed by the Borrower or
Material Subsidiary thereunder is not paid within 15 days of the date such
payment is due; or

     (f) Insolvency Proceedings, Etc. The Borrower or any Material Subsidiary
institutes or consents to the institution of any proceeding under any Debtor
Relief Law, or makes an assignment for the benefit of creditors; or applies for
or consents to the appointment of any receiver, trustee, custodian, conservator,
liquidator, rehabilitator or similar officer for it or for all or any material
part of its property; or any receiver, trustee, custodian, conservator,
liquidator,

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<PAGE>

rehabilitator or similar officer is appointed without the application or consent
of such Person and the appointment continues undischarged or unstayed for 60
calendar days; or any proceeding under any Debtor Relief Law relating to any
such Person or to all or any material part of its property is instituted without
the consent of such Person and continues undismissed or unstayed for 60 calendar
days, or an order for relief is entered in any such proceeding; or

     (g) Inability to Pay Debts; Attachment. (i) The Borrower or any Material
Subsidiary becomes unable or admits in writing its inability or fails generally
to pay its debts as they become due, or (ii) any writ or warrant of attachment
or execution or similar process is issued or levied against all or any material
part of the property of any such Person and is not released, vacated or fully
bonded within 30 days after its issue or levy; or

     (h) Judgments. There is entered against the Borrower or any Material
Subsidiary a final non-appealable judgment or order for the payment of money in
an aggregate amount exceeding the Threshold Amount (to the extent not covered by
independent third-party insurance (including but not limited to reinsurance
coverage) as to which the insurer or reinsurer does not dispute coverage) which
is not satisfied within fifteen (15) days from the date thereof, or any one or
more non-monetary final judgments that have, or could reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect and, in either
case, enforcement proceedings are commenced by any creditor upon such judgment
or order, or there is a period of 10 consecutive days during which a stay of
enforcement of such judgment, by reason of a pending appeal or otherwise, is not
in effect; or

     (i) ERISA. (i) An ERISA Event occurs with respect to a Pension Plan or
Multiemployer Plan which has resulted or could reasonably be expected to result
in liability of the Borrower under Title IV of ERISA to the Pension Plan,
Multiemployer Plan or the PBGC in an aggregate amount in excess of $10,000,000,
or (ii) the Borrower or any ERISA Affiliate fails to pay when due, after the
expiration of any applicable grace period, any installment payment with respect
to its withdrawal liability under Section 4201 of ERISA under a Multiemployer
Plan in an aggregate amount in excess of $10,000,000; or

     (j) Invalidity of Loan Documents. Any Loan Document, at any time after its
execution and delivery and for any reason other than as expressly permitted
hereunder or satisfaction in full of all the Obligations, ceases to be in full
force and effect; or the Borrower or any other Person contests in any manner the
validity or enforceability of any Loan Document; or the Borrower denies that it
has any or further liability or obligation under any Loan Document, or purports
to revoke, terminate or rescind any Loan Document; or

     (k) Change of Control. Any Change of Control occurs.

     8.02 REMEDIES UPON EVENT OF DEFAULT. If any Event of Default occurs and is
continuing, the Administrative Agent shall, at the request of, or may, with the
consent of, the Required Lenders, take any or all of the following actions:

     (a) declare the commitment of each Lender to make Loans to be terminated,
whereupon such commitments and obligation shall be terminated;

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<PAGE>

     (b) declare the unpaid principal amount of all outstanding Loans, all
interest accrued and unpaid thereon, and all other amounts owing or payable
hereunder or under any other Loan Document to be immediately due and payable,
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived by the Borrower; and

     (c) exercise on behalf of itself and the Lenders all rights and remedies
available to it and the Lenders under the Loan Documents or applicable law;

provided that upon the occurrence of an actual or deemed entry of an order for
relief with respect to the Borrower under the Debtor Relief Laws, the obligation
of each Lender to make Loans shall automatically terminate, and the unpaid
principal amount of all outstanding Loans and all interest and other amounts as
aforesaid shall automatically become due and payable.

     8.03 APPLICATION OF FUNDS. After the exercise of remedies provided for in
Section 8.02 (or after the Loans have automatically become immediately due and
payable as set forth in the proviso to Section 8.02), any amounts received on
account of the Obligations shall be applied by the Administrative Agent in the
following order:

First, to payment of that portion of the Obligations constituting fees,
indemnities, expenses and other amounts (including Attorney Costs and amounts
payable under Article III) payable to the Administrative Agent in its capacity
as such;

Second, to payment of that portion of the Obligations constituting fees,
indemnities and other amounts (other than principal and interest) payable to the
Lenders (including Attorney Costs and amounts payable under Article III),
ratably among them in proportion to the amounts described in this clause Second
payable to them;

Third, to payment of that portion of the Obligations constituting accrued and
unpaid interest on the Loans, ratably among the Lenders in proportion to the
respective amounts described in this clause Third payable to them;

Fourth, to payment of that portion of the Obligations constituting unpaid
principal of the Loans, ratably among the Lenders in proportion to the
respective amounts described in this clause Fourth held by them; and

Last, the balance, if any, after all of the Obligations have been indefeasibly
paid in full, to the Borrower or as otherwise required by Law.

                                   ARTICLE IX
                              ADMINISTRATIVE AGENT

     9.01 APPOINTMENT AND AUTHORITY. Each of the Lenders hereby irrevocably
appoints Bank of America to act on its behalf as the Administrative Agent
hereunder and under the other Loan Documents and authorizes the Administrative
Agent to take such actions on its behalf and to exercise such powers as are
delegated to the Administrative Agent by the terms hereof or thereof, together
with such actions and powers as are reasonably incidental thereto. The
provisions of this Article are solely for the benefit of the Administrative
Agent and the Lenders, and the Borrower shall not have rights as a third party
beneficiary of any of such provisions.

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<PAGE>

     9.02 RIGHTS AS A LENDER. The Person serving as the Administrative Agent
hereunder shall have the same rights and powers in its capacity as a Lender as
any other Lender and may exercise the same as though it were not the
Administrative Agent and the term "Lender" or "Lenders" shall, unless otherwise
expressly indicated or unless the context otherwise requires, include the Person
serving as the Administrative Agent hereunder in its individual capacity. Such
Person and its Affiliates may accept deposits from, lend money to, act as the
financial advisor or in any other advisory capacity for and generally engage in
any kind of business with the Borrower or any Subsidiary or other Affiliate
thereof as if such Person were not the Administrative Agent hereunder and
without any duty to account therefor to the Lenders.

