Document:

EXECUTION VERSION

 

PURCHASE AND SALE AGREEMENT

 

THIS PURCHASE AND SALE
AGREEMENT (this “Agreement”) is made as of December 18, 2013, by and between TTG Apparel, LLC, a Delaware
limited liability company (“Seller”), and HGI Funding, LLC, a Delaware limited liability company (“Purchaser”).

 

WHEREAS, immediately
following the execution and delivery of this Agreement, FOH Holdings, LLC, a Delaware limited liability company (“Parent”),
FOHG Acquisition Corp., a New York corporation and a wholly-owned subsidiary of Parent (“Merger Sub”),
and Frederick’s of Hollywood Group Inc., a New York corporation (the “Company”), are entering into an
Agreement and Plan of Merger (the “Merger Agreement”) which provides, among other things, for the merger
of Merger Sub with and into the Company, with the Company surviving as a wholly-owned subsidiary of Parent (the “Merger”);

 

WHEREAS, as of the
date hereof, Seller is the beneficial owner of 50,000 shares of Series A Convertible Preferred Stock, par value $0.01 per share,
of the Company, plus paid-in-kind dividends thereon (the “Series A Preferred Stock”); and

 

WHEREAS, concurrently
with the execution and delivery of this Agreement, Seller, Purchaser, and certain other parties are entering into a rollover agreement
with Parent (the “Rollover Agreement”), providing, among other things, for the contribution to Parent by Seller
and Purchaser, immediately prior to the Effective Time, of their respective shares of Series A Preferred Stock after giving effect
to the transactions contemplated by this Agreement in exchange for newly-issued membership interests of Parent.

 

NOW THEREFORE, in consideration
of the foregoing and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties
intending to be legally bound, hereby agree as follows:

 

1.           Purchase
and Sale of Series A Preferred Stock.

 

1.1         Sale
of Series A Preferred Stock; Closing; Disclosure.

 

(a)          Subject
to the terms and conditions of this Agreement, Purchaser agrees to purchase from Seller and Seller agrees to sell to Purchaser
14,900 shares of Series A Preferred Stock (the “Sale Shares”), for an aggregate purchase price of $1,490,000
(the “Purchase Price”).

 

(b)          Subject
to the satisfaction or waiver of the conditions set forth in Section 5 and Section 6 hereof, the closing of the transaction
contemplated by this Agreement (the “Closing”) shall take place at the offices of Milbank, Tweed, Hadley &
McCloy LLP at 10:00 A.M. local time on the Closing Date immediately prior to the Effective Time. At the Closing, Purchaser will
pay the Purchase Price, by wire transfer of immediately available funds, to such account as Seller may reasonably direct by written
notice delivered to Purchaser by Seller at least two (2) Business Days prior to the Closing. Simultaneously, Seller will assign
and transfer to Purchaser all right, title and interest in and to the Sale Shares, free and clear of all liens and encumbrances,
by delivering to Purchaser a certificate or certificates representing the Sale Shares, in genuine and unaltered form, duly endorsed
in blank or accompanied by duly executed stock powers endorsed in blank, with requisite stock transfer tax stamps, if any, attached.

 

    	 

    	 

    

 

(c)          Except
as required by applicable Law, Seller shall not, prior to the Closing, disclose to any third parties other than its advisors the
existence of, or any information concerning, this Agreement or the transactions contemplated by this Agreement.

 

1.2         Defined
Terms Used in this Agreement. In addition to the terms defined above, the following terms used in this Agreement shall be
construed to have the meanings set forth or referenced below. Capitalized terms used but not otherwise defined in this Agreement
shall have the meanings assigned to them in the Merger Agreement.

 

(a)          “Affiliate”
means, with respect to any specified Person, any other Person who, directly or indirectly, controls, is controlled by, or is under
common control with such Person, including, without limitation, any general partner, managing member, officer or director of such
Person or any venture capital fund now or hereafter existing that is controlled by one or more general partners or managing members
of, or shares the same management company with, such Person.

 

(b)          “control”
means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a
Person, whether through the ability to exercise voting power, by contract or otherwise. “controlling” and “controlled”
have meanings correlative thereto.

 

(c)         
“GAAP” means generally accepted accounting principles in the United States of America.

 

(d)          “Governmental
Authority” means the government of the United States of America, any other nation or any political subdivision thereof,
whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising
executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.

 

(e)          “Law”
means rule, regulation, statutes, orders, ordinance, guideline, code, or other legally enforceable requirement, including but not
limited to common law, state, local and federal laws or securities laws and laws of foreign jurisdictions.

 

(f)          
“Option” with respect to any Person means any security, right, subscription, warrant, option, “phantom”
stock right or other contract that gives the right to (i) purchase or otherwise receive or be issued any shares of capital stock
of such Person or any security of any kind convertible into or exchangeable or exercisable for any shares of capital stock of such
Person or (ii) receive or exercise any benefits or rights similar to any rights enjoyed by or accruing to the holder of shares
of capital stock of such Person, including any rights to participate in the equity or income of such Person or to participate in
or direct the election of any directors or officers of such Person or the manner in which any shares of capital stock of such Person
are voted.

 

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(g)          “Organizational
Documents” means, collectively, the organizational documents, including any certificate of incorporation, certificate
of formation, articles of organization, articles of association and/or certificates of existence and the bylaws, operating agreement,
limited liability company agreement, certificate of limited partnership or partnership agreement, as applicable, and any other
documents comparable to any of the foregoing, of any Person organized and existing under the Laws of any country anywhere in the
world.

