SAKS INC
EXHIBIT 10.1 - R. BRAD MARTIN EMPLOYMENT AGT.
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<b>
<p>EXHIBIT 10.1<br>
EMPLOYMENT AGREEMENT<br>
SAKS INCORPORATED AND SUBSIDIARIES</p>
<u><font face="Courier New">
<p align="CENTER">AMENDED AND RESTATED<br>
EMPLOYMENT AGREEMENT DATED MAY 31, 2001</p>
</b></font></u><font face="Courier New">
<p>&nbsp;&nbsp;&nbsp; This Amended and Restated Employment Agreement dated May
31, 2001 (&quot;Agreement&quot;) is entered into as of the 31<sup>st</sup> day
of May 2001, by and between Saks Incorporated (&quot;Company&quot;), and R. Brad
Martin (&quot;Executive&quot;).</p>
<p>Company and Executive agree as follows:</p>
<p>&nbsp;&nbsp;&nbsp; 1. <u>Employment</u>. Company hereby employs Executive as
Chief Executive Officer of Company. It is anticipated that Executive will be
elected Chairman of the Board.</p>
<p>&nbsp;&nbsp;&nbsp; 2. <u>Duties</u>. During his employment, Executive shall
devote substantially all of his working time, energies, and skills to the
benefit of Company's business. Executive agrees to serve Company diligently and
to the best of his ability and to use his best efforts to follow the policies
and directions of Company's Board of Directors.</p>
<p>&nbsp;&nbsp;&nbsp; 3. <u>Compensation</u>. Executive's compensation and
benefits under this Agreement shall be as follows:</p>
<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (a) <u>Base Salary</u>. Company
shall pay Executive a base salary (&quot;Base Salary&quot;) at a rate of no less
than $1,000,000 per year. In addition, the Board of Directors of Company shall,
in good faith, consider granting increases in such Base Salary based upon such
factors as Executive's performance and the growth and/or profitability of
Company. Executive's Base Salary shall be paid in installments in accordance
with Company's normal payment schedule for its senior management. All payments
shall be subject to the deduction of payroll taxes and similar assessments as
required by law.</p>
<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (b) <u>Bonus</u>. In addition to
the Base Salary, Executive shall be eligible pursuant to the 1998 Senior
Executive Bonus Plan for a yearly cash bonus with a maximum potential of 150%
(&quot;Maximum Bonus Potential&quot;) of Base Salary based upon his performance,
in accordance with specific annual objectives, set in advance, all as approved
by the Board of Directors.</p>
<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (c) <u>End of Five-Years Service
Stock Grants</u>. In accordance with Executive's prior employment agreements,
Company shall issue to Executive fifty thousand (50,000) shares of common stock
as soon as possible after October 11, 2001, provided Executive has served the
Company continuously for five years following October 11, 1996, the date of
Executive's Second Amended and Restated Employment Agreement. In the event of
Executive's death prior to October 11, 2001, Executive's estate shall be issued
a pro rata potion of the shares, on the basis of 10,000 shares per year.</p>
<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (d) <u>Annual Stock Grant Bonus</u>.
