Document:

exv10w6

 

EXHIBIT 10.6

Execution Copy

PRIVATE BRANDS AGREEMENT

     This PRIVATE BRANDS AGREEMENT (this “Agreement”), dated as of March 6, 2006 effective
as of March 5, 2006 (the “Effective Time”), is made among Saks Incorporated, a Tennessee
corporation (“Seller”), The Bon-Ton Stores, Inc., a Pennsylvania corporation (“Bon-Ton”),
Herberger’s Department Stores, LLC, a Minnesota limited liability company (“Herberger’s”),
and Parisian, Inc., an Alabama corporation (“Parisian,” with Bon-Ton, Herberger’s and
Parisian being collectively referred to herein as “Buyers” or individually as a
“Buyer”).

RECITALS

     WHEREAS, pursuant to that certain Purchase Agreement, dated as of October 29, 2005 (the
“Purchase Agreement”), by and between Seller and Bon-Ton, Seller has agreed to sell, or cause to be
sold, to Bon-Ton the Securities, and Bon-Ton has agreed to purchase the Securities as provided
therein; and

     WHEREAS, in connection with the transactions contemplated by the Purchase Agreement,
Herberger’s and Parisian wish to continue selling in their retail stores certain merchandise
bearing the private label brands owned by McRae’s, Inc., a subsidiary of Parisian, and other brands
owned by third parties and licensed to Seller, which merchandise was marketed and sold by
Herberger’s and Parisian to retail customers in the ordinary course of the Business immediately
prior to the Effective Time; and

     WHEREAS, the assets of Buyers include an existing inventory of products and the right to
acquire additional products that are the subject of outstanding and unfilled orders with Vendors
(as hereinafter defined),

     WHEREAS, following the execution of the Purchase Agreement Seller and Bon-Ton entered into
that certain Interim Private Brands Agreement dated as of January 1, 2006 (“Interim
Agreement”), under the terms of which Bon-Ton agreed to order from Seller prior to the Closing
certain merchandise bearing private label brands for resale in Bon-Ton retail stores;

     WHEREAS, Bon-Ton wishes to continue selling in its retail stores merchandise bearing private
label brands; and

     WHEREAS, following the Closing Buyers are willing to purchase from Seller and Seller is
willing to sell to Buyers On Order Products and additional New Order Products (as those terms are
hereinafter defined) subject to the terms as set forth in this Agreement.

     NOW, THEREFORE, in consideration of the premises and the mutual representations, warranties,
covenants and agreements contained in this Agreement, and for other

 

 

good and valuable consideration, the receipt and sufficiency of which are acknowledged, the
parties agree as follows:

     1. Scope.

     (a) Buyers shall acquire from Seller and Seller shall sell to Buyers the Products on the terms
and conditions set forth herein. For the purposes of this Agreement: (i) “Products” shall
mean collectively Inventory Products, On Order Products, New Order Products, Direct Order
Merchandise and Replenishment Merchandise; (ii) “Inventory Products” shall mean merchandise
bearing Private Brands in the inventory of the Business at the Effective Time; (iii) “On Order
Products” shall mean merchandise attributable to the Business bearing Private Brands that are
the subject of purchase orders or commitment sheets issued by Seller and accepted by Vendors prior
to the Effective Time that remain unfilled as of the Effective Time, or that Seller is or may
otherwise become obligated to purchase; (iv) “New Order Products” shall mean such other
merchandise bearing Private Brands as may be ordered by Buyers for delivery by Seller during the
Term of this Agreement; (v) “Replenishment Merchandise” shall mean regularly stocked
merchandise bearing Private Brands that Buyers shall maintain on their replenishment system and
order directly from Vendors (as defined below) and as to which Buyers shall otherwise deal directly
with Vendors; (vi) “Direct Order Merchandise” shall mean merchandise bearing Private Brands
sourced from Vendors located in the United States as to which Buyers shall order merchandise
directly from the Vendors and otherwise deal directly with Vendors in connection therewith, but
excluding Replenishment Merchandise; (vii) “Seller Sourced Products” shall mean,
collectively, Inventory Products, On Order Products and New Order Products; and (viii) “Private
Brands” shall mean, collectively, those trademarks set forth on Exhibit A identified as
private brands owned by McRae’s, Inc, a wholly-owned subsidiary of Parisian (“Owned
Brands”), and the private brands set forth on Exhibit A owned by third parties and
licensed to Seller (“Third Party Brands”). Notwithstanding the foregoing, Associated
Merchandising Corporation shall not be a Vendor of Direct Order Merchandise but shall be a Vendor
of On Order Products, New Order Products and Replenishment Merchandise.

     (b) Buyers shall purchase New Order Products pursuant to Purchase Orders (as hereinafter
defined) issued by Buyers from time to time under Section 4(a). Subject to obtaining any
necessary consents or approvals from Vendors or the owners or licensors of any applicable Third
Party Brands, Buyers’ obligations to purchase Inventory Products and On Order Products shall be
firm and not subject to modification or cancellation.

     (c) Buyers acknowledge that: (i) Seller is entering into this Agreement as an accommodation to
Buyers so that Buyers will have sources of supply for Products and may continue to offer to sell
Products bearing Third Party Brands (“Third Party Branded Products”) to retail customers in
their stores for up to six (6) months following the expiration or termination of this Agreement as
more fully set forth herein; (ii) Seller is not a manufacturer of the Products; (iii) Seller has
entered or will enter into agreements with one or more third party vendors, agents or service
providers (“Vendors”) to enable Seller to deliver Seller Sourced Products to Buyers and
Buyers to acquire Replenishment Merchandise and Direct Order Merchandise from Vendors; (iv) Seller
has agreed that Buyers may enter into direct business relationships with Vendors of Replenishment
Merchandise and Direct Order Merchandise for the purposes of acquiring such

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merchandise; and (v) Buyers will receive the benefits of Seller’s business relationships with
Vendors and the owners or licensors of the Third Party Brands.

     (d) With respect to Third Party Branded Products, Buyers acknowledge that: (i) Seller does not
own the Third Party Brands; (ii) Seller has entered into license agreements with third parties that
impose upon Seller certain obligations and restrictions with respect to the use of Third Party
Brands and the sale and marketing of the Third Party Branded Products; (iii) Seller must obtain the
consent of the owners or licensors of the Third Party Brands in order to permit the transfer or
sale to Buyers of Third Party Branded Products, and the resale of the Third Party Branded Products
to customers in Buyers’ retail stores; (iv) it shall be necessary for Buyers to take certain
actions with respect to Third Party Branded Products in order to prevent Seller from being in
breach or default of its obligations under its license agreements for the Third Party Brands; and
(v) agreements relating to Third Party Brands may terminate prior to the expiration or termination
of this Agreement (in which case Seller shall be under no obligation to make such Third Party
Branded Products available to Buyers). Seller agrees that any amendment or modification of an
agreement relating to a Third Party Brand will not contain terms that are more onerous on Buyers
than similar terms imposed upon Seller. In no event shall any amendment to or modification of an
agreement relating to any Third Party Brand or the AMC Agreement (as hereinafter defined) impose
upon Buyers any additional obligation to pay any minimum amounts (A) with respect to royalties
relating to any Third Party Brand or (B) with respect to any service charge under the AMC
Agreement.

     (e) Buyers will promote, market and sell the Third Party Branded Products in their businesses
in the same manner and to the same extent as the Third Party Branded Products were promoted,
marketed and sold by Herberger’s and Parisian or their Subsidiaries prior to the Effective Time.
Without limiting the generality of the foregoing, Buyers shall be responsible for their
proportionate share of any advertising or promotions obligations set forth in any license agreement
between Seller and the owner or licensor of any Third Party Brand in effect as of the Effective
Time (without any amendment or supplement thereto that would have a material adverse effect upon
the obligations of Buyers hereunder) and any such license agreement entered into after the
Effective Time with the consent of any Buyer. Subject to the consent of the owners of the Third
Party Brands, Buyers shall sell the Third Party Branded Products to retail customers in the
ordinary course of business only in the retail department stores operated by Buyers or their
Affiliates. When and as requested (subject to reasonable notice) by Seller, Buyers shall take any
action deemed reasonably necessary by Seller to protect the image, reputation and goodwill
represented by the Third Party Brands, to enable Buyers to remain in compliance with their
obligations under this Agreement with respect to the promotion, marketing and sale of Third Party
Branded Products, and to enable Seller to remain in compliance with Seller’s obligations under any
license agreement in effect as of the Effective Time (without any amendment or supplement thereto
that would have a material adverse effect upon the obligations of Buyers hereunder) and any such
license agreement entered into after the Effective Time with the consent of any Buyer with the
owner or licensor of a Third Party Brand. Without limiting the generality of the foregoing, when
and as requested by Seller, Buyers shall: (i) deliver to Seller copies of advertising or
promotional material for Third Party Branded Products; and (ii) modify or discontinue any
advertising or promotional material or other activity or practice with respect to the Third Party
Branded Products that is not in compliance with the requirements of this Agreement or Seller’s
license agreements for the Third Party Brands.

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     (f) Buyers shall not alter any Third Party Brand on any Third Party Branded Product, apply or
use any Third Party Brand on other goods or with respect to any services, or relabel, retag, modify
or repackage the Third Party Branded Products in any manner. Seller’s obligation to deliver or
sell to Buyers any Seller Sourced Products under this Agreement or the Purchase Agreement, or
Buyers’ right to purchase from Vendors Replenishment Merchandise or Direct Order Merchandise, shall
be conditioned upon the receipt by Seller of any consent or approval required under an agreement
between Seller and a Vendor or the owner or licensor of any Third Party Brand. Seller hereby
agrees to use its commercially reasonable efforts to obtain from any Vendors or the owners or
licensors of any applicable Third Party Brand any consents necessary for Seller to perform its
obligations under this Agreement and for Buyers and their Affiliates to sell all Third Party
Branded Products in the ordinary course of business in accordance with the requirements of the
license agreements for the Third Party Brands, provided Seller shall not be obligated to pay any
money or provide other consideration to a Vendor or the owner or licensor of a Third Party Brand in
order to obtain any such consent. The delivery or sale of Third Party Branded Products to Buyers
shall not be deemed to be a grant to Buyers of any right, title, interest or license in and to the
Third Party Brands or other intellectual property rights in the Third Party Branded Products other
than the limited right to promote, market and sell the Third Party Branded Products in accordance
with the terms of this Agreement. Buyers shall not seek to register or otherwise contest the
ownership of any Third Party Brand used on the Products.