 

(h)          “Person”
means any individual, corporation, partnership, trust, limited liability company, association or other entity.

 

(i)          “Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

(j)          “subsidiary”
means with respect to any Person (the “parent”) at any date, any corporation, limited liability company, partnership,
association or other entity the accounts of which would be consolidated with those of the parent in the parent’s consolidated
financial statements if such financial statements were prepared in accordance with GAAP as of such date, as well as any other corporation,
limited liability company, partnership, association or other entity (a) of which securities or other ownership interests representing
more than 50% of the equity or more than 50% of the ordinary voting power or, in the case of a partnership, more than 50%
of the general partnership interests are, as of such date, owned, controlled or held, or (b) that is, as of such date, otherwise
Controlled, by the parent or one or more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent.

 

(k)          “Tax”
means any present or future tax, levy, impost, duty, deduction, withholding, assessment, fee or other charge imposed by any Governmental
Authority, including any interest, additions to tax or penalties applicable thereto.

 

2.          Representations
and Warranties of Seller. Seller hereby represents and warrants to Purchaser that the following representations are true and
complete as of the date hereof.

 

2.1           Organization,
Good Standing, Corporate Power and Qualification. Seller is a limited liability company duly organized, validly existing and
in good standing under the laws of the State of Delaware and has all requisite power and authority to execute and deliver this
Agreement, to carry out its obligations hereunder, and to consummate the transactions contemplated hereby.

 

2.2           Authorization.
All limited liability company action required to be taken by Seller in order to authorize Seller to enter into this Agreement
and sell the Sale Shares, has been taken. All action on the part of the officers and members of Seller necessary for the execution
and delivery of this Agreement and the other documents referenced above, the performance of all obligations of Seller under this
Agreement to be performed, and the sale and delivery of the Sale Shares has been taken. This Agreement, when executed and delivered
by Seller, shall constitute a valid and legally binding obligation of Seller, enforceable against Seller in accordance with its
terms except as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, or other laws
of general application relating to or affecting the enforcement of creditors’ rights generally.

 

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2.3           Title
to Sale Shares. Seller is the legal, beneficial and record owner of the Sale Shares, and has good title thereto, free and
clear of any claim, lien, pledge, Option, charge, security interest or encumbrance of any nature whatsoever, including without
limitation any agreements restricting the transferability of the Sale Shares, and will transfer such good title to Purchaser,
free and clear of any liens.

 

2.4           Consents
and Filings. No consent, approval, order or authorization of, or registration, qualification, designation, declaration or
filing with, any Governmental Authority or any other Person is required on the part of Seller in connection with the consummation
of the transactions contemplated by this Agreement.

 

2.5           Compliance
with Other Instruments. The execution and delivery by Seller of this Agreement do not, and the consummation of the transactions
contemplated hereby will not:

 

(a)          conflict
with or result in a violation or breach of any of the terms, conditions or provisions of the Organizational Documents of Seller;

 

(b)          conflict
with or result in a violation or breach of any term or provision of any Law applicable to Seller or the Sale Shares; or

 

(c)          (i)
conflict with or result in a violation or breach of, (ii) constitute (with or without notice or lapse of time or both) a default
under, (iii) require Seller to obtain any consent, approval or action of, make any filing with or give any notice to any Person
as a result or under the terms of, (iv) result in or give to any Person any right of termination, cancellation, acceleration or
modification in or with respect to, (v) result in or give to any Person any additional rights or entitlement to increased, additional,
accelerated or guaranteed payments under, or (vi) result in the creation or imposition of any lien upon Seller or the Sale Shares
under, any contract or license to which Seller is a party or by which any of its assets and properties is bound.

 

2.6           Seller’s
Sophistication. Seller has conducted its own investigation with respect to the sale of the Sale Shares. Seller acknowledges
that Purchaser has not provided any information with respect to the Sale Shares or the Company. Seller, by reason of its knowledge
and experience in financial and business matters in general and investments in particular, is capable of evaluating the risks
and merits of selling the Sale Shares. In making its decision to sell the Sale Shares, Seller has relied solely on its own advisors,
and not on the advice of Purchaser or Purchaser’s advisors or legal counsel. Seller hereby acknowledges that Purchaser has
informed Seller that it and its Affiliates may have, or may have received or obtained, on a confidential or otherwise privileged
basis, non-public information that may be material concerning the Company and the Sale Shares, including but not limited to, potential
mergers or acquisitions or potential sale transactions and recent appraisals of the Company’s and/or the Sale Shares’
value (collectively, the “Purchaser Information”) and has not shared any such Purchaser Information with Seller.
Seller acknowledges that (i) Purchaser is an “insider”; (ii) that some of Purchaser Information may be material to
Seller’s decision to sell the Sale Shares to Purchaser; (iii) that Purchaser Information could be indicative of a value
of the Sale Shares that is greater than the purchase price reflected in this Agreement or could otherwise be adverse to Seller
and such Purchaser Information may be material to Purchaser’s decision to buy the Sale Shares; (iv) Seller has not requested
Purchaser Information and agrees that Purchaser shall not be obligated to disclose any Purchaser Information or have any liability
to Seller with respect to any such non-disclosure; and (v) Purchaser has not made any representation or warranty whatsoever with
respect to the business, condition (financial or otherwise), properties, prospects, creditworthiness, status or affairs of the
Company or with respect to the value of the Sale Shares.