Pursuant to the 1998 Senior Executive Bonus Plan, an amount up to twenty
thousand (20,000) shares of Company common stock may be issued to Executive as
soon as possible after the end of each fiscal year of Company, based upon annual
targeted growth in intrinsic value of the Company or other factors, as
determined by the Human Resources Committee of the Board of Directors. The Human
Resources Committee, subject to approval from the Board of Directors, shall have
sole and exclusive discretion to grant or withhold any portion of such yearly
stock grant.</p>
<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (e) <u>Second Annual Stock Grant
Bonus</u>. Pursuant to the 1998 Senior Executive Bonus Plan, Company shall award
Executive a bonus of up to 20,000 (twenty thousand) shares of Company common
stock on the basis of growth in earnings per share with the Human Resources
Committee of the Board of Directors setting the objectives in advance. The Human
Resources Committee shall have sole and exclusive discretion to determine
whether that objective has been met, and the Committee may consider matters such
as nonrecurring and extraordinary items. The Human Resource Committee may
allocate the 40,000 shares bonus potential in Paragraphs 3(d) and 3(e) in any
manner permitted by the 1998 Senior Executive Bonus Plan so that, if less than
20,000 shares of stock may be earned under this Section 3(e), it may increase
accordingly the number of shares that may be earned under Section 3(d).</p>
<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (f)</font>&nbsp; <font face="Courier New"><u>New
Option Grant</u>. Executive is granted a non-qualified option
(&quot;Option&quot;) to purchase 400,000 shares of Company common stock at an
option price equal to the closing price of the stock at the close of business on
May 31, 2001 (the &quot;Grant Date&quot;), as reported in the <u>Wall Street
Journal</u>. The Option is granted pursuant to the Company's 1994 Amended and
Restated Long-Term Incentive Plan (&quot;1994 LTIP&quot;), and shall be subject
to the terms and conditions thereof. The Option shall be exercisable at the
following times: to the extent of 20% after six months, 20% on May 31, 2002, 20%
on May 31, 2003, 20% on May 31, 2004, and 20% on May 31, 2005. The Option may be
exercised up to seven (7) years from the Grant Date. Executive shall have the
full term during which to exercise the Option in the event he retires from
Company.</font></p>
<p><font face="Courier New">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (g)</font>&nbsp;
<font face="Courier New"><u>Vesting of Prior Restricted Stock Grants</u>.
Company has declared earned the 137,500 unvested shares of restricted stock
granted under the TARSAP programs in 1996 and 1998. One third of those shares
shall vest on each of November 1, 2001, November 1, 2002, and November 1, 2003,
provided that Executive remains employed by Company on those dates.</font></p>
<p><font face="Courier New">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (h)</font>
<font face="Courier New"><u>New Five-Year Service Stock Grant</u>. Executive
shall be awarded 250,000 shares of Company common stock on May 31, 2006,
provided, however, that he does not voluntarily end his employment with Company
prior to that time.</font></p>
<p>&nbsp;&nbsp; <font face="Courier New">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(i) <u>Performance Stock Grant</u>. Executive shall have the ability to earn up
to 500,000 shares of Company common stock to be awarded on May 31, 2006. The
number of shares awarded, if any, will be based on the average stock price of
Company common stock from June 1, 2005, through May 31, 2006. The threshold for
earning any shares shall be $17.57, with 100,000 shares being earned at that
price. The maximum number of shares shall be 500,000, and that number of shares
shall be earned with a stock price of $29.30 or higher. Shares shall be pro
rated between $17.57 and $29.30.</p>
<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (j) <u>Effect of Change In Control
on Options and Restricted Stock</u>. In the event of a Change in Control (as
defined in the Company's 1994 LTIP), any Options and restricted stock granted to
Executive prior to such Change In Control shall immediately vest. The number of
shares awarded under subparagraph (i) shall be determined by using the purchase
price of the Company's shares.</p>
<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (k) <u>Forgiveness of Loan</u>.
Company shall continue to forgive the original $500,000 interest-free loan due
January 31, 1999, in $100,000 increments, at the end of each fiscal year;
provided, however, that Executive must continue to be employed by Company for
any portion of the loan to be forgiven, and provided further that Executive must
repay any outstanding balance if he terminates employment.</p>
<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (l) <u>Company Aircraft</u>.
Company requires Executive to use Company aircraft for personal or family use,
whenever possible. Such use is important for the safety of Executive and so that
Executive may remain in communications with other Company officials as
necessary. Executive may use Company aircraft or charter aircraft for such uses
without further reimbursement to Company.</p>
<p>&nbsp;&nbsp;&nbsp; Upon Executive's termination of employment for any
reason, Executive shall be entitled to use at his discretion and without cost to
Executive, an aircraft, comparable in size and quality to the aircraft he is
using as of this date, for 150 hours a year for three years.</p>
<p>&nbsp;&nbsp;&nbsp; Upon Executive's termination of employment for any
reason after a Change in Control (as defined in the 1994 LTIP), Executive shall
have the option to buy any one Company aircraft at its then book value on the
Company's books. If he exercises this option, Company shall reimburse him for
the operating costs of the aircraft for up to 150 hours per year for three
years.</p>
<p>&nbsp;&nbsp;&nbsp; 4. <u>Insurance and Other Expenses and Benefits</u>.