     (g) Buyers acknowledge that: (i) Seller’s agreement with AMC (“AMC Agreement”), a
Vendor of Seller Sourced Products and Replenishment Merchandise, contains an annual minimum service
charge requirement with respect to Seller Sourced Products to be purchased under this Agreement and
Replenishment Merchandise to be purchased directly by Buyers; and (ii) Seller’s license agreements
with the owners or licensors of the Third Party Brands contain annual minimum royalty obligations
with respect to the Retail Sales (as hereinafter defined) of Third Party Branded Products. The
quantities of Seller Sourced Products to be purchased under this Agreement by Seller from AMC and
Replenishment Merchandise to be purchased by Buyers directly from AMC represent a substantial
portion of the goods to be purchased by Seller under the AMC Agreement. The royalties attributable
to the Third Party Branded Products to be purchased under this Agreement (or separately by Buyers
with respect to the Laura Ashley brands for the period February 1, 2007 through December 31, 2007)
represent a significant portion of the Seller’s minimum royalty obligations under the license
agreements for the Third Party Brands. Accordingly, Buyers shall be responsible for their share of
any shortfall in meeting the applicable minimums if, in the case of the AMC Agreement, Buyer’s
purchases of Seller Sourced Products purchased by Seller from AMC or Replenishment Merchandise
purchased by Buyers from AMC, or in the case of the license agreements, royalties from Retail Sales
of each Third Party Branded Product, fail to meet the minimum amounts set forth on Exhibit
B for the periods indicated; provided, however, that Buyers shall not be responsible for any
portion of the shortfall to the extent that any portion of such shortfall is attributable to: (x)
the failure of Seller to obtain from any Vendors or the owners or licensors of any applicable Third
Party Brands any consents or approvals required under any agreement between Seller and a Vendor or
such owner or licensor; or (y) Seller’s failure to accept a Purchase Order pursuant to Section 4(b)
of this Agreement. Subject to the foregoing, the Buyers’ share of a shortfall shall be: (A) in the
case of the AMC Agreement, the amount, if any, by which the minimum set forth on Exhibit B
exceeds the service charges payable to AMC attributable to the Buyers’ actual purchases of Seller
Sourced Products and Replenishment Merchandise sourced through AMC;

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and (B) in the case of each category of Third Party Branded Products, the amount, if any, by
which the minimum set forth on Exhibit B exceeds the royalties actually paid by Buyers for
such Third Party Branded Products. For the purposes of this Agreement, “Retail Sales”
shall mean Buyers’ gross retail sales price of the Third Party Branded Products, less amounts
granted for returns or allowances to retail customers who purchase the Third Party Branded
Products. Retail Sales shall not include any sales or use taxes collected by Buyers from a retail
customer. Notwithstanding the foregoing, Buyers shall not be obligated to pay any shortfall for an
applicable period if Seller is not obligated to pay a shortfall with respect to its contracted
minimum to AMC or the owner or licensor of a Third Party Brand.

     (h) Buyers acknowledge that Seller’s license agreement with the licensor of the Laura Ashley
Brand (“Laura Ashley License”) expires on December 31, 2007, and that Seller has an
obligation for minimum royalties through such date. Concurrently with the expiration or
termination of this Agreement, Buyers shall enter into a sublicense agreement with Seller under the
terms of which Buyers will be licensed to source Laura Ashley branded merchandise from third
parties, will be obligated to pay the royalties on the Retail Sales of such merchandise, and will
be obligated to pay their proportionate share of the minimum royalties of Seller determined in
accordance with the principles set forth in Section 1(g). The sublicense will contain
such other terms and conditions as are required under the Laura Ashley License and as are customary
for an agreement of this nature. The sublicense shall be subject to the consent of the licensor
under the terms of the Laura Ashley License.

     (i) For five (5) years from the Effective Time (or in the case of the owner of the Preswick &
Moore Brand fifteen (15) years), neither Seller and its Affiliates, on the one hand, nor Buyers and
their Affiliates, on the other hand, may negotiate or enter into any agreement, arrangement or
understanding, oral or written, with any Vendor or owner or licensor of any Third Party Brand which
provides for the grant of exclusive rights to either of the Buyers or the Seller (or any of their
respective Affiliates) to the exclusion of the other.

     (j) Buyers acknowledge that Seller is maintaining personnel within its private brands
organization to provide services under this Agreement for the benefit of Buyers, to service
Seller’s retained businesses and to fulfill Seller’s obligations to Belk, Inc. Seller acknowledges
that Buyers plan to develop their own private brands capability during the Term and to transition
some of the business processes of Seller’s private brands organization to Buyers’ private brands
organization. In connection therewith, Schedule 1 identifies the categories of services
provided by the Seller’s private brands organization, a description of the processes involved with
each service, the portion of the monthly Administrative Fee allocated to each category, and the end
date and/or phase out plan for each category. Seller shall provide the category of service at the
level and through the end of the month indicated. The Administrative Fee will be reduced by the
amount indicated at such time as a category of service is discontinued or its level reduced. At
the time a category of service is discontinued or the level reduced, Seller’s staffing within its
private brands organization will be reduced accordingly. In connection with Seller’s staff
reductions, Buyers may wish to hire such personnel from Seller’s private brands organization in
order to staff Buyers’ private brands capability. Buyers shall coordinate with Seller all
communications to such personnel working in Seller’s private brands organization and Seller shall
reasonably cooperate with Buyers in this effort. Buyers agree and acknowledge that Seller shall
have the right to approve the transfer date of employment of any employee of Seller working in
Seller’s private

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brands organization to a Buyer or any Affiliates of the Buyers, which approval will not be
unreasonably withheld or delayed.

     (k) Buyers shall establish a direct business relationship with each Vendor of Replenishment
Merchandise and Direct Order Merchandise. Seller shall provide Buyers such information as Buyers
may reasonably require to place orders for Replenishment Merchandise and Direct Order Merchandise
and to manage their relationships with the Vendors of Replenishment Merchandise and Direct Order
Merchandise. All commercial terms for the acquisition of Replenishment Merchandise and Direct
Order Merchandise shall be established between Buyers and the Vendors. Without limiting the
generality of the foregoing, all orders for Replenishment Merchandise and Direct Order Merchandise
shall be placed by each Buyer directly with each Vendor, with invoices for the Replenishment
Merchandise and Direct Order Merchandise to be issued by each Vendor to the applicable Buyer, and
payment to be made by the applicable Buyer directly to each Vendor. Replenishment Merchandise and
Direct Order Merchandise bearing Third Party Brands shall be subject to the royalty obligations
under Section 3(d). Replenishment Merchandise purchased from AMC shall be credited against
Seller’s annual minimum service charge obligation to AMC under Section 1(g). In connection
therewith, within ten (10) days following the end of each month, Buyers shall submit to Seller a
written report identifying the quantity and Buyer’s fully landed cost of Replenishment Merchandise
purchased from AMC and delivered to Buyers during the preceding month and such other information as
Seller may reasonably require.

     (l) Bon-Ton, Herberger’s and Parisian shall each be jointly and severally liable for the
obligations of Buyers under this Agreement.

     (m) THIS AGREEMENT AND THE PURCHASE AGREEMENT STATE THE ONLY TERMS AND CONDITIONS UNDER WHICH
SELLER SHALL SELL TO BUYERS, AND BUYERS SHALL PURCHASE FROM SELLER, THE SELLER SOURCED PRODUCTS.

     2. Quantities.

     (a) From time to time as requested by Seller, Buyers shall provide a forecast of their
requirements for New Order Products. Any forecast of Buyers’ requirements for New Order Products
shall not be binding in any way on Buyers or Seller, it being understood that such forecasts shall
be requested by Seller and prepared by Buyers for planning purposes. Any such forecast may be
modified at any time by Buyers in their sole discretion.

     (b) Buyers’ commitment to purchase New Order Products from Seller shall be limited to New
Order Products that are subject to Purchase Orders issued by a Buyer and accepted by Seller
pursuant to Section 4.

     3. Price and Sales Reports.

     (a) The price for Inventory Products has been established and shall be deemed to be subsumed
within the purchase price for the Securities purchased under the Purchase Agreement.

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     (b) The price for On Order Products and New Order Products shall be Seller’s fully landed cost
for such Products, including the invoice price from each Vendor of Products, all freight (air,
ocean or land), insurance, duties, brokers or agents fees or commissions, imposts, levies, taxes or
other amounts paid by Seller with respect to the procurement of Products. The fully landed cost of
On Order Products and New Order Products shall not include Seller’s administrative costs of its
private brands organization, royalties payable by Seller to the owners or licensors of the Third
Party Brands, or Seller’s fees for services provided under the Buyer Transition Services Agreement.

     (c) Buyer shall pay to Seller a separate fee to cover Seller’s administrative costs of its
private brands organization (“Administrative Fee”). The Administrative Fee is set forth
on page 2 of Schedule 1 and shall be payable monthly in arrears five (5) days following the
end of each calendar month. The Administrative Fee for a partial month (i.e., the period from the
Effective Time to the end of the month in which this Agreement is executed, or the period beginning
on the day after the last full calendar month in the Term to the date of expiration or termination)
shall be prorated on a daily basis. The Administrative Fee for the first partial month shall be
paid on the Effective Time. The Administrative Fee shall be adjusted in accordance with
Section 1(j).