     9.03 EXCULPATORY PROVISIONS. The Administrative Agent shall not have any
duties or obligations except those expressly set forth herein and in the other
Loan Documents. Without limiting the generality of the foregoing, the
Administrative Agent:

     (a) shall not be subject to any fiduciary or other implied duties,
regardless of whether a Default has occurred and is continuing;

     (b) shall not have any duty to take any discretionary action or exercise
any discretionary powers, except discretionary rights and powers expressly
contemplated hereby or by the other Loan Documents that the Administrative Agent
is required to exercise as directed in writing by the Required Lenders (or such
other number or percentage of the Lenders as shall be expressly provided for
herein or in the other Loan Documents), provided that the Administrative Agent
shall not be required to take any action that, in its opinion or the opinion of
its counsel, may expose the Administrative Agent to liability or that is
contrary to any Loan Document or applicable law; and

     (c) shall not, except as expressly set forth herein and in the other Loan
Documents, have any duty to disclose, and shall not be liable for the failure to
disclose, any information relating to the Borrower or any of its Affiliates that
is communicated to or obtained by the Person serving as the Administrative Agent
or any of its Affiliates in any capacity.

     The Administrative Agent shall not be liable for any action taken or not
taken by it (i) with the consent or at the request of the Required Lenders (or
such other number or percentage of the Lenders as shall be necessary, or as the
Administrative Agent shall believe in good faith shall be necessary, under the
circumstances as provided in Sections 10.01 and 8.02) or (ii) in the absence of
its own gross negligence or willful misconduct. The Administrative Agent shall
be deemed not to have knowledge of any Default unless and until notice
describing such Default is given to the Administrative Agent by the Borrower or
a Lender.

     The Administrative Agent shall not be responsible for or have any duty to
ascertain or inquire into (i) any statement, warranty or representation made in
or in connection with this Agreement or any other Loan Document, (ii) the
contents of any certificate, report or other document delivered hereunder or
thereunder or in connection herewith or therewith, (iii) the performance or
observance of any of the covenants, agreements or other terms or conditions set
forth herein or therein or the occurrence of any Default, (iv) the validity,
enforceability, effectiveness or genuineness of this Agreement, any other Loan
Document or any other agreement, instrument or document or (v) the satisfaction
of any condition set forth in Article IV

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<PAGE>

or elsewhere herein, other than to confirm receipt of items expressly required
to be delivered to the Administrative Agent.

     9.04 RELIANCE BY ADMINISTRATIVE AGENT. The Administrative Agent shall be
entitled to rely upon, and shall not incur any liability for relying upon, any
notice, request, certificate, consent, statement, instrument, document or other
writing (including any electronic message, Internet or intranet website posting
or other distribution) believed by it to be genuine and to have been signed,
sent or otherwise authenticated by the proper Person. The Administrative Agent
also may rely upon any statement made to it orally or by telephone and believed
by it to have been made by the proper Person, and shall not incur any liability
for relying thereon. In determining compliance with any condition hereunder to
the making of a Loan that by its terms must be fulfilled to the satisfaction of
a Lender, the Administrative Agent may presume that such condition is
satisfactory to such Lender unless the Administrative Agent shall have received
notice to the contrary from such Lender prior to the making of such Loan. The
Administrative Agent may consult with legal counsel (who may be counsel for the
Borrower), independent accountants and other experts selected by it, and shall
not be liable for any action taken or not taken by it in accordance with the
advice of any such counsel, accountants or experts.

     9.05 DELEGATION OF DUTIES. The Administrative Agent may perform any and all
of its duties and exercise its rights and powers hereunder or under any other
Loan Document by or through any one or more sub agents appointed by the
Administrative Agent. The Administrative Agent and any such sub agent may
perform any and all of its duties and exercise its rights and powers by or
through their respective Related Parties. The exculpatory provisions of this
Article shall apply to any such sub agent and to the Related Parties of the
Administrative Agent and any such sub agent, and shall apply to their respective
activities in connection with the syndication of the credit facilities provided
for herein as well as activities as Administrative Agent.

     9.06 RESIGNATION OF ADMINISTRATIVE AGENT. The Administrative Agent may at
any time give notice of its resignation to the Lenders and the Borrower. Upon
receipt of any such notice of resignation, the Required Lenders shall have the
right, subject to the consent of the Borrower (such consent not to be
unreasonably withheld), to appoint a successor from the Lenders. If no such
successor shall have been so appointed by the Required Lenders and shall have
accepted such appointment within 30 days after the retiring Administrative Agent
gives notice of its resignation, then the retiring Administrative Agent may,
after consulting with the Borrower and the Lenders, appoint a successor
Administrative Agent from among the Lenders; provided that if the Administrative
Agent shall notify the Borrower and the Lenders that no Lender has accepted such
appointment, then such resignation shall nonetheless become effective in
accordance with such notice and (1) the retiring Administrative Agent shall be
discharged from its duties and obligations hereunder and under the other Loan
Documents (except for duties and obligations having arisen prior to the
effectiveness of such resignation) and (2) all payments, communications and
determinations provided to be made by, to or through the Administrative Agent
shall instead be made by or to each Lender directly, until such time as a
successor Administrative Agent is appointed as provided for above in this
Section. (For the avoidance of doubt, it is agreed that the Administrative
Agent's resignation shall not be effective until the earlier of 30 days after
the notice of its resignation or the appointment under the terms of this Section
of a successor.) Upon the acceptance of a successor's appointment as
Administrative Agent hereunder, such successor shall succeed to and become
vested with all of the rights,

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<PAGE>

powers, privileges and duties of the retiring (or retired) Administrative Agent,
and the retiring Administrative Agent shall be discharged from all of its duties
and obligations hereunder or under the other Loan Documents (if not already
discharged therefrom as provided above in this Section and except for duties and
obligations having arisen prior to the effectiveness of such resignation). The
fees payable by the Borrower to a successor Administrative Agent shall be the
same as those payable to its predecessor unless otherwise agreed between the
Borrower and such successor. After the retiring Administrative Agent's
resignation hereunder and under the other Loan Documents, the provisions of this
Article and Section 10.04 shall continue in effect for the benefit of such
retiring Administrative Agent, its sub agents and their respective Related
Parties in respect of any actions taken or omitted to be taken by any of them
while the retiring Administrative Agent was acting as Administrative Agent.

