Document:

ASSET PURCHASE AGREEMENT

                                  among

                           TARGET CORPORATION
                           TARGET BRANDS, INC.
                     TARGET RECEIVABLES CORPORATION
                        RETAILERS NATIONAL BANK
                    EIGHTH STREET DEVELOPMENT COMPANY
                       DAYTON DEVELOPMENT COMPANY

                                  and

                   THE MAY DEPARTMENT STORES COMPANY

                       Dated as of June 9, 2004

                  Relating to the Purchase and Sale of
                           Marshall Field's

_______________________________________________________________________________

TABLE OF CONTENTS

1.   PURCHASE AND SALE OF ASSETS..............................................1
  (a)   Generally.............................................................1
  (b)   Credit Card Portfolio Assets..........................................5
  (c)   Excluded Assets.......................................................6

2.   UNASSIGNABLE CONTRACTS...................................................9

3.   ASSUMPTION OF LIABILITIES................................................9
  (a)   Generally.............................................................9
  (b)   Excluded Liabilities.................................................11

4.   CLOSING; PURCHASE PRICE.................................................12
  (a)   Closing; Purchase Price..............................................12
  (b)   Purchase Price Adjustment............................................15
  (c)   Certain Payments.....................................................18
  (d)   Definitions Relating to Taxes........................................19
  (e)   Allocation of Purchase Price.........................................20
  (f)   Transfer Tax Valuation...............................................21
  (g)   Certain Stores.......................................................21
  (h)   Section 1031 Like-Kind Exchange......................................21

5.   CONDITIONS TO CLOSING...................................................22
  (a)   Buyer's Obligation...................................................22
  (b)   Sellers' Obligation..................................................24
  (c)   Effect of Closing....................................................24

6.   REPRESENTATIONS AND WARRANTIES OF THE COMPANY...........................25
  (a)   Organization and Authority...........................................25
  (b)   Non-Contravention....................................................25
  (c)   Shares of Acquired Subsidiaries......................................26
  (d)   Financial Statements.................................................27
  (e)   Nonforeign Certification.............................................27
  (f)   Taxes................................................................27
  (g)   Personal Property....................................................28
  (h)   Real Property........................................................28
  (i)   Condition of Assets..................................................31
  (j)   Intellectual Property................................................31
  (k)   Contracts............................................................32
  (l)   Litigation; Decrees..................................................33
  (m)   Insurance............................................................34

                                      -i-

  (n)   Employee Benefits; ERISA.............................................34
  (o)   Absence of Changes or Events.........................................34
  (p)   Compliance with Laws.................................................35
  (q)   Environmental Matters................................................36
  (r)   Employee and Labor Relations.........................................37
  (s)   Credit Card Matters; Receivables.....................................37
  (t)   Assets of Acquired Subsidiaries......................................38

7.   COVENANTS OF THE COMPANY................................................39
  (a)   Access...............................................................39
  (b)   Ordinary Conduct.....................................................39
  (c)   Confidentiality......................................................41
  (d)   Delivery of Records..................................................41
  (e)   Insurance and Insurance Proceeds.....................................41
  (f)   State Street Store...................................................42
  (g)   Issuance of Credit Cards.............................................42
  (h)   Certain Real Estate Options..........................................42
  (i)   Safety Net Program...................................................42
  (j)   Third-Party Confidentiality Agreements...............................43

8.   REPRESENTATIONS AND WARRANTIES OF BUYER.................................43
  (a)   Organization and Authority of Buyer..................................43
  (b)   Non-Contravention....................................................43
  (c)   Litigation...........................................................43
  (d)   Availability of Funds................................................44

9.   COVENANTS OF BUYER......................................................44
  (a)   Confidentiality......................................................44
  (b)   No Representations or Warranties.....................................44
  (c)   Gift Cards, Etc......................................................44
  (d)   Return Policies......................................................44
  (e)   Substitution of Collateral...........................................44
  (f)   HIPAA Confidentiality................................................45
  (g)   Indemnification......................................................45

10.  MUTUAL COVENANTS........................................................45
  (a)   Consents.............................................................45
  (b)   Cooperation; Further Assurances......................................46
  (c)   Use of Trademarks....................................................47
  (d)   Publicity............................................................49
  (e)   Reasonable Best Efforts..............................................50
  (f)   Antitrust Notification...............................................50
  (g)   Intercompany Accounts................................................51

                                     -ii-

  (h)   Transition Services..................................................51
  (i)   Credit Card Matters..................................................51
  (j)   Software Licenses....................................................53
  (k)   SEC Requirements.....................................................52

11.  EMPLOYEES AND EMPLOYEE BENEFITS.........................................53
  (a)   Offers of Employment.................................................53
  (b)   Buyer's Employee Benefit Plans Generally.............................54
  (c)   Severance Benefits...................................................55
  (d)   Vacation Pay and Personal Holidays...................................56
  (e)   Disability Benefits and Leaves.......................................56
  (f)   Medical, Dental and Vision Plan Liabilities..........................57
  (g)   COBRA Coverage.......................................................57
  (h)   Retiree Medical Plans................................................57
  (i)   Flexible Spending Accounts...........................................58
  (j)   Qualified Retirement and 401(k) Plans................................58
  (k)   Tuition Reimbursement Program........................................59
  (l)   Adoption Assistance Reimbursement Program............................59
  (m)   Retiree Merchandise Discount Programs................................59
  (n)   No Third-Party Beneficiaries.........................................59
  (o)   No Solicitation or Hire..............................................60
  (p)   Employee Information.................................................60
  (q)   Cooperation of Parties...............................................60

12.  TAX MATTERS.............................................................61
  (a)   Cooperation..........................................................61
  (b)   Filing Responsibility................................................61
  (c)   Refunds..............................................................62
  (d)   Tax-Sharing Agreements...............................................62

13.  ASSIGNMENT..............................................................62

14.  NO THIRD-PARTY BENEFICIARIES............................................62

15.  TERMINATION.............................................................63

16.  SURVIVAL OF REPRESENTATIONS.............................................64

17.  EXPENSES................................................................64

18.  AMENDMENTS..............................................................64

                                    -iii-

19.  NOTICES.................................................................64

20.  INTERPRETATION..........................................................66

21.  COUNTERPARTS............................................................66

22.  ENTIRE AGREEMENT........................................................66

23.  BROKERAGE FEES..........................................................67

24.  BULK TRANSFER LAWS......................................................67

25.  SEVERABILITY............................................................67

26.  GOVERNING LAW...........................................................67

27.  SPECIFIC PERFORMANCE....................................................67

28.  DISCLOSURE SCHEDULE.....................................................67

29.  KNOWLEDGE...............................................................68

30.  WAIVER..................................................................68

                                     -iv-

EXHIBIT A     -     Owned Real Estate
EXHIBIT B     -     Leased Real Estate
EXHIBIT C     -     Intellectual Property
EXHIBIT D     -     Customer Information
EXHIBIT E     -     Acquired Subsidiaries
EXHIBIT F     -     Computer Software
EXHIBIT G     -     Excluded Contracts
EXHIBIT H     -     Excluded Real Estate
EXHIBIT I     -     Excluded Intellectual Property
EXHIBIT J     -     Excluded Personal Property
EXHIBIT K     -     Form of Bill of Sale, Assignment and Assumption Agreement
EXHIBIT L     -     Form of Assignment and Assumption Agreement (Real Estate)
EXHIBIT M     -     Unaudited Transaction Balance Sheet
EXHIBIT N     -     Financial Statements
EXHIBIT O     -     Intentionally Deleted
EXHIBIT P     -     Form of Mervyn's Product License
EXHIBIT Q     -     Form of Frango License
EXHIBIT R     -     Form of Transition Services Agreement
EXHIBIT S     -     Form of Grantback Software License

                                      -v-

INDEX OF DEFINED TERMS

TERM                                                      REFERENCE

Account...................................................Section 1(b)(i)
Account Information.......................................Section 1(b)(ii)
Acquired Subsidiaries.....................................Section 1(a)(xv)
Acquired Subsidiaries' Shares.............................Section 6(c)(i)
Additional Account Information............................Section 1(b)(x)
Affiliate.................................................Section 20(c)
Allocation................................................Section 4(e)
Assets....................................................Section 1(a)
Assumed Liabilities.......................................Section 3(a)
Audit adjustments.........................................Section 4(b)(ii)(B)
Books and Records.........................................Section 1(a)(xiv)
Business..................................................Recitals
business day..............................................Section 20(d)
Buyer.....................................................Preamble
Buyer's Flex Plans........................................Section 11(i)(i)
Buyer's Plans.............................................Section 11(b)
Cardholder................................................Section 1(b)(iii)
Cardholder Agreement......................................Section 1(b)(iv)
Charged-Off Account.......................................Section 1(b)(xii)
Charge-Off Practices......................................Section 1(b)(xi)
Closing...................................................Section 4(a)
Closing Date..............................................Section 4(a)
COBRA.....................................................Section 11(g)
Code......................................................Section 6(e)
Collective Bargaining Agreement...........................Section 6(r)(i)
Company...................................................Preamble
Confidentiality Agreement.................................Section 9(a)
Contracts.................................................Section 1(a)(ix)
Covered Persons...........................................Section 11(b)(i)
Credit Card...............................................Section 1(b)(v)
Customer Information......................................Section 1(a)(xiii)
Cut-Off Date..............................................Section 4(a)
Cut-Off Date Employees....................................Section 11(a)
Dayton Development........................................Preamble
Disclosure Schedule.......................................Section 6
DOJ.......................................................Section 10(f)
Effective Time............................................Section 4(a)
Eighth Street.............................................Preamble

                                     -vi-

Employees.................................................Section 11(a)
Environmental Claim.......................................Section 6(q)(i)(A)
Environmental Laws........................................Section 6(q)(i)(B)
Environmental Permits.....................................Section 6(q)(i)(C)
Environmental Reports.....................................Section 6(q)(i)(D)
Equipment.................................................Section 1(a)(iii)
ERISA.....................................................Section 6(n)
Escrowed Purchase Price...................................Section 4(h)
Exchange Assets...........................................Section 4(h)
Exchange Transaction......................................Section 4(h)
Excluded Account..........................................Section 1(b)(xiii)
Excluded Assets...........................................Section 1(c)
Excluded Liabilities......................................Section 3(b)
Excluded Taxes............................................Section 4(d)(i)
Final Net Assets..........................................Section 4(b)(ix)
Financial Statements......................................Section 6(d)
FIRPTA affidavit..........................................Section 5(a)(vi)
FTC.......................................................Section 10(f)
Governmental Permits......................................Section 1(c)(ix)
Hazardous Substance.......................................Section 6(q)(i)(E)
HIPAA.....................................................Section 9(f)
HSR Act...................................................Section 5(a)(v)
Including.................................................Section 20(b)
Intellectual Property.....................................Section 1(a)(xi)
Internally Developed Applications.........................Section 10(c)(x)
Inventory.................................................Section 1(a)(vii)
Knowledge.................................................Section 29
Leased Permitted Exceptions...............................Section 6(h)(ii)
Leased Real Estate........................................Section 1(a)(ii)
Leasehold Interests.......................................Section 1(a)(ii)
Licenses..................................................Section 6(g)
Material Adverse Effect...................................Section 5(a)(i)
Material Contracts........................................Section 6(k)
Miscellaneous Receivables.................................Section 1(a)(vi)
Net Assets................................................Section 4(b)(iv)
Non-Prevailing Party......................................Section 4(b)(xi)
Owned Permitted Exceptions................................Section 6(h)(i)
Owned Real Estate.........................................Section 1(a)(i)
Permitted Exceptions......................................Section 6(h)(ii)
Permitted Liens...........................................Section 6(g)
Person....................................................Section 20(e)
Portfolio Assets..........................................Section 1(b)(vi)

                                    -vii-

Pre-Cut-Off Tax Period....................................Section 4(d)(ii)
Purchase Orders...........................................Section 1(a)(viii)
Purchase Price............................................Section 4(a)(i)
Real Estate...............................................Section 1(a)(ii)
Real Estate Agreements....................................Section 1(a)(x)
Receivables...............................................Section 1(b)(vii)
Required Consents.........................................Section 10(a)
Retained Names And Marks..................................Section 10(c)(i)
Return....................................................Section 4(d)(iii)
RNB.......................................................Preamble
Scoring Models............................................Section 1(b)(viii)
Sellers...................................................Preamble
Sellers' Flex Plans.......................................Section 11(i)
Sellers' Plans............................................Section 6(n)
Sellers' Retirement Plans.................................Section 11(j)(i)
Sellers' Severance Practices..............................Section 11(c)(i)
Straddle Period...........................................Section 4(d)(iv)
Surviving Representation..................................Section 16(a)
Target Brands.............................................Preamble
Target Companion Account..................................Section 1(b)(ix)
Taxes.....................................................Section 4(d)(v)
Taxing Authority..........................................Section 4(d)(vi)
terminable at will........................................Section 6(k)
Third-Party Confidentiality Agreements....................Section 1(a)(xx)
Title Commitments.........................................Section 6(h)(i)
transaction adjustments...................................Section 4(b)(ii)(A)
Transfer Taxes............................................Section 4(c)(ii)
Transferred Employees.....................................Section 11(a)(ii)
Transition Services Agreement.............................Section 10(h)
TRC.......................................................Preamble
Treasury Regulation.......................................Section 4(d)(viii)
Unaudited Transaction Balance Sheet as of 1/31/2004.......Section 4(b)(i)(A)
Unaudited Transaction Balance Sheet as of 5/1/2004........Section 4(b)(i)(B)
Unaudited Transaction Balance Sheet as of
  the Cut-Off Date........................................Section 4(b)(iii)
WARN Act..................................................Section 6(r)(iii)
Warranties................................................Section 1(a)(iv)

                                    -viii-

                         ASSET PURCHASE AGREEMENT

     This Asset Purchase Agreement, dated as of June 9, 2004, is made among
Target Corporation, a Minnesota corporation (the "Company"); Target Brands,
Inc., a Minnesota corporation ("Target Brands"); Target Receivables
Corporation, a Minnesota corporation ("TRC"); Retailers National Bank, a
national banking association ("RNB"); Eighth Street Development Company, a
Minnesota corporation ("Eighth Street"); Dayton Development Company, a
Minnesota corporation ("Dayton Development"); and The May Department Stores
Company, a New York corporation ("Buyer").  The Company, Target Brands, TRC,
RNB, Eighth Street and Dayton Development are collectively referred to as
"Sellers."

                                   Recitals

     A.   The Company is engaged in the business of owning and operating
retail department stores through its Marshall Field's division (the "Business")
and in certain other businesses.

     B.   The Company and/or Target Brands, a wholly owned subsidiary of the
Company, owns, among other things, intellectual property that is used
exclusively in the operation of the Business.

     C.   TRC is an indirect wholly owned subsidiary of the Company, and RNB
is a wholly owned subsidiary of the Company.  TRC and RNB own, among other
things, certain customer credit card accounts and receivables arising from the
Business.

     D.   Eighth Street and Dayton Development are wholly owned subsidiaries
of the Company that own, among other things, certain real estate used
exclusively in the operation of the Business.

     E.   Sellers desire to sell, and Buyer desires to purchase, substantially
all of the assets of Sellers solely related to the Business on the terms and
subject to the conditions of this Agreement.

                                   Agreement

     Now, therefore, the parties hereby agree as follows:

     1.    Purchase and Sale of Assets.

           (a)  Generally.  On the terms and subject to the conditions of this
     Agreement, Sellers agree to (and agree to cause their affiliates to) sell,
     transfer, convey and deliver to Buyer, and Buyer agrees to purchase from
     Sellers, all of Sellers' (and their affiliates') right, title and interest
     as of the Effective Time (as defined in Section 4(a) hereof) in all
     property and assets described in this Section 1(a) (collectively, the
     "Assets").

                (i)     The real property listed on Exhibit A hereto, together
           with all buildings, structures, installations, fixtures, trade
           fixtures and other improvements situated thereon and all easements,
           rights of way and other rights, interests and appurtenances of the
           Sellers therein or thereunto pertaining (collectively, "Owned Real
           Estate").

                (ii)    The leasehold and subleasehold interests of the Sellers
           in all real property listed on Exhibit B hereto (collectively,
           "Leased Real Estate" and, together with the Owned Real Estate,
           referred to as "Real Estate"), together with all interests of Sellers
           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 Sellers 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 located on the
           Real Estate as of the Effective Time (exclusive of Inventory (which
           is defined in, and subject to, Section 1(a)(vii) hereof)), and the
           motor vehicles owned by any Seller that are solely related to the
           Business (collectively, "Equipment").

                (iv)    All warranties or guarantees by any manufacturer,
           supplier or other vendor to the extent solely related to any of the
           Assets ("Warranties").

                (v)     The Portfolio Assets (as defined in Section 1(b)(vi)
           hereof).

                (vi)    All unpaid accounts, notes and other miscellaneous
           receivables in favor of Sellers with respect to the Business (other
           than the Portfolio Assets or the Excluded Accounts, as defined in
           Section 1(b)(xiii) hereof), together with all collateral security
           therefor ("Miscellaneous Receivables").

                (vii)   The inventory, packaging materials and supplies of the
           Business located on the Real Estate as of the Effective Time and
           inventory on order or in transit solely for the Business
           (collectively, the "Inventory").

                (viii)  All purchase orders issued by the Company in the
           ordinary course to the extent they solely relate to the operation of
           the Business ("Purchase Orders").

                (ix)    All contracts, guarantees, leases, licenses (including
           those relating to concessions or licensed departments), commitments
           and other agreements solely related to the Business  (exclusive of
           Real Estate Agreements, which are defined in, and subject to, Section
           1(a)(x) hereof) ("Contracts").

                                      -2-

                (x)     All reciprocal easement and operating agreements,
           agreements supplemental thereto, easements, each Seller'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 are appurtenant to the Real
           Estate, including the license agreement for J. B. Hudson's in the
           Minneapolis Marshall Field's store (collectively, "Real Estate
           Agreements").

                (xi)    The copyrights, patents, trademarks, trade names,
           service marks (registered or unregistered), trade dress, logos, and
           all of the goodwill appurtenant thereto, registrations and
           applications for any of the foregoing, and all trade secrets,
           inventions, know how, other confidential information, and other
           intellectual property owned by or licensed to any Seller that are
           solely related to the Business, including those identified on Exhibit
           C hereto, but except for those specifically excluded on Exhibit I
           hereto ("Intellectual Property").

                (xii)   The franchises, approvals, permits, licenses, orders,
           registrations, certificates, variances and similar rights obtained
           from governments and governmental agencies solely related to the
           Business.

                (xiii)  The information regarding customers of the Business
           described on Exhibit D hereto, exclusive of Account Information and
           Additional Account Information, each as defined in Section 1(b)
           hereof, and all other information regarding customers of the Business
           that the Company can, upon Buyer's request made prior to March 31,
           2005, produce, utilizing commercially reasonable efforts ("Customer
           Information"); provided that Buyer agrees to pay for any costs
           associated with producing Customer Information, other than Customer
           Information described on Exhibit D, that in the aggregate exceed
           $100,000.  In addition, Buyer understands and agrees that Sellers
           will not produce any Customer Information residing in the Target
           guest database, nor will Sellers produce any information that would
           violate any contractual obligation or violate any law or regulation.
           The Company agrees to retain information regarding customers of the
           Business in accordance with its existing retention policies and
           procedures.

                (xiv)   All material sales records, accounting records,
           purchase records, supplier lists, advertising and promotional
           materials, production records and other records primarily related to
           the Business (other than the Customer Information); the material real
           estate and engineering data, blueprints and other property records
           primarily related to the Business; the material records regarding the
           Occupational Safety and Health Act and other governmental
           examinations and clearances primarily related to the Business;
           personnel, benefits and payroll records of Transferred Employees (as
           defined in Section 11(a)), to the extent permitted by law; and all

                                      -3-

           other material books and records primarily related to the Business,
           exclusive of Account Information and Additional Account Information
           (collectively, "Books and Records"), provided that Sellers shall have
           the right to keep and use a copy of all Books and Records where
           necessary to comply with applicable laws or desirable for use in
           connection with the preparation of Returns (as defined in Section
           4(d)), the administration of Sellers' Plans (as defined in Section
           6(n)), the preparation of Sellers' financial statements, the
           fulfillment of obligations under the Transition Services Agreement
           (as defined in Section 10(h)) or in connection with investigations or
           litigation.  If any Books and Records relate primarily, but not
           solely, to the Business, Sellers may, before delivering such Books
           and Records to Buyer, redact all information and data therefrom that
           relate to businesses of Sellers other than the Business.

                (xv)    All capital stock of the wholly owned subsidiaries of
           the Company set forth on Exhibit E hereto (the "Acquired
           Subsidiaries").

                (xvi)   "Register cash" in an amount as is necessary to open the
           stores of the Business on the day after the Cut-Off Date (as defined
           in Section 4(a)), determined by reference to the historical practices
           of the Business.

                (xvii)  All rights of any Seller 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 related
           to the Business.

                (xviii) The computer software (including intellectual property
           rights related thereto) listed on Exhibit F hereto, and all telephone
           numbers, domain names and URL addresses solely related to the
           Business or the Assets, including those listed on Exhibit F.

                (xix)   All prepaid expenses and goodwill to the extent related
           to the Business.

                (xx)    The Confidentiality Agreements that the Company entered
           into with prospective purchasers (other than Buyer) of the Business
           (the "Third-Party Confidentiality Agreements") to the extent related
           to the Business and assignable by the Company.

                (xxi)   All other assets (other than Excluded Assets) of the
           nature of the assets reflected on the Unaudited Transaction Balance
           Sheet as of 5/1/2004 used in connection with the Business that are
           (1) physically located on the Real Estate and primarily and
           predominantly used for the operation of the Business on an ongoing
           basis or (2) not physically located on the Real Estate at the
           Effective Time but solely used for the operation of the Business or

                                      -4-

           (3) that portion of the tangible personal property that is divisible
           into discrete units (such as the portion of the rolling stock which
           is used for the Business) (wherever located) and is used for the
           Business or (4) paid for by the Business or accrued for on the books
           of the Business or that are associated with Assumed Liabilities; but
           Assets shall not include any assets (such as computer systems) in any
           other case that are used for the benefit of other divisions of the
           Company and that are not located on the Real Estate.

           (b)     Credit Card Portfolio Assets.  For purposes of this
     Agreement:

                (i)     "Account" means (A) a credit card account established by
           RNB as a Marshall Field's account, pursuant to which the person with
           whom such account is established may finance the purchase of goods or
           services from Marshall Field's and its affiliates for personal,
           family or household purposes; or (B) an account established by the
           Company as a Marshall Field's account, pursuant to which the person
           with whom such account is established may finance the purchase of
           goods or services from Marshall Field's and its affiliates for
           commercial purposes.  "Account" does not include the Excluded
           Accounts.

                (ii)    "Account Information" means certain information
           relating to an Account that is included on the information systems
           operated by or on behalf of RNB or the Company and used by or on
           behalf of RNB or the Company with respect to the Business as of the
           date hereof, as set forth in Section 1(b)(ii) of the Disclosure
           Schedule.

                (iii)   "Cardholder" means any person who (A) has at any time
           entered into a Cardholder Agreement and has been issued a Credit
           Card; or (B) is authorized to use a Credit Card by a person who has
           been issued a Credit Card.

                (iv)    "Cardholder Agreement" means the credit card agreement
           between RNB or the Company and a person for whom an Account has been
           established and to whom a Credit Card has been issued.

                (v)     "Credit Card" means any credit card issued with respect
           to an Account.  Credit Card does not include any other credit card
           issued by the Company or RNB for accounts other than the Accounts.

                (vi)    "Portfolio Assets" means all of Sellers' right, title
           and interest as of the Effective Time in and to: (A) the Accounts;
           (B) the Receivables; (C) all outstanding Credit Cards; (D) the
           Scoring Models; and (E) the Account Information.

                (vii)   "Receivables" means all amounts owing from Cardholders
           as of the Effective Time in respect of their Accounts (including any

                                      -5-

           amounts owing for the payment of goods and services, late fees,
           finance charges, NSF fees, and any other interest, charge, fee or
           expense of every nature, kind and description whatsoever, imposed on
           or incurred with respect to the Accounts), together with any
           collateral security therefor.

                (viii)  "Scoring Models" means certain custom risk-management
           scorecards developed by or on behalf of RNB or the Company with
           respect to the Accounts.

                (ix)    "Target Companion Account" means a subaccount of an
           Account (A) that is established and treated as a separate account in
           respect of the Cardholder's Credit Card purchases at Target stores,
           and with respect to which the Cardholder receives a separate billing
           statement for purchases at Target Stores and (B) that is classified
           as age 0 or 1.

                (x)     "Additional Account Information" means all Cardholder
           Agreements and all files, records, documentation, materials,
           correspondence, data and information evidencing or relating to the
           Accounts (other than the Account Information), including forms of
           current and historical account documents such as applications,
           account agreements, change-in-terms notices and other communications
           and marketing materials; all models, records and data used to
           service, underwrite, collect or otherwise manage the Accounts; and
           such other information (including information regarding Target
           Companion Accounts) as may be necessary to research and service
           inquiries of customers of the Business relating to credit, charges,
           payments, privacy or similar issues; in each case whether in the
           possession of Sellers or any agents, subservicers or affiliates of
           any Seller and in any form or medium in which the same may exist or
           be stored, administered or maintained, including the information
           listed in Section 1(b)(x) of the Disclosure Schedule.

                (xi)    "Charge-Off Practices" means the practices, policies and
           procedures that have been applied by Sellers since January 1, 2000
           and in effect on the date hereof in classifying Accounts as Charged-
           Off Accounts.

                (xii)   "Charged-Off Account" means an account that has been
           charged-off by Sellers, or that should have been charged-off, in
           accordance with the Charge-Off Practices.

                (xiii)  "Excluded Account" means (A) any credit card or charge
           account established or maintained by the Company or RNB as a Mervyn's
           account or a Target account or (B) any Target Companion Account.