Company shall allow Executive to participate in each employee benefit plan and
to receive each executive benefit that Company provides for senior executives at
the level of Executive's position.</p>
<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (a) Company shall pay the
reasonable costs for Executive's tax and financial planning, and shall buy
split-dollar life insurance for Executive in accordance with the directions of
the Human Resources Committee of the Board. In addition, Company shall reimburse
Executive, as additional compensation, his share of annual premiums paid for
split dollar life insurance. For three years after Executive's employment ends
for any reason, Company shall reimburse Executive for financial and tax
planning, as well as an offsite office and one secretary.</p>
<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (b) Company shall provide security
for Executive's residences or shall reimburse Executive for such expenses.</p>
<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (c) Executive shall be entitled to
lifetime participation in Company's health plan in the event that he retires
from Company.</p>
<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (d)</font>&nbsp; <font face="Courier New">Executive
shall be entitled to a lifetime</font> <font face="Courier New">associate
discount for merchandise purchased from Company, and this provision shall
survive termination of employment or expiration of this Agreement.</p>
<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (e) Company shall provide
Executive with long-term disability insurance with a benefit of $30,000 per
month. Company shall also pay for a required annual physical examination of
Executive.</p>
<p>&nbsp;&nbsp;&nbsp; 5. <u>Term; termination without Cause or for Good Reason</u>.
The term of this Agreement shall be for five (5) years, provided, however, that
Company may terminate this Agreement at any time without Cause, as defined
below, upon thirty (30) days' prior written notice and Executive may terminate
this Agreement for Good Reason. Good Reason shall mean a mandatory relocation
from the Memphis, Tennessee area, or at any time Executive chooses to terminate
employment within one year after a Change In Control of Company (as defined in
the in the 1994 LTIP). Upon such termination of employment, this Agreement shall
terminate except for Section 8, which shall continue in effect as set forth in
Section 8. In the event of such termination by Company without Cause or by
Executive for Good Reason, Executive shall be entitled, in addition to all
earned but unpaid wages and benefits, to the following severance benefits:</p>
<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (a) a sum equal to the Base Salary
then in effect plus 25% of Executive's Maximum Bonus Potential times the longer
of 3 years or the balance of the time remaining in the Term, and</p>
<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (b) immediate vesting of all stock
options and restricted stock awards (including service grants) with the ability
to exercise the stock options for the shorter of two years or the original
expiration period of the option, and</p>
<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (c) participation in Company's
health plans, with family coverage, for his life, and continuation of
split-dollar insurance agreements for five years, and</p>
<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (d) vesting at the retirement rate
in Company's Supplemental Savings Plan with no reduction in the current rate
of return,</p>
<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (e) reimbursement for the cost of
a full-time secretary during the balance of the term of this Agreement or three
years, whichever is longer, and</p>
<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (f) if any payment, right or
benefit provided for in this Agreement or otherwise paid to Executive by Company
is treated as an &quot;excess parachute payment&quot; under Section 280(G)(b) of
the Internal Revenue Code of 1986, as amended, (the &quot;Code&quot;), Company
shall indemnify and hold harmless and make whole, on an after-tax basis,
Executive for any adverse tax consequences, including but not limited to
providing to Executive on an after-tax basis the amount necessary to pay any tax
imposed by Code Section 4999.</p>
<p>&nbsp;&nbsp;&nbsp; In addition, this Agreement shall terminate upon the death
of Executive, except as to: (a) Executive's estate's right to exercise any
unexercised stock options pursuant to Company's stock option plan then in
effect, with it being understood that Company would follow its traditional
policy of vesting all of Executive's stock options upon death, (b) other