 

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3.           Representations
and Warranties of Purchaser. Purchaser hereby represents and warrants to Seller that:

 

3.1           Authorization.
All limited liability company action required to be taken by Purchaser in order to authorize Purchaser to enter into this Agreement
and purchase the Sale Shares has been taken. All action on the part of the officers and members of Purchaser necessary for the
execution and delivery of this Agreement, the performance of all obligations of Purchaser under this Agreement to be performed,
and the purchase of the Sale Shares, has been taken. This Agreement, when executed and delivered by Purchaser, shall constitute
a valid and legally binding obligation of Purchaser, enforceable against Purchaser in accordance with its terms except as limited
by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, or other laws of general application
relating to or affecting the enforcement of creditors’ rights generally.

 

3.2           Legends.
Purchaser understands that the Sale Shares and any securities issued in respect of or exchange for the Sale Shares, may bear the
following legend:

 

“THE SHARES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “SECURITIES ACT”), AND HAVE BEEN ACQUIRED FOR INVESTMENT
AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. THE SHARES REPRESENTED BY THIS CERTIFICATE MAY
NOT BE SOLD OR TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT OR AN EXEMPTION THEREFROM UNDER THE SECURITIES ACT OR STATE
SECURITIES LAWS.”

 

3.3           Accredited
Investor. Purchaser is an accredited investor as defined in Rule 501(a) of Regulation D promulgated under the Securities
Act.

 

4.           Additional
Obligations.

 

4.1           Actions
Required With Respect to the Merger. Seller shall use its commercially reasonable efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary, proper or advisable under applicable Law to consummate the purchase
and sale of the Sale Shares contemplated by this Agreement.

 

4.2           Transfer
and Other Restrictions. Unless and until this Agreement is terminated pursuant to Subsection 7.3, Seller agrees not
to:

 

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(a)          sell,
sell short, transfer (including for consideration, by gift or by waive of a trust, whether voting or non-voting), pledge, encumber,
assign, deposit or otherwise dispose of, or enter into any contract, option or other arrangement or understanding with respect
to the sale, transfer, pledge, encumbrance, assignment or other disposition of, any of its Sale Shares or any interest therein;
or

 

(b)          grant
any proxy or power of attorney or enter into any voting agreement or other arrangement, other than the Voting Agreement, in respect
of its Series A Preferred Stock.

 

4.3           Further
Assurances. From time to time after the date hereof and at the Closing, each party shall use its commercially reasonable efforts
to cooperate with the other and shall execute and deliver such further conveyances and other instruments as may be necessary or
appropriate to effectuate the transfer of the Sale Shares to Purchaser.

 

5.           Conditions
to the Obligations of Purchaser.

 

5.1           Conditions
Precedent. The obligation of Purchaser hereunder to purchase the Sale Shares is subject to the fulfillment, at or before the
Closing, of each of the following conditions (all or any of which may be waived in whole or in part by Purchaser in its sole discretion):

 

(a)          Representations
and Warranties. Each of the representations and warranties made by Seller in this
Agreement shall be true and correct on and as of the Closing Date as though such representation or warranty was made on and as
of the Closing Date. 

 

(b)          Performance.
Seller shall have performed and complied with each agreement, covenant and obligation required by this Agreement to be so performed
or complied with by Seller at or before the Closing.

 

(c)          Officers’
Certificates. Seller shall have delivered to Purchaser a certificate, dated the Closing
Date and executed in the name and on behalf of Seller, by the Manager of Seller, substantially in the form and to the effect
of Exhibit A hereto, and a certificate, dated the Closing Date and
executed by the Secretary or any Assistant Secretary of Seller, substantially in the form and to the effect of Exhibit B
hereto.

 

5.2           Condition
Subsequent. The obligation of Purchaser to purchase the Sale Shares is subject to the fulfillment, at or promptly following
the Closing, the following condition subsequent:

 

(a)          Merger
Certificate. The (i) Closing shall have occurred, and (ii) the Merger Certificate
shall have been filed with and accepted by the Department of State of the State of New York and the Merger shall have become effective
pursuant thereto.

 

6.          Conditions
to the Obligations of Seller. The obligations of Seller hereunder to sell the Sale Shares are subject to the fulfillment,
at or before the Closing, of each of the following conditions (all or any of which may be waived in whole or in part by Seller
in its sole discretion):

 

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6.1           Representations
and Warranties. Each of the representations and warranties made by Purchaser in this Agreement shall be true and correct on
and as of the Closing Date as though such representation or warranty was made on and as of the Closing Date.

 

6.2           Performance.
Purchaser shall have performed and complied with each agreement, covenant and obligation required by this Agreement to be so performed
or complied with by Purchaser at or before the Closing.

 

6.3           Officers’
Certificates. Purchaser shall have delivered to Seller a certificate, dated the Closing Date and executed in the name and
on behalf of Purchaser by any Vice President of Purchaser, substantially in the form and to the effect of Exhibit C
hereto, and a certificate, dated the Closing Date and executed by the Secretary or any Assistant Secretary of Purchaser, substantially
in the form and to the effect of Exhibit D hereto.

 

7.          Miscellaneous.

 

7.1           Survival
of Warranties and Covenants. Unless otherwise set forth in this Agreement, the representations and warranties of Seller and
Purchaser contained in or made pursuant to this Agreement shall survive for twelve (12) months from the date hereof (the
date that is twelve (12) months from the date hereof, the “Survival Date”) regardless of any investigation
made by Purchaser or on its behalf. Notwithstanding any provision to the contrary contained in this Agreement, with respect to
claims for breaches of representations and warranties contained in this Agreement, no party will be liable with respect thereto
unless written notice of a possible claim with respect to such breach is given by the party making such claim on or prior to the
Survival Date, it being understood that so long as such written notice is given on or prior to the Survival Date, such representations
and warranties shall continue to survive until such matter is resolved. All covenants and agreements contained herein shall survive
until they are completed or no longer applicable in accordance with the terms of this Agreement.

