SAKS HOLDINGS INC, S-1/A, 1996-05-07

SAKS HOLDINGS INC
S-1/A, 1996-05-07
DEPARTMENT STORES

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As filed with the Securities and Exchange Commission on May 7, 1996

Registration No. 333-2426
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SECURITIES AND EXCHANGE COMMISSION
------------
AMENDMENT NO. 3
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------
SAKS HOLDINGS, INC.
(Exact name of registrant as specified in its charter)

<TABLE>
<S> <C> <C>
DELAWARE 5311 52-1685667
(State or other jurisdiction (Primary Standard (I.R.S. Employer
of incorporation or Industrial Classification Identification No.)
organization) Code Number)
</TABLE>

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12 EAST 49TH STREET
NEW YORK, NEW YORK 10017
(212) 940-4048
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)

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JOAN F. KREY
GENERAL COUNSEL
SAKS HOLDINGS, INC.
12 EAST 49TH STREET
NEW YORK, NEW YORK 10017
(212) 940-4048
(Name, address, including zip code, and telephone number,
including area code, of agent for service)

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Copies to:

<TABLE>
<S> <C>
CHARLES K. MARQUIS PATRICIA A. CERUZZI
STEVEN R. FINLEY SULLIVAN & CROMWELL
GIBSON, DUNN & CRUTCHER 250 PARK AVENUE
200 PARK AVENUE NEW YORK, NEW YORK 10177
NEW YORK, NEW YORK 10166 (212) 558-4000
(212) 351-4000
</TABLE>

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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.

------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.

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<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The Registrant's expenses in connection with the Offerings described in this
registration statement are set forth below. All amounts except the Securities
and Exchange Commission registration fee, the NASD filing fee and the NYSE
listing fee are estimated.

<TABLE>
<CAPTION>
<S> <C>
Securities and Exchange Commission registration fee........... $ 146,000
NASD filing fee............................................... 30,500
Printing and engraving expenses............................... 500,000
Accounting fees and expenses.................................. 1,000,000
Legal fees and expenses....................................... 1,000,000
NYSE listing fee.............................................. 123,100
Fees and expenses (including legal fees) for qualifications
under state securities laws................................... 30,000
Transfer agent's fees and expenses............................ 50,000
Miscellaneous................................................. 2,320,400
----------
Total..................................................... $5,200,000
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----------
</TABLE>

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- -------- ---------------------------------------------------------------------------------
<S> <C>
1.01 Form of U.S. Underwriting Agreement
1.02 Form of International Underwriting Agreement
3.01.1* Amended and Restated Certificate of Incorporation of Saks Holdings, as filed with
the Delaware Secretary of State on June 29, 1990
3.01.2* Certificate of Designation of Saks Holdings, as filed with the Delaware Secretary
of State on June 29, 1990
3.01.3* Amendment to the Amended and Restated Certificate of Incorporation of Saks
Holdings, as filed with the Delaware Secretary of State on
July 2, 1990
3.01.4* Amendment to the Amended and Restated Certificate of Incorporation of Saks
Holdings, as filed with the Delaware Secretary of State on
February 28, 1991
3.01.5* Amendment to the Amended and Restated Certificate of Incorporation of Saks
Holdings, as filed with the Delaware Secretary of State on
May 20, 1992
3.01.6* Amendment to the Amended and Restated Certificate of Incorporation of Saks
Holdings, as filed with the Delaware Secretary of State on December 26, 1995
3.01.7* Certificate of Saks Holdings, as filed with the Delaware Secretary of State on
December 27, 1995, relating to the retirement of Class D Shares
3.01.8* Amendment to the Amended and Restated Certificate of Incorporation of Saks
Holdings, as filed with the Delaware Secretary of State on April 16, 1996.
3.01.9* Form of Amended and Restated Certificate of Incorporation of Saks Holdings, as
proposed to be filed with the Delaware Secretary of State upon completion of the
Offerings
3.02* Bylaws of Saks Holdings, as adopted on August 6, 1990
4.01.1* See Exhibits 3.01.1, 3.01.2, 3.01.3, 3.01.4, 3.01.5, 3.01.6, 3.01.7 and 3.01.8 as
to the rights of holders of Saks Holdings' Class A Shares, Class B Shares, Class
C Shares and Class D Shares prior to the Offerings
</TABLE>

II-1
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- -------- ---------------------------------------------------------------------------------
<S> <C>
4.01.2* See Exhibit 3.01.9 as to the rights of holders of Saks Holdings' Common Stock
upon completion of the Offerings
4.02* Form of Stock Certificate of the Common Stock of Saks Holdings
4.03.1* Amended and Restated Credit Agreement, dated as of July 1, 1993, among Saks,
Chemical Bank and Bankers Trust Company as managing agents, Chemical Bank,
Bankers Trust Company, the CIT Group/Business Credit, Inc. and Barclays Bank PLC
as co-agents, and Chemical Bank as administrative agent (the "Credit Facility")
4.03.2* First Amendment to the Credit Facility, dated as of March 1, 1995
4.03.3* Second Amendment to the Credit Facility, dated as of October 24, 1995
4.03.4* Third Amendment to the Credit Facility, dated as of March 5, 1996
4.03.5* Fourth Amendment to the Credit Facility, dated as of April 10, 1996
4.03.6* Fifth Amendment to the Credit Facility, dated as of April 18, 1996
4.04* Amended and Restated Loan and Security Agreement dated as of
May 12, 1995 between Fifth Avenue Capital Trust ("FACT") and certain direct and
indirect wholly-owned subsidiaries of Saks (the "Borrowers")
4.05* Trust and Servicing Agreement dated as of May 12, 1995 among FACT, Bankers Trust
Company, as servicer, and Marine Midland Bank, as trustee
4.06* Amended and Restated Trust Agreement, dated as of May 12, 1995, among Saks, HNY,
Inc. and Wilmington Company, as owner trustee
4.07 Indenture, dated as of July 1, 1993, between Saks and AIBC Services N.V., as
trustee
4.08 First Supplemental Indenture, dated as of April 22, 1996, between Saks and AIBC
Services N.V., as trustee
5.01* Opinion of Gibson, Dunn & Crutcher
10.01.1* Amended and Restated Pooling & Servicing Agreement, dated as of December 16,
1991, among SFA Finance Company, Saks and Bankers Trust Company, as trustee (the
"1991 P&S")
10.01.2* First Amendment to the 1991 P&S, dated as of November 5, 1992
10.01.3* Second Amendment to the 1991 P&S, dated as of October 26, 1993
10.02.1* Second Amended and Restated Receivables Purchase Agreement, dated as of December
16, 1991, between Saks and SFA Finance Company (the "Receivables Purchase
Agreement")
10.02.2* First Amendment to the 1991 Receivables Purchase Agreement, dated as of November
5, 1992
10.02.3* Second Amendment to the 1991 Receivables Purchase Agreement, dated as of October
26, 1993
10.03.1* Series 1991-2 Supplement, dated as of December 16, 1991, among SFA Finance
Company, Saks, MHTC, as administrative agent, and Bankers Trust Company, as
trustee (the "1991-2 Supplement")
10.03.2* First Amendment to the 1991-2 Supplement, dated as of July 22, 1992
10.03.3* Second Amendment to the 1991-2 Supplement, dated as of August 20, 1992
10.03.4* Third Amendment to the 1991-2 Supplement, dated as of November 5, 1992
10.03.5* Fourth Amendment to the 1991-2 Supplement, dated as of May 20, 1993
10.03.6* Fifth Amendment to the 1991-2 Supplement, dated as of October 28, 1993
10.03.7* Sixth Amendment to the 1991-2 Supplement, dated as of September 30, 1994
10.04.1* Class C Supplement to Series 1991-2 Supplement, dated as of
November 5, 1992, among SFA Finance Company, Saks and Bankers Trust Company, as
trustee (the "1991-2(C) Supplement")
10.04.2* First Amendment to the 1991-2(C) Supplement, dated as of September 30, 1994
10.05* Class B Supplement to Series 1991-2 Supplement, dated as of September 30, 1994,
among SFA Finance Company, Saks and Bankers Trust Company, as trustee
10.06.1* Series 1993-1 Supplement, dated as of October 28, 1993, among SFA Finance
Company, Saks, Swiss Bank Corporation, New York Branch, as administrative agent,
and Bankers Trust Company, as trustee (the "1993-1 Supplement")
</TABLE>

II-2
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
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<S> <C>
10.06.2* First Amendment to the 1993-1 Supplement, dated as of September 13, 1995
10.06.3* Second Amendment to the 1993-1 Supplement, dated as of October 6, 1995
10.07* Class B Supplement to Series 1993-1 Supplement, dated as of September 13, 1995,
among SFA Finance Company, Saks and Bankers Trust Company, as trustee
10.08* Class C Supplement to Series 1993-1 Supplement, dated as of September 13, 1995,
among SFA Finance Company, Saks and Bankers Trust Company, as trustee
10.09* Series 1995-1 Supplement, dated as of November 13, 1995, among SFA Finance
Company, Saks, Swiss Bank Corporation, New York Branch, as administrative agent,
and Bankers Trust Company, as trustee
10.10* Deposit Trust Agreement, dated as of October 26, 1993, between SFA Finance
Company II and Wilmington Trust Company, as trustee
10.11* Collateral Trust Agreement, dated as of October 28, 1993, between Saks Fifth
Avenue Owner Trust 1993-1 and Bankers Trust Company
10.12* Depositary Agreement, dated as of October 27, 1993, between Saks Fifth Avenue
Owner Trust 1993-1 and Chemical Bank
10.13* Purchase Agreement, dated May 4, 1995 among Saks, FACT, the Borrowers, Goldman,
Sachs & Company and Chemical Securities, Inc., with respect to the sale of
Commercial Mortgage Pass-Through Certificates due May 12, 2002
10.14* Saks Fifth Avenue Supplemental Pension Plan, effective July 2, 1990
10.15* Saks Holdings, Inc. Senior Management Stock Incentive Plan, dated as of October
17, 1990 (the "Old Incentive Plan")
10.16* Standard Form of Stock Option Agreement Pursuant to the Old Incentive Plan
10.17.1* Saks Holdings, Inc. 1996 Management Stock Incentive Plan, dated as of February 1,
1996 (the "New Incentive Plan")
10.17.2 Amendment to the New Incentive Plan
10.18* Standard Form of Stock Option Agreement Pursuant to the New Incentive Plan
10.19 Amended and Restated Employment Agreement, dated as of March 1, 1996, between
Saks and Philip B. Miller
10.20 Amended and Restated Employment Agreement, dated as of March 1, 1996, between
Saks and Rose Marie Bravo
10.21 Amended and Restated Employment Agreement, dated as of March 1, 1996, between
Saks and Owen E. Dorsey
10.22 Employment Agreement, dated as of March 1, 1996, between Saks and Brian E.
Kendrick
10.23.1* Agreement for Management Advisory and Consulting Services, dated
July 2, 1990, between Windows Acquisition Corp. and III
10.23.2* Agreement for Management Advisory and Consulting Services, dated as of July 2,
1995, between Saks and III
10.24* Acquisitions Advisory Agreement, dated as of January 29, 1995, between Saks and
III
10.25 Transition Supplement to the 1991 P&S, dated as of April 25, 1996, among SFA
Finance Company, Saks and Bankers Trust Company, as trustee
10.26 Pooling and Servicing Agreement, dated as of April 25, 1996, among SFA Finance
Company, Saks and Bankers Trust Company, as trustee (the "1996 P&S")
10.27 Series 1996-1 Supplement to the 1996 P&S, dated as of April 25, 1996, among SFA
Finance Company, Saks and Bankers Trust Company, as trustee
10.28 Third Amended and Restated Receivables Purchase Agreement, dated as of April 25,
1996, between Saks and SFA Finance Company
10.29 Series 1996-2 Supplement to the 1996 P&S, dated as of April 25, 1996, among SFA
Finance Company, Saks and Bankers Trust Company, as trustee
10.30 Public Company Expenses Agreement, dated as of April 27, 1996, between Saks
Holdings and Saks.
10.31 Form of Common Stock Purchase Agreement between Saks Holdings and Investcorp,
S.A.
21.01* Subsidiaries of Saks Holdings
23.01* Consent of Coopers & Lybrand L.L.P.
</TABLE>

II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
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<S> <C>
23.02* Consent of Gibson, Dunn & Crutcher (contained in Exhibit 5.01)
24.01* Power of Attorney (included on signature page of Registration Statement)
</TABLE>

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* Previously filed.

II-4
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this Amendment No. 3 to the Registration Statement to
be signed on its behalf by the undersigned, thereunto duly authorized, in The
City of New York, State of New York, on May 3, 1996.

SAKS HOLDINGS, INC.

By /s/ PHILIP B. MILLER

...................................

Philip B. Miller
Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the capacity
indicated on May 3, 1996.

<TABLE>
<CAPTION>
SIGNATURE TITLE
- ---------------------------------------- ------------------------------------------------

<S> <C>
/s/ PHILIP B. MILLER Chairman of the Board and
........................................ Chief Executive Officer
Philip B. Miller (Principal Executive Officer)

/s/ BRIAN E. KENDRICK Vice Chairman of the Board and
........................................ Chief Financial Officer
Brian E. Kendrick (Principal Financial Officer)

/s/ ROSE MARIE BRAVO President and Director
........................................
Rose Marie Bravo

* Director
........................................
Savio W. Tung

* Director
........................................
Jon P. Hedley

* Director
........................................
E. Garrett Bewkes III

* Director
........................................
Charles J. Philippin

/s/ MARK E. HOOD Vice President--Finance
........................................ (Principal Accounting Officer)
Mark E. Hood
</TABLE>

*By: /s/ MARK E. HOOD

...........................................................................

Mark E. Hood
Attorney in Fact

II-5

Exhibit 1.01

Saks Holdings, Inc.

Common Stock
(par value $0.01 per share)

Underwriting Agreement
(U.S. Version)

May __, 1996
Goldman, Sachs & Co.,
CS First Boston Corporation,
Morgan Stanley & Co. Incorporated,
Salomon Brothers Inc,
As representatives of the several Underwriters
named in Schedule I hereto,
c/o Goldman, Sachs & Co.,
85 Broad Street,
New York, New York 10004.

Ladies and Gentlemen:

Saks Holdings, Inc., a Delaware corporation (the "Company"), proposes,
subject to the terms and conditions stated herein, to issue and sell to the
Underwriters named in Schedule I hereto (the "Underwriters") an aggregate of
11,000,000 shares (the "Firm Shares") and, at the election of the Underwriters,
up to 1,650,000 additional shares (the "Optional Shares") of Common Stock, par
value $0.01 per share ("Stock") of the Company (the Firm Shares and the Optional
Shares that the Underwriters elect to purchase pursuant to Section 2 hereof
being collectively called the "Shares").

It is understood and agreed to by all parties that the Company is
concurrently entering into an agreement (the "International Underwriting
Agreement") providing for the sale by the Company of up to a total of 3,162,500
shares of Stock (the "International Shares"), including the overallotment option
thereunder, through arrangements with certain underwriters outside the United
States (the "International Underwriters"), for whom Goldman Sachs International,
CS First Boston Limited, Morgan Stanley & Co. International Limited and Salomon
Brothers International Limited are acting as lead managers. Anything herein or
therein to the contrary notwithstanding, the respective closings under this
Agreement and the International Agreement are hereby expressly made conditional
on one another. The Underwriters hereunder and the International Underwriters
are simultaneously entering into an Agreement between U.S. and International
Underwriting Syndicates (the "Agreement between Syndicates") which provides,
among other things, for the transfer of shares of Stock between

<PAGE>

the two syndicates. Two forms of prospectus are to be used in connection with
the offering and sale of shares of Stock contemplated by the foregoing, one
relating to the Shares hereunder and the other relating to the International
Shares. The latter form of prospectus will be identical to the former except
for the front cover page, back cover page, and the text under the caption
"Underwriting" and for the addition of a section captioned "Certain United
States Tax Consequences to Non-U.S. Holders. Except as used in Sections 2, 3,
4, 9 and 11 herein, and except as the context may otherwise require, references
hereinafter to the Shares shall include all the shares of Stock which may be
sold pursuant to either this Agreement or the International Underwriting
Agreement, and references herein to any prospectus whether in preliminary or
final form, and whether as amended or supplemented, shall include both the
U.S. and the international versions thereof.

1. The Company represents and warrants to, and agrees with, each of the
Underwriters that:

(a) A registration statement on Form S-1 (File No. 333-2426) (the
"Initial Registration Statement") in respect of the Shares has been filed
with the Securities and Exchange Commission (the "Commission"); the Initial
Registration Statement and any post-effective amendment thereto, each in
the form heretofore delivered to you, and, excluding exhibits thereto, to
you for each of the other Underwriters, have been declared effective by the
Commission in such form; other than a registration statement, if any,
increasing the size of the offering (a "Rule 462(b) Registration
Statement"), filed pursuant to Rule 462(b) under the Securities Act of
1933, as amended (the "Act"), which became effective upon filing, no other
document with respect to the Initial Registration Statement has heretofore
been filed with the Commission; and no stop order suspending the
effectiveness of the Initial Registration Statement, any post-effective
amendment thereto or the Rule 462(b) Registration Statement, if any, has
been issued and, to the knowledge of the Company, no proceeding for that
purpose has been initiated or threatened by the Commission (any preliminary
prospectus included in the Initial Registration Statement or filed with the
Commission pursuant to Rule 424(a) of the rules and regulations of the
Commission under the Act is hereinafter called a "Preliminary Prospectus";
the various parts of the Initial Registration Statement and the Rule 462(b)
Registration Statement, if any, including all exhibits thereto and
including the information contained in the form of final prospectus filed
with the Commission pursuant to Rule 424(b) under the Act in accordance
with Section 5(a) hereof and deemed by virtue of Rule 430A under the Act to
be part of the Initial Registration Statement at the time it was declared
effective or such part of the Rule 462(b) Registration Statement, if any,
became or hereafter becomes effective, each as amended at the time such
part became effective, are hereinafter collectively called the
"Registration Statement"; and such final prospectus, in the form first
filed pursuant to Rule 424(b) under the Act, is hereinafter called the
"Prospectus";

(b) No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission, and each Preliminary
Prospectus, at the time of filing thereof, conformed in all material
respects to the requirements of the Act and the rules and regulations of
the Commission thereunder (except that the preliminary prospectus dated
March 14, 1996 did not include an estimated range of the maximum

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<PAGE>

offering price and share and per share data), and did not contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading; provided,
however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by an Underwriter through
Goldman, Sachs & Co. expressly for use therein;

(c) As of the applicable effective date as to the Registration
Statement and any amendment thereto, and as of the applicable filing date
as to the Prospectus and any amendment or supplement thereto, the
Registration Statement conformed, and the Prospectus and any further
amendments or supplements to the Registration Statement or the Prospectus
will conform, in all material respects to the requirements of the Act and
the rules and regulations of the Commission thereunder and do not and will
not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made in the case of the Prospectus and any amendment or supplement thereto,
not misleading; provided, however, that this representation and warranty
shall not apply to any statements or omissions made in reliance upon and in
conformity with information furnished in writing to the Company by an
Underwriter through Goldman, Sachs & Co. expressly for use therein;

(d) Neither the Company nor any of its significant subsidiaries, as
such term is defined in Rule 405 under the Act and which significant
subsidiaries are listed on Schedule 2 hereto (its "Subsidiaries"), has
sustained since the date of the latest audited financial statements
included in the Prospectus any loss or interference with its business from
fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action, order
or decree, which loss or interference is material to the financial position
or results of operations of the Company and its subsidiaries taken as a
whole otherwise than as set forth or contemplated in the Prospectus; and,
since the respective dates as of which information is given in the
Registration Statement and the Prospectus, there has not been any change in
the capital stock (other than pursuant to the exercise of existing options
and other than as described in or referred to in the Prospectus) or
increase in the long-term debt (other than pursuant to the Company's
accounts receivable sale program) of the Company or any of its
Subsidiaries, any material revaluation of inventories, or any material
adverse change, or any development involving a prospective material adverse
change, in or affecting the general affairs, management, financial
position, stockholders' equity or results of operations of the Company and
its subsidiaries taken as a whole, otherwise than as set forth or
contemplated in the Prospectus;

(e) The Company and its Subsidiaries own all real property and
personal property as set forth in the Prospectus other than as described in
or referred to in the Prospectus in each case free and clear of all liens,
encumbrances and defects except such as are described or referred to in the
Prospectus or such as do not materially affect the value of such property
and do not interfere with the use made and proposed

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<PAGE>

to be made of such property by the Company and its subsidiaries; and any
real property and buildings held under lease by the Company and its
Subsidiaries are held by them under valid, subsisting and enforceable
leases with such exceptions as are described or referred to in the
Prospectus or are not material and do not interfere with the use made and
proposed to be made of such property and buildings by the Company and its
subsidiaries;

(f) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of Delaware with corporate
power and authority to own its properties and conduct its business as
described in the Prospectus, and has been duly qualified as a foreign
corporation for the transaction of business and is in good standing under
the laws of each other jurisdiction in which it owns or leases properties
or conducts any business so as to require such qualification, except where
the failure to be so qualified would not result in a material adverse
change to the financial position or results of operations of the Company
and its subsidiaries taken as a whole; and each Subsidiary has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation with corporate power
and authority to own its properties and conduct its business as described
in the Prospectus, and has been duly qualified as a foreign corporation for
the transaction of business and is in good standing under the laws of each
other jurisdiction in which it owns or leases properties or conducts any
business so as to require such qualification except where the failure to be
so qualified would not result in a material adverse change to the financial
position or results of operations of the Company and its subsidiaries taken
as a whole, or is subject to no material liability or disability by reason
of the failure to be so qualified in any such jurisdiction;

(g) The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of capital stock of the Company
have been duly and validly authorized and issued, are fully paid and
non-assessable and conform to the description of the Stock contained in the
Prospectus; and all of the issued shares of capital stock of each
Subsidiary have been duly and validly authorized and issued, are fully paid
and (except, with respect to any Subsidiary incorporated in the State of
New York, as provided in Section 630 of the Business Corporations Law of
the State of New York) non-assessable and (except for directors' qualifying
shares) are owned directly or indirectly by the Company, free and clear of
all liens, encumbrances, equities or claims except as otherwise set forth
in or contemplated by the Prospectus;

(h) The unissued Shares to be issued and sold by the Company to the
Underwriters hereunder and to the International Underwriters under the
International Underwriting Agreement have been duly and validly authorized
and, when issued and delivered against payment therefor as provided herein
and in the International Underwriting Agreement, will be duly and validly
issued and fully paid and non-assessable and will conform to the
description of the Stock contained in the Prospectus;

(i) The issue and sale of the Shares by the Company hereunder and
under the International Underwriting Agreement and the compliance by the
Company with all of

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<PAGE>

the provisions of this Agreement and the International Underwriting
Agreement and the consummation by the Company of the transactions to be
performed by the Company herein and therein contemplated will not conflict
with or result in a breach or violation of or constitute a default under,
any of the existing terms or provisions of, any indenture, mortgage, deed
of trust, loan agreement or other agreement or instrument to which the
Company or any of its Subsidiaries is a party or by which the Company or
any of its Subsidiaries is bound or to which any of the property or assets
of the Company or any of its Subsidiaries is subject except for such
conflicts, breaches, violations or defaults that individually or in the
aggregate would not result in a material adverse change to the financial
position or results of operations of the Company and its subsidiaries taken
as a whole, nor will such action result in any violation of the provisions
of the Certificate of Incorporation or By-laws of the Company or any
existing United States federal or state statute (excluding for purposes of
this paragraph (i) United States federal or state securities laws) or any
existing order, rule or regulation of any United States federal or state
court or governmental agency or body having jurisdiction over the Company
or any of its Subsidiaries or any of their properties except for such
violations (other than any relating to the Certificate of Incorporation or
By-Laws of the Company) that individually or in the aggregate would not
result in a material adverse change to the financial position or results of
operations of the Company and its subsidiaries taken as a whole; and no
consent, approval, authorization, order, registration or qualification of
or with any such United States federal or state court or governmental
agency or body is required to be obtained by the Company on the date hereof
or at any Time of Delivery for the issue and sale of the Shares by the
Company to the Underwriters or for the issue and sale of the International
Shares by the Company to the International Underwriters or the consummation
by the Company of the transactions to be performed by the Company
contemplated by this Agreement and the International Underwriting
Agreement, except the registration under the Act of the Shares and such
consents, approvals, authorizations, registrations or qualifications as may
be required under state or foreign securities or Blue Sky laws in
connection with the purchase and distribution of the Shares by the
Underwriters and the International Underwriters;

(j) Neither the Company nor any of its Subsidiaries is in violation
of its Certificate of Incorporation or By-laws. Neither the Company nor
any of its Subsidiaries is in default in the performance or observance of
any material obligation, agreement, covenant or condition contained in any
indenture, mortgage, deed of trust, loan agreement, lease or other
agreement or instrument to which it is a party or by which it or any of its
properties may be bound except for such violations and defaults as would
not result in a material adverse change to the financial position or
results of operations of the Company and its subsidiaries taken as a whole;

(k) The statements set forth in the Prospectus under the caption
"Description of Capital Stock", insofar as they purport to describe the
terms of the Stock and under the caption "Certain United States Tax
Consequences to Non-U.S. Holders" in the International Prospectus, insofar
as they purport to describe the provisions of the laws and documents
referred to therein, present in all material respects a fair description of
such provisions and documents;

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<PAGE>

(l) Other than as set forth or contemplated in the Prospectus, there
are no legal or governmental proceedings pending to which the Company or
any of its subsidiaries is a party or of which any property of the Company
or any of its subsidiaries is the subject which could reasonably be
expected to be determined adversely to the Company and any of its
subsidiaries and, if so determined, would individually or in the aggregate
have a material adverse effect on the current or future consolidated
financial position, stockholders' equity or results of operations of the
Company and its subsidiaries taken as a whole; and, to the best of the
Company's knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others;

(m) The Company and its subsidiaries own, or possess adequate rights
to use, all trademarks, service marks, trade names, copyrights and licenses
(including the names, "Saks Fifth Avenue", "SFA", "Off 5th", "S5A" and
"Folio") necessary to conduct their businesses currently and as proposed to
be conducted, and neither the Company nor its subsidiaries has received any
notice of infringement of or conflict with (or knows of any such
infringement or conflict with) asserted rights of others with respect to
such trademarks, service marks, tradenames, copyrights or licenses;

(n) The Company is not and, after giving effect to the offering and
sale of the Shares, will not be an "investment company" or an entity
"controlled" by an "investment company", as such terms are defined in the
Investment Company Act of 1940, as amended (the "Investment Company Act");

(o) Neither the Company nor any of its affiliates does business with
the government of Cuba or with any person or affiliate located in Cuba
within the meaning of Section 517.075, Florida Statutes;

(p) Coopers & Lybrand L.L.P., who have certified certain financial
statements of the Company and its subsidiaries, are independent public
accountants as required by the Act and the rules and regulations of the
Commission thereunder;

(q) Each of the Company and its Subsidiaries (i) is in compliance
with any and all applicable federal, state and local laws and regulations
relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants
("Environmental Laws"), (ii) has received all permits, licenses or other
approvals required of it under applicable Environmental Laws to conduct its
business and (iii) is in compliance with all terms and conditions of any
such permit, license or approval, except in the case of (i), (ii) or (iii)
where such noncompliance with Environmental Laws, failure to receive
required permits, licenses or other approvals or failure to comply with the
terms and conditions of such permits, licenses or approvals would not,
singly or in the aggregate, have a material adverse effect on the Company
and its subsidiaries taken as a whole;

(r) The Shares have been approved for listing on the New York Stock
Exchange, subject to official notice of issuance;

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<PAGE>

(s) There are no contracts, agreements, or understandings between the
Company and any person granting such person the right to require the
Company to include any securities of the Company in the Registration
Statement for sale by such person; and

(t) There are no contracts or other documents of a character required
to be filed as an exhibit to the Registration Statement or required to be
described in the Registration Statement or the Prospectus which are not
filed or described as required.

2. Subject to the terms and conditions herein set forth, (a) the Company
agrees to issue and sell to each of the Underwriters, and each of the
Underwriters agrees, severally and not jointly, to purchase from the Company, at
a purchase price per share of $........................, the number of Firm
Shares set forth opposite the name of such Underwriter in Schedule I hereto and
(b) in the event and to the extent that the Underwriters shall exercise the
election to purchase Optional Shares as provided below, the Company agrees to
issue and sell to each of the Underwriters, and each of the Underwriters agrees,
severally and not jointly, to purchase from the Company, at the purchase price
per share set forth in clause (a) of this Section 2, that portion of the number
of Optional Shares as to which such election shall have been exercised (to be
adjusted by you so as to eliminate fractional shares) determined by multiplying
such number of Optional Shares by a fraction, the numerator of which is the
maximum number of Optional Shares which such Underwriter is entitled to purchase
as set forth opposite the name of such Underwriter in Schedule I hereto and the
denominator of which is the maximum number of Optional Shares that all of the
Underwriters are entitled to purchase hereunder.

The Company hereby grants to the Underwriters the right to purchase at
their election up to 1,650,000 Optional Shares, at the purchase price per share
set forth in the paragraph above, for the sole purpose of covering
overallotments in the sale of the Firm Shares. Any such election to purchase
Optional Shares may be exercised only by written notice from you to the Company,
given within a period of 30 calendar days after the date of this Agreement,
setting forth the aggregate number of Optional Shares to be purchased and the
date on which such Optional Shares are to be delivered, as determined by you but
in no event earlier than the First Time of Delivery (as defined in Section 4
hereof) or, unless you and the Company otherwise agree in writing, earlier than
two or later than ten business days after the date of such notice.

3. Upon the authorization by you of the release of the Firm Shares, the
several Underwriters propose to offer the Firm Shares for sale upon the terms
and conditions set forth in the Prospectus.

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<PAGE>

Company. The Company will cause the certificates representing the Shares to be
made available for checking and packaging at least twenty-four hours prior to
the Time of Delivery (as defined below) with respect thereto at the office of
Goldman, Sachs & Co., 85 Broad Street, New York, New York 10004 (the "Designated
Office"). The time and date of such delivery and payment shall be, with respect
to the Firm Shares, 9:30 a.m., New York City time, on May ..., 1996 or such
other time and date as Goldman, Sachs & Co. and the Company may agree upon in
writing, and, with respect to the Optional Shares, 9:30 a.m., New York time, on
the date specified by Goldman, Sachs & Co. in the written notice given by
Goldman, Sachs & Co. of the Underwriters' election to purchase such Optional
Shares, or such other time and date as Goldman, Sachs & Co. and the Company may
agree upon in writing. Such time and date for delivery of the Firm Shares is
herein called the "First Time of Delivery", such time and date for delivery of
the Optional Shares, if not the First Time of Delivery, is herein called the
"Second Time of Delivery", and each such time and date for delivery is herein
called a "Time of Delivery".

(b) The documents to be delivered at each Time of Delivery by or on
behalf of the parties hereto pursuant to Section 7 hereof, including the
cross receipt for the Shares and any additional documents requested by the
Underwriters pursuant to Section 7(k) hereof, will be delivered at the
offices of Sullivan & Cromwell, 125 Broad Street, New York, New York 10004
(the "Closing Location"), and the Shares will be delivered at the
Designated Office, all at such Time of Delivery. A meeting will be held at
the Closing Location at 2:00 p.m., New York City time, on the New York
Business Day next preceding such Time of Delivery, at which meeting the
final drafts of the documents to be delivered pursuant to the preceding
sentence will be available for review by the parties hereto. For the
purposes of this Section 4, "New York Business Day" shall mean each Monday,
Tuesday, Wednesday, Thursday and Friday which is not a day on which banking
institutions in New York are generally authorized or obligated by law or
executive order to close.