entitlements under this contract that expressly survive death, (c) vesting at
the retirement rate of benefits under Company's Supplemental Savings Plan, (d)
payment of earned but unpaid wages and benefits, and (e) any rights which
Executive's estate or dependents may have under COBRA or any other federal or
state law or which are derived independent of this Agreement by reason of his
participation in any plan maintained by Company.</p>
<p>&nbsp;&nbsp;&nbsp; 6. <u>Termination by Company for Cause</u>. (a) Company
shall have the right to terminate Executive's employment under this Agreement
for Cause, in which event no salary or bonus shall be paid after termination for
Cause except for (i) earned but unpaid wages and benefits, and (ii) Company
shall vest a pro rata fractional portion of Executive's stock options based on
the number of days Executive was employed since the last vesting of such
options. Termination for Cause shall be effective immediately upon notice sent
or given to Executive. For purposes of this Agreement, the term
&quot;Cause&quot; shall mean and be strictly limited to: conviction of
Executive, after all applicable rights of appeal have been exhausted or waived,
for any crime that materially discredits Company or is materially detrimental to
the reputation or goodwill of Company.</p>
<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (b) In the event that Executive's
employment is terminated, Executive agrees to resign as an officer and/or
director of Company (or any of its subsidiaries or affiliates), effective as of
the date of such termination, and Executive agrees to return to Company upon
such termination any of the following which contain confidential information:
all documents, instruments, papers, facsimiles, and computerized information
which are the property of Company or such subsidiary or affiliate.</p>
<p>&nbsp;&nbsp;&nbsp; 7. <u>Disability</u>. If Executive becomes disabled at any
time during the term of this Agreement, he shall after he becomes disabled
continue to receive all payments and benefits provided under the terms of this
Agreement for a period of twelve consecutive months, or for the remaining term
of this Agreement, whichever period is shorter. In the event that Executive is
disabled for more than twelve consecutive months during the term of this
Agreement, Executive shall, at the expiration of the initial twelve consecutive
month period, be entitled to receive under this Agreement 50% of his Base Salary
plus the insurance and benefits described in Section 4 of this Agreement for the
remaining term of this Agreement. While Executive is disabled, he shall remain
employed for purposes of vesting of restricted stock and stock options, and,
after his employment ends, he shall be entitled to the lifetime benefits set
forth in Section 5(c). For purposes of this Agreement, the term
&quot;disabled&quot; shall mean the inability of Executive (as the result of a
physical or mental condition) to perform the duties of his position under this
Agreement with reasonable accommodation and which inability is reasonably
expected to last at least one (1) full year.</p>
<p>&nbsp;&nbsp;&nbsp; 8. <u>Non-competition; Unauthorized Disclosure</u>.</p>
<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (a) <u>Non-competition</u>. During
the period Executive is employed under this Agreement, and for a period of two
years thereafter, Executive:</p>
<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (i) shall
not engage in any activities, whether as employer, proprietor, partner,
stockholder (other than the holder of less than 5% of the stock of a corporation
the securities of which are traded on a national securities exchange or in the
over-the-counter market), director, officer, employee or otherwise, in
competition with (i) the businesses conducted at the date hereof by Company or
any subsidiary or affiliate, or (ii) any business in which Company or any
subsidiary or affiliate is substantially engaged at any time during the
employment period;</p>
<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (ii) shall
not solicit, in competition with Company, any person who is a customer of the
businesses conducted by Company at the date hereof or of any business in which
Company is substantially engaged at any time during the term of this Agreement;
and</p>
<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (iii)
shall not induce or attempt to persuade any employee of Company or any of its
divisions, subsidiaries or then present affiliates to terminate his or her
employment relationship in order to enter into competitive employment.</p>
<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (b) <u>Unauthorized Disclosure</u>.