 

7.2           Successors
and Assigns. The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors
and assigns of the parties. Purchaser shall be permitted to assign its rights under this Agreement. Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns
any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.

 

7.3           Termination.
This Agreement shall terminate upon the termination of the Merger Agreement in accordance with Article VII thereof. The termination
of this Agreement in accordance with this Subsection 7.3 shall not relieve any party from liability for any breach of its
obligations hereunder committed prior to such termination.

 

7.4           Governing
Law. This Agreement shall be governed by and construed in accordance with the laws in effect in the State of New York, without
giving effect to its conflicts of law principles (other than § 5-1401 of the New York General Obligations Law).

 

7.5           Counterparts.
This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together
shall constitute one and the same instrument. Counterparts may be delivered via facsimile, electronic mail (including “.pdf”)
or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid
and effective for all purposes.

 

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7.6           Titles
and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered
in construing or interpreting this Agreement.

 

7.7           Notices.
All notices and other communications given or made pursuant to this Agreement shall be in writing and shall be deemed effectively
given upon the earlier of actual receipt or: (a) personal delivery to the party to be notified, (b) when sent, if sent
by electronic mail or facsimile during normal business hours of the recipient, and if not sent during normal business hours, then
on the recipient’s next Business Day, (c) five (5) days after having been sent by registered or certified mail,
return receipt requested, postage prepaid, or (d) one (1) Business Day after deposit with a nationally recognized overnight
courier, freight prepaid, specifying next business day delivery, with written verification of receipt. All communications shall
be sent to the respective parties at their address as set forth on the signature page, or to such e-mail address or address as
subsequently modified by written notice given in accordance with this Subsection 7.7. If notice is given to Seller,
a copy shall also be sent to Edwards Wildman Palmer LLP, 225 West Wacker Drive, Suite 2800, Chicago, Illinois 60606-1229, Attn:
Adam S. Calisoff, Esq., and if notice is given to Purchaser, a copy shall also be given to Milbank, Tweed, Hadley & McCloy
LLP, One Chase Manhattan Plaza, New York, New York 10005, Attn: Alexander M. Kaye, Esq. and Roland Hlawaty, Esq.

 

7.8           No
Finder’s Fees. Each party represents that it neither is nor will be obligated for any finder’s fee or commission
in connection with this transaction. Purchaser agrees to indemnify and to hold harmless Seller from any liability for any commission
or compensation in the nature of a finder’s or broker’s fee arising out of this transaction (and the costs and expenses
of defending against such liability or asserted liability) for which Purchaser or any of its officers, employees, or representatives
is responsible. Seller agrees to indemnify and hold harmless Purchaser from any liability for any commission or compensation in
the nature of a finder’s or broker’s fee arising out of this transaction (and the costs and expenses of defending
against such liability or asserted liability) for which Seller or any of its officers, employees or representatives is responsible.

 

7.9           Amendments
and Waivers. This Agreement may not be changed orally, but only by an agreement in writing signed by the party against whom
enforcement is sought. Any term or condition of this Agreement may be waived at any time by the party that is entitled to the
benefit thereof, but no such waiver shall be effective unless set forth in a written instrument duly executed by or on behalf
of the party waiving such term or condition. No waiver by any party of any term or condition of this Agreement, in any one or
more instances, shall be deemed to be or construed as a waiver of the same or any other term or condition of this Agreement on
any future occasion. All remedies, either under this Agreement or by Law or otherwise afforded, will be cumulative and not alternative.

 

7.10         Severability.
The invalidity or unenforceability of any provision hereof shall in no way affect the validity or enforceability of any other
provision.

 

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7.11         Delays
or Omissions. No delay or omission to exercise any right, power or remedy accruing to any party under this Agreement, upon
any breach or default of any other party under this Agreement, shall impair any such right, power or remedy of such non-breaching
or non-defaulting party nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or
of or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a
waiver of any other breach or default theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind
or character on the part of any party of any breach or default under this Agreement, or any waiver on the part of any party of
any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set
forth in such writing. All remedies, either under this Agreement or by law or otherwise afforded to any party, shall be cumulative
and not alternative.

 

7.12         Entire
Agreement. This Agreement (including the Exhibits hereto) constitutes, together with the Merger Agreement and the Rollover
Agreement, the full and entire understanding and agreement between the parties with respect to the subject matter hereof, and
any other written or oral agreement relating to the subject matter hereof existing between the parties are expressly canceled.

 

7.13         Governing
Law; Jurisdiction. This Agreement shall be governed by and construed in accordance with the Laws of the State of New York,
regardless of the Laws that might otherwise govern under applicable principles of conflicts of laws thereof, except to the extent
that mandatory provisions of federal Law apply. Each of the parties hereto hereby irrevocably and unconditionally submits, for
itself and its property, to the exclusive jurisdiction of the courts of the State of New York located in the borough of Manhattan
(and any appellate court thereof) and the United States District Court for the Southern District of New York (and any appellate
court thereof), in any action or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby
or for recognition or enforcement of any judgment relating thereto, and each of the parties hereby irrevocably and unconditionally
(a) agrees not to commence any such action except in such courts, (b) agrees that any claim in respect of any such action
or proceeding may be heard and determined in such courts, (c) waives, to the fullest extent it may legally and effectively
do so any objection which it may now or hereafter have to venue of any such action or proceeding in any such courts, and (d) waives,
to the fullest extent permitted by Law, the defense of any inconvenient forum to the maintenance of such action or proceeding
in any such courts. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive
and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law. Each of the parties
to this Agreement irrevocably consents to service of process in any such action or proceeding in the manner provided for notices
in Subsection 7.7 of this Agreement; provided, however, that nothing in this Agreement shall affect
the right of any party to this Agreement to serve process in any other manner permitted by Law.