     (d) In connection with sales by Buyers of Third Party Branded Products, Buyers shall pay to
Seller the applicable royalties payable by Seller to the owners or licensors of the Third Party
Brands. The amount of such royalties shall be the Retail Sales of the Third Party Branded Products
times the applicable percentage indicated on Exhibit A. Within ten (10) days following
the end of a calendar quarter (i.e., each three (3) month period ending on March 31, June 30,
September 30 and December 31 of each year) Buyers shall submit to Seller a written sales report
signed and certified as accurate in all material respects by an officer of each Buyer identifying
the Retail Sales of each category of Third Party Branded Products sold by Buyers during the
applicable quarter. Such report shall be required even if no sales of a particular Third Party
Branded Product have been made in such quarter. Payment of the royalties due with respect to each
category of Third Party Branded Products shall accompany each report. In no event shall Seller’s
receipt of Buyers’ report or acceptance of a royalty payment be deemed to be a waiver of Seller’s
right to challenge (on behalf of itself or the owner or licensor of a Third Party Brand) the
accuracy of any report or the amount of any payment due from Buyers.

     4. Purchase Orders.

     (a) A purchase order issued by each Buyer for the New Order Products may consist of a hard
copy in the same form utilized by Seller in the ordinary course of business immediately prior to
the Effective Time, an electronic message in a form and delivered pursuant to procedures
established by Seller, or other written communication from a Buyer to Seller in a form acceptable
to Seller which complies with the requirements of this Agreement (“Purchase Orders”). All
Purchase Orders issued by a Buyer shall: (i) reference this Agreement; (ii) identify the New Order
Products and requested delivery date or dates; and (iii) identify the quantities to be purchased,
the requested delivery point, and the requested delivery date, which shall be no sooner than
permitted by the customary lead times for the delivery of New Order Products from Vendors to
Seller. REGARDLESS OF FORM, EVERY PURCHASE ORDER ISSUED UNDER THIS AGREEMENT SHALL BE DEEMED TO
EXCLUDE THE STANDARD TERMS AND

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CONDITIONS SET FORTH ON THE REVERSE SIDE OF ANY SUCH FORM OR ANY OTHER FORM OR AGREEMENT USED
BY EITHER PARTY.

     (b) Seller shall accept a Purchase Order for New Order Products issued by a Buyer conforming
to the lead times and other procedures and requirements established by Seller and Vendors to the
extent the quantity of New Order Products being ordered is no greater than the quantity of the same
or comparable merchandise ordered for the comparable procurement cycle immediately prior to the
Effective Time. Seller shall have the right to accept or reject a Purchase Order that does not so
conform. Notwithstanding the quantity limitations set forth in the first sentence of this
Section 4(b), and provided all other conditions of the first sentence have been met, Seller
shall accept Purchase Orders for additional New Order Products to the extent the quantities of such
additional New Order Products fairly reflect Buyers’ requirements with respect to: (i) stores
planned by Buyers prior to the Effective Time but opened after the Effective Time; (ii) stores of
Buyers that were existing at the Effective Time which are expanded after the Effective Time; (iii)
additional demand reasonably anticipated by Buyers at such stores; or (iv) as permitted by any plan
developed in accordance with the provisions of Section 4(e). Once accepted by Seller, a
Purchase Order shall be deemed to be non-cancelable by Buyer. Seller may cancel a Purchase Order
if and to the extent any Vendor refuses to accept Seller’s purchase order to acquire New Order
Products from the Vendor, or if following such acceptance, the Vendor fails or refuses to deliver
New Order Products in accordance with Seller’s purchase order.

     (c) Wherever commercially reasonable, Seller shall cause New Order Products to be shipped
directly from the Vendor to a destination designated by a Buyer in its Purchase Order. Buyers may
change the quantities and delivery dates on individual Purchase Orders without penalty, provided a
Buyer notifies Seller of the changes in accordance with the applicable Vendor’s lead times and the
Vendor otherwise accepts any such change.

     (d) Seller’s ability to fulfill Buyers’ Purchase Orders for New Order Products shall be
dependent upon Buyers issuing Purchase Orders conforming to the lead times and other procedures and
requirements established by Seller and Vendors. Seller shall use reasonable commercial efforts to
deliver New Order Products in accordance with Buyers’ Purchase Orders, provided under no
circumstances shall Seller be liable to Buyers for any failure to perform under any Purchase Order
or this Agreement caused by any failure or refusal of a Vendor to perform any obligation to Seller
with respect to any such Buyer’s Purchase Order.

     (e) Buyers and Seller shall cooperate in good faith to develop mutually acceptable plans for
the purchase by Buyers of New Order Products for stores owned and operated by Bon-Ton other than
the stores that are the subject of the Purchase Agreement and this Agreement. Such plans shall
take into consideration: (i) Bon-Ton’s reasonable requirements for such New Order Products,
including the assortment and quantity of such New Order Products; (ii) the commitments of Seller’s
private brands organization to Belk, Inc. and Seller’s retained businesses; and (iii) Seller’s
obligations to Vendors or the owners or licensors of Third Party Brands. The plans shall also
provide for an appropriate adjustment of the Administrative Fee to reflect the increases in
Seller’s costs, if any, associated with the additional volume. Once the plan has been mutually
agreed upon, Buyers’ orders for New Order Products made under the plan shall be subject to the
terms and conditions of this Agreement.

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     5. Delivery, Title and Risk of Loss. 

     (a) Inventory Products shall be deemed to be delivered to a Buyer at the Effective Time. On
Order Products and New Order Products shall be deemed to be delivered to a Buyer at such time as
the On Order Products or New Order Products are delivered to Seller by a Vendor under the
applicable purchase order or other agreement between Seller and the Vendor.

     (b) Freight, insurance and other costs attributable to the delivery and sale of On Order
Products and New Order Products shall be determined in accordance with the applicable purchase
order or other agreement between Seller and the Vendor.

     (c) Title and risk of loss for Inventory Products shall be deemed to pass to a Buyer at the
Effective Time. Title and risk of loss for On Order Products and New Order Products shall be
deemed to pass automatically from Seller to a Buyer at such time as title and risk of loss passes
from the Vendor to Seller pursuant to the applicable purchase order or other agreement between
Seller and the Vendor.

     6. Billing and Payment.

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

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to time. Failure to maintain the LOC(s) in effect in accordance with this Section 6(a), or to
comply with the other requirements of this Section 6(a), shall constitute a material breach of this
Agreement and Seller may, without liability and in addition to its other remedies under this
Agreement, suspend its obligations hereunder with respect to all outstanding Purchase Orders for On
Order Products or New Order Products until such time as Bon-Ton complies with the requirements of
this Section 6(a) to Seller’s reasonable satisfaction.

     (b) Unless paid as provided in Section 6(a), Buyers shall promptly pay Seller’s
invoices and other amounts due under this Agreement. Seller will provide reasonable additional
information requested by Buyers in writing supporting Seller’s invoices. Unless directed otherwise
by Seller, Buyers shall pay all invoices or other amounts due, as applicable, in the case of
invoices, not later than fifteen (15) days following receipt by a Buyer of Seller’s invoice, or, in
the case of other amounts, on the due date. Buyers shall not be entitled to offset any amounts
owing to it by Seller or any of Seller’s Affiliates against amounts payable by Buyers hereunder or
under any other agreement or arrangement. Should Buyers reasonably and in good faith dispute any
portion of an invoice, Buyers shall pay the undisputed portion of the invoice in accordance with
this Section 6(b) and promptly notify Seller in writing of the nature and basis of the
dispute.

     (c) If a bank or other financial institution fails to honor any amount drawn on an LOC, such
failure shall be considered a material breach of this Agreement (except to the extent of any
invoiced amounts reasonably disputed by Buyers in good faith and of which dispute Buyers have
notified Seller in accordance with the requirements of this Agreement) and Seller may, without
liability, suspend its obligations hereunder with respect to all undelivered On Order Products or
New Order Products or outstanding Purchase Orders for On Order Products or New Order Products until
such time as such invoices have been paid in full. The remedy provided to Seller by this
Section 6(c) shall be without limitation of any other applicable provisions of this
Agreement, including Sections 6(e) and 8. Notwithstanding the foregoing, Seller
shall be entitled to draw the full face amount of any LOC, in prepayment of the applicable Purchase
Orders, if such LOC: (i) is scheduled to expire within thirty (30) days; and (ii) has not been
replaced with a substitute LOC that complies with the requirements of Section 6(a).

     (d) All charges and fees to be paid by Buyers to Seller under this Agreement are exclusive of
any applicable taxes required by law to be collected from Buyers (including withholding, sales,
use, excise or services taxes, which may be assessed on the provision of any services hereunder).
If a withholding, sales, use, excise or services tax is assessed on the delivery or sale of Seller
Sourced Products or the provision of any other services under this Agreement, Buyers shall pay
directly, reimburse or indemnify Seller and its Affiliates for such tax. The parties shall
cooperate with each other in determining the extent to which any tax is due and owing under the
circumstances, and shall provide and make available to each other any resale certificate,
information regarding out-of-state use of materials, services or sale, and other exemption
certificates or information reasonably requested by the other party.

     (e) All payments required to be made pursuant to this Agreement shall bear interest from and
including: (i) the date ten (10) days following receipt by Buyers of Seller’s invoice for
undisputed invoiced amounts (but only in cases in which Buyers have not paid within fifteen (15)
days following receipt by Buyers of Seller’s invoice); or (ii) the due date with respect

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to other amounts, in each case to but excluding the date of payment at a rate equal to a per
annum rate 150 basis points above LIBOR, or such higher rate as Seller may be obligated to pay to
an owner or licensor under a license agreement for a Third Party Brand, or to a Vendor under an
applicable agreement or purchase order, from the date such interest begins to accrue to the payment
date. Such interest shall be payable at the same time as the payment to which it relates is made
and shall be calculated on the basis of the number of days (excluding the payment date) by which
the payment date follows the date such payment is due.