           (c)  Excluded Assets.  The Sellers are not selling, and the Buyer is
     not purchasing, any property or assets not expressly described in Section

                                      -6-

     1(a) hereof (the "Excluded Assets").  Without limiting the generality of
     the foregoing, the following property and assets of Sellers constitute
     Excluded Assets, notwithstanding anything to the contrary provided in
     Section 1(a) hereof:

                (i)     cash (except as provided in Section 1(a)(xvi)), and
           receivables from third-party credit card or debit card sales
           transactions on or before the Cut-Off Date (regardless of when
           posted); proceeds from checks and bank drafts accepted on or before
           the Cut-Off Date (regardless of when cleared); payments (including by
           check or bank draft, regardless of when cleared) on Accounts received
           by Sellers on or before the Cut-Off Date; amounts in bank accounts
           and certificates of deposit; together with all other cash
           equivalents, securities (whether or not marketable) and investments
           (other than the capital stock of the Acquired Subsidiaries);

                (ii)    Excluded Accounts;

                (iii)   all rights of any Seller under any surety bonds posted
           by such Seller and to any refunds for Excluded Taxes (as defined in
           Section 4(d) hereof) or otherwise with respect to Excluded Assets;

                (iv)    any Seller's rights under the contracts, guarantees,
           licenses, personal property leases, commitments and other agreements,
           warranties and purchase orders listed on Exhibit G hereto; any
           Seller's rights under the contracts, guarantees, licenses, personal
           property leases, commitments and other agreements, warranties and
           purchase orders that relate both to the Business and any other
           business of any Seller; and, except for Real Estate Agreements and
           the Leasehold Interests, each other contract, guarantee, license,
           personal property lease, commitment and other agreement, warranty or
           purchase order that is not assignable without the consent, approval
           or waiver of a third party and with respect to which one or more
           necessary third-party consents, approvals or waivers shall not have
           been received;

                (v)     any Seller's rights under any policies of insurance
           purchased by Sellers, or any benefits, proceeds or premium refunds
           payable or paid thereunder or with respect thereto (except as
           provided in Section 7(e) hereof);

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

                                      -7-

                (vii)   the rights of any Seller under this Agreement or any
           other agreement between any Seller and Buyer entered into on or after
           the date of this Agreement in accordance with the terms hereof;

                (viii)  all websites, website content and web images and all
           computer software (including intellectual property rights related
           thereto), except computer software listed on Exhibit F hereto, and
           all books and records related thereto;

                (ix)    the franchises, approvals, permits, licenses, orders,
           registrations, certificates, variances and similar rights obtained
           from governments and governmental agencies ("Governmental Permits")
           that are not transferable without the consent of a government or
           government agency and with respect to which the required consent is
           not obtained;

                (x)     the real estate listed on Exhibit H hereto;

                (xi)    any copyright, trademark, trade name, service mark,
           logo, and goodwill appurtenant thereto, domain name, corporate name
           or comparable property, or any registration or application for any of
           the foregoing, that uses in whole or in part any of the items set
           forth on Exhibit I hereto or any derivative or diminutive form or
           expansion thereof, whether or not stylized, and any trade dress that
           either is used by any Seller (or any other affiliate of the Company)
           solely in any business other than the Business or that will be
           licensed to Buyer in accordance with Sections 10(c)(vii) and (ix)
           hereof;

                (xii)   all assets held with respect to Sellers' Plans;

                (xiii)  all assets related to any accounting, computer hardware
           (not located on the Real Estate), legal, human resource, payroll,
           treasury, insurance, transportation, tax or other general and
           administrative services supplied by any Seller unless such services
           are supplied on the Real Estate;

                (xiv)   the personal property listed on Exhibit J hereto;

                (xv)    all information regarding customers of the Business that
           is not Account Information or that is not described on Exhibit D
           hereto or otherwise required to be provided to Buyer pursuant to
           Section 1(a)(xiii).  The transfer of the Portfolio Assets shall not
           prevent or impair, and the Sellers shall retain, the right to solicit
           Cardholders to establish credit card accounts with RNB or any of
           RNB's affiliates and to use the Account Information for the sole
           purpose of such solicitation.  Except for the use authorized in the
           preceding sentence, Sellers shall treat the Account Information as
           confidential and will not disclose, sell, assign or transfer it to
           any other person or entity, it being understood that Cardholders have

                                      -8-

           credit cards issued by Sellers that do not relate to the Accounts and
           that nothing stated in this Agreement shall limit or otherwise affect
           Sellers' right to retain and use account information in Sellers'
           possession related thereto;

                (xvi)   all rights and recoveries of Sellers under the
           litigation captioned In re Visa Check Card/Master Money Antitrust
           Litigation, regardless of whether received before, on or after the
           Cut-Off Date;

                (xvii)  all intercompany accounts between Sellers and the
           Company or any of the Company's affiliates, which accounts are
           subject to Section 10(g) hereof;

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

                (xix)   the Additional Account Information.

     2.    Unassignable Contracts.  Notwithstanding anything to the contrary
stated in this Agreement, if (a) 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 (b) 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 Buyer shall assume the obligations and liabilities
of Sellers under such Contract, Warranty or Purchase Order (but not such
Contract, Warranty or Purchase Order itself), and the claims, rights and
benefits of Sellers arising under such Contract, Warranty or Purchase Order or
resulting therefrom after the Cut-Off Date (but not such Contract, Warranty or
Purchase Order itself) shall be included in the Assets transferred to Buyer
hereunder (and any such payments or other benefits received by Sellers therefrom
after the Cut-Off Date shall immediately be transferred by Sellers to Buyer),
and Sellers shall, following the Closing, use all reasonable efforts to assist
Buyer in attempting to obtain the necessary approvals, consents and waivers
(provided that Sellers shall not 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 Contract, Warranty or Purchase Order
to Buyer if such approvals, consents and waivers are obtained.

     3.    Assumption of Liabilities.

           (a)  Generally.  On the terms and subject to the conditions of
     this Agreement, at the Closing, Buyer shall assume, and hereby agrees to
     pay, perform and observe fully and timely, effective as of the Effective
     Time, all liabilities and obligations, known or unknown, asserted or
     unasserted, absolute or contingent, of Sellers to the extent solely
     relating to or arising out of the Business or the Assets, whether arising

                                      -9-

     before, on or after the Cut-Off Date other than liabilities or obligations
     constituting Excluded Liabilities (as defined in Section 3(b) hereof)
     (collectively, the liabilities and obligations so assumed being referred to
     as the "Assumed Liabilities").  To the extent that any Seller pays any
     Assumed Liability following the Cut-Off Date, Buyer shall reimburse the
     Company for any amount so paid immediately upon demand and to the extent
     that Buyer pays any Excluded Liability from and after the Cut-Off Date, the
     Company shall reimburse Buyer for any amount so paid immediately upon
     demand. Without limiting the generality of the foregoing, the following
     liabilities constitute Assumed Liabilities:

                (i)     all liabilities and obligations of Sellers under or in
           respect of the Real Estate, Real Estate Agreements, Leasehold
           Interests, Equipment, Inventory, Acquired Subsidiaries, Contracts,
           Warranties and Purchase Orders;

                (ii)    all unpaid accounts payable (including accounts payable
           that Sellers paid by check or bank draft on or before the Cut-Off
           Date, which check or bank draft has not cleared by the Effective
           Time) of Sellers to the extent solely related to the Business and all
           accrued expenses of Sellers to the extent solely related to the
           Business;

                (iii)   all obligations with respect to Sellers' Plans, to the
           extent such obligations are assumed by Buyer pursuant to Section 11;

                (iv)    all payment obligations relating to compensation,
           commissions, and bonuses (including those under the spring season
           incentive plans) that have been earned but have not been paid as of
           the Effective Time to Employees;

                (v)     all liabilities and obligations arising from litigation,
           arbitration, administrative, workers' compensation or other
           proceedings, pending or threatened against the Business or the Assets
           and all performance obligations under any product recall or any non-
           financial settlement obligation relating to the Business;

                (vi)    all liabilities and obligations arising from Marshall
           Field's gift certificate, gift card, merchandise voucher, coupon,
           cash refund or "Regards Reward" redemptions submitted by customers
           for gift certificates, gift cards, merchandise vouchers, coupons,
           cash refunds or Regards Rewards purchased, issued or earned on or
           prior to the Cut-Off Date;

                (vii)   any claims (including product-liability and infringement
           claims) relating to goods sold or services provided by the Business
           before, on or after the Cut-Off Date;

                (viii)  any claims (other than claims under Sellers' Plans to
           the extent such claims are not assumed by Buyer under Section 11)

                                     -10-

           asserted by Employees, by persons formerly on the Marshall Field's
           payroll (or any predecessor payroll), or by dependents of such
           Employees or former employees, for acts or omissions occurring on or
           before the Cut-Off Date;

                (ix)    all liabilities and obligations relating to the
           ownership or condition of the tangible Assets (including
           environmental conditions) before, on or after the Cut-Off Date, or
           arising from the transfer of the Assets to Buyer;

                (x)     any obligation or liability of Sellers to pay or perform
           any obligation or liability (A) pursuant to any guaranty or
           obligation or lien, security interest or other encumbrance on, or in
           respect of, any collateral of any Seller (other than the Assets) to
           ensure performance given or made by any such Seller to the extent
           solely in connection with the Business (including pursuant to a
           letter of credit or surety bond), or (B) that otherwise arises as a
           matter of law or contract to the extent solely in connection with the
           Business, but in no event shall the provisions of this subsection
           include any obligation to repay any borrowed money;

                (xi)    all Taxes attributable to the Business, the Assets or
           the Acquired Subsidiaries, other than Excluded Taxes; and

                (xii)   all liabilities and obligations of Sellers relating to
           or arising in connection with the Portfolio Assets, including all
           liabilities and obligations to Cardholders under the Cardholder
           Agreements.

           (b)  Excluded Liabilities.  Notwithstanding anything to the contrary
     provided in Section 3(a) hereof, Assumed Liabilities shall not include the
     following liabilities and obligations (the "Excluded Liabilities"):

                (i)     any liability or obligation for money borrowed;

                (ii)    any liability or obligation for Excluded Taxes;

                (iii)   any liability or obligation for costs and expenses
           (other than Transfer Taxes, as defined in Section 4(c)(ii) hereof) in
           connection with the negotiation and execution of this Agreement or
           the consummation of the transactions contemplated hereby;

                (iv)    any liability or obligation of Sellers under this
           Agreement or under any other agreement between one or more of the
           Sellers and Buyer entered into on or after the date of this Agreement
           in accordance with the terms hereof;

                (v)     any liability or obligation relating to any Sellers'
           Plans to the extent such liabilities are retained by Sellers pursuant
           to Section 11;

                                     -11-

                (vi)    any liability or obligation relating to stores or
           distribution centers formerly used in the operation of the Business
           that have been closed or sold prior to the date of this Agreement or
           otherwise are no longer used in the operation of the Business;

                (vii)   all intercompany accounts between Sellers and the
           Company or any of the Company's affiliates, which accounts are
           subject to Section 10(g) hereof;

                (viii)  liabilities and obligations primarily related to the
           Excluded Assets (except as provided in Section 2 hereof) and any
           other assets not transferred to and not purchased by Buyer; and

                (ix)    any liability or obligation other than the Transfer
           Taxes payable in respect of the transfer of the State Street Marshall
           Field's store to the Company from the current owner and from the
           Company to Buyer (including as Excluded Liabilities all other Taxes)
           pertaining to the entering into or the termination of, or in any
           other way related to, the lease of the State Street Marshall Field's
           store or the repurchase by the Company of the State Street Marshall
           Field's store.

           Except as to Transfer Taxes payable in connection therewith (as
     provided above), the Company shall defend with counsel approved by Buyer
     (which approval shall not be unreasonably withheld) and indemnify Buyer
     against any and all liabilities, obligations, losses, damages, fines,
     penalties, claims, demands, costs, charges, judgments and expenses,
     including reasonable attorneys' fees, which may be imposed upon or incurred
     or paid by or asserted against Buyer by reason of or in connection with the
     State Street sale-leaseback transaction, the termination of the lease of
     the State Street Marshall Field's Store and/or the reconveyance of the
     State Street Marshall Field's store to the Company, whether the indemnified
     obligations arise before or after the Effective Time.

     Sellers hereby agree to pay, perform and fully observe all Excluded
Liabilities.

     4.    Closing; Purchase Price.

           (a)  Closing; Purchase Price.  The closing (the "Closing") of the
     purchase and sale of the Assets shall be held at the offices of Faegre &
     Benson LLP, 2200 Wells Fargo Center, 90 South Seventh Street, Minneapolis,
     Minnesota, at 10:00 a.m. Minneapolis time on July 30, 2004 (or, if the
     conditions to Closing set forth in Section 5 hereof shall not have been so
     satisfied or waived by the appropriate party by such date, subject to the
     provisions of Section 15 hereof, at 10:00 a.m. Minneapolis time on the
     first Friday that is a business day to occur following the date on which
     all of the conditions to Closing set forth in Section 5 hereof shall have
     been so satisfied or waived), or at such other time and day as the parties

                                     -12-

     may agree.  The date on which the Closing shall occur is referred to as the
     "Closing Date," although the transfer of Assets and the assumption of the
     Assumed Liabilities shall be effective as of 12:00 midnight (if the Cut-Off
     Date is July 31, 2004 and 11:59 p.m. if the Cut-Off Date is any other date)
     Minneapolis time (the "Effective Time") on the Saturday immediately
     following the Closing Date (the "Cut-Off Date").  To compensate Buyer for
     the Closing Date occurring prior to the Cut-Off Date, Sellers shall pay
     Buyer at Closing an amount equal to interest on the Purchase Price,
     calculated on the basis of the number of days by which the Cut-Off Date
     follows the Closing Date and otherwise in accordance with the provisions of
     Section 4(b)(vi).  At the Closing:

                (i)     Buyer shall pay to Sellers an amount in cash equal to
           $3,200,000,000 as the purchase price for the Assets (the "Purchase
           Price"), subject to adjustment pursuant to Section 4(b);

                (ii)    Sellers shall deliver to Buyer quit claim deeds to the
           Owned Real Estate.  If Buyer shall not have secured to its
           satisfaction the unconditional release and waiver of the rights of
           first refusal on the sale of the Marshall Field's stores at Ridgedale
           or Rosedale from the respective holders of such rights on or before
           Closing, then, at Buyer's request, the applicable Sellers and Buyer
           shall promptly cooperate to comply with the applicable provisions of
           the applicable right of first refusal (including entering into
           separate purchase and sale agreements for the Real Estate for each
           such store that is the subject of such right of first refusal and
           excluding such Real Estate (but only to the extent the same is
           subject to the right of first refusal in question and without effect
           on the other Assets) from the terms of this Agreement), including
           providing the holder of such right or option with such other
           sufficient information and documentation to exercise such right.  The
           separate purchase price for Ridgedale and Rosedale for such purposes
           shall be $75 million and $55 million, respectively.  The Purchase
           Price under this Agreement shall not be reduced by such amounts and
           shall be payable in full as otherwise provided in this Agreement
           whether or not any such holder exercises any such right or the
           closing on or conveyance of any of such stores occurs.  However, if
           the Closing under this Agreement occurs, Buyer shall be entitled to
           receive all proceeds payable under each such separate agreement,
           whether the closing thereunder occurs prior to, concurrent with, or
           subsequent to the Closing under this Agreement, whether payable by
           the holder of such right or by Buyer if such holder does not exercise
           such right, provided that the proceeds shall not be payable prior to
           Closing.  If any such right is not exercised, then the store that was
           the subject of such right shall be conveyed to Buyer pursuant to the
           applicable separate agreement;

                (iii)   Sellers and Buyer shall deliver to each other a Bill of
           Sale, Assignment and Assumption Agreement, effective as of the

                                     -13-

           Effective Time, executed by Sellers and Buyer in substantially the
           form of Exhibit K hereto, which shall expressly disclaim any
           representation or warranty by Sellers;

                (iv)    with respect to each Leasehold Interest and Real Estate
           Agreement (except that the lease of the State Street Marshall Field's
           store shall be terminated prior to or concurrent with the Closing,
           such parcel shall be deemed to constitute Owned Real Estate at the
           Closing and such parcel shall be conveyed by quit claim deed; and
           except that with respect to the Marshall Field's store at Hilldale
           Mall, in lieu of an Assignment and Assumption Agreement, the
           applicable Seller and Buyer shall, without seeking the landlord's
           consent or approval, enter into a "pass-through" sublease for such
           store, pursuant to which all of such Seller's rights and obligations
           therein or thereto are leased to and assumed by Buyer with such
           Seller to have no obligations other than payment of rent under the
           prime lease contingent upon payment of rent by Buyer under the
           sublease and the obligation to cooperate reasonably with Buyer to
           enforce rights under the lease at Buyer's sole expense), the
           applicable Seller and Buyer shall deliver to each other an Assignment
           and Assumption Agreement (Real Estate), effective as of the Effective
           Time, executed and acknowledged by the applicable Seller and Buyer in
           substantially the form of Exhibit L hereto, 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
           Sellers as provided in Exhibit L hereto), with separate instruments,
           including quit claim improvement deeds, for each parcel of Real
           Estate (each of which shall expressly disclaim any representation or
           warranty by Sellers, including in the case of the sublease, an
           express disclaimer of any covenant of quiet enjoyment other than
           against acts or failure to act by Sellers when so required under the
           sublease);

                (v)     each Seller, as applicable, shall deliver or cause to be
           delivered to Buyer executed assignments, effective as of the
           Effective Time, of Intellectual Property and of motor vehicles
           constituting Equipment in proper form and suitable for filing with
           the appropriate governmental agency and such other assignments and
           endorsements, without recourse or representation, as are necessary to
           transfer the Assets to Buyer; and

                (vi)    the Company shall deliver to Buyer stock certificates
           representing all outstanding capital stock of the Acquired
           Subsidiaries, duly endorsed or accompanied by duly executed
           assignments separate from certificates in form suitable for transfer
           of all such capital stock and ownership interests to Buyer effective
           as of the Effective Time.

                                     -14-

           (b)  Purchase Price Adjustment.

                (i)     Exhibit M shows:

                     (A)  the unaudited balance sheet of the Business as of
                January 31, 2004, prepared based on unaudited trial balance
                information provided by Sellers together with adjustments to
                reflect the transaction contemplated by this Agreement (which
                balance sheet, after such adjustments, is referred to as the
                "Unaudited Transaction Balance Sheet as of 1/31/2004"); and

                     (B)  the unaudited balance sheet of the Business as of May
                1, 2004, prepared based on unaudited trial balance information
                provided by Sellers, together with adjustments to reflect the
                transaction contemplated by this Agreement (which balance sheet,
                after such adjustments, is referred to as the "Unaudited
                Transaction Balance Sheet as of 5/1/2004").

                (ii)    Prior to the Cut-Off Date, Sellers shall provide audited
           financial statements for the Business for the fiscal year ended
           January 31, 2004, accompanied by an unqualified opinion of Ernst &
           Young LLP, to the effect that the audited financial statements
           present fairly in all material respects the financial position and
           results of operations of the Business and have been prepared in
           accordance with generally accepted accounting principles in the
           United States, consistently applied, together with:

                     (A)  adjustments to the audited balance sheet to reflect
                the transaction contemplated by this Agreement (which
                adjustments are referred to as "transaction adjustments"); and

                     (B)  a summary of the adjustments, other than transaction
                adjustments, from the trial balance information referred to in
                Section 4(b)(i)(A) to the audited financial statements (which
                adjustments are referred to as the "audit adjustments")

                (iii)   Within 60 days after the Cut-Off Date, Sellers shall
           provide an unaudited balance sheet as of the close of business on the
           Cut-Off Date reflecting the transaction adjustments, of the nature of
           the transaction adjustments set forth in the Unaudited Transaction
           Balance Sheet as of 5/1/2004, which will also reflect all audit
           adjustments as appropriate (the "Unaudited Transaction Balance Sheet
           as of the Cut-Off Date").  Buyer shall reasonably assist Sellers and
           their representatives in the preparation of the Unaudited Transaction
           Balance Sheet as of the Cut-Off Date and shall provide Sellers and

                                     -15-

           their representatives access at all reasonable times to the
           personnel, properties and books and records of the Business for such
           purpose.

                (iv)    To the extent that the net assets, calculated in a
           manner consistent with the principles, policies and procedures used
           in preparing Exhibit M ("Net Assets"), reflected in the Unaudited
           Transaction Balance Sheet as of the Cut-Off Date exceed the Net
           Assets reflected in the Unaudited Transaction Balance Sheet as of
           5/1/2004 by more than $40 million, then the Purchase Price shall be
           increased by the excess over $40 million.  For the avoidance of
           doubt, "Net Assets" shall not include any Excluded Asset or any
           Excluded Liability.  Notwithstanding anything to the contrary in this
           Section 4(b), the book value of all assets on the Unaudited
           Transaction Balance Sheet as of the Cut-Off Date shall be calculated
           without giving effect to any depreciation or amortization thereof
           after May 1, 2004.

                (v)     To the extent that the Net Assets reflected in the
           Unaudited Transaction Balance Sheet as of 5/1/2004 exceed the Net
           Assets reflected in the Unaudited Transaction Balance Sheet as of the
           Cut-Off Date by more than $40 million, then the Purchase Price shall
           be decreased by the excess over $40 million.

                (vi)    If the Purchase Price is to be increased pursuant to
           Section 4(b)(iv), then Buyer shall, within five business days after
           the amount of such increase has been determined, pay Sellers an
           amount equal to such increase, together with interest thereon at an
           annual rate equal to the three-month LIBOR rate in effect as of the
           Closing Date, calculated on the actual number of days elapsed from
           the Closing Date to the date of payment divided by 365.  If the
           Purchase Price is to be decreased pursuant to Section 4(b)(v), then
           Sellers shall, within five business days after the amount of such
           decrease has been determined, pay Buyer an amount equal to such
           decrease, together with interest thereon at an annual rate equal to
           the three-month LIBOR rate in effect as of the Closing Date,
           calculated on the actual number of days elapsed from the Closing Date
           to the date of payment divided by 365.

                (vii)   Sellers represent that Sellers have not changed
           accounting policies or procedures, or application thereof, since
           January 31, 2004, and that the Unaudited Transaction Balance Sheet as
           of 5/1/2004 is prepared on a basis consistent with the Unaudited
           Transaction Balance Sheet as of 1/31/2004 (except for adjustments
           normally reflected only in year-end audited financial statements).

                (viii)  Sellers covenant that Sellers will not change accounting
           policies or procedures, or the application thereof, from those

                                     -16-

           reflected in the Unaudited Transaction Balance Sheet as of 5/1/2004,
           and that the Unaudited Transaction Balance Sheet as of the Cut-Off
           Date will be prepared on a basis consistent with the Unaudited
           Transaction Balance Sheet as of 5/1/2004 (except for the audit
           adjustments, as appropriate, and except as otherwise provided in
           Sections 4(b)(iv) and 7(e)).

                (ix)    If Buyer in good faith objects, by notice in writing to
           Sellers, to the Net Assets set forth on the Unaudited Transaction
           Balance Sheet as of the Cut-Off Date ("Final Net Assets") within 30
           days after Sellers' delivery thereof, setting forth in its written
           objection its determination of Final Net Assets, Sellers and Buyer
           shall attempt in good faith to resolve any such objections within 30
           days after the Sellers' receipt of Buyer's objections.  Buyer may
           object pursuant to this Section 4(b)(ix) only if, assuming all of
           Buyer's objections were sustained, the Purchase Price, as adjusted by
           any adjustments pursuant to this Section 4(b), would be lower than
           the Purchase Price based on Sellers' determination of Final Net
           Assets, and Buyer's objections must specify in reasonable detail the
           nature of any disagreement with Sellers.  The only objections that
           Buyer may make pursuant to this Section 4(b)(ix) are those that
           relate to:

                     (A)  any claimed inconsistencies between the principles,
                policies or procedures used in the preparation of the Unaudited
                Transaction Balance Sheet as of 5/1/2004 and the principles,
                policies or procedures used in the preparation of the Unaudited
                Transaction Balance Sheet as of the Cut-Off Date (except for
                audit adjustments, as appropriate, and except as otherwise
                provided in Sections 4(b)(iv) and 7(e));

                     (B)  the application of the audit adjustments; or

                     (C)  errors in mathematical computation.

                (x)     If Sellers and Buyer are unable to resolve the matter
           within such 30-day period, they shall jointly appoint a mutually
           acceptable firm of independent accountants of national reputation
           that is one of the so-called "big four" (or, if they cannot agree on
           a mutually acceptable firm, they shall cause their respective
           accounting firms to select such firm) within three business days
           following the end of such 30-day period.  Buyer and Sellers shall
           provide such accounting firm full cooperation.  Such firm shall be
           instructed to reach its conclusion regarding the disputes as soon as
           reasonably possible.  Such firm's resolution of the disputes shall be
           rendered in a written decision determining all disputes and shall be
           conclusive and binding upon Buyer and Sellers.

                                     -17-

                (xi)    The Non-Prevailing Party (as defined below) in any
           determination by such accounting firm shall pay its own expenses
           incurred with respect to the submission to such accounting firm and
           shall pay a percentage of (A) the fees and expenses of such
           accounting firm plus (B) the reasonable out-of-pocket expenses
           (including reasonable attorneys' fees) of the other party incurred
           with respect to the submission, which percentage shall be calculated
           by dividing (1) an amount equal to the difference between the Non-
           Prevailing Party's determination of Final Net Assets, as submitted to
           such accounting firm, and such accounting firm's determination of
           Final Net Assets by (2) an amount equal to the difference between the
           parties' respective determinations of Final Net Assets, as submitted
           to such accounting firm.  The other party shall pay the remainder of
           the fees and expenses of such accounting firm and its own expenses
           not required to be paid by the Non-Prevailing Party hereunder.  A
           party is the "Non-Prevailing Party" if such accounting firm's
           determination of Final Net Assets is closer to the other party's
           determination of Final Net Assets, as submitted to such accounting
           firm, than it is to that party's determination of Final Net Assets,
           as submitted to such accounting firm.  Notwithstanding anything to
           the contrary in this Section 4(b)(xi), if such accounting firm's
           determination of Final Net Assets does not result in a Purchase Price
           that is lower than the Purchase Price would have been based upon
           Sellers' determination of Final Net Assets (after giving effect to
           Section 4(b)(iv) or 4(b)(v)), Buyer shall pay all of the fees and
           expenses of such accounting firm plus all reasonable out-of-pocket
           expenses (including reasonable attorneys' fees) of Sellers incurred
           with respect to the submission.

           (c)  Certain Payments.

                (i)     Property Taxes and Special Assessments.  In the case of
           real property Taxes, personal property Taxes, and special assessments
           relating to the Assets, Sellers shall pay, on or prior to the Cut-Off
           Date, all such Taxes and installments of special assessments that
           Sellers would pay on or prior to the Cut-Off Date in the ordinary
           course of business, consistent with past practices, subject to
           reimbursement by Buyer pursuant to Section 3(a)(ii) hereof to the
           extent that any such payment is made by check or bank draft and
           constitutes an Assumed Liability.  If Tax statements for any Assets
           are sent directly to any Seller by a Taxing Authority (as defined in
           Section 4(d)(vi) hereof) after the date of this Agreement, the
           Company shall use reasonable efforts to cause such statements to be
           forwarded promptly to Buyer.