     9.07 NON-RELIANCE ON ADMINISTRATIVE AGENT AND OTHER LENDERS. Each Lender
acknowledges that it has, independently and without reliance upon the
Administrative Agent or any other Lender or any of their Related Parties and
based on such documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Lender or any of their Related Parties and
based on such documents and information as it shall from time to time deem
appropriate, continue to make its own decisions in taking or not taking action
under or based upon this Agreement, any other Loan Document or any related
agreement or any document furnished hereunder or thereunder.

     9.08 NO OTHER DUTIES, ETC. Anything herein to the contrary notwithstanding,
none of the Book Manager, the Joint Lead Arrangers, Co-Syndication Agents or
Co-Documentation Agents listed on the cover page hereof shall have any powers,
duties or responsibilities under this Agreement or any of the other Loan
Documents, except in its capacity, as applicable, as the Administrative Agent or
a Lender hereunder.

     9.09 ADMINISTRATIVE AGENT MAY FILE PROOFS OF CLAIM. In case of the pendency
of any receivership, insolvency, liquidation, bankruptcy, reorganization,
arrangement, adjustment, composition or other judicial proceeding relative to
the Borrower, the Administrative Agent (irrespective of whether the principal of
any Loan shall then be due and payable as herein expressed or by declaration or
otherwise and irrespective of whether the Administrative Agent shall have made
any demand on the Borrower) shall be entitled and empowered, by intervention in
such proceeding or otherwise

     (a) to file and prove a claim for the whole amount of the principal and
interest owing and unpaid in respect of the Loans and all other Obligations that
are owing and unpaid and to file such other documents as may be necessary or
advisable in order to have the claims of the Lenders and the Administrative
Agent (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Lenders and the Administrative Agent and their
respective agents and counsel and all other amounts due the Lenders and the
Administrative Agent under Section 10.04) allowed in such judicial proceeding;
and

     (b) to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same;

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<PAGE>

     and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Lender to make such payments to the Administrative Agent and, in the event
that the Administrative Agent shall consent to the making of such payments
directly to the Lenders, to pay to the Administrative Agent any amount due for
the reasonable compensation, expenses, disbursements and advances of the
Administrative Agent and its agents and counsel, and any other amounts due the
Administrative Agent under Sections 2.07 and 10.04.

     Nothing contained herein shall be deemed to authorize the Administrative
Agent to authorize or consent to or accept or adopt on behalf of any Lender any
plan of reorganization, arrangement, adjustment or composition affecting the
Obligations or the rights of any Lender or to authorize the Administrative Agent
to vote in respect of the claim of any Lender in any such proceeding.

                                    ARTICLE X
                                  MISCELLANEOUS

     10.01 AMENDMENTS, ETC. No amendment or waiver of any provision of this
Agreement or any other Loan Document, and no consent to any departure by the
Borrower therefrom, shall be effective unless in writing signed by the Required
Lenders and the Borrower, and acknowledged by the Administrative Agent, and each
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given; provided, however, that no such amendment,
waiver or consent shall:

     (a) waive any condition set forth in Section 4.01(a) without the written
consent of each Lender;

     (b) extend or increase the Commitment of any Lender (or reinstate any
Commitment terminated pursuant to Section 8.02) without the written consent of
such Lender;

     (c) postpone any date fixed by this Agreement or any other Loan Document
for any payment of principal, interest, fees or other amounts due to the Lenders
(or any of them) hereunder or under any other Loan Document without the written
consent of each Lender directly affected thereby;

     (d) reduce the principal of, or the rate of interest specified herein on,
any Loan, or (subject to clause (ii) of the second proviso to this Section
10.01) any fees or other amounts payable hereunder or under any other Loan
Document without the written consent of each Lender directly affected thereby;
provided, however, that only the consent of the Required Lenders shall be
necessary to amend the definition of "Default Rate" or to waive any obligation
of the Borrower to pay interest at the Default Rate;

     (e) change Section 2.11 or Section 8.03 in a manner that would alter the
pro rata sharing of payments required thereby without the written consent of
each Lender; or

     (f) change any provision of this Section or the definition of "Required
Lenders" or any other provision hereof specifying the number or percentage of
Lenders required to amend,

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waive or otherwise modify any rights hereunder or make any determination or
grant any consent hereunder, without the written consent of each Lender;

and, provided further, that (i) no amendment, waiver or consent shall, unless in
writing and signed by the Administrative Agent in addition to the Lenders
required above, affect the rights or duties of the Administrative Agent under
this Agreement or any other Loan Document; and (ii) the Fee Letter may be
amended, or rights or privileges thereunder waived, in a writing executed only
by the parties thereto. Notwithstanding anything to the contrary herein, no
Defaulting Lender shall have any right to approve or disapprove any amendment,
waiver or consent hereunder, except that the Commitment of such Lender may not
be increased or extended without the consent of such Lender.

     10.02 NOTICES; EFFECTIVENESS; ELECTRONIC COMMUNICATION.

     (a) Notices Generally. Except in the case of notices and other
communications expressly permitted to be given by telephone (and except as
provided in subsection (b) below), all notices and other communications provided
for herein shall be in writing and shall be delivered by hand or overnight
courier service, mailed by certified or registered mail or sent by telecopier as
follows, and all notices and other communications expressly permitted hereunder
to be given by telephone shall be made to the applicable telephone number, as
follows:

          (i) if to the Borrower or the Administrative Agent, to the address,
     telecopier number, electronic mail address or telephone number specified
     for such Person on Schedule 10.02; and

          (ii) if to any other Lender, to the address, telecopier number,
     electronic mail address or telephone number specified in its Administrative
     Questionnaire.

Notices sent by hand or overnight courier service, or mailed by certified or
registered mail, postage prepaid, shall be deemed to have been given when
received; notices sent by telecopier shall be deemed to have been given when
sent (except that, if not given during normal business hours for the recipient,
shall be deemed to have been given at the opening of business on the next
business day for the recipient). Notices delivered through electronic
communications to the extent provided in subsection (b) below, shall be
effective as provided in such subsection (b).

     (b) Electronic Communications. Notices and other communications to the
Lenders hereunder may be delivered or furnished by electronic communication
(including e mail and Internet or intranet websites) pursuant to procedures
approved by the Administrative Agent, provided that the foregoing shall not
apply to notices to any Lender pursuant to Article II if such Lender has
notified the Administrative Agent that it is incapable of receiving notices
under such Article by electronic communication. The Administrative Agent or the
Borrower may, in its discretion, agree to accept notices and other
communications to it hereunder by electronic communications pursuant to
procedures approved by it, provided that approval of such procedures may be
limited to particular notices or communications.