5. The Company agrees with each of the Underwriters:

(a) To prepare the Prospectus in a form approved by you and to file
such Prospectus pursuant to Rule 424(b) under the Act not later than the
Commission's close of business on the second business day following the
execution and delivery of this Agreement (or to transmit such Prospectus by
a means reasonably calculated to result in filing with the Commission by
such date), or, if applicable, such earlier time as may be required by Rule
430A(a)(3) under the Act; to make no further amendment or any supplement to
the Registration Statement or Prospectus prior to the last Time of Delivery
which shall be disapproved by you promptly after reasonable notice thereof;
to advise you, promptly after it receives notice thereof, of the time when
any amendment to the Registration Statement has been filed with the
Commission or becomes effective or any supplement to the Prospectus or any
amended Prospectus has been filed with the Commission and to furnish you
with copies of any such amendment or supplement; to advise you, promptly
after it receives notice thereof, of the issuance by the Commission of any
stop order or of any order preventing or suspending the use of any
Preliminary Prospectus or prospectus, of the suspension of the
qualification of the Shares for offering or sale in any jurisdiction, of
the initiation

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<PAGE>

or threatening of any proceeding for any such purpose, or of any request by
the Commission for the amending or supplementing of the Registration
Statement or Prospectus or for additional information; and, in the event of
the issuance of any stop order or of any order preventing or suspending the
use of any Preliminary Prospectus or prospectus or suspending any such
qualification, promptly to use its reasonable best efforts to obtain the
withdrawal of such order;

(b) Promptly from time to time to take such action as you may
reasonably request to qualify the Shares for offering and sale under the
securities laws of such jurisdictions within the United States as you may
request and to comply with such laws so as to permit the continuance of
sales and dealings therein in such jurisdictions for as long as may be
necessary to complete the distribution of the Shares, provided that in
connection therewith the Company shall not be required to qualify as a
foreign corporation or to file a general consent to service of process in
any jurisdiction;

(c) On the New York Business Day next succeeding the date of this
Agreement and from time to time, to furnish the Underwriters with copies of
the Prospectus in New York City in such quantities as you may reasonably
request, and, if the delivery of a prospectus is required at any time prior
to the expiration of nine months after the time of issue of the Prospectus
in connection with the offering or sale of the Shares and if at such time
any event shall have occurred as a result of which the Prospectus as then
amended or supplemented would include an untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made when such Prospectus is delivered, not misleading, or, if for any
other reason it shall be necessary during such period to amend or
supplement the Prospectus in order to comply with the Act, to notify you
and upon your request to prepare and furnish without charge to each
Underwriter and to any dealer in securities as many copies as you may from
time to time reasonably request of an amended Prospectus or a supplement to
the Prospectus which will correct such statement or omission or effect such
compliance, and in case any Underwriter is required to deliver a prospectus
in connection with sales of any of the Shares at any time nine months or
more after the time of issue of the Prospectus, upon your request but at
the expense of such Underwriter, to prepare and deliver to such Underwriter
as many copies as you may request of an amended or supplemented Prospectus
complying with Section 10(a)(3) of the Act;

(d) To make generally available to its securityholders as soon as
practicable, but in any event not later than eighteen months after the
effective date of the Registration Statement (as defined in Rule 158(c)
under the Act), an earnings statement of the Company and its subsidiaries
(which need not be audited) complying with Section 11(a) of the Act and the
rules and regulations thereunder (including, at the option of the Company,
Rule 158);

(e) During the period beginning from the date hereof and continuing
to and including the date 180 days after the date of the Prospectus, not to
offer, sell, contract to sell or otherwise dispose of, except as provided
hereunder and under the International Underwriting Agreement, any
securities of the Company that are

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<PAGE>

substantially similar to the Shares, including but not limited to any
securities that are convertible into or exchangeable for, or that represent
the right to receive, Stock or any such substantially similar securities
(other than (i) in connection with the acquisition of or merger with any
other corporation or other entity or the acquisition of any assets or
properties thereof or (ii) pursuant to employee stock option, stock
purchase or other employee benefit plans, provided that in the case of each
of (i) and (ii) above, prior to the issuance of such securities, the
Company obtains and delivers to the Underwriters executed copies of an
agreement from any such corporation or entity substantially to the effort
set forth in this Section 5(e) in form satisfactory to you), without your
prior written consent;

(f) To furnish to its stockholders as soon as practicable after the
end of each fiscal year an annual report (including a balance sheet and
statements of income, stockholders' equity and cash flows of the Company
and its consolidated subsidiaries certified by independent public
accountants) and, as soon as practicable after the end of each of the first
three quarters of each fiscal year (beginning with the fiscal quarter
ending after the effective date of the Registration Statement),
consolidated summary financial information of the Company and its
subsidiaries for such quarter in reasonable detail;

(g) During a period of three years from the effective date of the
Registration Statement, to furnish to you copies of all reports or other
communications (financial or other) generally furnished to stockholders,
and to deliver to you (i) as soon as they are available, copies of any
reports and financial statements furnished to or filed with the Commission
pursuant to the Securities Exchange Act of 1934; and (ii) such additional
information, which additional information shall be kept confidentially by
you, concerning the business and financial condition of the Company as you
may from time to time reasonably request (such financial statements to be
on a consolidated basis to the extent the accounts of the Company and its
subsidiaries are consolidated in reports furnished to its stockholders
generally or to the Commission);

(h) To use the net proceeds received by it from the sale of the
Shares pursuant to this Agreement and the International Underwriting
Agreement in substantially the manner specified in the Prospectus under the
caption "Use of Proceeds";

(i) To use its best efforts to list, subject to notice of issuance,
the Shares on the New York Stock Exchange (the "Exchange");

(j) To file with the Commission such reports on Form SR as may be
required by Rule 463 under the Act; and

(k) If the Company elects to rely upon Rule 462(b), the Company shall
file a Rule 462(b) Registration Statement with the Commission in compliance
with Rule 462(b) by 10:00 p.m., Washington, D.C. time, on the date of this
Agreement, and the Company shall at the time of filing either pay to the
Commission the filing fee for the Rule 462(b) Registration Statement or
give irrevocable instructions for the payment of such fee pursuant to Rule
111(b) under the Act.

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<PAGE>

6. The Company covenants and agrees with the several Underwriters that
the Company will pay or cause to be paid the following: (i) the fees,
disbursements and expenses of the Company's counsel and accountants in
connection with the registration of the Shares under the Act and all other
expenses in connection with the preparation, printing and filing of the
Registration Statement, any Preliminary Prospectus and the Prospectus and
amendments and supplements thereto and the mailing and delivering of copies
thereof to the Underwriters and dealers; (ii) the cost of printing or producing
any Agreement among Underwriters, this Agreement, the International Underwriting
Agreement, the Agreement between Syndicates, the Selling Agreement, the Blue Sky
Memorandum, closing documents and any other documents that the Company may
request in connection with the offering, purchase, sale and delivery of the
Shares; (iii) all expenses in connection with the qualification of the Shares
for offering and sale under state securities laws as provided in Section 5(b)
hereof, including the fees and disbursements of counsel for the Underwriters in
connection with such qualification and in connection with the Blue Sky survey;
(iv) all fees and expenses in connection with listing the Shares on the New York
Stock Exchange; (v) the filing fees incident to, and the fees and disbursements
of counsel for the Underwriters in connection with, securing any required review
by the National Association of Securities Dealers, Inc. of the terms of the sale
of the Shares; (vi) the cost of preparing stock certificates; (vii) the cost and
charges of any transfer agent or registrar; and (viii) all other costs and
expenses incident to the performance by the Company of its obligations hereunder
which are not otherwise specifically provided for in this Section. It is
understood, however, that, except as provided in this Section, and Sections 8
and 11 hereof, the Underwriters will pay all of their own costs and expenses,
including the fees of their counsel, stock transfer taxes on resale of any of
the Shares by them, and any advertising expenses connected with any offers they
may make.

7. The obligations of the Underwriters hereunder, as to the Shares to be
delivered at each Time of Delivery, shall be subject, in their discretion, to
the condition that all representations and warranties and other statements of
the Company herein are, at and as of such Time of Delivery, true and correct,
the condition that the Company shall have performed all of its obligations
hereunder theretofore to be performed, and the following additional conditions:

(a) The Prospectus shall have been filed, or transmitted by a means
reasonably calculated to result in filing, with the Commission pursuant to
Rule 424(b) within the applicable time period prescribed for such filing by
the rules and regulations under the Act and in accordance with Section 5(a)
hereof; if the Company has elected to rely upon Rule 462(b), the Rule
462(b) Registration Statement shall have become effective by 10:00 p.m.,
Washington D.C. time, on the date of this Agreement; no stop order
suspending the effectiveness of the Registration Statement or any part
thereof shall have been issued and no proceeding for that purpose shall
have been initiated or threatened by the Commission; and all requests for
additional information on the part of the Commission shall have been
complied with to your reasonable satisfaction;

(b) Sullivan & Cromwell, counsel for the Underwriters, shall have
furnished to you such opinion or opinions (a draft of each such opinion is
attached as Annex II(a) hereto), dated such Time of Delivery, with respect
to the matters covered in paragraphs (i), (ii), (vii), (xi) and (xiii) of
subsection (c) below as well as such other

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<PAGE>

related matters as you may reasonably request, and such counsel shall have
received such papers and information as they may reasonably request to
enable them to pass upon such matters;

(c) Gibson, Dunn & Crutcher, special counsel for the Company, shall
have furnished to you their written opinion (a draft of such opinion is
attached as Annex II(b) hereto), dated such Time of Delivery, in form and
substance satisfactory to you, to the effect that:

(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the state
of Delaware with corporate power and authority to own its properties
and conduct its business as described in the Prospectus;

(ii) The Company has an authorized capitalization as set forth in
the Prospectus, and all of the issued shares of capital stock of the
Company (including the Shares being delivered at such Time of
Delivery) have been duly authorized and validly issued and are fully
paid and nonassessable; and the Shares conform to the description of
the Stock contained in the Prospectus;

(iii) This Agreement and the International Underwriting Agreement
have been duly authorized, executed and delivered by the Company;

(iv) The issue and sale of the Shares being delivered to the
Underwriters and the International Underwriters at such Time of
Delivery and the compliance by the Company with all of the provisions
of this Agreement and the International Underwriting Agreement and the
consummation by the Company of the transactions to be performed by the
Company herein and therein contemplated will not conflict with or
result in a breach or violation of, or constitute a default under, any
of the existing terms or provisions of, any indenture, mortgage, deed
of trust, loan agreement or other agreement or instrument filed as an
exhibit to the Registration Statement, nor will such action result in
any violation of the provisions of the Certificate of Incorporation or
By-laws of the Company or any existing statute or any existing order,
rule or regulation (other than foreign and state securities laws, as
to which such counsel expresses no opinion and other than federal
securities laws, as to which such counsel expresses no opinion except
as otherwise set forth herein) known to such counsel of any United
States federal or state court or governmental agency or body having
jurisdiction over the Company or any of its Subsidiaries;

(v) No consent, approval, authorization, order, registration or
qualification of or with any such court or governmental agency or body
is required to be obtained by the Company for the issue and sale by
the Company of the Shares to the Underwriters and the International
Underwriters or the consummation by the Company of the transactions to
be performed by the Company contemplated by this Agreement and the
International Underwriting Agreement, except the registration under
the Act of the Shares, and such

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consents, approvals, authorizations, registrations or qualifications
as may be required under state or foreign securities or Blue Sky laws;

(vi) The Company is not an "investment company" or an entity
"controlled" by an "investment company", as such terms are defined in
the Investment Company Act; and

In addition, such counsel shall state that such counsel has
participated in the preparation of the Registration Statement and the Prospectus
and in conferences with officers and other representatives of the Company,
counsel for the Company, representatives of the independent auditors of the
Company and your representatives at which the contents of the Registration
Statement and Prospectus and related matters were discussed. Such counsel may
also state that because the purpose of their professional engagement was not to
establish or confirm factual matters and because the scope of their examination
of the affairs of the Company did not permit them to verify the accuracy,
completeness or fairness of the statements set forth in the Registration
Statement or Prospectus, they are not passing upon and do not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement or Prospectus, except to the extent set
forth in the last sentence of this paragraph. Such counsel also shall state
that, on the basis of the foregoing, except for the financial statements and
schedules and other financial data included therein, as to which such counsel
need express no opinion or belief, (a) such counsel is of the opinion that the
Registration Statement at the time it became effective, and the Prospectus as of
the date thereof and as of the date of such opinion, appeared on their face to
be appropriately responsive in all material respects to the relevant
requirements of the Securities Act and the General Rules and Regulations
promulgated thereunder and (b) no facts have come to such counsel's attention
that lead such counsel to believe that the Registration Statement at the time it
became effective contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading, or the Prospectus as of its date and as of
the date of such opinion contained or contains an untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading. Such counsel also shall state that,
insofar as the statements contained in the Registration Statement and the
Prospectus under the caption "Description of Capital Stock" constitute a summary
of the documents and legal matters referred to therein, such counsel is of the
opinion that such statements fairly present the information called for with
respect to such documents and legal matters by the Securities Act and the
applicable rules and regulations of the Commission thereunder relating to
registration statements on Form S-1 and prospectuses, and, insofar as the
statements contained in the Registration Statement and the Prospectus under the
caption "Certain United States Tax Consequences to Non-U.S. Holders" purport to
describe the legal matters referred to therein, such counsel is of the opinion
that such description of legal matters is accurate in all material respects.

In rendering such opinion, such counsel may state that they express no
opinion as to the laws of any jurisdiction other than the States of New York and
California, the General Corporation Law of the State of Delaware and the federal
law of the United States.

(d) Joan F. Krey, general counsel of the Company, shall have
furnished to you her written opinion (a draft of such opinion is attached
as Annex II(c) hereto),

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<PAGE>

dated such Time of Delivery, in form and substance satisfactory to you, to
the effect that:

(i) The Company has been duly qualified as a foreign corporation
for the transaction of business and is in good standing under the laws
of each other jurisdiction in which it owns or leases properties or
conducts any business so as to require such qualification, or is
subject to no material liability or disability by reason of failure to
be so qualified in any such jurisdiction (such counsel being entitled
to rely in respect of the opinion in this clause upon opinions of
local counsel and in respect of matters of fact upon certificates of
officers of the Company or State officials);

(ii) Each Subsidiary of the Company has been duly incorporated
and is validly existing as a corporation in good standing under the
laws of its jurisdiction of incorporation and has been duly qualified
as a foreign corporation for the transaction of business and is in
good standing under the laws of each other jurisdiction in which it
owns or leases properties or conducts any business so as to require
such qualification, or is subject to no material liability or
disability by reason of the failure to be so qualified in any such
jurisdiction; and all of the issued shares of capital stock of each
such Subsidiary have been duly authorized and validly issued, are
fully paid and (except, with respect to any Subsidiary incorporated in
the State of New York, as provided in Section 630 of the Business
Corporations Law of the State of New York) non-assessable, and (except
for directors' qualifying shares) are owned directly or indirectly by
the Company, free and clear of all liens, encumbrances, equities or
claims and except as otherwise described or referred to in the
Prospectus (such counsel being entitled to rely in respect of the
opinion in this clause upon opinions of local counsel and in respect
to matters of fact upon certificates of officers of the Company or its
subsidiaries and state officials, provided that such counsel shall
state that they believe that both you and they are justified in
relying upon such opinions and certificates);

(iii) To such counsel's knowledge and other than as set forth in
the Prospectus, there are no legal or governmental proceedings pending
to which the Company or any of its subsidiaries is a party or of which
any property of the Company or any of its subsidiaries is the subject
which could reasonably be expected to be determined adversely to the
Company and any of its subsidiaries and, if so determined, would
individually or in the aggregate have a material adverse effect on the
current or future consolidated financial position, stockholders'
equity or results of operations of the Company and its subsidiaries;
and, to such counsel's knowledge, no such proceedings are threatened
or contemplated by governmental authorities or threatened by others;

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<PAGE>

and the International Underwriting Agreement and the consummation by
the Company of the transactions to be performed by the Company herein
and therein contemplated will not conflict with or result in a breach
or violation of, or constitute a default under, any of the existing
terms or provisions of, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument filed as an exhibit to the
Registration Statement, nor will such action result in any violation
of the provisions of the Certificate of Incorporation or By-laws of
the Company or any existing statute or any existing order, rule or
regulation (other than foreign and state securities laws, as to which
such counsel expresses no opinion and other than federal securities
laws, as to which such counsel expresses no opinion except as
otherwise set forth herein) known to such counsel of any United States
federal or state court or governmental agency or body having
jurisdiction over the Company or any of its Subsidiaries;

(v) Neither the Company nor any of its Subsidiaries is in
violation of its Certificate of Incorporation or By-laws or in default
in any material respect in the performance or observance of any
material obligation, agreement, covenant or condition contained in any
indenture, mortgage, deed of trust, loan agreement, lease or other
agreement or instrument to which it is a party or by which it or any
of its properties may be bound.

(e) On the date of the Prospectus at a time prior to the execution of
this Agreement, at 9:30 a.m., New York City time, on the effective date of
any post-effective amendment to the Registration Statement filed subsequent
to the date of this Agreement and also at each Time of Delivery, Coopers &
Lybrand shall have furnished to you a letter or letters, dated the
respective dates of delivery thereof, in form and substance satisfactory to
you, to the effect set forth in Annex I hereto (the executed copy of the
letter delivered prior to the execution of this Agreement is attached as
Annex I(a) hereto and a draft of the form of letter to be delivered on the
effective date of any post-effective Amendment to the Registration
Statement and as of each Time of Delivery is attached as Annex I(b)
hereto);

(f)(i) Neither the Company nor any of its Subsidiaries shall have
sustained since the date of the latest audited financial statements
included in the Prospectus any loss or interference with its business from
fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action, order
or decree, which loss or interference is material to the financial position
or results of operations of the Company and its Subsidiaries taken as a
whole, otherwise than as set forth or contemplated in the Prospectus, and
(ii) since the respective dates as of which information is given in the
Prospectus there shall not have been any change in the capital stock (other
than pursuant to the exercise of existing options and other than as
described in or referred to in the Prospectus) or increase in the long-term
debt (other than pursuant to the accounts receivable sale program) of the
Company or any of its Subsidiaries, any material revaluation of
inventories, or any change, or any development involving a prospective
change, in or affecting the general affairs, management, financial
position, stockholders' equity or results of operations of the

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Company and its subsidiaries taken as a whole, otherwise
than as set forth or contemplated in the Prospectus, the effect of which,
in any such case described in Clause (i) or (ii), is in the judgment of the
Representatives so material and adverse as to make it impracticable or
inadvisable to proceed with the public offering or the delivery of the
Shares being delivered at such Time of Delivery on the terms and in the
manner contemplated in the Prospectus;

(g) On or after the date hereof there shall not have occurred any of
the following: (i) a suspension or material limitation in trading in
securities generally on the New York Stock Exchange; (ii) a suspension or
material limitation in trading in the Company's securities on the New York
Stock Exchange; (iii) a general moratorium on commercial banking activities
declared by either Federal or New York State authorities; or (iv) the
outbreak or escalation of hostilities involving the United States or the
declaration by the United States of a national emergency or war, if the
effect of any such event specified in this Clause (iv) in the judgment of
the Representatives makes it impracticable or inadvisable to proceed with
the public offering or the delivery of the Shares being delivered at such
Time of Delivery on the terms and in the manner contemplated in the
Prospectus;

(h) The Shares to be sold at such Time of Delivery shall have been
duly listed, subject to notice of issuance, on the Exchange;

(i) The Company has obtained and delivered to the Underwriters
executed copies of an agreement from the holders of at least __% of the
outstanding Stock, substantially to the effect set forth in Subsection 5(e)
hereof in form and substance satisfactory to you;

(j) The Company shall have complied with the provisions of Section
5(c) hereto with respect to the furnishing of prospectuses on the New York
Business Day next succeeding the date of this Agreement; and

(k) The Company shall have furnished or caused to be furnished to you
at such Time of Delivery certificates of officers of the Company
satisfactory to you as to the accuracy of the representations and
warranties of the Company herein at and as of such Time of Delivery, as to
the performance by the Company of all of its obligations hereunder to be
performed at or prior to such Time of Delivery, as to the matters set forth
in subsections (a) and (f) of this Section and as to such other matters as
you may reasonably request.

-16-

<PAGE>

necessary to make the statements therein not misleading, and will reimburse
each Underwriter for any legal or other expenses reasonably incurred by
such Underwriter in connection with investigating or defending any such
action or claim as such expenses are incurred; provided, however, that the
Company shall not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made
in any Preliminary Prospectus, the Registration Statement or the Prospectus
or any such amendment or supplement in reliance upon and in conformity with
written information furnished to the Company by any Underwriter through
Goldman, Sachs & Co. expressly for use therein.

(b) Each Underwriter will indemnify and hold harmless the Company
against any losses, claims, damages or liabilities to which the Company may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon an untrue statement or alleged untrue statement of a material
fact contained in any Preliminary Prospectus, the Registration Statement or
the Prospectus, or any amendment or supplement thereto, or arise out of or
are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent,
that such untrue statement or alleged untrue statement or omission or
alleged omission was made in any Preliminary Prospectus, the Registration
Statement or the Prospectus or any such amendment or supplement in reliance
upon and in conformity with written information furnished to the Company by
such Underwriter through Goldman, Sachs & Co. expressly for use therein;
and will reimburse the Company for any legal or other expenses reasonably
incurred by the Company in connection with investigating or defending any
such action or claim as such expenses are incurred.

-17-

<PAGE>

effect without the consent of the indemnifying party which consent will not
be unreasonably withheld. No indemnifying party shall, without the written
consent of the indemnified party, effect the settlement or compromise of,
or consent to the entry of any judgment with respect to, any pending or
threatened action or claim in respect of which indemnification or
contribution may be sought hereunder (whether or not the indemnified party
is an actual or potential party to such action or claim) unless such
settlement, compromise or judgment (i) includes an unconditional release of
the indemnified party from all liability arising out of such action or
claim and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act, by or on behalf of any indemnified party.

(d) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the
one hand and the Underwriters on the other from the offering of the Shares.
If, however, the allocation provided by the immediately preceding sentence
is not permitted by applicable law or if the indemnified party failed to
give the notice required under subsection (c) above, then each indemnifying
party shall contribute to such amount paid or payable by such indemnified
party in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company on the one
hand and the Underwriters on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities (or
actions in respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one
hand and the Underwriters on the other shall be deemed to be in the same
proportion as the total net proceeds from the offering of the Shares
purchased under this Agreement (before deducting expenses) received by the
Company bear to the total underwriting discounts and commissions received
by the Underwriters with respect to the Shares purchased under this
Agreement, in each case as set forth in the table on the cover page of the
Prospectus. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates
to information supplied by the Company on the one hand or the Underwriters
on the other and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission. The Company and the Underwriters agree that it would not be just
and equitable if contributions pursuant to this subsection (d) were
determined by pro rata allocation (even if the Underwriters were treated as
one entity for such purpose) or by any other method of allocation which
does not take account of the equitable considerations referred to above in
this subsection (d). The amount paid or payable by an indemnified party as
a result of the losses, claims, damages or liabilities (or actions in
respect thereof) referred to above in this subsection (d) shall be deemed
to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this subsection (d), no
Underwriter shall be

-18-

<PAGE>

required to contribute any amount in excess of the amount by which the
total price at which the Shares underwritten by it and distributed to the
public were offered to the public exceeds the amount of any damages which
such Underwriter has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Underwriters'
obligations in this subsection (d) to contribute are several in proportion
to their respective underwriting obligations and not joint.

(e) The obligations of the Company under this Section 8 shall be in
addition to any liability which the Company may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any, who
controls any Underwriter within the meaning of the Act; and the obligations
of the Underwriters under this Section 8 shall be in addition to any
liability which the respective Underwriters may otherwise have and shall
extend, upon the same terms and conditions, to each officer and director of
the Company and to each person, if any, who controls the Company within the
meaning of the Act.

9. (a) If any Underwriter shall default in its obligation to
purchase the Shares which it has agreed to purchase hereunder at a Time of
Delivery, you may in your discretion arrange for you or another party or
other parties to purchase such Shares on the terms contained herein. If
within thirty-six hours after such default by any Underwriter you do not
arrange for the purchase of such Shares, then the Company shall be entitled
to a further period of thirty-six hours within which to procure another
party or other parties satisfactory to you to purchase such Shares on such
terms. In the event that, within the respective prescribed periods, you
notify the Company that you have so arranged for the purchase of such
Shares, or the Company notifies you that it has so arranged for the
purchase of such Shares, you or the Company shall have the right to
postpone such Time of Delivery for a period of not more than seven days, in
order to effect whatever changes may thereby be made necessary in the
Registration Statement or the Prospectus, or in any other documents or
arrangements, and the Company agrees to file promptly any amendments to the
Registration Statement or the Prospectus which in your opinion may thereby
be made necessary. The term "Underwriter" as used in this Agreement shall
include any person substituted under this Section with like effect as if
such person had originally been a party to this Agreement with respect to
such Shares.

(b) If, after giving effect to any arrangements for the purchase of
the Shares of a defaulting Underwriter or Underwriters by you and the
Company as provided in subsection (a) above, the aggregate number of such
Shares which remains unpurchased does not exceed one-eleventh of the
aggregate number of all the Shares to be purchased at such Time of
Delivery, then the Company shall have the right to require each
non-defaulting Underwriter to purchase the number of Shares which such
Underwriter agreed to purchase hereunder at such Time of Delivery and, in
addition, to require each non-defaulting Underwriter to purchase its pro
rata share (based on the number of Shares which such Underwriter agreed to
purchase hereunder) of the Shares

-19-

<PAGE>

of such defaulting Underwriter or Underwriters for which such arrangements
have not been made; but nothing herein shall relieve a defaulting
Underwriter from liability for its default.

(c) If, after giving effect to any arrangements for the purchase of
the Shares of a defaulting Underwriter or Underwriters by you and the
Company as provided in subsection (a) above, the aggregate number of such
Shares which remains unpurchased exceeds one-eleventh of the aggregate
number of all the Shares to be purchased at such Time of Delivery, or if
the Company shall not exercise the right described in subsection (b) above
to require non-defaulting Underwriters to purchase Shares of a defaulting
Underwriter or Underwriters, then this Agreement (or, with respect to the
Second Time of Delivery, the obligations of the Underwriters to purchase
and of the Company to sell the Optional Shares) shall thereupon terminate,
without liability on the part of any non-defaulting Underwriter or the
Company, except for the expenses to be borne by the Company and the
Underwriters as provided in Section 6 hereof and the indemnity and
contribution agreements in Section 8 hereof; but nothing herein shall
relieve a defaulting Underwriter from liability for its default.

10. The respective indemnities, agreements, representations, warranties
and other statements of the Company and the several Underwriters, as set forth
in this Agreement or made by or on behalf of them, respectively, pursuant to
this Agreement, shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of any Underwriter or any controlling person of any Underwriter, or the Company,
or any officer or director or controlling person of the Company, and shall
survive delivery of and payment for the Shares.

11. If this Agreement shall be terminated pursuant to Section 9 hereof or
as a result of the failure of a condition set forth in Section 7(g) hereof, the
Company shall not then be under any liability to any Underwriter except as
provided in Sections 6 and 8 hereof; but, if for any other reason, any Shares
are not delivered by or on behalf of the Company as provided herein, the Company
will reimburse the Underwriters through you for all out-of-pocket expenses
approved in writing by you, including fees and disbursements of counsel,
reasonably incurred by the Underwriters in making preparations for the purchase,
sale and delivery of the Shares not so delivered, but the Company shall then be
under no further liability to any Underwriter in respect of the Shares not so
delivered except as provided in Sections 6 and 8 hereof.

12. In all dealings hereunder, you shall act on behalf of each of the
Underwriters, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Underwriter made or
given by you jointly or by Goldman, Sachs & Co. on behalf of you as the
representatives.

All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex or
facsimile transmission to you as the representatives in care of Goldman, Sachs &
Co., 85 Broad Street, New York, New York 10004, Attention: Registration
Department; and if to the Company shall be delivered or sent by mail, telex or
facsimile transmission to the address of the Company set forth in the

-20-

<PAGE>

Registration Statement, Attention: Secretary; provided, however, that any notice
to an Underwriter pursuant to Section 8(c) hereof shall be delivered or sent by
mail, telex or facsimile transmission to such Underwriter at its address set
forth in its Underwriters' Questionnaire, or telex constituting such
Questionnaire, which address will be supplied to the Company by you upon
request. Any such statements, requests, notices or agreements shall take effect
at the time of receipt thereof.

13. This Agreement shall be binding upon, and inure solely to the benefit
of, the Underwriters, the Company and, to the extent provided in Sections 8 and
10 hereof, the officers and directors of the Company and each person who
controls the Company or any Underwriter, and their respective heirs, executors,
administrators, successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement. No purchaser of any of the
Shares from any Underwriter shall be deemed a successor or assign by reason
merely of such purchase.

14. Time shall be of the essence of this Agreement. As used herein, the
term "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.

15. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.

16. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.

-21-

<PAGE>

If the foregoing is in accordance with your understanding, please sign and
return to seven counterparts hereof, and upon the acceptance hereof by you, on
behalf of each of the Underwriters, this letter and such acceptance hereof shall
constitute a binding agreement between each of the Underwriters and the Company.
It is understood that your acceptance of this letter on behalf of each of the
Underwriters is pursuant to the authority set forth in a form of Agreement among
Underwriters (U.S. Version), the form of which shall be submitted to the Company
for examination upon request, but without warranty on your part as to the
authority of the signers thereof.

Very truly yours,

Saks Holdings, Inc.

By:____________________________
Name:
Title:
Accepted as of the date hereof:

Goldman, Sachs & Co.
CS First Boston Corporation
Morgan Stanley & Co. Incorporated
Salomon Brothers Inc

By:________________________________
(Goldman, Sachs & Co.)
On behalf of each of the Underwriters

-22-

<PAGE>

SCHEDULE I

Number of Optional
Share to be
Total Number of Purchased if
Firm Shares to Maximum Option
Underwriter be Purchased Exercised
----------- ----------------- ------------------

Goldman, Sachs & Co. . . . . . . . . .
CS First Boston Corporation . . . . . .
Morgan Stanley & Co. Incorporated . . .
Salomon Brothers Inc . . . . . . . . .

Total . . . . . . . . . . . . . .
---------------- -------------------

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

-23-

<PAGE>

SCHEDULE II

SIGNIFICANT SUBSIDIARIES
------------------------

-24-

<PAGE>

ANNEX I

FORM OF ANNEX I DESCRIPTION OF COMFORT LETTER

Pursuant to Section 7(e) of the Underwriting Agreement, the accountants
shall furnish letters to the Underwriters to the effect that:

(i) They are independent certified public accountants with respect to
the Company and its subsidiaries within the meaning of the Act and the
applicable published rules and regulations thereunder;

(ii) In their opinion, the financial statements and any supplementary
financial information and schedules (and, if applicable, financial
forecasts and/or pro forma financial information) examined by them and
included in the Prospectus or the Registration Statement comply as to form
in all material respects with the applicable accounting requirements of the
Act and the related published rules and regulations thereunder; and, if
applicable, they have made a review in accordance with standards
established by the American Institute of Certified Public Accountants of
the unaudited consolidated interim financial statements, selected financial
data, pro forma financial information, financial forecasts and/or condensed
financial statements derived from audited financial statements of the
Company for the periods specified in such letter, as indicated in their
reports thereon, copies of which have been furnished to the representatives
of the Underwriters (the "Representatives");

(iii) They have made a review in accordance with standards
established by the American Institute of Certified Public Accountants of
the unaudited condensed consolidated statements of income, consolidated
balance sheets and consolidated statements of cash flows included in the
Prospectus as indicated in their reports thereon copies of which have been
separately furnished to the Representatives and on the basis of specified
procedures including inquiries of officials of the Company who have
responsibility for financial and accounting matters regarding whether the
unaudited condensed consolidated financial statements referred to in
paragraph (vi)(A)(i) below comply as to form in all material respects with
the applicable accounting requirements of the Act and the related published
rules and regulations, nothing came to their attention that caused them to
believe that the unaudited condensed consolidated financial statements do
not comply as to form in all material respects with the applicable
accounting requirements of the Act and the related published rules and
regulations;

(iv) The unaudited selected financial information with respect to the
consolidated results of operations and financial position of the Company
for the five most recent fiscal years included in the Prospectus agrees
with the corresponding amounts (after restatements where applicable) in the
audited consolidated financial statements for such five fiscal years;

(v) They have compared the information in the Prospectus under
selected captions with the disclosure requirements of Regulation S-K and on
the basis of limited procedures specified in such letter nothing came to
their attention as a result of the

<PAGE>

foregoing procedures that caused them to believe that this information does
not conform in all material respects with the disclosure requirements of
Items 301, 302, 402 and 503(d), respectively, of Regulation S-K;

(vi) On the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and other
information referred to below, a reading of the latest available interim
financial statements of the Company and its subsidiaries, inspection of the
minute books of the Company and its subsidiaries since the date of the
latest audited financial statements included in the Prospectus, inquiries
of officials of the Company and its subsidiaries responsible for financial
and accounting matters and such other inquiries and procedures as may be
specified in such letter, nothing came to their attention that caused them
to believe that:

(A) (i) the unaudited consolidated statements of income,
consolidated balance sheets and consolidated statements of cash flows
included in the Prospectus do not comply as to form in all material
respects with the applicable accounting requirements of the Act and
the related published rules and regulations, or (ii) any material
modifications should be made to the unaudited condensed consolidated
statements of income, consolidated balance sheets and consolidated
statements of cash flows included in the Prospectus for them to be in
conformity with generally accepted accounting principles;

(B) any other unaudited income statement data and balance sheet
items included in the Prospectus do not agree with the corresponding
items in the unaudited consolidated financial statements from which
such data and items were derived, and any such unaudited data and
items were not determined on a basis substantially consistent with the
basis for the corresponding amounts in the audited consolidated
financial statements included in the Prospectus;

(C) the unaudited financial statements which were not included
in the Prospectus but from which were derived any unaudited condensed
financial statements referred to in Clause (A) and any unaudited
income statement data and balance sheet items included in the
Prospectus and referred to in Clause (B) were not determined on a
basis substantially consistent with the basis for the audited
consolidated financial statements included in the Prospectus;

(D) any unaudited pro forma consolidated condensed financial
statements included in the Prospectus do not comply as to form in all
material respects with the applicable accounting requirements of the
Act and the published rules and regulations thereunder or the pro
forma adjustments have not been properly applied to the historical
amounts in the compilation of those statements;

(E) as of a specified date not more than five days prior to the
date of such letter, there have been any changes in the consolidated
capital stock (other than issuances of capital stock upon exercise of
options and stock

-2-

<PAGE>

appreciation rights, upon earn-outs of performance shares and upon
conversions of convertible securities, in each case which were
outstanding on the date of the latest financial statements included in
the Prospectus) or any increase in the consolidated long-term debt of
the Company and its subsidiaries, or any decreases in consolidated net
current assets or stockholders' equity or other items specified by the
Representatives, or any increases in any items specified by the
Representatives, in each case as compared with amounts shown in the
latest balance sheet included in the Prospectus, except in each case
for changes, increases or decreases which the Prospectus discloses
have occurred or may occur or which are described in such letter; and

(F) for the period from the date of the latest financial
statements included in the Prospectus to the specified date referred
to in Clause (E) there were any decreases in consolidated net revenues
or operating profit or the total or per share amounts of consolidated
net income or other items specified by the Representatives, or any
increases in any items specified by the Representatives, in each case
as compared with the comparable period of the preceding year and with
any other period of corresponding length specified by the
Representatives, except in each case for decreases or increases which
the Prospectus discloses have occurred or may occur or which are
described in such letter; and

(vii) In addition to the examination referred to in their report(s)
included in the Prospectus and the limited procedures, inspection of minute
books, inquiries and other procedures referred to in paragraphs (iii) and
(vi) above, they have carried out certain specified procedures, not
constituting an examination in accordance with generally accepted auditing
standards, with respect to certain amounts, percentages and financial
information specified by the Representatives, which are derived from the
general accounting records of the Company and its subsidiaries, which
appear in the Prospectus, or in Part II of, or in exhibits and schedules
to, the Registration Statement specified by the Representatives, and have
compared certain of such amounts, percentages and financial information
with the accounting records of the Company and its subsidiaries and have
found them to be in agreement.