     7. Books and Records; Audits.

     (a) Buyers shall prepare and maintain complete and accurate books of account and records
(specifically including without limitation the originals or copies of documents supporting entries
in the books of account and records) covering all transactions arising out of or relating to this
Agreement. Seller and its duly authorized representatives (or in the case of Third Party Branded
Products, the owner or licensor of the Third Party Brand), upon appropriate advance notice to
Buyers, shall have the right, during regular business hours, for the duration of this Agreement,
and for a term of one (1) year following the early termination or expiration of this Agreement, to
audit said books of account and records and examine all other documents and materials in the
possession of, or under the control of, Buyers with respect to the subject matter of this
Agreement. All such books of account, records and documents shall be kept available by Buyers for
at least one (1) year after the early termination or expiration of this Agreement.

     (b) If, as a result of any audit of Buyers’ books and records, it is shown that with respect
to any calendar quarter during the Term, royalties or minimums paid by Buyers to Seller were: (i)
less than the amounts which should have been paid, Buyers immediately shall pay such shortfall to
Seller together with the interest due under Section 6(e) with respect to the shortfall; and
(ii) greater than the amounts which should have been paid, Seller shall refund such overpayment to
Buyer(s) to the extent Seller is entitled to, or obtains after utilizing commercially reasonable
efforts without incurring any cost or expense, a refund of the overpayment from a Vendor or the
owner or licensor of a Third Party Brand. If the amount of a shortfall is equal to four percent
(4%) or more of the payment actually due Seller, Buyers shall reimburse Seller for the cost to
Seller of such audit. Such payments shall be made within ten (10) days following delivery to
Buyers of a written demand by Seller for payment.

     (c) In addition to any inspection or audit by Seller or an owner or licensor of a Third Party
Brand of the books and records of Buyers under Section 7(a), Buyers shall permit the owner
or licensor of a Third Party Brand, as applicable, to inspect the facilities and operations where a
Buyer conducts business activities with respect to Products to the extent required by the agreement
relating to the applicable Third Party Brand.

     (d) In the event of an assignment by Seller of this Agreement to one of the companies
identified in Schedule 2 (“Subject Buyers”), Seller’s audit, inspection and access rights
under this Section 7 shall be limited to audit, inspection and access by an independent
certified public accounting firm designated by Seller (selected from one of the “Big Four” or a
reasonable substitute), and in connection with its activities such accounting firm shall not
disclose to Seller or to any other Person Confidential Information of Buyers and their Affiliates
not otherwise known to Seller in the ordinary course of the business relationship between the
parties.

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     8. Term of Agreement; Termination.

     (a) This Agreement shall commence on the Effective Time and shall continue (unless sooner
terminated pursuant to the terms hereof) through January 31, 2007 (“Term”). This Agreement
shall not be subject to renewal.

     (b) Buyers may terminate this Agreement at any time upon written notice to Seller in the event
of a material breach of this Agreement by Seller. Such termination shall become effective thirty
(30) days from the date of Seller’s receipt of such notice unless the breach is cured or, if not
able to be cured within said 30-day period, significant steps to cure have been taken by Seller
within that period.

     (c) Seller may terminate this Agreement at any time upon written notice to Buyers in the event
of a material breach of this Agreement by a Buyer. Such termination shall become effective thirty
(30) days from the date of Buyers’ receipt of such notice unless the breach is cured or, if not
able to be cured within said 30-day period, significant steps to cure have been taken by Buyers
within that period; provided, that if such breach relates to the non-payment by Buyers of
any amount due under Section 6, then termination under this Section 8(c) shall be
effective fifteen (15) days from the date of receipt of notice of breach from Seller unless all
unpaid fees or expenses that are in payment default have been paid in full within such 15-day
period.

     (d) Following the expiration or earlier termination of this Agreement for any reason, Seller
shall not be obligated to accept any Purchase Order for New Order Products. Following the
expiration of this Agreement under Section 8(a) or the termination of this Agreement by
Buyers under Section 8(b), but subject to the terms and conditions of this Agreement,
Seller shall continue to deliver any previously undelivered On Order Products and to fill
previously accepted outstanding and unfilled Purchase Orders for New Order Products. Following any
termination of this Agreement by Seller under Section 8(c), but subject to the terms and
conditions of this Agreement, Seller may elect to continue to deliver any previously undelivered On
Order Products and to fill previously accepted outstanding and unfilled Purchase Orders for New
Order Products, provided under no circumstances shall Seller be obligated to do so. Buyers shall
continue to maintain the letter of credit required under Section 6(a) until Buyers have
paid for all Products delivered by Seller following the expiration or termination of this
Agreement. Subject to Sections 1(c) through 1(h), Section 1(k),
Section 3(d) and Section 6, Buyers shall have six (6) months following the
expiration or termination of this Agreement to sell off their inventory of Third Party Branded
Products, or such longer or shorter period as may be permitted under an applicable license
agreement for the Third Party Brand.

     (e) Notwithstanding any other provision in this Agreement to the contrary, whether this
Agreement expires or is terminated by Seller or Buyers, or whether this Agreement is subject to a
partial termination under Section 9, Buyers shall remain liable for the payment of the
Administrative Fee accrued prior to expiration or termination and all amounts due with respect to
On Order Products or New Order Products delivered under the terms of this Agreement, even though
such On Order Products or New Order Products may not be delivered until after such expiration or
termination. Further, in the event of expiration or termination of this Agreement,
Sections 1(e) through 1(i), 1(k), 1(l), 3(a), 3(b), 3(d), 5, 6, 7, 8, 10, 12,
13 and 15

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through 24 shall continue in full force and effect; provided that Sections
1(g) and 1(h) shall not survive if this Agreement is terminated pursuant to Section
8(b).

     9. Partial Termination. Subject to Section 8(d), this Agreement shall
automatically terminate with respect to: (i) any category of Third Party Branded Product upon the
expiration or termination for any reason of the applicable license agreement between Seller and the
owner or licensor of the Third Party Brand; or (ii) any other Product affected by the expiration or
termination of a purchase order, sourcing or other agreement between Seller and a Vendor of the
Product.

     10. Confidentiality. Each party shall, and shall cause each of its Affiliates and
each of its and their officers, directors and employees to, hold all information relating to the
business of the other party disclosed to it by reason of this Agreement (the “Confidential
Information”) confidential, and shall not disclose or permit to be disclosed any such
Confidential Information to any third party unless legally compelled to disclose such information;
provided, however, that to the extent that a Person receiving Confidential
Information hereunder may become legally compelled to disclose any Confidential Information, such
Person: (a) may only disclose such information if it shall first have used commercially reasonable
efforts to, and, if practicable, shall have afforded the other party the opportunity to, obtain an
appropriate protective order or other satisfactory assurance of confidential treatment for the
information required to be so disclosed; and (b) if such protective order or other remedy is not
obtained, or the other party waives such Person’s compliance with the provisions of this
Section 10, shall only furnish that portion of the Confidential Information which is
legally required to be so disclosed. As used herein, “Confidential Information” does not
include any information that: (i) is or becomes generally available to the public other than as a
result of a disclosure by the party receiving the Confidential Information; (ii) was available to
the receiving party on a non-confidential basis prior to its disclosure by the disclosing party
(except to the extent that such information was available to Seller in connection with the
Business); (iii) becomes available to the receiving party from a Person other than the disclosing
party or its Affiliates who is not, to the receiving party’s knowledge, subject to any legally
binding obligation to keep such information confidential; or (iv) such party demonstrates is or was
independently developed by or on behalf of a party without the direct or indirect use of any of the
other party’s Confidential Information.

     11. Third Party Non-Disclosure Agreements. To the extent that any information
disclosed under this Agreement requires a specific form of non-disclosure agreement under the terms
of an applicable license agreement for a Third Party Brand as a condition of its disclosure or use,
Buyers shall execute (and shall cause Buyers’ employees to execute, if and to the extent required)
any such form.

     12. Limitation of Liability; Disclaimer; Indemnity.

     (a) Except in the case of fraud, willful misconduct or gross negligence, each party and their
respective Affiliates shall not be liable to the other parties, their Affiliates or any third party
for any special, incidental, consequential (including loss of revenues or profits), exemplary or
punitive damages arising from any claim relating to this Agreement or any of the Products to be
provided hereunder or the performance of or failure to perform such party’s

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obligations under this Agreement, whether such claim is based on warranty, contract, tort
(including negligence or strict liability) or otherwise, all of which are hereby excluded by
agreement of the parties regardless of whether or not a party to this Agreement has been advised of
the possibility of such damages. Any of the foregoing categories of damages Seller is required to
pay a third party on account of or attributable to a Buyer’s conduct shall be deemed to be direct
damages of Seller and not subject to the previous sentence or the limitations of the next sentence.
Notwithstanding anything in this Agreement to the contrary, Seller shall be under no obligation
to deliver or sell any Seller Sourced Product under this Agreement to the extent that Seller, in
its reasonable discretion, determines that to do so would conflict with, violate or breach its
obligations under any license or other agreement to which either Seller or any of its Affiliates is
bound. SELLER SPECIFICALLY DISCLAIMS ALL WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, ARISING OUT
OF OR RELATED TO THIS AGREEMENT, INCLUDING WITHOUT LIMITATION ANY WARRANTY OF MERCHANTABILITY,
FITNESS OR NON-INFRINGEMENT. Except in the case of fraud, willful misconduct or gross negligence,
notwithstanding the foregoing, Seller’s cumulative aggregate liability to Buyers and their
Affiliates under this Agreement shall not exceed the amount paid for the Products or the
Administrative Fee giving rise to the claim. Notwithstanding anything contained herein to the
contrary, the limitations set forth in this Section 12(a) shall not apply with respect to
any breach of Section 10.

     (b) Buyers shall indemnify Seller and each of its Affiliates against all Losses and Expenses
attributable to: (i) third party claims arising from or relating to the activities contemplated by
this Agreement to the extent that such Losses and Expenses arise from the fraud, gross negligence
or willful misconduct of a Buyer, any of their Affiliates or any of their respective employees,
officers or directors; and (ii) product liability claims involving personal injury or property
damage arising out of the use of any Product.

     (c) Seller shall indemnify Buyers and each of their Affiliates against all Losses and Expenses
attributable to any third party claims arising from or relating to the activities contemplated by
this Agreement to the extent that such Losses and Expenses arise from the fraud, gross negligence
or willful misconduct of Seller, any of its Affiliates or any of their respective employees,
officers or directors.