     Unless the Administrative Agent otherwise prescribes, (i) notices and other
communications sent to an e-mail address shall be deemed received upon the
sender's receipt of an acknowledgement from the intended recipient (such as by
the "return receipt requested"

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function, as available, return e-mail or other written acknowledgement),
provided that if such notice or other communication is not sent during the
normal business hours of the recipient, such notice or communication shall be
deemed to have been sent at the opening of business on the next business day for
the recipient, and (ii) notices or communications posted to an Internet or
intranet website shall be deemed received upon the deemed receipt by the
intended recipient at its e-mail address as described in the foregoing clause
(i) of notification that such notice or communication is available and
identifying the website address therefor.

     (c) The Platform. THE PLATFORM IS PROVIDED "AS IS" AND "AS AVAILABLE." THE
AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF
THE BORROWER MATERIALS OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM
LIABILITY FOR ERRORS IN OR OMISSIONS FROM THE BORROWER MATERIALS. NO WARRANTY OF
ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD
PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY AGENT
PARTY IN CONNECTION WITH THE BORROWER MATERIALS OR THE PLATFORM. In no event
shall the Administrative Agent or any of its Related Parties (collectively, the
"Agent Parties") have any liability to the Borrower, any Lender or any other
Person for losses, claims, damages, liabilities or expenses of any kind (whether
in tort, contract or otherwise) arising out of the Borrower's or the
Administrative Agent's transmission of Borrower Materials through the Internet,
except to the extent that such losses, claims, damages, liabilities or expenses
are determined by a court of competent jurisdiction by a final and nonappealable
judgment to have resulted from the gross negligence or willful misconduct of
such Agent Party; provided, however, that in no event shall any Agent Party have
any liability to the Borrower, any Lender or any other Person for indirect,
special, incidental, consequential or punitive damages (as opposed to direct or
actual damages).

     (d) Change of Address, Etc. Each of the Borrower and the Administrative
Agent may change its address, telecopier or telephone number for notices and
other communications hereunder by notice to the other parties hereto. Each other
Lender may change its address, telecopier or telephone number for notices and
other communications hereunder by notice to the Borrower and the Administrative
Agent. In addition, each Lender agrees to notify the Administrative Agent from
time to time to ensure that the Administrative Agent has on record (i) an
effective address, contact name, telephone number, telecopier number and
electronic mail address to which notices and other communications may be sent
and (ii) accurate wire instructions for such Lender.

     (e) Reliance by Administrative Agent and Lenders. The Administrative Agent
and the Lenders shall be entitled to rely and act upon any notices (including
telephonic Loan Notices) purportedly given by or on behalf of the Borrower even
if (i) such notices were not made in a manner specified herein, were incomplete
or were not preceded or followed by any other form of notice specified herein,
or (ii) the terms thereof, as understood by the recipient, varied from any
confirmation thereof. The Borrower shall indemnify the Administrative Agent,
each Lender and the Related Parties of each of them from all losses, costs,
expenses and liabilities resulting from the reliance by such Person on each
notice purportedly given by or on behalf of the Borrower. All telephonic notices
to and other telephonic communications with the Administrative Agent

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may be recorded by the Administrative Agent, and each of the parties hereto
hereby consents to such recording.

     10.03 NO WAIVER; CUMULATIVE REMEDIES. No failure by any Lender, or the
Administrative Agent to exercise, and no delay by any such Person in exercising,
any right, remedy, power or privilege hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges herein provided are cumulative and not exclusive of any
rights, remedies, powers and privileges provided by law.

     10.04 EXPENSES; INDEMNITY; DAMAGE WAIVER.

     (a) Costs and Expenses. The Borrower shall pay (i) all reasonable out of
pocket expenses incurred by the Administrative Agent and its Affiliates
(including the reasonable fees, charges and disbursements of counsel for the
Administrative Agent), in connection with the syndication of the credit
facilities provided for herein, the preparation, negotiation, execution,
delivery and administration of this Agreement and the other Loan Documents or
any amendments, modifications or waivers of the provisions hereof or thereof
(whether or not the transactions contemplated hereby or thereby shall be
consummated), and (ii) all reasonable out-of-pocket expenses incurred by the
Administrative Agent or any Lender (including the reasonable fees, charges and
disbursements of any counsel for the Administrative Agent or any Lender), and
shall pay, without duplication, all reasonable fees and time charges for
attorneys who may be employees of the Administrative Agent or any Lender, in
connection with the enforcement or protection of its rights (A) in connection
with this Agreement and the other Loan Documents, including its rights under
this Section, or (B) in connection with the Loans made hereunder, including all
such reasonable out-of-pocket expenses incurred during any workout,
restructuring or negotiations in respect of such Loans.

     (b) Indemnification by the Borrower. The Borrower shall indemnify the
Administrative Agent (and any sub-agent thereof) and each Lender, and each
Related Party of any of the foregoing Persons (each such Person being called an
"Indemnitee") against, and hold each Indemnitee harmless from, any and all
losses, claims, damages, liabilities and related expenses (including the
reasonable fees, charges and disbursements of any counsel for any Indemnitee),
and shall indemnify and hold harmless each Indemnitee, without duplication, from
all reasonable fees and time charges and disbursements for attorneys who may be
employees of any Indemnitee, incurred by any Indemnitee or asserted against any
Indemnitee by any third party or by the Borrower arising out of, in connection
with, or as a result of (i) the execution or delivery of this Agreement, any
other Loan Document or any agreement or instrument contemplated hereby or
thereby, the performance by the parties hereto of their respective obligations
hereunder or thereunder, the consummation of the transactions contemplated
hereby or thereby, (ii) any Loan or the use or proposed use of the proceeds
therefrom, (iii) any actual or alleged presence or release of Hazardous
Materials on or from any property owned or operated by the Borrower or any of
its Subsidiaries, or any Environmental Liability related in any way to the
Borrower or any of its Subsidiaries, or (iv) any actual or prospective claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory, whether brought by a third
party or by the Borrower, and regardless of whether

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any Indemnitee is a party thereto; provided that such indemnity shall not, as to
any Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses (x) are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the gross
negligence or willful misconduct of such Indemnitee or (y) result from a claim
brought by the Borrower against an Indemnitee for breach of such Indemnitee's
obligations hereunder or under any other Loan Document, if the Borrower has
obtained a final and nonappealable judgment in its favor on such claim as
determined by a court of competent jurisdiction unless such damages are
determined by a court of competent jurisdiction.