-3-

Exhibit 1.02

Saks Holdings, Inc.
Common Stock
(par value $0.01 per Share)

Underwriting Agreement
(International Version)

May __, 1996

Goldman Sachs International,
CS First Boston Limited,
Morgan Stanley & Co. International Limited,
Salomon Brothers International Limited,
As representatives of the several Underwriters
named in Schedule I hereto,
c/o Goldman Sachs International,
Peterborough Court,
133 Fleet Street,
London EC4A 2BB, England.

Ladies and Gentlemen:

Saks Holdings, Inc., a Delaware corporation (the "Company"), proposes,
subject to the terms and conditions stated herein, to issue and sell to the
Underwriters named in Schedule I hereto (the "Underwriters") an aggregate of
2,750,000 shares (the "Firm Shares") and, at the election of the Underwriters,
up to 412,500 additional shares (the "Optional Shares") of Common Stock, par
value $0.01 per share (the "Stock") of the Company (the Firm Shares and the
Optional Shares which the Underwriters elect to purchase pursuant to Section 2
hereof being collectively called the "Shares").

It is understood and agreed to by all parties that the Company is
concurrently entering into an agreement, a copy of which is attached hereto (the
"U.S. Underwriting Agreement"), providing for the offering by the Company of up
to a total of 12,650,000 shares of Stock (the "U.S. Shares") including the
overallotment option thereunder through arrangements with certain underwriters
in the United States (the "U.S. Underwriters"), for whom Goldman, Sachs & Co.,
CS First Boston Corporation, Morgan Stanley & Co. Incorporated and Salomon
Brothers Inc are acting as representatives. Anything herein and therein to the
contrary notwithstanding, the respective closings under this Agreement and the
U.S. Underwriting Agreement are hereby expressly made conditional on one
another. The Underwriters hereunder and the U.S. Underwriters are
simultaneously entering into an Agreement between U.S. and International
Underwriting Syndicates (the "Agreement between Syndicates") which provides,
among other things, for the transfer of shares of Stock between the two
syndicates and for consultation by the Lead Managers hereunder with Goldman,
Sachs & Co. prior to

<PAGE>

exercising the rights of the Underwriters under Section 7 hereof. Two forms of
prospectus are to be used in connection with the offering and sale of shares of
Stock contemplated by the foregoing, one relating to the Shares hereunder and
the other relating to the U.S. Shares. The latter form of prospectus will be
identical to the former except for the front cover page, back cover page, and
the text under the caption "Underwriting" and for the elimination of a section
captioned "Certain United States Tax Consequences to Non-U.S. Holders. Except
as used in Sections 2, 3, 4, 9 and 11 herein, and except as the context may
otherwise require, references hereinafter to the Shares shall include all of the
shares of Stock which may be sold pursuant to either this Agreement or the
U.S. Underwriting Agreement, and references herein to any prospectus whether in
preliminary or final form, and whether as amended or supplemented, shall include
both of the U.S. and the international versions thereof.

In addition, this Agreement incorporates by reference certain provisions
from the U.S. Underwriting Agreement (including the related definitions of
terms, which are also used elsewhere herein) and, for purposes of applying the
same, references (whether in these precise words or their equivalent) in the
incorporated provisions to the "Underwriters" shall be to the Underwriters
hereunder, to the "Shares" shall be to the Shares hereunder as just defined, to
"this Agreement" (meaning therein the U.S. Underwriting Agreement) shall be to
this Agreement (except where this Agreement is already referred to or as the
context may otherwise require) and to the representatives of the Underwriters or
to Goldman, Sachs & Co. shall be to the addressees of this Agreement and to
Goldman Sachs International ("GSI"), and, in general, all such provisions and
defined terms shall be applied mutatis mutandis as if the incorporated
provisions were set forth in full herein having regard to their context in this
Agreement as opposed to the U.S. Underwriting Agreement.

1. The Company hereby makes with the Underwriters the same representa-
tions, warranties and agreements as are set forth in Section 1 of the U.S.
Underwriting Agreement, which Section is incorporated herein by this reference.

2. Subject to the terms and conditions herein set forth, the Company
agrees to issue and sell to each of the Underwriters, and each of the
Underwriters agrees, severally and not jointly, to purchase from the Company, at
a purchase price per share of $______, the number of Firm Shares set forth
opposite the name of such Underwriter in Schedule I hereto and (b) in the event
and to the extent that the Underwriters shall exercise the election to purchase
Optional Shares as provided below, the Company agrees to issue and sell to each
of the Underwriters, and each of the Underwriters agrees, severally and not
jointly, to purchase from the Company, at the purchase price per share set forth
in clause (a) of this Section 2, that portion of the number of Optional Shares
as to which such election shall have been exercised (to be adjusted by you so as
to eliminate fractional shares) determined by multiplying such number of
Optional Shares by a fraction the numerator of which is the maximum number of
Optional Shares which such Underwriter is entitled to purchase as set forth
opposite the name of such Underwriter in Schedule I hereto and the denominator
of which is the maximum number of Optional Shares that all of the Underwriters
are entitled to purchase hereunder.

The Company hereby grants to the Underwriters the right to purchase at
their election up to 412,500 Optional Shares, at the purchase price per share
set forth in the paragraph

-2-

<PAGE>

above, for the sole purpose of covering overallotments in the sale of the Firm
Shares. Any such election to purchase Optional Shares may be exercised only by
written notice from you to the Company, given within a period of 30 calendar
days after the date of this Agreement, setting forth the aggregate number of
Optional Shares to be purchased and the date on which such Optional Shares are
to be delivered, as determined by you but in no event earlier than the First
Time of Delivery (as defined in Section 4 hereof) or, unless you and the Company
otherwise agree in writing, earlier than two or later than ten business days
after the date of such notice.

3. Upon the authorization by GSI of the release of the Firm Shares, the
several Underwriters propose to offer the Firm Shares for sale upon the terms
and conditions set forth in the Prospectus and in the forms of Agreement among
Underwriters (International Version) and Selling Agreements, which have been
previously submitted to the Company by you. Each Underwriter hereby makes to
and with the Company the representations and agreements of such Underwriter as a
member of the selling group contained in Sections 3(d) and 3(e) of the form of
Selling Agreements.

4. (a) Certificates representing the Shares to be purchased by each
Underwriter hereunder, in definitive form, and in such authorized denominations
and registered in such names as GSI may request upon at least forty-eight hours'
prior notice to the Company shall be delivered by or on behalf of the Company to
GSI for the account of such Underwriter, against payment by or on behalf of such
Underwriter of the purchase price therefor by wire transfer of same day funds
payable to the order of the Company. The Company will cause the certificates
representing the Shares to be made available for checking and packaging at least
twenty-four hours prior to the Time of Delivery (as defined below) with respect
thereto at the office GSI, 85 Broad Street, New York, New York 10004 (the
"Designated Office"). The time and date of such delivery and payment shall be,
with respect to the Firm Shares, 9:30 a.m., New York City time, on May ..., 1996
or such other time and date as GSI and the Company may agree upon in writing,
and, with respect to the Optional Shares, 9:30 a.m., New York City time, on the
date specified by GSI in the written notice given by GSI of the Underwriters'
election to purchase such Optional Shares, or such other time and date as GSI
and the Company may agree upon in writing. Such time and date for delivery of
the Firm Shares is herein called the "First Time of Delivery", such time and
date for delivery of the Optional Shares, if not the First Time of Delivery, is
herein called the "Second Time of Delivery", and each such time and date for
delivery is herein called a "Time of Delivery".

(b) The documents to be delivered at each Time of Delivery by or on
behalf of the parties hereto pursuant to Section 7 of the U.S. Underwriting
Agreement, including the cross receipt for the Shares and any additional
documents requested by the Underwriters pursuant to Section 7(k) of the
U.S. Underwriting Agreement hereof, will be delivered at the offices of
Sullivan & Cromwell, 125 Broad Street, New York, New York 10004 (the
"Closing Location"), and the Shares will be delivered at the Designated
Office, all at such Time of Delivery. A meeting will be held at the
Closing Location at 2:00 p.m., New York City time, on the New York Business
Day next preceding such Time of Delivery, at which meeting the final drafts
of the documents to be delivered pursuant to the preceding sentence will be
available for review by the parties hereto. For the purposes of this
Section 4, "New York Business Day" shall

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<PAGE>

mean each Monday, Tuesday, Wednesday, Thursday and Friday which is not a
day on which banking institutions in New York are generally authorized or
obligated by law or executive order to close.

5. The Company hereby makes to the Underwriters the same agreements as
are set forth in Section 5 of the U.S. Underwriting Agreement, which Section is
incorporated herein by this reference.

6. The Company and the Underwriters hereby agree with respect to certain
expenses on the same terms as are set forth in Section 6 of the
U.S. Underwriting Agreement, which Section is incorporated herein by this
reference.

7. Subject to the provisions of the Agreement between Syndicates, the
obligations of the Underwriters hereunder shall be subject, in their discretion,
at each Time of Delivery, to the condition that all representations and
warranties and other statements of the Company herein are, at and as of such
Time of Delivery, true and correct, the condition that the Company shall have
performed all of its obligations hereunder theretofore to be performed, and
additional conditions identical to those set forth in Section 7 of the
U.S. Underwriting Agreement, which Section is incorporated herein by this
reference.

8. (a) The Company will indemnify and hold harmless each Underwriter
against any losses, claims, damages or liabilities, joint or several, to which
such Underwriter may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, the Registration
Statement or the Prospectus, or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse each Underwriter for any legal or
other expenses reasonably incurred by such Underwriter in connection with
investigating or defending any such action or claim as such expenses are
incurred; provided, however, that the Company shall not be liable in any such
case to the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in any Preliminary Prospectus, the Registration Statement
or the Prospectus or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by any Underwriter
through GSI expressly for use therein.

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<PAGE>

Preliminary Prospectus, the Registration Statement or Prospectus or any
such amendment or supplement in reliance upon and in conformity with
written information furnished to the Company by such Underwriter through
GSI expressly for use therein; and will reimburse the Company for any legal
or other expenses reasonably incurred by the Company in connection with
investigating or defending any such action or claim as such expenses are
incurred.

(c) Promptly after receipt by an indemnified party under subsection
(a) or (b) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made
against the indemnifying party under such subsection, notify the
indemnifying party in writing of the commencement thereof; but the omission
so to notify the indemnifying party shall not relieve it from any liability
which it may have to any indemnified party otherwise than under such
subsection. In case any such action shall be brought against any
indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish, jointly with any
other indemnifying party similarly notified, to assume the defense thereof,
with counsel satisfactory to such indemnified party (who shall not, except
with the consent of the indemnified party (which consent shall not be
unreasonably withheld), be counsel to the indemnifying party), and, after
notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not
be liable to such indemnified party under such subsection for any legal
expenses of other counsel or any other expenses, in each case subsequently
incurred by such indemnified party, in connection with the defense thereof
other than reasonable costs of investigation. The indemnifying party shall
not be liable for any settlement of an action or claim for monetary damages
which an indemnified party may effect without the consent of the
indemnifying party which consent will not be unreasonably withheld. No
indemnifying party shall, without the written consent of the indemnified
party, effect the settlement or compromise of, or consent to the entry of
any judgment with respect to, any pending or threatened action or claim in
respect of which indemnification or contribution may be sought hereunder
(whether or not the indemnified party is an actual or potential party to
such action or claim) unless such settlement, compromise or judgment (i)
includes an unconditional release of the indemnified party from all
liability arising out of such action or claim and (ii) does not include a
statement as to or an admission of fault, culpability or a failure to act,
by or on behalf of any indemnified party.

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<PAGE>

each indemnifying party shall contribute to such amount paid or payable by
such indemnified party in such proportion as is appropriate to reflect not
only such relative benefits but also the relative fault of the Company on
the one hand and the Underwriters on the other in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by the Company on
the one hand and the Underwriters on the other shall be deemed to be in the
same proportion as the total net proceeds from the offering of the Shares
purchased under this Agreement (before deducting expenses) received by the
Company bear to the total underwriting discounts and commissions received
by the Underwriters with respect to the Shares purchased under this
Agreement, in each case as set forth in the table on the cover page of the
Prospectus relating to such Shares. The relative fault shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company on the one
hand or the Underwriters on the other and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the Underwriters agree that it
would not be just and equitable if contributions pursuant to this
subsection (d) were determined by pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by any other
method of allocation which does not take account of the equitable
considerations referred to above in this subsection (d). The amount paid
or payable by an indemnified party as a result of the losses, claims,
damages or liabilities (or actions in respect thereof) referred to above in
this subsection (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this subsection (d), no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at
which the Shares underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation. The Underwriters' obligations in this
subsection (d) to contribute are several in proportion to their respective
underwriting obligations and not joint.

9. (a) If any Underwriter shall default in its obligation to purchase
the Shares which it has agreed to purchase hereunder at a Time of Delivery, you
may in your discretion

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<PAGE>

arrange for you or another party or other parties to purchase such Shares on the
terms contained herein. If within thirty-six hours after such default by any
Underwriter you do not arrange for the purchase of such Shares, then the Company
shall be entitled to a further period of thirty-six hours within which to
procure another party or other parties satisfactory to you to purchase such
Shares on such terms. In the event that, within the respective prescribed
periods, you notify the Company that you have so arranged for the purchase of
such Shares, or the Company notifies you that it has so arranged for the
purchase of such Shares, you or the Company shall have the right to postpone
such Time of Delivery for a period of not more than seven days, in order to
effect whatever changes may thereby be made necessary in the Registration
Statement or the Prospectus, or in any other documents or arrangements, and the
Company agrees to file promptly any amendments to the Registration Statement or
the Prospectus which in your opinion may thereby be made necessary. The term
"Underwriter" as used in this Agreement shall include any person substituted
under this Section with like effect as if such person had originally been a
party to this Agreement with respect to such Shares.

(b) If, after giving effect to any arrangements for the purchase of
the Shares of a defaulting Underwriter or Underwriters by you and the
Company as provided in subsection (a) above, the aggregate number of such
Shares which remains unpurchased does not exceed one-eleventh of the
aggregate number of all the Shares to be purchased at such Time of
Delivery, then the Company shall have the right to require each
non-defaulting Underwriter to purchase the number of shares which such
Underwriter agreed to purchase hereunder at such Time of Delivery and, in
addition, to require each non-defaulting Underwriter to purchase its pro
rata share (based on the number of Shares which such Underwriter agreed to
purchase hereunder) of the Shares of such defaulting Underwriter or
Underwriters for which such arrangements have not been made; but nothing
herein shall relieve a defaulting Underwriter from liability for its
default.

(c) If, after giving effect to any arrangements for the purchase of
the Shares of a defaulting Underwriter or Underwriters by you and the
Company as provided in subsection (a) above, the aggregate number of such
Shares which remains unpurchased exceeds one-eleventh of the aggregate
number of all the Shares to be purchased at such Time of Delivery, or if
the Company shall not exercise the right described in subsection (b) above
to require non-defaulting Underwriters to purchase Shares of a defaulting
Underwriter or Underwriters, then this Agreement (or, with respect to the
Second Time of Delivery, the obligation of the Underwriters to purchase and
of the Company to sell the Optional Shares) shall thereupon terminate,
without liability on the part of any non-defaulting Underwriter or the
Company, except for the expenses to be borne by the Company and the
Underwriters as provided in Section 6 hereof and the indemnity and
contribution agreements in Section 8 hereof; but nothing herein shall
relieve a defaulting Underwriter from liability for its default.

-7-

<PAGE>

made by or on behalf of any Underwriter or any controlling person of any
Underwriter, or the Company, or any officer or director or controlling person of
the Company, and shall survive delivery of and payment for the Shares.

11. If this Agreement shall be terminated pursuant to Section 9 hereof or
as a result of the failure of a condition set forth in Section 7(g) of the U.S.
Underwriting Agreement, the Company shall not then be under any liability to any
Underwriter except as provided in Section 6 and Section 8 hereof, but, if for
any other reason any Shares are not delivered by or on behalf of the Company as
provided herein, the Company will reimburse the Underwriters through GSI for all
out-of-pocket expenses approved in writing by GSI, including fees and
disbursements of counsel, reasonably incurred by the Underwriters in making
preparations for the purchase, sale and delivery of the Shares not so delivered,
but the Company shall then be under no further liability to any Underwriter in
respect of the Shares not so delivered except as provided in Sections 6 and 8
hereof.

12. In all dealings hereunder, you shall act on behalf of each of the
Underwriters, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Underwriter made or
given by you jointly or by GSI on behalf of you as the representatives of the
Underwriters.

All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex or
facsimile transmission to the Underwriters in care of GSI, Peterborough Court,
133 Fleet Street, London EC4A 2BB, England, Attention: Equity Capital Markets,
Telex No. 94012165, facsimile transmission No. (071) 774-1550; and if to the
Company shall be delivered or sent by registered mail, telex or facsimile
transmission to the address of the Company set forth in the Registration
Statement, Attention: Secretary; provided, however, that any notice to an
Underwriter pursuant to Section 8(c) hereof shall be delivered or sent by mail,
telex or facsimile transmission to such Underwriter at its address set forth in
its Underwriters' Questionnaire, or telex constituting such Questionnaire, which
address will be supplied to the Company by GSI upon request. Any such
statements, requests, notices or agreements shall take effect upon receipt
thereof.

14. Time shall be of the essence of this Agreement.

15. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York, United States of America.

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<PAGE>

If the foregoing is in accordance with your understanding, please sign and
return to seven counterparts hereof, and upon the acceptance hereof by you, on
behalf of each of the Underwriters, this letter and such acceptance hereof shall
constitute a binding agreement among each of the Underwriters and the Company.
It is understood that your acceptance of this letter on behalf of each of the
Underwriters is pursuant to the authority set forth in a form of Agreement among
Underwriters (International Version), the form of which shall be furnished to
the Company for examination upon request, but without warranty on your part as
to the authority of the signers thereof.

Very truly yours,

Saks Holdings, Inc.

By: . . . . . . . . . . .
Name:
Title:
Accepted as of the date hereof:

Goldman Sachs International
CS First Boston Limited
Morgan Stanley & Co. International Limited
Salomon Brothers International Limited

By: Goldman Sachs International

By: . . . . . . . . . . .
(Attorney-in-fact)
On behalf of each of the Underwriters

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SCHEDULE I

Number of Optional
Shares to be
Total Number of Purchased
Firm Shares if Maximum Option
Underwriter to be Purchased Exercised
----------- --------------- -----------------

Goldman Sachs International . . . .
CS First Boston Limited . . . . . .
Morgan Stanley & Co. International
Limited . . . . . . . . . . . . . .
Salomon Brothers International
Limited . . . . . . . . . . . . .

_______________ __________________
Total . . . . . . . . . . . .
=============== ==================

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Exhibit 4.07

Saks & Company

AIBC Services, N.V.

Trustee

INDENTURE

Dated as of July 1, 1993

$50,000,000

9% Subordinated

Notes Due May 31, 2001

<PAGE>

TABLE OF CONTENTS

RECITALS OF THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION . . . . . . . . . . . 1

SECTION 1.01. Definitions. . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.02. Compliance Certificate and Opinions. . . . . . . . . . . 7
SECTION 1.03. Form of Documents Delivered to Trustee. . . . . . . . . . 7
SECTION 1.04. Acts of Holders. . . . . . . . . . . . . . . . . . . . . 8
SECTION 1.05. Notices, Etc., to Trustee, Company and Bank Agent. . . . 8
SECTION 1.06. Notice to Holders; Waiver. . . . . . . . . . . . . . . . 9
SECTION 1.07. Effect of Headings and Table of Contents. . . . . . . . . 9
SECTION 1.08. Successors and Assigns. . . . . . . . . . . . . . . . . . 9
SECTION 1.09. Separability Clause. . . . . . . . . . . . . . . . . . . 10
SECTION 1.10. Benefits of Indenture. . . . . . . . . . . . . . . . . . 10
SECTION 1.11. GOVERNING LAW; JURISDICTION. . . . . . . . . . . . . . . 10
SECTION 1.12. Execution in Counterparts. . . . . . . . . . . . . . . . 10
SECTION 1.13. Legal Holidays. . . . . . . . . . . . . . . . . . . . . . 10

ARTICLE TWO
THE NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

SECTION 2.01. Forms Generally. . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.02. Title and Terms. . . . . . . . . . . . . . . . . . . . . 11
SECTION 2.03. Date and Denomination of Notes; Interest;
Place of Payment. . . . . . . . . . . . . . . . . . . . . 11
SECTION 2.04. Execution, Authentication and Delivery. . . . . . . . . . 12
SECTION 2.05. Temporary Notes. . . . . . . . . . . . . . . . . . . . . 12
SECTION 2.06. Registration, Registration of Transfer and Exchange. . . 13
SECTION 2.07. Mutilated, Destroyed, Lost or Stolen Notes. . . . . . . . 13
SECTION 2.08. Payment of Interest; Interest Rights Preserved. . . . . . 14

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SECTION 2.09. Persons Deemed Owners. . . . . . . . . . . . . . . . . . 15
SECTION 2.10. Cancellation. . . . . . . . . . . . . . . . . . . . . . . 15

ARTICLE THREE
SATISFACTION AND DISCHARGE . . . . . . . . . . . . . . . . . . . . . . . . . 16

SECTION 3.01. Satisfaction and Discharge of Indenture. . . . . . . . . 16
SECTION 3.02. Application of Trust Funds. . . . . . . . . . . . . . . . 17

ARTICLE FOUR
REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

SECTION 4.01. Events of Default. . . . . . . . . . . . . . . . . . . . 17
SECTION 4.02. Acceleration of Maturity; Rescission and Annulment. . . . 18
SECTION 4.03. Collection of Indebtedness and Suits for
Enforcement by the Trustee. . . . . . . . . . . . . . . . 20
SECTION 4.04. Trustee May File Proofs of Claim. . . . . . . . . . . . . 20
SECTION 4.05. Trustee May Enforce Claims Without Possession of
Notes. . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 4.06. Application of Funds Collected. . . . . . . . . . . . . . 21
SECTION 4.07. Limitation on Suits. . . . . . . . . . . . . . . . . . . 22
SECTION 4.08. Unconditional Right of Holders to Receive
Principal, Premium and Interest. . . . . . . . . . . . . 22
SECTION 4.09. Restoration of Rights and Remedies. . . . . . . . . . . . 22
SECTION 4.10. Rights and Remedies Cumulative. . . . . . . . . . . . . . 23
SECTION 4.11. Delay or Omission Not Waiver. . . . . . . . . . . . . . . 23
SECTION 4.12. Control by Holders. . . . . . . . . . . . . . . . . . . . 23
SECTION 4.13. Waiver of Past Defaults. . . . . . . . . . . . . . . . . 23
SECTION 4.14. Undertaking for Costs. . . . . . . . . . . . . . . . . . 23
SECTION 4.15. Waiver of Stay or Extension Laws. . . . . . . . . . . . . 24

ARTICLE FIVE
THE TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

SECTION 5.01. Certain Duties and Responsibilities. . . . . . . . . . . 24
SECTION 5.02. Notice of Defaults. . . . . . . . . . . . . . . . . . . . 25

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SECTION 5.03. Certain Rights of Trustee. . . . . . . . . . . . . . . . 25
SECTION 5.04. Not Responsible for Recitals or Issuance of Notes. . . . 26
SECTION 5.05. May Hold Notes; Paying Agent; Other Individual
Rights of Trustee. . . . . . . . . . . . . . . . . . . . 26
SECTION 5.06. Funds Held in Trust. . . . . . . . . . . . . . . . . . . 26
SECTION 5.07. Compensation and Reimbursement. . . . . . . . . . . . . . 26
SECTION 5.08. Corporate Trustee Required; Eligibility. . . . . . . . . 27
SECTION 5.09. Resignation and Removal; Appointment of a Successor. . . 27
SECTION 5.10. Acceptance of Appointment by Successor Trustee. . . . . . 28
SECTION 5.11. Merger, Conversion, Consolidation or Succession to
Business. . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 5.12. Appointment of Authenticating Agent. . . . . . . . . . . 29

ARTICLE SIX
HOLDERS' LISTS AND REPORTS BY THE COMPANY . . . . . . . . . . . . . . . . . . 30

SECTION 6.01. Company to Furnish Trustee Names and Addresses of
Holders. . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 6.02. Preservation of Information. . . . . . . . . . . . . . . 30
SECTION 6.03. Reports by the Company. . . . . . . . . . . . . . . . . . 30

ARTICLE SEVEN
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE . . . . . . . . . . . . 31

SECTION 7.01. Company May Not Consolidate, Etc., on Certain Terms. . . 31
SECTION 7.02. Successor Corporation Substituted. . . . . . . . . . . . 31

ARTICLE EIGHT
SUPPLEMENTAL INDENTURES . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

SECTION 8.01. Supplemental Indentures Without Consent of Holders. . . . 32
SECTION 8.02. Supplemental Indentures With Consent of Holders. . . . . 32
SECTION 8.03. Execution of Supplemental Indentures. . . . . . . . . . . 33
SECTION 8.04. Effect of Supplemental Indentures. . . . . . . . . . . . 33
SECTION 8.05. Reference in Notes to Supplemental Indentures. . . . . . 33

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SECTION 8.06. Consent of Senior Lenders. . . . . . . . . . . . . . . . 33

ARTICLE NINE
COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

SECTION 9.01. Payment of Principal, Premium, if any, and Interest. . . 33
SECTION 9.02. Maintenance of Office or Agency. . . . . . . . . . . . . 34
SECTION 9.03. Funds for Note Payments to Be Held in Trust. . . . . . . 34
SECTION 9.04. Corporate Existence. . . . . . . . . . . . . . . . . . . 35
SECTION 9.05. Maintenance of Properties. . . . . . . . . . . . . . . . 35
SECTION 9.06. Payment of Taxes and Other Claims. . . . . . . . . . . . 36
SECTION 9.07. Provision of Reports. . . . . . . . . . . . . . . . . . . 36
SECTION 9.08. Waiver of Usury Defense. . . . . . . . . . . . . . . . . 36
SECTION 9.09. Waiver of Certain Covenants. . . . . . . . . . . . . . . 36
SECTION 9.10. Statement by Officers as to Default. . . . . . . . . . . 36
SECTION 9.11. Limitation on Indebtedness. . . . . . . . . . . . . . . . 37
SECTION 9.12. Limitation on Creation of Classes of Senior
Indebtedness. . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 9.13. Limitation on the Payment of Dividends and Purchase of
Stock. . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 9.14. Change of Control. . . . . . . . . . . . . . . . . . . . 39

ARTICLE TEN
REDEMPTION OF NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

SECTION 10.01. Optional Redemption. . . . . . . . . . . . . . . . . . . 40
SECTION 10.02. Applicability of Article. . . . . . . . . . . . . . . . 40
SECTION 10.03. Election to Redeem. . . . . . . . . . . . . . . . . . . 41
SECTION 10.04. Selection by Company of Notes to be Redeemed. . . . . . 41
SECTION 10.05. Notice of Redemption. . . . . . . . . . . . . . . . . . 41
SECTION 10.06. Deposit of Redemption Price. . . . . . . . . . . . . . . 42
SECTION 10.07. Notes Payable on Redemption Date. . . . . . . . . . . . 42
SECTION 10.08. Notes Redeemed in Part. . . . . . . . . . . . . . . . . 42

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<PAGE>

ARTICLE ELEVEN
SUBORDINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

SECTION 11.01. Agreement of Subordination. . . . . . . . . . . . . . . 42
SECTION 11.02. Payments to Holders of Notes. . . . . . . . . . . . . . 43
SECTION 11.03. Subrogation of Notes. . . . . . . . . . . . . . . . . . 44
SECTION 11.04. Authorization by Holders of Notes. . . . . . . . . . . . 45
SECTION 11.05. Notice to Trustee. . . . . . . . . . . . . . . . . . . . 45
SECTION 11.06. Trustee's Relation to Senior Indebtedness. . . . . . . . 46
SECTION 11.07. No Impairment of Subordination. . . . . . . . . . . . . 46
SECTION 11.08. Article Eleven Not to Prevent Events of Default. . . . . 47
SECTION 11.09. Continuing Effect. . . . . . . . . . . . . . . . . . . . 47
SECTION 11.10. Individual Rights of Senior Lenders. . . . . . . . . . . 47
SECTION 11.11. Article Applicable to Paying Agents and
Depositaries. . . . . . . . . . . . . . . . . . . . . . 48
EXHIBIT A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

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<PAGE>

This INDENTURE is dated as of July 1, 1993 from SAKS & COMPANY, a New
York corporation (the "Company"), to AIBC SERVICES N.V., a Netherlands Antilles
corporation (the "Trustee").

RECITALS OF THE COMPANY

For its lawful corporate purposes, the Company has duly authorized the
issue of its 9% Subordinated Notes due May 31, 2001 (the "Notes") of
substantially the tenor and amount hereinafter set forth, and to provide
therefor the Company has duly authorized the execution and delivery of this
Indenture.

All acts and things necessary to make the Notes, when executed by the
Company and authenticated and delivered by the Trustee, as provided in this
Indenture, the valid, binding and legal obligations of the Company, and to
constitute this Indenture a valid agreement according to its terms, have been
done and performed, and the execution of this Indenture and the issue hereunder
of the Notes in all respects have been duly authorized.

NOW, THEREFORE, THIS INDENTURE WITNESSETH:

In consideration of the premises and the purchase and acceptance of
the Notes by the Holders thereof, the Company covenants and agrees with the
Trustee for the equal and proportionate benefit of the Holders from time to time
of the Notes as follows:

ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION

SECTION 1.01. Definitions.
-----------

The terms defined in this Section 1.01 (except as herein otherwise
expressly provided or unless the context otherwise requires) for all purposes of
this Indenture and of any indenture supplemental hereto shall have the
respective meanings specified in this Section 1.01. The words "herein,"
"hereof" and "hereunder" and words of similar import refer to this Indenture as
a whole and not to any particular Article, Section or other subdivision. The
terms defined in this Article One include the plural as well as the singular.

Act, when used with respect to any Holder, has the meaning specified
---
in Section 1.04.

Affiliate of any specified Person means any other Person directly or
---------
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise,
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.

Authenticating Agent means any Person authorized by the Trustee to act
--------------------
on behalf of the Trustee to authenticate Notes.

<PAGE>

Bank Agent means (a) Chemical Bank as long as Chemical Bank is an
----------
agent under the Senior Credit Facility and (b) thereafter, any other
administrative agent under the Senior Credit Facility.

Bankruptcy Law means Title 11 of the U.S. Code or any similar Federal
--------------
or state law for the relief of debtors.

Business Day means any day on which banking institutions in both
------------
Curacao, Netherlands Antilles, and New York, New York, are open for business.

Capital Lease means, as of any date, any lease of property, real or
-------------
personal, that is or should be capitalized on a balance sheet of the lessee
prepared as of such date in accordance with GAAP.