 

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7.14         Waiver
of Jury Trial. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY THAT MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE SUCH WAIVER, (B) IT UNDERSTANDS
AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVER, (C) IT MAKES SUCH WAIVER VOLUNTARILY, AND (D) IT HAS BEEN INDUCED TO ENTER
THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVER AND CERTIFICATIONS CONTAINED IN THIS SUBSECTION 7.14.

 

[Signature
Page Follows]

 

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IN WITNESS WHEREOF,
each of the parties or their officer thereunto duly authorized, has executed this Purchase and Sale Agreement as of the date first
written above.

 

	 	SELLER:
	 	 
	 	TTG APPAREL, LLC 
	 	 
	 	By:	/s/ Michael T. Tokarz
	 	 	 
	 	Name:	Michael T. Tokarz
	 	 	 
	 	Title:	Manager
	 	 	 
	 	Address:	TTG Apparel, LLC
	 	 	287 Bowman, 2nd Floor
	 	 	Purchase, NY 10577
	 	 	 
	 	Email:	mtokarz@tokarzgroup.com,
	 	 	with a copy to AdamCalisoff@ewp.com
	 	 	 
	 	PURCHASER:
	 	 
	 	HGI Funding, LLC
	 	 	 
	 	By:	/s/ Thomas A. Williams
	 	 	 
	 	Name:	Thomas A. Williams
	 	 	 
	 	Title:	Chief Financial Officer
	 	 	 
	 	Address:	c/o Harbinger Group Inc.
	 	 	Attention: Gus Cheliotis
	 	 	450 Park Avenue, 30th Floor
	 	 	New York, NY 10022
	 	 	 
	 	Email:	GCheliotis@Harbingergroupinc.com

 

[Signature Page to Purchase and Sale
Agreement]

 

    	 

    	 

    

 

EXHIBIT A

 

TTG APPAREL, LLC

 

Officer’s Certificate

 

TTG APPAREL, LLC, a Delaware limited liability
company (“Seller”), pursuant to Subsection 5.1(c) of the Purchase and Sale Agreement dated as of
December 18, 2013 (the “Purchase and Sale Agreement”, capitalized terms not defined herein shall have
the meanings ascribed to them in the Purchase and Sale Agreement) between HGI Funding, LLC, a Delaware limited liability company,
and Seller, HEREBY CERTIFIES that:

 

(1)         Each
of the representations and warranties made by Seller in the Purchase and Sale Agreement is true and correct on and as of the date
hereof as though made on and as of the date hereof.

 

(2)         Each
of the agreements, covenants and obligations required by the Purchase and Sale Agreement to be performed or complied with by Seller
at or before the Closing has been duly performed or complied with.

 

IN WITNESS WHEREOF, Seller has caused this
Certificate to be executed on its behalf by the undersigned on and as of ________ ___, 2013.

 

	 	TTG APPAREL, LLC
	 	 
	 	By:	 
	 	 	Name:  
	 	 	Title:

 

    	 

    	 

    

 

EXHIBIT B

 

TTG APPAREL, LLC

 

Secretary’s Certificate

 

I, __________, Secretary of TTG Apparel,
LLC, a Delaware limited liability company (“Seller”), pursuant to Subsection 5.1(c) of the Purchase
and Sale Agreement dated as of December 18, 2013 (the “Purchase and Sale Agreement”) between HGI Funding,
LLC, a Delaware limited liability company, and Seller, DO HEREBY CERTIFY on behalf of Seller as follows:

 

(1)         Attached
hereto as Exhibit A is a true, complete and correct copy of the [Restated] Certificate of Formation of Seller and all amendments
thereto (as so amended, the “Certificate of Formation”), and no amendment to the Certificate of Formation has
been authorized or become effective since the date of the last of such amendments, no amendment or other document relating to or
affecting the Certificate of Formation has been filed in the office of the Secretary of State of the State of Delaware since such
date and no action has been taken by Seller, its members, directors or officers in contemplation of the filing of any such amendment
or other document or in contemplation of the liquidation or dissolution of Seller.

 

(2)         Attached
hereto as Exhibit B is a true, complete and correct copy of the limited liability company agreement of Seller as in full
force and effect on the date hereof and at all times since [date of last amendment].

 

(3)         Attached
hereto as Exhibit C is a true, complete and correct copy of resolutions adopted by [●] of Seller with respect to the
Purchase and Sale Agreement and the transactions contemplated thereby, which resolutions were duly and validly adopted by [●]
on ________ ___, 2013 [at which a quorum was present and acting throughout]. All such resolutions are in full force and effect
on the date hereof in the form in which adopted and no other resolutions have been adopted by the [●] of Seller relating
to the Purchase and Sale Agreement and the transactions contemplated thereby.

 

(4)         Each
of the following named individuals is a duly elected or appointed, qualified and acting officer of Seller who holds, and at all
times since date of execution of Purchase and Sale Agreement has held, the offices set opposite such individual’s name, and
the signature written opposite the name and title of such officer is such officer’s genuine signature:

 

	[Name]	[Title]	______________________________
	 	 	 
	[Name]	[Title]	______________________________
	 	 	 
	[Name]	[Title]	______________________________
	 	 	 
	[Name]	[Title]	______________________________

 

    	 

    	 

    

 

IN WITNESS WHEREOF, Seller has caused this
Certificate to be executed on its behalf by the undersigned on and as of _________ ____, 2013.