     (c) Reimbursement by Lenders. To the extent that the Borrower for any
reason fails to indefeasibly pay any amount required under subsection (a) or (b)
of this Section to be paid by it to the Administrative Agent (or any sub-agent
thereof) or any Related Party of any of the foregoing, each Lender severally
agrees to pay to the Administrative Agent (or any such sub-agent) or such
Related Party, as the case may be, such Lender's Applicable Percentage
(determined as of the time that the applicable unreimbursed expense or indemnity
payment is sought) of such unpaid amount, provided that the unreimbursed expense
or indemnified loss, claim, damage, liability or related expense, as the case
may be, was incurred by or asserted against the Administrative Agent (or any
such sub-agent) or against any Related Party of any of the foregoing acting for
the Administrative Agent (or any such sub-agent) in connection with such
capacity. The obligations of the Lenders under this subsection (c) are subject
to the provisions of Section 2.10(d).

     (d) Waiver of Consequential Damages, Etc. To the fullest extent permitted
by applicable law, the Borrower shall not assert, and hereby waives, any claim
against any Indemnitee, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages)
arising out of, in connection with, or as a result of, this Agreement, any other
Loan Document or any agreement or instrument contemplated hereby, the
transactions contemplated hereby or thereby, any Loan or the use of the proceeds
thereof. No Indemnitee referred to in subsection (b) above shall be liable for
any damages arising from the use by unintended recipients of any information or
other materials distributed by it through telecommunications, electronic or
other information transmission systems in connection with this Agreement or the
other Loan Documents or the transactions contemplated hereby or thereby unless
such damages are determined by a court of competent jurisdiction by final and
nonappealable judgment to have resulted from the gross negligence or willful
misconduct of such Indemnitee.

     (e) Payments. All amounts due under this Section shall be payable not later
than thirty days after demand therefor.

     (f) Survival. The agreements in this Section shall survive the resignation
of the Administrative Agent, the replacement of any Lender, the termination of
the Aggregate Commitments and the repayment, satisfaction or discharge of all
the other Obligations.

     10.05 PAYMENTS SET ASIDE. To the extent that any payment by or on behalf of
the Borrower is made to the Administrative Agent or any Lender, or the
Administrative Agent or any Lender exercises its right of setoff, and such
payment or the proceeds of such setoff or any part thereof is subsequently
invalidated, declared to be fraudulent or preferential, set aside or required
(including pursuant to any settlement entered into by the Administrative Agent
or such Lender in

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<PAGE>

its discretion) to be repaid to a trustee, receiver or any other party, in
connection with any proceeding under any Debtor Relief Law or otherwise, then
(a) to the extent of such recovery, the obligation or part thereof originally
intended to be satisfied shall be revived and continued in full force and effect
as if such payment had not been made or such setoff had not occurred, and (b)
each Lender severally agrees to pay to the Administrative Agent upon demand its
applicable share (without duplication) of any amount so recovered from or repaid
by the Administrative Agent, plus interest thereon from the date of such demand
to the date such payment is made at a rate per annum equal to the Federal Funds
Rate from time to time in effect. The obligations of the Lenders under clause
(b) of the preceding sentence shall survive the payment in full of the
Obligations and the termination of this Agreement.

     10.06 SUCCESSORS AND ASSIGNS.

     (a) Successors and Assigns Generally. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby, except that the Borrower may
not assign or otherwise transfer any of its rights or obligations hereunder
without the prior written consent of the Administrative Agent and each Lender
and no Lender may assign or otherwise transfer any of its rights or obligations
hereunder except (i) to an assignee in accordance with the provisions of
subsection (b) of this Section, (ii) by way of participation in accordance with
the provisions of subsection (d) of this Section, or (iii) by way of pledge or
assignment of a security interest subject to the restrictions of subsection (f)
of this Section (and any other attempted assignment or transfer by any party
hereto shall be null and void). Nothing in this Agreement, expressed or implied,
shall be construed to confer upon any Person (other than the parties hereto,
their respective successors and assigns permitted hereby, Participants to the
extent provided in subsection (d) of this Section and, to the extent expressly
contemplated hereby, the Related Parties of each of the Administrative Agent and
the Lenders) any legal or equitable right, remedy or claim under or by reason of
this Agreement.

     (b) Assignments by Lenders. Any Lender may at any time assign to one or
more assignees all or a portion of its rights and obligations under this
Agreement (including all or a portion of its Commitment and the Loans at the
time owing to it); provided that any such assignment shall be subject to the
following conditions:

          (i) Minimum Amounts.

               (A) in the case of an assignment of the entire remaining amount
          of the assigning Lender's Commitment and the Loans at the time owing
          to it or in the case of an assignment to a Lender, an Affiliate of a
          Lender or an Approved Fund, no minimum amount need be assigned; and

               (B) in any case not described in subsection (b)(i)(A) of this
          Section, the aggregate amount of the Commitment (which for this
          purpose includes Loans outstanding thereunder) or, if the Commitment
          is not then in effect, the principal outstanding balance of the Loans
          of the assigning Lender subject to each such assignment, determined as
          of the date the Assignment and Assumption with respect to such
          assignment is delivered to the Administrative Agent or, if "Trade
          Date" is specified in the Assignment and Assumption, as of the Trade
          Date, shall

                                       64

<PAGE>

          not be less than $5,000,000 unless each of the Administrative Agent
          and, so long as no Event of Default has occurred and is continuing,
          the Borrower otherwise consents (each such consent not to be
          unreasonably withheld or delayed); provided, however, that concurrent
          assignments to members of an Assignee Group and concurrent assignments
          from members of an Assignee Group to a single assignee (or to an
          assignee and members of its Assignee Group) will be treated as a
          single assignment for purposes of determining whether such minimum
          amount has been met.