Change of Control means (a) if at any time prior to an initial Public
-----------------
Offering by Holdings, Investcorp together with Investcorp's Affiliates shall
cease to own, directly or indirectly, in the aggregate, at least 51% of the
issued and outstanding voting capital stock of the Company (any such indirect
ownership of the voting capital stock of the Company to be measured by
multiplying (i) Investcorp's (and Investcorp's Affiliates') aggregate percentage
interest in the voting power of the voting stock of any other Person which holds
voting stock of the Company by (ii) the percentage interest of the voting stock
of the Company held, directly or indirectly, by such other Person), other than
as a result of an initial Public Offering, free and clear of all liens (except
in the case of the capital stock of the Company owned by Holdings, for liens
created in connection with the Senior Credit Facility) and (b) if at any time
after an initial Public Offering by Holdings, if any Person (other than
Investcorp, any of Investcorp's Affiliates, any Person that is senior management
of the Company or any entity the majority of the equity ownership interests of
which is owned by such senior management of the Company or any Person acting in
the capacity of an underwriter), whether singly or in concert with one or more
Persons, shall, directly or indirectly, have acquired 20% or more, on a fully
diluted basis, of the outstanding common stock of the Holdings (excluding, for
purposes of such determination, the percentage, on a fully diluted basis, of the
common stock of Holdings outstanding on the date hereof and owned, directly or
indirectly, by such Person or Persons).

Change of Control Date has the meaning specified in Section 9.14.
----------------------

Change of Control Offer has the meaning specified in Section 9.14.
-----------------------

Change of Control Payment Date has the meaning specified in
------------------------------
Section 9.14.

Commission means the Securities and Exchange Commission, as from time
----------
to time constituted, created under the Securities Exchange Act of 1934, as
amended, or, if at any time after the execution of this instrument such
Commission is not existing, the body performing its duties at such time.

Company means the Person named as the "Company" in the first paragraph
-------
of this instrument until a successor corporation shall have become such pursuant
to the provisions of Article Seven, and thereafter "Company" shall mean such
successor corporation.

Company Order or Company Request means a written order or request
------------- ---------------
signed in the name of the Company by its Chairman of the Board, a Vice Chairman,
its President or a

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<PAGE>

Vice President, and by its Treasurer, an Assistant Treasurer, its Secretary or
an Assistant Secretary, and delivered to the Trustee.

Custodian means any receiver, trustee, assignee, liquidator,
---------
sequestrator or similar official under any Bankruptcy Law.

Defaulted Interest has the meaning specified in Section 2.08.
------------------

Event of Default has the meaning specified in Section 4.01.
----------------

Fiscal Year of the Company means the fiscal year of the Company in
-----------
effect at the time of any determination thereof.

GAAP means generally accepted accounting principles in effect in the
----
United States of America at the time of any determination thereof.

Holder means a Person in whose name at the time of any determination
------
thereof a particular Note is registered on the Note Register.

Holdings has the meaning specified in Section 9.13.
--------

Indebtedness means the principal of and, premium, if any, and interest
------------
on, any of the following, whether outstanding at the date hereof or hereafter
incurred, created, assumed or guarantied:

(a) all indebtedness of the Company for money borrowed (including any
indebtedness secured by a Lien that is (i) given to secure all or part of the
purchase price of property subject thereto, whether given to the vendor of such
property or to another, or (ii) existing on property at the time of acquisition
thereof);

(b) all indebtedness and liabilities of the Company evidenced by
notes, debentures, bonds or other securities sold by the Company for value;

(c) all liabilities under letters of credit issued for the account of
the Company, including without limitation reimbursement obligations;

(d) all obligations of the Company under Capital Leases (the
capitalized amount of which is being deemed "principal" for purposes of this
definition);

(e) all indebtedness and liabilities of others of the kinds described
in any of the preceding clauses (a), (b) and (c) and all lease obligations of
others of the kind described in the preceding clause (d) assumed by or
guarantied in any manner by the Company or in effect guarantied by the Company
through an agreement to purchase, contingent or otherwise; and

(f) all renewals, extensions and refundings of indebtedness and
liabilities of the kinds described in any of the preceding clauses (a), (b), (c)
and (e) and all renewals, extensions and refundings of lease obligations of the
kinds described in either of the preceding clauses (d) and (e).

Indenture means this instrument as originally executed or, if amended
---------
or supplemented as herein provided, as so amended or supplemented.

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--------------

<PAGE>

Interest Payment Date means the Stated Maturity of an installment of
---------------------
interest on the Notes.

Interest Swap Obligations means the obligations of any Person pursuant
-------------------------
to any arrangement with any other Person whereby, directly or indirectly, such
Person is entitled to receive from time to time periodic payments calculated by
applying either a floating or a fixed rate of interest on a stated notional
amount in exchange for periodic payments made by such Person calculated by
applying a fixed or a floating rate of interest on the same notional amount.

Investcorp means INVESTCORP S.A., a company organized under the laws
----------
of Luxembourg and as of the date hereof having an address at 37 rue Notre Dame,
Luxembourg.

Investcorp's Affiliates means (a) any Person which, directly or
-----------------------
indirectly, is in control of, is controlled by, or is under common control with,
Investcorp or (b) any Person who is a director or officer (i) of Investcorp,
(ii) of any wholly-owned Subsidiary of Investcorp or (iii) of any Person
described in clause (a) above. For purposes of this definition, "control" of a
Person shall mean the power, directly or indirectly, (A) to vote a majority in
interest (more than 50%) of the securities having ordinary voting power for the
election of directors of such Person, whether by ownership of securities,
contract, proxy or otherwise, or (B) to direct or cause the direction of the
management and policies of such Person, whether by ownership of securities,
contract, proxy or otherwise.

Lien means, with respect to any property or assets, any mortgage or
----
deed of trust, pledge, hypothecation, assignment, deposit arrangement, security
interest, lien, charge, encumbrance, preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever on or
with respect to such property or assets (including, without limitation, any
conditional sale or other title retention agreement having substantially the
same economic effect as any of the foregoing).

Maturity when used with respect to any Note means the date on which
--------
the principal of such Note becomes due and payable as therein or herein
provided, whether at the Stated Maturity or by declaration of acceleration, call
for redemption or otherwise.

Merger means the acquisition by Windows Acquisition Corp. of the
------
Company and the subsequent merger of Windows Acquisition Corp. with and into the
Company.

Notes has the meaning specified in the Recitals hereto.
-----

Note Register and Note Registrar have the respective meanings
------------- --------------
specified in Section 2.06.

Officers' Certificate means a certificate signed by the Chairman of
---------------------
the Board, a Vice Chairman, the President or a Vice President and by the
Treasurer, an Assistant Treasurer, the Chief Financial Officer, the Secretary or
an Assistant Secretary of the Company, and delivered to the Trustee.

Opinion of Counsel means an opinion in writing signed by legal counsel
------------------
acceptable to the Trustee.

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--------------

<PAGE>

Outstanding when used with reference to Notes means, as of the date of
-----------
determination, all Notes authenticated and delivered by the Trustee under this
Indenture, except:

(a) Notes theretofore cancelled by the Trustee or delivered to the
Trustee for cancellation;

(b) Notes, or portions thereof, for the payment or redemption of
which funds in the necessary amount shall have been deposited in trust with the
Trustee or with any paying agent (other than the Company) or shall have been set
aside and segregated in trust by the Company (if the Company shall act as its
own paying agent), provided that if such Notes are to be redeemed, notice of
such redemption shall have been given pursuant to this Indenture or provision
satisfactory to the Trustee shall have been made for giving such notice; and

(c) Notes in exchange for or in lieu of which other Notes shall have
been authenticated and delivered pursuant to the terms of Section 2.07 unless
proof satisfactory to the Trustee is presented that any such Notes are held by
bona fide holders in due course;

provided, however, that in determining whether the Holders of the
requisite principal amount of Outstanding Notes have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Notes owned by
the Company, any other obligor on the Notes or any Subsidiary of the Company
shall be deemed not to be Outstanding, except that, in determining whether the
Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Notes that the Trustee
knows to be so owned shall be so disregarded. Notes so owned that have been
pledged in good faith may be regarded as Outstanding if the pledgee establishes
to the satisfaction of the Trustee the pledgee's right so to act with respect to
such Notes and that the pledgee is not the Company or any other obligor on the
Notes or a Subsidiary of the Company.

Person means a corporation, an association, a partnership, a joint
------
venture, an organization, a trust, an individual or a government or any agency
or political subdivision thereof.

Predecessor Note, with respect to any particular Note, means every
----------------
previous Note evidencing all or a portion of the same debt as that evidenced by
such particular Note. For the purposes of this definition, any Note
authenticated and delivered under Section 2.07 in lieu of a destroyed, lost or
stolen Note shall be deemed to evidence the same debt as the destroyed, lost or
stolen Note.

Principal Office of the Trustee means the principal office of the
-------------------------------
Trustee at which at any particular time its corporate trust business shall be
administered.

Public Offering means the sale of at least 25% of the Company's then
---------------
outstanding voting stock pursuant to an effective registration statement (other
than a registration statement on Form S-4, S-8 or any successor or similar
forms) filed under the Securities Act of 1933, as amended, and in compliance
with all applicable state securities laws.

Redemption Date, when used with respect to any Note to be redeemed,
---------------
means the date fixed for such redemption by or pursuant to this Indenture.

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<PAGE>

Regular Record Date for the interest payable on any Interest Payment
-------------------
Date means the June 15 or December 15 (whether or not a Business Day), as the
case may be, next preceding such Interest Payment Date.

Responsible Officer means any officer of the Trustee.
-------------------

Senior Credit Facility means the credit facilities under the Amended
----------------------
and Restated Credit Agreement dated as of July 1, 1993, among the Company,
Chemical Bank, as Administrative Agent and the financial institutions which are
parties thereto from time to time, including all obligations of the Company and
its Subsidiaries to be incurred thereunder, and any related notes, collateral
documents, letter of credit applications and guaranties and any increases,
renewals, extensions, refundings, deferrals, restructurings, amendments,
modifications, replacements or refinancings of, or additions to, any of the
foregoing (whether provided by the original Bank Agent and lenders under such
Amended and Restated Credit Agreement or another Bank Agent or other lenders and
whether or not provided under the original Amended and Restated Credit
Agreement).

Senior Indebtedness means, whether now existing or hereafter incurred,
-------------------
(a) the principal of and premium, if any, and interest on (i) all indebtedness
of the Company for borrowed money, whether short-term or long-term, (ii) all
obligations with respect to letters of credit issued for the account of the
Company, whether secured or unsecured, and (iii) all indebtedness evidenced by
notes, bonds, debentures or other securities and including all Indebtedness and
other monetary obligations of the Company under the Senior Credit Facility,
(b) the principal of and premium, if any, and interest on all indebtedness
incurred by the Company in the acquisition (whether by way of purchase, merger,
consolidation or otherwise and whether by the Company or any Subsidiary or
Affiliate of the Company) of any business, real property or other asset (except
assets acquired in the ordinary course of the conduct of the acquiror's
business), (c) guaranties by the Company of indebtedness for borrowed money of a
Subsidiary of the Company, and (d) renewals, extensions, refundings, deferrals,
restructurings, amendments and modifications of any such indebtedness,
obligation or guaranty, (e) any Interest Swap Obligations related to payment
obligations on Indebtedness in respect of the Senior Credit Facility; unless, in
------
the case of (a), (b), (c), (d) or (e), by the terms of the instrument creating,
governing or evidencing such indebtedness, obligation or guaranty, it is
provided that such indebtedness, obligation or guaranty is not senior or
superior in right of payment to the Notes; and provided that Senior Indebtedness
--------
shall not include any indebtedness, obligation or guaranty of the Company (i) to
or in favor of any Subsidiary of the Company, (ii) to trade creditors for
materials and supplies purchased in the ordinary course of business or (iii) to
any Person arising out of any lawsuit against the Company or any of its
Subsidiaries, including any settlement thereof. If any Senior Indebtedness
under the Senior Credit Facility is disallowed, avoided or subordinated pursuant
to the provisions of Section 548 of the Bankruptcy Law or any applicable state
fraudulent conveyance law, it shall nevertheless constitute Senior Indebtedness.

Senior Lender means the Person or Persons to whom the Company is
-------------
obligated under any Senior Indebtedness on any date.

Significant Subsidiary means, on any date, any Subsidiary of the
----------------------
Company (a) the book value of the assets of which amounts to 10% or more of the
book value of the consolidated total assets of the Company and its consolidated
Subsidiaries taken as a whole, or (b) the revenues of which for the most recent
fiscal quarter amount to 10% or more of the consolidated revenues of the Company
and its consolidated Subsidiaries for such quarter, in

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--------------

<PAGE>

each case as determined in accordance with GAAP on the basis of the Company's
most recently available consolidated financial statements.

Special Record Date for the payment of any Defaulted Interest means a
-------------------
date fixed by the Trustee pursuant to Section 2.08.

Specified Senior Indebtedness means the Senior Credit Facility and any
-----------------------------
other Senior Indebtedness with an original principal amount of not less than
$50,000,000, in each case to the extent permitted by Section 9.11.

Stated Maturity, when used with respect to any Note or any installment
---------------
of interest thereon, means the date specified in such Note as the fixed date on
which the principal of such Note or such installment of interest is due and
payable.

Subsidiary, with respect to any Person, means a corporation more than
----------
50% of the outstanding voting stock of which is owned, directly or indirectly,
by such Person or by one or more other Subsidiaries of such Person, or by such
Person and one or more other Subsidiaries of such Person. For the purposes of
this definition, "voting stock" means stock that ordinarily has voting power for
the election of directors, whether at all times or only so long as no senior
class of stock has such voting power by reason of any contingency.

Trustee means the Person named as the "Trustee" in the first paragraph
-------
of this instrument until a successor Trustee shall have become such pursuant to
the provisions of Article Five, and thereafter "Trustee" shall mean such
successor Trustee.

SECTION 1.02. Compliance Certificate and Opinions.
-----------------------------------

Upon any application or request by the Company to the Trustee to take
any action under any of the provisions of this Indenture, the Company shall
furnish to the Trustee (a) an Officers' Certificate stating that all conditions
precedent, if any, provided for in this Indenture relating to the proposed
action have been complied with and (b) an Opinion of Counsel stating that, in
the opinion of such counsel, all such conditions precedent, if any, have been
complied with, except that in the case of any such application or request as to
which the furnishing of such documents specifically is required by any provision
of this Indenture relating to such particular application or request no
additional certificate or opinion shall be requested by the Trustee.

SECTION 1.03. Form of Documents Delivered to Trustee.
--------------------------------------

In any case where several matters are required to be certified by or
covered by an opinion of any specified Person, it is not necessary that all such
matters be certified by or covered by the opinion of only one such Person, or
that they be so certified or covered by only one document, but one such Person
may certify or give an opinion with respect to some matters and one or more
other such Persons as to other matters, and any such Person may certify or give
an opinion as to such matters in one or several documents.

Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of or
representations by counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or Opinion of Counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of or
representations by an

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--------------

<PAGE>

officer or officers of the Company stating that the information with respect to
such factual matters is in the possession of the Company, unless such counsel
knows, or in the exercise of reasonable care should know, that the certificate
or opinion or representations with respect to such matters are erroneous and
provided that the Person issuing the certificate or opinion or representation is
authorized to issue the certificate or opinion or representation on behalf of
the Person in respect of which such certificate or opinion or representation is
issued.

Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.

SECTION 1.04. Acts of Holders.
---------------

(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by an agent duly
appointed in writing; and except as herein otherwise expressly provided such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is expressly required by this Indenture, to the
Company. Such instrument or instruments (and the action embodied therein and
evidenced thereby) herein sometimes are referred to as the "Act" of the Holders
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Indenture and conclusive in favor of the Trustee and the Company
if made in the manner provided in this Section 1.04.

(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where
such execution is by a signer acting in a capacity other than his individual
capacity, such certificate also shall constitute sufficient proof of his
authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, also may be proved
in any other reasonable manner that the Trustee deems sufficient.

(d) Any request, demand, authorization, direction, notice, consent,
waiver or Act of the Holder of any Note shall bind every future Holder of the
same Note and the Holder of every Note issued upon the registration of transfer
thereof or in exchange therefor or in lieu thereof in respect of anything done,
omitted or suffered to be done by the Trustee or the Company in reliance
thereon, whether or not notation of such action is made upon such Note.

SECTION 1.05. Notices, Etc., to Trustee, Company and Bank Agent.
-------------------------------------------------

Any request, demand, authorization, direction, notice, consent,
waiver, Act of Holders or other document provided or permitted by this Indenture
to be made upon, given or furnished to, or filed with,

(a) the Trustee by any Holder, the Company or any Senior Lender shall
be sufficient for every purpose hereunder if in writing and sent to the Trustee
in care of AMACO

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--------------

<PAGE>

N.V. by personal delivery, overnight courier or first-class mail, postage
prepaid, return receipt requested, at P.O. Box 3141, Schnottegatweg Oost 130,
Curacao, Netherlands Antilles, or by telecopier at 599-9-615-392, or such other
address or telecopier number as is set forth in a notice theretofore given by
the Trustee to the Holders, the Company and the Bank Agent, or

(b) the Company by the Trustee, any Holder or any Senior Lender shall
be sufficient for every purpose hereunder if in writing and sent to the Company
by personal delivery, overnight courier or first-class mail, postage prepaid,
return receipt requested, at 12 East 49th Street, New York, New York 10017, or
by telecopier at (212) 940-4103, in each case to the attention of Executive Vice
President, or at such other address or telecopier number, or to such other
Person's attention, as is set forth in a notice theretofore given by the Company
to the Trustee, the Holders and the Bank Agent, or

(c) the Bank Agent by the Trustee, any Holder or the Company shall
be sufficient for every purpose hereunder if in writing and sent to the Bank
Agent by personal delivery, overnight courier or first-class mail, postage
repaid, return receipt requested, at 270 Park Avenue, New York, New York 10017,
or by telecopier at (212) 972-0009, in each case to the attention of Joseph A.
Jabes and William C. Caggiano, or at such other address or telecopier number, or
to such other Person's attention, as is set forth in a notice theretofore given
by the Bank Agent to the Trustee and the Company.

SECTION 1.06. Notice to Holders; Waiver.
-------------------------

Where this Indenture provides for notice of any event or report to
Holders, such notice or report shall be deemed to have been given (unless
otherwise herein expressly provided) if in writing and mailed, first-class
postage prepaid, return receipt requested, to each Holder affected thereby, at
his address as it appears in the Note Register, not later than the latest date,
and not earlier than the earliest date, prescribed for the giving of such notice
or report. In any case where notice to Holders is to be given, neither the
failure to send such notice, nor any defect in any notice, to any particular
Holder shall affect the sufficiency of such notice with respect to other
Holders.

Where this Indenture provides for notice in any manner, such notice
may be waived in writing by the Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Holders shall be filed with the Trustee, but such
filing shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.

If by reason of the suspension of regular mail service or by reason of
any other cause it shall be impracticable to give such notice by mail, such
notification as shall be made with the approval of the Trustee shall constitute
a sufficient notification for every purpose hereunder.

SECTION 1.07. Effect of Headings and Table of Contents.
----------------------------------------

The table of contents and the titles and headings of the Articles and
Sections of this Indenture have been inserted for convenience of reference only
and are not to be considered a part hereof and in no way shall modify or
restrict any of the terms or provisions hereof.

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<PAGE>

SECTION 1.08. Successors and Assigns.
----------------------

All the covenants and agreements of the Company in this Indenture
shall bind its successors and assigns whether so expressed or not.

SECTION 1.09. Separability Clause.
-------------------

If any provision of this Indenture or in the Notes shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not be affected or impaired thereby.

SECTION 1.10. Benefits of Indenture.
---------------------

Nothing in this Indenture or in the Notes, express or implied, shall
give any Person any benefit or any legal or equitable right, remedy or claim
under this Indenture, other than the parties hereto, any paying agent, any Note
Registrar and their successors hereunder, the Holders of Notes and the Senior
Lenders.

SECTION 1.11. GOVERNING LAW; JURISDICTION.
---------------------------

THIS INDENTURE AND EACH NOTE SHALL BE DEEMED TO BE CONTRACTS MADE
UNDER THE LAWS OF THE STATE OF NEW YORK, AND FOR ALL PURPOSES SHALL BE CONSTRUED
IN ACCORDANCE WITH THE LAWS OF SUCH STATE. Any claim arising under this
Indenture shall be brought only in a state or Federal court in the City of New
York, State of New York, and the Company, the Trustee and any Holders of Notes
issued pursuant to this Indenture hereby consent to the exercise of the
jurisdiction by any such court.

SECTION 1.12. Execution in Counterparts.
-------------------------

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

SECTION 1.13. Legal Holidays.
--------------

In any case where any Interest Payment Date, Redemption Date or Change
of Control Payment Date or the Stated Maturity of any Note shall not be a
Business Day, then (notwithstanding any other provision of this Indenture or the
Notes) payment of principal of or premium, if any, or interest on any Note due
on such date need not be made or effected on such date but may be made or
effected on the next succeeding Business Day with the same force and effect as
if made on the Interest Payment Date, Redemption Date or Change of Control
Payment Date or at the Stated Maturity, provided that no interest shall accrue
with respect to the payment of principal, premium, if any, or interest that is
due on such Interest Payment Date, Redemption Date, Change of Control Payment
Date or Stated Maturity, as the case may be, from such date until such next
succeeding Business Day.

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<PAGE>

ARTICLE TWO
THE NOTES

SECTION 2.01. Forms Generally.
---------------

The Notes and the Trustee's certificate of authentication to be borne
by the Notes shall be substantially in the forms set forth on Exhibit A, which
is hereby incorporated in and made a part of this Indenture, with such
appropriate insertions, omissions, substitutions and other variations as are
required or permitted by this Indenture, and may have such letters, numbers or
other marks of identification and such legends or endorsements placed thereon as
may be required to comply with the rules of any securities exchange or as may,
consistently herewith, be determined by the officers executing such Notes, as
evidenced by their execution of the Notes. Any portion of the text of any Note
may be set forth on the reverse thereof, with an appropriate reference thereto
on the face of the Note.

The definitive Notes may be typed, printed, lithographed or engraved
or produced by any combination of these methods, but if listed on any securities
exchange shall be produced in a manner permitted by the rules of any such
securities exchange, all as may be determined by the officers executing such
Notes, as evidenced by their execution of such Notes.

SECTION 2.02. Title and Terms.
---------------

The Notes shall be designated as "9% Subordinated Notes due May 31,
2001." Notes in the principal amount specified in the Company Order referred to
in the third paragraph of Section 2.04 may be executed by the Company and
delivered to the Trustee for authentication upon the execution of this
Indenture, or from time to time thereafter, and the Trustee thereupon shall
authenticate and deliver such Notes as provided in such Company Order; provided
that the aggregate principal amount of all Notes at any time Outstanding (except
for Notes issued in lieu of or in substitution for destroyed, lost or stolen
Notes as provided in Section 2.07) shall not exceed $50,000,000.

SECTION 2.03. Date and Denomination of Notes; Interest; Place of Payment.
----------------------------------------------------------

The Stated Maturity of the Notes shall be May 31, 2001, and they shall
bear interest at the rate of 9% per annum from the date upon which such Notes
are originally issued under this Indenture or from the most recent Interest
Payment Date to which interest has been paid or duly provided for, as the case
may be, until Maturity. Interest on the Notes shall be computed on the basis of
a year of twelve 30-day months and paid for the actual number of days elapsed.
Interest shall be payable in arrears on each June 30 and December 31, commencing
December 31, 1993 and at Maturity. Interest shall be payable on any overdue
principal and on any overdue installment of interest, to the extent that the
payment of such interest shall be legally enforceable, at the lesser of the rate
of 11% per annum or the maximum rate permitted by law.

The principal of and premium, if any, and interest on the Notes shall
be payable at the office or agency of the Company maintained for such purpose in
Curacao, Netherlands Antilles, in such coin or currency of the United States of
America as at the time of payment is legal tender for the payment of public and
private debts; provided, however, that at the option of the Company payment may
be made by check mailed to the Person entitled thereto at his address appearing
on the Note Register. Notwithstanding the foregoing, the principal of and
premium, if any, and interest on any Note (other than the final payment of
principal on

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<PAGE>

a Note) at the option of the Holder thereof shall be paid directly to such
Holder, by wire transfer of immediately available funds, without presentment, to
the address designated by such Holder in writing. Before selling or otherwise
transferring any Note, the Holder thereof shall make a notation thereon of the
aggregate amount of all payments of principal theretofore made, and of the date
to which interest has been paid.

The Notes shall be issuable in registered form without coupons in
denominations of $1,000 and any integral multiple of $1,000. Every Note shall
be dated the date of its authentication, shall bear interest from the applicable
date and shall be payable on the dates specified on the face of the form of
Note.

The rate of interest payable on any Note shall in no event exceed the
maximum rate permissible under applicable law. If interest would otherwise be
payable to the Holder of a Note in excess of the maximum lawful amount, the
interest payable shall be reduced to the maximum amount permitted under
applicable law; and if the Holder shall ever receive anything of value deemed
interest under applicable law in excess of the maximum lawful amount, an amount
equal to any excessive interest shall be applied to the reduction of the
principal of the Note and not to payment of interest, or if such excessive
interest exceeds the unpaid balance of principal on the Note, such excess shall
be refunded to the Company.

SECTION 2.04. Execution, Authentication and Delivery.
--------------------------------------

The Notes shall be executed on behalf of the Company by its Chairman
of the Board, its Vice Chairman, its President or a Vice President, under its
corporate seal reproduced thereon attested to by its Secretary or an Assistant
Secretary. The signature of any of these officers on the Notes may be manual or
facsimile.

Notes bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of such Notes.

At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver Notes executed by the Company to the
Trustee for authentication, together with a Company Order for the authentication
and delivery of such Notes; and the Trustee in accordance with such Company
Order shall authenticate and deliver such Notes as in this Indenture provided
and not otherwise.

No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Note a
certificate of authentication substantially in the form provided for on
Exhibit A, manually executed by the Trustee, and such certificate upon any Note
shall be conclusive evidence, and the only evidence, that such Note has been
duly authenticated and delivered hereunder.

SECTION 2.05. Temporary Notes.
---------------

Pending the preparation of definitive Notes, the Company may execute
and upon Company Order the Trustee shall authenticate and deliver temporary
Notes (which may be printed, lithographed, typewritten or otherwise produced) in
any authorized denomination and substantially in the form of the definitive
Notes in lieu of which they are issued, but with such appropriate omissions,
insertions and variations as the officers executing such Notes may determine, as
evidenced by their execution of such Notes. Every such temporary Note shall

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<PAGE>

be executed by the Company and authenticated by the Trustee upon the same
conditions and in substantially the same manner, and with the same effect, as
the definitive Notes. Without unreasonable delay the Company will execute and
deliver to the Trustee definitive Notes and thereupon the temporary Notes may be
surrendered in exchange for definitive Notes at the Principal Office of the
Trustee without charge to the Holder. Upon surrender for cancellation of any
one or more temporary Notes, the Company shall execute and the Trustee shall
authenticate and deliver in exchange for the temporary Notes an equal aggregate
principal amount of definitive Notes. Until so exchanged, the temporary Notes
in all respects shall be entitled to the same benefits under this Indenture as
definitive Notes.

SECTION 2.06. Registration, Registration of Transfer and Exchange.
---------------------------------------------------

All of the Notes issued under this Indenture shall be registered as to
both principal and interest as specified in the Notes. The Company shall cause
to be kept at the Principal Office of the Trustee a register (the "Note
Register") in which, subject to such reasonable regulations as the Trustee may
prescribe, Notes shall be registered and the transfer of Notes shall be
registered as provided in this Article Two. The Note Register shall be in
written form or in any other form capable of being converted into written form
within a reasonable time. The Trustee hereby is appointed "Note Registrar" for
the purpose of registering Notes and transfers of Notes as herein provided.

Upon due presentment for registration of transfer of any Note at any
such office or agency maintained by the Company for such purpose, the Company
shall execute and the Trustee shall authenticate and deliver in the name of the
transferee or transferees a new Note or Notes for an equal aggregate principal
amount.

At the option of the Holder, Notes may be exchanged for a like
aggregate principal amount of Notes of other authorized denominations. Notes to
be exchanged shall be surrendered at the Principal Office of the Trustee and the
Company shall execute and the Trustee shall authenticate and deliver in exchange
therefor the Note or Notes which the Holder making the exchange shall be
entitled to receive.

Every Note presented for registration of transfer or for exchange (if
so required by the Company or the Trustee) shall be duly endorsed by, or be
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Note Registrar duly executed by, the Holder or his attorney duly
authorized in writing.

No service charge shall be made for any registration of transfer or
exchange of Notes, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
therewith, other than an exchange pursuant to Section 2.05, 8.05, 9.14 or 10.08.

The Company shall not be required to (a) issue, register the transfer
of or exchange any Note during a period beginning at the opening of business 15
days before the day of the mailing of (i) a notice of redemption of Notes
selected for redemption or (ii) a Change of Control Offer pursuant to Section
9.14, and ending at the close of business on the day of such mailing or
(b) register the transfer of or exchange any Note selected for redemption or to
be repurchased pursuant to Section 9.14, in whole or in part, except the
unredeemed or unrepurchased portion of any Note being redeemed or repurchased in
part.

All Notes issued upon any registration of transfer or exchange of
Notes shall be valid obligations of the Company, evidencing the same debt, and
entitled to the same

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<PAGE>

benefits under this Indenture, as the Notes surrendered upon such registration
of transfer or exchange.

SECTION 2.07. Mutilated, Destroyed, Lost or Stolen Notes.
------------------------------------------

If any Note shall become mutilated or be destroyed, lost or stolen,
the Company in its discretion may execute, and upon its request the Trustee
shall authenticate and deliver, a new Note, bearing a number not
contemporaneously Outstanding, in exchange and substitution for the mutilated
Note, or in lieu of and in substitution for the Note so destroyed, lost or
stolen. In every case the applicant for a substitute Note shall furnish to the
Company and to the Trustee such security or indemnity as may be required by them
to save each of them harmless and, in every case of destruction, loss or theft,
evidence to their satisfaction of the destruction, loss or theft of such Note
and of the ownership thereof.

Upon the issuance of any substitute Note, the Company may require the
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto and any other expense connected therewith.
If any Note that has matured or is about to mature or has been called for
redemption shall become mutilated or be destroyed, lost or stolen, the Company,
instead of issuing a substitute Note, may pay or authorize the payment of the
same (without surrender thereof except in the case of a mutilated Note) if the
applicant for such payment shall furnish to the Company and to the Trustee such
security or indemnity as may be required by them to save each of them harmless
and, in case of destruction, loss or theft, evidence satisfactory to them of the
destruction, loss or theft of such Note and of the ownership thereof.

Every substitute Note issued pursuant to the provisions of this
Section 2.07 by virtue of the fact that any Note is destroyed, lost or stolen
shall constitute an additional contractual obligation of the Company, whether or
not the destroyed, lost or stolen Note shall be found at any time, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
all other Notes duly issued hereunder.

To the extent permitted by law, all Notes shall be held and owned upon
the express condition that the foregoing provisions are exclusive with respect
to the replacement or payment of mutilated, destroyed, lost or stolen Notes and
shall preclude any and all other rights or remedies notwithstanding any law or
statute existing or hereafter enacted to the contrary with respect to the
replacement or payment of negotiable instruments or other securities without
their surrender.

SECTION 2.08. Payment of Interest; Interest Rights Preserved.
----------------------------------------------

Interest on any Note that is payable, and is punctually paid or duly
provided for, on any Interest Payment Date shall be paid to the Person in whose
name that Note (or one or more Predecessor Notes) is registered at the close of
business on the Regular Record Date for such interest.

Any interest on any Note that is payable, but is not punctually paid
or duly provided for, on any Interest Payment Date ("Defaulted Interest")
forthwith will cease to be payable to the Holder on the relevant Regular Record
Date by virtue of his having been such Holder; and such Defaulted Interest may
be paid by the Company, at its election in each case, as provided in clause (a)
or (b) below:

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--------------

<PAGE>

(a) The Company may elect to make payment of any Defaulted Interest
to the Persons in whose names the Notes (or their respective Predecessor Notes)
are registered on the Note Register at the close of business on a Special Record
Date for the payment of such Defaulted Interest, which shall be fixed in the
following manner. The Company shall notify the Trustee in writing of the amount
of Defaulted Interest proposed to be paid on each Note and of the proposed
payment date. At the same time the Company shall deposit with the Trustee funds
in an amount equal to the aggregate amount of Defaulted Interest proposed to be
paid, or shall make arrangements satisfactory to the Trustee for such deposit
prior to the date of the proposed payment, such funds when deposited to be held
in trust for the benefit of the Persons entitled to such Defaulted Interest as
provided in this clause (a). Thereupon the Trustee shall fix a Special Record
Date for the payment of such Defaulted Interest which shall be not more than 15
days and not less than ten days prior to the date of the proposed payment and
not less than ten days after the receipt by the Trustee of the notice of the
proposed payment. The Trustee promptly shall notify the Company of such Special
Record Date and, in the name and at the expense of the Company, shall cause
notice of the proposed payment of such Defaulted Interest and the Special Record
Date therefor to be mailed, first-class postage prepaid to each Holder at his
address as it appears on the Note Register, not less than ten days prior to such
Special Record Date. Notice of the proposed payment of such Defaulted Interest
and the Special Record Date therefor having been so mailed, such Defaulted
Interest shall be paid to the Persons in whose names the Notes (or their
respective Predecessor Notes) are registered at the close of business on such
Special Record Date and shall no longer be payable pursuant to the following
clause (b).