                (ii)    Sales or Transfer Taxes and Recording Fees.  Buyer shall
           pay all sales, use, value-added, business, goods and services,
           transfer, documentary, conveyancing or similar Taxes or expenses and

                                     -18-

           all recording fees that may be imposed as a result of the sale and
           transfer of the Assets to Buyer under this Agreement, including as a
           result of the transfer of the State Street Marshall Field's store
           from the current owner to the Company (including any stamp, duty or
           other Tax chargeable in respect of any instrument transferring
           property and any Taxes (other than Excluded Taxes) payable in
           connection with the sale and transfer of the Intellectual Property),
           together with any and all fines, penalties, interest and additions to
           tax with respect thereto ("Transfer Taxes"), and Sellers and Buyer
           shall cooperate in timely making all filings, returns, reports and
           forms as may be required to comply with the provisions of such tax
           laws.  Buyer shall execute and deliver to Sellers at the Closing all
           appropriate exemption certificates relating to an occasional-sale
           exemption or an inventory-resale exemption from Transfer Taxes.

                (iii)   Taxes Generally.  Sellers shall pay all Excluded
           Taxes.  Except to the extent otherwise provided in this Agreement,
           Buyer shall pay all Taxes (other than Excluded Taxes) attributable to
           the Business, the Assets or the Acquired Subsidiaries.

                (iv)    No Adjustment to Purchase Price.  Notwithstanding
           anything to the contrary provided in this Agreement, no Taxes,
           charges, payments or fees, the payment of which is provided for
           herein, whether they constitute obligations of Sellers or Buyer
           hereunder, shall cause an adjustment to the Purchase Price, but
           nothing contained herein shall limit the parties' rights and
           obligations under Sections 4(b) and 16.

           (d)  Definitions Relating to Taxes.

                (i)     "Excluded Taxes" means (1) except in the case of
           Acquired Subsidiaries, Taxes (other than sales, use, property,
           Transfer, recording and similar Taxes) on or based upon or measured
           by gross or net receipts or gross or net income (including Taxes in
           the nature of minimum taxes, tax preference items, and alternative
           minimum taxes), capital or net worth or capital stock; (2) in the
           case of the Acquired Subsidiaries, the Taxes described in clause (1)
           hereof for any Pre-Cut-Off Tax Period (including any Tax liability of
           an Acquired Subsidiary for such period arising as a result of the
           application of Treasury Regulation section 1.1502-6 or any similar
           provision of any applicable state, local or foreign Tax law); and (3)
           any Taxes of Sellers to the extent not attributable to the Business,
           the Assets or the Acquired Subsidiaries.  For purposes of this
           Agreement, the amount of Excluded Taxes attributable to an Acquired
           Subsidiary for the portion of a Straddle Period ending on the Cut-Off
           Date shall be determined (x) in the case of Taxes based upon or
           measured by gross or net receipts or gross or net income as described
           above, as if such Tax period ended on the Cut-Off Date, and (y) in

                                     -19-

           the case of Taxes relating to capital, net worth, or capital stock,
           by reference to the level of such items as of the Effective Time.

                (ii)    "Pre-Cut-Off Tax Period" with respect to the Acquired
           Subsidiaries means any Tax period ending on or before the Cut-Off
           Date, and with respect to a Straddle Period, any portion thereof
           ending on the Cut-Off Date.

                (iii)   "Return" means any return, statement, report or form,
           including in each case any amendments thereto, required to be filed
           with any Taxing Authority by or with respect to Taxes or any claim
           for refund.

                (iv)    "Straddle Period" means any complete Tax period of an
           Acquired Subsidiary that includes but does not end on the Cut-Off
           Date.

                (v)     "Taxes" means all federal, state, local or foreign
           income, profits, franchise, gross receipts, net receipts, capital,
           capital stock, net worth, sales, use, withholding, turnover, value
           added, ad valorem, registration, general business, employment, social
           security, disability, occupation, real property, personal property
           (tangible and intangible), recording, stamp, transfer (including real
           property transfer or gains), conveyance, severance, production,
           excise and other taxes, withholdings, duties, levies, imposts,
           license and registration fees and other similar charges and
           assessments (including all fines, penalties and additions
           attributable to or otherwise imposed on or with respect to any such
           taxes, charges, fees, levies or other assessments, and interest
           thereon and any liability arising pursuant to the application of
           Treasury Regulation section 1.1502-6 or any similar provision of any
           applicable state, local or foreign Tax law) imposed by or on behalf
           of any Taxing Authority.

                (vi)    "Taxing Authority" means any governmental or regulatory
           authority, body or instrumentality exercising any authority to
           impose, regulate or administer the imposition of Taxes.

                (vii)   "Transfer Taxes" has the meaning assigned thereto in
           Section 4(c)(ii) hereof.

                (viii)  "Treasury Regulation" means the U.S. treasury
           regulations pursuant to the Code (as defined in Section 6(e) hereof).

           (e)  Allocation of Purchase Price.  Within 180 days after the
     Closing, Buyer and the Company shall jointly prepare an allocation (the
     "Allocation") of the Purchase Price among the Assets consistent with the
     provisions of Section 1060 of the Code and the Treasury Regulations
     thereunder.  In preparing such Allocation, the parties agree that not less
     than $250 million of the Purchase Price shall be allocated to the assets of

                                     -20-

     Target Brands.  If a party disagrees with respect to any material item
     included in a proposed allocation, the parties shall negotiate in good
     faith to resolve the issue.  If they cannot resolve the issue within 30
     days, it shall be resolved by an accounting or appraisal firm chosen by and
     mutually acceptable to both parties.  The costs, fees and expenses of such
     firm shall be borne equally by the Company and Buyer.  Neither Buyer nor
     Sellers, nor any of their respective affiliates, shall take any position on
     any Return or audit inconsistent with such Allocation unless required to do
     so by applicable law.  Sellers and Buyer shall each provide to the other
     for review a copy of its report with respect to this transaction pursuant
     to Section 1060 of the Code and the Treasury Regulations thereunder at
     least ten business days prior to its submission to the Internal Revenue
     Service.

           (f)  Transfer Tax Valuation.  Prior to the Closing Date, the
     Company 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 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 based on Buyer's valuation and, upon resolution, the
     party responsible for filing the Return with respect to such Tax shall make
     such corrective filings with the appropriate Taxing Authority and Buyer
     shall pay any additional, and shall be entitled to any refund of, any
     Transfer Tax resulting from such corrective filings.

           (g)  Certain Stores.  If Buyer is prevented from acquiring the
     ownership of, or leasehold interest in, one or more parcels of Real Estate
     due to an injunction or court order prior to the Closing, then (i) all
     assets and liabilities relating to any such parcel shall be excluded from
     the calculations of Net Assets as of May 1, 2004 and the Cut-Off Date, and
     (ii) the parties shall negotiate a mutually acceptable reduction to the
     Purchase Price equal to the fair market value of such ownership or
     leasehold interests; provided that this sentence shall not apply to any
     injunction or court order in respect of the stores at Rosedale or Ridgedale
     based on the rights of first refusal described in Section 4(a)(ii) hereof,
     the treatment of which shall be as provided therein.  If the parties cannot
     agree on the fair market value, then the parties shall resolve their
     differences pursuant to the procedures set forth in Section 4(b),
     substituting a mutually acceptable real estate appraisal firm for the
     accounting firm referred to in Section 4(b).

           (h)  Section 1031 Like-Kind Exchange.  Notwithstanding any other
     provision of this Agreement, the Company may elect to effectuate the sale
     of one or more of the Assets (the "Exchange Assets") by means of an
     exchange of "like-kind" property that will qualify under Section 1031 of

                                     -21-

     the Code and the Treasury Regulations thereunder (including the Rosedale
     and Ridgedale Marshall Field's stores pursuant to the separate agreements
     contemplated by Section 4(a)(ii)) (each, an "Exchange Transaction"); Buyer
     shall at Seller's sole cost and expense cooperate in an Exchange
     Transaction arranged by the Company and a qualified exchange intermediary
     (as such term is used in the Treasury Regulations promulgated under Section
     1031 of the Code) designated by the Company.  The Company shall provide
     written notice to Buyer of the Company's election to participate in an
     Exchange Transaction no later than 10 days prior to Closing.  Buyer shall
     not incur any Tax liability, any expenses or any liability of any nature in
     connection with any Exchange Transaction. Buyer shall not be obligated to
     take title to any exchange property under any circumstances.  The Company
     shall indemnify and save and hold harmless Buyer from any and all
     liabilities arising out of or related to any Exchange Transaction.  Buyer
     shall, upon the Company's request, execute and deliver such documents and
     agreements as are reasonably necessary for the purpose of facilitating an
     Exchange Transaction, and Buyer shall pay the portion of the Purchase Price
     attributable to the Exchange Assets (the "Escrowed Purchase Price") at the
     Closing to the Company's designated qualified exchange intermediary.  The
     Company's right to receive the Escrowed Purchase Price shall be limited as
     required by Section 1031 of the Code and the Treasury Regulations
     thereunder.  If a tax-deferred exchange cannot be effected by Seller for
     any reason other than a breach by Buyer, Sellers shall still be obligated
     to close this transaction pursuant to the terms of this Agreement.  Under
     no circumstances shall Sellers' right or election to exchange, rather than
     sell, Assets delay closing, require Buyer to incur any expense it would not
     have otherwise incurred (unless paid or reimbursed by Sellers as provided
     above) or otherwise adversely affect Buyer's rights hereunder.  The
     Escrowed Purchase Price for any Real Estate shall be the same as the amount
     allocated for such Real Estate as determined under Section 4(f) or Section
     4(a)(ii) hereof as applicable.

     5.     Conditions to Closing.

           (a)  Buyer's Obligation.  The obligation of Buyer to purchase and pay
     for the Assets is subject to the satisfaction (or waiver by Buyer) as of
     the Closing of the following conditions:

                (i)     The representations and warranties of the Company made
           in this Agreement shall be true and correct as of the date hereof and
           (except (A) as otherwise provided in Section 6(h)(vii), (B) as they
           may be affected by transactions contemplated hereby and (C) for
           representations and warranties that by their terms are made only as
           of an earlier date) immediately prior to the Closing, as though made
           immediately prior to the Closing, except to the extent any inaccuracy
           in any such representation or warranty does not materially impair the
           ability of Sellers to consummate the transactions contemplated by
           this Agreement and does not have a Material Adverse Effect (as

                                     -22-

           defined below) (provided that, solely for purposes of this Section
           5(a)(i), any representation or warranty in this Agreement that is
           qualified by materiality or Material Adverse Effect language shall be
           read as if such language were not present).  As used in this
           Agreement, "Material Adverse Effect" means any change or effect that,
           individually or in the aggregate, has or is reasonably likely to have
           a material adverse effect on the operations, results of operations,
           properties, or financial condition of the Business as a whole (other
           than any such change or effect resulting from (1) any change, event
           or occurrence generally affecting the industry in which the Business
           operates, (2) general economic or securities market conditions in the
           United States, (3) the public announcement or existence of this
           Agreement and the transactions contemplated hereby, (4) acts of
           terrorism or war (whether or not declared), or (5) any change, event
           or occurrence resulting from or relating to compliance with the terms
           of, or the taking of any action required by, this Agreement).

                (ii)    Sellers shall have performed or complied in all material
           respects with all obligations and covenants required by this
           Agreement to be performed or complied with by Sellers by the time of
           the Closing.

                (iii)   The Company shall have delivered to Buyer a certificate
           dated the Closing Date and signed by an executive officer of the
           Company on behalf of the Company confirming the satisfaction of the
           conditions set forth in Sections 5(a)(i) and (ii) hereof.

                (iv)    No injunction or order of any court or administrative
           agency of competent jurisdiction shall be in effect that restrains or
           prohibits the purchase or sale of the Assets hereunder; provided that
           an injunction or court order that prohibits the transfer of ownership
           of, or leasehold interests in, one or more parcels of Real Estate or
           other Assets shall not be deemed to restrain or prohibit the purchase
           or sale of the Assets hereunder unless the failure of Buyer to
           acquire ownership of, or leasehold interests in, such parcels or
           other Assets has a Material Adverse Effect; provided that nothing in
           this Section 5(a)(iv) shall affect the condition set forth in Section
           5(a)(v); and provided also that an injunction or court order which
           prohibits the transfer of any or all of the Ridgedale and Rosedale
           stores shall not be considered to be all or a part of a Material
           Adverse Effect.

                (v)     The waiting period under the Hart-Scott-Rodino Antitrust
           Improvements Act of 1976, as amended (the "HSR Act"), shall have
           expired or terminated.

                (vi)    Sellers shall have delivered to Buyer an affidavit (a
           so-called "FIRPTA affidavit") duly executed by each Seller,

                                     -23-

           certifying facts that would exempt the transactions contemplated
           hereby from the provisions of the Foreign Investment in Real Property
           Tax Act.

                (vii)   The Company shall have purchased the State Street
           Marshall Field's store on or before Closing, free and clear of all
           mortgages, liens, security interests, easements, restrictive
           covenants, rights-of-way, encroachments, purchase options, rights of
           first refusal or first offer or other encumbrances except those of
           the nature described in Sections 6(h)(i)(A) through (D).

           (b)  Sellers' Obligation.  The obligation of Sellers to sell and
     deliver the Assets to Buyer is subject to the satisfaction (or waiver by
     Sellers) as of the Closing of the following conditions:

                (i)     The representations and warranties of Buyer made in this
           Agreement shall be true and correct in all material respects as of
           the date hereof and (except as they may be affected by transactions
           contemplated hereby and except for representations and warranties
           that by their terms are made only as of an earlier date) immediately
           prior to the Closing, as though made immediately prior to the
           Closing; Buyer shall have performed or complied in all material
           respects with all obligations and covenants required by this
           Agreement to be performed or complied with by Buyer by the time of
           the Closing; and Buyer shall have delivered to the Company a
           certificate dated the Closing Date and signed by an executive officer
           of Buyer on behalf of Buyer confirming the foregoing.

                (ii)    No injunction or order of any court or administrative
           agency of competent jurisdiction shall be in effect that restrains or
           prohibits the purchase or sale of the Assets hereunder; provided that
           an injunction or court order that prohibits the transfer of ownership
           of, or leasehold interests in, one or more parcels of Real Estate or
           other Assets shall not be deemed to restrain or prohibit the purchase
           or sale of the Assets hereunder unless the failure of Buyer to
           acquire ownership of, or leasehold interests in, such parcels or
           other Assets has a Material Adverse Effect; provided that nothing in
           this Section 5(b)(ii) shall affect the condition set forth in Section
           5(b)(iii); and provided also that an injunction or court order which
           prohibits the transfer of any or all of the Ridgedale and Rosedale
           stores shall not be considered to be all or a part of a Material
           Adverse Effect.

                (iii)      The waiting period under the HSR Act shall have
           expired or terminated.

           (c)  Effect of Closing.  Notwithstanding anything to the contrary, if
     either party shall be in breach of any covenants or agreements under this
     Agreement, the party not in breach may require the completion of Closing
     without waiving any rights under this Agreement, and the party not in

                                     -24-

     breach may also require compliance by the breaching party with its
     covenants and agreements after Closing is completed.

     6.    Representations and Warranties of the Company.  Except as set forth
in the disclosure schedule initialed by the Company and Buyer (the "Disclosure
Schedule"), the Company hereby represents and warrants to Buyer as follows:

           (a)  Organization and Authority.  Each Seller and each Acquired
     Subsidiary is a corporation or other organization duly organized, validly
     existing and in good standing under the laws of its jurisdiction of
     incorporation or organization.  Each Seller and each Acquired Subsidiary is
     incorporated or organized in the jurisdiction set forth beside its name in
     Section 6(a) of the Disclosure Schedule.  Each Seller and each Acquired
     Subsidiary is duly qualified and in good standing to do business as a
     foreign corporation or organization in each jurisdiction in which the
     Assets or the nature of the Business requires them to be qualified, except
     where the failure to be so qualified or in good standing does not have a
     Material Adverse Effect.  Each Seller has all requisite corporate or
     organizational power and authority to enter into this Agreement and to
     consummate the transactions contemplated hereby.  All corporate or
     organizational acts and proceedings required to be taken to authorize the
     execution, delivery and performance by Sellers of this Agreement and the
     consummation by Sellers of the transactions contemplated hereby have been
     duly and properly taken.  This Agreement has been duly executed and
     delivered by each Seller and, assuming due authorization, execution and
     delivery of this Agreement by Buyer, constitutes a valid and binding
     obligation of each Seller, enforceable against each Seller in accordance
     with its terms, except as such enforceability may be limited by bankruptcy,
     insolvency, moratorium and other similar laws affecting creditors' rights
     generally and by general principles of equity.

           (b)  Non-Contravention.  Subject to other applicable provisions
     of this Agreement, including Sections 2 and 6(h)(iv) hereof, the execution,
     delivery and performance by Sellers of this Agreement do not, and the
     consummation by Sellers of the transactions contemplated hereby will not,
     (i) conflict with, or result in any violation of, any provision of the
     articles of incorporation or by-laws (or similar organizational documents)
     of any Seller, or (ii) conflict with, result in any violation of, or
     constitute a default under, or create a lien on any of the Assets under, or
     result in the acceleration or termination of, or result in a material
     increase in payment obligations under, any instrument, contract,
     commitment, agreement or arrangement to which any Seller is a party or by
     which any Seller or any of the Assets are bound, or any judgment, order,
     writ, injunction or decree to which any Seller has been specifically
     identified as subject, or (iii) result in any violation of any statute,
     law, ordinance, rule or regulation applicable to any Seller or the Assets
     (except where such conflict, violation, default, lien, acceleration,
     termination or increased obligations would not materially impair the
     ability of Sellers to consummate the transactions contemplated hereby or

                                     -25-

     have a Material Adverse Effect).  No material consent, approval, license,
     permit, order or authorization of, or registration, declaration or filing
     with, any court, administrative agency or commission or other governmental
     authority or instrumentality, domestic or foreign, is required to be
     obtained or made by or with respect to Sellers in connection with the
     execution, delivery and performance by Sellers of this Agreement or the
     consummation by Sellers of the transactions contemplated hereby other than
     compliance with and filings under the HSR Act; provided, however, that no
     representation is made as to whether any new governmental consents,
     approvals, licenses, permits, orders, authorizations, registrations,
     declarations or filings will be required as a result of the sale of Assets
     to Buyer in order for Buyer to continue to conduct the Business and operate
     the Assets following the Cut-Off Date in the manner in which the Business
     was conducted and the Assets were operated on or prior to the Cut-Off Date.

           (c)  Shares of Acquired Subsidiaries.

                (i)     The Company has good and valid title to all of the
           outstanding capital stock of each of the Acquired Subsidiaries (the
           "Acquired Subsidiaries' Shares"), free and clear of any claims,
           liens, encumbrances, security interests, charges, rights of third
           parties and restrictions whatsoever, except restrictions imposed by
           applicable securities laws.  Assuming Buyer has the requisite power
           and authority to be the lawful owner of the Acquired Subsidiaries'
           Shares, upon delivery to Buyer of certificates representing the
           Acquired Subsidiaries' Shares, duly endorsed by the Company for
           transfer to Buyer, and upon Sellers' receipt of the Purchase Price,
           good and valid title to the Acquired Subsidiaries' Shares will pass
           to Buyer as of the Effective Time, free and clear of any claims,
           liens, encumbrances, security interests, charges, rights of third
           parties and restrictions whatsoever other than those arising from
           acts of Buyer or its affiliates and restrictions imposed by
           applicable securities laws.  The Acquired Subsidiaries' Shares are
           not subject to any voting trust agreement or other contract,
           agreement, arrangement, commitment or understanding, including any
           such contract, agreement, arrangement, commitment or understanding
           restricting or otherwise relating to the voting, dividend rights or
           disposition of the Acquired Subsidiaries' Shares, other than this
           Agreement.

                (ii)    The total outstanding capital stock of each Acquired
           Subsidiary is set forth beside the name of the Acquired Subsidiary in
           Section 6(c) of the Disclosure Schedule.  Each of the Acquired
           Subsidiaries' Shares is duly authorized, validly issued and
           outstanding and fully paid and nonassessable.  The Acquired
           Subsidiaries' Shares have not been issued in violation of, and are
           not subject to, any preemptive or subscription rights.  Except as set
           forth above, there are no shares of capital stock or other equity
           securities of any Acquired Subsidiary outstanding.  There are no
           outstanding warrants, options, agreements, convertible or

                                     -26-

           exchangeable securities or other commitments pursuant to which the
           Company or any of its affiliates is or may become obligated to issue,
           sell or otherwise dispose of, purchase, return, redeem or otherwise
           acquire any Acquired Subsidiaries' Shares other than this Agreement,
           and there are not any equity securities of any Acquired Subsidiaries
           reserved for issuance for any purpose.  The Assets do not include any
           capital stock of or other equity interests in any corporation or
           other entity except the Acquired Subsidiaries' Shares.

           (d)  Financial Statements.  Attached hereto as Exhibit N are (i)
     unaudited balance sheets of the Business as of January 31, 2004 and
     February 1, 2003 and unaudited statements of income of the Business for the
     fiscal years then ended and (ii) an unaudited balance sheet of the Business
     as of May 1, 2004 and an unaudited statement of income of the Business for
     the three-month period then ended (the statements listed in clauses (i) and
     (ii) are referred to as the "Financial Statements").  Except as expressly
     disclosed therein, the Financial Statements fairly present, in all material
     respects, the assets, liabilities and financial condition of the Business
     at their respective dates and the results of operations of the Business for
     the respective periods covered thereby, and have been prepared on a basis
     consistent with the principles historically applied by the Company in the
     preparation of the financial statements for its Marshall Field's segment
     included in the Company's filings with the Securities and Exchange
     Commission, except as disclosed in the notes to the Financial Statements
     and except that Excluded Assets and Excluded Liabilities and profits and
     losses related thereto are excluded from the Financial Statements.  Except
     as expressly provided in this Section 6(d), no representation is made by
     the Company as to any financial information of the Business provided to
     Buyer, including any financial information provided to Buyer in its due
     diligence investigation of the Business or set forth in the Confidential
     Information Memorandum regarding the Business provided to Buyer by Goldman,
     Sachs & Co.  Without limiting the generality of the foregoing, no
     representation is made as to the accuracy, fairness or reasonableness of
     any projections provided to Buyer or the assumptions used in preparing the
     same, or as to the likelihood that such projections will be achieved.

           (e)  Nonforeign Certification. No Seller is a "foreign person" within
     the meaning of Section 1445 of the Internal Revenue Code of 1986, as
     amended (the "Code").

           (f)  Taxes.  With respect to all Taxes (other than Excluded Taxes,
     with respect to which no representations or warranties are being made in
     this Agreement) Sellers and the Acquired Subsidiaries have filed or caused
     to be filed in a timely manner (within any applicable extension periods)
     all material Returns required to be filed by applicable federal, state,
     local or foreign Tax laws that relate to the Business, the Assets or an
     Acquired Subsidiary.  All such Taxes related to the Business, the Assets or
     an Acquired Subsidiary shown to be due on such Returns have been paid in

                                     -27-

     full or will be paid in full by the Company, except to the extent they are
     Assumed Liabilities or other obligations of Buyer as provided in Section
     4(c) hereof.

           (g)  Personal Property.  Sellers have or will have as of the
     Effective Time good title to all Equipment, Inventory and Miscellaneous
     Receivables, in each case free and clear of all liens, security interests
     and other encumbrances, except (i) mechanics', materialmen's, carriers',
     workmen's, warehousemen's, repairmen's, landlord's or other like liens on
     tangible Assets securing obligations that are not delinquent; (ii) liens
     for Taxes and other governmental charges that are not due and payable or
     that may be paid without penalty; (iii) liens, security interests and other
     encumbrances evidenced by any security agreement, financing statement,
     purchase money agreement, conditional sales contract, capital lease or
     operating lease, or by any license, coexistence agreement, undertaking,
     declaration, limitation of use or consent to use (collectively,
     "Licenses"), in each case as described in Section 6(k) of the Disclosure
     Schedule or the non-disclosure of which therein does not constitute a
     misrepresentation under Section 6(k) hereof; and (iv) imperfections of
     title and encumbrances that do not, individually or in the aggregate,
     materially impair the value or the continued use and operation
     substantially in the current manner of the Assets to which they relate (the
     liens, security interests and other encumbrances described in clauses (i)
     through (iv) above being referred to collectively as "Permitted Liens").

           (h)  Real Property.

                (i)     Exhibit A hereto sets forth a true and complete list of
           the land constituting Owned Real Estate.  Certain of the sites listed
           on Exhibit A hereto include lands, buildings or space leased by a
           Seller and used in connection with Owned Real Estate, the Leasehold
           Interests in respect of which are included in the representations in
           Section 6(h)(ii) hereof.  Sellers own good and marketable fee simple
           title to the Owned Real Estate, free and clear of all mortgages,
           liens, security interests, easements, restrictive covenants, rights-
           of-way, encroachments and other encumbrances, except (A) Permitted
           Liens; (B) liens, security interests, easements, Real Estate
           Agreements, restrictive covenants, rights-of-way, encroachments,
           purchase options, rights of first refusal or first offer, and other
           encumbrances and matters that are included in or disclosed by the
           documents relating to each parcel of Real Estate made available to
           Buyer on or before May 28, 2004, shown (whether or not deleted or
           insured over) on any title insurance commitment made available to
           Buyer on or before May 28, 2004 (the "Title Commitments"), or of
           record; (C) any conditions that may be shown by a current, accurate
           survey or physical inspection of the Owned Real Estate; and (D) (1)
           platting, subdivision, zoning, building and other similar
           restrictions, (2) easements, restrictive covenants, rights-of-way,
           encroachments and other similar encumbrances not of record, and (3)
           reservations of coal, oil, gas, minerals and mineral interests, none

                                     -28-

           of which items set forth in clauses (C) and (D) individually or in
           the aggregate materially interferes with the continued use and
           operation of the Owned Real Estate substantially in the manner in
           which the Owned Real Estate is currently used and operated
           (collectively, "Owned Permitted Exceptions").  The marketability of
           title to the Owned Real Estate shall be subject to the Owned
           Permitted Exceptions.  Notwithstanding anything in this Agreement,
           except for the Uniform Short Form Mortgage dated May 14, 2001
           encumbering the Marshall Fields store in St. Paul, Minnesota, the
           Owned Real Estate shall be conveyed to Buyer free and clear of all
           mortgages and deeds of trust.