     (d) All claims for indemnification pursuant to this Section 12 shall be made in
accordance with the procedures set forth in Sections 10.3 and 10.5 of the Purchase
Agreement. Notwithstanding any other provision of this Section 12 or any provision set forth in
the Purchase Agreement, Buyers and their Affiliates shall not be limited in any recovery of Losses
or Expenses under this Agreement by any provision set forth in the Purchase Agreement, and any
Losses or Expenses paid by Seller to Buyers or their Affiliates under this Agreement shall not be
counted for purposes of any aggregate damage limitations set forth in the Purchase Agreement. In
addition, for the avoidance of doubt, no Loss or Expense suffered by Buyers or their Affiliates
pursuant to this Agreement shall be counted for purposes of satisfying the deductibles set forth in
the proviso to Section 10.1(a) of the Purchase Agreement.

     (e) At their expense, Seller, on the one hand, and Buyers, on the other hand, shall each
procure and maintain in full force and effect at all times during which the Products are being
sold, and for a period of one (1) year thereafter, with responsible insurance carriers

-14-

 

acceptable to the other part(ies)at least Five Million Dollars ($5,000,000) of products
liability insurance coverage with respect to their sale of the Products. Such insurance coverage
shall name the other part(ies) and the owner or licensor of each Third Party Brand as an additional
insured and shall provide for a minimum of twenty (20) days prior written notice to the other
part(ies) in the event that the insurance carrier intends to cancel or substantially reduce the
insurance coverage. Such insurance coverage may be obtained in conjunction with a policy of
product liability insurance which covers other products manufactured and/or sold by a party.
Seller, on the one hand, and Buyers, on the other hand, shall each also procure and maintain during
the Term of this Agreement and for a period of one (1) year thereafter, at least the minimum
business insurance coverages, including but not limited to bodily injury, property damage, workers
compensation, business interruption and general liability that are required by the laws and
regulations of any jurisdiction in which Seller or Buyers sell the Products. Upon request, Seller
and Buyers shall furnish or cause to be furnished to the other part(ies) a certificate(s) of
insurance, or upon request, a certified copy of said insurance policy(s), evidencing the
maintenance of the insurance coverages required by this Section 12(e).

     13. Relationship of Parties. The contractual relationship between the parties
established under this Agreement is solely that of seller and purchaser. Except as specifically
provided herein, neither party shall: (a) act or represent or hold itself out as having authority
to act as an agent or partner of the other party; or (b) in any way bind or commit the other party
to any obligations or agreement. Nothing contained in this Agreement shall be construed as
creating a partnership, joint venture, agency, trust, fiduciary relationship or other association
of any kind, each party being individually responsible only for its obligations as set forth in
this Agreement. The parties’ respective rights and obligations hereunder shall be limited to the
contractual rights and obligations expressly set forth herein on the terms and conditions set forth
herein.

     14. Force Majeure. If Seller, any of its Affiliates or any Vendor is prevented from
or delayed in complying, either totally or in part, with any of the terms or provisions of this
Agreement by reason of fire, flood, storm, strike, walkout, lockout or other labor trouble or
shortage, delays by unaffiliated suppliers or carriers, shortages of fuel, power, raw materials or
components, any law, order, proclamation, regulation, ordinance, demand, seizure or requirement of
any governmental authority, riot, civil commotion, war, rebellion, acts of terrorism, nuclear
accident or other causes beyond the reasonable control of any such Person or other acts of God, or
acts, omissions or delays in acting by any governmental or military authority or Buyers, then upon
notice to Buyers, the affected provisions and/or other requirements of this Agreement shall be
suspended during the period of such disability and Seller shall have no liability to Buyers, their
Affiliates or any other Person in connection therewith. Seller and Buyers shall make commercially
reasonable efforts to remove such disability within thirty (30) days after giving notice of such
disability; provided, however, that nothing in this Section 14 will be construed to require the
settlement of any strike, walkout, lockout or other labor dispute on terms which, in the reasonable
judgment of Seller, are contrary to its interest. It is understood that the settlement of a
strike, walkout, lockout or other labor dispute will be entirely within the discretion of Seller.
In the event that Seller shall fail to perform its obligations hereunder for at least twenty (20)
days as a consequence of any such force majeure event, then the Administrative Fee shall be reduced
by that portion of the Administrative Fee

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allocated to the function or functions that Seller fails to perform after such twenty (20) day
period and prior to the time that Seller restores such function or functions.

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

     If to Buyers, to:

The Bon-Ton Stores, Inc.

2801 Market Street

York, PA 17402

Facsimile: (717) 751-3008

Attention: Vice President and General Counsel

with a copy to:

Wolf, Block, Schorr and Solis-Cohen LLP

1650 Arch Street, 22nd Floor

Philadelphia, PA 19103

Facsimile: (215) 977-2334

Attention: Henry F. Miller, Esquire

     If to Seller, to:

Saks Incorporated

750 Lakeshore Parkway

Birmingham, Alabama 35211

Facsimile: (205) 940-4468

Attention: Executive Vice President and General Counsel

with a copy to:

Sidley Austin LLP

One South Dearborn Street

Chicago, Illinois 60603

Facsimile: (312) 853-7036

Attention: Michael S. Sigal and Gary D. Gerstman

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

     16. Successors and Assigns. The rights under this Agreement shall not be assignable
by Buyers and the duties shall not be delegated by Buyers without the prior written consent of
Seller, such consent not to be unreasonably withheld or delayed. The rights of Seller

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and its Affiliates under Section 1(i) of this Agreement shall not be assignable by
Seller to any Person (together with its Affiliates) that prior to such assignment is predominantly
engaged in the traditional department store business or in the retail apparel business without the
prior written consent of Buyers, such consent not to be unreasonably withheld or delayed. This
Agreement shall be binding upon and inure to the benefit of the parties hereto and their successors
and permitted assigns. Except for the rights afforded owners or licensors of Third Party Brands
expressly set forth herein, nothing in this Agreement, expressed or implied, is intended or shall
be construed to confer upon any Person other than the parties and successors and assigns permitted
by this Section 16 any right, remedy or claim under or by reason of this Agreement.

     17. Entire Agreement; Amendments. This Agreement, the Exhibits and Schedules
attached hereto and the Purchase Orders or other documents delivered pursuant hereto contain the
entire understanding of the parties hereto with regard to the subject matter contained herein or
therein, and supersede all other prior representations, warranties, agreements, understandings or
letters of intent between or among any of the parties hereto (it being understood, however, that
the Purchase Agreement, agreements contemplated thereby and the Interim Agreement set forth certain
additional understandings between Seller and Buyer regarding their relationship after the Effective
Time). This Agreement replaces and supersedes in its entirety the Private Brands Agreement
attached as Exhibit G to the Purchase Agreement. This Agreement shall not be amended, modified or
supplemented except by a written instrument signed by an authorized representative of each of the
parties hereto.

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

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

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

     21. Governing Law. This Agreement shall be governed by and construed in accordance
with the internal laws of the State of New York without giving effect to the

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principles of conflicts of law thereof except Section 5-1401 of the New York General
Obligations Law.

     22. Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY
AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT
OR THE TRANSACTIONS CONTEMPLATED HEREBY.

     23. Interpretation. Capitalized terms used in this Agreement and not otherwise
defined herein have the meanings given to such terms in the Purchase Agreement. For purposes of
this Agreement: (a) the words “include,” “includes” and “including” shall be deemed to be followed
by the words “without limitation”; (b) the word “or” is not exclusive; and (c) the words “herein,”
“hereof,” “hereby,” “hereto” and “hereunder” refer to this Agreement as a whole. Unless the
context otherwise requires, references herein (i) to Sections mean the Sections of this Agreement
and (ii) to an agreement, instrument or other document means such agreement, instrument or other
document as amended, supplemented and modified from time to time to the extent permitted by the
provisions thereof and by this Agreement. Headings of Sections are inserted for convenience of
reference only and shall not be deemed a part of or to affect the meaning or interpretation of this
Agreement. This Agreement shall be construed without regard to any presumption or rule requiring
construction or interpretation against the party drafting an instrument or causing any instrument
to be drafted.

     24. Exhibits and Schedules. Exhibits A and B and Schedules 1
and 2 shall be construed with and as an integral part of this Agreement to the same extent
as if it was set forth verbatim herein.

[Remainder of page intentionally left blank]

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

	 	 	 	 	 
	 	SAKS INCORPORATED

 	 
	 	By:  	/S/  CHARLES J. HANSEN
 	 
	 	 	Name:  	Charles J. Hansen 	 
	 	 	Title:  	Executive Vice President 	 
	 
	 	THE BON-TON STORES, INC.

 	 
	 	By:  	/S/  JAMES H. BAIREUTHER
 	 
	 	 	Name:  	James H. Baireuther 	 
	 	 	Title:  	Vice Chairman and Chief Administrative Officer 	 
	 
	 	HERBERGER’S DEPARTMENT STORES, LLC

 	 
	 	By:  	/S/  JAMES H. BAIREUTHER
 	 
	 	 	Name:  	James H. Baireuther 	 
	 	 	Title:  	Senior Vice President and Chief Administrative Officer 	 
	 
	 	PARISIAN, INC.

 	 
	 	By:  	/S/  JAMES H. BAIREUTHER
 	 
	 	 	Name:  	James H. Baireuther 	 
	 	 	Title:  	Senior Vice President and Chief Administrative Officer 	 
	 

Signature Page

to

Private Brands Agreementexv10w7

 

EXHIBIT 10.7

Execution
Copy

AMENDED AND RESTATED TRANSITION SERVICES AGREEMENT

(SELLER AS SERVICE PROVIDER)

     This AMENDED AND RESTATED
TRANSITION SERVICES AGREEMENT (this “Agreement”), dated as of March 10, 2006 and
effective as of March 5, 2006 (the “Effective Date”), is made by and between Saks
Incorporated, a Tennessee corporation (“Seller”), and The Bon-Ton Stores, Inc. a
Pennsylvania corporation (“Buyer”).