(b) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any securities
exchange on which the Notes may be listed, and upon such notice as may be
required by such exchange, if, after notice given by the Company to the Trustee
of the proposed payment pursuant to this clause (b), such manner of payment
shall be deemed practicable by the Trustee.

Subject to the foregoing provisions of this Section 2.08, each Note
delivered under this Indenture upon registration of transfer or in exchange for
or in lieu of any other Note shall carry the rights of interest accrued and
unpaid, and to accrue, that were carried by such other Note.

SECTION 2.09. Persons Deemed Owners.
---------------------

Prior to due presentment of a Note for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name such Note is registered as the owner of such Note for the
purpose of receiving payment of principal of and premium, if any, and (subject
to Section 2.08) interest on such Note and for all other purposes whatsoever,
whether or not the interest, premium, if any, or principal of such Note shall be
or have become due, and none of the Company, the Trustee or any agent of the
Company or the Trustee shall be affected by notice to the contrary.

SECTION 2.10. Cancellation.
------------

All Notes surrendered for payment, redemption, exchange or
registration of transfer, if surrendered to any Person other than the Trustee,
shall be surrendered to the Trustee and promptly cancelled by it. The Company
at any time may deliver to the Trustee for cancellation any Note previously
authenticated and delivered hereunder that the Company may have acquired in any
manner whatsoever, and all Notes so delivered promptly shall be cancelled by the
Trustee. No Note shall be issued in lieu of or in exchange for any Note

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--------------

<PAGE>

cancelled as provided in this Section 2.10, except as expressly permitted by
this Indenture. All cancelled Notes held by the Trustee shall be disposed of as
directed by a Company Order. If the Company shall acquire any of the Notes,
such acquisition shall not operate as a redemption or satisfaction of the
indebtedness represented by such Notes unless and until the same are delivered
to the Trustee for cancellation.

ARTICLE THREE
SATISFACTION AND DISCHARGE

SECTION 3.01. Satisfaction and Discharge of Indenture.
---------------------------------------

This Indenture upon Company Request shall cease to be of further
effect (except as to any surviving rights of registration of transfer or
exchange of Notes herein expressly provided for), and the Trustee, at the
expense of the Company, shall execute such instruments as the Company reasonably
may request acknowledging satisfaction and discharge of this Indenture, when:

(a) either

(i) all Notes theretofore authenticated and delivered (other than (A)
Notes that have been exchanged, mutilated, destroyed, lost or stolen and that
have been replaced or paid as provided in Section 2.07 and (B) Notes for whose
payment funds theretofore have been deposited in trust or segregated and held in
trust by the Company and thereafter repaid to the Company or discharged from
such trust, as provided in Section 9.03) have been delivered to the Trustee for
cancellation; or

(ii) all such Notes not theretofore delivered to the Trustee for
cancellation

(A) have become due and payable,

(B) will become due and payable at their Stated Maturity within one
year, or

(C) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice of redemption
by the Trustee in the name, and at the expense, of the Company,

and the Company, in the case of (A), (B) or (C) above and only if
permitted by Article Eleven, has deposited or caused to be deposited with the
Trustee as trust funds an amount sufficient to pay and discharge the entire
indebtedness on such Notes not theretofore delivered to the Trustee for
cancellation, for principal, premium, if any, and interest to the date of such
deposit (in the case of Notes that have become due and payable) or to the Stated
Maturity or Redemption Date, as the case may be;

(b) the Company has paid or caused to be paid all other amounts
payable hereunder by the Company; and

(c) the Company has delivered to the Trustee an Officer's Certificate
and an Opinion of Counsel, each stating that all conditions precedent herein
provided for relating to the satisfaction and discharge of this Indenture have
been complied with.

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--------------

<PAGE>

Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 5.07, the obligations of
the Trustee to any Authenticating Agent under Section 5.12 and, if funds shall
have been deposited with the Trustee pursuant to Section 3.01(a), the
obligations of the Trustee under Section 3.02 and the last paragraph of
Section 9.03 shall survive.

SECTION 3.02. Application of Trust Funds.
--------------------------

Subject to the provisions of Section 9.03, all funds deposited with
the Trustee pursuant to Section 3.01 shall be held in trust and applied by it,
in accordance with the provisions of the Notes and this Indenture, to the
payment, notwithstanding the provisions of Article Eleven, either directly or
through any paying agent (including the Company if acting as its own paying
agent) as the Trustee may determine, to the Persons entitled thereto, of the
principal, premium, if any, and interest for whose payment such funds have been
deposited with the Trustee.

ARTICLE FOUR
REMEDIES

SECTION 4.01. Events of Default.
-----------------

"Event of Default," wherever used herein, means any one or more of the
following events (whatever the reason for such Event of Default and whether it
shall be occasioned by the provisions of Article Eleven or be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):

(a) default in the payment of any interest on any Note when such
interest becomes due and payable, and continuance of such default for a period
of 30 days;

(b) default in the payment of the principal of or premium, if any, on
any Note at its Maturity;

(d) failure on the part of the Company duly to observe or perform any
of the covenants or agreements on the part of the Company to be performed and
set forth in Section 9.13, which failure continues for ten Business Days;

(e) failure on the part of the Company duly to observe or perform any
other of the covenants or agreements on the part of the Company set forth in the
Notes or in this Indenture which continues for a period of 60 days after the
date on which there has been given, by registered or certified mail, to the
Company and the Trustee by the Holders of at least 40% in aggregate principal
amount of the Notes at the time Outstanding, a written notice specifying such
failure and requiring it to be remedied and stating that such notice is a
"Notice of Default" hereunder;

(f) the rendering of a final judgment for the payment of money in an
amount in excess of $20,000,000 (after giving effect to any applicable insurance
and bonds) against the Company and/or any Significant Subsidiary, (i) which
judgment continues undischarged, and is not waived or stayed, for a period of 45
days after the date on which the

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--------------

<PAGE>

right to final appeal has expired and (ii) which default continues for a period
of 30 days after the date on which there has been given, by registered or
certified mail, to the Company and the Trustee by the Holders of at least 40% in
aggregate principal amount of the Notes at the time Outstanding, a written
notice specifying the failure described in clause (i) and requiring it to be
remedied and stating that such notice is a "Notice of Default" hereunder;

(g) a default under any bond, debenture, note or other evidence of
Indebtedness of the Company (other than the Notes) or any Significant
Subsidiary, or under any mortgage, indenture or other instrument under which
there may be issued or by which there may be secured or evidenced Indebtedness
for money borrowed by the Company or such Significant Subsidiary (including
without limitation the Senior Credit Facility), whether such Indebtedness now
exists or hereafter shall be created, which Indebtedness has a principal amount
of $20,000,000 or more, and which default (i) consists of a failure to pay at
final maturity of the agreement under which such Indebtedness was issued any
amount in excess of $20,000,000 due and payable on or with respect to such
Indebtedness (subject to any applicable grace periods), or (ii) has resulted in
such Indebtedness being declared due and payable, without such acceleration
having been rescinded or annulled, provided, a period of ten days has expired
--------
after there has been given, by registered or certified mail, to the Company and
the Trustee by the Holders of at least 40% in aggregate principal amount of the
Notes at the time Outstanding, a written notice requiring the Company to cause
such defaulted payment to be made or such acceleration to be rescinded and
annulled, as the case may be, and stating that such notice is a "Notice of
Default" hereunder;

(h) the Company or any Significant Subsidiary, pursuant to or
within the meaning of any Bankruptcy Law:

(i) commences a voluntary case or proceeding;

(ii) consents to the entry of an order for relief against it in an
involuntary case or proceeding;

(iii) consents to the appointment of a Custodian of it or for all or
substantially all of its property; or

(iv) makes a general assignment for the benefit of its creditors;
or
admits in writing its inability to pay its debts generally as they
become due; or

(i) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:

(i) is for relief against the Company or any Significant
Subsidiary in an involuntary case or proceeding;

(ii) appoints a Custodian of the Company or any Significant
Subsidiary or for all or substantially all of their respective properties; or

(iii) orders the liquidation of the Company or any Significant
Subsidiary;

and, in each case, such order or decree remains unstayed and in effect
for 60 days.

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--------------

<PAGE>

SECTION 4.02. Acceleration of Maturity; Rescission and Annulment.
--------------------------------------------------

If an Event of Default occurs under clause (h) or (i) of Section 4.01,
then the principal of and premium, if any, and the accrued interest on all the
Notes shall become due and payable immediately. If any other Event of Default
occurs and is continuing, then, and in every such case, the Holders of not less
than 40% in aggregate principal amount of the Notes then Outstanding, by notice
in writing to the Company, to the Trustee and, if any Senior Indebtedness under
the Senior Credit Facility then is outstanding or any commitment to lend under
the Senior Credit Facility exists, to the Bank Agent, may declare the principal
amount of all the Notes to be due and payable, and upon any such declaration
such principal amount shall become due and payable upon the first to occur of
(a) an acceleration under the Senior Credit Facility or (b) 20 Business Days (or
ten Business Days in the case of an Event of Default specified in
Section 4.01(a), (b) or (c)) after receipt by the Company, the Trustee and, if
applicable, the Bank Agent of such written notice given hereunder, provided in
each case that the Event of Default which permitted such acceleration shall be
continuing. In the event of a declaration of acceleration under the Indenture
because an Event of Default set forth in Section 4.01(g) has occurred and is
continuing, such declaration of acceleration shall be automatically annulled if
the holders of the Indebtedness that is the subject of such Event of Default
have rescinded their declaration of acceleration in respect of such Indebtedness
within 90 days of such declaration of acceleration or if such Indebtedness shall
have been paid within such 90-day period and no other Event of Default (other
than failure to pay principal and interest the maturity of which has been
accelerated as a result of such declaration of acceleration) has occurred during
such 90-day period which has not been cured or waived.

At any time after such a declaration of acceleration has been made and
before a judgment or decree for the payment of the amount due has been obtained
by the Trustee as hereinafter provided in this Article Four, the Holders of a
majority in aggregate principal amount of the Outstanding Notes, by written
notice to the Company and the Trustee, may rescind and annul such declaration
and its consequences if:

(a) the Company has paid or deposited with the Trustee a sum
sufficient to pay

(i) the amount of all overdue installments of interest on all Notes
in the case of an Event of Default specified in Section 4.01(a),

(ii) the principal of and premium, if any, on all Notes that have
become due to the extent such amounts have become due otherwise than by such
declaration of acceleration, and interest thereon (to the extent that payment of
such interest is lawful) at the applicable rate provided in Section 2.03 in the
case of an Event of Default specified in Section 4.01(b),

(iii) to the extent that payment of such interest is lawful,
interest upon overdue installments of interest at the applicable rate provided
in Section 2.03, and

(iv) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel; and

(b) all Events of Default, other than the nonpayment of the
principal of Notes that have become due solely by such declaration of
acceleration, have been cured or waived as provided in Section 4.13.

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--------------

<PAGE>

No such rescission shall affect any subsequent default or impair any
right consequent thereon.

If the Bank Agent has provided the Trustee with its address for
notices in accordance with Section 1.05, the Trustee shall provide a copy of any
written notice received by it pursuant to this Section 4.02 to the Bank Agent no
more than three Business Days after receipt by it of any such notice; provided,
however, that the Trustee shall have no liability to the Bank Agent or any
Senior Lenders for any failure to comply with this paragraph.

SECTION 4.03. Collection of Indebtedness and Suits for Enforcement by the
-----------------------------------------------------------
Trustee.
-------

The Company covenants that if:

(a) default is made in the payment of any installment of interest on
any Note when such interest becomes due and payable and such default continues
for a period of 30 days, or

(b) default is made in the payment of the principal of or premium, if
any, on any Note at the Maturity thereof,

the Company, upon demand of the Trustee, and subject to
Article Eleven, will pay to the Trustee, for the benefit of the Holders of such
Notes, the defaulted amount then due and payable on such Notes for principal,
premium, if any, and interest, with interest (to the extent that payment of
interest on overdue interest is enforceable under applicable law) upon overdue
installments of interest, at the applicable rate provided in Section 2.03, and,
in addition thereto, such further amount as shall be sufficient to cover the
costs and expenses of collection, including reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.

If the Company fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust, at the request
of the Holders of a majority in aggregate principal amount of the Outstanding
Notes, will institute a judicial proceeding for the collection of the sums so
due and unpaid, will prosecute such proceeding to judgment or final decree and
will enforce against the Company or any other obligor on the Notes and collect
the money adjudged or decreed to be payable in the manner provided by law out of
the property of the Company or any other obligor on the Notes, wherever
situated.

If an Event of Default occurs and is continuing, the Trustee at the
request of the Holders of a majority in aggregate principal amount of the
Outstanding Notes will proceed to protect and enforce its rights and the rights
of the Holders by such judicial proceedings as such Holders shall request to
protect and enforce such rights, whether for the specific enforcement of any
covenant or agreement in this Indenture or in aid of the exercise of any power
granted herein, or to enforce any other proper remedy.

SECTION 4.04. Trustee May File Proofs of Claim.
--------------------------------

In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor on the Notes or
the property of the Company or of such other obligor or their creditors, the
Trustee, irrespective of whether the principal of the Notes shall then be due
and payable as therein expressed or by declaration or

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--------------

<PAGE>

otherwise and irrespective of whether the Trustee shall have made any demand on
the Company for the payment of overdue principal or interest, at the request of
a majority in aggregate principal amount of the Outstanding Notes, by
intervention in such proceedings or otherwise:

(a) will file and prove a claim for the whole amount of principal,
premium, if any, and interest owing and unpaid in respect of the Notes and file
such other papers or documents as may be necessary or advisable in order to have
the claims of the Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel) and
of the Holders allowed in such judicial proceedings; and

(b) subject to Article Eleven, will collect and receive any funds or
other property payable or deliverable on any such claims and distribute the
same;

and, subject to Article Eleven, any Custodian or similar official in
any such judicial proceeding hereby is authorized by each Holder to make such
payments to the Trustee and, in the event that such payments shall be made
directly to the Holders, to pay to the Trustee any amount due it for the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel, and any other amounts due the Trustee under
Section 5.07.

Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder or to authorize the Trustee to vote in respect of the
claim of any Holder in any such proceeding.

SECTION 4.05. Trustee May Enforce Claims Without Possession of Notes.
------------------------------------------------------

All rights of action and claims under this Indenture or the Notes may
be prosecuted and enforced by the Trustee without the possession of any of the
Notes or the production thereof in any proceeding relating thereto, and any such
proceeding instituted by the Trustee shall be brought in its own name as trustee
of an express trust, and any recovery of judgment, after provision for the
payment of the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel, shall be for the ratable benefit of the
Holders of the Notes in respect of which such judgment has been recovered.

SECTION 4.06. Application of Funds Collected.
------------------------------

Subject to the provisions of Article Eleven, any funds collected by
the Trustee pursuant to this Article Four shall be applied in the following
order, at the date or dates fixed by the Trustee and, in case of the
distribution of such funds on account of principal, premium, if any, or
interest, upon presentation of the Notes and the notation thereon of the payment
if only partially paid and upon surrender thereof if fully paid:

First: to the payment of all amounts due the Trustee under
-----
Section 5.07;

Second: to the Senior Lenders to the extent required by Article
------
Eleven;

Third: to the payment of the amounts then due and unpaid for
-----
principal of and premium, if any, and interest on the Notes in respect of which
or for the benefit of which such funds have been collected, ratably, without
preference or priority of any kind, according to the

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--------------

<PAGE>

amounts due and payable on such Notes for principal, premium, if any, and
interest, respectively; and

Fourth: the balance, if any, to the Company.
------

SECTION 4.07. Limitation on Suits.
-------------------

No Holder of a Note shall have any right to institute any proceeding,
judicial or otherwise, with respect to this Indenture, or for the appointment of
a receiver or trustee, or for any other remedy hereunder, unless:

(a) such Holder previously has given to the Trustee written notice of
a continuing Event of Default;

(b) the Holders of not less than 40% in aggregate principal amount of
the Outstanding Notes shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name as
Trustee hereunder;

(c) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;

(d) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity shall have failed to institute any such proceeding; and

(e) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a majority in
aggregate principal amount of the Outstanding Notes;

it being understood and intended that no one or more Holders shall
have any right in any manner whatever by virtue of or by availing of any
provision of this Indenture to affect, disturb or prejudice the rights of any
other Holder, or to obtain or seek to obtain priority or preference over any
other Holder or to enforce any right under this Indenture, except in the manner
herein provided and for the equal and ratable benefit of all the Holders.

SECTION 4.08. Unconditional Right of Holders to Receive Principal, Premium
------------------------------------------------------------
and Interest.
------------

Notwithstanding any other provision in this Indenture but subject to
Article Eleven hereof, the Holder of any Note shall have the right, which is
absolute and unconditional, to receive payment of the principal of and premium,
if any, and (subject to Section 2.08) interest on such Note on the respective
Stated Maturities expressed in such Note (or, in the case of redemption or
repurchase in conformity with Section 9.14, on the Redemption Date or the Change
of Control Payment Date, respectively), and to institute suit for the
enforcement of any such payment and such rights shall not be impaired or
affected without the consent of such Holder.

SECTION 4.09. Restoration of Rights and Remedies.
----------------------------------

If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in

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every such case, subject to any determination in such proceeding, the Company,
the Trustee and the Holders shall be restored severally and respectively to
their former positions hereunder and thereafter all rights and remedies of the
Trustee and the Holders shall continue as though no such proceeding had been
instituted.

SECTION 4.10. Rights and Remedies Cumulative.
------------------------------

No right or remedy herein conferred upon or reserved to the Trustee or
the Holders is intended to be exclusive of any other right or remedy, and every
right and remedy, to the extent permitted by law, shall be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.

SECTION 4.11. Delay or Omission Not Waiver.
----------------------------

No delay or omission on the part of the Trustee or of any Holder of
any Note to exercise any right or power accruing upon any Event of Default shall
impair any such right or remedy or constitute a waiver of any such Event of
Default or an acquiescence therein. Every right and remedy given by this
Article Four or by law to the Trustee or to the Holders may be exercised from
time to time, and as often as may be deemed expedient, by or at the direction of
the Holders.

SECTION 4.12. Control by Holders.
------------------

The Holders of a majority in aggregate principal amount of the
Outstanding Notes shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on the Trustee. The Trustee shall not take any
actions under this Article Four except for actions taken to implement the
instructions of the Holders.

SECTION 4.13. Waiver of Past Defaults.
-----------------------

The Holders of a majority in aggregate principal amount of the
Outstanding Notes on behalf of the Holders of all of the Notes may waive any
past default hereunder and its consequences except a default

(a) in the payment of the principal of or premium, if any, or
interest on any Note, or

(b) in respect of a covenant or provision hereof that under Article
Eight cannot be modified or amended without the consent of the Holder of each
Outstanding Note affected.

Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.

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SECTION 4.14. Undertaking for Costs.
---------------------

All parties to this Indenture agree, and each Holder of any Note by
his acceptance thereof shall be deemed to have agreed, that any court in its
discretion may require, as a condition to initiating or maintaining any suit for
the enforcement of any right or remedy under this Indenture or any suit against
the Trustee for any action taken, suffered or omitted by it as Trustee, the
filing by any party litigant in such suit of an undertaking to pay the costs of
such suit and that such court in its discretion may assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in such suit,
having due regard to the merits and good faith of the claims or defenses made by
such party litigant; but the provisions of this Section 4.14 shall not apply to
any suit instituted by the Trustee, to any suit instituted by any Holder or
group of Holders holding in the aggregate more than 40% in principal amount of
the Outstanding Notes or to any suit instituted by any Holder pursuant to
Section 4.07 hereof for the enforcement of the payment of the principal of or
premium, if any, or interest on any Note on or after the respective Stated
Maturities expressed in such Note (or, in the case of redemption or repurchase,
on or after the Redemption Date or Change of Control Payment Date).

SECTION 4.15. Waiver of Stay or Extension Laws.
--------------------------------

The Company covenants (to the extent that it lawfully may do so) that
it will not at any time insist upon, plead or in any manner whatsoever claim or
take the benefit or advantage of any stay or extension law wherever enacted, now
or at any time hereafter in force, that may affect the covenants or the
performance of this Indenture; and the Company (to the extent that it lawfully
may do so) hereby expressly waives all benefit or advantage of any such law and
covenants that it will not hinder, delay or impede the execution of any power
herein granted to the Trustee or the Holders, but will suffer and permit the
execution of every such power as though no such law had been enacted.

ARTICLE FIVE
THE TRUSTEE

SECTION 5.01. Certain Duties and Responsibilities.
-----------------------------------

(a) The Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture, and no implied covenants
or obligations shall be read into this Indenture against the Trustee.

(b) In the absence of bad faith on its part, the Trustee conclusively
may rely, as to the truth of the statements and the correctness of the opinions
expressed therein, upon certificates or opinions furnished to the Trustee and
conforming to the requirements of this Indenture, but in the case of any such
certificates or opinions that by any provision hereof specifically are required
to be furnished to the Trustee, the Trustee shall be under a duty to examine the
same to determine whether or not they conform to the requirements of this
Indenture.

(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own grossly negligent action, its own grossly
negligent failure to act or its own willful misconduct, except that:

(i) this Section 5.01(c) shall not be construed to limit the effect
of Section 5.01(a) or 5.01(b);

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(ii) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer, unless it shall be proved that the
Trustee was grossly negligent in ascertaining the pertinent facts;

(iii) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the direction of
the Holders of a majority in aggregate principal amount of the Outstanding Notes
relating to the time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred upon
the Trustee, under this Indenture; and

(iv) no provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if it shall have reasonable ground for believing that the
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.

(d) Whether or not therein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section 5.01.

SECTION 5.02. Notice of Defaults.
------------------

Within 60 days after learning of the occurrence of a default
hereunder, the Trustee shall mail to all Holders, as their names and addresses
appear in the Note Register, notice of all defaults known to the Trustee, unless
such defaults shall have been cured before the giving of such notice. For the
purpose of this Section 5.02, the term "default" means any event that is, or
after notice or lapse of time would become, an Event of Default.

SECTION 5.03. Certain Rights of Trustee.
-------------------------

(a) The Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note or other paper or document believed by it to be genuine and to have been
signed or presented by the proper party or parties.

(b) Any request, direction, order or demand of the Company mentioned
herein shall be sufficiently evidenced by a Company Request or Company Order and
any resolution of a majority of the entire Board of Directors may be evidenced
by a copy thereof certified by the Secretary or an Assistant Secretary of the
Company.

(c) Whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed), in the absence of gross negligence or bad
faith on its part, may rely on an Officers' Certificate.

(d) The Trustee may consult with counsel and the written advice of
such counsel or any Opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reliance thereon.

(e) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request, order or
direction of any of the Holders

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--------------

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pursuant to the provisions of this Indenture, unless such Holders shall have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities that might be incurred by it in complying with such
request, order or direction.

(f) The Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, approval, bond,
debenture, note or other paper or document, but the Trustee, in its discretion,
may make such further inquiry or investigation into such facts or matters as it
may see fit, and if the Trustee shall determine to make such further inquiry or
investigation it shall be entitled to examine the books, records and premises of
the Company, personally or by agent or attorney.

(g) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed by it with due care
hereunder.

SECTION 5.04. Not Responsible for Recitals or Issuance of Notes.
-------------------------------------------------

The recitals contained herein and in the Notes (except the Trustee's
certificate of authentication) shall be taken as the statements of the Company,
and the Trustee assumes no responsibility for their correctness. The Trustee
makes no representation as to the validity or sufficiency of this Indenture or
of the Notes. The Trustee shall not be accountable for the use or application
by the Company of Notes or the proceeds thereof.

SECTION 5.05. May Hold Notes; Paying Agent; Other Individual Rights of
--------------------------------------------------------
Trustee.
-------

The Trustee, any Authenticating Agent, any paying agent, the Note
Registrar or any other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Notes and otherwise may deal with
the Company with the same rights it would have if it were not Trustee,
Authenticating Agent, paying agent, Note Registrar or other agent. Until the
Company shall appoint another paying agent hereunder, the Trustee shall act as
paying agent. The Trustee, the Authenticating Agent and any paying agent may be
an Affiliate of the Company.

SECTION 5.06. Funds Held in Trust.
-------------------

Funds held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by law. The Trustee shall be
under no liability for interest on any funds received by it hereunder except as
otherwise agreed with the Company.

SECTION 5.07. Compensation and Reimbursement.
------------------------------

The Company agrees:

(a) to pay to the Trustee from time to time reasonable compensation
for all services rendered by it hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee of an
express trust);

(b) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and advances
incurred or made by

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<PAGE>

the Trustee in accordance with any provision of this Indenture (including the
reasonable compensation and the expenses and disbursements of its agents and
counsel) except any such expense, disbursement or advance as may be attributable
to its gross negligence or willful misconduct; and

(c) to indemnify the Trustee for, and to hold it harmless against,
any loss, liability or expense incurred without gross negligence or willful
misconduct on its part, arising out of or in connection with the acceptance or
administration of this trust, including the costs and expenses of defending
itself against any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder.

The obligations of the Company under this Section 5.07 shall be
secured by a Lien prior to that of the Notes upon all property and funds held or
collected by the Trustee as such, except funds held in trust for the benefit of
the Holders of particular Notes.

SECTION 5.08. Corporate Trustee Required; Eligibility.
---------------------------------------

There shall at all times be a Trustee hereunder which shall be a
corporation organized and doing business under the laws of the Netherlands
Antilles or United States of America, one of the States thereof or the District
of Columbia, authorized under such laws to exercise corporate trust powers. If
at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section 5.08, the Trustee shall resign immediately in the
manner and with the effect specified in this Article Five.

SECTION 5.09. Resignation and Removal; Appointment of a Successor.
---------------------------------------------------

(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee shall become effective until the acceptance of appointment by
the successor Trustee under Section 5.10.

(b) The Trustee may resign at any time by giving written notice
thereof to the Company. If an instrument of acceptance by a successor Trustee
required by Section 5.10 shall not have been delivered to the Trustee within 30
days after the giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.

(c) The Trustee may be removed at any time by the Act of the Holders
of a majority in aggregate principal amount of the Outstanding Notes delivered
to the Trustee and to the Company.

(d) If at any time the Trustee (i) shall cease to be eligible under
Section 5.08 and shall fail to resign after written request therefor by the
Holders of at least 40% in aggregate principal amount of the Outstanding Notes,
or (ii) shall become incapable of acting, or shall be adjudged a bankrupt or an
insolvent, or a receiver of the Trustee or of its property shall be appointed,
or any public officer shall take charge or control of the Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation; then, in any such case, the Holders of a majority in aggregate
principal amount of the Outstanding Notes may remove the Trustee and appoint a
successor Trustee by an Act of such Holders, in triplicate, one copy of which
instrument shall be delivered to the Trustee so removed, the successor Trustee
and to the Company or, subject to the provisions of Section 4.14, the Holders of
at least 40% in aggregate principal amount of the Outstanding Notes, on behalf
of

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<PAGE>

themselves and all others similarly situated, may petition any court of
competent jurisdiction for the removal of the Trustee and the appointment of a
successor Trustee.

(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of the Trustee for any cause,
the Company, by order of a majority of the entire Board of Directors, promptly
shall appoint a successor Trustee. If, within one year after such resignation,
removal or incapability, or the occurrence of such a vacancy, a successor
Trustee shall be appointed by Act of the Holders of a majority in aggregate
principal amount of the Outstanding Notes delivered to the Company and the
retiring Trustee, the successor Trustee so appointed, forthwith upon its
acceptance of such appointment, shall become the successor Trustee and supersede
the successor Trustee appointed by the Company. If no successor Trustee shall
have been so appointed by the Company or by the Holders and accepted appointment
in the manner hereinafter provided, subject to Section 4.14, the Holders of at
least 40% in aggregate principal amount of the Outstanding Notes, on behalf of
themselves and all others similarly situated, may petition any court of
competent jurisdiction for the appointment of a successor Trustee.

(f) The Company shall give notice of each resignation and each
removal of the Trustee and each appointment of a successor Trustee by mailing
written notice of such event by first-class mail, postage prepaid, to all
Holders as their names and addresses appear in the Note Register. Each notice
shall include the name of the successor Trustee and the address of the Principal
Office of the successor Trustee.

SECTION 5.10. Acceptance of Appointment by Successor Trustee.
----------------------------------------------

Any successor Trustee appointed hereunder shall execute, acknowledge
and deliver to the Company and to its predecessor Trustee an instrument
accepting such appointment, and thereupon the resignation or removal of the
predecessor Trustee shall become effective and such successor Trustee, without
any further act, deed or conveyance, shall become vested with all the rights,
powers, trusts and duties of its predecessor Trustee hereunder; but, on request
of the Company or the successor Trustee, such predecessor Trustee, upon payment
of any amounts then due it pursuant to the provisions of Section 5.07, shall
execute and deliver an instrument transferring to such successor Trustee all the
rights and powers of such predecessor Trustee, and shall duly assign, transfer
and deliver to such successor Trustee all property and funds held by such
predecessor Trustee hereunder. Upon request of any such successor Trustee, the
Company shall execute any and all instruments in writing for more fully and
certainly vesting in and confirming to such successor Trustee all such rights,
powers and trusts. Any Trustee ceasing to act nevertheless shall retain a Lien
upon all property or funds held or collected by such Trustee (except funds held
in trust for the benefit of Holders of particular Notes) to secure any amounts
then due it pursuant to the provisions of Section 5.07.

No successor Trustee shall accept appointment as provided in this
Section 5.10 unless at the time of such acceptance such successor Trustee shall
be eligible under the provisions of Section 5.08.

SECTION 5.11. Merger, Conversion, Consolidation or Succession to Business.
-----------------------------------------------------------

Any corporation into which a corporate Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Trustee shall be a
party, or any corporation succeeding to all or substantially all of the
corporate trust business of such Trustee, shall be

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the successor to the Trustee hereunder, provided such corporation shall be
eligible under the provisions of Section 5.08, without the execution or filing
of any instrument or any further act on the part of any of the parties hereto.
In case any Notes shall have been authenticated but not delivered by the Trustee
then in office, any successor by merger, conversion or consolidation to such
authenticating Trustee may adopt such authentication and deliver the Notes so
authenticated with the same effect as if such successor Trustee had itself
authenticated such Notes.

SECTION 5.12. Appointment of Authenticating Agent.
-----------------------------------

At any time the Trustee may appoint an Authenticating Agent or Agents
which shall be authorized to act on behalf of the Trustee to authenticate Notes
issued upon exchange, registration of transfer or partial redemption or
repurchase thereof or pursuant to Section 2.06 or 2.07, and the Notes so
authenticated shall be entitled to the benefits of this Indenture and shall be
valid and obligatory for all purposes as if authenticated by the Trustee
hereunder. Wherever reference is made in this Indenture to the authentication
and delivery of Notes by the Trustee or the Trustee's certificate of
authentication, such reference shall be deemed to include authentication and
delivery on behalf of the Trustee by an Authenticating Agent and a certificate
of authentication executed on behalf of the Trustee by an Authenticating Agent.
Each Authenticating Agent shall be acceptable to the Company and shall be a
corporation organized and doing business under the laws of the Netherlands
Antilles or the United States of America, one of the States thereof or the
District of Columbia, authorized under such laws to act as Authenticating Agent.
If at any time an Authenticating Agent shall cease to be eligible in accordance
with the provisions of this Section 5.12, such Authenticating Agent shall resign
immediately in the manner and with the effect specified in this Section 5.12.

Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to all or substantially all of
the corporate trust business of an Authenticating Agent, shall be the successor
to the Authenticating Agent, provided such corporation otherwise shall be
qualified and eligible under this Section 5.12, without the execution or filing
of any instrument or any further act on the part of the Trustee or the
Authenticating Agent.

An Authenticating Agent may resign at any time by giving written
notice thereof to the Trustee and to the Company. The Trustee at any time may
terminate the agency of an Authenticating Agent by giving written notice thereof
to such Authenticating Agent and the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be qualified and eligible in accordance with
the provisions of this Section 5.12, the Trustee may appoint a successor
Authenticating Agent which shall be acceptable to the Company and shall mail
written notice of such appointment by first-class mail, postage prepaid, to all
Holders as their names and addresses appear in the Note Register. Any successor
Authenticating Agent upon acceptance of its appointment hereunder shall become
vested with all the rights, powers and duties of its predecessor hereunder, with
like effect as if originally named as an Authenticating Agent herein.