 

	 	TTG APPAREL, LLC
	 	 	 
	 	By:	 
	 	 	Name:  
	 	 	Title:  

 

I, __________, [title of officer] of Seller,
DO HEREBY CERTIFY on behalf of Seller that __________ is the duly elected or appointed, qualified and acting Secretary of Seller,
and the signature set forth above is the genuine signature of such officer.

 

	 	By:	 
	 	 	Name:  
	 	 	Title:  

 

_________ ___, 2013

    	 

    	 

    

 

EXHIBIT C

 

HGI FUNDING, LLC

 

Officer’s Certificate

 

HGI FUNDING, LLC, a Delaware
limited liability company (“Purchaser”), pursuant to Subsection 6.3 of the Purchase and Sale Agreement
dated as of December 18, 2013 (the “Purchase and Sale Agreement”; capitalized terms not defined herein
shall have the meanings ascribed to them in the Purchase and Sale Agreement) between Purchaser and TTG Apparel, LLC, a Delaware
limited liability company, HEREBY CERTIFIES that:

 

(1)         Each
of the representations and warranties made by Purchaser in the Purchase and Sale Agreement is true and correct on and as of the
date hereof as though made on and as of the date hereof.

 

(2)         Each
of the agreements, covenants and obligations required by the Purchase and Sale Agreement to be performed or complied with by Purchaser
at or before the Closing has been duly performed or complied with.

 

IN WITNESS WHEREOF, Purchaser has caused
this Certificate to be executed on its behalf by the undersigned on and as of _______ ___, 2013

 

	 	HGI FUNDING, LLC
	 	 	 
	 	By:	 
	 	 	Name:  
	 	 	Title:  

 

    	 

    	 

    

 

EXHIBIT D

 

HGI FUNDING, LLC

 

Secretary’s Certificate

 

I, __________, Secretary of HGI Funding,
LLC a Delaware limited liability company (“Purchaser”), pursuant to Subsection 6.3 of the Purchase
and Sale Agreement dated as of December 18, 2013 (the “Purchase and Sale Agreement”) between Purchaser
and TTG Apparel, LLC, a Delaware limited liability company, DO HEREBY CERTIFY on behalf of Purchaser as follows:

 

(1)         Attached
hereto as Exhibit A is a true, complete and correct copy of the Certificate of Formation of Purchaser and all amendments
thereto (as so amended, the “Certificate of Formation”), and no amendment to the Certificate of Formation has
been authorized or become effective since the date of the last of such amendments, no amendment or other document relating to or
affecting the Certificate of Formation has been filed in the office of the Secretary of State of the State of Delaware since such
date and no action has been taken by Purchaser, its members, directors or officers in contemplation of the filing of any such amendment
or other document or in contemplation of the liquidation or dissolution of Purchaser.

 

    	 

    	 

    

 

IN WITNESS WHEREOF, Purchaser has caused
this Certificate to be executed on its behalf by the undersigned on and as of ________ ___, 2013.

 

	 	HGI FUNDING, LLC
	 	 	 
	 	By:	 
	 	 	Name:  
	 	 	Title:  

 

I, __________, [title of officer] of Purchaser,
DO HEREBY CERTIFY on behalf of Purchaser that __________ is the duly elected or appointed, qualified and acting Secretary of Purchaser,
and the signature set forth above is the genuine signature of such officer.

 

	 	By:	 
	 	 	Name:  
	 	 	Title:  

 

_________ ___, 2013Execution Copy

 

AMENDED AND RESTATED

EMPLOYMENT AGREEMENT

 

This AMENDED AND RESTATED
EMPLOYMENT AGREEMENT (this “Agreement”), is dated as of and shall become effective upon the Effective Time
(as defined in Section 2, below), by and among THOMAS LYNCH, residing at 14 Harnden Road, Foxboro, Massachusetts 02035 (“Executive”),
FREDERICK’S OF HOLLYWOOD GROUP INC., a New York corporation (“Company”), and FOHG
Holdings, LLC, a Delaware limited liability company (“FOHG”).

 

WHEREAS, the Company
and Executive entered into an agreement dated as of June 29, 2010 governing the terms and conditions of Executive’s
employment by the Company for a term ending on January 2, 2014 (the “Employment Agreement”);

 

WHEREAS, the Company
and Executive entered into a certain letter agreement, dated as of December 31, 2012, amending the Employment Agreement (the “Amendment”
and, together with the Employment Agreement, the “Existing Agreement”);

 

WHEREAS, the Company
and FOHG desire to continue the employment of Executive, and Executive desires to continue his employment with the Company; and

 

WHEREAS, the Company,
FOHG and Executive wish to amend and restate the Existing Agreement in its entirety on the terms, and subject to the conditions,
set forth herein.

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth in this Agreement, and for
other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

 

1.           Employment,
Duties and Acceptance.

 

1.1.        Prior
Agreement. The Existing Agreement is hereby amended, restated and superseded in its entirety by the terms, conditions and agreements
set forth in this Agreement.