          (ii) Proportionate Amounts. Each partial assignment shall be made as
     an assignment of a proportionate part of all the assigning Lender's rights
     and obligations under this Agreement with respect to the Loans or the
     Commitment assigned;

          (iii) Required Consents. No consent shall be required for any
     assignment except to the extent required by subsection (b)(i)(B) of this
     Section and, in addition:

               (A) the consent of the Borrower (such consent not to be
          unreasonably withheld or delayed) shall be required unless (1) an
          Event of Default has occurred and is continuing at the time of such
          assignment or (2) such assignment is to a Lender, an Affiliate of a
          Lender or an Approved Fund; and

               (B) the consent of the Administrative Agent (such consent not to
          be unreasonably withheld or delayed) shall be required if such
          assignment is to a Person that is not a Lender, an Affiliate of such
          Lender or an Approved Fund with respect to such Lender.

          (iv) Assignment and Assumption. The parties to each assignment shall
     execute and deliver to the Administrative Agent an Assignment and
     Assumption, together with a processing and recordation fee in the amount of
     $3,500, provided, however, that the Administrative Agent may, in its sole
     discretion, elect to waive such processing and recordation fee in the case
     of any assignment. The assignee, if it is not a Lender, shall deliver to
     the Administrative Agent an Administrative Questionnaire.

          (v) No Assignment to Company. No such assignment shall be made to the
     Borrower or any of the Borrower's Affiliates or Subsidiaries.

          (vi) No Assignment to Natural Persons. No such assignment shall be
     made to a natural person.

Subject to acceptance and recording thereof by the Administrative Agent pursuant
to subsection (c) of this Section, from and after the effective date specified
in each Assignment and Assumption, the assignee thereunder shall be a party to
this Agreement and, to the extent of the interest assigned by such Assignment
and Assumption, have the rights and obligations of a Lender under this
Agreement, and the assigning Lender thereunder shall, to the extent of the
interest assigned by such Assignment and Assumption, be released from its
obligations under this Agreement, other than its obligations under Section 10.07
relating to Information received by such Lender, (and, in the case of an
Assignment and Assumption covering all of the assigning Lender's rights and
obligations under this Agreement, such Lender shall cease to be a party

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<PAGE>

hereto) but shall continue to be entitled to the benefits of Sections 3.01,
3.04, 3.05, and 10.04 with respect to facts and circumstances occurring prior to
the effective date of such assignment. Upon request, the Borrower (at its
expense) shall execute and deliver a Note to the assignee Lender. Any assignment
or transfer by a Lender of rights or obligations under this Agreement that does
not comply with this subsection shall be treated for purposes of this Agreement
as a sale by such Lender of a participation in such rights and obligations in
accordance with subsection (d) of this Section.

     (c) Register. The Administrative Agent, acting solely for this purpose as
an agent of the Borrower, shall maintain at the Administrative Agent's Office a
copy of each Assignment and Assumption delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitments of,
and principal amounts of the Loans owing to, each Lender pursuant to the terms
hereof from time to time (the "Register"). The entries in the Register shall, to
the extent permitted by law, be prima facie evidence of the matters set forth
therein, and the Borrower, the Administrative Agent and the Lenders may treat
each Person whose name is recorded in the Register pursuant to the terms hereof
as a Lender hereunder for all purposes of this Agreement, notwithstanding notice
to the contrary. The Register shall be available for inspection by the Borrower
and any Lender, at any reasonable time and from time to time upon reasonable
prior notice.

     (d) Participations. Any Lender may at any time, without the consent of, or
notice to, the Borrower or the Administrative Agent, sell participations to any
Person (other than a natural person or the Borrower or any of the Borrower's
Affiliates or Subsidiaries ) (each, a "Participant") in all or a portion of such
Lender's rights and/or obligations under this Agreement (including all or a
portion of its Commitment and/or the Loans owing to it); provided that (i) such
Lender's obligations under this Agreement shall remain unchanged, (ii) such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations and (iii) the Borrower, the Administrative Agent
and the Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement.

     Any agreement or instrument pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole right to
enforce this Agreement and to approve any amendment, modification or waiver of
any provision of this Agreement; provided that such agreement or instrument may
provide that such Lender will not, without the consent of the Participant, agree
to any amendment, waiver or other modification described in the first proviso to
Section 10.01 that materially adversely affects such Participant. Subject to
subsection (e) of this Section, the Borrower agrees that each Participant shall
be entitled to the benefits of Sections 3.01, 3.04 and 3.05 to the same extent
as if it were a Lender and had acquired its interest by assignment pursuant to
subsection (b) of this Section.

     (e) Limitations upon Participant Rights. A Participant shall not be
entitled to receive any greater payment under any provision of Article III than
the applicable Lender would have been entitled to receive with respect to the
participation sold to such Participant, unless the sale of the participation to
such Participant is made with the Borrower's prior written consent expressly
acknowledging such entitlement. A Participant that would be a Foreign Lender if
it were a Lender shall not be entitled to the benefits of Section 3.01 unless
the Borrower is notified

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<PAGE>

of the participation sold to such Participant and such Participant agrees, for
the benefit of the Borrower, to comply with Section 3.01(e) as though it were a
Lender.

     (f) Certain Pledges. Any Lender may at any time pledge or assign a security
interest in all or any portion of its rights under this Agreement (including
under its Note(s), if any) to secure obligations of such Lender, including any
pledge or assignment to secure obligations to a Federal Reserve Bank; provided
that no such pledge or assignment shall release such Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such Lender
as a party hereto.

     (g) Electronic Execution of Assignments. The words "execution," "signed,"
"signature," and words of like import in any Assignment and Assumption shall be
deemed to include electronic signatures or the keeping of records in electronic
form, each of which shall be of the same legal effect, validity or
enforceability as a manually executed signature or the use of a paper-based
recordkeeping system, as the case may be, to the extent and as provided for in
any applicable law, including the Federal Electronic Signatures in Global and
National Commerce Act, the New York State Electronic Signatures and Records Act,
or any other similar state laws based on the Uniform Electronic Transactions
Act.