The Trustee agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section 5.12, and the
Trustee shall be entitled to be reimbursed for such payments, subject to the
provisions of Section 5.07.

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<PAGE>

If an appointment is made pursuant to this Section 5.12, the Notes may
have endorsed thereon, in addition to the Trustee's certificate of
authentication, an alternate certificate of authentication in the following
form:

This is one of the Notes described in the within-mentioned Indenture.

AIBC SERVICES N.V.,

As Trustee

By:
----------------------------------

As Authenticating Agent

By:
----------------------------------
Authorized Officer

ARTICLE SIX
HOLDERS' LISTS AND REPORTS BY THE COMPANY

SECTION 6.01. Company to Furnish Trustee Names and Addresses of Holders.
---------------------------------------------------------

If the Trustee shall not be the Note Registrar, the Company will
furnish or cause to be furnished to the Trustee:

(a) semi-annually, not more than five days after each Regular Record
Date, a list, in such form as the Trustee reasonably may require, of the names
and addresses of the Holders as of such Regular Record Date; and

(b) at such other times as the Trustee may request in writing, within
30 days after receipt by the Company of any such request, a list of similar form
and content as of a date not more than five days prior to the time such
information is furnished.

SECTION 6.02. Preservation of Information.
---------------------------

The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 6.01 or received by the
Trustee in its capacity as Note Registrar. The Trustee may destroy any list
furnished to it as provided in Section 6.01 upon receipt of a new list so
furnished.

SECTION 6.03. Reports by the Company.
----------------------

If the Company shall be subject to the requirement to file annual or
other reports with the Commission or with any securities exchange on which the
Notes are listed, it shall:

(a) file with the Trustee, within 15 days after the Company is
required to file the same with the Commission or with any securities exchange on
which the Notes are listed, copies of such annual reports and of such
information, documents and other reports (or copies of such portions of any of
the foregoing as the Commission or any such exchange from time to time by rules
and regulations may prescribe) that the Company shall be required to file

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with the Commission pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934, as amended, or such exchange; and

(b) file with the Trustee, in accordance with the rules and
regulations prescribed from time to time by the Commission or by any securities
exchange on which the Notes are listed, such additional information, documents
and reports as it shall file with the Commission or such securities exchange
with respect to compliance by the Company with the conditions and covenants of
this Indenture as may be required from time to time by such rules and
regulations.

ARTICLE SEVEN
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR
LEASE

SECTION 7.01. Company May Not Consolidate, Etc., on Certain Terms.
---------------------------------------------------

The Company shall not consolidate with or merge into any other
corporation or convey, transfer or lease its properties and assets substantially
as an entirety to any Person, unless:

(a) the corporation formed by such consolidation or into which the
Company is merged or the Person which acquires by conveyance or transfer, or
which leases, the properties and assets of the Company substantially as an
entirety shall be a corporation organized and existing under the laws of the
United States, one of the States thereof or the District of Columbia and
expressly shall assume, by an indenture supplemental hereto, executed and
delivered to the Trustee, in form satisfactory to the Trustee, the due and
punctual payment of the principal of and premium, if any, and interest on all
Notes and the performance of every covenant of this Indenture on the part of the
Company to be performed or observed;

(b) immediately after giving effect to such transaction no Event of
Default, and no event that, after notice or lapse of time or both, would become
an Event of Default, shall have occurred and be continuing; and

(c) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that such consolidation, merger,
conveyance, transfer or lease and, if a supplemental indenture is required in
connection with such transaction, such supplemental indenture comply with this
Article Seven and that all conditions precedent herein provided for relating to
such transaction have been met.

SECTION 7.02. Successor Corporation Substituted.
---------------------------------

Upon any consolidation or merger by the Company with or into any other
corporation or any conveyance, transfer or lease of the properties and assets of
the Company substantially as an entirety to any Person in accordance with
Section 7.01, the successor corporation formed by such consolidation or into
which the Company is merged or to which such conveyance, transfer or lease is
made shall succeed to, and be substituted for, and may exercise every right and
power of, the Company under this Indenture with the same effect as if such
successor corporation had been named as the Company herein, and thereafter,
except in the case of a lease to another Person, the predecessor corporation
shall be relieved of all obligations and covenants under this Indenture and the
Notes.

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ARTICLE EIGHT
SUPPLEMENTAL INDENTURES

SECTION 8.01. Supplemental Indentures Without Consent of Holders.
--------------------------------------------------

Without the consent of any of the Holders, the Company, when
authorized by a majority of its entire Board of Directors, and the Trustee from
time to time and at any time may enter into one or more indentures supplemental
hereto for any of the following purposes:

(a) to evidence the succession of another corporation to the Company
and the assumption by the successor corporation of the covenants, agreements and
obligations of the Company herein and in the Notes;

(b) to add to the covenants of the Company for the benefit of the
Holders or to surrender any right or power herein conferred upon the Company;

(d) to convey, transfer, assign, mortgage or pledge to the Trustee,
as security for the Notes, any property or assets; or

(e) to cure any ambiguity or to correct or supplement any provision
herein that may be inconsistent with any other provision herein, or to make such
other provisions in regard to matters or questions arising under this Indenture
as are not inconsistent with the provisions of this Indenture and as shall not
adversely affect the interests of the Holders.

SECTION 8.02. Supplemental Indentures With Consent of Holders.
-----------------------------------------------

With the consent of the Holders of not less than a majority in
aggregate principal amount of the Outstanding Notes, by Act of the Holders
delivered to the Company and the Trustee, the Company, when authorized by a
majority of its entire Board of Directors, and the Trustee from time to time and
at any time may enter into an indenture or indentures supplemental hereto for
the purpose of adding any provision to or changing in any manner or eliminating
any of the provisions of this Indenture or of modifying in any manner the rights
of the Holders under this Indenture; provided, however, that no such
supplemental indenture shall, without the consent of the Holder of each
Outstanding Note affected thereby:

(a) change the Stated Maturity of the principal of, or any
installment of interest on, any Note, or reduce the rate or extend the time of
payment of interest thereon, or reduce the principal amount thereof or premium,
if any, thereon, or impair the right to institute suit for the payment on or
after the Stated Maturity thereof (or, in the case of redemption or repurchase
in conformity with Section 9.14, on or after the Redemption Date or Change of
Control Payment Date), or change the place of payment where, or the coin or
currency in which, the principal of or premium, if any, or interest on any Note
is payable;

(b) reduce the percentage in principal amount of the Outstanding
Notes the consent of whose Holders is required for any waiver (or compliance
with certain provisions of this Indenture or certain defaults hereunder and
their consequences) provided for in this Indenture;

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(d) modify any of the Events of Default enumerated in Section 4.01;
or

(e) modify any of the provisions of Section 9.14 or Articles Ten or
Eleven in a manner adverse to the Holders.

It shall not be necessary for any Act of Holders under this
Section 8.02 to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such Act shall approve the substance
thereof.

SECTION 8.03. Execution of Supplemental Indentures.
------------------------------------

In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article Eight or the modification
thereby of the trusts created by this Indenture, the Trustee shall be entitled
to receive, and shall be fully protected in relying upon, an Opinion of Counsel
stating that the execution of such supplemental indenture is authorized or
permitted by this Indenture. The Trustee may, but shall not be obligated to,
enter into any such supplemental indenture that affects the Trustee's own
rights, duties or immunities under this Indenture or otherwise.

SECTION 8.04. Effect of Supplemental Indentures.
---------------------------------

Upon execution of any supplemental indenture under this Article Eight,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Notes theretofore or thereafter authenticated and delivered hereunder shall
be bound thereby.

SECTION 8.05. Reference in Notes to Supplemental Indentures.
---------------------------------------------

Notes authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article Eight may, and shall, if
required by the Trustee, bear a notation in form approved by the Trustee as to
any matter provided for in such supplemental indenture. If the Company shall so
determine, new Notes so modified as to conform, in the opinion of the Trustee
and a majority of the entire Board of Directors of the Company, to any such
supplemental indenture may be prepared and executed by the Company and
authenticated and delivered by the Trustee in exchange for the Outstanding
Notes.

SECTION 8.06. Consent of Senior Lenders.
-------------------------

Notwithstanding any other provision of this Article Eight, no
provision in any supplemental indenture shall directly or indirectly modify the
provisions of Article Eleven in any manner that might terminate or impair the
subordination of the Notes as against any Senior Lender who has not consented
thereto.

ARTICLE NINE

COVENANTS

SECTION 9.01. Payment of Principal, Premium, if any, and Interest.
---------------------------------------------------

The Company will duly and punctually pay the principal of and premium,
if any, and interest on each of the Notes in accordance with the terms of the
Notes and this Indenture.

Saks Indenture
--------------

<PAGE>

SECTION 9.02. Maintenance of Office or Agency.
-------------------------------

The Company will maintain in Curacao, Netherlands Antilles, an office
or agency where Notes may be presented for payment, redemption or repurchase,
where Notes may be surrendered for registration of transfer or exchange, and
where notices and demands to or upon the Company in respect of the Notes and
this Indenture may be served. The Company will give prompt written notice to
the Trustee of the location, and of any change in the location, of such office
or agency. If at any time the Company shall fail to maintain any such required
office or agency or shall fail to furnish the Trustee with the address thereof,
such presentations, surrenders, notices and demands may be made or served at the
Principal Office of the Trustee and the Company hereby appoints the Trustee as
its agent to receive all such presentations, surrenders, notices and demands.

The Company from time to time also may designate one or more other
offices or agencies (in or outside of the above location) where the Notes may be
presented or surrendered for such purposes and from time to time may rescind
such designation; provided, however, that no such designation or rescission
shall relieve the Company of its obligation to maintain an office or agency in
Curacao, Netherlands Antilles, for the payment of the Notes. The Company will
give prompt written notice to the Trustee of any such designation or rescission
and of any change in the location of any such other office or agency.

SECTION 9.03. Funds for Note Payments to Be Held in Trust.
-------------------------------------------

If the Company at any time shall act as its own paying agent, on or
before each due date of the principal of or premium, if any, or interest on the
Notes it will segregate and hold in trust for the benefit of the Persons
entitled thereto a sum sufficient to pay the principal, premium, if any, or
interest so becoming due until such sums shall be paid to such Persons or
otherwise disposed of as herein provided and promptly will notify the Trustee of
its action or failure so to act.

Whenever the Company shall have one or more paying agents, before each
due date of the principal of or premium, if any, or interest on the Notes it
will deposit with the principal paying agent a sum sufficient to pay the
principal, premium, if any, or interest so becoming due, such sum to be held in
trust for the benefit of the Persons entitled to such principal, premium, if
any, or interest, and (unless such principal paying agent is the Trustee) the
Company promptly will notify the Trustee of its action or any failure so to act.

The Company will cause each paying agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such paying agent
shall agree with the Trustee, subject to the provisions of this Section 9.03,
that such paying agent will:

(a) hold all sums held by it as such agent for the payment of the
principal of or premium, if any, or interest on the Notes in trust for the
benefit of the Persons entitled thereto until such sums shall be paid to such
Persons or otherwise disposed of as herein provided;

(b) give the Trustee notice of any default by the Company (or by any
other obligor on the Notes) in the making of any payment of principal, premium,
if any, or interest; and

Saks Indenture
--------------

<PAGE>

(c) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so held in
trust by such paying agent.

The Company, at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, may pay,
or by Company Order direct any paying agent to pay, to the Trustee all funds
held in trust by the Company or such paying agent hereunder, such funds to be
held by the Trustee upon the same trusts as those upon which such funds were
held by the Company or such paying agent; and upon such payment by the Company
or any paying agent to the Trustee, the Company or such paying agent shall be
released from all further liability with respect to such funds.

Any funds deposited with the Trustee or any paying agent, or then held
by the Company, in trust for the payment of the principal of or premium, if any,
or interest on any Note and remaining unclaimed for two years after such
principal, premium, if any, or interest has become due and payable shall be paid
to the Company on Company Request or (if then held by the Company) shall be
discharged from such trust; and the Holder of such Note thereafter, as an
unsecured general creditor, shall look only to the Company for payment thereof,
and all liability of the Trustee or such paying agent with respect to such
funds, and all liability of the Company as trustee thereof, shall thereupon
cease; provided, however, that the Trustee or such paying agent, before being
required to make any such payment, at the expense of the Company may cause to be
published once, in a newspaper published in the English language, customarily
published on each Business Day and of general circulation in Curacao,
Netherlands Antilles, and once in two Arabic language newspapers, customarily
published on each Business Day (which is also a business day in the Arabian
Gulf) and of general circulation in the Arabian Gulf, notice that such funds
remain unclaimed and that, after a date specified therein, which shall not be
less than 30 days from the date of such publication, any unclaimed balance of
such funds then remaining will be repaid to the Company.

SECTION 9.04. Corporate Existence.
-------------------

Subject to the provisions of Article Seven, the Company will do or
cause to be done, and will cause each Significant Subsidiary to do or cause to
be done, all things necessary to preserve and keep in full force and effect its
corporate existence, rights (charter and statutory) and franchises; provided,
however, that the Company shall not be required to preserve or cause to be
preserved any such right or franchise if a majority of the entire Board of
Directors of the Company or the relevant Significant Subsidiary shall determine
that the preservation thereof is no longer desirable in the conduct of the
business of the Company or the Significant Subsidiary, as the case may be, and
that the loss thereof is not disadvantageous in any material respect to the
Holders.

SECTION 9.05. Maintenance of Properties.
-------------------------

The Company will cause all properties used or useful in the conduct of
its and any Significant Subsidiary's business to be maintained and kept in good
condition, repair and working order and supplied with all necessary equipment
and will cause to be made all necessary repairs, renewals, replacements,
betterments and improvements thereof, all as in the judgment of the Company or
such Significant Subsidiary may be necessary so that the business carried on in
connection therewith may be properly and advantageously conducted at all times;
provided, however, that nothing in this Section 9.05 shall prevent the Company
or any Significant Subsidiary from discontinuing the operation or maintenance of
any of such properties if such discontinuance, in the judgment of the Company or
such Significant

Saks Indenture
--------------

<PAGE>

Subsidiary, as the case may be, is desirable in the conduct of its business and
not disadvantageous in any material respect to the Holders.

SECTION 9.06. Payment of Taxes and Other Claims.
---------------------------------

The Company will pay or discharge or cause to be paid or discharged,
and will cause each Significant Subsidiary to pay, discharge or cause to be paid
or discharged, before the same shall become delinquent, (a) all material taxes,
assessments and governmental charges levied or imposed upon the Company or such
Significant Subsidiary or upon the income, profits or property of the Company or
such Significant Subsidiary and (b) all lawful, material claims for labor,
materials and supplies that, if unpaid, might by law become a Lien upon the
property of the Company or such Significant Subsidiary; provided, however, that
neither the Company nor any Significant Subsidiary shall be required to pay or
discharge or cause to be paid or discharged any such tax, assessment, charge or
claim whose amount, applicability or validity is being contested in good faith
by appropriate proceedings.

SECTION 9.07. Provision of Reports.
--------------------

The Company shall, at such time as the same are required to be
delivered to the holders of Senior Indebtedness (other than the Notes) pursuant
to the provisions of the instruments creating or evidencing such Senior
Indebtedness, furnish to the Trustee copies of the monthly, quarterly and annual
financial statements of the Company as well as the related auditors' reports, to
the extent required to be delivered by the Company to the holders of any such
Senior Indebtedness and any other information made available generally by the
Company to all holders of such Senior Indebtedness whether required by the terms
of the instrument creating or evidencing such Senior Indebtedness or otherwise.
The Trustee shall distribute such copies to the Holders as soon as practicable
after its receipt thereof.

SECTION 9.08. Waiver of Usury Defense.
-----------------------

To the extent permitted by applicable law, the Company agrees that it
will not assert, plead (as a defense or otherwise) or in any manner whatsoever
claim (and will actively resist any attempt to compel it to assert, plead or
claim) in any action, suit or proceeding that the effective interest rate on the
Notes (or any interest or other amounts payable pursuant to Section 2.03 hereof
or the Notes) violates present or future usury or other laws relating to the
interest payable on any indebtedness and will not otherwise avail itself (and
will actively resist any attempt to compel it to avail itself) of the benefits
or advantages of any such laws.

SECTION 9.09. Waiver of Certain Covenants.
---------------------------

The Company may omit in any particular instance to comply with any
covenant or condition set forth in this Article Nine, other than any such
covenant or condition contained in Section 9.01 or 9.14, if before the time for
such compliance the Holders of at least a majority in principal amount of the
Notes at the time Outstanding shall, by Act of such Holders, either waive such
compliance in such instance or generally waive compliance with such covenant or
condition, but no such waiver shall extend to or affect such covenant or
condition except to the extent so expressly waived and, until such waiver shall
become effective, the obligations of the Company and the duties of the Trustee
in respect of any such covenant or condition shall remain in full force and
effect.

Saks Indenture
--------------

<PAGE>

SECTION 9.10. Statement by Officers as to Default.
-----------------------------------

The Company will deliver to the Trustee, within 90 days after the end
of each fiscal quarter of the Company, an Officers' Certificate stating whether
or not to the best knowledge of the signers thereof the Company is in default in
the performance and observance of any of the terms, provisions and conditions of
Sections 9.01 through 9.07 or Sections 9.10 through 9.14, and if the Company
shall be in default, specifying all such defaults and the nature and status
thereof.

SECTION 9.11. Limitation on Indebtedness.
--------------------------

Neither the Company nor any of its Subsidiaries will incur any
Indebtedness except that the Company and, if indicated below, its Subsidiaries
shall not be prohibited hereby from incurring:

(a) Indebtedness of the Company under the Notes and this Indenture,
provided that the aggregate principal amount of Indebtedness permitted to be
outstanding on any date by this clause (a) shall not exceed $50,000,000 less the
aggregate principal amount of Notes that would have been redeemed, repurchased
or otherwise repaid on or prior to such date pursuant to the terms of this
Indenture, as in effect on the date hereof;

(b) Indebtedness of the Company (which may be guaranteed by any of
its Subsidiaries) under the Senior Credit Facility, provided that the aggregate
principal amount of Indebtedness permitted to be outstanding (including pursuant
to letters of credit and other contingent obligations) on any date by this
clause (b) shall not exceed the lesser of (i) $775,000,000, or (ii) if the
Senior Credit Facility has been amended, supplemented, renewed, extended,
refunded, deferred, restructured, replaced, refinanced or otherwise modified
after the date hereof, the maximum amount that would have been permitted to be
outstanding on such date pursuant to the terms of the Senior Credit Facility, as
in effect on the date hereof;

(c) Indebtedness of the Company (which may be guaranteed by any of
its Subsidiaries) under the Senior Credit Facility in an aggregate principal
amount at any time outstanding, in addition to amounts permitted to be
outstanding pursuant to clause (b), not to exceed $225,000,000;

(d) Senior Indebtedness of the Company in an aggregate principal
amount at any time outstanding, in addition to amounts permitted to be
outstanding pursuant to clauses (a), (b) and (c), not to exceed $200,000,000;

(e) Indebtedness of the Company under Interest Swap Obligations
relating to payments under the Senior Credit Facility;

(f) Indebtedness of the Company or any of its Subsidiaries under
Capital Leases entered into in connection with a sale and leaseback of any real
or personal property of the Company or its Subsidiaries (together, "Capital
Lease Transactions"), provided all cash received by the Company or any
Subsidiary of the Company in connection with such Capital Lease Transactions,
net of (without duplication) (a) brokers' and underwriters' commissions, legal
and lenders' fees and other expenses incurred to third parties in connection
with such Capital Lease Transactions and, to the extent permitted to be deducted
in calculating Net Proceeds under the Senior Credit Facility, reasonable
expenses paid to Investcorp's Affiliates, and (b) any taxes payable as a result
of such Capital Lease Transactions, as reasonably

Saks Indenture
--------------

<PAGE>

estimated by the Company, is applied to the repayment or prepayment of
Indebtedness of the Company or to capital expenditures or other general
corporate purposes;

(g) Additional Indebtedness of the Company or any of its Subsidiaries
(including Indebtedness under Capital Leases, in addition to amounts permitted
to be outstanding under clause (f)), other than Senior Indebtedness, in an
aggregate principal amount at any time outstanding not to exceed $300,000,000;

(h) Indebtedness of any wholly-owned Subsidiary of the Company to the
Company or any other Subsidiary of the Company or of the Company to any of its
wholly-owned Subsidiaries; and

(i) any Indebtedness of the Company or any of its Subsidiaries the
proceeds of which are used to redeem, repurchase, retire for value, refinance or
refund any Indebtedness referred to in clauses (a) through (h) above (or
outstanding on the date of the Merger), provided (i) such Indebtedness in right
of payment ranks pari passu with or, subject to Section 9.12, junior to the
Indebtedness being redeemed, repurchased, retired, refinanced or refunded, and
(ii) the principal amount thereof, together with any other Indebtedness
permitted to be outstanding under any such clause, does not exceed the amount
specified in such clause (or, in the case of Indebtedness the proceeds of which
are used to redeem, repurchase, retire, refinance or refund any Indebtedness
outstanding on the date of the Merger, the principal amount thereof on such
date), provided that any such new Indebtedness is on terms that materially
benefit the Company and, provided further, that, and without limitation, this
clause (i) shall permit Indebtedness comprising Real Estate Financings (as
defined in and permitted by the Senior Credit Facility) and Accounts Receivables
Financings (as defined in and permitted by the Senior Credit Facility) and any
other Indebtedness secured by a Lien on real property or accounts receivable
that may be incurred by the Company or any of its Subsidiaries (or guaranteed by
any of its Subsidiaries) to refinance any Indebtedness under the Senior Credit
Facility permitted by clauses (b) and (c).

SECTION 9.12. Limitation on Creation of Classes of Senior Indebtedness.
--------------------------------------------------------

The Company will not create or incur or permit to remain outstanding
any Senior Indebtedness of the Company which is by its terms subordinated in
right of payment to other Indebtedness of the Company, provided, however,
nothing in this Section 9.12 shall prevent the Company from affording security,
by mortgage or pledge of assets or otherwise, for all or any part of the
Indebtedness of the Company or from affording security for certain Indebtedness
different from that afforded other Indebtedness.

SECTION 9.13. Limitation on the Payment of Dividends and Purchase of
------------------------------------------------------
Stock.
-----

The Company will not:

(a) declare or pay, or make or set aside, any dividend or
distribution on any share of its capital stock (other than dividends payable
solely in shares of capital stock of the Company);

(b) purchase, redeem or otherwise acquire or retire any shares of its
capital stock;

(c) set apart any sum for the purchase, redemption or other
acquisition or retirement of any shares of its capital stock; or

Saks Indenture
--------------

<PAGE>

(d) make any other distribution, by reduction of capital or
otherwise, on or with respect to any shares of its capital stock;

provided, however, that nothing in this Section 9.13 shall prohibit (i) the
Company from repurchasing or redeeming any of its capital stock pursuant to the
terms of any subscription agreement entered into after the date hereof with any
officer, director or employee of the Company or any of its Subsidiaries or
(ii) the Company from paying dividends to Saks Holdings Company, a Delaware
corporation ("Holdings") (A) in amounts equal to the amounts required for
Holdings to pay franchise taxes and other fees required to maintain its
corporate existence; (B) in amounts equal to amounts required for Holdings to
pay Federal, state and local income taxes to the extent that such income taxes
are attributable to the income of the Company and its Subsidiaries; and (C) in
amounts equal to amounts expended by Holdings to repurchase capital stock of
Holdings owned by former employees of the Company and its Subsidiaries and their
assigns, estates and heirs, provided that the amount paid to Holdings pursuant
--------
to this clause (C) shall not exceed in the aggregate $10,000,000 during the term
hereof, plus any amounts contributed by Holdings to the Company as a result of
resales of such repurchased capital stock.

SECTION 9.14. Change of Control.
-----------------

If at any time after the date hereof a Change of Control occurs, (the
date on which the Change of Control occurs being referred to herein as the
"Change of Control Date"), then the Company shall promptly make an offer to
purchase for cash (the "Change of Control Offer"), which shall not constitute a
redemption for the purposes of Article Ten hereof or the Notes, on the last day
of the next fiscal quarter of the Company commencing after the Change of Control
Date (the "Change of Control Payment Date"), all Notes then Outstanding at the
purchase price equal to the price specified in the form of Note for optional
redemptions, together with all accrued interest to and including the Change of
Control Payment Date. Prior to the Change of Control Payment Date, the Company
covenants to (a) repay in full all Indebtedness under the Senior Credit Facility
(and terminate the Senior Credit Facility) or (b) obtain the requisite consent
under the documents governing the Senior Credit Facility to permit the
repurchase of the Notes as provided for in this Section 9.14. The Company shall
first comply with the covenant in the preceding sentence before it shall be
required to offer to repurchase and repurchase the Notes pursuant to this
Section 9.14.

Notice of the Change of Control Offer shall be mailed by the Company
not less than 25 days before the Change of Control Payment Date to the Holders
of the Notes at their last registered addresses with a copy to the Trustee. At
least five Business Days prior to the Company's mailing of a notice of Change of
Control Offer, the Company shall notify the Trustee of its obligation to offer
to repurchase all of the Notes. The Change of Control Offer shall remain open
from the time of mailing until the Change of Control Payment Date. The notice
shall be accompanied by a copy of the most recent financial statements furnished
pursuant to Section 9.07 hereof. The notice shall contain all instructions and
materials reasonably necessary to enable such Holders to tender Notes pursuant
to the Change of Control Offer. The notice, which shall govern the terms of the
Change of Control Offer, shall state:

(a) that the Change of Control Offer is being made pursuant to this
Section 9.14, that Notes may be surrendered in whole or in part (in
denominations of $1,000 and integral multiples thereof), and that all Notes will
be accepted for payment;

(b) the purchase price and the Change of Control Payment Date;

Saks Indenture
--------------

<PAGE>

(d) that any Note (or part thereof) accepted for payment pursuant to
the Change of Control Offer shall cease to accrue interest after the Change of
Control Payment Date;

(e) that Holders electing to have a Note purchased pursuant to a
Change of Control Offer will be required to surrender the Note, with the form
entitled "Option of Holder to Elect Repurchase" on the reverse of the Note
completed, to the place specified in the notice prior to 5:00 p.m., New York
City time, on the Change of Control Payment Date;

(f) that Holders will be entitled to withdraw their election if the
Person designated in the notice receives, not later than 5:00 p.m., New York
City time, on the Change of Control Payment Date, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Note(s) the Holder delivered for purchase and a statement that
such Holder is withdrawing its election to have the Note(s) purchased;

(g) that Holders whose Notes are purchased only in part will be
issued new Notes equal in principal amount to the unpurchased portion of the
Notes surrendered; and

(h) that the Company's obligation to repurchase is limited as set
forth in the second and third sentences of the first paragraph of this Section
9.14.

On the Change of Control Payment Date, subject to the second and third
sentences of the first paragraph of this Section 9.14, the Company shall
(i) accept for payment Notes or portions thereof tendered pursuant to the Change
of Control Offer, (ii) deposit with the Trustee funds sufficient to pay the
purchase price of all Notes or portions thereof so tendered and (iii) deliver to
the Trustee all Notes so accepted for payment, and the Trustee shall promptly
authenticate and mail to such Holders a new Note equal in principal amount to
any unpurchased portion of any Note surrendered. The Company will notify the
Holders of the results of the Change of Control Offer on or as soon as
practicable after the Change of Control Payment Date.

ARTICLE TEN

REDEMPTION OF NOTES

SECTION 10.01. Optional Redemption.
-------------------

Subject to the restrictions specified in the form of Note, the Notes
may be redeemed as a whole at any time or in part from time to time, at the
redemption prices and as otherwise specified in such form of Note for
redemptions, together with all accrued interest to the Redemption Date.

SECTION 10.02. Applicability of Article.
------------------------

Redemption of Notes at the election of the Company or otherwise, as
permitted or required by any provision of this Indenture, shall be made in
accordance with such provision and this Article Ten.

Saks Indenture
--------------

<PAGE>

SECTION 10.03. Election to Redeem.
------------------

The election by the Company to redeem Notes pursuant to Section 10.01
shall be evidenced by a resolution adopted by a majority of the entire Board of
Directors of the Company.

SECTION 10.04. Selection by Company of Notes to be Redeemed.
--------------------------------------------

(a) The particular Notes to be redeemed pursuant to Section 10.01, if
less than all the Outstanding Notes are to be redeemed pursuant thereto, shall
be selected by the Company not more than 60 days nor less than 30 days prior to
the Redemption Date, from the Outstanding Notes not previously called for
redemption and, subject to Section 10.04(c) hereof, shall be redeemed pro rata
among the Holders in the proportion that the aggregate amount of Notes held by a
Holder bears to the aggregate amount of Notes Outstanding, provided Notes shall
be selected for redemption in denomination of $1,000 or integral multiples
thereof.

(b) The Company promptly shall notify the Trustee in writing of the
Notes selected for redemption and, in the case of any Notes selected for partial
redemption, the principal amount thereof to be redeemed.

(c) For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Notes shall relate, in
the case of any Note redeemed or to be redeemed only in part, to the portion of
the principal amount of such Note that has been or is to be redeemed.

SECTION 10.05. Notice of Redemption.
--------------------

Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not less than 30 or more than 60 days prior to the Redemption
Date, to each Holder of Notes to be redeemed, at his address appearing in the
Note Register.

All notices of redemption shall state:

(a) the Redemption Date;

(b) the redemption price;

(c) if less than all the Outstanding Notes are to be redeemed, the
identification (and, in the case of partial redemption, the principal amounts)
of the particular Notes to be redeemed;

(d) that on the Redemption Date the redemption price will become due
and payable upon each such Note to be redeemed and that interest thereon will
cease to accrue on and after such date; and

(e) the place or places where such Notes are to be surrendered for
payment of the redemption price.

Notice of redemption of Notes to be redeemed at the election of the
Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company.

Saks Indenture
--------------

<PAGE>

SECTION 10.06. Deposit of Redemption Price.
---------------------------

Prior to any Redemption Date, the Company shall deposit with the
Trustee or with the paying agent (or, if the Company is acting as its own paying
agent, it shall segregate and hold in trust as provided in Section 9.03) funds
sufficient to pay the redemption price of, and (except if the Redemption Date
shall be an Interest Payment Date) accrued interest on, all the Notes that are
to be redeemed on that date.

SECTION 10.07. Notes Payable on Redemption Date.
--------------------------------

Notice of redemption having been given as aforesaid, the Notes so to
be redeemed shall become due and payable on the Redemption Date, at the
redemption price therein specified, and from and after such date (unless the
Company shall default in the payment of the redemption price and accrued
interest) such Notes shall cease to bear interest. Upon surrender of any such
Note for redemption in accordance with such notice, such Note shall be paid by
the Company at the redemption price, together with all accrued interest to the
Redemption Date; provided, however, that installments of interest whose Stated
Maturity is on or prior to the Redemption Date shall be payable to the Holders
of such Notes, or one or more Predecessor Notes, registered as such at the close
of business on the relevant Record Dates according to their terms and the
provisions of Section 2.08.

If any Note called for redemption shall not be so paid upon surrender
thereof for redemption, the principal and premium, if any, shall, until paid,
bear interest from the Redemption Date at the applicable rate specified in
Section 2.03.

SECTION 10.08. Notes Redeemed in Part.
----------------------

Any Note that is to be redeemed only in part shall be surrendered at
an office or agency of the Company designated for that purpose pursuant to
Section 9.02 (with, if the Company or the Trustee so requires, due endorsement
by, or a written instrument of transfer in form satisfactory to the Company and
the Trustee duly executed by, the Holder thereof or his attorney duly authorized
in writing), and the Company shall execute, and the Trustee shall authenticate
and deliver to the Holder of such Note, at the expense of the Company, a new
Note or Notes, of any authorized denomination requested by such Holder, in an
aggregate principal amount equal to and in exchange for the unredeemed portion
of the principal amount of the Note so surrendered.

ARTICLE ELEVEN

SUBORDINATION

SECTION 11.01. Agreement of Subordination.
--------------------------

The Company covenants and agrees, and each Holder of Notes by his
acceptance thereof likewise covenants and agrees, that all Notes shall be issued
subject to the provisions of this Article Eleven; and each Person holding any
Note, whether upon original issue or exchange or upon transfer or assignment
thereof, accepts and agrees to be bound by such provisions.

The payment of the principal of and premium, if any, interest and any
other amount due on all Notes, to the extent and in the manner hereinafter set
forth, shall be subordinated and subject in right of payment to the prior
payment in full in cash of all Senior Indebtedness (including interest accruing
after the filing of a petition by or against the

Saks Indenture
--------------

<PAGE>

Company under any Bankruptcy Law, whether or not allowed as a claim), whether
outstanding at the date hereof or hereafter incurred.

SECTION 11.02. Payments to Holders of Notes.
----------------------------

In the event and during the continuation of any default in the payment
of principal of, premium, if any, or interest on or any other payment due under
any Specified Senior Indebtedness, then, unless and until such default shall
have been cured or waived, no payment or distribution shall be made by or on
behalf of the Company with respect to the principal of or premium, if any,
interest or any other payment due on or with respect to the Notes.