RECITALS

     WHEREAS, pursuant to that certain Purchase Agreement, dated as of
October 29, 2005, by and between Seller and Buyer (the “Purchase Agreement”), Seller
has agreed to sell, or caused to be sold, to Buyer the Securities, and Buyer has agreed to purchase
the Securities as provided therein; and

     WHEREAS, in connection with the transactions contemplated by the Purchase Agreement, Buyer and
Seller desire that Seller provide Buyer with certain transition services relating to the Business
as set forth in this Agreement.

     NOW, THEREFORE, in consideration of the premises and the mutual representations, warranties,
covenants and agreements contained in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are acknowledged, the parties agree as follows:

     1. Transition Services.

     (a) During the term of this Agreement as set forth in Section 7 (the “Transition
Period”), and subject to the terms and conditions set forth herein, Seller shall provide, or
cause one or more of its Affiliates to provide, to Buyer and its Affiliates (with respect to the
Business) each of the services (each of the twelve (12) categories described on Annex A, a
“Service” and, collectively, the “Services”) specified on Annex A hereto
from the Effective Date and for the specific period of time described on Annex A with
respect to each such Service, which shall be provided in a manner consistent in all material
respects with that provided by Seller or one or more of its Affiliates to the Business during the
twelve (12) month period immediately prior to the Effective Date. Buyer shall purchase and pay for
such Services as provided for herein. The quantity of each Service shall be that which Buyer
reasonably requires for the operation of the Business in the ordinary course consistent in all
material respects with the operation of the Business during the twelve (12) month period
immediately prior to the Effective Date. The Services shall only be made available for, and Buyer
shall only be entitled to utilize the Services for the benefit of the stores operated by the
Companies and the Subsidiaries (in respect of the Business) immediately prior to the Effective
Date. Annex B hereto contains a description of each of the Services specified on Annex
A.

     (b) The fees payable by Buyer to Seller for each Service are set forth on Annex A;
provided, that, if, after the Effective Date, Seller upgrades or otherwise changes any of
the Services provided to its Affiliates, Seller shall offer such upgraded or changed Service to
Buyer and provide support and maintenance related thereto for a fee at a rate equal to Seller’s

 

 

incremental cost of providing such upgraded or changed Service to Buyer, plus a pro-rata
allocation of actual overhead costs allocable to the provision of such Service, which rate shall
not in any event exceed the fee rate Seller charges its Affiliates for such upgraded or changed
Service, and, if Buyer accepts such upgraded or changed Service, Annex A shall be amended
to reflect such fees. If Buyer does not accept any such upgraded or changed Service, Seller shall
continue to provide such Service to Buyer in a form that is no less beneficial to Buyer as the form
in which it exists prior to such upgrade or change; provided, however, that if
Seller determines it would be burdensome to continue to provide Services to Buyer without such
upgraded or changed Service, Seller shall have the right to require Buyer to accept such upgraded
or changed Service at no additional cost to Buyer other than the application in each instance of
the Cost Adjustment Factor set forth in Annex A. Seller and Buyer acknowledge that some of
the Services to be provided hereunder require instructions and information from Buyer; Seller shall
inform Buyer, as soon as reasonably practicable after Seller becomes aware of the need therefor, of
any instructions or information that Seller shall require from Buyer to provide any Service
(including any upgraded or changed Service), and Buyer shall provide to Seller such requested
instructions or information in sufficient time for Seller or its Affiliates to provide or procure
such Services. Buyer shall pay any additional costs or expenses resulting from any failure of
Buyer to timely provide such instructions or information requested by Seller.

     (c) Seller shall use commercially reasonable efforts to obtain the consent of any licensors of
Software or any other third party that may be required in connection with the provision of any of
the Services hereunder (a “Third Party Consent”); provided, however, that
Seller shall have no obligation to pay money or grant any accommodation to any third party in order
to obtain any such Third Party Consent; provided, further, that if any such third
party refuses to consent to Seller’s provision of Services to Buyer hereunder, Buyer and Seller
shall promptly work together in good faith to determine if Seller can provide such Services or
comparable Services reasonably satisfactory to Buyer by another method or procedure without
requiring such consent; provided, further, that if any such third party refuses to
consent to Seller’s provision of Services to Buyer hereunder and Seller and Buyer are unable to
determine an alternate method or procedure as described in the proviso immediately foregoing,
Seller shall attempt to negotiate a license having a term equal to the shorter of 12 months or the
remaining duration of the applicable Service (a “Short-Term License”). If Seller (i) is
unable to obtain any Third Party Consent for the shorter of 12 months or the remaining duration of
the applicable Service without the payment of a fee to the applicable third party (the “Third
Party Consent Fee”) or (ii) obtains a Short-Term License for a fee (the “Short-Term License
Fee”), then Buyer shall have the option, subject to
Schedule 1(c), to elect to (A) pay any such Third Party Consent Fee or
Short-Term License Fee or (B) terminate any of the applicable Services.

     2. Limitation on Services. Except as provided in Section 1(b), Seller shall
have no obligation to upgrade, enhance or otherwise modify any computer hardware, Software or
network environment currently used in the Business or to provide any support or maintenance

-2-

 

services for any computer hardware, Software or network environment that has been upgraded,
enhanced or otherwise modified by Seller from the computer hardware, Software or network
environments that is currently used in the Business.

      3. Additional Services. If Buyer reasonably determines that additional transition
services of the type previously provided by Seller to the Business are necessary to complete the
transition, Seller will consider in good faith providing such services to Buyer. If Seller agrees
to add any additional services (“Additional Services”), representatives of Seller and Buyer
will meet to discuss in good faith the terms and conditions (including cost) upon which such
Additional Services will be provided. Any such Additional Services mutually agreed to and the fees
thereof shall be effective as of the date of execution of an amendment to this Agreement by duly
authorized representatives of the parties hereto. It is understood and agreed that Seller shall be
under no obligation to provide or procure any such Additional Services requested by Buyer.

     4. Subcontractors. Seller may, directly or through one or more Affiliates, hire or
engage one or more subcontractors or other third parties (each, a “Subcontractor”) to
perform any or all of its obligations under this Agreement; provided, that: (a) Seller
remains ultimately responsible under this Agreement, including for ensuring that the obligations
with respect to the nature, quality and standards of care set forth in Section 1 are
satisfied with respect to any Service provided by any Subcontractor; (b) the use of any
Subcontractor will not increase any fees payable by Buyer hereunder; and (c) the use of any
Subcontractor will not adversely affect the quality or timeliness of delivery of any Service
provided to Buyer.

     5. Title to Seller Equipment; Management and Control; SOA.

     (a) All procedures, methods, systems, strategies, tools, equipment, facilities and other
resources used by Seller, any of its Affiliates or any third party service provider in connection
with the provision of Services hereunder (collectively, the “Seller Equipment”) shall
remain the property of Seller, its Affiliates or such third party service provider and, except as
otherwise provided herein, shall at all times be under the sole direction and control of Seller,
its Affiliates or such third party service provider.

     (b) Except as otherwise provided herein, management of, and control over, the provision of the
Services (including the determination or designation at any time of the Seller Equipment, employees
and other resources of Seller, its Affiliates or any third party service provider to be used in
connection with the provision of the Services) shall reside solely with Seller. Without limiting
the generality of the foregoing, all labor matters relating to any employees of Seller, its
Affiliates and any third party service provider shall be within the exclusive control of such
parties, and Buyer shall take no action affecting, or have any rights with respect to, such
matters. Seller shall be solely responsible for the payment of all salary and benefits and all
income tax, social security taxes, unemployment compensation, tax, workers’ compensation tax, other
employment taxes or withholdings and premiums and remittances with respect to employees of Seller
and its Affiliates used to provide Services.

     (c) In connection with any obligations of Seller or any of its Affiliates to a third party,
Seller shall not permit any lien or other encumbrance to be placed upon any assets or

-3-

 

other materials owned by Buyer or any of its Affiliates that are transported, shipped,
warehoused or otherwise held in the custody of Seller or any of its Affiliates on behalf of Buyer.

     (d) No more than once annually Seller shall, subject to Seller’s site safety, and
confidentiality and security procedures, provide to Buyer’s third-party auditors and Buyer’s
internal audit staff access to: (i) any facility at which the Services are being performed; (ii)
appropriate Seller management personnel and Subcontractors; and (iii) the data and records (and
other documentation reasonably requested by Buyer) maintained by Seller with respect to the
Services, in each case solely for the purpose of performing audits and inspections of Buyer and its
businesses to enable Buyer to meet its requirements under Section 404 of the Sarbanes-Oxley Act of
2002.

     6. Billing and Payment.

     (a) Buyer shall promptly pay any bills and invoices that it receives from Seller or its
Affiliates for Services provided under this Agreement, subject to receiving, if requested, any
appropriate support documentation for such bills and invoices. Such charges shall be billed within
five (5) business days of the end of each calendar month. Unless otherwise provided herein or on
Annex A, Buyer shall pay all invoices by wire transfer of immediately available funds in
accordance with the instructions provided by Seller or any of its Affiliates (in writing to Buyer),
as applicable, not later than thirty (30) days following receipt by Buyer of Seller’s or any of its
Affiliates’ invoice. Buyer shall not offset any amounts owing to it by Seller or any of Seller’s
Affiliates against amounts payable by Buyer hereunder or under any other agreement or arrangement.
Should Buyer dispute any portion of any invoice, Buyer shall promptly notify Seller in writing of
the nature and basis of the dispute.

     (b) If Buyer fails to pay the full amount of any invoice within thirty (30) days after the
relevant payment date, such failure shall be considered a material breach of this Agreement (except
to the extent of any invoiced amounts reasonably disputed by Buyer in good faith and of which
dispute Buyer has notified Seller in accordance with the requirements of this Agreement) and if at
any time the aggregate amount of such overdue unpaid invoices (except to the extent of any invoiced
amounts reasonably disputed by Buyer in good faith) exceeds $250,000, Seller may, without
liability, suspend its obligations hereunder to provide any and all of the Services to Buyer until
such time as such invoices have been paid in full (except to the extent of any invoiced amounts
reasonably disputed by Buyer in good faith and of which dispute Buyer has notified Seller in
accordance with the requirements of this Agreement). The remedy provided to Seller by this
Section 6(b) shall be without limitation of any other applicable provisions of this
Agreement, including Sections 6(d) and 7.