     10.07 TREATMENT OF CERTAIN INFORMATION; CONFIDENTIALITY AND NON-USE. Each
of the Administrative Agent and the Lenders agrees to maintain the
confidentiality of the Information (as defined below), except that Information
may be disclosed (a) to its Affiliates and to its and its Affiliates' respective
directors, officers, employees, agents, advisors and representatives who, in
each case, needs to know the Information in connection with the exercise of its
rights, or performance of its obligations, under this Agreement or any other
Loan Document (collectively, the "Representatives") (it being understood that
the Persons to whom such disclosure is made will be informed of the confidential
nature of such Information and instructed to keep such Information
confidential), (b) to the extent requested by any regulatory authority
purporting to have jurisdiction over it (including any self-regulatory
authority, such as the National Association of Insurance Commissioners), (c) to
the extent required by applicable laws or regulations or by any subpoena or
similar legal process, (d) to any other party hereto, (e) in connection with the
exercise of any remedies hereunder or under any other Loan Document or any
action or proceeding relating to this Agreement or any other Loan Document or
the enforcement of rights hereunder or thereunder, (f) subject to an agreement
containing provisions substantially the same as those of this Section, to (i)
any assignee of or Participant in, or any prospective assignee of or Participant
in, any of its rights or obligations under this Agreement or (ii) any actual or
prospective counterparty (or its advisors) to any swap or derivative transaction
relating to the Borrower and its obligations, (g) with the consent of the
Borrower or (h) to the extent such Information (x) becomes publicly available
other than as a result of a breach of this Section or (y) becomes available to
the Administrative Agent, any Lender or any of their respective Affiliates on a
nonconfidential basis from a source other than the Borrower. Each of the
Administrative Agent and the Lenders further agrees it will use the Information
only in connection with the exercise of its rights, or performance of its
obligations, or in connection with other business with the Borrower or its
Affiliates.

     For purposes of this Section, "Information" means all information received
from the Borrower or any Subsidiary relating to the Borrower or any Subsidiary
or any of their respective

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<PAGE>

businesses, other than any such information that is available to the
Administrative Agent or any Lender on a nonconfidential basis prior to
disclosure by the Borrower or any Subsidiary. Any Person required to maintain
the confidentiality of Information as provided in this Section shall be
considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.

     Each of the Administrative Agent and the Lenders acknowledges that (a) the
Information may include material non-public information concerning the Borrower
or a Subsidiary, as the case may be, (b) it has developed compliance procedures
regarding the use of material non-public information and (c) it will handle such
material non-public information in accordance with applicable Law, including
Federal and state securities Laws.

     10.08 RIGHT OF SETOFF. If an Event of Default shall have occurred and be
continuing, each Lender and each of their respective Affiliates is hereby
authorized at any time and from time to time, to the fullest extent permitted by
applicable law, to set off and apply any and all deposits (general or special,
time or demand, provisional or final, in whatever currency) at any time held and
other obligations (in whatever currency) at any time owing by such Lender or any
such Affiliate to or for the credit or the account of the Borrower against any
and all of the obligations of the Borrower now or hereafter existing under this
Agreement or any other Loan Document to such Lender, irrespective of whether or
not such Lender shall have made any demand under this Agreement or any other
Loan Document and although such obligations of the Borrower may be contingent or
unmatured or are owed to a branch or office of such Lender different from the
branch or office holding such deposit or obligated on such indebtedness. The
rights of each Lender and their respective Affiliates under this Section are in
addition to other rights and remedies (including other rights of setoff) that
such Lender or their respective Affiliates may have. Each Lender agrees to
notify the Borrower and the Administrative Agent promptly after any such setoff
and application, provided that the failure to give such notice shall not affect
the validity of such setoff and application.

     10.09 INTEREST RATE LIMITATION. Notwithstanding anything to the contrary
contained in any Loan Document, the interest paid or agreed to be paid under the
Loan Documents shall not exceed the maximum rate of non-usurious interest
permitted by applicable Law (the "Maximum Rate"). If the Administrative Agent or
any Lender shall receive interest in an amount that exceeds the Maximum Rate,
the excess interest shall be applied to the principal of the Loans or, if it
exceeds such unpaid principal, refunded to the Borrower. In determining whether
the interest contracted for, charged, or received by the Administrative Agent or
a Lender exceeds the Maximum Rate, such Person may, to the extent permitted by
applicable Law, (a) characterize any payment that is not principal as an
expense, fee, or premium rather than interest, (b) exclude voluntary prepayments
and the effects thereof, and (c) amortize, prorate, allocate, and spread in
equal or unequal parts the total amount of interest throughout the contemplated
term of the Obligations hereunder.

     10.10 COUNTERPARTS; INTEGRATION; EFFECTIVENESS. This Agreement may be
executed in counterparts (and by different parties hereto in different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement and the other
Loan Documents constitute the entire contract among the parties

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<PAGE>

relating to the subject matter hereof and supersede any and all previous
agreements and understandings, oral or written, relating to the subject matter
hereof. Except as provided in Section 4.01, this Agreement shall become
effective when it shall have been executed by the Administrative Agent and when
the Administrative Agent shall have received counterparts hereof that, when
taken together, bear the signatures of each of the other parties hereto.
Delivery of an executed counterpart of a signature page of this Agreement by
telecopy shall be effective as delivery of a manually executed counterpart of
this Agreement.

     10.11 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties made hereunder and in any other Loan Document or other document
delivered pursuant hereto or thereto or in connection herewith or therewith
shall survive the execution and delivery hereof and thereof. Such
representations and warranties have been or will be relied upon by the
Administrative Agent and each Lender, regardless of any investigation made by
the Administrative Agent or any Lender or on their behalf and notwithstanding
that the Administrative Agent or any Lender may have had notice or knowledge of
any Default at the time of any Loan, and shall continue in full force and effect
as long as any Loan or any other Obligation hereunder shall remain unpaid or
unsatisfied.

     10.12 SEVERABILITY. If any provision of this Agreement or the other Loan
Documents is held to be illegal, invalid or unenforceable, (a) the legality,
validity and enforceability of the remaining provisions of this Agreement and
the other Loan Documents shall not be affected or impaired thereby and (b) the
parties shall endeavor in good faith negotiations to replace the illegal,
invalid or unenforceable provisions with valid provisions the economic effect of
which comes as close as possible to that of the illegal, invalid or
unenforceable provisions. The invalidity of a provision in a particular
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

     10.13 REPLACEMENT OF LENDERS. If any Lender requests compensation under
Section 3.04, or if the Borrower is required to pay any additional amount to any
Lender or any Governmental Authority for the account of any Lender pursuant to
Section 3.01, or if any Lender is a Defaulting Lender, then the Borrower may, at
its sole expense and effort, upon notice to such Lender and the Administrative
Agent, require such Lender to assign and delegate, without recourse (in
accordance with and subject to the restrictions contained in, and consents
required by, Section 10.06), all of its interests, rights and obligations under
this Agreement and the related Loan Documents to an assignee that shall assume
such obligations (which assignee may be another Lender, if a Lender accepts such
assignment), provided that:

     (a) the Borrower shall have paid to the Administrative Agent the assignment
fee specified in Section 10.06(b);

     (b) such Lender shall have received payment of an amount equal to the
outstanding principal of its Loans, accrued interest thereon, accrued fees and
all other amounts payable to it hereunder and under the other Loan Documents
(including any amounts under Section 3.05) from the assignee (to the extent of
such outstanding principal and accrued interest and fees) or the Borrower (in
the case of all other amounts);

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<PAGE>

     (c) in the case of any such assignment resulting from a claim for
compensation under Section 3.04 or payments required to be made pursuant to
Section 3.01, such assignment will result in a reduction in such compensation or
payments thereafter; and

     (d) such assignment does not conflict with applicable Laws.