                (ii)    Exhibit B hereto sets forth a true and complete list
           of the land constituting Leased Real Estate.  Assuming good and
           marketable fee title vested in the landlord, and subject to any
           defects in or other matters affecting the landlord's title, Sellers
           own good and marketable leasehold estates in all Leasehold Interests
           and in all Leased Real Estate, free and clear of all mortgages,
           liens, security interests, easements, restrictive covenants, rights-
           of-way, encroachments and other encumbrances, except (A) Permitted
           Liens; (B) easements, Real Estate Agreements, restrictive covenants,
           rights-of-way, encroachments, purchase options, lease-termination
           options, rights of first refusal or first offer, and other
           encumbrances and matters that are included in or disclosed by the
           documents relating to each parcel of Real Estate made available to
           Buyer on or before May 28, 2004, shown (whether or not deleted or
           insured over) on any Title Commitment, or of record; (C) any
           conditions that may be shown by a current, accurate survey or
           physical inspection of the Leased Real Estate; (D) mortgages, liens,
           security interests or encumbrances that have been placed by any
           developer, landlord or other third party on any Leased Real Estate;
           and (E) (1) platting, subdivision, zoning, building and other similar
           restrictions, and (2) easements, restricted covenants, rights-of-way,
           encroachments and other similar encumbrances not of record, none of
           which items set forth in clauses (C) and (E) individually or in the
           aggregate materially interferes with the continued use and operation
           of the Leased Real Estate substantially in the manner in which the
           Leased Real Estate is currently used and operated (the "Leased
           Permitted Exceptions," and, together with the Owned Permitted
           Exceptions, the "Permitted Exceptions").  The marketability of
           Sellers' leasehold estates shall be subject to the Leased Permitted
           Exceptions.  Notwithstanding anything in this Agreement, the
           Leasehold Interests shall be conveyed to Buyer free and clear of all
           mortgages and deeds of trust.

                (iii)   There are no eminent domain proceedings pending (with
           respect to which the Company has been notified) or, to the Knowledge
           of the Company, threatened against any Real Estate or any material
           portions thereof.  The Company has made available to Buyer, with
           respect to the Owned Real Estate, true and correct copies of the
           Title Commitments described in Section 6(h) of the Disclosure

                                     -29-

           Schedule.  Sellers do not own or lease any real estate primarily
           related to the Business except for the Real Estate.

                (iv)    Notwithstanding anything to the contrary in this
           Agreement or in any certificate or instrument delivered pursuant
           hereto, no representation or warranty is made herein as to whether
           any consents, approvals, waivers, agreements or actions of, or (with
           or without lapse of time) notice to, third parties (including
           governmental authorities), or fulfillment of any conditions, are
           needed in connection with the transfer of the Real Estate, the Real
           Estate Agreements or any of the Permitted Exceptions pursuant to this
           Agreement or the operation by Buyer of the Business on the Real
           Estate after the Cut-Off Date.

                (v)     Section 6(h)(v) of the Disclosure Schedule sets forth
           certain statutory disclosures relating to the Owned Real Estate
           required by the states in which the Owned Real Estate is located.

                (vi)    Copies (which to the Company's Knowledge are true,
           complete and correct in all material respects) of the Real Estate
           Agreements (which term, for purposes of this Section 6(h)(vi) only,
           shall be deemed to include the leases pertaining to the Leased Real
           Estate and other agreements related to the Real Estate and the
           Leasehold Interests) within Sellers' possession, including all
           amendments and supplements to each, have been heretofore provided by
           Sellers to Buyer, and to the Company's Knowledge, there are no
           material agreements pertaining to the Real Estate that have not
           heretofore been provided by Sellers to Buyer.  To the Company's
           Knowledge, Sellers are not in default under or in violation of any of
           the terms or conditions of any of the Real Estate Agreements and
           there is no event that, but for the passing of time or the giving of
           notice, or both, would constitute an event of default by Sellers
           under any of the terms and conditions of the Real Estate Agreement
           that individually or in the aggregate, materially interferes with the
           continued use and operation of the Real Estate substantially in the
           manner in which the Real Estate is currently used and operated.

                (vii)   The Company is not making any representation regarding
           the real estate constituting the State Street Marshall Field's store
           except (A) the representation in Section 6(h)(ii) as of the date of
           this Agreement, which representation, for purposes of Sections
           5(a)(i) and 5(a)(iii) hereof, shall be deemed to be true and correct
           only as of the date of this Agreement and not immediately prior to
           the Closing and (B) the representation in Section 6(h)(i), which
           representation, for purposes of Sections 5(a)(i) and 6(h)(i), shall
           be deemed to be true and correct only immediately prior to the
           Closing and not as of the date of this Agreement.  For purposes of

                                     -30-

           this Agreement, the State Street Marshall Field's store shall be
           deemed to be Leased Real Estate as of the date of this Agreement and
           Owned Real Estate as of the Closing Date.

           (i)  Condition of Assets.  Except as expressly provided in Section
     6(q) hereof, no representation or warranty, direct or indirect, by
     implication or otherwise, is made concerning or based upon the physical
     condition of the Real Estate or any other tangible Assets, all of which are
     being accepted "AS IS AND WHERE IS" by Buyer (including as to all
     environmental aspects thereof, except as otherwise provided in Section 6(q)
     hereof).  EXCEPT AS SET FORTH EXPRESSLY IN THIS AGREEMENT, SELLERS DISCLAIM
     ANY EXPRESS OR IMPLIED WARRANTY WITH RESPECT TO THE ASSETS, TANGIBLE OR
     INTANGIBLE, INCLUDING IMPLIED WARRANTIES OF NONINFRINGEMENT, FITNESS,
     MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

           (j)  Intellectual Property.  Exhibit C hereto contains a true and
     complete list of all of the Assets that are material patents, patent
     applications, trademark applications, trademark registrations, service mark
     applications, service mark registrations and copyright registrations.
     Sellers own or will own at the Effective Time (free and clear of all liens,
     security interests and other encumbrances other than Permitted Liens) or
     have the right to use without payment of a royalty, license fee or similar
     fee to any other party (other than pursuant to a License described in
     Section 6(k) of the Disclosure Schedule or the non-disclosure of which
     therein would not constitute a misrepresentation under Section 6(k)
     hereof), the material patents, trademarks, trade names, service marks and
     copyrights and other intellectual property used by Sellers solely in the
     operation of the Business.  To the Knowledge of the Company, (i) no
     material outstanding claims against any Seller have been made in writing
     since January 1, 2002 by any other person challenging or questioning either
     the right of Sellers to use any intellectual property of Sellers used in
     the Business, or the validity of, any patent, trademark, trade name,
     service mark or copyright described on Exhibit C in any jurisdiction,
     domestic or foreign (other than claims, challenges or questions by
     governmental intellectual property office examiners as part of the
     application process), (ii) since January 1, 2002, no other person has
     claimed in writing and continues to claim the right to use any such
     material patent, trademark, trade name, service mark, copyright or any
     other intellectual property of Sellers used in the Business in a manner
     that would interfere with Sellers' use thereof in the ordinary course of
     operating the Business (other than pursuant to a License described in
     Section 6(k) of the Disclosure Schedule or the non-disclosure of which
     therein would not constitute a misrepresentation under Section 6(k)
     hereof), and (iii) no material outstanding claims of patent, trademark,
     trade name, service mark, copyright or trade dress infringement have been
     made in writing since January 1, 2002 by any person against Sellers with
     respect to payment of a royalty, license fee or similar fee to such person
     (other than payments that are currently subject to a License described in
     Section 6(k) of the Disclosure Schedule or the non-disclosure of which

                                     -31-

     therein would not constitute a misrepresentation under Section 6(k)
     hereof).  Sellers have not received any written notice that any material
     patent, trademark, service mark or copyright described in Exhibit C has
     been declared unenforceable or otherwise invalid by any court or
     governmental authority.

           (k)  Contracts.  Section 6(k) of the Disclosure Schedule lists the
     following written agreements or contracts (other than the Leasehold
     Interests and the Real Estate Agreements) in effect as of the date of this
     Agreement solely relating to the Business or the Assets to which a Seller
     is a party:

                (i)     each employment agreement that will remain in effect
           after the Cut-Off Date (other than those that are or at the Cut-Off
           Date will be terminable at will by a Seller without penalty);

                (ii)    each covenant not to compete that materially restricts
           the operation of the Business as presently conducted, other than
           those providing for non-competition with a licensed department within
           a particular store location;

                (iii)   each material agreement or contract of the Company with
           any affiliate of the Company other than Sellers or any current
           officer or director of the Company or any affiliate of the Company
           (other than (A) employment agreements the non-disclosure of which in
           Section 6(k) of the Disclosure Schedule does not constitute a
           misrepresentation under Section 6(k)(i) hereof, or (B) contracts
           constituting Sellers' Plans);

                (iv)    each operating lease (as lessor or lessee) of tangible
           personal property (except for any such lease calling for payments of
           less than $250,000 per year);

                (v)     each material License of any patents, trademarks, trade
           names, service marks or copyrights or other intellectual property
           received from or granted to third parties not affiliated with any
           Seller (other than non-negotiated licenses of commercially available
           computer software used in the operation of the Business and non-
           negotiated licenses to intellectual property embedded in equipment or
           fixtures, and licenses related to products used in the operation of
           the Business);

                (vi)    each management, personal service, consulting or other
           similar type of contract under which there exists an aggregate future
           liability in excess of $500,000 per contract (other than those that
           are or at the Cut-Off Date will be terminable at will or upon not
           more than 90 days' notice by a Seller without penalty and other than
           those entered into in connection with a License);

                                     -32-

                (vii)   each material radio, television or newspaper advertising
           agreement (other than those that are or at the Cut-Off Date will be
           terminable at will or upon not more than 90 days' notice by a Seller
           without penalty);

                (viii)  each material agreement for the purchase by Sellers of
           supplies or products that calls for performance over a period of more
           than one year (other than those that are or at the Cut-Off Date will
           be terminable at will or upon not more than 90 days' notice by a
           Seller without penalty);

                (ix)    each mortgage agreement, deed of trust, security
           agreement, purchase money agreement, conditional sales contract or
           capital lease created or assumed by, or permitted to be created by
           written instrument made or accepted by, any Seller (other than (A)
           any purchase money agreement, conditional sales contract or capital
           lease evidencing liens only on tangible personal property under which
           there exists an aggregate future liability not in excess of $250,000
           per contract or lease, (B) protective filings of financing statements
           under the Uniform Commercial Code, and (C) agreements evidencing
           liens on the Real Estate covered by a Title Commitment that are shown
           on a Title Commitment or are otherwise of record); and

                (x)     each other agreement or contract not made in the
           ordinary course of business, except those calling for payments of
           less than $250,000 per year.

To the Knowledge of the Company, each agreement and contract described in
Section 6(k) of the Disclosure Schedule (collectively, the "Material Contracts")
is valid, binding and in full force and effect, except as such enforceability
may be limited by bankruptcy, insolvency, moratorium and other similar laws
affecting creditors' rights generally and by general principles of equity.  No
Seller is (with or without the lapse of time or the giving of notice, or both)
in breach of or in default under any of the Material Contracts, and, to the
Knowledge of the Company, no other party to any of the Material Contracts is
(with or without the lapse of time or the giving of notice, or both) in breach
of or in default under any of the Material Contracts, except for, in each event,
defaults that do not have a Material Adverse Effect.  A true and complete copy
of each Material Contract has been made available to Buyer.  For purposes of
this Section 6(k), agreements or contracts "terminable at will" mean agreements
or contracts that do not provide for specified terms of completion, expiration
or termination or are expressly made terminable at will, regardless of whether
any covenant of good faith and fair dealing may be implied, as a matter of law,
in connection with the termination thereof.

           (l)  Litigation; Decrees.  No action, lawsuit, proceeding or
     governmental investigation is pending (with respect to which a Seller has
     been served or otherwise notified) or, to the Knowledge of the Company,
     threatened against a Seller as of the date of this Agreement with respect
     to the Business (other than (A) workers' compensation claims, (B) actions,
     lawsuits, proceedings or investigations set forth in the Environmental

                                     -33-

     Reports (as defined in Section 6 hereof), and (C) challenges by
     governmental intellectual property office examiners as part of the
     application process) that, if decided adversely to such person, (i) would
     have a Material Adverse Effect, (ii) would reasonably be expected to result
     in liability in excess of $2 million, or (iii) would materially impair the
     ability of Sellers to consummate the transactions contemplated hereby.  The
     foregoing representation does not relate to Taxes or environmental matters,
     all representations with respect to which are the subject of Sections 6(f)
     and 6(q) hereof, respectively.  As of the date of this Agreement, no Seller
     is specifically identified as a party subject to any material restrictions
     or limitations with respect to the Business under any judgment, order or
     decree of any court, administrative agency or commission or other
     governmental authority or instrumentality, domestic or foreign.

           (m)  Insurance.  The Business is insured under policies presently
     issued in favor of one or more of the Sellers.  None of such insurance
     policies will be transferred or assigned to Buyer, but promptly after the
     date of this Agreement.  Sellers shall use commercially reasonable efforts
     to have Buyer named as an additional insured and loss payee under and
     entitled to the benefits of any such policy to the extent of Buyer's
     insurable interest with respect to events occurring prior to the Cut-Off
     Date.

           (n)  Employee Benefits; ERISA.  Section 6(n) of the Disclosure
     Schedule identifies each employee pension, profit sharing, retirement,
     stock bonus, stock option, stock purchase, deferred compensation, medical,
     dental, vacation, insurance, sick pay, disability, severance, or other
     plan, fund, program, policy, contract or arrangement (including any
     "employee benefit plan" as defined in Section 3(3) of the Employee
     Retirement Income Security Act of 1974, as amended ("ERISA")) providing
     employee benefits that is maintained or contributed to by any of the
     Sellers in which any Employees are participating or under which any
     Employees or persons formerly on the Marshall Field's payroll (or any
     predecessor payroll) are participating or have accrued any benefits to
     which they remain entitled (collectively, "Sellers' Plans").  The Company
     has made available to Buyer true and complete copies or accurate summaries
     of all Sellers' Plans.

           (o)  Absence of Changes or Events.  From February 1, 2004 to the date
     of this Agreement, the Business has been conducted in the ordinary course
     substantially consistent with past practice.  Without limiting the
     generality of the immediately preceding sentence, from February 1, 2004 to
     the date of this Agreement, Sellers have not:

                (i)     suffered any damage to or destruction of any Assets or
           other event or occurrence that has a Material Adverse Effect;

                (ii)    granted to any officer or director-level Employee any
           increase in compensation or other material benefits, except as

                                     -34-

           required under existing agreements or in the ordinary course of
           business consistent with past practice, and except for retention
           agreements disclosed in Section 6(o) of the Disclosure Schedule and
           not extending past the Cut-Off Date;

                (iii)   granted any mortgage, pledge, lien or encumbrance on, or
           agreed to the imposition of any restriction or charge of any kind
           with respect to, any of the Assets, other than pursuant to purchase
           money agreements, conditional sales contracts, capital leases,
           operating leases or Licenses affecting non-Real Estate Assets
           disclosed in Section 6(k) of the Disclosure Schedule or the non-
           disclosure of which in Section 6(k) of the Disclosure Schedule would
           not constitute a misrepresentation under Section 6(k) hereof;

                (iv)    purchased or otherwise acquired any Assets that are
           material, individually or in the aggregate, to the Business (other
           than purchases of inventory in the ordinary course of business
           consistent with past practice);

                (v)     sold or otherwise disposed of any Assets that are
           material, individually or in the aggregate, to the Business (other
           than sales of inventory or Charged-Off Accounts in the ordinary
           course of business consistent with past practice);

                (vi)    materially adversely modified or amended any Material
           Contract, Leasehold Interest or Real Estate Agreement or taken or
           failed to take any other action with respect thereto or with respect
           to any Real Estate which would materially adversely affect Buyer's
           rights or obligations with respect thereto;

                (vii)   made any change in accounting methods or principles or
           credit policies or procedures applicable to the Business;

                (viii)  transferred outside of the Business any employee on the
           Marshall Field's payroll at the level of manager or above; or

                (ix)    other than this Agreement, agreed to do any of the
           foregoing.

           (p)  Compliance with Laws.  To the Knowledge of the Company, the
     Business is in compliance with all applicable statutes, laws, ordinances,
     rules, orders and regulations of any governmental authority or
     instrumentality, domestic or foreign, except for noncompliance that does
     not have a Material Adverse Effect.  This Section 6(p) does not relate to
     Taxes or compliance with Environmental Laws, all representations with
     respect to which are the subject of Sections 6(f) and 6(q) hereof,
     respectively.

                                     -35-

           (q)  Environmental Matters.

                (i)     As used in this Agreement:

                        (A)  "Environmental Claim" means any written notice to
                any of the Sellers by a person or entity alleging potential
                material liability of any of the Sellers (including potential
                material liability for investigatory costs, cleanup costs or
                governmental response costs) arising out of, based on or
                resulting from (1) the presence, or release into the
                environment, of any Hazardous Substance at any Real Estate, or
                (2) circumstances forming the basis of any violation, or alleged
                violation, of any Environmental Law;

                        (B)  "Environmental Laws" means all applicable federal,
                state and local statutes, regulations, laws or ordinances
                relating to human health or the environment;

                        (C)  "Environmental Permits" means all permits, licenses
                or authorizations required pursuant to any Environmental Law;

                        (D)  "Environmental Reports" means those environmental
                reports described in Section 6(q) of the Disclosure Schedule;
                and

                        (E)  "Hazardous Substance" means contaminants, hazardous
                wastes, petroleum, and other materials listed in, regulated by
                or identified in any Environmental Law.

                (ii)    Except as disclosed by the Environmental Reports or
           where noncompliance does not prevent, for more than 10 days, the
           operation of any store or distribution center which is part of the
           Real Estate in the ordinary course of business, the operation of the
           Business by the Sellers is in compliance with all applicable
           Environmental Laws and Environmental Permits.

                (iii)   Except as disclosed by the Environmental Reports, there
           are no Environmental Claims pending or, to the Knowledge of the
           Company, threatened, with respect to the Business, except for
           Environmental Claims that do not prevent, for more than 10 days, the
           operation of any store or distribution center which is part of the
           Real Estate in the ordinary course of business.

                (iv)    To the Knowledge of the Company, except as disclosed by
           the Environmental Reports, and except for conditions that do not
           prevent, for more than 10 days, the operation of any store or
           distribution center which is part of the Real Estate in the ordinary
           course of business, no Hazardous Substances are present in, on, or
           under, the Real Estate in such forms or quantities so as to create
           any material unpaid liability under any Environmental Law.

                                     -36-

                (v)     The Company has made available to Buyer true, complete
           and accurate copies of the Environmental Reports but makes no
           representation or warranty as to the accuracy of any aspect of the
           Environmental Reports.

                (vi)    Except as disclosed by the Environmental Reports, there
           is no material order, decree, injunction, or other arrangement with
           any governmental entity or third party with respect to the Assets or
           the Business relating to any Environmental Claim or Environmental
           Law, which is reasonably likely to prevent, for more than 10 days,
           the operation of any store or distribution center which is part of
           the Real Estate in the ordinary course of business.

                (vii)   The Company has made available to Buyer copies of all
           material environmental reports, studies, assessments, sampling data
           and other material environmental information in its possession
           relating to the Assets or to the Business.

           (r)  Employee and Labor Relations.

                (i)     Section 6(r) of the Disclosure Schedule lists each
           collective bargaining agreement to which any Seller is a party with
           any labor union representing Employees (a "Collective Bargaining
           Agreement").

                (ii)      With respect to all Employees who are not covered by a
           Collective Bargaining Agreement, (A) no labor strikes, lockouts or
           material labor disputes or work stoppages are pending or, to the
           Knowledge of the Company, have been threatened from January 1, 2002
           to the date of this Agreement against or affecting such Employees,
           and (B) to the Knowledge of the Company, no union organizational
           campaign has occurred from January 1, 2002 to the date of this
           Agreement with respect to such Employees.

                (iii)      Sellers have not engaged in any plant closing,
           workforce reduction or other action related to any Employee that has
           resulted or could result in liability under the Worker Adjustment and
           Retraining Notification Act of 1988 or under any comparable law or
           regulation of a state or a foreign jurisdiction (collectively, the
           "WARN Act"), and Sellers have not issued any notice that any such
           action is to occur in the future.

           (s)  Credit Card Matters; Receivables.

                (i)     Each Account and each Receivable is in all material
           respects as described in the Account Information, and when delivered
           by Sellers to Buyer, the information contained in the Account
           Information will be correct in all material respects as of the
           Effective Time.

                                     -37-

                (ii)    Representative forms of Cardholder Agreements have been
           provided to Buyer, and those forms contain all material terms of the
           Cardholder Agreements as in effect as of the date of this Agreement.
           The terms of the Cardholder Agreements have not been waived,
           impaired, altered or modified in any material respect by Sellers
           (other than on a case-by-case basis in the ordinary course of
           business).

                (iii)   Except as does not have a Material Adverse Effect, the
           Accounts have been solicited, originated, created, maintained and
           serviced in compliance with (A) the applicable Cardholder Agreement,
           (B) the applicable policies, procedures and practices pursuant to
           which Sellers manage the Portfolio Assets or underwrite, establish,
           administer, process, service, collect, terminate or charge-off the
           Accounts and Receivables in effect from time to time, and (C) all
           applicable legal requirements.

                (iv)    Except as does not have a Material Adverse Effect, all
           disclosures made in connection with the Accounts attributable to any
           Seller complied in all material respects with all applicable legal
           requirements as of the time made, and, as of the date of this
           Agreement, no legal requirements require any supplemental disclosures
           that have not already been made.

                (v)     Except as does not have a Material Adverse Effect, the
           Cardholder Agreements are the legal, valid and binding obligations of
           the obligors thereto and are enforceable in accordance with their
           respective terms except as such enforceability may be limited by
           bankruptcy, insolvency, moratorium and other similar laws affecting
           creditors' rights generally and by general principles of equity;
           provided that nothing stated herein shall constitute a guaranty by
           Sellers, and Sellers do not guaranty, the collectibility of any
           Receivables or Miscellaneous Receivables.

                (vi)    All Cardholder Agreements (including amendments
           thereto), Receivables and Accounts are free and clear of all liens,
           security interests or other encumbrances and are freely assignable by
           Sellers and do not require the approval or consent of any Cardholder
           or any other person to effectuate the valid assignment of the same in
           favor of Buyer.

                (vii)      Since February 1, 2004, no Credit Card has been
           issued to a Cardholder as a replacement or substitute for a Credit
           Card, except another Marshall Field credit card in the ordinary
           course of business.

           (t)  Assets of Acquired Subsidiaries.  The only assets of the
     Acquired Subsidiaries are liquor licenses and other assets necessary for
     conducting restaurant operations, and the Acquired Subsidiaries have no
     material liabilities other than those incurred in the ordinary course of
     restaurant operations.  No representation is made

                                     -38-

     as to the validity of the liquor licenses held by the Acquired Subsidiaries
     after the transfer of the stock of the Acquired Subsidiaries to Buyer.

     7.     Covenants of the Company.  The Company covenants as follows:

          (a)     Access.  Subject to Buyer's obligations under the
     Confidentiality Agreement (as defined in Section 9(a) hereof), prior to the
     Closing, the Company will, and will cause each other Seller to, give Buyer
     and its officers, employees, agents and representatives reasonable access,
     during normal business hours and upon reasonable notice, to the personnel,
     properties, and Books and Records of the Business; provided, however, that
      (i) such access shall not unreasonably disrupt the normal operations of
     Sellers or the Business and (ii) neither Buyer nor any of its officers,
     employees, agents or representatives shall have access to any personnel of
     the Business or any other businesses of the Company or its affiliates other
     than the persons identified in Section 7(a) of the Disclosure Schedule
     without the Company's prior written consent, which shall not be
     unreasonably withheld.

          (b)     Ordinary Conduct.  Except as set forth in Section 7(b) of the
     Disclosure Schedule or as expressly contemplated by this Agreement
      (including Section 10(g) hereof), from the date hereof through the Cut-Off
     Date, the Company will cause the Business to be conducted in the ordinary
     course in all material respects in the same manner as presently conducted
     and will maintain proper business and accounting records, and make all
     reasonable efforts consistent with past practices to preserve the Business,
     including, without limitation, the organization thereof, and relationships
     of the Business with its material customers and suppliers, officer-level
     Employees and others with whom it has a material business relationship.  In
     addition, except as set forth in Section 7(b) of the Disclosure Schedule or
     as expressly contemplated by this Agreement, the Company will not, and will
     not permit any of the other Sellers to, do any of the following without the
     prior written consent of Buyer:

                (i)     enter into or amend any collective bargaining agreement
          relating to the Business;

                (ii)    other than retention agreements not extending past the
          Cut-Off Date, grant to any officer or director-level Employee any
          increase in compensation or other material benefits, except as may be
          required under existing agreements or in the ordinary course of
          business consistent with past practice;

                (iii)   grant any mortgage, pledge, lien or encumbrance on, or
          agree to the imposition of any restriction or charge of any kind with
          respect to, any of the Assets, other than pursuant to purchase money
          agreements, conditional sales contracts, capital leases, operating
          leases or Licenses affecting non Real Estate Assets, the non-

                                     -39-

          disclosure of which in Section 6(k) of the Disclosure Schedule would
          not constitute a misrepresentation under Section 6(k) hereof;

                (iv)    sell, transfer or lease any material Assets to, or enter
          into any material agreement, contract or arrangement with, any of its
          affiliates other than Sellers relating to the Business;

                (v)     purchase or otherwise acquire any assets or make any
          capital expenditures constituting Assets 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) such capital expenditures that, together with
          all other such capital expenditures made by the Company since May 1,
          2004, do not exceed an amount equal to the expenditures contemplated
          by the capital expenditure plans provided by Sellers to Buyer plus $5
          million in the aggregate, (C) capital expenditures required under Real
          Estate Agreements for capital improvements that are not controlled
          exclusively by Sellers, (D) capital expenditures required by any
          governmental or regulatory authority, and (E) opening Accounts and
          creating Receivables in the ordinary course of business;

                (vi)    sell or otherwise dispose of any Assets that are
          material, individually or in the aggregate, to the Business (other
          than sales of inventory in the ordinary course of business consistent
          with past practice);

                (vii)   materially adversely modify, amend or terminate any of
          the Material Contracts, Leasehold Interests or Real Estate Agreements
          or take or fail to take any other action with respect thereto or with
          respect to any Real Estate which would materially adversely affect
          Buyer's rights or obligations with respect thereto, except
          terminations upon expiration of the term of a Material Contract,
          Leasehold Interest or Real Estate Agreement;

                (viii)  make any change in accounting methods or principles
          applicable to the Business;

                (ix)    permit any Seller's right with respect to material
          Intellectual Property to lapse or be cancelled;

                (x)     waive or release any rights of any material value of or
          with respect to the Business;

                (xi)    materially modify any terms, policies, practices or
          procedures relating to the Portfolio Assets; or

                (xii)   agree, whether in writing or otherwise, to do any
          of the foregoing.
                                     -40-

          (c)     Confidentiality.  The Company will keep confidential and cause
     the other Sellers and the Company's other affiliates to keep confidential
     all non-public information relating to the Business that does not also
     relate to any of the other businesses of Sellers or any of their
     affiliates, except for disclosures required by law or administrative
     process (including disclosures required in Returns or in other governmental
     filings), disclosures permitted pursuant to the Transition Services
     Agreement and disclosures in the defense of any third-party claim or the
     contest of any Tax claim, provided that the Company shall provide Buyer
     with reasonable notice of any required disclosure, to the extent
     practicable, and except for information that becomes public other than as a
     result of a breach of this Section 7(c) or is disclosed by Sellers in the
     defense of any claim by Buyer or any of its affiliates against Sellers.
     Notwithstanding the foregoing provisions of this Section 7(c), nothing in
     this Agreement shall restrict the ability of Sellers to keep copies of the
     Books and Records, the Customer Information and the Account Information to
     use only to the extent that they are required by the Company to facilitate
      (i) the preparation of any financial statements or Returns the Company may
     be required to file with respect to the operations of the Business or in
     connection with any audit, amended Return, claim for refund or any
     proceedings with respect thereto, and (ii) the investigation, litigation
     and final disposition of any claims which may have been or may be made by
     or against the Company or the other Sellers in connection with the Assets
     or the operations of the Business.