During the period Executive is employed under this Agreement, and for a further
period of two years thereafter, Executive shall not, except as required by any
court or administrative agency, without the written consent of the Board of
Directors, or a person authorized thereby, disclose to any person, other than an
employee of Company or a person to whom disclosure is reasonably necessary or
appropriate in connection with the performance by Executive of his duties as an
executive for Company, any confidential information obtained by him while in the
employ of Company; provided, however, that confidential information shall not
include any information now known or which becomes known generally to the public
(other than as a result of unauthorized disclosure by Executive).</p>
<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (c) <u>Scope of Covenants;
Remedies</u>. The following provisions shall apply to the covenants of Executive
contained in this Section 8:</p>
<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (i) the
covenants contained in paragraph (i) and (ii) of Section 8(a) shall apply within
all the territories in which Company is actively engaged in the conduct of
business while Executive is employed under this Agreement, including, without
limitation, the territories in which customers are then being solicited;</p>
<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (ii)
without limiting the right of Company to pursue all other legal and equitable
remedies available for violation by Executive of the covenants contained in this
Section 8, it is expressly agreed by Executive and Company that such other
remedies cannot fully compensate Company for any such violation and that Company
shall be entitled to injunctive relief to prevent any such violation or any
continuing violation thereof;</p>
<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (iii) each
party intends and agrees that if, in any action before any court or agency
legally empowered to enforce the covenants contained in this Section 8, any
term, restriction, covenant or promise contained therein is found to be
unreasonable and accordingly unenforceable, then such term, restriction,
covenant or promise shall be deemed modified to the extent necessary to make it
enforceable by such court or agency; and</p>
<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (iv) the
covenants contained in this Section 8 shall survive the conclusion of
Executive's employment by Company.</p>
<p>&nbsp;&nbsp;&nbsp; 9. <u>General Provisions</u>.</p>
<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (a) <u>Notices</u>. Any notice to
be given hereunder by either party to the other may be effected by personal
delivery, facsimile, electronic mail or U.S. mail, registered or certified,
postage prepaid with return receipt requested. Mailed notices shall be addressed
to the parties at the addresses set forth below, but each party may change his
or its address by written notice in accordance with this Section 9(a). Notices
shall be deemed communicated as of the actual receipt or refusal of receipt.</p>
<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; If to
Executive: R. Brad Martin<br>
&nbsp;&nbsp; </font>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<font face="Courier New">1025 Cherry Road<br>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Memphis, TN 38117</p>
<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; If to
Company:&nbsp;&nbsp; Saks Incorporated<br>
&nbsp;&nbsp; </font>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<font face="Courier New">750 Lakeshore Parkway<br>
&nbsp;&nbsp; </font>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<font face="Courier New">Birmingham, AL 35211</p>
<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (b) <u>Partial Invalidity</u>. If
any provision in this Agreement is held by a court of competent jurisdiction to
be invalid, void or unenforceable, the remaining provisions shall, nevertheless,
continue in full force and without being impaired or invalidated in any way.</p>
<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (c) <u>Governing Law</u>. This
Agreement shall be governed by and construed in accordance with the laws of the
State of Tennessee.</p>
<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (d) <u>Entire Agreement</u>.
Except for any prior grants of options, restricted stock, or other forms of
incentive compensation evidenced by a written instrument -- some of which are
attached hereto as Exhibit A -- or by an action of the Board or Directors, this
Agreement supersedes any and all other agreements, either oral or in writing,
between the parties hereto with respect to employment of Executive by Company
and contains all of the covenants and agreements between the parties with
respect to such employment. Each party to this Agreement acknowledges that no
representations, inducements or agreements, oral or otherwise, that have not
been embodied herein, and no other agreement, statement or promise not contained
in this Agreement, shall be valid or binding. Any modification of this Agreement
will be effective only if it is in writing signed by the party to be charged.</p>
<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (e) <u>No Conflicting Agreement</u>.
By signing this Agreement, Executive warrants that he is not a party to any
restrictive covenant, agreement or contract which limits the performance of his
duties and responsibilities under this Agreement or under which such performance
would constitute a breach.</p>
<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (f) <u>Headings</u>. The Section,
paragraph, and subparagraph headings are for convenience or reference only and
shall not define or limit the provisions hereof.</p>
<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (i)</font>&nbsp; <font face="Courier New"><u>Attorney's
Fees</u>. If any case is brought to enforce any right or provision set out in
this Agreement, Company shall reimburse Executive for reasonable costs incurred
(including attorneys' fees) by Executive: (i) in the case of termination of
employment that occurs prior to a Change in Control only if the Executive
substantially prevails, and (ii) in the case of termination of employment after
a Change in Control regardless of the outcome of the action with reimbursement
being made as expenses are incurred.</p>
<p>&nbsp;&nbsp;&nbsp; IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first written above.</p>
<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
SAKS INCORPORATED</p>
<p align="JUSTIFY">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
BY: <u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</u>&nbsp;<br>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
James A. Coggin<br>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
President</p>
<p align="JUSTIFY">&nbsp;</p>
<p align="JUSTIFY"><u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u>&nbsp;<br>
R. Brad Martin<br>
Executive</p>
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