 

1.2.        General.
During the Term (as defined herein), the Company shall employ Executive as its Chief Executive Officer (“CEO”).
All of Executive’s powers and authority in any capacity shall at all times be subject to the direction and control of the
Company’s Board of Directors. Executive shall report directly to the Company’s Board of Directors. The Company’s
Board of Directors may assign to Executive such general management and supervisory responsibilities and executive duties for the
Company or any subsidiary of the Company, including serving as a director and/or officer, as are consistent with Executive’s
status as CEO. The Company and Executive acknowledge that (i) Executive’s primary functions and duties as CEO shall be to
manage and supervise the overall operations of the Company’s business and (ii) each of the Company and Executive expect that
during the term hereof and for the foreseeable future, the Company shall be a non-public company with a single or majority controlling
shareholder.

 

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1.3.        Full-Time
Position. Executive accepts such employment and agrees to devote substantially all of his business time, energies and attention
to the performance of his duties hereunder. Nothing herein shall be construed as preventing Executive from making and supervising
personal investments, provided they will not interfere with the performance of Executive’s duties hereunder or violate the
provisions of Section 6.4 hereof.

 

1.4.        Location.
Executive shall be based in New England. Executive shall undertake such travel, within or outside the United States, as is reasonably
necessary in the interests of the Company to fully perform his duties hereunder.

 

2.           Term.
The term of Executive’s employment hereunder will commence upon the Effective Time (as such term is defined that certain
Agreement and Plan of Merger by and among the Company, FOHG and FOHG Acquisition Corp., a New York corporation, dated as of December
18, 2013) and shall continue until the third (3rd) anniversary of the Effective Time (“Term”), unless
terminated earlier as hereinafter provided in this Agreement, or unless extended by mutual written agreement of the Company, FOHG
and Executive. Unless the Company and Executive have otherwise agreed in writing, if Executive continues to work for the Company
after the expiration of the Term, Executive’s employment thereafter shall be under the same terms and conditions provided
for in this Agreement, except that his employment will be on an “at will” basis and the provisions of Section 4.4
and Section 4.6(d)(i), (ii), (vi), (vii) and (viii) shall no longer be in effect.

 

3.           Compensation
and Benefits.

 

3.1.        Annual
Base Salary. The Company shall pay to Executive a salary (“Base Salary”) at the annual rate of $540,000,
with such increases as may be approved by the Company’s Board of Directors and FOHG. Executive’s compensation shall
be paid in equal, periodic installments in accordance with the Company’s normal payroll procedures.

 

3.2.        Bonuses.

 

(a)          Incentive
Bonus. In addition to Base Salary, for each of the fiscal years ending on the last Saturday of September in calendar years
2014, 2015 and 2016, Executive shall be eligible to earn a target annual incentive bonus of up to sixty-five percent (65%) of
Executive’s Base Salary (“Incentive Bonus”), which shall be based on the Company and Executive achieving
goals and objectives established by the Committee and approved by the Company’s Board of Directors for each fiscal year.
Any amounts due under this Section 3.2 shall be payable to the Executive in accordance with the terms of an annual bonus program(s)
approved by the Company’s Board of Directors and FOHG.

 

(b)          Discretionary
Bonus. Executive shall be eligible to receive from time to time such discretionary bonuses as the Company’s Board of
Directors and FOHG, at its discretion, deem appropriate

 

(c)          Signing
Bonus. Within thirty (30) days of the Effective Time, the Company shall pay to Executive, a one-time cash signing bonus of
$150,000.

 

3.3.        Equity
Grant. As additional compensation for Executive entering into this Agreement and agreeing to be bound by its terms, and for
the services to be rendered by Executive hereunder, FOHG shall recommend to its Board that a grant of 53 Series B Units shall be
made to Executive promptly, but in no event after the date that is sixty (60) days, following the Effective Time. The terms of
such Series B Units shall be governed by the FOHG LLC Agreement and the Grant Agreement pursuant to which such grant is made.

 

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3.4.        Benefit
Plans.

 

(a)          Executive
shall be eligible to participate in the welfare benefit plans, practices, policies and programs (including, but not limited to,
medical, dental, short and long-term disability, employee life, group life and accidental death insurance plans and programs) and
all savings and retirement plans in accordance with the terms and conditions of such plans, policies and programs maintained by
the Company for its senior executives.

 

(b)          The
Company will, at its own cost and expense, maintain (i) a life insurance policy on the life of Executive which will provide a death
benefit to Executive’s beneficiary in the amount of $1,500,000 and which will be owned by Executive and (ii) a disability
insurance policy which will provide a non-taxable benefit of at least $10,000 per month payable to Executive until Executive attains
the age of 64. Notwithstanding the foregoing, Executive hereby acknowledges that the cost of premiums for such life insurance and
disability insurance policies will be considered taxable income for Executive in the year paid by the Company and will be reported
by the Company to the Internal Revenue Service as taxable income.

 

3.5.        Vacation.
Executive shall be entitled to take off such holidays as are observed by the Company from time to time and up to five (5) weeks
of paid vacation during each calendar year, to be taken at times mutually acceptable to Executive and the Company in accordance
with the Company’s vacation policies and procedures applicable to senior executives of the Company. Executive’s annual
vacation shall accrue ratably on a monthly basis and the total maximum amount of accrued vacation at any time shall be limited
to fifteen (15) weeks. The Company acknowledges that as of the Effective Time, Executive has accrued 10 weeks of vacation.

 

3.6.        Expenses.
The Company will pay or reimburse Executive for all transportation, hotel and other expenses reasonably incurred by Executive on
business trips and for all other ordinary and reasonable out-of-pocket expenses actually incurred by him in the conduct of the
business of the Company against itemized vouchers submitted with respect to any such expenses and approved in accordance with customary
procedures adopted by the Board.

 

4.            Termination.

 

4.1.        Death.
If Executive dies during the term of this Agreement, Executive’s employment hereunder shall terminate and the Company shall
pay to Executive’s estate the amount set forth in Section 4.6(a).