          (d)     Delivery of Records.  At the Closing or as soon thereafter
     as practicable, but in no event later than 60 days after the Closing Date,
     the Company will deliver or cause to be delivered to Buyer the Books and
     Records, subject to its retention rights provided in Sections 1(a)(xiv) and
     7(c) hereof.

          (e)     Insurance and Insurance Proceeds.  The Company shall keep, or
     cause to be kept, all insurance policies of Sellers relating to the
     Business, or equivalent replacements therefor, in full force and effect
     through the Cut-Off Date.  All proceeds of insurance payable (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
     received by the Company in trust for Buyer and, to the extent the damage to
     the Assets to which the proceeds pertain has not been repaired or restored
     or paid for by Sellers, shall be paid over to Buyer at the Closing, or, if
     no proceeds have been received before the Closing, the Company shall assign
     any of its claims thereto to Buyer promptly following the Closing Date.
     Provided that Sellers comply with Sellers' obligations under this Section
     7(e), neither the occurrence of any casualty damage nor the payment,
     receipt or collection of insurance proceeds shall be included or accounted
     for in any way under the provisions of Section 4(b) or in the determination
     of Final Net Assets.  Subject to the terms of the Company's liability
     insurance policies, the Company shall use commercially reasonable efforts
     so that Buyer will have the right, power and authority, in the name of the

                                     -41-

     Company, to make directly to the insurer any request for payment under the
     Company's liability insurance policies of any claim relating to or arising
     from an Assumed Liability.  Buyer may make such a request for payment only
     to the extent that a person of ordinary prudence in like circumstances
     would make a claim under the person's own insurance policy.

          (f)     State Street Store.  On or before the Closing Date, the
     Company, at its sole cost and expense (except for Transfer Taxes payable by
     Buyer) shall repurchase, and terminate the lease encumbering, and shall
     acquire fee simple title from the current owner of, the State Street
     Marshall Field's store, as well as terminate all other agreements in any
     way related to the State Street sale-leaseback transaction or the
     termination of the lease relating thereto that may impose any liabilities
     or obligations on Buyer or the Real Estate for such store other than
     Permitted Exceptions.

          (g)     Issuance of Credit Cards.  Neither the Company nor RNB
     shall (i) between the date of this Agreement and the Closing Date issue a
     credit card to a Cardholder as a replacement or substitute for the Credit
     Card except another Marshall Field credit card in the ordinary course of
     business or (ii) issue a credit card with respect to a Target Companion
     Account except upon the Cardholder's request.

          (h)     Certain Real Estate Options.  At Buyer's request, Sellers'
     shall, on the business date immediately preceding the date on which the
     Effective Time is scheduled to occur (or such earlier date that is
     necessary to effectuate the following options, notice of which is given by
     Buyer to Sellers at least 10 days prior to such date), and at Buyer's sole
     cost and expense, exercise any and all lease extensions or options to
     purchase contained in the Real Estate Agreements for the Marshall Field's
     stores at Cherryvale Mall and River Oaks Mall as identified by Buyer to
     Sellers by written notice given at least ten days prior to the Effective
     Time.  If the closing on the option to purchase the Marshall Field's store
     at River Oaks Mall has not occurred by the Effective Time, then the
     applicable Seller and Buyer shall enter into the necessary arrangements
     with respect to such store and otherwise use their reasonable best efforts
     to enable Buyer to acquire ownership of such store as a result of the
     exercise of the option to purchase, with any undertaking by Sellers being
     without warranty or recourse, with any instrument of or related to the
     transfer being on a quit claim basis.  Buyer agrees to indemnify, defend
     and hold Sellers harmless from and against any and all claims, liabilities,
     costs and expenses (including reasonable attorney fees) arising out of any
     such exercise (with the purchase price for River Oaks Mall payable by Buyer
     to Sellers as and when payable by Sellers, whether before, on or after the
     Closing hereunder) or the consequences of such exercise even if the Closing
     of the sale of Assets to Buyer does not occur.

           (i)     Safety Net Program.  Sellers shall, prior to the Closing
     Date, terminate the Safety Net debt cancellation program and
     notify all affected Cardholders in accordance with the terms of the program
     and all applicable laws and regulations.

                                     -42-

          (j)     Third-Party Confidentiality Agreements.  From and after
     the Closing Date, the Company shall, at such times as Buyer may request,
     take commercially reasonable efforts to enforce the terms of the Third-
     Party Confidentiality Agreements for the benefit of Buyer; provided that
     Buyer shall reimburse the Company for all out-of-pocket expenses (including
     attorneys' fees) incurred by the Company in undertaking such enforcement.

     8.     Representations and Warranties of Buyer.  Buyer hereby represents
and warrants to the Company as follows:

          (a)     Organization and Authority of Buyer.  Buyer is a
     corporation duly organized, validly existing and in good standing under the
     laws of New York.  Buyer has all requisite corporate power and authority to
     enter into this Agreement and to consummate the transactions contemplated
     hereby.  All corporate acts and proceedings required to be taken to
     authorize the execution, delivery and performance by Buyer of this
     Agreement and the consummation by Buyer of the transactions contemplated
     hereby have been duly and properly taken.  This Agreement has been duly
     executed and delivered by Buyer and, assuming due authorization, execution
     and delivery of this Agreement by Sellers, constitutes a valid and binding
     obligation of Buyer, enforceable against Buyer in accordance with its
     terms, except as such enforceability may be limited by bankruptcy,
     insolvency, moratorium and other similar laws affecting creditors' rights
     generally and by general principles of equity.

          (b)     Non-Contravention.  The execution, delivery and
     performance by Buyer of this Agreement do not, and the consummation by
     Buyer of the transactions contemplated hereby will not, (i) conflict with,
     or result in any violation of, any provision of the charter or by-laws of
     Buyer, or (ii) conflict with, result in any violation of, or constitute a
     default under, any instrument, contract, commitment, agreement or
     arrangement to which Buyer is a party or by which Buyer or the property or
     assets of Buyer is bound, or any judgment, order, writ, injunction or
     decree to which Buyer has been specifically identified as subject, or
     result in any violation of any statute, law, ordinance, rule or regulation
     applicable to Buyer or its property or assets (except where such conflict,
     violation or default would not materially impair the ability of Buyer to
     consummate the transactions contemplated hereby).  No material consent,
     approval, license, permit, order or authorization of, or registration,
     declaration or filing with, any court, administrative agency or commission
     or other governmental authority or instrumentality, domestic or foreign, is
     required to be obtained or made by or with respect to Buyer in connection
     with the execution, delivery and performance by Buyer of this Agreement or
     the consummation by Buyer of the transactions contemplated hereby other
     than compliance with and filings under the HSR Act.

          (c)     Litigation. There are no actions, lawsuits, proceedings or
     investigations pending (with respect to which Buyer has been served or

                                     -43-

     otherwise notified) or, to the knowledge of Buyer, threatened against Buyer
     as of the date of this Agreement that, if decided adversely to Buyer, would
     materially impair the ability of Buyer to consummate the transactions
     contemplated hereby.

          (d)     Availability of Funds.  Buyer has available cash and/or
     existing committed borrowing facilities that are sufficient to enable it to
     consummate the transactions contemplated by this Agreement.

     9.     Covenants of Buyer.  Buyer covenants as follows:

          (a)     Confidentiality.  Buyer acknowledges that the information
     being provided to it by Sellers is subject to the terms of a
     confidentiality agreement between Buyer and the Company dated April 1, 2004
      (the "Confidentiality Agreement"), the terms of which are incorporated
     herein by reference.  The Confidentiality Agreement shall remain in effect
     after the Closing Date as to all confidential information that does not
     relate to the Business. Notwithstanding anything in the Confidentiality
     Agreement to the contrary or any other confidential arrangement to the
     contrary, Buyer shall be permitted to pursue all necessary or appropriate
     consents or approvals pertaining to the conveyance of the Assets or the
     operation of the Business by Buyer.

          (b)     No Representations or Warranties.  Buyer acknowledges that
     neither the Company nor any other person has made any representation or
     warranty, expressed or implied, as to the accuracy or completeness of any
     information regarding Sellers, the Assets or the Business not expressly
     included in this Agreement or in any certificate signed by any Seller and
     delivered pursuant hereto, and no Seller or any other person will have or
     be subject to any liability to Buyer or any other person resulting from the
     distribution to Buyer, or Buyer's use, of any such information.

          (c)     Gift Cards, Etc.  Following the Cut-Off Date, without
     recourse to Sellers, Buyer shall manage and honor, in accordance with their
     respective terms, all gift certificates, gift cards, merchandise vouchers,
     coupons, cash refunds and "Regards Rewards" of Marshall Field's purchased,
     issued or earned in connection with the Business on or before the Cut-Off
     Date.

          (d)     Return Policies.  For the 90-day period following the Cut-
     Off Date, Buyer shall honor the existing return policies of the Business,
     with respect to products sold on or before the Cut-Off Date, without
     recourse to Sellers.

          (e)     Substitution of Collateral.  At the Closing, or as soon
     thereafter as reasonably possible and in any event within 30 days after
     request from the Company, Buyer shall use its reasonable best efforts to
     secure the unconditional release and, as appropriate, return to Sellers, of
     any letter of credit and any collateral given to the issuer thereof,
     escrowed funds, guarantee, bond, or other collateral given by or on behalf
     of any Seller to the extent pertaining to the Assets provided that such

                                     -44-

     collateral is not shown as an asset on the Unaudited Transaction Balance
     Sheet as of the Cut-Off Date.  If the release is not secured until after
     the Closing, then the costs and expenses incurred by Sellers for the
     continuation of such collateral after the Closing shall be paid by Buyer
     immediately upon demand.  Nothing in this Section 9(e) shall limit or
     otherwise affect the assumption by Buyer of all liabilities and obligations
     constituting Assumed Liabilities, including pursuant to Section 3(a)(x)
     hereof.

          (f)     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 regulations
     promulgated thereunder ("HIPAA").  Sellers 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
     Sellers reasonably determine that disclosure of such information to Buyer
     would violate HIPAA.

          (g)     Indemnification.  Buyer shall defend with counsel approved
     by Sellers (which approval may not be unreasonably withheld) and indemnify
     Sellers against any and all liabilities, obligations, losses, damages,
     fines, penalties, claims, demands, costs, charges, judgments and expenses,
     including reasonable attorneys' fees, which may be imposed upon or incurred
     or paid by or asserted against Sellers, or any of them, by reason of or in
     connection with the first refusal rights held by third parties with respect
     to the Marshall Field's stores at Ridgedale and Rosedale, including by
     reason of or in connection with the procedures and transactions and
     proposed transactions set forth in Section 4(a)(ii), any separate purchase
     agreements entered into pursuant to Section 4(a)(ii), any breach or claimed
     breach of those rights of first refusal, and any injunctive or other relief
     or process asserted by any holder of any such right, regardless of whether
     or not any store is sold or conveyed to Buyer or the holder of any such
     right, whether or not the Closing occurs and whether the indemnified
     obligations arise before, at or after the Effective Time.

     10.     Mutual Covenants.  Each of the Company and Buyer covenants as
follows:

          (a)     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 (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 new governmental franchises,
     approvals, permits, licenses, orders, registrations, certificates,
     variances and similar rights may be required in order for Buyer to conduct
     the Business and own the Assets following the Cut-Off Date in the same
     manner in which the Business was conducted and the Assets were owned prior
     to the Cut-Off Date.  Buyer agrees that, except as otherwise expressly

                                     -45-

     provided in Section 2 hereof or this Section 10(a), Sellers shall not have
     any liability whatsoever to Buyer arising out of or relating to the failure
     to obtain any Required Consents or any such new governmental franchises,
     approvals, permits, licenses, orders, registrations, certificates,
     variances or similar rights that may be required.  Buyer further agrees
     that no representation, warranty or covenant of any 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 Required Consents or any
     such new 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 persons arising out of or relating to the failure to
     obtain any such Required Consents or any such new governmental franchises,
     approvals, permits, licenses, orders, registrations, certificates,
     variances or similar rights.  Nothing stated in this Agreement shall
     supersede or otherwise affect the obligations or conditions set forth in
     Sections 5(a)(iv), 5(a)(v), 5(b)(ii) or 5(b)(iii) hereof or the obligations
     of the Company under Section 2 hereof or this Section 10(a) or Section 7(f)
     or with respect to the repurchase of, and termination of the lease with
     respect to, the State Street Marshall Field's store.  Without limiting the
     generality of the foregoing, the Real Estate and the Real Estate Agreements
     shall be transferred, and shall be deemed for all purposes under this
     Agreement to have been properly and lawfully transferred by Sellers, to
     Buyer as of the Effective Time notwithstanding the failure to obtain any
     Required Consent (or fulfill any condition thereto) or governmental
     franchise, approval, permit, license, order, registration, certificate,
     variance or similar right, and all liabilities in respect thereof shall
     constitute Assumed Liabilities.  The Company and Buyer shall cooperate in
     connection with obtaining any Required Consents, any consents to the
     transfer of Governmental Permits and any new governmental franchises,
     approvals, permits, licenses, orders, registrations, certificates,
     variances or similar rights.

          (b)     Cooperation; Further Assurances.

                (i)     Buyer and the Company shall cooperate with each
          other and shall cause their respective affiliates and the officers,
          employees, agents and representatives of themselves and their
          respective affiliates to cooperate with each other for a reasonable
          period of time not to extend past March 31, 2005 to ensure the orderly
          transition of the Business and the Assets from Sellers' to Buyer's
          ownership and to minimize any disruption to the respective businesses
          of Sellers or Buyer that might result from the transactions
          contemplated hereby.  Each party shall reimburse the other for
          reasonable out-of-pocket costs and expenses incurred in assisting the
          other pursuant to this Section 10(b).  Neither party shall be required
          by this Section 10(b) to take any action that would unreasonably
          interfere with the conduct of its or its affiliates' businesses.

                                     -46-

                (ii)    Without limiting the provisions of any other
          Section hereof, after the Closing, upon reasonable written notice,
          Buyer and the Company agree to furnish or cause to be furnished to
          each other and each other's officers, employees, agents and
          representatives access, during normal business hours, to such
          information relating to the Business and the Assets and such other
          assistance as is reasonably necessary for financial reporting,
          accounting and other reasonably appropriate purposes; provided,
          however, that such access or assistance shall not unreasonably disrupt
          the normal operations of Sellers or Buyer.  Without limiting the
          generality of the foregoing, the Company and its representatives shall
          have the right to reasonable access to the Books and Records
          maintained by Buyer at reasonable times during normal working hours
          upon reasonable notice to Buyer for so long after the Closing as Buyer
          retains such Books and Records consistent with its ordinary course for
          the purpose of examining the Books and Records and making copies
          thereof; provided that  Buyer shall retain Books and Records relating
          to Taxes or Returns for at least seven years after the Closing.

                (iii)   From time to time after the Closing, as and when
          requested by a party hereto, the other parties shall (A) execute and
          deliver, or cause to be executed and delivered, all such documents and
          instruments as such requesting party may reasonably deem necessary or
          desirable to give full effect to this Agreement, (B) take, or cause to
          be taken, all such further or other actions (subject to the limitation
          set forth in Section 10(a) hereof), as such requesting party may
          reasonably deem necessary or desirable to give full effect to this
          Agreement, including quit claim deeds by Sellers and their affiliates
          with respect to Real Estate, (C) make the required person available to
          testify in any proceedings and do all other acts which may be
          necessary or desirable in the reasonable opinion of the other party to
          protect or effectuate any rights arising from this Agreement or to aid
          in the prosecution or defense of any rights arising from this
          Agreement or the operation of the Business or the ownership of the
          Assets by Sellers prior to the Effective Time, and (D) make the
          required person available to assist with any governmental review,
          investigation or other types of inquiry, all without further
          consideration other than reimbursement by the requesting party to the
          requested party of reasonable out-of-pocket expenses.

                (iv)    Nothing in this Section 10(b) shall affect the
          rights and obligations of the Company and Buyer under the Transition
          Services Agreement.

          (c)    Use of Trademarks.

                (i)     As used in this Agreement, "Retained Names And Marks"
          means any trade name, trademark, service mark, trade dress, logos or
          the

                                     -47-

          name of the Company or other Seller or affiliate of the Company, other
          than any such trade names, trademarks, service marks, trade dress or
          logos that are included in Assets.  For avoidance of doubt, "Marshall
          Field's" and "Field's" (or any variation of any of such names or
          marks) do not constitute Retained Names And Marks.

                (ii)    Buyer shall promptly, but in no event later than 30 days
          after the Cut-Off Date, cease using any (A) advertising or promotional
          materials, (B) Cardholder Agreements, Account solicitations or
          applications, Account billing statements and other similar items,
          except that such items referred to in this clause (B) may be used for
          up to 90 days after the Cut-Off Date and (C) any stationery, business
          cards, business forms and other similar items included within the
          Assets, in each case that contain anywhere thereon any of the Retained
          Names And Marks; provided, however, that Buyer shall, when using items
          referred to in clause (B) or (C) in the context of entering into or
          conducting contractual relationships, make clear to all other
          applicable parties that Buyer rather than the Company, any other
          Seller or any other affiliate of the Company is the party entering
          into or conducting the contractual relationship, and further provided
          that personnel of Buyer using such items shall not, and shall have no
          authority to, hold themselves out as officers, employees or agents of
          the Company, any other Seller or any other affiliate of the Company.

                (iii)   Buyer shall promptly, but in no event later than
          90 days after the Cut-Off Date, cease using any packaging materials
          included within the Assets that contain anywhere thereon any of the
          Retained Names And Marks, unless such materials are changed to
          completely and permanently cover, delete or obliterate the Retained
          Names And Marks or anything confusingly similar thereto.

                (iv)    Buyer shall have the right to exhaust all Inventories of
          finished products 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 (iii) above) any of the
          Retained Names And Marks, provided that Buyer shall use its best
          efforts to dispose of such finished products promptly after the Cut-
          Off Date.

                (v)     At the Closing, Sellers shall present Buyer with a
          short-term trademark and trade name license agreement that grants
          Buyer the short-term right, subject to the restrictions set forth
          under clauses (ii) through (iv) above, to use the Retained Names And
          Marks, and Buyer shall present Sellers with a short-term trademark and
          trade name license agreement that grants Sellers the short-term right
          to use the Intellectual Property constituting Assets for wind-down
          purposes.

                                     -48-

                (vi)    Other than as permitted under clauses (ii) through
           (iv) above, Buyer shall not, without the prior written consent of
          Sellers, use any of the Retained Names And Marks (or anything
          confusingly similar thereto) in any manner whatsoever.

                (vii)    If the Closing occurs before the closing of the
          Company's sale of its Mervyn's subsidiary, then the Company will cause
          one of its affiliates to enter into a short-term, royalty-bearing
          license agreement with Buyer relating to the private-label products of
          Mervyn's listed on Exhibit P hereto, effective at or before the
          Effective Time, containing terms and conditions substantially as set
          forth in Exhibit P hereto.  If the Closing does not occur before the
          closing of the Company's sale of its Mervyn's subsidiary, then the
          Company shall cause one of its affiliates to enter into a short-term,
          royalty-bearing license agreement with the Company relating to the
          private-label products of Mervyn's listed on Exhibit P hereto,
          effective at or before the effective time of the Mervyn's closing,
          containing terms and conditions substantially as set forth in Exhibit
          P hereto, which license shall be deemed to be an Asset hereunder.

                (viii)  Buyer shall grant the Company a non-assignable
          short-term license containing terms and conditions substantially as
          set forth in Exhibit Q hereto to use the trademark Frango for
          cheesecakes through January 31, 2005.

                (ix)    At the Closing, Sellers and Buyer will execute a
          short-term trademark and trade name license agreement in form and
          substance acceptable to Sellers and Buyer that grants Buyer the right
          to use the name "Hudson's" and variations thereof to the extent now
          used in the Business for a period of up to 180 days after the Cut-Off
          Date.  Sellers hereby agree that they shall not use the name
          "Dayton's" or "Hudson's" or any combination or variation thereof to
          identify any retail department store business or any similar business
          following the Effective Time.

                (x)     At the Closing, Buyer and the Company will execute a
          nonexclusive, perpetual, sublicensable, royalty-free license agreement
          granting the Company and its affiliates rights to the software
          identified in Exhibit F as "Internally Developed Applications,"
          containing terms and conditions substantially as set forth in Exhibit
          S hereto.

          (d)     Publicity.  Effective from the date of this Agreement, no
     public release or announcement concerning the transactions contemplated
     hereby shall be issued by either Sellers, on the one hand, or Buyer, on the
     other hand, prior to the Closing Date without the prior written consent of
     the other party, except as such release or announcement may be required by
     law or the rules or regulations of any United States or foreign securities
     exchange, in which case the party required to make the release or
     announcement shall, if practicable under the circumstances, allow the other

                                     -49-

     party reasonable time to comment on such release or announcement in advance
     of such issuance.

          (e)     Reasonable Best Efforts.  Subject to the terms and
     conditions of this Agreement (including the limitations set forth in
     Section 10(a) hereof), each party will use its reasonable best efforts as
     promptly as practicable to satisfy all conditions to Closing set forth in
     this Agreement that are within such party's control.

          (f)     Antitrust Notification.  Each of the Company and Buyer (or
     its ultimate parent) will as promptly as practicable, but in no event later
     than seven days following the execution and delivery of this Agreement,
     file with the United States Federal Trade Commission (the "FTC") and the
     United States Department of Justice (the "DOJ") the notification and report
     form required for the transactions contemplated hereby and any supplemental
     information required in connection therewith pursuant to the HSR Act.

                (i)     Each party hereto represents and warrants that such
          notification and report form and all such supplemental information
          submitted by such party or its ultimate parent, and any additional
          supplemental information filed by such party or its ultimate parent
          after the date of the original filing, will be in substantial
          compliance with the requirements of the HSR Act and shall request
          early termination of the thirty day notification period provided for
          under the HSR Act.

                (ii)    Each of Buyer and the Company shall, at their own
          expense, furnish to the other such necessary information and
          reasonable assistance as the other may request in connection with its
          preparation of any filing or submission that is necessary under the
          HSR Act.  The Company and Buyer shall keep each other apprised of the
          status of any communications with, and inquiries or requests for
          additional information from, the FTC or the DOJ, and shall use their
          reasonable best efforts to comply promptly with any such inquiry or
          request.  Neither the Company nor the Buyer will independently
          participate in any meeting with any governmental authority in respect
          of any findings or inquiry without giving the other prior notice of
          the meeting unless prohibited by the governmental authority and,
          unless prohibited by the governmental authority, the opportunity to
          attend and/or participate.  The Company and Buyer will consult and
          cooperate with one another in connection with any information or
          proposals submitted in connection with proceedings under or relating
          to the HSR Act.

                (iii)   Each of the Company and Buyer will use its
          reasonable best efforts to cause the expiration or early termination
          of the waiting period required under the HSR Act as a condition to the
          purchase and sale of the Assets and shall use its reasonable best
          efforts to defend against any action of the FTC or the DOJ to enjoin
          the sale of the Assets to Buyer.

                                     -50-

                (iv)    Nothing stated in this Agreement shall require
          Buyer to agree to, or permit the Company to agree to, the divestiture
          of any assets of Buyer or any of the Assets or take or agree to take
          any other action or agree to any limitation or restriction (other than
          a divestiture, action, limitation or restriction that the Board of
          Directors of Buyer reasonably determines in good faith, after
          considering the advice of its management and legal and financial
          advisors, to be on commercially  reasonable terms and to be not
          material to the Business or to the Buyer) to obtain termination of the
          waiting period under the HSR Act.

          (g)     Intercompany Accounts.  On or before the Closing Date, the
     Company shall cancel without payment all intercompany accounts between
     Sellers and the Business or any of the Company's affiliates relating to the
     Business or the Assets.  For the avoidance of doubt, Net Assets and Final
     Net Assets shall be determined without giving effect to any intercompany
     accounts or the cancellation thereof.

          (h)     Transition Services.  At the Closing, the Company and
     Buyer shall enter into an agreement substantially in the form of Exhibit R
     hereto relating to the Company's providing, or causing to be provided, to
     Buyer certain transition services (including software licenses and
     sublicenses) after the Cut-Off Date (the "Transition Services Agreement").

          (i)     Credit Card Matters.