In the event and during the continuation of any default (other than a
default of any payment due) with respect to the Senior Credit Facility
permitting the Senior Lenders thereunder to accelerate the maturity thereof,
then, unless and until such default shall have been cured or waived, no payment
or distribution shall be made by or on behalf of the Company with respect to the
principal of or premium, if any, interest or any other payment due on or with
respect to the Notes, if written notice of such default shall have been given to
the Trustee and the Company by the Bank Agent, during the period commencing on
the date on which such notice is received by the Company and the Trustee and
ending on the earlier to occur of (a) the 179th day thereafter or (b) the day on
which such default is cured or waived; provided, however, that this sentence
shall not prohibit any payment of any installment of principal of or premium, if
any, interest or any other payment due on the Notes for more than 179 days in
any 365-day period and provided, further, that no default that once formed the
basis for any such notice by the Bank Agent shall form the basis of any
subsequent notice under this paragraph. For purposes of the preceding sentence,
"default" shall mean any default or failure to observe or perform any provision
of the Senior Credit Facility, after the giving of notice, the expiration of any
grace periods, or both, so that the Senior Lenders are entitled to accelerate
the maturity thereof.

Upon any payment by the Company, or distribution of assets or
securities of the Company of any kind or character, whether in cash, property or
securities, to creditors upon any dissolution, winding-up, total or partial
liquidation or reorganization of the Company or its property, whether voluntary
or involuntary, or any assignment for the benefit of creditors or any
marshalling of assets and liabilities, or in bankruptcy, insolvency,
receivership or other proceedings, all amounts due or to become due upon all
Senior Indebtedness first shall be paid in full in cash, or payment thereof
provided for in cash in accordance with its terms, before any payment is made on
account of the principal of or premium, if any, interest or any other amount due
on or with respect to the Notes; and upon any such dissolution, winding-up,
liquidation, reorganization, assignment, marshalling or proceedings:

(a) the Senior Lenders shall be entitled to receive payment in full
in cash and cash equivalents of all Senior Indebtedness before the Holders of
the Notes and the Trustee shall be entitled to receive any payment of principal
or premium, if any, or interest on or other amounts payable with respect to the
Notes; and

(b) any payment by the Company, or distribution of assets or
securities of the Company of any kind or character, whether in cash, property or
securities, to which the Holders of the Notes or the Trustee would be entitled
except for the provisions of this Article Eleven, shall be paid by the Company
or by any Custodian, agent or other Person making such payment or distribution,
or by any Holder, the Trustee, any paying agent or any depositary if

Saks Indenture
--------------

<PAGE>

received by it, directly to the Senior Lenders or their representative or
representatives, or the trustee or trustees under any indenture pursuant to
which any instruments evidencing any such Senior Indebtedness may have been
issued, as their respective interests may appear, to the extent necessary to pay
all such Senior Indebtedness in full in cash or cash equivalents, after giving
effect to any concurrent payment or distribution to or for the Senior Lenders.

In the event that, notwithstanding the foregoing, any payment by or
distribution of assets or securities of the Company of any kind or character,
whether in cash, property or securities, prohibited by the foregoing, shall be
received by the Trustee or the Holders before all such Senior Indebtedness is
paid in full in cash, such payment or distribution shall be held in trust for
the benefit of and shall be paid over or delivered to the Senior Lenders or
their representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instrument evidencing any such Senior
Indebtedness may have been issued, as their respective interests may appear, for
application to the payment of all such Senior Indebtedness remaining unpaid to
the extent necessary to pay all such Senior Indebtedness in full in cash or cash
equivalents in accordance with its terms, after giving effect to any concurrent
payment or distribution to or for the benefit of the Senior Lenders.

The consolidation of the Company with or the merger of the Company
into another corporation, or the liquidation or dissolution of the Company
following the conveyance or transfer of its property or assets as an entirety or
substantially as an entirety to another corporation, upon the terms and
conditions provided for in Article Seven, shall not be deemed a dissolution,
winding-up, liquidation or reorganization for the purposes of this Section 11.02
if such other corporation, as a part of such consolidation, merger, conveyance
or transfer, shall comply with the conditions stated in Article Seven. Nothing
in this Section 11.02 shall apply to claims of or payments to the Trustee
pursuant to Section 5.07.

The Senior Lenders, at any time and from time to time, without the
consent of or notice to the Holders, without incurring responsibility to the
Holders and without impairing or releasing the obligations of the Holders
hereunder to the Senior Lenders, may: (a) change the manner, place or terms of
payment or change or extend the time of payment of, or renew or alter, the
Senior Indebtedness, or otherwise amend in any manner Senior Indebtedness or any
instrument evidencing the same or any agreement under which the Senior
Indebtedness is outstanding; (b) sell, exchange, release or otherwise deal with
any property pledged, mortgaged or otherwise securing the Senior Indebtedness;
(c) release any Person liable in any manner for the collection or payment of the
Senior Indebtedness; and (d) exercise or refrain from exercising any rights
against the Company or any other Person.

For purposes of this Article Eleven, "payment" of or with respect to
the Notes includes any payment, redemption, acquisition, deposit, segregation,
retirement, sinking fund payment and defeasance of or with respect to the Notes,
but does not include the delivery of Outstanding or previously redeemed Notes in
satisfaction of all or any part of any sinking fund payment.

SECTION 11.03. Subrogation of Notes.
--------------------

Subject to the payment in full in cash of all Senior Indebtedness at
the time outstanding, the Holders shall be subrogated to the rights of the
Senior Lenders to receive payments or distributions of cash, property or
securities of the Company applicable to the Senior Indebtedness until the
principal of and premium, if any, and interest on the Notes shall be paid in
full; and, for the purposes of such subrogation, no payments or distributions to
the Senior Lenders of any cash, property or securities to which the Holders of
the Notes or the

Saks Indenture
--------------

<PAGE>

Trustee would be entitled except for the provisions of this Article Eleven, and
no payment over pursuant to the provisions of this Article Eleven to or for the
benefit of the Senior Lenders by the Holders or the Trustee, shall, as between
the Company, its creditors other than the Senior Lenders and the Holders, be
deemed to be a payment by the Company to or on account of such Senior
Indebtedness. It is understood that the provisions of this Article Eleven are
and are intended solely for the purpose of defining the relative rights of the
Holders on the one hand and the Senior Lenders on the other hand.

Nothing contained in this Article Eleven or elsewhere in this
Indenture (except to the extent contemplated by Section 4.02) or in the Notes is
intended to or shall impair, as between the Company, its creditors other than
the Senior Lenders and the Holders, the obligation of the Company, which is
absolute and unconditional, to pay to the Holders the principal of and premium,
if any, and interest on the Notes as and when the same shall become due and
payable in accordance with their terms, or is intended to or shall affect the
relative rights of the Holders and creditors of the Company other than the
Senior Lenders, nor shall anything herein (except to the extent contemplated by
Section 4.02) or therein prevent the Trustee or the Holder of any Note from
exercising all remedies otherwise permitted by applicable law upon default under
this Indenture, subject to the rights, if any, under this Article Eleven of the
Senior Lenders in respect of cash, property or securities of the Company
received upon the exercise of any such remedy.

Upon any payment or distribution of assets or securities of the
Company referred to in this Article Eleven, the Trustee, subject to the
provisions of Section 5.01, and the Holders shall be entitled to rely upon any
order or decree made by any court of competent jurisdiction in which such
dissolution, winding-up, liquidation, reorganization, assignment, marshalling or
proceedings are pending, or a certificate of any Custodian, agent or other
Person making such payment or distribution, delivered to the Trustee or to the
Holders, for the purpose of ascertaining the Persons entitled to participate in
such payment or distribution, the Senior Lenders and the holders of other
indebtedness of the Company, the amount thereof or payable thereon, the amount
or amounts paid or distributed thereon and all other facts pertinent thereto or
to this Article Eleven.

SECTION 11.04. Authorization by Holders of Notes.
---------------------------------

Each Holder of a Note by his acceptance thereof authorizes and directs
the Trustee on his behalf to take such action as may be necessary or appropriate
to acknowledge or effectuate the subordination provided in this Article Eleven
and appoints the Trustee his attorney-in-fact for any and all such purposes
including, without limitation in the event of any dissolution, winding-up,
liquidation, marshalling of assets and liabilities or reorganization of the
Company (whether in bankruptcy, insolvency, receivership, reorganization or
similar proceedings or upon an assignment for the benefit of creditors or
otherwise) tending towards liquidation of the business and assets of the
Company, the filing of a claim for the unpaid principal balance of and premium,
if any, and accrued interest on and other obligations with respect to the Notes
in the form required in those proceedings.

SECTION 11.05. Notice to Trustee.
-----------------

The Company shall give prompt written notice to the Trustee of any
fact known to the Company that would prohibit the making of any payment or
distribution to or by the Trustee in respect of the Notes pursuant to the
provisions of this Article Eleven. Notwithstanding the provisions of this
Article Eleven or any other provision of this Indenture, the Trustee shall not
be charged with knowledge of the existence of any fact that would

Saks Indenture
--------------

<PAGE>

prohibit the making of any payment or distribution to or by the Trustee in
respect of the Notes pursuant to the provisions of this Article Eleven, unless
and until a Responsible Officer shall have received written notice thereof at
the Principal Office of the Trustee from the Company or a Senior Lender or from
any trustee for Senior Indebtedness; and prior to the receipt of any such
written notice the Trustee, subject to the provisions of Section 5.01, shall be
entitled in all respects to assume that no such facts exist; provided, however,
that if the Trustee shall not have received the notice provided for in this
Section 11.05 within one Business Day prior to the date upon which by the terms
hereof any funds may become payable for any purpose (including without
limitation the payment of the principal of or premium, if any, or interest on
any Note), then, anything herein contained to the contrary notwithstanding, the
Trustee shall have full power and authority to receive such funds and to apply
the same to the purpose for which they were received and shall not be affected
by any notice to the contrary that may be received by it within one Business Day
prior to such date.

The Trustee, subject to the provisions of Section 5.01, shall be
entitled to rely on the delivery to it of a written notice by a Person
representing himself to be a Senior Lender (or a trustee or agent on behalf of a
Senior Lender) to establish that such notice has been given by a Senior Lender
or a trustee or agent on behalf of any such Senior Lender. In the event that
the Trustee determines in good faith that further evidence is required with
respect to the right of any Person as a Senior Lender to participate in any
payment or distribution pursuant to this Article Eleven, the Trustee may request
such Person to furnish evidence to the reasonable satisfaction of the Trustee as
to the amount of Senior Indebtedness held by such Person, the extent to which
such Person is entitled to participate in such payment or distribution and any
other fact pertinent to the rights of such Person under this Article Eleven, and
if such evidence is not furnished, the Trustee may defer any payment to such
Person pending judicial determination as to the right of such Person to receive
such payment or distribution.

SECTION 11.06. Trustee's Relation to Senior Indebtedness.
-----------------------------------------

The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article Eleven in respect of any Senior Indebtedness at
any time held by it, to the same extent as any other Senior Lender, and no
provision of this Indenture shall deprive the Trustee of any of its rights as
such Senior Lender.

With respect to the Senior Lenders, the Trustee undertakes to perform
or to observe only such covenants and obligations as are specifically set forth
in this Article Eleven, and no implied covenant or obligation with respect to
the Senior Lenders shall be read into this Indenture against the Trustee. The
Trustee shall not be deemed to owe any fiduciary duty to the Senior Lenders.

Whenever a distribution is to be made or a notice given to Senior
Lenders, the distribution may be made and the notice given to their
representative(s).

SECTION 11.07. No Impairment of Subordination.
------------------------------

No right of any present or future Senior Lender to enforce
subordination as herein provided at any time in any way shall be prejudiced or
impaired by any act or failure to act on the part of the Company or by any act
or failure to act, in good faith, by any such Senior Lender, or by any
noncompliance by the Company with the terms, provisions and covenants of this
Indenture, regardless of any knowledge thereof which any such Senior Lender may
have or otherwise be charged with.

Saks Indenture
--------------

<PAGE>

SECTION 11.08. Article Eleven Not to Prevent Events of Default.
-----------------------------------------------

The failure to make a payment on account of principal, premium, if
any, interest or any other amount due hereunder or on the Notes by reason of any
provision in this Article Eleven shall not be construed as preventing the
occurrence of an Event of Default under Section 4.01 but the remedies in respect
thereof are limited as set forth in Article Four and any amounts realized
through the exercise of such remedies shall be subject to the provisions of this
Article Eleven.

SECTION 11.09. Continuing Effect.
-----------------

The foregoing provisions constitute a continuing offer to all Persons
who become, or continue to be, Senior Lenders; and such provisions are made for
the benefit of the Senior Lenders, and such Senior Lenders are hereby made
obligees hereunder the same as if their names were written herein as such, and
they and/or each of them may proceed to enforce such provisions and need not
prove reliance thereon.

SECTION 11.10. Individual Rights of Senior Lenders.
-----------------------------------

A Senior Lender in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the Company or any
Subsidiary or Affiliate of the Company with the same rights as if it were not a
Senior Lender.

Saks Indenture
--------------

<PAGE>

SECTION 11.11. Article Applicable to Paying Agents and Depositaries.
----------------------------------------------------

In case at any time any paying agent or depositary other than the
Trustee shall have been appointed by the Company and be then acting hereunder,
the term "Trustee" as used in this Article shall in such case (unless the
context otherwise requires) be construed as extending to and including such
paying agent or depositary within its meaning as fully for all intents and
purposes as if such paying agent or depositary were named in this Article in
addition to or in place of the Trustee; provided, however, that Section 11.06
--------
shall not apply to the Company if it acts as paying agent.

AIBC Services N.V. hereby accepts the trusts in this Indenture
declared and provided, upon the terms and conditions hereinabove set forth.

IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly signed, and their respective corporate seals, if any, to be hereunto
affixed and attested, all as of the date first written above.

SAKS & COMPANY

By: /s/ Richard F. Zannino
--------------------------------
Title: Vice President
------------------------------

Attest:

By: /s/ Joan F. Krey
--------------------------
Title Secretary
--------------------------

AIBC SERVICES, N.V.

By its Managing Director

Antillean Management Corporation
"AMACO" N.V.

By: __________________________

Saks Indenture
--------------

<PAGE>

SECTION 11.11 Article Applicable to Paying Agents and Depositaries.

----------------------------------------------------

In case at any time any paying agent or depositary other than the
Trustee shall have been appointed by the Company and be then acting hereunder,
the term "Trustee" as used in this Article shall in such case (unless the
context otherwise requires) be construed as extending to and including such
paying agent or depositary within its meaning as fully for all intents and
purposes as if such paying agent or depositary were named in this Article in
addition to or in place of the Trustee; provided, however, that Section 11.06
shall not apply to the Company if it acts as paying agent.

AIBC Services N.V. hereby accepts the trusts in this Indenture declared
and provided, upon the terms and conditions hereinabove set forth.

IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly signed, and their respective corporate seals, if any, to be hereunto
affixed and attested, all as of the date first written above.

SAKS & COMPANY

By:
---------------------
Title:
------------------

Attest:

By:
----------------------

Title:
--------------------

AIBC SERVICES N.V.

By its Managing Director

Antillean Management Corporation
"AMACO" N.V.

By: /s/ Harry P.F. von Aesch
---------------------------

Harry P.F. von Aesch
Title: Managing Director

Saks Indenture
--------------

<PAGE>

EXHIBIT A

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED
WITHOUT REGISTRATION UNDER SUCH ACT EXCEPT UPON DELIVERY OF AN OPINION OF
COUNSEL, SATISFACTORY IN FORM AND SUBSTANCE TO THE ISSUER, THAT ANY SUCH SALE,
PLEDGE, HYPOTHECATION OR OTHER TRANSFER MAY PROPERLY BE MADE WITHOUT
REGISTRATION UNDER SUCH ACT.

SAKS & COMPANY

9% Subordinated Note Due May 31, 2001

No. $
---------- --------------

AS STATED IN THE INDENTURE, THE RIGHTS OF THE HOLDER HEREOF ARE SUBJECT TO
SUBORDINATION IN CERTAIN EVENTS TO ALL SENIOR INDEBTEDNESS (AS DEFINED IN THE
INDENTURE REFERRED TO HEREIN) OF THE COMPANY

Saks & Company, a New York corporation (the "Company," which term
includes any successor corporation under the Indenture hereinafter referred
to), for value received, hereby promises to pay to
, or registered assigns, the principal
- ---------------------------------------
sum of US $ on May 31, 2001, and to pay interest thereon
-----------------------
at the rate of 9% per annum from the date this Note was originally issued under
the Indenture or from the most recent Interest Payment Date to which interest
has been paid or duly provided for, as the case may be, until Maturity.
Interest shall be computed on the basis of a year of twelve 30-day months and
paid for the actual number of days elapsed. Interest at such rate shall be
payable in arrears on each May 31 and November 30, commencing November 30, 1993
and at Maturity. Interest shall be payable at the lesser of the rate of 11% per
annum or the maximum rate permitted by law on any overdue principal and on any
overdue installment of interest, to the extent that the payment of such interest
shall be legally enforceable. The interest so payable, and punctually paid or
duly provided for, on any Interest Payment Date, will be paid, as provided in
the Indenture, to the Person in whose name this Note (or one or more Predecessor
Notes) is registered at the close of business on the Regular Record Date for
such interest, which shall be the May 15 and November 15, as the case may be,
next preceding such Interest Payment Date. Any such interest not so punctually
paid or duly provided for on any Interest Payment Date forthwith will cease to
be payable to the Holder on such Regular Record Date by virtue of his having
been such Holder and shall be paid to the Person in whose name this Note (or one
or more Predecessor Notes) is registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest to be fixed by the
Trustee, notice of which shall be given to Holders not less than ten days prior
to such Special Record Date, or be paid at any time in any other lawful manner
not inconsistent with the requirements of any securities exchange on which the
Notes may be listed, and upon such notice as may be required by such exchange,
all as more fully provided in the Indenture. Payment of the principal of and
premium, if any, and interest on this Note will be made at the office or agency
of the Company maintained for such purpose in Curacao, Netherlands Antilles, in
such coin or currency of the United States of America as at the time of payment
is legal tender for the payment of public and private debts; provided, however,
that at the option of the Company payment may be made by check mailed to the
Person entitled thereto at his

<PAGE>

address appearing on the Note Register. Notwithstanding the foregoing, the
principal of and premium, if any, and interest on this Note (other than the
final payment of principal) at the option of the Holder hereof shall be made
directly to such Holder, by wire transfer of immediately available funds,
without presentment, to the address designated by such Holder in writing.
Before selling or otherwise transferring this Note, such Holder will make a
notation hereon of the aggregate amount of all payments of principal theretofore
made, and of the date to which interest has been paid.

Reference is made to the further provisions of this Note set forth
on the reverse hereof. Such further provisions shall for all purposes have the
same effect as though fully set forth on this front side of this Note.

THIS NOTE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF
THE STATE OF NEW YORK, AND FOR ALL PURPOSES SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS THEREOF.

This Note shall not be valid or become obligatory for any purpose
until the certificate of authentication hereon shall have been manually signed
by the Trustee as provided in the Indenture.

Capitalized terms used herein that are not defined herein but that
are defined in the Indenture are used as therein defined.

IN WITNESS WHEREOF, Saks & Company. has caused this instrument to
be duly executed under its corporate seal.

SAKS & COMPANY

By:
-----------------------------------
Title:
--------------------------------

Attest:

- ---------------------------
Title: Secretary

Exhibit A -- Form of Note
-------------------------

<PAGE>

(REVERSE OF NOTE)

This Note is one of a duly authorized issue of Notes of the Company,
designated as its 9% Subordinated Notes due May 31, 2001 (the "Notes"), limited
in aggregate principal amount to not more than $50,000,000 and to be issued
under an Indenture dated as of July 1, 1993 (the "Indenture"), from the Company
to AIBC Services N.V. (the "Trustee," which term includes any successor Trustee
under the Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a description of the rights, limitations of rights,
obligations, duties and immunities thereunder of the Trustee, the Company, the
Senior Lenders, the Holders of Notes and of the terms upon which the Notes are,
and are to be, authenticated and delivered.

Subject to the terms of Articles Ten and Eleven of the Indenture, the
Notes are subject to redemption at any time or from time to time, upon not less
than 30 days' nor more than 60 days' notice, as a whole or in part, at the
election of the Company, at the following optional redemption prices (expressed
as a percentage of principal amount redeemed), if redeemed during the period
beginning on the respective date indicated below and ending on the day before
the next date indicated, plus accrued interest thereon to the date of such
redemption on the amount redeemed:

Date Optional Redemption Price
---- -------------------------

July 1, 1993 104%

November 30, 1993 103.5%

May 31, 1994 103%

November 30, 1994 102.5%

May 31, 1995 102%

November 30, 1995 101.5%

May 31, 1996 101%

November 30, 1996 100.5%

May 31, 1997 until Maturity 100%

In each case, interest installments whose Stated Maturity is on or
prior to such Redemption Date will be payable to the Holders of such Notes, or
one or more Predecessor Notes, of record at the close of business on the
relevant Record Dates referred to on the face hereof, all as provided in the
Indenture.

In the event of redemption of this Note in part only, a new Note or
Notes for the unredeemed portion hereof will be issued in the name of the Holder
hereof upon the cancellation hereof.

The Indenture further provides that, upon the occurrence of a Change
of Control, the Company shall notify the Trustee in writing and shall promptly
make an offer to purchase, on the last day of the next fiscal quarter of the
Company commencing after the

Exhibit A -- Form of Note
-------------------------

<PAGE>

Change of Control Date (the "Change of Control Payment Date"), all Notes then
Outstanding at a purchase price equal to the price specified in this Note for
optional redemption, together with accrued interest to and including the Change
of Control Payment Date. The obligation of the Company to make such purchase is
subject to certain limitations and qualifications set forth in the Indenture,
including that the Senior Credit Facility shall have been terminated or the Bank
Agent consented to such repurchase.

The indebtedness evidenced by the Notes, to the extent provided in the
Indenture, is subordinated and subject in right of payment to the prior payment
in full in cash of all Senior Indebtedness of the Company as defined in the
Indenture, whether outstanding at the date of the Indenture or subsequently
incurred, and this Note is issued subject to the provisions of the Indenture
with respect to such subordination. Each Holder of this Note, by his acceptance
hereof, agrees to be bound by such provisions of the Indenture and authorizes
and directs the Trustee on his behalf to take such action as may be necessary or
appropriate to acknowledge or effectuate the subordination of this Note as
provided in the Indenture and appoints the Trustee his attorney-in-fact for any
and all such purposes, including, without limitation, in the event of any
dissolution, winding-up, liquidation, marshalling of assets and liabilities or
reorganization of the Company (whether in bankruptcy, insolvency, receivership,
reorganization or similar proceedings or upon an assignment for the benefit of
creditors or otherwise) tending towards liquidation of the business and assets
of the Company, the filing of a claim for the unpaid principal balance of and
premium, if any, and accrued interest on and other obligations with respect to
the Notes in the form required in those proceedings. Each Holder of this Note,
by his acceptance hereof, agrees that each Senior Lender, whether the Senior
Indebtedness held by it was created or acquired before or after the issuance of
the Notes, shall be deemed conclusively to have relied on such provisions in
acquiring and continuing to hold or in continuing to hold, such Senior
Indebtedness.

If an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of all Notes may be declared, and upon
such declaration shall become, due and payable, in the manner, with the effect
and subject to the conditions provided in the Indenture.

So long as any Senior Indebtedness is outstanding or the Company shall
have any outstanding obligation thereunder, the Company may not amend or modify
in certain respects any of the subordination provisions contained in the
Indenture as against any Senior Lender who has not consented thereto.

The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the Holders of not less than a majority in
aggregate principal amount of the Notes at the time Outstanding, evidenced as in
the Indenture provided, to execute supplemental indentures adding any provision
to or changing in any manner or eliminating any provision of the Indenture or of
any supplemental indenture or modifying in any manner the rights of the Holders
of the Notes; provided that no such supplemental indenture shall, without the
consent of the Holder of each Outstanding Note affected thereby, (a) change the
Stated Maturity of the principal of, or any installment of interest on, any
Note, or reduce the rate or extend the time of payment of interest thereon, or
reduce the principal amount thereof or premium, if any, thereon, or impair the
right to institute suit for the payment on or after the Stated Maturity thereof
(or, in the case of redemption or repurchase, on or after the Redemption Date or
Change of Control Payment Date), or change the place of payment where, or the
coin or currency in which, the principal, premium, if any, or interest is
payable, (b) reduce the aforesaid percentage in principal amount of the
Outstanding Notes the consent of whose Holders is required to waive compliance
with certain provisions of the Indenture or

Exhibit A -- Form of Note
-------------------------

<PAGE>

certain defaults thereunder or to consent to any such supplemental indenture or
(c) modify certain sections of the Indenture or the Events of Default
thereunder. The Indenture also provides that, prior to any declaration
accelerating the maturity of the Notes, the Holders of a majority in aggregate
principal amount of the Notes at the time Outstanding on behalf of the Holders
of all of the Notes may waive any past default or Event of Default under the
Indenture and its consequences except a default in the payment of the principal
of or premium, if any, or interest on any of the Notes and certain other
defaults. Any such consent or waiver by the Holder of this Note (unless revoked
as provided in the Indenture) shall be conclusive and binding upon such Holder
and upon all future Holders of this Note and any Note that may be issued in
exchange or substitution herefor, irrespective of whether or not any notation
thereof is made upon this Note or such other Note.

No reference herein to the Indenture and no provision of this Note or
of the Indenture (except to the extent contemplated by Section 4.02 of the
Indenture) shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and premium, if any, and
interest on this Note at the place, at the times, at the rate and in the coin or
currency herein prescribed.

The Notes are issuable only in registered form (pursuant to Regulation
Sec. 5f.103-1 of the Federal Income Tax Regulations) without coupons in
denominations of $1,000 and any integral multiple thereof and may be transferred
only by surrender of this Note and the reissuance by the Company of this Note to
the transferee or the issuance by the Company of a new Note or new Notes to the
transferee or transferees. At the office or agency of the Company maintained
for such purpose and in the manner and subject to the limitations provided in
the Indenture, Notes may be exchanged for a like aggregate principal amount of
Notes of other authorized denominations.

Upon due presentment for registration of transfer of this Note at the
office or agency of the Company maintained for such purpose, a new Note or Notes
of authorized denominations for an equal aggregate principal amount will be
issued to the transferee in exchange herefor, subject to the limitations
provided in the Indenture, without charge except for any tax or other
governmental charge imposed in connection therewith.

The Company, the Trustee, any paying agent, and any Note Registrar may
deem and treat the Person in whose name this Note is registered as the absolute
owner of this Note (whether or not this Note shall be overdue and
notwithstanding any notation of ownership or other writing hereon made by anyone
other than the Company or any Note Registrar), for the purpose of receiving
payment hereof and for all other purposes, and none of the Company, the Trustee,
any paying agent or any Note Registrar shall be affected by any notice to the
contrary. All payments made to or upon the order of such registered Holder, to
the extent of the sum or sums paid, shall satisfy and discharge liability for
amounts payable on this Note.

The rate of interest payable hereon shall in no event exceed the
maximum rate permissible under applicable law. If interest would otherwise be
payable to the Holder hereof in excess of the maximum lawful amount, the
interest payable shall be reduced to the maximum amount permitted under
applicable law; and if the Holder shall ever receive anything of value deemed
interest by applicable law in excess of the maximum lawful amount, an amount
equal to any excessive interest shall be applied to the reduction of the
principal hereof and not to payment of interest, or if such excessive interest
exceeds the unpaid balance of principal hereon, such excess shall be refunded to
the Company.

Exhibit A -- Form of Note
-------------------------

<PAGE>

OPTION OF HOLDER TO ELECT REPURCHASE

If you wish to have this Note repurchased by the Company pursuant to
Section 9.14 of the Indenture, check the box: / / If you wish to have a portion
--
of this Note repurchased by the Company pursuant to Section 9.14 of the
Indenture, state the amount (which must be $1,000 or integral multiples of
$1,000):

$
--------------

DATE:
---------------

YOUR SIGNATURE:
---------------------

SIGNATURE GUARANTEE:
----------------

Exhibit A -- Form of Note
-------------------------

<PAGE>

FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION
-----------------------------------------------

This is one of the Notes referred to in the within-mentioned
Indenture.

AIBC SERVICES N.V.,

as Trustee

By:
-----------------

Authorized Officer

Exhibit A -- Form of Note
-------------------------

Exhibit 4.08

FIRST SUPPLEMENTAL INDENTURE

This FIRST SUPPLEMENTAL INDENTURE (this "First Supplemental
Indenture") is dated as of April 22, 1996 between SAKS & COMPANY, a New York
corporation (the "Company"), and AIBC SERVICES, N.V., a Netherlands Antilles
corporation, as trustee (the "Trustee") under the Indenture (as hereinafter
defined).

R E C I T A L S
- - - - - - - -

A. The Company has heretofore executed and delivered to the Trustee
a certain Indenture dated as of July 1, 1993 (the "Indenture"), providing for
the issuance of $50,000,000 principal amount of its 9% Subordinated Notes due
May 31, 2001 (the "Notes"). All terms used in this First Supplemental Indenture
which are defined in the Indenture shall have the same meanings assigned to them
in the Indenture.

B. Pursuant to Section 8.01 of the Indenture, a supplemental
indenture may be entered into by the Company and the Trustee without the consent
of any of the Holders of Outstanding Notes to, among other things, cure any
ambiguity or correct or supplement any provision in the Indenture that may be
inconsistent with any other provision in the Indenture, or to make such other
provisions in regard to matters or questions arising under the Indenture as are
not inconsistent with the provisions of the Indenture and as shall not adversely
affect the interests of the Holders.

C. All things necessary to make this First Supplemental Indenture
when executed by the parties hereto a valid and binding amendment of and
supplement to the Indenture have been done and performed.

A G R E E M E N T
- - - - - - - - -

NOW, THEREFORE, for and in consideration of the premises and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto do hereby mutually covenant and agree as
follows:

SECTION 1. Amendment to Indenture. Section 1.01 of the Indenture
----------------------
shall be amended by amending the definition of "Public Offering" by deleting the
words "the Company's" and substituting therefor the word "Holdings's".

SECTION 2. Severability. In case any provision in this First
-------------
Supplemental Indenture shall be invalid, illegal or unenforceable, the validity,
legality, and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.

SECTION 3. No Third Party Beneficiaries. Nothing in this First
-----------------------------
Supplemental Indenture, express or implied, shall give to any Person other than
the parties hereto and their successors under the Indenture, the Senior Lenders
and the Holders of the Notes, any benefit or any legal or equitable right,
remedy or claim under the Indenture.

<PAGE>

SECTION 4. Effect of First Supplemental Indenture. This First
--------------------------------------
Supplemental Indenture supplements the Indenture and shall be a part and subject
to all the terms thereof. Except as supplemented hereby, the Indenture shall
continue in full force and effect.

SECTION 5. Governing Law. This First Supplemental Indenture shall be
-------------
governed by and construed in accordance with the laws of the State of New York.

SECTION 6. Counterparts. This First Supplemental Indenture may be
------------
executed in any number of counterparts, each of which so executed shall be
deemed to be an original, but all such counterparts shall together constitute
but one and the same instrument.

[The remainder of this page has been intentionally left blank.]

<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be duly executed and their respective corporate seals,
if any, to be hereunto affixed and attested, all as of the day and year first
above written.

SAKS & COMPANY

By: /s/ Robert J. Vill
----------------------------
Name: Robert J. Vill
Title: Vice President, Treasurer

Attest:

By: /s/ Joan F. Krey
-------------------------
Name: Joan F. Krey
Title: Vice President, Secretary,.
General Counsel

AIBC SERVICES N.V.

By: AMACO (Curacao) N.V.

By:
-------------------------------
Name:
Title:

<PAGE>

SAKS & COMPANY

By:
-----------------------------
Name:
Title:

Attest:

By:
---------------------------
Name:
Title:

AIBC SERVICES N.V.

By: AMACO (Curacao) N.V.

By: /s/ Petronella J.S. Dunselman
------------------------------
Name: Petronella J.S. Dunselman
Title: Attorney-in-fact

/s/ Rudolphus F.M. Scholten
----------------------------
Name: Rudolphus F.M. Scholten
Title: Attorney-in-fact

Exhibit 10.17.2

UNANIMOUS WRITTEN CONSENT
OF
THE BOARD OF DIRECTORS
OF
SAKS HOLDINGS, INC.