     (c) All charges and fees to be paid by Buyer to Seller and its Affiliates under this Agreement
are exclusive of any applicable taxes required by law to be collected from Buyer (including
withholding, sales, use, excise or services taxes, which may be assessed on the provision of the
Services hereunder). If a withholding, sales, use, excise or services tax is assessed on the
provision of any of the Services provided under this Agreement, Buyer shall pay directly, reimburse
or indemnify Seller and its Affiliates for such tax. The parties shall cooperate with each other
in determining the extent to which any tax is due and owing under the circumstances, and shall
provide and make available to each other any resale certificate,

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information regarding out-of-state use of materials, services or sale, and other exemption
certificates or information reasonably requested by the other party.

     (d) All payments required to be made pursuant to this Agreement shall bear interest from and
including the date five (5) days after such payment is due to but excluding the date of payment at
an annual rate equal to the average daily one-month LIBOR rate in effect during the period, plus
150 basis points, from the date such interest begins to accrue to the payment date (except to the
extent of any invoiced amounts reasonably disputed by Buyer in good faith in accordance with this
Agreement, in which case no late fee shall be payable by Buyer in respect of any portion of such
disputed amount resolved in Buyer’s favor). Such interest shall be payable at the same time as the
payment to which it relates and shall be calculated on the basis of the number of days (excluding
the payment date) by which the payment date follows the date such payment is due.

     7. Term of Agreement; Termination.

     (a) This Agreement shall commence on the Effective Date and shall continue (unless sooner
terminated pursuant to the terms hereof) for the period during which Seller is providing Services
hereunder, or such shorter period as may be specified on Annex A with respect to any
particular Service. In the event that Buyer desires to renew any Services beyond the date at which
they terminate pursuant to Section 1(a), Buyer shall notify Seller of such desire to renew
any such Services at least sixty (60) days’ prior to the expiration of the initial service period
for such Services as set forth on Annex A, except with respect to the renewal of the (a)
Information Technology Service, for which Buyer must provide at least 180 days’ prior written
notice to Seller in order to renew and (b) the Credit Operations Service, for which Buyer must
provide at least 120 days’ prior written notice to Seller in order to renew. Buyer shall be
entitled to renew any particular Service in monthly increments for a renewal period not to exceed
the lesser of (i) 50% of the initial service period set forth on Annex A or (ii) six (6)
months. Neither Seller nor any of its Affiliates shall be obligated to provide Services on behalf
of Buyer following the expiration or earlier termination of this Agreement or any particular
Service.

     (b) Buyer may terminate this Agreement at any time upon written notice to Seller in the event
of a material breach of this Agreement by Seller. Such termination shall become effective thirty
(30) days from the date of Seller’s receipt of such notice unless the breach is cured prior to the
end of said 30-day period.

     (c) Seller may terminate this Agreement at any time upon written notice to Buyer in the event
of a material breach of this Agreement by Buyer. Such termination shall become effective thirty
(30) days from the date of Buyer’s receipt of such notice unless the breach is cured prior to the
end of said 30-day period; provided, that if such breach relates to the non-payment by
Buyer of any fees or expenses under Section 6, then termination under this Section
7(c) shall be effective fifteen (15) days from the date of receipt of notice of breach from
Seller unless all unpaid fees or expenses have been paid in full within such 15-day period (except
to the extent of any invoiced amounts reasonably disputed by Buyer in good faith and of which
dispute Buyer has notified Seller in accordance with the requirements of this Agreement).

-5-

 

     (d) Notwithstanding any other provision in this Agreement to the contrary, if this Agreement
is terminated by Seller or any particular Service is terminated by Buyer pursuant to Section
8, Buyer shall remain liable for (i) the payment of fees and expenses accruing for the period
prior to termination even though such fees may not become due until after termination and (ii) 50%
of the monthly fees associated with all of the Services (in the case of a termination of the
Agreement) or 50% of the monthly fees associated with any particular Service (in the case of a
partial termination pursuant to Section 8), in each case as specified on Annex A,
from the termination date through the end of the initial service period or the renewal period, as
the case may be. Further, in the event of termination of this Agreement pursuant to this
Section 7, Sections 5(a), 5(c), 6(a), 6(c)-(d), 7,
9, 11, 12 and 14 through 23 shall continue in full force
and effect.

     (e) Provided that Buyer has met and continues to meet its obligations set forth in Section
6, prior to the termination of this Agreement, Seller shall cooperate with Buyer as reasonably
requested by Buyer to effect an orderly transition of the Services provided hereunder and shall use
commercially reasonable efforts to assist Buyer to complete the transition as promptly as
practicable. The parties agree to cooperate in good faith and to use their commercially reasonable
efforts to mutually develop a conversion plan to effect the orderly transition of the Services from
Seller’s systems to Buyer’s systems. Buyer agrees to pay Seller for such conversion services on
the basis of Seller’s direct costs, administrative support costs and costs associated with special
requests.

     8. Partial Termination. Subject to Section 7(e), Buyer may terminate any and
all of the Services, effective as of the last day of an accounting month of Seller, at any time
prior to the expiration of the period specified on Annex A (including any renewal period)
upon at least sixty (60) days prior written notice to Seller, except with respect to the (i)
Information Technology Service which may be terminated by Buyer only upon at least 180 days’ prior
written notice to Seller and (ii) Credit Operations Service which may be terminated by Buyer only
upon at least 120 days’ prior written notice to Seller. As soon as reasonably practicable
following receipt of any such notice, Seller shall advise Buyer in writing as to whether
termination of such Services shall reasonably require the termination or partial termination of, or
otherwise affect the provision of, any other Services. If such is the case, Buyer may withdraw its
termination notice in writing within five (5) days of being so advised by Seller. Otherwise, such
termination shall be final.

     9. Confidentiality. Each party shall, and shall cause each of its Affiliates and each
of its and their officers, directors and employees to, hold all information relating to the
business of the other party disclosed to it by reason of this Agreement (the “Confidential
Information”) confidential, and shall not disclose or permit to be disclosed any such
Confidential Information to any third party unless legally compelled to disclose such information;
provided, however, that to the extent that a Person receiving Confidential
Information hereunder may receive the written advice of outside counsel that disclosure of any
Confidential Information is required in order that such Person not commit a violation of law, such
Person: (a) to the extent not inconsistent with such Person’s obligation to disclose, will give the
other party hereto prompt notice of such request so that such party may seek an appropriate
protective order; (b) may only disclose such information if it shall first have used commercially
reasonable efforts to obtain an appropriate protective order or other satisfactory assurance of
confidential treatment for the

-6-

 

information required to be so disclosed; and (c) if such protective order or other remedy is
not obtained, or the other party waives such Person’s compliance with the provisions of this
Section 9, shall only furnish that portion of the Confidential Information which is legally
required to be so disclosed. As used herein, “Confidential Information” does not include
any information that: (i) is or becomes generally available to the public or the retail industry
other than as a result of a disclosure, directly or indirectly, by the party receiving the
Confidential Information; (ii) was available to the receiving party on a non-confidential basis
prior to its disclosure by the disclosing party or becomes available to the receiving party on a
non-confidential basis, in each case from a source other than the disclosing party or its
representatives, which source was not itself known to be bound by a confidentiality agreement with
the disclosing party or its representatives and had not, to the knowledge of the receiving party,
received such information, directly or indirectly, from a third party so bound or (iii) such party
demonstrates is or was independently developed by or on behalf of a party without the direct or
indirect use of any of the other party’s Confidential Information.

     10. Third Party Non-Disclosure Agreements. To the extent that any third party
proprietor of information or Software to be disclosed or made available to Buyer in connection with
performance of the Services hereunder requires a specific form of non-disclosure agreement as a
condition of its consent to use of the same for the benefit of Buyer or to permit Buyer access to
such information or Software, Buyer shall execute (and shall cause Buyer’s employees to execute, if
required) any such form; provided, that Buyer shall not be required to execute and deliver any such
form of agreement not reasonably acceptable to Buyer (it being understood that if Buyer refuses to
execute any such form, Seller shall be under no obligation to permit Buyer access to such
information or Software or to provide any Services to Buyer to the extent the provision of such
Services requires the use of the information or Software of the applicable third party proprietor).

     11. Limitation of Liability; Disclaimer; Indemnity.

     (a) Other than in the case of fraud, willful misconduct or gross negligence, neither party nor
any of their respective Affiliates shall be liable to the other party, its Affiliates or any third
party for any special, incidental, consequential (including loss of revenues or profits), exemplary
or punitive damages arising from any claim relating to this Agreement or any of the Services to be
provided hereunder or the performance of or failure to perform such party’s obligations under this
Agreement, whether such claim is based on warranty, contract, tort (including negligence or strict
liability) or otherwise, all of which are hereby excluded by agreement of the parties regardless of
whether or not any party to this Agreement has been advised of the possibility of such damages.
Notwithstanding anything in this Agreement to the contrary, Seller shall be under no obligation to
provide the Services described in this Agreement to the extent that Seller, in its reasonable
discretion, determines that to do so would conflict with, violate or breach its obligations under
any license or other agreement to which either Seller or any of its Affiliates is bound. EXCEPT AS
SPECIFICALLY SET FORTH HEREIN, SELLER SPECIFICALLY DISCLAIMS ALL WARRANTIES OF ANY KIND, EXPRESS OR
IMPLIED, ARISING OUT OF OR RELATED TO THIS AGREEMENT, INCLUDING WITHOUT LIMITATION, THE WARRANTIES
OF MERCHANTABILITY, FITNESS FOR PURPOSE AND NON-INFRINGEMENT. Notwithstanding the foregoing, other
than in the case of fraud, willful misconduct or gross negligence, Seller’s cumulative aggregate
liability to

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Buyer and its Affiliates under this Agreement shall not exceed the amount of fees paid by
Buyer to Seller pursuant to this Agreement during the six (6) months prior to the date of such
failure with respect to the Service(s) that is the subject of the dispute; provided, that,
if the date of such failure occurs prior to the first 6-month anniversary of the date of this
Agreement, Seller’s aggregate liability shall not exceed an amount equal to the good faith estimate
of the fees to be paid during the first six (6) months of this Agreement with respect to the
Service(s) that is the subject of the dispute, which estimate shall be based on the aggregate
amount of fees received by Seller pursuant hereto at the time of such failure with respect to such
Service(s). Notwithstanding anything contained herein to the contrary, the limitations set forth
in this Section 11(a) shall not apply with respect to any breach of Section 9.