                (i)     Following the Closing Date, unless otherwise agreed
          to by Buyer and the Company, Sellers shall report the sale of each
          Account to any credit bureau to which the Account is reported and
          advise the credit bureau to report the sale as "$0 balance, not rated
          'RUR,' and transferred to Buyer."

                (ii)    Sellers shall have no obligation to make any
          payments to Buyer in respect of the Accounts for returned goods and
          services, customer service adjustments, redebits for NSF checks, or
          similar adjustments that occur after the Cut-Off Date with respect to
          transactions that occurred on or before the Cut-Off Date.

                (iii)   Following the Cut-Off Date, neither the Company
          nor any of its affiliates will accept Credit Cards for purchases of
          goods and services.

                (iv)    Promptly following the Cut-Off Date, Buyer shall
          prepare and deliver notices to active Cardholders that notify such
          Cardholders:  (A) of the purchase of the Portfolio Assets by Buyer;
           (B) that from and after the Cut-Off Date, Buyer or Buyer's affiliate
          is the issuer of the Credit Cards and that neither the Company nor RNB
          is the issuer; (C) of the name, address and phone number of the new
          issuer; and (D) that the Credit Cards will no longer be accepted at
          any stores owned by the Company or any of its affiliates.  The notices
          shall be in a form approved by Sellers, which approval will not be
          unreasonably withheld or delayed, and shall comply with all applicable
          legal requirements.  The notice described in this paragraph shall be

                                     -51-

          delivered to each Cardholder who becomes active during the 12-month
          period following the Cut-Off Date.  Buyer shall bear all costs and
          expenses related to the notices.  During the 12-month period following
          the Cut-Off Date, the Company will refer Cardholder inquiries
          regarding Accounts to a customer service telephone number designated
          by Buyer (provided a number is so designated).

                (v)     For a period of seven years following the Cut-Off
          Date, at Buyer's reasonable request, the Company will furnish Buyer
          with copies of Additional Account Information relating to an Account.
          Buyer's request for Additional Account Information must be made with
          sufficient specificity to enable the Company to locate the requested
          document, and the Company will only be required to deliver documents
          that apply exclusively to Accounts.  The Company will exercise the
          same degree of effort and timeliness in processing such requests as
          Sellers exercise in retrieving similar information with respect to
          Sellers' portfolios.  Sellers shall retain the Additional Account
          Information for a period that is at least equal to the longer of (A)
          the period required by applicable requirements of law or (B) the
          normal retention period under the records-management programs of
          Sellers, unless the parties, applicable requirements of law
          permitting, agree upon a shorter period.  Buyer shall reimburse the
          Company for the actual cost of processing requests for Additional
          Account Information.

          (j)     Software Licenses.  Prior to the Closing, the Company and
     Buyer shall cooperate to obtain written consents and acknowledgements from
     each third-party licensor of each piece of software identified on Section
     10(j) of the Disclosure Schedule evidencing 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 Transition Period (as such term is
     defined in the Transition Services Agreement) and to allow the Company to
     sell, transfer, convey and deliver to Buyer all Equipment upon which such
     software is loaded without obligating the Company to remove such software
     from such Equipment prior to the sale, transfer, conveyance and delivery
     thereof; provided, however, that the Company shall have no obligation to
     pay money or grant any accommodation in order to obtain any such consents
     and acknowledgements.  With respect to any item identified on Section 10(j)
     of the Disclosure Schedule for which the applicable third-party licensor
     affirmatively would not provide such consents and acknowledgements prior to
     the Closing, then the Company shall have the right to remove such
     identified software from such Equipment prior to the sale, transfer,
     conveyance and delivery thereof.

                                     -52-

          (k)     SEC Requirements.  Sellers and Buyer shall cooperate with
     each other to fulfill any requirement of the Securities and Exchange
     Commission and other governmental or stock exchange requirements,
     including, without limitation, having Ernst & Young LLP provide any audited
     financial statements of the Marshall Field's division as of the prior
     fiscal year end.  The work shall be performed in sufficient time to meet
     any applicable filing deadlines that Sellers or Buyer may have.

     11.    Employees and Employee Benefits.

          (a)     Offers of Employment.  For purposes of this Agreement,
     "Employees" means persons on the Marshall Field's payroll, excluding
     independent contractors and employees of any licensee or other third party;
     and "Cut-Off Date Employees" means all Employees on the Marshall Field's
     payroll on the Cut-Off Date.

                (i)     Buyer will offer employment effective immediately
          after the Effective Time to all Cut-Off Date Employees (both hourly
          and salaried), including each Cut-Off Date Employee on medical,
          disability, family, military or other leave of absence as of the Cut-
          Off Date, but excluding those persons identified in Section 11(a) of
          the Disclosure Schedule as persons who will be retained by the
          Company.

                (ii)    The offered employment shall in each case be on
          terms and conditions (other than employee benefits, incentive
          compensation arrangements and personnel policies, which are subject to
          the other provisions of this Section 11) that are comparable to the
          terms and conditions of employment provided to each such Cut-Off Date
          Employee on the Cut-Off Date.  The Cut-Off Date Employees who become
          employees of Buyer are referred to in this Agreement as "Transferred
          Employees."  Nothing in this Section 11(a) shall obligate Buyer to
          continue the employment of any such Transferred Employee for any
          specific period or on any specific terms and conditions following the
          Cut-Off Date.

                (iii)      Following the Cut-Off Date, Buyer shall be
          responsible for delivering any notices that may be required under the
          WARN Act.  Buyer acknowledges that Sellers are relying on this
          covenant for purposes of assessing their obligations to give notice of
          the transactions contemplated hereby to Cut-Off Date Employees or to
          take any other action under applicable federal, state or local laws.

                                     -53-

          (b)     Buyer's Employee Benefit Plans Generally.  As of the
     Effective Time, Buyer shall provide Transferred Employees with employee
     benefits that are comparable to the benefits provided to similarly situated
     employees of Buyer ("Buyer's Plans").  As of the Effective Time, the
     following shall apply:

                (i)     Buyer or a Buyer's Plan shall assume all liabilities
          and obligations for benefits that relate to events occurring or
          expenses incurred at or prior to the Effective Time and that are
          payable under each Sellers' Plan that is not a "Section 11(b)(iii)
          Plan" (including benefits paid by Sellers by check or bank draft on or
          before the Cut-Off Date, which check or bank draft has not cleared by
          the Effective Time) to or with respect to any Employee, any former
          employee of Sellers who was on the Marshall Field's payroll (or any
          predecessor payroll) at the time the person's employment with Sellers
          terminated, and any dependent or former dependent of any such Employee
          or former employee, including any dependent or former dependent
          entitled to COBRA coverage assumed by Buyer under Section 11(g) hereof
          (collectively, "Covered Persons").

                (ii)    Buyer will not have any liability or obligation,
          and Sellers shall retain all liability or obligation, for benefits
          payable under any Sellers' Plan to or with respect to any person who
          is not a Covered Person.

                (iii)   Buyer shall have no obligations or liabilities,
          and Sellers will retain all liabilities and obligations, with respect
          to benefits payable to or with respect to any individual under the
          Sellers' Plans listed as "Section 11(b)(iii) Plans" in Section 6(n) of
          the Disclosure Schedule ("Section 11(b)(iii) Plans").

                (iv)    Buyer will not have liability or obligation, and
          Sellers shall retain all liability or obligation, of any kind with
          respect to any similar plan, fund, program, policy, contract or
          arrangement maintained by any Seller, or by any of its affiliates that
          is aggregated with such Seller under Code Section 414 or ERISA Section
          4001, that is not a Seller's Plan but that would be a Sellers' Plan if
          it covered Employees.

                (v)     Any benefits related to events occurring or expenses
          incurred after the Cut-Off Date shall be covered by Buyer's Plans to
          the extent that Buyer's Plans provide benefits to other similarly
          situated employees of Buyer under such circumstances following the
          Effective Time.

                (vi)    Buyer shall give each Transferred Employee credit
          under Buyer's employee benefit plans or personnel policies that cover
          the Transferred Employees, including Buyer's medical, dental, life,
          accident, profit sharing and retirement plans and personnel policies
          for vacation, sick leave and severance, for purposes of eligibility,
          and where applicable, vesting and determination of vacation, sick

                                     -54-

          leave and severance entitlements, for the Transferred Employee's
          service with the Company and its affiliates prior to the Effective
          Time.  Buyer shall allow such Transferred Employees to participate in
          each medical, dental, vision or long-term disability plan without
          regard to pre-existing conditions, evidence of insurability or late
          enrollment penalties or procedures (including applicable waiting
          periods) so long as the Transferred Employee was enrolled in one of
          Seller's medical, dental, vision or long term disability plans at the
          Effective Time.

                (vii)   No portion of the assets of any trust or other fund
          maintained by Sellers for the purpose of paying benefits under any of
          Sellers' Plans will be transferred to Buyer or any Buyer's Plan.

                (viii)  Seller and Buyer intend that Sellers' Plans are
          and will remain Sellers' Plans, and that nothing in this Agreement
          shall result in Buyer being a plan sponsor of, or fiduciary with
          respect to, any of Seller's Plans.

          (c)     Severance Benefits.

                (i)     If any Transferred Employee not covered by the
          Company's Income Continuance Policy is involuntarily terminated by
          Buyer within 12 months following the Cut-Off Date under circumstances
          that would have qualified the Transferred Employee for severance
          benefits under any of the Company's severance plans or practices
          listed in Section 6(n) of the Disclosure Schedule, other than the
          Company's Income Continuance Policy ("Sellers' Severance Practices")
          if the Transferred Employee had been terminated involuntarily under
          the same circumstances by any Seller at or prior to the Effective Time
           (except that "same circumstances" shall not be deemed to include the
          requirement under Sellers' Severance Practices that the termination
          have been made in connection with the Company's consideration of the
          transaction that is the subject of this Agreement), Buyer will provide
          to the Transferred  Employee benefits that are at least equal to the
          severance pay and other benefits provided under the Sellers' Severance
          Practices, applicable to each such Transferred Employee.  For the
          purpose of determining the severance benefits, Buyer will credit the
          Transferred Employee with service from his or her original hire date
          by the Company or its affiliates, excluding any breaks in service.

                (ii)    With respect to any Transferred Employee who was
          covered by the Company's Income Continuance Policy immediately prior
          to the Effective Time or former employee on Marshall Field's payroll,
          Buyer shall provide benefits under Buyer's programs to fully offset
          any obligations the Company may have to such Transferred Employee or
          former employee under the Company's Income Continuance Policy after
          the Cut-Off Date; provided that, as a condition to any person's
          receipt of such benefits, Buyer shall notify the Company of such

                                     -55-

          termination and require such person to execute an instrument releasing
          all claims such person may have against Buyer or against Sellers
          relating to the person's employment or the termination thereof.

          (d)     Vacation Pay and Personal Holidays.  Buyer shall credit to
     each Transferred Employee all vacation and personal holiday pay that the
     Transferred Employee is entitled to use but has not used as of the
     Effective Time pursuant to Sellers' vacation and personal holiday pay
     policies listed in Section 6(n) of the Disclosure Schedule (including any
     earned vacation or personal holiday pay to be used in future years), and
     shall assume all liability for the payment of such amounts.

          (e)     Disability Benefits and Leaves.

                (i)     Disabilities that Occurred Prior to the Effective
          Time.  With respect to any disability of a Transferred Employee that
          occurred prior to the Effective Time, Sellers' Plans shall retain the
          liability for all long-term disability benefits payable to any Cut-Off
          Date Employee under the terms of Sellers' long-term disability plans
          after the Effective Time (but not with respect to any reoccurrence of
          such a disability after the Effective Time, unless such reoccurrence
          would be considered a continuation of the original disability under
          the terms of the applicable Sellers' long-term disability plan).
          Buyer or a Buyer's Plan shall assume the liability for all short-term
          disability benefits payable to any Transferred Employee under Sellers'
          short-term disability plans that are payable following the Effective
          Time with respect to any disability that occurred prior to the
          Effective Time (determined under the terms of Seller's Plans or
          personnel policy that applies to the disabled Transferred Employee
          immediately prior to the Effective Time) until the date, if any, on
          which the Transferred Employee qualifies for benefits under the
          Sellers' long-term disability plans.  Buyer acknowledges that
          liability for short-term disability benefits is not accrued on the
          Financial Statements.

                                     -56-

                (ii)    Disabilities that Occur After the Effective Time.
          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, unless such reoccurrence would be
          considered a continuation of an original disability that occurred
          prior to the Effective Time under the terms of the applicable Sellers'
          long-term disability plan).  If any Transferred Employee is on any
          form of leave of absence on the Cut-Off Date (including any leave
          subject to the Family and Medical Leave Act of 1993, the Uniform
          Services Employment and Reemployment Rights Act or comparable state
          law), Buyer shall reinstate such Transferred Employee to active
          employment as provided in Section 11(a) and otherwise as required by
          any applicable law or regulation or by Buyer's personnel policies, and
          shall satisfy any other obligation owed to such Transferred Employee
          upon expiration of the leave.

          (f)     Medical, Dental and Vision Plan Liabilities.  Buyer shall
     pay or shall cause the applicable Buyer's Plan to pay any such benefits or
     expenses that are incurred with respect to services performed for the
     Covered Persons prior to the Effective Time but have not been paid by
     Sellers' Plans prior to the Effective Time, including benefits paid by
     Sellers by check or bank draft on or before the Cut-Off Date, which check
     or bank draft has not cleared by the Effective Time.  Buyer shall pay or
     cause the applicable Buyer's Plan to pay any such benefits or expenses that
     are incurred with respect to services that are performed for the
     Transferred Employee or the Transferred Employee's dependents after the
     Cut-Off Date.

          (g)     COBRA Coverage.  Buyer will assume and satisfy (or cause a
     Buyer's Plan to satisfy) all entitlements under Code Section 4980B, Title
     VI of ERISA, or any similar state law (collectively "COBRA") with respect
     to any Sellers' Plan subject to COBRA of any Employee or former employee of
     Sellers, or any dependent or former dependent of any Employee or former
     employee of Sellers, whose qualifying event occurred prior to the Effective
     Time at a time when the Employee or former employee was on the payroll of
     Marshall Field's or a predecessor payroll (or whose qualifying event occurs
     at the Effective Time as a result of the transactions covered by this
     Agreement), including any obligations to individuals currently on such
     COBRA continuation coverage and any obligations to any individual whose
     period for electing such COBRA continuation coverage has not yet expired.

          (h)     Retiree Medical Plans.  Any Employee eligible as of the Cut-
     Off Date to retire from Sellers and qualify for retiree medical benefits
     under Sellers' retiree medical plan(s) shall be entitled to receive such
     benefits under Sellers' retiree medical plan(s), if the Employee elects to
     receive the benefits pursuant to the terms of Seller's retiree medical
     plan(s).  Sellers acknowledge that all such Employees electing to receive
     such retiree medical benefits shall be offered employment with Buyer
     effective immediately after the Effective Time.  Buyer will not offer
     retiree medical benefits to any Employees, and will not be liable for
     retiree medical benefits under Seller's retiree medical plan(s).

                                     -57-

          (i)     Flexible Spending Accounts.  With respect to each
     Transferred Employee with a positive balance as of the Cut-Off Date under
     Sellers' health care and dependent flexible spending account plans listed
     in Section 6(n) of the Disclosure Schedule ("Sellers Flex Plan"), Buyer and
     Sellers will cooperate to implement an arrangement under which either

                (i)     Buyer will credit each Transferred Employee under a
          health care and dependent care flexible spending account plan or plans
          maintained (or to be established) by Buyer ("Buyer's Flex Plans") with
          a balance as of the Cut-Off Date equal to the unused balance credited
          to such Transferred Employee under Sellers' Flex Plans as of the Cut-
          Off Date, and Buyer will reimburse each such Transferred Employee
          under terms and conditions no less favorable than those that applied
          under the applicable Sellers' Flex Plan on the Cut-Off Date for
          expenses incurred during the current plan year of such Sellers' Flex
          Plan (whether incurred before or after the Cut-Off Date) that had not
          been reimbursed under such Sellers' Flex Plan on or prior to the Cut-
          Off Date; or

                (ii)    Buyer and Seller will use their best efforts to
          implement an alternative arrangement under which Transferred Employees
          who participate in the Sellers' Flex Plans will be entitled to receive
          the same benefits, with the same tax consequences to the employee, as
          they would have received under the Sellers' Flex Plans for the current
          plan year as if they had continued to participate in the Sellers' Flex
          Plan..

          (j)     Qualified Retirement and 401(k) Plans.

                (i)     Buyer will have no liability for benefits payable
          under the Target Corporation's 401(k) Plan, the Target Corporation
          Pension Plan, the Mervyn's Pension Plan or the Retirement Plan of the
          J.L. Hudson Company (collectively, the "Sellers' Retirement Plans").

                (ii)    Outstanding 401(k) Loans.  On or before December
          31, 2004, Buyer will offer each Transferred Employee who

                     (A)     has an outstanding loan balance under the Target
               Corporation's 401(k) Plan on the Cut-Off Date

                     (B)     does not increase the outstanding loan balance
               after the Cut-Off Date, and

                                     -58-

                     (C)     continues to have an outstanding loan balance
               under that loan the opportunity to repay the loan to the
               Transferred Employee's 401(k) account from the proceeds of a
               special loan program.  Under the special loan program, Buyer will
               repay the Transferred Employee's outstanding loan balance
               directly to the Target Corporation's 401(k) Plan in exchange for
               the Transferred Employee's agreement to repay Buyer under a new
               loan agreement with terms similar to the outstanding loan,
               through automatic payroll deductions.  If the Transferred
               Employee terminates employment with Buyer before the loan under
               the special loan program has been repaid, the outstanding
               principal balance will be due in full.  Buyer's Profit Sharing
               Plan does not provide for loans.

          (k)     Tuition Reimbursement Program.  Buyer will offer a tuition
     reimbursement plan to all Transferred Employees comparable to the tuition
     reimbursement plan provided to similarly situated employees of Buyer.  If a
     Transferred Employee submitted a completed initial application and
     supporting documentation for a course pursuant to the terms of the Sellers'
     Tuition Reimbursement Program on or before the date of this Agreement, then
     Buyer's tuition reimbursement plan will provide benefits no less favorable
     than Sellers' Tuition Reimbursement Program to such Transferred Employee
     with respect to such course for not less than two years from the Cut-Off
     Date.

          (l)     Adoption Assistance Reimbursement Program.  If a
     Transferred Employee submitted a completed application and supporting
     documentation for reimbursement pursuant to the terms of the Seller's
     Adoption Assistance Reimbursement Program on or before the date of this
     Agreement, then Buyer will provide benefits no less favorable than Seller's
     Adoption Assistance Reimbursement Program to such Transferred Employee with
     respect to such adoption for not less than two years from the Cut-Off Date.

          (m)      Retiree Merchandise Discount Programs.  Buyer will provide
     under Buyer's retiree discount programs (which currently are generally
     similar to Sellers' programs) retiree discounts to each Marshall Field's
     retiree, or spouse or dependent of a retiree, who is eligible for such
     programs as of the Cut-Off Date under Sellers' eligibility guidelines.

          (n)      No Third-Party Beneficiaries.  Without limiting the
     generality of Section 14 hereof, none of the preceding subsections of this
     Section 11 shall confer any rights or remedies upon any employee or former
     employee of any Seller or Buyer or any other person other than the parties
     and their respective successors and assigns.

                                     -59-

          (o)     No Solicitation or Hire.

                (i)     No Solicitation or Hire of Marshall Field Employees
          by Sellers.  For the period from the date of this Agreement through
          April 15, 2006, neither Sellers nor any affiliate of Sellers shall
          solicit or hire any employee on the Marshall Field's payroll on or
          after the date of this Agreement (excluding those persons identified
          in Section 11(a) of the Disclosure Schedule as persons who will be
          retained by the Company) who is at or above the level of (1) member of
          the DMG, (2) buyer or (3) store manager in the Marshall Fields
          organization unless Buyer terminates the employment of such employee
          or Buyer consents in writing to the employment of such employee by
          Sellers or their affiliates.

                (ii)    No Solicitation or Hire of Sellers' Employees by
          Marshall Field's.  For the period from the date of this Agreement
          through April 15, 2006, neither Buyer nor any affiliate of the Buyer
          shall solicit or hire, on behalf of the Marshall Field's division of
          Buyer, any employee on the payroll of any Seller or any affiliate of
          any Seller on or after the date of this Agreement who is at or above
          the level of the equivalent in the Seller's organization of (1) member
          of the DMG, (2) buyer or (3) store manager in the Marshall Field's
          organization unless Sellers terminate the employment of such employee
          or the Company consents in writing to the employment of such employee
          by the Marshall Field's division of Buyer

          (p)     Employee Information.  Sellers shall provide within five
     (5) days after the public announcement of this Agreement and shall update
     through the Cut-Off Date, employee benefit and such other information with
     respect to the employees on Marshall Field's payroll as Buyer shall
     reasonably request, consistent with the requirements of HIPAA.  Nothing
     contained herein shall be deemed to constitute a contract of employment
     between Buyer and such employees, or to limit Buyer's rights to establish,
     maintain or change its employment practices.  After the public announcement
     of this Agreement and before the Effective Time, Buyer shall have access,
     on reasonable notice and upon receiving consent of the Company, which shall
     not be unreasonably withheld, to Company employees for proper purposes
     relating to the employees' post-Closing employment with Buyer or to
     implementation of this Agreement, during normal business hours on Sellers'
     premises whenever they are not engaged in the performance of their duties
     and responsibilities.

          (q)     Cooperation of Parties.  Sellers shall make all
     information that Buyer reasonably requests with respect to the
     participation of any Employee or covered dependent in any of the Sellers'
     Plans available to Buyer until the Cut-Off Date and for such time
     thereafter as Buyer reasonably requests in writing, to assist Buyer in
     making employee benefits available to Employees and covered dependents.
     Sellers and Buyer agree to cooperate in the appropriate communication to
     Employees and their dependents with respect to the transition from coverage
     under the Sellers' Plan to coverage under Buyer's Plans.  To achieve

                                     -60-

     Buyer's objective of maintaining a fully functioning executive team and
     headquarters staff, Sellers shall cooperate and support Buyer's efforts to
     retain all Marshall Field's employees (except those persons identified in
     Section 11(a) of the Disclosure Schedule as persons who will be retained by
     the Company and except that, after April 15, 2006, nothing in this
     Agreement shall restrict Sellers from hiring any employees of Marshall
     Field's or from soliciting any such employee for hire).

     12.    Tax Matters.

          (a)     Cooperation.  Buyer and Sellers shall, and shall cause their
     respective subsidiaries and other affiliates to, cooperate with respect to
     Tax matters.  Buyer and Sellers shall provide one another with such
     information as is reasonably requested in order to enable the requesting
     to complete and file all Returns that they may be required to file
     party with respect to the Business, the Assets or an Acquired Subsidiary or
     to respond to audits, inquiries or other proceedings by any Taxing
     authority and otherwise to satisfy Tax requirements.  Such cooperation
     shall further include (i) provision of reasonably necessary powers of
     attorney relating to Tax matters to satisfy obligations under this Section
     12, (ii) promptly forwarding copies of appropriate notices, forms or other
     communications received from or sent to any Taxing Authority, and (iii)
     promptly providing reasonably requested copies of all relevant Returns
     together with accompanying schedules and related workpapers, documents
     relating to rulings, audits or other determinations by any Taxing Authority
     and records concerning the ownership and tax basis of property, in each
     case only to the extent such materials relate to the Business, the Assets
     or an Acquired Subsidiary.

          (b)     Filing Responsibility.  Sellers shall prepare and file or
     shall cause an Acquired Subsidiary, as the case may be, to prepare and file
     all Returns (i) with respect to Taxes attributable to the Assets, the
     Business or an Acquired Subsidiary that are required to be filed (taking
     into account extensions therefor) on or prior to the Cut-Off Date and (ii)
     with respect to Excluded Taxes.  To the extent that any such Returns filed
     by Sellers pertain to an Acquired Subsidiary, they shall be prepared in
     accordance with past practice (unless a contrary position is required by
     law).  Buyer shall file or cause to be filed all Returns attributable to
     the Assets, the Business, or an Acquired Subsidiary, for which Sellers do
     not have filing responsibility pursuant to this Section 12(b).  Buyer and
     Sellers shall discharge all Tax liabilities shown on Returns based on the
     assumption and allocation of Tax liabilities provided in this Agreement
     party without regard to the party that has prepared the Return, and the
     responsible for payment of any amount of Taxes shown due on a Return shall
     pay such unpaid amount to the party filing the Return no later than one
     business day prior to the filing of such Return.

                                     -61-

          (c)     Refunds.  (i) Sellers shall be entitled to any refunds or
     credits of or against any Excluded Taxes (plus any interest received with
     respect thereto) and Buyer shall, at the Company's expense, file, or cause
     to be filed, any claims for such refunds or credits reasonably requested by
     Sellers; (ii) except to the extent set forth in Section 12(c)(i) hereof,
     Buyer or an Acquired Subsidiary shall be entitled to any refunds or credits
     of Taxes attributable to the Business, the Assets or an Acquired Subsidiary
      (plus any interest received with respect thereto) and Sellers shall, at
     the Buyer's expense, file, or cause to be filed, any claims for such
     refunds or credits reasonably requested by Buyer; (iii) Buyer shall
     promptly forward to Sellers or reimburse Sellers for any refund or credits
     due Sellers (pursuant to the terms of this Section 12) after receipt
     thereof, and Sellers shall promptly forward to Buyer or reimburse Buyer for
     any refunds or credits due Buyer or an Acquired Subsidiary (pursuant to the
     terms of this Section 12) after receipt thereof; (iv) refunds or credits
     for a Straddle Period shall be allocated in the manner in which Taxes are
     in Section 4(d)(i) hereof; and (v) Buyer shall not elect to carry back any
     item of loss, deduction or credit of Buyer, an Acquired Subsidiary or any
     of their affiliates which arises in any Tax period or portion thereof
     ending after the Cut-Off Date into any Tax period or portion thereof of the
     Company, an Acquired Subsidiary, or any of their affiliates ending on or
     before the Cut-Off Date.

          (d)     Tax-Sharing Agreements.  Any tax-sharing agreement or
     similar arrangement between Sellers or any of their affiliates, on the one
     hand, and an Acquired Subsidiary, on the other hand, shall be terminated
     with respect to an Acquired Subsidiary on or prior to the Cut-Off Date.