     A Lender shall not be required to make any such assignment or delegation
if, prior thereto, as a result of a waiver by such Lender of a claim for
compensation or otherwise, the circumstances entitling the Borrower to require
such assignment and delegation (except for the circumstance of such Lender
having been a Defaulting Lender) cease to exist.

     10.14 NO ADVISORY OR FIDUCIARY RESPONSIBILITY. In connection with all
aspects of each transaction contemplated hereby, the Borrower acknowledges and
agrees that: (i) the credit facility provided for hereunder and any related
arranging or other services in connection therewith (including in connection
with any amendment, waiver or other modification hereof or of any other Loan
Document) are an arm's-length commercial transaction between the Borrower and
its Affiliates, on the one hand, and the Administrative Agent, the Arranger, and
the Co-Arranger, on the other hand, and the Borrower is capable of evaluating
and understanding and understand and accept the terms, risks and conditions of
the transactions contemplated hereby and by the other Loan Documents (including
any amendment, waiver or other modification hereof or thereof); (ii) in
connection with the process leading to such transaction, the Administrative
Agent, the Arranger, and the Co-Arranger each is and has been acting solely as a
principal and is not the financial advisor, agent or fiduciary, for any of the
Borrower or any of its Affiliates, stockholders, creditors or employees or any
other Person; (iii) neither the Administrative Agent, the Arranger nor the
Co-Arranger has assumed or will assume an advisory, agency or fiduciary
responsibility in favor of the Borrower with respect to any of the transactions
contemplated hereby or the process leading thereto, including with respect to
any amendment, waiver or other modification hereof or of any other Loan Document
(irrespective of whether the Administrative Agent, the Arranger or the
Co-Arranger has advised or is currently advising the Borrower or its Affiliates
on other matters) and neither the Administrative Agent, the Arranger nor the
Co-Arranger has any obligation to the Borrower or its Affiliates with respect to
the transactions contemplated hereby except those obligations expressly set
forth herein and in the other Loan Documents; (iv) the Administrative Agent, the
Arranger and the Co-Arranger and their respective Affiliates may be engaged in a
broad range of transactions that involve interests that differ from those of the
Borrower and its Affiliates, and neither the Administrative Agent, the Arranger
nor the Co-Arranger has any obligation to disclose any of such interests by
virtue of any advisory, agency or fiduciary relationship; and (v) the
Administrative Agent, the Arranger and the Co-Arranger have not provided and
will not provide any legal, accounting, regulatory or tax advice with respect to
any of the transactions contemplated hereby (including any amendment, waiver or
other modification hereof or of any other Loan Document) and the Borrower has
consulted its own legal, accounting, regulatory and tax advisors to the extent
it has deemed appropriate. The Borrower hereby waives and releases, to the
fullest extent permitted by law, any claims that it may have against the
Administrative Agent, the Arranger and the Co-Arranger with respect to any
breach or alleged breach of agency or fiduciary duty.

     10.15 GOVERNING LAW; JURISDICTION; ETC.

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<PAGE>

     (a) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF ILLINOIS.

     (b) SUBMISSION TO JURISDICTION. THE BORROWER IRREVOCABLY AND
UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE
JURISDICTION OF THE COURTS OF THE STATE OF ILLINOIS SITTING IN COOK COUNTY AND
OF THE UNITED STATES DISTRICT COURT OF THE NORTHERN DISTRICT OF ILLINOIS, AND
ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR
ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND
UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH ILLINOIS STATE COURT OR, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE
PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING
SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE
JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT OR IN
ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT THE ADMINISTRATIVE AGENT OR
ANY LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST THE BORROWER OR ITS PROPERTIES IN
THE COURTS OF ANY JURISDICTION.

     (c) WAIVER OF VENUE. THE BORROWER IRREVOCABLY AND UNCONDITIONALLY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW
OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT
REFERRED TO IN PARAGRAPH (B) OF THIS SECTION. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE
DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING
IN ANY SUCH COURT.

     (d) SERVICE OF PROCESS. EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE
OF PROCESS BY CERTIFIED OR REGISTERED MAIL, POSTAGE PREPAID. NOTHING IN THIS
AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY APPLICABLE LAW.

     10.16 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR

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<PAGE>

ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE
BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

     10.17 USA PATRIOT ACT NOTICE. Each Lender that is subject to the Act (as
hereinafter defined) and the Administrative Agent (for itself and not on behalf
of any Lender) hereby notifies the Borrower that pursuant to the requirements of
the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26,
2001)) (the "Act"), it is required to obtain, verify and record information that
identifies the Borrower, which information includes the name and address of the
Borrower and other information that will allow such Lender or the Administrative
Agent, as applicable, to identify the Borrower in accordance with the Act.

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<PAGE>

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.

                                        DELPHI FINANCIAL GROUP, INC.

                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

                                       S-1

<PAGE>

                                        BANK OF AMERICA, N.A., as
                                        Administrative Agent and as a Lender

                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

                                       S-2

<PAGE>

                                        WACHOVIA BANK, NATIONAL ASSOCIATION

                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

                                       S-3

<PAGE>

                                        HSBC BANK USA, NATIONAL
                                        ASSOCIATION

                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

                                       S-4

<PAGE>

                                        US BANK NATIONAL ASSOCIATION

                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

                                       S-5

<PAGE>

                                        KEYBANK NATIONAL ASSOCIATION

                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

                                       S-6

<PAGE>

                                        THE NORTHERN TRUST COMPANY

                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

                                       S-7

<PAGE>

                                        LA SALLE BANK NATIONAL ASSOCIATION

                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

                                       S-8

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00111-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00111-of-00352.parquet"}]]