     (b) Buyer shall indemnify Seller and each of its Affiliates against all Losses and Expenses
attributable to any third party claims arising from or relating to the provision of Services under
this Agreement to the extent that such Losses and Expenses arise from the fraud, willful misconduct
or gross negligence of Buyer, any of its Affiliates or any of their respective employees, officers
or directors.

     (c) Seller shall indemnify Buyer and each of its Affiliates against all Losses and Expenses
attributable to any third party claims arising from or relating to the provision of Services under
this Agreement to the extent that such Losses and Expenses arise from the fraud, willful misconduct
or gross negligence of Seller, any of its Affiliates or any of their respective employees, officers
or directors.

     (d) All claims for indemnification pursuant to this Section 11 shall be made in
accordance with the procedures set forth in Sections 10.3 and 10.5 of the Purchase Agreement.
Notwithstanding any other provision of this Section 11 or any provision set forth in the Purchase
Agreement, Buyer and its Affiliates shall not be limited in any recovery of Losses or Expenses
under this Agreement by any provision set forth in the Purchase Agreement, and any Losses or
Expenses paid by Seller to Buyer or its Affiliates under this Agreement shall not be counted for
purposes of any aggregate damage limitations set forth in the proviso of Section 10.1(a) of the
Purchase Agreement. In addition, for the avoidance of doubt, no Loss or Expense suffered by Buyer
and its Affiliates pursuant to this Agreement shall be counted for purposes of satisfying the
deductibles set forth in the proviso to Section 10.1(a) of the Purchase Agreement.

     12. Relationship of Parties. Except as specifically provided herein, neither party
shall: (a) act or represent or hold itself out as having authority to act as an agent or partner of
the other party; or (b) in any way bind or commit the other party to any obligations or agreement.
Nothing contained in this Agreement shall be construed as creating a partnership, joint venture,
agency, trust, fiduciary relationship or other association of any kind, each party being
individually responsible only for its obligations as set forth in this Agreement. The parties’
respective rights and obligations hereunder shall be limited to the contractual rights and
obligations expressly set forth herein on the terms and conditions set forth herein.

     13. Force Majeure. If Seller, any of its Affiliates or any third party service
provider is prevented from or delayed in complying, either totally or in part, with any of the
terms or provisions of this Agreement by reason of fire, flood, storm, strike, walkout, lockout or
other labor trouble or shortage, delays by unaffiliated suppliers or carriers, shortages of fuel,

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power, raw materials or components, any law, order, proclamation, regulation, ordinance,
demand, seizure or requirement of any governmental authority, riot, civil commotion, war,
rebellion, acts of terrorism, nuclear accident or other causes beyond the reasonable control of any
such Person or other acts of God, or acts, omissions or delays in acting by any governmental or
military authority or Buyer, then upon notice to Buyer, the affected provisions and/or other
requirements of this Agreement shall be suspended during the period of such disability and Seller
shall have no liability to Buyer, it Affiliates or any other Person in connection therewith.
Seller and Buyer shall make commercially reasonable efforts to remove such disability within sixty
(60) days after giving notice of such disability; provided, however, that nothing
in this Section 13 will be construed to require the settlement of any strike, walkout,
lockout or other labor dispute on terms which, in the reasonable judgment of Seller, are contrary
to its interest. It is understood that the settlement of a strike, walkout, lockout or other labor
dispute will be entirely within the discretion of Seller. If Seller is unable to provide any of
the Services due to such a disability, each party shall use their commercially reasonable efforts
to cooperatively seek a solution that is mutually satisfactory; provided, that, Buyer shall be
entitled to terminate this Agreement with respect to the provision of any or all of the affected
Services immediately upon the conclusion of the sixty (60) day period provided in the preceding
sentence. In the event that Seller shall fail to perform its obligations hereunder for at least
twenty (20) days with respect to any Service as a consequence of any such force majeure event, then
the monthly fee payable by Buyer with respect to such Service (as set forth on Annex A)
shall be reduced proportionately during the period after such twenty (20) day period and prior to
the time that Seller restores such function or functions.

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

     If to Buyer, to:

	 	 	 
	 

	 	The Bon-Ton Stores, Inc.
	 

	 	2801 East Market Street
	 

	 	York, Pennsylvania 17402
	 

	 	Facsimile: (717) 751-3008
	 

	 	Attention: Vice President and General Counsel

     with a copy to:

	 	 	 
	 

	 	Wolf, Block, Schorr and Solis-Cohen LLP
	 

	 	1650 Arch Street
	 

	 	Philadelphia, Pennsylvania 19103
	 

	 	Facsimile: (215) 977-2334
	 

	 	Attention: Henry Miller

     If to Seller, to:

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	 	Saks Incorporated
	 

	 	750 Lakeshore Parkway
	 

	 	Birmingham, Alabama 35211
	 

	 	Facsimile: (205) 940-4468
	 

	 	Attention: Executive Vice President and General Counsel

     with a copy to:

	 	 	 
	 

	 	Sidley Austin LLP
	 

	 	One South Dearborn Street
	 

	 	Chicago, Illinois 60603
	 

	 	Facsimile: (312) 853-7036
	 

	 	Attention: Michael S. Sigal and Gary D. Gerstman

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

     15. Successors and Assigns. The rights of either party under this Agreement shall
not be assignable by such party (other than to an Affiliate of such party) (except by operation of
law in connection with a merger involving, or sale of substantially all of the assets of, such
party) without the prior written consent of the other party not be unreasonably withheld. No
assignment of this Agreement (including to an Affiliate) shall relieve a party of any of its
obligations under this Agreement. This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their successors and permitted assigns. Nothing in this Agreement,
expressed or implied, is intended or shall be construed to confer upon any Person other than the
parties and successors and assigns permitted by this Section 15 any right, remedy or claim
under or by reason of this Agreement.

     16. Entire Agreement; Amendments. This Agreement and the annexes referred to herein
and the documents delivered pursuant hereto contain the entire understanding of the parties hereto
with regard to the subject matter contained herein or therein, and supersede all other prior
representations, warranties, agreements, understandings or letters of intent between or among any
of the parties hereto (it being understood, however, that the Purchase Agreement and agreements
contemplated thereby set forth certain additional understandings between Seller and Buyer regarding
their relationship after the Closing Date). This Agreement shall not be amended, modified or
supplemented except by a written instrument signed by an authorized representative of each of the
parties hereto.

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

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

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

     20. Governing Law. This Agreement shall be governed by and construed in accordance
with the internal laws of the State of New York without giving effect to the principles of
conflicts of law thereof except Section 5-1401 of the New York General Obligations Law.

     21. Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY
AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT
OR THE TRANSACTIONS CONTEMPLATED HEREBY.

     22. Interpretation. Capitalized terms used in this Agreement and not otherwise
defined herein have the meanings given to such terms in the Purchase Agreement. For purposes of
this Agreement: (a) the words “include,” “includes” and “including” shall be deemed to be followed
by the words “without limitation”; (b) the word “or” is not exclusive; and (c) the words “herein,”
“hereof,” “hereby,” “hereto” and “hereunder” refer to this Agreement as a whole. Unless the
context otherwise requires, references herein (i) to Sections mean the Sections of this Agreement
and (ii) to an agreement, instrument or other document means such agreement, instrument or other
document as amended, supplemented and modified from time to time to the extent permitted by the
provisions thereof and by this Agreement. Headings of Sections are inserted for convenience of
reference only and shall not be deemed a part of or to affect the meaning or interpretation of this
Agreement. This Agreement shall be construed without regard to any presumption or rule requiring
construction or interpretation against the party drafting an instrument or causing any instrument
to be drafted.

     23. Annexes. Annex A and Annex B shall be construed with and as an
integral part of this Agreement to the same extent as if it was set forth verbatim herein.

     24. Ankeny, Iowa POS Repair Facility. At the expiration or termination of this
Agreement, the parties agree to work together in good faith to divide up in an equitable manner the
then existing equipment at the POS repair facilities in Ankeny, Iowa and Rockford, Illinois between
the Business and the businesses of Seller and its Affiliates. With respect to the personnel in
such facilities, the parties agree to work together in good faith in order to (i) allow

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each party to have a reasonable opportunity to employ or continue the employment of a
sufficient number of employees to support its business and (ii) maximize the employment
opportunities for the personnel in such facilities.

-12-

 

     IN WITNESS WHEREOF, each of the parties has caused this Agreement to be duly executed as of
the date set forth above, all effective as of the Effective Date.

	 	 	 	 	 
	 	SAKS INCORPORATED

 	 
	 	By:  	          /S/
CHARLES J. HANSEN
 	 
	 	 	Name:  	Charles J. Hansen	 
	 	 	Title:  	Executive Vice President	 
	 

	 	 	 	 	 
	 	THE BON-TON STORES, INC.

 	 
	 	By:  	          /S/
KEITH E. PLOWMAN
 	 
	 	 	Name:  	Keith E. Plowman	 
	 	 	Title:  	Senior Vice President,

Chief Financial Officer

and Principal Accounting Officer	 
	 

      

      

      

      

      

Signature Page

to

Amended and Restated Transition Services Agreement

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00099-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00099-of-00352.parquet"}]]