      13.    Assignment.  This Agreement and the rights hereunder shall not be
assignable or transferable by Buyer or Sellers without the prior written consent
of the other party hereto, which consent may be withheld in a party's sole
discretion.  Buyer shall have the right to take title to any of the Owned Real
Estate or Leased Real Estate, or other Assets and related interests in the name
of an affiliated nominee provided that doing so does not change any of Buyer's
obligations to Sellers under this Agreement, limit the Assumed Liabilities
assumed by Buyer pursuant to this Agreement, or require Sellers to exhaust any
remedies against any such assignee before proceeding against Buyer with respect
to the Assumed Liabilities or any other liabilities of Buyer under this
Agreement.

     14.    No Third-Party Beneficiaries.  This Agreement is for the sole
benefit of the parties hereto and their successors and permitted assigns, and
nothing herein expressed or implied shall give or be construed to give to any
person, other than the parties hereto and such successors and assigns, any
legal or equitable rights hereunder.

                                     -62-

     15.    Termination.

          (a)      Anything contained herein to the contrary notwithstanding,
     this Agreement may be terminated and the transactions contemplated hereby
     abandoned at any time prior to the Closing:

                (i)      by mutual written consent of Sellers and Buyer;

                (ii)      by Sellers upon five business days' notice if any of
          the conditions set forth in Section 5(b) hereof shall have become
          incapable of fulfillment at the Closing, and shall not have been
          waived in writing by Sellers;

                (iii)    by Buyer upon five business days' notice if any of
          the conditions set forth in Section 5(a) hereof shall have become
          incapable of fulfillment at the Closing, and shall not have been
          waived in writing by Buyer; or

                (iv)     by Sellers or Buyer, if the Closing does not occur
          on or prior to November 5, 2004; provided that the failure to satisfy
          the conditions or consummate the transactions contemplated by this
          Agreement did not result from the breach in any material respect of
          any of its representations, warranties, covenants or agreements
          contained in this Agreement by the party seeking termination.

          (b)      In the event of termination by Sellers or Buyer pursuant to
     this Section 15, written notice thereof shall forthwith be given to the
     other party and the transactions contemplated by this Agreement shall be
     terminated, without further action by any party.  If the transactions
     contemplated by this Agreement are terminated as provided herein:

                (i)     Buyer shall return to the Company all documents and
          other material received from or on behalf of Sellers relating to the
          transactions contemplated hereby, whether so obtained before or after
          the execution hereof; and

                (ii)    all confidential information received by Buyer shall
          be treated in accordance with the Confidentiality Agreement, which
          shall remain in full force and effect in accordance with the terms
          thereof notwithstanding the termination of this Agreement.

          (c)     If this Agreement is terminated and the transactions
     contemplated hereby are abandoned as described in this Section 15, this
     Agreement shall become void and of no further force and effect, except for
     the provisions of (i) Section 9(a) hereof relating to the obligation of
     Buyer to keep confidential certain information and data obtained by it
     from Sellers, (ii) Section 17 hereof relating to certain expenses, (iii)
     Section 10(d) hereof relating to publicity, (iv) Section 23 hereof

                                     -63-

     relating to finder's fees and broker's fees and commissions and (v) this
     Section 15.  Upon any termination pursuant to this Section 15, no party
     shall have any further liability or obligation hereunder other than for
     any pre-termination breach by such party of the terms and provisions of
     this Agreement or for pre-termination breach of any payment obligations
     under this Agreement.

     16.    Survival of Representations.

          (a)     The representations and warranties set forth in Section
     6(s)(vi) of this Agreement (the "Surviving Representation") and in any
     certificate delivered pursuant hereto and relating to such specific
     representation and warranty shall survive the Closing for a period of one
     year from the Effective Time, and from and after the first anniversary of
     the Effective Time no party shall have any liability for any breach
     thereof which was not raised by written notice to the applicable party
     prior to the first anniversary of the Effective Time.  Except as
     specifically set forth in the preceding sentence, none of the
     representations and warranties contained in this Agreement shall survive
     Closing and Buyer shall have no rights or remedies after Closing with
     respect to any breach of any such representation or warranty.  All other
     terms of this Agreement shall survive the Closing.

          (b)     Sellers shall be liable for breach of the Surviving
     Representation, only to the extent that Buyer notifies Sellers of a claim
     of breach within one year from the Closing Date.

     17.    Expenses.  Whether or not the transactions contemplated hereby
are consummated, and except as otherwise provided in this Agreement, all costs
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such costs or expenses.

     18.    Amendments.  No amendment to this Agreement shall be effective
unless it shall be in writing and signed by all parties hereto.

     19.    Notices.  All notices or other communications required or
permitted to be given hereunder shall be in writing and shall be delivered by
hand, or sent by telecopy, or sent, postage prepaid, by United States
registered, certified or express mail, or reputable overnight courier
service, and shall be deemed given, if delivered by hand, when so
delivered, or if sent by telecopy, when received, or if sent by mail,
three business days after mailing (two business days in the case of
express mail), or if sent by overnight courier service, one business day
after delivery to such service, as follows:

                                     -64-

                   (i)       if to Buyer, to

                             The May Department Stores Company
                             611 Olive Street
                             St. Louis, MO  63101

                             Attention:  President
                             Facsimile No.:  (314) 342-3060

                             with a copy to:

                             The May Department Stores Company
                             611 Olive Street
                             St. Louis, MO  63101

                             Attention:  General Counsel
                             Facsimile No.:  (314) 342-3040

                   (ii)      if to any Seller, to

                             Target Corporation
                             1000 Nicollet Mall
                             TPN - 1446
                             Minneapolis, MN  55403

                             Attention: Chief Financial Officer
                             Facsimile No.:  (612) 761-5555

                             with a copy to:

                             Target Corporation
                             1000 Nicollet Mall
                             TPS - 3255
                             Minneapolis, MN  55403

                             Attention: General Counsel
                             Facsimile No.:  (612) 696-6909

Any party hereto may change the address to which notices and other
communications are to be delivered or sent by giving the other parties notice in
the manner herein set forth.

                                     -65-

     20.    Interpretation.  In this Agreement, the Disclosure Schedule and
any exhibits hereto:

          (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)     "affiliate" has the meaning set forth in Rule 12b-2 of the
     General Rules and Regulations under the Securities Exchange Act of 1934,
     as amended;

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

          (e)     "person" means an individual, partnership, joint venture,
     corporation, limited liability company, trust, unincorporated
     organization, government, governmental department or agency or other
     entity;

          (f)    the use of headings is for convenience of reference only
     and shall not affect the meaning or interpretation of this Agreement, the
     Disclosure Schedule or any exhibits annexed hereto;

          (g)    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;

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

          (i)     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; and

          (j)     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.

     21.    Counterparts.  This Agreement may be executed in counterparts,
all of which shall be considered one and the same agreement, and shall become
effective when counterparts have been signed by each of the parties and
delivered to the other parties.

     22.    Entire Agreement.  This Agreement (including the Disclosure
Schedule and the exhibits hereto) and the Confidentiality Agreement contain the

                                     -66-

entire agreement and understanding between the parties hereto with respect to
the subject matter hereof and supersede all prior agreements and understandings
relating to such subject matter.

     23.    Brokerage Fees.  Sellers hereby represent that (a) the only
brokers or finders that have acted for such parties in connection with this
Agreement or the transactions contemplated hereby or that may be entitled to any
brokerage fee, finder's fee or commission in respect thereof are Goldman, Sachs
& Co., and (b) the Company will pay all fees or commissions that may be payable
to Goldman, Sachs & Co.  Buyer hereby represents that (i) the only brokers or
finders that have acted for Buyer in connection with this Agreement or the
transactions contemplated hereby or that may be entitled to any brokerage fee,
finder's fee or commissions in respect thereof are Morgan Stanley & Co.,
Incorporated and (ii) Buyer will pay all fees or commissions that may be payable
to Morgan Stanley & Co., Incorporated.

     24.    Bulk Transfer Laws.  Buyer acknowledges that Sellers and Buyer
will not comply with the provisions of any bulk transfer laws or tax laws
relating to bulk transfers of any jurisdiction in connection with the
transactions contemplated by this Agreement, waives any requirement of
compliance with such laws and agrees that such non-compliance does not
constitute a breach of any representation, warranty or covenant of the Company
contained in this Agreement notwithstanding anything stated in Section 6 hereof
or any other Section of this Agreement.

     25.    Severability.  If any provision of this Agreement or the
application of any such provision to any person or circumstance shall be held
invalid, illegal or unenforceable in any respect by a court of competent
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision hereof.

     26.    Governing Law.  This Agreement shall be governed by and construed
in accordance with the internal laws of the State of Minnesota applicable to
agreements made and to be performed entirely within such state, without regard
to the conflicts-of-law principles of such state.

     27.    Specific Performance.  The parties agree that irreparable damage
would occur if any provision of this Agreement were not performed in accordance
with its terms and that the parties shall be entitled to an injunction to
prevent breaches of this Agreement or to enforce specifically the performance of
the terms hereof, in addition to any other remedy to which the parties are
entitled.

     28.    Disclosure Schedule.  Matters reflected in the Disclosure
Schedule are not necessarily limited to matters required by this Agreement to be
reflected in the Disclosure Schedule.  Such additional matters are set forth
for informational purposes and do not necessarily include other matters of a
similar nature.  Matters disclosed by Sellers to Buyer pursuant to any Section
of this Agreement or the Disclosure Schedule shall be deemed to be disclosed
with respect to all Sections of this Agreement and the Disclosure Schedule to
the extent this Agreement requires such disclosure.

                                     -67-

     29.    Knowledge.  For all purposes of this Agreement, "Knowledge" of
the Company or a similar phrase means the actual knowledge of any executive
officer of the Company or of any person listed in Section 29 of the Disclosure
Schedule.

     30.    Waiver.  Any party may waive, in whole or in part, a provision,
condition or covenant contained in this Agreement which is for the benefit of
the party making such waiver.  Any such waiver must be in writing and delivered
to the beneficiary of such waiver.  No waiver by any party of any covenant,
condition or breach under this Agreement shall be deemed to be a waiver of any
other subsequent covenant, condition or breach.

[Signature Page Follows]

                                     -68-

      IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first written above.

TARGET CORPORATION
(Seller)

By        /s/ Robert J. Ulrich
  Name:   Robert J. Ulrich
  Title:  Chairman of the Board and Chief
          Executive Officer

TARGET BRANDS, INC.
(Seller)

By        /s/ Timothy R. Baer
  Name:   Timothy R. Baer
  Title:  President

TARGET RECEIVABLES CORPORATION
(Seller)

By        /s/ James T. Hale
  Name:   James T. Hale
  Title:  Vice President

EIGHTH STREET
DEVELOPMENT COMPANY
(Seller)

By        /s/ James T. Hale
  Name:   James T. Hale
  Title:  Vice President

DAYTON DEVELOPMENT COMPANY
(Seller)

By        /s/ James T. Hale
  Name:   James T. Hale
  Title:  Vice President

RETAILERS NATIONAL BANK
(Seller)

By        /s/ Terrence J. Scully
  Name:   Terrence J. Scully
  Title:  President

THE MAY DEPARTMENT STORES COMPANY
(Buyer)

By        /s/ John L. Dunham
  Name:   John L. Dunham
  Title:  President

                                     -69-Final Bruce J. Klatsky Employment Agreement

Exhibit 10.1

EMPLOYMENT AGREEMENT

AGREEMENT between PHILLIPS-VAN HEUSEN CORPORATION, a Delaware corporation (the "Company"), and BRUCE J. KLATSKY (the
"Executive"), dated as of April 12, 2004 (the "Effective Date").

WHEREAS, the Board of Directors of the Company (the "Board") has determined that it is in the best interests of the Company and
its stockholders to assure that the Company will have the continued dedication of the Executive;

WHEREAS, the Executive and the Company wish to set forth the terms and conditions of the Executive's employment in this Agreement, which
will consolidate the rights and obligations under the existing arrangements between the parties, including without limitation, the letter
agreement between the Company and the Executive, dated as of September 15, 1998 (the "1998 Letter Agreement");

WHEREAS, the Company desires to ensure that, in the event of the Executive's cessation of employment with the Company, the Executive will be
bound by certain restrictive covenants;

WHEREAS, in consideration for the Executive's waiver of future participation in the Company's long-term incentive compensation plans,
including without limitation, the Company's 1997, 2000 and 2003 Stock Option Plans (the "Option Plans") and the Company's Long-Term
Incentive Plan (the "LTIP"), and their respective successor plans, the Board has determined to grant the Executive stock options to
acquire shares of Company common stock, par value $1.00 ("Share"), under the Option Plans in accordance with the terms set forth in
Section 2(b)(iii) hereof; 

WHEREAS, the parties hereto desire to enter into this Agreement to set forth the terms and conditions of the Executive's employment with the
Company, to replace and supersede the 1998 Letter Agreement and to amend or clarify the Company's and the Executive's rights and obligations
under certain plans and arrangements of the Company.

NOW THEREFORE, in consideration of the mutual promises and covenants made herein and the mutual benefits to be derived from this Agreement,
the parties hereto agree as follows:
1.Employment Period.  The Company hereby agrees to continue to employ the Executive, and the Executive hereby agrees to continue
to serve the Company, subject to the terms and conditions of this Agreement, for the period commencing on the Effective Date and ending on
sixth anniversary of the Effective Date (the "Employment Period"). 

2.Terms of Employment.  (a)  Position and Duties.  (i)  During the Employment Period, (A) the Executive shall serve as
Chairman of the Board and Chief Executive Officer of the Company, with such duties and responsibilities as are consistent with such positions
in a company the size and nature of the Company, (B) the Executive shall report directly to the Board and (C) the Executive's services shall be
performed at the Company's headquarters in New York, New York as of the Effective Date or such other location as may be mutually agreed between
the Company and the Executive.    
(ii)During the Employment Period, and excluding any periods of vacation and sick leave to which the Executive is entitled, the Executive
agrees to devote substantially all of his business attention and time to the business and affairs of the Company and, to the extent necessary
to discharge the responsibilities assigned to the Executive hereunder, to use the Executive's reasonable best efforts to perform faithfully and
efficiently such responsibilities.  During the Employment Period, the Executive shall be entitled to serve as a member of the board of
directors of a reasonable number of other companies, to serve on civic and charitable boards and to manage his personal and family investments,
in each case, to the extent such activities do not materially interfere, in the reasonable judgment of the Board (or a committee thereof), with
the performance of his duties for the Company and are otherwise consistent with the Company's governance policies.

(b)Compensation  (i)  Annual Base Salary.  During the Employment Period, the Executive shall receive an annual base salary
("Annual Base Salary") at a rate of $1.2 million, payable in accordance with the Company's normal payroll policies.  The Executive's
Annual Base Salary shall be reviewed for increase at least annually by the Board pursuant to its normal performance review policies for senior
executives.  Annual Base Salary shall not be reduced after any increase, and the term Annual Base Salary as utilized in this Agreement shall
refer to the Executive's annual base salary as then in effect.  
(ii)Annual Bonus.  With respect to each fiscal year ending during the Employment Period, the Executive shall be entitled to
participate in the Company's annual incentive plan as in effect from time to time, with the Executive's annual bonus opportunity being higher
than the bonus opportunity of any other eligible executive under the plan, and otherwise on a basis no less favorable than other executives of
the Company.  

(iii)Special Option Award.  On the Effective Date, the Company shall grant the Executive stock options to purchase an
aggregate of 1,750,000 Shares (collectively the "Option"), of which, options to purchase 84,700 Shares shall be granted from the 1997
Stock Option Plan, options to purchase 155,360 Shares shall be granted from the 2000 Stock Option Plan and options to purchase 1,509,940 Shares
shall be granted from the 2003 Stock Option Plan.  Notwithstanding the foregoing, the grant of the Option in respect of 309,940 Shares
under the 2003 Stock Option Plan shall be subject to the Company's receipt of stockholder approval of an amendment to the 2003 Stock Option
Plan providing for an increase in the maximum number of Shares that may be granted to a participant under such plan in any year.  The Option
shall have a term of seven years from the date of grant, subject to earlier expiration as provided herein.  The per Share exercise price of the
Shares underlying the Option shall be equal to the "fair market value" (as defined in the applicable Option Plan) of a Share as of
the date of grant.  Subject to the Executive's continued employment with the Company (except as otherwise provided in this Section 2(b)(iii)),
the Option shall vest in full on the sixth anniversary of the date of grant; provided, however, that, if the closing price of a Share on
the New York Stock Exchange averages $22.50 or higher for any period of 20 consecutive trading days following the grant date, the Option shall
vest with respect to 50% of the Shares underlying the Option; another 25% of the Shares underlying the Option shall vest 

2

if such closing price of a Share averages $25.00 or higher for any 20 consecutive trading-day period; and the remaining 25% of the Shares
underlying the Option shall vest if such closing price of a Share averages $27.50 or higher for any 20 consecutive trading-day period; and,
provided, further, that the Option shall fully vest upon the earliest to occur of the following events:  (A) a termination of the
Executive's employment by the Company without Cause or by the Executive for Good Reason (each as defined in Exhibit A attached hereto),
(B) upon the Executive's death or Disability (as defined in Exhibit A attached hereto), or (C) upon a Change in Control (as defined in
Exhibit A attached hereto).  Upon a termination for Cause, the unvested portion of the Option shall be forfeited, and the vested portion
shall remain exercisable for the shorter of 90 days from the Date of Termination (as defined in Section 3(e)) and the remaining portion of the
seven-year term.  Except as otherwise provided in this Section 2(b)(iii) and Sections 4 and 5 below, the Option shall be governed by the terms
of the applicable Option Plan; provided, however, that notwithstanding anything to the contrary in any such Option Plan, this Agreement
or otherwise, the Option shall not vest on an accelerated basis upon the Executive's retirement (meaning, for this purpose, the Executive's
voluntary termination of employment), and, to the extent not previously vested as of any such retirement, the unvested portion of the Option
shall be forfeited and cancelled as of the Date of Termination.
(iv)Long-Term Incentive Plans.  Except as the Board or a committee thereof may otherwise determine, in its sole discretion,
to take into account special circumstances, the Option granted pursuant to Section 2(b)(iii) above shall be in lieu of any future annual stock
option or other equity award grants, or any participation in LTIP cycles beginning in fiscal year 2004 and thereafter, and the Executive
hereby waives his right to any such future grants and participation. 

(v)Welfare Benefits.  During the Employment Period, the Executive shall be entitled to participate in the employee welfare
benefit programs of the Company on a basis no less favorable than the basis the Executive was participating in such programs immediately prior
to the Effective Date.  

(vi)Supplemental Savings Plan.  Notwithstanding any provision to the contrary in the Company's Supplemental Savings Plan, in
the event that the Executive's employment is terminated by the Company at any time after the Effective Date or there is a Change in Control,
all accrued benefits under the Supplemental Savings Plan shall be paid to the Executive in a lump sum as soon as practicable after the Date of
Termination or the date of the Change in Control, as applicable.  Except as provided in the foregoing sentence, the terms of the Supplemental
Savings Plan and the Executive's elections under such plan (if any) shall govern with respect to all other terminations of employment. This
Section 2(b)(vi) shall survive the expiration of the Employment Period.

(vii)Supplemental Defined Benefit Plan.  Notwithstanding any provision to the contrary in the Company's Supplemental Defined
Benefit Plan, in the event the Executive's employment is terminated by the Company at any time after the Effective Date or there is a
Change in Control, all accrued benefits under the Supplemental Defined Benefit Plan shall be paid to the Executive in a lump sum as soon as
practicable after the Date of Termination or the date of the Change in Control, as applicable.  Except as provided in the 

3

foregoing sentence, the terms of the Supplemental Defined Benefit Plan and the Executive's elections under such plan (if any) shall govern
with respect to all other terminations of employment.  This Section 2(b)(vii) shall survive the expiration of the Employment Period.
(viii)Capital Accumulation Plan.  Notwithstanding any provision to the contrary in the capital accumulation program agreement
between the Executive and the Company, dated as of February 12, 1987, as amended (the "CAP Agreement"), the Executive's benefits
under the CAP Agreement shall become immediately payable (A) upon a termination of the Executive's employment by the Company without Cause or
by the Executive for Good Reason, (B) upon the Executive's retirement, death or Disability or (C) upon a termination of the Executive's
employment following a Change in Control, in a lump sum equal to the undiscounted value of the future payments.  Upon a termination of the
Executive's employment for Cause, the CAP Agreement benefit shall be forfeited consistent with the terms of the CAP Agreement.  This Section
2(b)(viii) shall survive the expiration of the Employment Period.

3.Termination of Employment.  (a)  Death or Disability.  The Executive's employment shall terminate automatically upon the
Executive's death during the Employment Period.  In the event of the Executive's Disability, either party may provide the other with written
notice in accordance with Section 12(b) of this Agreement of his or its intention to terminate the Executive's employment due to Disability.
In such event, the Executive's employment with the Company shall terminate effective on the 30th day after receipt of such notice by the
Executive (the "Disability Effective Date"), provided that, if the notice is given by the Company, within the 30 days after
such receipt, the Executive shall not have returned to full-time performance of the Executive's duties.  

(b)With or Without Cause.  The Executive is an employee at will and the Company may terminate the Executive's employment either
with or without Cause.

(c)With or Without Good Reason.  The Executive's employment may be terminated by the Executive voluntarily with or without Good
Reason.  

(d)Notice of Termination.  Any termination by the Company for Cause, or by the Executive for Good Reason, shall be communicated
by Notice of Termination to the other party hereto given in accordance with Section 12(b) of this Agreement.  For purposes of this Agreement, a
"Notice of Termination" means a written notice which (i) indicates the specific termination provision in this Agreement relied upon,
(ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated and (iii) if the Date of Termination is other than the date of receipt of such notice,
specifies the Date of Termination (which date shall be not more than 30 days after the giving of such notice).  The failure by the Executive or
the Company to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Good Reason or Cause shall not
waive any right of the Executive or the Company, respectively, hereunder or preclude the Executive or the Company, respectively, from asserting
such fact or circumstance in enforcing the Executive's or the Company's rights hereunder.

4
(e)Date of Termination.  "Date of Termination" means (i) if the Executive's employment is terminated by the Company for
Cause, or by the Executive with or without Good Reason, the date of receipt of the Notice of Termination or any later date specified therein
within 30 days of such notice, as the case may be, (ii) if the Executive's employment is terminated by the Company other than for Cause or
Disability, the Date of Termination shall be the date on which the Company notifies the Executive of such termination and (iii) if the
Executive's employment is terminated by reason of death or Disability, the Date of Termination shall be the date of death of the Executive or
the Disability Effective Date, as the case may be.

(f)Resignation.  Upon termination of the Executive's employment for any reason, the Executive agrees to resign, effective as of
the Date of Termination, from any positions that the Executive holds with the Company and its affiliates, the Board (and any committees
thereof), unless the Board requests otherwise and the Executive agrees, and the board of directors (and any committees thereof) of any of the
Company's affiliates.

4.Obligations of the Company upon Termination.  (a)  Good Reason; Other Than for Cause, Death or Disability.  If, during
the Employment Period, the Company shall terminate the Executive's employment without Cause (and other than as a result of the Executive's
death or Disability), or the Executive shall terminate employment for Good Reason, the Company shall pay or provide to the Executive the
following amounts and benefits:
(i)the severance payment and benefits continuation provided pursuant to Section 5 of the Special Severance Benefit Plan as in effect
as of January 1, 2004 (the "Severance Plan") upon a termination of employment following a "change in control" (as defined
in the Severance Plan), except that, in the case of the continuation of any medical, dental, life or disability insurance coverage, if the
applicable plan or policy does not permit such continued participation, the Company shall provide the Executive with the economic equivalent
thereof on an after-tax basis;

(ii)an amount equal to the Executive's unpaid Annual Base Salary for services through the Date of Termination;

(iii)the Option shall vest in full and remain exercisable for the shorter of three years from the Date of Termination and the
remaining portion of the seven-year term;

(iv)except as otherwise provided in clause (iii) of this Section 4(a) with respect to the Option, all other equity awards
outstanding as of the Date of Termination, if any, shall vest in full, and any outstanding stock options shall remain exercisable for the
period applicable to retirees under the applicable option plan;

(v)the benefits under the CAP Agreement in accordance with Section 2(b)(viii) above;

(vi)any amounts earned or owing to the Executive but not yet paid, including any incentive payment earned for performance periods
that have ended prior to the Date of Termination; and

5
(vii)other payments, entitlements or benefits, if any, shall be paid or provided in accordance with terms of the applicable plans,
programs, arrangements or other agreements of the Company or any affiliate thereof as to which the Executive held rights to such payments,
entitlements or benefits, whether as a participant, beneficiary or otherwise on the Date of Termination.

In addition, (A) upon a termination by the Company without Cause, the Executive shall be entitled to the accrued benefits under the
Supplemental Savings Plan in accordance with Section 2(b)(vi) above and the accrued benefits under the Supplemental Defined Benefit Plan in
accordance with Section 2(b)(vii) above; and (B) upon a termination by the Executive for Good Reason, the Executive shall be entitled to the
accrued benefits under the Supplemental Savings Plan and the Supplemental Defined Benefit Plan in accordance with the terms of the applicable
plan and the Executive's elections under such plans (if any).
(b)Death or Disability.  If the Executive's employment is terminated by reason of the Executive's death or Disability during the
Employment Period, this Agreement shall terminate without further obligations to the Executive or his legal representatives, as applicable,
under this Agreement, other than for the payment of the amounts and provision of the benefits set forth below:
(i)an amount equal to the Executive's unpaid Annual Base Salary for services through the Date of Termination;

(ii)the Option shall vest in full and remain exercisable for the shorter of three years from the Date of Termination and the
remaining portion of the seven-year term;

(iii)except as otherwise provided in clause (ii) of this Section 4(b) with respect to the Option, all other equity awards
outstanding as of the Date of Termination, if any, shall vest in full, and any outstanding stock options shall remain exercisable for the
period applicable to retirees under the applicable option plan;

(iv)until the third anniversary of the Date of Termination, continued coverage of the Executive and his eligible dependents, as
applicable, under the Company's medical insurance plan, as in effect from time to time with respect to executives of the Company; 

(v)the accrued benefits under the Supplemental Savings Plan and the Supplemental Defined Benefit Plan in accordance with the terms
of the applicable plan and the Executive's elections under such plans (if any);

(vi)the benefits under the CAP Agreement in accordance with Section 2(b)(viii) above;

(vii)any amounts earned or owing to the Executive but not yet paid, including any incentive payment earned for performance periods
that have ended prior to the Date Termination; and

(viii)other payments, entitlements or benefits, if any, shall be paid or provided in accordance with terms of the applicable plans,
programs, arrangements or other agreements of the Company or any affiliate thereof as to which the Executive held rights to such payments,
entitlements or benefits, whether as a participant, beneficiary or otherwise on the Date of Termination.