The undersigned, being all of the directors of Saks Holdings, Inc., a
Delaware corporation (the "Corporation"), and acting hereunder without convening
a formal meeting, do hereby consent, effective as of April 18, 1996, in writing
to the adoption of the following resolutions pursuant to Section 141(f) of the
General Corporation Law of Delaware, such action to have the same force and
effect as a unanimous vote of the directors of the Corporation at a meeting duly
called and held:

1996 MANAGEMENT STOCK INCENTIVE PLAN
- ------------------------------------

WHEREAS, in February 1996 the shareholders of the
Corporation approved the adoption by the Corporation of, and the
Corporation adopted, a management stock incentive plan (the "1996
Management Stock Incentive Plan");

WHEREAS, the 1996 Management Stock Incentive Plan provides
that the number of shares of stock that may be subject to the
1996 Management Stock Incentive Plan shall not in the aggregate
exceed 486,6000, subject to adjustment as provided for therein;
and

WHEREAS, it is deemed in the best interest of the
Corporation that the aggregate number of shares of stock that may
be subject to the 1996 Management Stock Incentive Plan be
increased to 1,241,809, subject to adjustment as provided for
therein.

NOW, THEREFORE, BE IT RESOLVED, that the 1996 Management
Stock Incentive Plan be, and it hereby is, amended in the
following manner: Section 2 of the 1996 Management Stock
Incentive Plan shall be, and it hereby is, deleted and replaced
in its entirety with the following:

"2. Stock Subject to the Plan. The maximum number of
-------------------------
shares of stock that may be subject to Options or Stock
Appreciation Rights granted hereunder and the number of
shares of stock that may be sold as Restricted Stock
hereunder, when combined with the number of shares of
stock subject to Options or Stock Appreciation Rights
granted, or Restricted Stock sold, under the 1990
Senior Management Stock Incentive Plan previously
established by the Company, shall not in the aggregate
exceed 1,241,809 shares of the Class C Stock, one cent
($0.01) par value (the "Shares"), of the Company,
subject to adjustment under Section 15 hereof. The
Shares that may be subject to Options granted and
Restricted Stock sold or granted under the Plan may be
authorized and unissued Shares or Shares reacquired by
the Company and held as treasury stock.

Shares that are subject to the unexercised portions of
any Options that expire, terminate or are canceled, and
Shares that are not required to satisfy the exercise

<PAGE>

of any Stock Appreciation Rights that expire, terminate
or are canceled, and Shares of Restricted Stock that
are reacquired by the Company pursuant to the
restrictions thereon, may again become available for
the grant of Options or Stock Appreciation Rights and
the sale or grant of Restricted Stock under the Plan.
If a Stock Appreciation Right is exercised, any Option
or portion thereof that is surrendered in connection
with such exercise shall terminate and the Shares
theretofore subject to the Option or portion thereof
shall not be available for further use under the Plan."

GENERAL AUTHORIZING RESOLUTION; RATIFICATION
- --------------------------------------------

FURTHER RESOLVED, that any specific resolutions that may be
required to have been adopted by the Board in connection with the
transactions contemplated by the foregoing resolutions be, and
the same hereby are, adopted, and each appropriate officer of the
Corporation is hereby authorized in the name and on behalf of the
Corporation to certify as to the adoption of any and all such
resolutions;

FURTHER RESOLVED, that the appropriate officers of the
Corporation be, and each of them acting alone hereby is,
authorized and directed in the name and on behalf of the
Corporation to execute and deliver any instrument, document or
agreement or to take or cause to be taken any other action or
actions which such officer or officers may deem necessary,
appropriate or desirable to carry out the intent and purposes of
the foregoing resolutions, such approval to be conclusively
evidenced by the taking of any such action or the execution and
delivery of any such instrument by an officer of the Corporation;
and

FURTHER RESOLVED, that any action heretofore taken by any
officer of the Corporation in connection with or otherwise in
contemplation of the transactions contemplated by any of the
foregoing resolutions be, and they hereby are, adopted, approved,
confirmed and ratified.

[remainder of this page intentionally left blank]

<PAGE>

IN WITNESS WHEREOF, each of the undersigned has hereunto set his
hand effective as of the day and year first written above.

/s/ Savio W. Tung
-------------------------------

Savio W. Tung

/s/ Jon P. Hedley
-------------------------------

Jon P. Hedley

-------------------------------

E. Garrett Bewkes III

/s/ Charles J. Philippin
--------------------------------
Charles J. Philippin

--------------------------------
Philip B. Miller

--------------------------------
Rose Marie Bravo

--------------------------------
Brian E. Kendrick

<PAGE>

IN WITNESS WHEREOF, each of the undersigned has hereunto set his
hand effective as of the day and year first written above.

-------------------------------
Savio W. Tung

-------------------------------
Jon P. Hedley

-------------------------------
E. Garrett Bewkes III

--------------------------------
Charles J. Philippin

/s/ Philip B. Miller
--------------------------------
Philip B. Miller

/s/ Rose Marie Bravo
--------------------------------
Rose Marie Bravo

/s/ Brian E. Kendrick
--------------------------------
Brian E. Kendrick

<PAGE>

IN WITNESS WHEREOF, each of the undersigned has hereunto set his
hand effective as of the day and year first written above.

-------------------------------
Savio W. Tung

-------------------------------
Jon P. Hedley

/s/ E. Garrett Bewkes III
-------------------------------

E. Garrett Bewkes III

--------------------------------
Charles J. Philippin

--------------------------------
Philip B. Miller

--------------------------------
Rose Marie Bravo

--------------------------------
Brian E. Kendrick

Exhibit 10.19

AMENDED AND RESTATED
--------------------
AGREEMENT
---------

This Amended and Restated Agreement (this "Agreement") is entered into

as of March 1, 1996, by and between Saks & Company ("Employer") and Philip B.

Miller ("Employee").

WHEREAS, Employer and Employee are party to a certain Employment

Agreement, dated as of August 6, 1990 (the "Old Employment Agreement"); and

WHEREAS, Employer and Employee desire to amend certain provisions of

the Old Employment Agreement;

NOW, THEREFORE, the parties hereto, intending to be legally bound,

hereby agree that, effective as of March 1, 1996, the terms and provisions of

the Old Employment Agreement be and they hereby are amended and restated in

their entirety as set forth below:

1. Position. Employee shall serve under this Agreement as Chairman
--------

of the Board of Directors of Employer (the "Board") and as Chief Executive

Officer of Employer. Employee shall devote his best efforts and all of his

business time and attention to the performance of his duties. Employee's duties

hereunder may be changed from time to time hereafter but only in a manner

consistent with Employee's position with Employer and reputation in the

retailing industry. Employment shall be principally at Employer's offices in

New York City, except for business travel.

<PAGE>

2. Compensation. For services performed, Employer agrees to pay and
------------

Employee agrees to accept, the following terms of compensation:

A. Salary. A salary, payable semi-monthly, at the annual rate
------

of $1,200,000. Employee's salary hereunder shall be subject to annual review by

the Board, provided that the level of such salary shall not be subject to

reduction and shall be increased annually by a minimum percentage amount equal

to the percentage increase (if any) in the "CPI" during the calendar year

immediately preceding such fiscal year. As used in this paragraph, "CPI" means

the Consumer Price Index-All Urban Consumers, All Items (CPI-U), New York City

(Base Year 1982-1984=100), as published by the United States Bureau of Labor

Statistics. If the CPI is discontinued or revised, such other government index

or computation with which it is replaced shall be used in order to obtain

substantially the same result as would have been obtained if the CPI had not

been discontinued or revised.

B. Personal Expense Allowance. A personal expense allowance,
--------------------------

payable annually, at the rate of not less than $40,000 per year throughout the

term of this Agreement.

C. Bonuses. Employer agrees to adopt bonus arrangements
-------

applicable to Employee which in the good faith judgment of the Board are fair

and reasonable in the context of then-relevant factors, including without

limitation the financial condition of Employer, its recent operating

performance, its

<PAGE>

prospects, the performance and responsibilities of Employee, and competitive

conditions in the retailing industry.

3. Supplemental Items. Employer agrees to provide the following
------------------

supplemental items:

A. Benefit Plans. Employee shall be entitled to participate in
-------------

all of Employers benefit plans applicable to, and to the same extent as,

Employer's highest ranking executives, including incentive and option plans, if

any, according to the terms of those plans, provided that Employee's right to

participate in such plans shall not affect Employers right to amend or terminate

the general applicability of such plans.

B. Medical Dental and Vision Care. Reimbursement by Employer
------------------------------

(through insurance or otherwise) for the full amount of any medical, dental and

vision-care expenses incurred by Employee and his spouse and dependent children

during the term of this Agreement.

C. Life Insurance. Full participation in any life insurance
--------------

plan or plans of Employer. Employer shall provide life insurance coverage

(through such plan or otherwise), in an amount at least equal to twice annual

Salary under Paragraph 3.A. above, and Employee may purchase at his own expense

additional coverage in an amount equal to annual Salary under Paragraph 3.A.

above.

D. Pension. Employee shall be entitled to participate in all
-------

of Employer's pension and deferred benefits plans applicable to, and to the same

extent as, Employer's

<PAGE>

highest ranking executives according to the terms of those plans, provided that

Employee's right to participate in such plans shall not affect Employer's right

to amend or terminate the general applicability of such plans. Employee's

"Credited Service" for purposes of calculating Employee's entitlement to

supplemental pension benefits will be equal to the sum of (A) one month of

Credited Service for each actual month of employment by Employer commencing on

August 6, 1990, plus (B) notional service equal to thirteen (13) years of

Credited Service.

4. Taxes. Federal, state and local income taxes shall be withheld
-----

on all cash and in-kind payments made by Employer to Employee in accordance with

applicable tax laws and regulations.

5. Termination. The provisions of this Paragraph 5 shall apply upon
-----------

termination of Employee's employment hereunder. The phrase "Standard

Termination Amounts" shall mean, as of the date of termination of Employee's

employment hereunder, pro-rated as appropriate, the following: earned but unpaid

salary, bonus and deferred compensation; unpaid personal expense allowance;

unreimbursed medical, dental and vision care expenses; unpaid or unreimbursed

benefits under other applicable benefit plans; life insurance benefits; and non-

forfeitable benefits under Employers Pension Plans.

A. Death. In the event of Employee's death, all provisions of this
-----

Agreement shall terminate, except any survivor(s) benefits subject to the

provisions of Paragraph 3.D.

<PAGE>

above and the right of his beneficiaries to receive the Standard Termination

Amounts.

B. Disability. In the event of Employee's failure to render services
----------

to Employer for a continuous period of six months on account of physical or

mental disability, Employer may terminate this Agreement. However, this will

not affect Employee's right or the right of Employee's beneficiaries to receive

any (i) disability benefits set forth in this Paragraph; and (ii) Standard

Termination Amounts. In the event this Agreement is terminated by Employer on

account of Employee's disability, Employee shall receive disability benefits in

accordance with the terms of the Employers long-term disability plan. The

disability payments to be made hereunder shall not be reduced by the amount of

supplement pension payments to which Employee shall-be entitled hereunder.

C. Retirement. In the event of Employee's retirement at Employer's
----------

normal retirement age, which is age 65, or earlier retirement with the consent

of the Board, all provisions of this Agreement shall terminate except for

Paragraphs 3.D, 6, 7, 8, 9 and 10. However, this will not affect Employee's

right or the right of Employee's beneficiaries to receive any Standard

Termination Amounts.

D. By Employer. In the event Employer terminates Employee's
-----------

employment for any reason other than for death, disability, retirement or cause,

all provisions of this Agreement shall terminate, except the provisions of

Paragraph 7 hereof and Employee's right or the right of his beneficiaries to

receive any

<PAGE>

Standard Termination Amounts. In addition, Employer shall, in such event, pay

to Employee, within thirty (30) days of the date of such termination, an amount

in cash equal to three times Employee's annual base salary as then in effect,

without deduction or offset except as provided in paragraph 4 hereof. If at any

time during the term of this Agreement Employee shall not be a member of both

the Board and the board of directors of Employer's parent corporation, Saks

Holdings, Inc., and each of their respective successors or assigns, Employee

shall have the right, by written notice to Employer, to terminate his services

hereunder, and such termination shall be deemed a termination by Employer

pursuant to this Paragraph 5.D, provided that Employee shall no longer have the

right to so terminate his services hereunder if prior to the delivery of such

notice of termination, Employer shall cause Employee to be elected a director of

the appropriate board(s) of directors. If Employer shall breach any of its

obligations to Employee hereunder and if such breach is not cured by Employer in

all material respects within thirty (30) days after receipt by Employer of

written notification thereof from Employee, and if within thirty (30) days of

the expiration of the aforesaid thirty (30) day period Employee shall terminate

his services hereunder by written notice to Employer, such termination shall be

deemed a termination by Employer pursuant to this Section 5.D.

E. By Employee, or by Employer for Cause. In the event that
-------------------------------------

Employee voluntarily terminates employment (which shall include retirement by

Employee prior to age 65 without the consent of the Board) or if Employer

terminates Employee's

<PAGE>

employment for cause, all provisions of this Agreement shall terminate, except

Employee's right, or the right of his beneficiaries, to receive any Standard

Termination Amounts, and except that in the event of voluntary termination the

provisions of Paragraph 7 shall remain in effect. Termination by Employer for

"cause" shall mean termination by action of the Employer because of serious,

willful misconduct by Employee as, for example, the commission by Employee of a

felony arising from specific conduct of Employee which reasonably relates to his

qualification or ability (personal or professional) to perform his duties

hereunder or a perpetration by Employee of a common law fraud against Employer.

In the event of a termination under this Paragraph 5.E., Employer shall promptly

give Employee a written notice specifying the grounds for Employer's

determination of misconduct.

F. Continuation of Medical Coverage. In the event of the
--------------------------------

termination of Employee's employment pursuant to Paragraph 5.A, 5.B or 5.C,

Employee and his spouse shall have the right, upon delivery of written notice to

Employer by Employee or his spouse or representative within forty-five (45) days

of such termination, to continue to receive for his life and that of his spouse,

at Employee's cost or the cost of his spouse, the benefits provided under the

health care plan of the Employer then in effect, which benefits may but need not

be provided under said plan or plans. Employee's cost or the cost of his spouse

shall be determined at least annually in accordance with the formulae for

"applicable premium" set forth in Section 4980B(f)(4) of the Internal Revenue

Code of 1986, as amended (the "I.R.C."),

<PAGE>

provided, however, that, except as required by law during the COBRA continuation

period, no other provision of Section 4980B shall apply to the health care

continuation provided for herein. If changes in law cause the foregoing

arrangement for Employee's and his spouse's health benefits to negatively affect

any tax aspect of such benefits or plan with respect to the Employer, other

employees or the Employer's plan or trust, then the foregoing arrangement shall

no longer be in effect, and Employer shall design and implement an arrangement

for providing equivalent health benefits for Employee and his spouse which will

not have such negative effect described above.

6. Confidential Information. Employee agrees that he will not
------------------------

disclose, and Employer may enjoin Employee from disclosing, any confidential

information concerning Employer to any competing business, and that nothing

herein shall preclude Employer from enjoining or attempting to enjoin any such

competing business from receiving any confidential information from Employee.

For purposes of the foregoing, "confidential information" does not include

information which (i) is or becomes generally available to the public other than

as a result of disclosure by Employee or (ii) is or becomes available to the

competing business from a source other than Employee which source, to Employee's

best knowledge, did not violate any contractual or common law obligation to

Employer by making available such information.

7. Excess Parachute Parent Indemnification. If any payment, right
---------------------------------------

or benefit provided for herein or in connection with Employee's providing

services to Employer is treated as an

<PAGE>

"excess parachute payment" as such term is defined in Section 280G(b) of the

I.R.C., Employer shall indemnify, hold harmless and make whole, on an after-tax

basis, Employee for any adverse federal tax consequences, including but not

limited to providing to Employee on an after-tax basis the amount necessary to

pay any tax imposed by I.R.C. S 4999; provided, however, that in determining

whether any adverse federal tax consequences have occurred, the denial of a tax

deduction to the Employer with respect to the amount of a payment made to or

other benefit conferred on Employee shall not be treated as giving rise to an

adverse federal tax consequence with respect to Employee. The Employer shall

use its reasonable efforts to insure that any payments, rights or benefits

provided for herein or in connection with Employees providing services to

Employer are not treated as excess parachute payments, including, but not

limited to, seeking shareholder approval of the amount of such any payment,

right or benefit as provided for in I.R.C. Sec. 280G(b)(5)(B).

8. Construction and Amendment. This Agreement contains all of the
--------------------------

material terms and conditions governing Employers continuing employment of

Employee, and shall supersede all prior agreements between Employer and

Employee. No amendment of the terms and conditions of this Agreement shall be

effective unless agreed to in writing by Employer and Employee. This Agreement

shall be construed in accordance with and governed by the laws of the State of

New York, applicable to agreements made and to be enforced in that state.

9. Binding Effect. This Agreement shall be binding upon and inure
--------------

to the benefit of Employer, its successors

<PAGE>

and assigns, and Employee, his heirs, executors, administrators, and legal

representatives Employee's rights and benefits under this Agreement are personal

to him, and, except as otherwise provided herein, no such right or benefit shall

be subject to voluntary or involuntary alienation, assignment or transfer

without the prior written consent of Employer.

10. Notice. Any notice or other communication required or permitted
------

under this Agreement shall be in writing and shall be delivered by hand or sent

prepaid telex, cable or telecopy, or sent postage prepaid by registered,

certified or express mail or sent by reputable overnight courier service and

shall be deemed given when so delivered by hand, telexed, cabled or telecopied,

or if mailed, three days after mailing (one business day in the case of express

mail or overnight courier service), to the addresses indicated below or to such

other address as the addressee shall have theretofore furnished in writing to

the other party:

If to Employer: Saks & Company
12 East 49th Street
New York, New York 10017

Attn: Chairman of the Board

with a copy to: Gibson, Dunn & Crutcher
200 Park Avenue
New York, New York 10166

Attn: Charles K. Marquis

If to Employee: Saks & Company
12 East 49th Street
New York, New York 10017

Attn: Mr. Philip B. Miller

<PAGE>

with a copy to: _________________
_________________
_________________
Attn:

IN WITNESS WHEREOF, Employer and Employee have signed this Agreement.

SAKS & COMPANY

By: /s/ [ILLEGIBLE]
__________________
Title:

Agreed to and Accepted:

/s/ Philip B. Miller
_______________________
Philip B. Miller

Date:

Exhibit 10.20

AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
--------------------

This Amended and Restated Employment Agreement (this "Agreement") is

entered into as of March 1, 1996, by and between Saks & Company ("Employer") and

Rosemarie Bravo ("Employee").

WHEREAS, Employer and Employee are party to a certain Employment

Agreement, dated as of September __, 1992 (the "Old Employment Agreement"); and

WHEREAS, Employer and Employee desire to amend certain provisions of

the Old Employment Agreement;

NOW, THEREFORE, the parties hereto, intending to be legally bound,

hereby agree that, effective as of March 1, 1996, the terms and provisions of

the Old Employment Agreement be and they hereby are amended and restated in

their entirety as set forth below:

l. Position; Commencement. Employee shall serve under this
----------------------

Agreement as President of Employer. Employee shall devote her best efforts and

all her business time and attention to the performance of her duties hereunder.

Employment shall be principally at Employer's offices in New York City, except

for business travel.

<PAGE>

2. Compensation. For services performed, Employer agrees to pay,
------------

and Employee agrees to accept, salary, payable semi-monthly, at the annual rate

of $750,000.00. Employee shall be entitled to a performance and salary review

in April, 1997, and annually thereafter, and to receive bonus payments at the

discretion of the board of directors of Employer. In addition, Employee shall

be entitled to participate in all of Employer's bonus and benefit plans

applicable to, and to the same extent as, Employer's other similarly situated

officers, according to the terms of those plans, provided that Employee's right

to participate in such plans shall not affect Employer's right to amend or

terminate the general applicability of such plans, and provided further that

Employee shall be entitled to four (4) weeks vacation per year.

3. Taxes. Federal, state and local income taxes shall be withheld
-----

on all cash and in-kind payments made by Employer to Employee in accordance with

applicable tax laws and regulations.

4. Termination. The provisions of this Paragraph 4 shall apply upon
-----------

termination of Employee's employment hereunder. The phrase "Standard Termination

Amounts" shall mean, as of the date of termination of Employee's employment

hereunder, pro-rated as appropriate, the following: earned but unpaid salary;

unreimbursed normal business expenses; and unpaid or unreimbursed

<PAGE>

bonus payments and benefits under, and in accordance with the terms of,

applicable bonus and benefit plans.

A. Death. In the event of Employee's death, all provisions of
-----

this Agreement shall terminate, except the right of her estate or her

beneficiaries to receive the Standard Termination Amounts.

B. Disability. In the event of Employee's failure to render
----------

services to Employer for a continuous period of six months on account of

physical or mental disability, Employer may terminate this Agreement in which

event all provisions of this Agreement shall terminate except the provisions of

Paragraph 5 hereof. However, this will not affect Employee's right or the right

of Employee's estate or beneficiaries to receive any Standard Termination

Amounts.

C. Retirement. In the event of Employee's retirement at
----------

Employer's normal retirement age, which is age 65, or earlier retirement with

the consent of the Board, all provisions of this Agreement shall terminate

except the provisions of Paragraph 5 hereof. However, this will not affect

Employee's right or the right of Employee's estate or beneficiaries to receive

any Standard Termination Amounts.

D. By Employer. In the event Employer terminates Employee's
-----------

employment for any reason other than for death, disability, retirement, or cause

(as defined in 4.E.

<PAGE>

hereof), all provisions of this Agreement shall terminate except the provisions

of Paragraph 5 hereof and Employee's right or the right of Employee's estate or

beneficiaries to receive any Standard Termination Amounts. In addition, Employer

shall, in such event, pay to Employee, within thirty (30) days of the date of

such termination, an amount in cash equal to two times Employee's annual base

salary as then in effect, without deduction or offset except as provided in

paragraph 3 hereof. In the event that Employer assigns to Employee duties

inconsistent with her status as a senior executive officer of Employer or in the

event that there is a substantial adverse alteration in the nature or status of

her responsibilities, if Employee terminates her employment within three (3)

months thereafter Employer shall be deemed to have terminated Employee's

employment without cause, and Employee shall be entitled to the payment provided

for in the preceding sentence.

E. By Employee, or by Employer for Cause. In the event that
-------------------------------------

Employee voluntarily terminates employment or if Employer terminates Employee's

employment for cause, all provisions of this Agreement shall terminate, except

the provisions of Paragraph 5 hereof and Employee's right, or the right of

Employee's estate or beneficiaries, to receive any Standard Termination Amounts.

Termination by Employer for "cause" shall mean termination by action of Employer

because of serious, willful misconduct by Employee as, for example, the

commission by

<PAGE>

Employee of a felony arising from specific conduct of Employee which reasonably

relates to Employee's qualification or ability (personal or professional) to

perform Employee's duties hereunder or a perpetration by Employee of a common

law fraud against Employer. In the event of a termination under this Paragraph

4.E., Employer shall promptly give Employee a written notice specifying the

grounds for Employer's determination of misconduct.

5. Confidential Information. Employee agrees to keep confidential
------------------------

and not disclose (either directly or indirectly), and Employer may enjoin

Employee from disclosing, any confidential information concerning Employer to

any third party, including, without limitation, any business competing with

Employer. For purposes of the foregoing, "confidential information" does not

include information that (i) is or becomes generally available to the public

other than as a result of disclosure by Employee or (ii) is or becomes available

to a third party from a source other than Employee which source, to Employee's

best knowledge, did not violate any contractual or common law obligation to

Employer by making available such information.

6. Construction and Amendment. This Agreement contains all of the
--------------------------

material terms and conditions governing Employer's continuing employment of

Employee, and shall supersede any and all prior oral and written understandings

and agreements

<PAGE>

and all contemporaneous oral understandings and agreements between Employer and

Employee In this respect, Employee acknowledges and agrees that Employer's sole

obligations to Employee with respect to the future termination of Employee's

employment by Employer (for whatever reason and under whatever circumstances)

are as set forth in this Agreement. No amendment of the terms and conditions of

this Agreement shall be effective unless agreed to in writing by Employer and

Employee. If any provision of this Agreement shall be held unenforceable, the

enforceability of the remaining provisions hereof shall not be affected. This

Agreement shall be construed in accordance with and governed by the laws of the

State of New York, applicable to agreements made and to be enforced in that

state.

7. Binding Effect. This Agreement shall be binding upon and inure
--------------

to the benefit of Employer, its successors and assigns, and Employee and

Employee's heirs, executors, administrators, and legal representatives.

Employee's rights and benefits under this Agreement are personal, and, except as

otherwise provided herein, no such right or benefit shall be subject to

voluntary or involuntary alienation, assignment or transfer without the prior

written consent of Employer.

8. Notice. Any notice or other communication required or permitted
------

under this Agreement shall be in writing and shall be delivered by hand or sent

prepaid telex, cable or telecopy, or sent postage prepaid by registered,

certified or

<PAGE>

express mail or sent by reputable overnight courier service and shall be deemed

given when so delivered by hand, telexed, cabled or telecopied, or if mailed,

three days after mailing (one business day in the case of express mail or

overnight courier service), to the address indicated below or to such other

address as the addressee shall have theretofore furnished in writing to the

other party:

If to Employer: Saks & Company

12 East 49th Street

New York, New York 10017

Attn: Chairman of the Board

If to Employee: Ms. Rosemarie Bravo

____________________

<PAGE>

IN WITNESS WHEREOF, Employer and Employee have signed this Agreement.

SAKS & COMPANY

By: /s/ Philip B. Miller
----------------------
Title:

Agreed to and Accepted:

/s/ Rosemarie Bravo
- ----------------------
Rosemarie Bravo

Exhibit 10.21

AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
--------------------

This Amended and Restated Employment Agreement (this "Agreement") is

entered into as of March 1, 1996, by and between Saks & Company ("Employer") and

Owen E. Dorsey ("Employee").

WHEREAS, Employer and Employee are party to a certain Employment

Agreement, dated as of November 1, 1993 (the "Old Employment Agreement"); and

WHEREAS, Employer and Employee desire to amend certain provisions of

the Old Employment Agreement;

NOW, THEREFORE, the parties hereto, intending to be legally bound,

hereby agree that, effective as of March 1, 1996, the terms and provisions of

the Old Employment Agreement be and they hereby are amended and restated in

their entirety as set forth below.

1. Position; Commencement. Employee shall serve under this
----------------------

Agreement as Executive Vice President of Employer. Employee shall devote his

best efforts and all his business time and attention to the performance of his

duties hereunder. Employment shall be principally at Employer's offices in New

York City, except for business travel.

<PAGE>

2. Compensation. For services performed, Employer agrees to pay, and
------------

Employee agrees to accept, salary, payable semi-monthly, at the minimum annual

rate of $360,000.00, or such higher amount as shall be authorized by the

Chairman of Employer or Employer's board of directors. Employee shall be

entitled to a performance and salary review in April, 1996, and annually

thereafter, and to receive bonus payments at the discretion of the board of

directors of the Employer. In addition, Employee shall be entitled to

participate in all of Employer's other bonus and benefit plans applicable to,

and to the same extent as, Employer's other similarly situated officers,

according to the terms of those plans, provided that Employee's right to

participate in such plans shall not affect Employer's right to amend or

terminate the general applicability of such plans, and provided further that

Employee shall be entitled to four (4) weeks vacation per year.

3. Taxes. Federal, state and local income taxes shall be withheld on
-----

all cash and in-kind payments made by Employer to Employee in accordance with

applicable tax laws and regulations.

4. Termination. The provisions of this Paragraph 4 shall apply upon
-----------

termination of Employee's employment hereunder. The phrase "Standard Termination

Amounts" shall mean, as of the date of termination of Employee's employment

hereunder, pro-rated as appropriate, the following: earned but unpaid salary;

unreimbursed normal business expenses; and unpaid or unreimbursed

<PAGE>

bonus payments and benefits under, and in accordance with the terms of,

applicable bonus and benefit plans.

A. Death. In the event of Employee's death, all provisions of
-----

this Agreement shall terminate, except the right of his estate or his

beneficiaries to receive the Standard Termination Amounts.

B. Disability. In the event of Employee's failure to render
----------

services to Employer for a continuous period of six months on account of

physical or mental disability, Employer may terminate this Agreement in which

event all provisions of this Agreement shall terminate except the provisions of

Paragraph 5 hereof. However, this will not affect Employee's right or the right

of Employee's estate or beneficiaries to receive any Standard Termination

Amounts.

C. Retirement. In the event of Employee's retirement at
----------

Employer's normal retirement age, which is age 65, or earlier retirement with

the consent of the Board, all provisions of this Agreement shall terminate

except the provisions of Paragraph 5 hereof. However, this will not affect

Employee's right or the right of Employee's estate or beneficiaries to receive

any Standard Termination Amounts.

D. By Employer or After Change in Duties. In the event that
-------------------------------------

either (i) Employer terminates Employee's employment for any reason other than

for death, disability, retirement, or

<PAGE>

cause or (ii) Employee resigns after a material change in Employee's duties, all

provisions of this Agreement shall terminate except the provisions of Paragraph

5 hereof and Employee's right or the right of Employee's estate or beneficiaries

to receive any Standard Termination Amounts. In addition, Employer shall, in

such event, pay to Employee, within thirty (30) days of the date of such

termination, an amount in cash equal to Employee's annual base salary as then in

effect and shall continue Employee's benefits for one (l) year following

termination.

E. By Employee or by Employer for Cause. In the event that
------------------------------------

Employee voluntarily terminates employment (other than pursuant to Paragraph

4.D(ii) above) or if Employer terminates Employee's employment for cause, all

provisions of this agreement shall terminate, except the provisions of Paragraph

5 hereof and Employee's right, or the right of Employee's estate or

beneficiaries, to receive any Standard Termination Amounts. Termination by

Employer for "cause" shall mean termination by action of Employer because of

serious, willful misconduct by Employee as, for example, the commission by

Employee of a felony arising from specific conduct of Employee which reasonably

relates to Employee's qualification or ability (personal or professional) to

perform Employee's duties hereunder or a perpetration by Employee of a common

law fraud against Employer. In the event of a termination under this Paragraph

4.E. for

<PAGE>

cause, Employer shall promptly give Employee a written notice specifying the

grounds for Employer's determination of cause.

5. Confidential Information. Employee agrees to keep confidential
------------------------

and not disclose (either directly or indirectly), and Employer may enjoin

Employee from disclosing, any confidential information concerning Employer to

any third party, including, without limitation, any business competing with

Employer. For purposes of the foregoing, "confidential information" does not

include information that (i) is or becomes generally available to the public

other than as a result of disclosure by Employee or (ii) is or becomes available

to a third party from a source other than Employee which source, to Employer's

best knowledge, did not violate any contractual or common law obligation to

Employer by making available such information.

6. Construction and Amendment. This Agreement contains all of the
--------------------------

material terms and conditions governing Employer's continuing employment of

Employee, and shall supersede any and all prior oral and written understandings

and agreements and all contemporaneous oral understandings and agreements

between Employer and Employee. In this respect, Employee acknowledges and

agrees that Employer's sole obligations to Employee with respect to the future

termination of Employee's employment by Employer (for whatever reason and under

whatever circumstances) are as set forth in this Agreement. No amendment

<PAGE>

of the terms and conditions of this Agreement shall be effective unless agreed

to in writing by Employer and Employee. If any provision of this Agreement

shall be held unenforceable, the enforceability of the remaining provisions

hereof shall not be affected. This Agreement shall be construed in accordance

with and governed by the laws of the State of New York, applicable to agreements

made and to be enforced in that state.

7. Binding Effect. This Agreement shall be binding upon and inure
--------------

to the benefit of Employer, its successors and assigns, and Employee and

Employee's heirs, executors, administrators, and legal representatives.

Employee's rights and benefits under this Agreement are personal, and, except-

as otherwise provided herein, no such right or benefit shall be subject to

voluntary or involuntary alienation, assignment or transfer without the prior

written consent of Employer.

8. Notice. Any notice or other communication required or permitted
------

under this Agreement shall be in writing and shall be delivered by hand or sent

prepaid telex, cable or telecopy, or sent postage prepaid by registered,

certified or express mail or sent by reputable overnight courier service and

shall be deemed given when so delivered by hand, telexed, cabled or telecopies,

or if mailed, three days after mailing (one business day in the case of express

mail or overnight courier service), to the address indicated below or to such

other address

<PAGE>

as the addressee shall have theretofore furnished in writing to the other party:

If to Employer: Saks & Company
12 East 49th Street
New York, New York 10017

Attn: Chairman of the Board

If to Employee: Mr. Owen Dorsey
4150 Woodlark Cab.
Roswell, GA 30075

IN WITNESS WHEREOF, Employer and Employee have signed this Agreement.

SAKS & COMPANY

By: /s/ Philip B. Miller
----------------------
Title:

Agreed to and Accepted:

/s/ Owen Dorsey
- ----------------------
Owen Dorsey

Exhibit 10.22

EMPLOYMENT AGREEMENT
--------------------

This Employment Agreement (this "Agreement") is entered into as of

March 1, 1996, by and between Saks & Company ("Employer") and Brian E. Kendrick

("Employee").

l. Position; Commencement. Employee shall serve under this
----------------------

Agreement as Vice Chairman of the Board of Directors and as Chief Financial

Officer of Employer. Employee shall devote his best efforts and all his

business time and attention to the performance of his duties hereunder.