6
(c)Cause.  If the Executive's employment shall be terminated by the Company for Cause, this Agreement shall terminate without
further obligations to the Executive, other than for the payment of the amounts and provision of the benefits set forth below: 
(i)an amount equal to the Executive's unpaid Annual Base Salary for services through the Date of Termination;

(ii)for 90 days after the Date of Termination, the portion of the Option that was vested as of the Date of Termination, if any,
shall remain exercisable, and the portion of the Option that was not vested as of the Date of Termination shall be forfeited and cancelled
effective as of the Date of Termination; 

(iii)except as otherwise provided in clause (ii) of this Section 4(c) with respect to the Option, all other equity awards
outstanding as of the Date of Termination, whether or not vested as of the Date of Termination, shall be forfeited and cancelled effective as
of the Date of Termination; 

(iv)the accrued benefits under the Supplemental Savings Plan and the Supplemental Defined Benefit Plan in accordance with the terms
of the applicable plan and the Executive's elections under such plans (if any); and

(v)other payments, entitlements or benefits, if any, shall be paid or provided in accordance with applicable plans, programs,
arrangements or other agreements of the Company or any affiliate thereof as to which the Executive held rights to such payments, entitlements
or benefits, whether as a participant, beneficiary or otherwise on the Date of Termination, provided that in no event shall the Executive be
entitled to any benefits under the Severance Plan.

(d)Retirement.  If the Executive's employment is terminated by reason of the Executive's retirement during the Employment Period
(meaning, for purposes of this Section 4(d), the Executive's voluntary termination of employment), this Agreement shall terminate without
further obligations to the Executive under this Agreement, except as provided in this Section 4(d).  For purposes of this Section 4(d), the
Executive's retirement shall not be deemed to be a breach of any agreement between the Company and the Executive.  Any voluntary resignation
(which shall not include a resignation in connection with a termination by the Company for Cause) of the Executive during the Employment Period
shall be deemed to be a retirement and shall be treated as a retirement for purposes of any plan, policy, program or arrangement of the Company
or any affiliate thereof as to which the Executive held rights, whether as a participant, beneficiary or otherwise on the Date of Termination
or of any agreement between the Company and the Executive, including this Agreement; provided, however, that, notwithstanding
anything to the contrary in this Agreement, any stock option plan of the Company or otherwise, the Option shall not vest on an accelerated
basis upon the Executive's retirement, and, to the extent the Option has not previously vested as of any such 

7

retirement, the unvested portion of the Option shall be forfeited and cancelled effective as of the Date of Termination.  Upon the
Executive's retirement, the portion of the Option that was vested as of the Date of Termination, if any, shall remain exercisable for the
shorter of three years from such Date of Termination and the remaining portion of the seven-year term.  Upon termination due to retirement, the
Executive shall be entitled to any amounts earned or owing to the Executive but not yet paid, including any incentive payment earned for
performance periods that have ended prior to the Date of Termination.
5.Change in Control Protections.   Nothing in this Agreement is intended to alter the Executive's rights under the terms of the
Severance Plan or the CAP Agreement upon a "change in control" (as defined in the Severance Plan and the CAP Agreement,
respectively); provided, however, that in no event shall the Executive be entitled to payments and benefits under the Severance Plan
and/or the CAP Agreement that are duplicative of any payments or benefits provided under this Agreement.  In addition, upon a Change in
Control, (a) the Option shall vest in full and, upon the termination of the Executive's employment following the Change in Control (other than
a termination by the Company for Cause), shall remain exercisable for the shorter of three years from the Executive's Date of Termination and
the remaining portion of the seven-year term, (b) all other outstanding stock options shall fully vest and, upon the termination of  the
Executive's employment following the Change in Control (other than a termination by the Company for Cause), shall remain exercisable for the
period applicable to retirees under the applicable option plan, and (c) all other outstanding awards shall be governed by the terms of the
applicable plan or award agreement.  This Section 5 shall survive the expiration of the Employment Period.

6.Certain Additional Payments by the Company.  (a)  Anything in this Agreement to the contrary notwithstanding, in the event it
shall be determined that any payment, distribution, benefit or other entitlement by the Company to or for the benefit of the Executive (whether
paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, but determined without regard to any
additional payments required under this Section 6) (a "Payment") would be subject to the excise tax imposed by Section 4999 of
the Internal Revenue Code of 1986, as amended (the "Code") or any interest or penalties are incurred by the Executive with respect to
such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the "Excise
Tax"), then the Executive shall be entitled to receive an additional payment (a "Gross-Up Payment") in an amount such that after
payment by the Executive of all taxes (including any interest or penalties imposed with respect to such taxes), including, without limitation,
any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Executive
retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. 

(b)Subject to the provisions of Section 6(c), all determinations required to be made under this Section 6, including whether and
when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such
determination, shall be made by the Company's auditors or such other nationally recognized certified public accounting firm reasonably
acceptable to the Executive as may be designated by the Company (the "Accounting Firm") which shall provide detailed supporting
calculations both to the Company and the Executive within fifteen business days of the receipt of notice from the 

8

Executive that there has been a Payment, or such earlier time as is requested by the Company.  All fees and expenses of the Accounting Firm
shall be borne solely by the Company.  Any Gross-Up Payment, as determined pursuant to this Section 6, shall be paid by the Company to the
Executive or directly to the Internal Revenue Service, in the sole discretion of the Company, within five days of the later of (i) the due date
for the payment of any Excise Tax, and (ii) the receipt of the Accounting Firm's determination.  Any determination by the Accounting Firm shall
be binding upon the Company and the Executive, subject to the provisions of this Section 6.  As a result of the uncertainty in the application
of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments
which will not have been made by the Company should have been made ("Underpayment"), consistent with the calculations required to be
made hereunder.  In the event that the Company exhausts its remedies pursuant to Section 6(c) and the Executive thereafter is required to make
a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment
shall be promptly paid by the Company to or for the benefit of the Executive.
(c)The Executive shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the
payment by the Company of the Gross-Up Payment.  Such notification shall be given as soon as practicable but no later than ten business days
after the Executive is informed in writing of such claim and shall apprise the Company of the nature of such claim and the date on which such
claim is requested to be paid.  The Executive shall not pay such claim prior to the expiration of the 30-day period following the date on which
he gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due).
If the Company notifies the Executive in writing prior to the expiration of such period that it desires to contest such claim, the Executive
shall:
(i)give the Company any information reasonably requested by the Company relating to such claim,

(ii)take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company,

(iii)cooperate with the Company in good faith in order effectively to contest such claim, and 

(iv)permit the Company to participate in any proceedings relating to such claim;

provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and
penalties) incurred in connection with such contest and shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise
Tax or income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and
expenses.  Without limitation on the foregoing provisions of this Section 6(c), the Company shall control all proceedings taken in connection

9

with such contest, and, at its sole option, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences
with the taxing authority in respect of such claim and may, at its sole option, either pay the tax claimed to the appropriate taxing authority
on behalf of the Executive and direct the Executive to sue for a refund or contest the claim in any permissible manner, and the Executive
agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided, however, that, if the Company pays such claim and directs the
Executive to sue for a refund, the Company shall indemnify and hold the Executive harmless, on an after-tax basis, from any Excise Tax or
income tax (including interest or penalties with respect thereto) imposed with respect to such payment or with respect to any imputed income in
connection with such payment; and provided, further, that any extension of the statute of limitations relating to payment of
taxes for the taxable year of the Executive with respect to which such contested amount is claimed to be due is limited solely to such
contested amount.  Furthermore, the Company's control of the contest shall be limited to issues with respect to which the Gross-Up Payment
would be payable hereunder, and the Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority.
(d)If, after the receipt by the Executive of a payment by the Company of an amount on the Executive's behalf pursuant to
Section 6(c), the Executive becomes entitled to receive any refund with respect to such claim, the Executive shall (subject to the
Company's complying with the requirements of Section 6(c)) promptly after his receipt pay to the Company the amount of such refund
(together with any interest paid or credited thereon after taxes applicable thereto).  If, after payment by the Company of an amount on the
Executive's behalf pursuant to Section 6(c), a determination is made that the Executive shall not be entitled to any refund with respect to
such claim and the Company does not notify the Executive in writing of its intent to contest such denial of refund prior to the expiration of
30 days after such determination, then the amount of such payment shall offset, to the extent thereof, the amount of Gross-Up Payment required
to be paid.

7.No Duplication; No Mitigation; Limited Offset.  In no event shall the Executive be entitled to duplicate payments or benefits
under different provisions of this Agreement or pursuant to the terms of any other plan, program or arrangement of the Company or its
affiliates.  In the event of any termination of the Executive's employment, the Executive shall be under no obligation to seek other
employment, and, there shall be no offset against amounts due the Executive under this Agreement or pursuant to any plan of the Company or any
of its affiliates on account of any remuneration attributable to any subsequent employment or any claim asserted by the Company or any of its
affiliates, except with respect to the continuation of benefits under Section 4(a)(i) (excluding for this purpose the severance payment
referred to in Section 4(a)(i)) or 4(b)(iv), which shall terminate immediately upon obtaining comparable coverage from another employer during
such three-year period in accordance with the terms of the Severance Plan.  

8.Indemnification.  The Executive shall be entitled to indemnification (and the advancement of expenses) in connection with a
litigation or proceeding arising out of the Executive's acting as Chairman of the Board, Chief Executive Officer or an employee, officer or
director of the Company, to the fullest extent permitted by applicable law; provided, however, 

10

that in the event that it is finally determined that the Executive is not entitled to indemnification, the Executive shall promptly return
any advanced amounts to the Company.  In addition, the Executive shall be entitled to liability insurance coverage pursuant to a Company-
purchased directors' and officers' liability insurance policy on the same basis as other directors and officers of the Company.  This Section 8
shall survive the expiration of the Employment Period. 
9.Restrictive Covenants.  (a)  Confidentiality.  The Executive recognizes that any knowledge and information of any type
whatsoever of a confidential nature relating to the business of the Company, including, without limitation, all types of trade secrets, vendor
and customer lists and information, employee lists and information, information regarding product development, marketing plans, management
organization information, operating policies and manuals, sourcing data, performance results, business plans, financial records, and other
financial, commercial, business and technical information (collectively, "Confidential Information"), must be protected as confidential, not
copied, disclosed or used, other than for the benefit of the Company, at any time.  The Executive further agrees that at any time during the
Employment Period or thereafter he will not divulge to anyone publish or make use of any Confidential Information, except in the ordinary
course of carrying out his duties pursuant to this Agreement, without the prior written consent of the Company, except (i) as (and only to the
extent) required by an order of a court having competent jurisdiction or under subpoena from an appropriate government agency and then only
after providing the Company with the reasonable opportunity to prevent such disclosure or to receive confidential treatment for the
Confidential Information required to be disclosed, (ii) with respect to any other litigation, arbitration or mediation involving this
Agreement, including, but not limited to the enforcement of this Agreement or (iii) as to Confidential Information that becomes generally known
to the public or within the relevant trade or industry other than due to the Executive's violation of Section 9(a).  The Executive further
agrees that following the termination of the Employment Period or the Executive's employment for whatever reason, (i) the Company shall keep
all tangible property assigned to the Executive or prepared by the Executive and (ii) the Executive shall not misappropriate or infringe upon
the Confidential Information of the Company, in each case to the extent related to his employment with the Company.

(b)Non-Competition.  While employed by the Company and for three years after the Executive's termination of employment
for any reason, whether during or after the Employment Period (the "Restricted Period"), the Executive will not, without the prior
written consent of the Company, directly or indirectly, whether as an officer, employee, consultant or owner or in any other business or
ownership relationship, including without limitation, stockholder, advisor, member, partner or director, be employed by or engaged with any
other business or entity that competes in the same geographic area as the Company with any business actively conducted or actively planned by
the Company at the time the Executive's employment with the Company is terminated.  Ownership, for personal investment purposes only, of less
than 5% of the voting stock of any publicly held corporation or 2% of the ownership interest in any non-publicly held company shall not
constitute a violation hereof.  Notwithstanding anything contained herein to the contrary, from and after a Change in Control, the restrictions
contained in this Section 9(b) shall be inapplicable with respect to conduct of the Executive following the date of such Change in Control.

11

(c)Non-Interference.  The Executive acknowledges that information regarding the Company's business and financial
relations with its vendors and customers is Confidential Information and proprietary to the Company and that any interference with such
relations based directly or indirectly on the use of such information would cause irreparable damage to the Company.  The Executive
acknowledges that by virtue of his employment with the Company, he has gained or may gain knowledge of such information concerning the
Company's vendors and customers (respectively "Vendor Information" or "Customer Information"), and that he would inevitably have to draw on
this Vendor Information and Customer Information and on other Confidential Information if he were to solicit or service the Company's vendors
or customers on behalf of a competing business enterprise.  Accordingly, and subject to the immediately following sentence, the Executive
agrees that during the Restricted Period, the Executive will not, on behalf of himself or any other person or entity, directly or indirectly,
in such a way as interferes with the Company's business or financial relations with a customer or vendor, do business with, solicit the
business of, or perform any services for any actual vendor or customer of the Company, any person or entity that has been a vendor or customer
of the Company within the 12-month period preceding such termination or any actively solicited prospective vendor or customer as to whom or
which the Executive provided any services or as to whom or which the Executive has knowledge of Vendor Information, Customer Information or
Confidential Information.  In addition, the Executive agrees that, during the Restricted Period, he will not, directly or indirectly, seek to
encourage or induce any such vendor or customer to cease doing business with, or lessen its business with, the Company, or otherwise interfere
with or damage (or attempt to interfere with or damage) any of the Company's relationships with its vendors and customers, except in the
ordinary course of the Company's business.

(d)Non-Solicitation.  The Executive agrees that during the Restricted Period, he will not knowingly hire or solicit to hire,
whether on his own behalf or on behalf of any other person (other than the Company), any employee of the Company or any individual who had left
the employ of the Company within 12 months of the termination of the Executive's employment with the Company.  In addition, during the
Restricted Period, the Executive will not, directly or indirectly, knowingly encourage or induce any employee of the Company to leave the
Company's employ, except in the ordinary course of the Company's business.

(e)Public Comment.  The Executive, during the Employment Period and at all times thereafter, shall not make any public derogatory
comment concerning the Company or anyone the Executive knows to be a current or former director, officer, stockholder or employee of the
Company.  Similarly, the senior management of the Company and its directors shall not make any derogatory comment concerning the Executive.
Notwithstanding the foregoing, true statements by any party in response to a derogatory public statement made by another party shall not be
deemed to be a violation of this Section 9(e). 

(f)Blue Penciling.  If any of the restrictions on competitive or other activities contained in this Section 9 shall for any
reason be held by a court of competent jurisdiction to be excessively broad as to duration, geographical scope, activity or subject, such
restrictions shall be construed so as thereafter to be limited or reduced to be enforceable to the extent compatible with the applicable law;
it being understood that by the execution of this Agreement, (i) the parties hereto regard such restrictions as reasonable and compatible with
their respective rights 

12

and (ii) the Executive acknowledges and agrees that the restrictions will not prevent him from obtaining gainful employment subsequent
to the termination of his employment.  

(g)Injunctive Relief.  The Executive acknowledges and agrees that the covenants and obligations of the Executive set forth in
this Section 9 relate to special, unique and extraordinary services rendered by the Executive to the Company and that a violation of any of the
terms of such covenants and obligations will cause the Company irreparable injury for which adequate remedies are not available at law.  The
Company acknowledges and agrees that a violation of its covenants and obligations under Section 9(e) will cause the Executive irreparable
injury for which adequate remedies are not available at law.  Therefore, the Executive and the Company agree that each party shall be entitled
to seek an injunction, restraining order or other temporary or permanent equitable relief (without the requirement to post bond) restraining
the other party from committing any violation of the covenants and obligations contained herein.  These injunctive remedies are cumulative and
are in addition to any other rights and remedies the parties may have at law or in equity.  The existence of any claim or cause of action by
either party against the other party shall not constitute a defense to the enforcement by either party of the foregoing restrictive covenants,
but such claim or cause of action shall be determined separately.

(h)Survival.  The provisions of this Section 9 shall remain in full force and effect until the expiration of the periods
specified herein notwithstanding the earlier termination of the Executive's employment hereunder or the expiration of the Employment Period.
For purposes of this Section 9, "Company" shall mean the Company and any entity controlled by, controlling or under common control
with the Company.
10.Dispute Resolution/Legal Fees.  Except to the extent necessary to enforce the provisions of  Section 9 hereof in accordance
with Section 9(g), any disputes under this Agreement shall be settled by arbitration in Manhattan in accordance with the Commercial Arbitration
Rules of the American Arbitration Association.  Both during and after the Executive's employment, the Company will advance (and pay) all of the
Executive's legal and accounting fees incurred in connection with the Executive (or his estate) enforcing any rights under any Company plan or
program or pursuant to this Agreement or in defending against any challenge to such rights, including by any governmental agency.  The
Executive shall be entitled to reimbursement for all reasonable legal fees associated with the negotiation and preparation of this Agreement.
This Section 10 shall survive the expiration of the Employment Period.

11.Successors.  (a)  This Agreement is personal to the Executive and without the prior written consent of the Company shall not
be assignable by the Executive.  This Agreement shall inure to the benefit of and be enforceable by the Executive's legal representatives,
heirs or legatees.
(b)This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns.  No rights or
obligations of the Company under this Agreement may be assigned or transferred by the Company without the Executive's prior written consent
except that such rights or obligations may be assigned or transferred pursuant to a merger or consolidation in which the Company is not the
continuing entity, or a sale, liquidation or other disposition of all or substantially all of the assets of the Company, provided that the

13

assignee or transferee is the successor to all or substantially all of the assets of the Company and assumes the liabilities, obligations
and duties of the Company under this Agreement, either contractually or as a matter of law.
(c)The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and
to the same extent that the Company would be required to perform it if no such succession had taken place.  As used in this Agreement,
"Company" shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes
and agrees to perform this Agreement by operation of law, or otherwise.  

12.Miscellaneous.  (a)  This Agreement shall be governed by and construed in accordance with the laws of the State of New York,
without reference to principles of conflict of laws.  The captions of this Agreement are not part of the provisions hereof and shall have no
force or effect.  This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their
respective successors and legal representatives.
(b)All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage prepaid, addressed as follows:
If to the Executive:At the most recent address

on file at the Company.

If to the Company:Phillips-Van Heusen Corporation

200 Madison Avenue 

New York, New York  10016

Attention:  General Counsel

or to such other address as either party shall have furnished to the other in writing in accordance herewith.  Notice and communications
shall be effective when actually received by the addressee.
(c)The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.

(d)The Company may withhold from any amounts payable under this Agreement such Federal, state, local or foreign taxes as shall be
required to be withheld pursuant to any applicable law or regulation.

(e)The Executive's or the Company's failure to insist upon strict compliance with any provision of this Agreement or the failure to
assert any right the Executive or the Company may have hereunder, including, without limitation, the right of the Executive to terminate
employment for Good Reason pursuant to Section 3(c) of this Agreement or the right of the Company to terminate the Executive for Cause
pursuant to Section 3(b) of this Agreement, shall not be deemed to be a waiver of such provision or right or any other provision or right
of

14

 this Agreement.  No waiver shall be valid unless in writing signed by the party providing the waiver (that is, by the Executive or an
authorized officer of the Company, as the case may be).
(f)Except as otherwise expressly provided herein, from and after the Effective Date, this Agreement shall supersede any other
employment, severance or change of control agreement between the parties and between the Executive and the Company, with respect to the subject
matter hereof, including without limitation, the 1998 Letter Agreement.  In the event of any inconsistency between the provisions of this
Agreement and the provisions of any Company plan, policy, program, arrangement or other agreement, including any definition, the provision
and/or definition contained in this Agreement shall govern.  Any provision of this Agreement, to the extent necessary to carry out the intent
of such provision, shall survive after the expiration of the Employment Period or the termination of the Executive's employment in accordance
with its terms.

15

IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand and, pursuant to the authorization from its Board of Directors, the
Company has caused these presents to be executed in its name on its behalf, all as of the day and year first above written.
BRUCE J. KLATSKY

PHILLIPS-VAN HEUSEN CORPORATION

By

Name: 

Title: 

16

EXHIBIT A

Except as otherwise expressly provided in the Agreement, for all purposes of this Agreement, the following terms shall have the meanings
set forth below:

"affiliate" of a person or other entity shall mean a person or other entity controlled by, controlling or under common
control with the person or other entity specified.

"Cause" shall mean:
(i)the Executive is convicted of, or pleads guilty or nolo contendere to, a felony within the meaning of U.S. Federal, state or
local law (other than a traffic violation); or

(ii)in carrying out his duties, the Executive has engaged in conduct that constitutes willful gross neglect or willful misconduct
resulting, in either case, in material harm to the Company, provided that an action or failure to act by the Executive shall not be considered
"willful" if the Executive believed in good faith that his action or failure to act was in, or not opposed to, the best interests of
the Company and its affiliates.

Anything notwithstanding to the contrary, the Executive's employment shall not be terminated for "Cause," within the meaning of
clause (ii) above, unless the Executive has been given written notice by the Board stating the basis for such termination and he is given
twenty (20) days to cure the neglect or conduct that is the basis of any such claim and, if he fails to cure such conduct, or such conduct
cannot be cured, the Executive has an opportunity to be heard before the full Board and after such hearing, the Board gives the Executive
written notice confirming that in the judgment of a majority of all the disinterested directors of the Company "Cause" for
terminating the Executive's employment on the basis set forth in the original notice exists.  

"Change in Control" shall be deemed to occur upon the first to occur of the following events:

(i)Any "person" (as such term is used in Sections 3(a)(9) and 13(d) of the Securities Exchange Act of 1934), other than a
"person" who on the Effective Date is the owner of at least 8% of the Voting Power (as defined below) of the securities of the
Company having Voting Power, becomes (A) a "beneficial owner," as such term is used in Rule 13d-3 promulgated under that act, of at
least one-quarter but less than one-half of the Voting Power of securities having Voting Power, unless such acquisition has been approved in
advance by at least three-quarters of the Incumbent Board (as defined in clause (ii) below taking into account the provisos) or (B) a
"beneficial owner," as such term is used in Rule 13d-3, of securities with at least one-half of the Voting Power of the securities of
the Company having Voting Power;

(ii)Individuals who, as of the date hereof, constitute the Board (the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election,
or nomination for election by the Company's shareholders, was approved by a vote of at least a majority of the directors then comprising the
Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or
removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board;

(iii)Consummation of a reorganization, merger, consolidation or a sale or other disposition of all or substantially all of the assets of
the Company (each, a "Business Combination"), in each case unless, following such Business Combination, (A) all or substantially all
of the individuals and entities that were the beneficial owners of the outstanding shares of common stock of the Company (the "Outstanding
Company Common Stock") and the Voting Power of the securities of the Company having Voting Power, immediately prior to such  Business
Combination, beneficially own, directly or indirectly, more than 50% of the then- outstanding shares of common stock and more than 50% of the
combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of
the corporation resulting from such Business Combination (including, without limitation, a corporation that, as a result of such transaction,
owns the Company or all or substantially all of the Company's assets either directly or through one or more subsidiaries) in substantially the
same proportions as their ownership immediately prior to such Business Combination of the Outstanding Company Common Stock and the Voting Power
of the securities of the Company having Voting Power, as the case may be (there being excluded from securities held by such security holders of
the corporation resulting from the Business Combination, but not from the securities with Voting Power of the corporation resulting from such
Business Combination, any securities with Voting Power received by affiliates of such other company in exchange for securities of such other
company or, if such other company is the surviving company and its securities remain unchanged, any securities of such other company with
Voting Power held by an affiliate of such other company immediately prior to the Business Combination), (B) no Person (excluding any
corporation resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such corporation
resulting from such Business Combination) beneficially owns directly or indirectly, 20% or more of, respectively, the then-outstanding shares
of common stock of the corporation resulting from such Business Combination or the combined Voting Power of the then-outstanding voting
securities of such corporation, except to the extent that such ownership existed in the Company prior to the Business Combination, and (C) at
least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the
Incumbent Board at the time of the execution of the initial agreement or of the action of the Board providing for such Business Combination,
whichever occurs first; or

(iv)Approval by the stockholders of the Company of  (A) a liquidation of all or substantially all of the Company's assets or (B) a
dissolution of the Company.

For purposes of this Change in Control definition, the "Company" shall include any entity that succeeds to all or
substantially all of the business of the Company, and "Voting Power" shall mean general voting power under ordinary circumstances, in
the absence of contingencies, to elect the directors of a corporation.

"Disability" shall mean the Executive's inability, due to physical or mental incapacity, to 

2

substantially perform his duties and responsibilities for a period of 180 consecutive days as determined by a medical doctor selected by the
Company and reasonably acceptable to the Executive or his legal representative.  If the parties cannot agree on a medical doctor, each party
shall select a medical doctor and the two doctors shall select a third who shall be the approved medical doctor for this purpose.

 "Good Reason" shall mean termination by the Executive of his employment after written notice to the Company following
the occurrence of any of the following events without his prior written consent: 
(i)a reduction in the Executive's then current Annual Base Salary or the failure to grant the Option as contemplated by Section
2(b)(iii) of this Agreement;

(ii)a material diminution in the Executive's positions, duties or authorities, so that he is unable to carry out his duties as
contemplated on the Effective Date;

(iii)failure to appoint or elect (or reappoint or reelect) the Executive to the position of Chairman of the Board and Chief Executive
Officer of the Company and as a member of the Board, or the removal of the Executive from any such position;

(iv)the assignment to the Executive of duties which are materially inconsistent with his duties as the Chairman of the Board and Chief
Executive Officer of the Company;

(v)the taking of any action by the Company that would substantially diminish the aggregate value of the benefits provided to the
Executive pursuant to the Company's employee benefit plans as in effect on the Effective Date;

(vi)a change in the reporting structure so that the Executive reports to someone other than the Board;

(vii)requiring the Executive to relocate more than 35 miles from the location of the Company's headquarters as of the Effective Date;

(viii)a breach by the Company of any material provision of this Agreement; or

(ix)the failure of the Company to require any successor to the Company (whether direct or indirect, by purchase, merger, consolidation
or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement
in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place.

3

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