 

4.2.        Disability.
The Company, by written notice to Executive, may terminate Executive’s employment hereunder if Executive shall fail because
of illness or incapacity to render services of the character contemplated by this Agreement for one hundred and eighty (180) consecutive
calendar days in any consecutive twelve calendar month period. Upon such termination, the Company shall pay to Executive the amount
set forth in Section 4.6(b).

 

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4.3.        By
Company for “Cause”. The Company, by written notice to Executive, may terminate Executive’s employment hereunder
for “Cause.” As used herein, “Cause” shall mean: (a) the refusal, or failure resulting from the lack
of good faith efforts, by Executive to carry out specific directions of the Company’s Board of Directors or FOHG which are
of a material nature, or the refusal, or failure resulting from the lack of good faith efforts, by Executive to perform a material
part of Executive’s duties hereunder; (b) the commission by Executive of a material breach of any of the provisions
of this Agreement; (c) fraud or dishonest action by Executive in his relations with the Company or any of its subsidiaries
or affiliates, or with any customer or business contact of the Company or any of its subsidiaries or affiliates (“dishonest”
for these purposes shall mean Executive knowingly making a material misstatement or omission, or knowingly committing a material
improper act, for his personal benefit); or (d) the conviction of Executive of any crime involving an act of moral turpitude.
Notwithstanding the foregoing, no “Cause” for termination shall be deemed to exist with respect to Executive’s
acts described in clauses (a) or (b) above, unless the Company shall have given written notice to Executive specifying
the “Cause” with reasonable particularity and, within thirty (30) calendar days after such notice, Executive shall
not have cured or eliminated the problem or thing giving rise to such “Cause;” provided, however, that a repeated breach
after notice and cure of any provision of clauses (a) or (b) above involving the same or substantially similar actions
or conduct, shall be grounds for termination for “Cause” without any additional notice from the Company. Upon such
termination, the Company shall pay to executive the amount set forth in Section 4.6(c).

 

4.4.        By
Employee for “Good Reason”. The Executive, by written notice to the Company, may terminate Executive’s employment
hereunder if a “Good Reason” exists. For purposes of this Agreement, “Good Reason” shall mean the occurrence
of any of the following circumstances without the Executive’s prior express written consent: (a) a substantial and material
breach of this Agreement by the Company; (b) a failure by the Company to make any payment to Executive when due, unless the
payment is not material and is being contested by the Company, in good faith; (c) a material adverse change in the nature of Executive’s
title, duties or responsibilities with the Company that represents a demotion from his title, duties or responsibilities as in
effect immediately prior to such change or (d) a material and adverse change in Executive’s compensation and benefits
described in Section 3 of this Agreement without Executive’s consent. Notwithstanding the foregoing, “Good Reason”
shall not be deemed to exist with respect to the Company’s acts described in clauses (a), (b), (c), or (d) above,
unless the Executive shall have given written notice to the Company specifying the Good Reason with reasonable particularity and,
within thirty (30) calendar days after such notice, the Company shall not have cured or eliminated the problem or thing giving
rise to such Good Reason; provided, however, that a repeated breach after notice and cure of any provision of clauses (a),
(b),  (c) or (d) above involving the same or substantially similar actions or conduct, shall be grounds for termination
for Good Reason without any additional notice from the Executive. Upon such termination, the Company shall pay to Executive the
amount set forth in Section 4.6(d).

 

4.5.        By
Company Without “Cause”. The Company may terminate Executive’s employment hereunder without “Cause”.
Upon such termination, the Company shall pay to Executive the amount set forth in Section 4.6(d).

 

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4.6.        Compensation
Upon Termination.

 

(a)          Payment
Upon Death. In the event that Executive’s employment is terminated pursuant to Section 4.1, the Company shall no
longer be under any obligation to Executive or his legal representatives pursuant to this Agreement except for (i) the Base
Salary due Executive pursuant to Section 3.1 hereof through the date of termination, (ii) any Incentive Bonus which would
have become payable under Section 3.2 for the year in which the employment was terminated, prorated by multiplying the full
amount of the Incentive Bonus by a fraction, the numerator of which is the number of “full calendar months” worked
by Executive during the year of termination and the denominator of which is 12 (a “full calendar month” is a month
in which the Executive worked at least two weeks), which Incentive Bonus will be calculated and paid after the Company’s
fiscal year end, but in any event no later than the December 31st following the end of such fiscal year, and in accordance
with the Company’s customary procedures (“Pro-Rated Bonus”), (iii) all earned and previously approved but
unpaid Incentive Bonuses and other discretionary bonuses for any year prior to the year of termination, (iv) all valid expense
reimbursements and (v) all accrued but unused vacation pay.

 

(b)          Payment
Upon Disability. In the event that Executive’s employment is terminated pursuant to Section 4.2, the Company shall
no longer be under any obligation to Executive or his legal representatives pursuant to this Agreement except for (i) the
Base Salary due Executive pursuant to Section 3.1 hereof through the date of termination, (ii) any Pro-Rated Bonus which
would have become payable under Section 3.2 for the year in which the employment was terminated, which Pro-Rated Bonus will
be calculated and paid after the Company’s fiscal year end, but in any event no later than the December 31st following
the end of such fiscal year, and in accordance with the Company’s customary procedures, (iii) all earned and previously
approved but unpaid Incentive Bonuses and other discretionary bonuses for any year prior to the year of termination, (iv) all
valid expense reimbursements; and (v) all accrued but unused vacation pay.

 

(c)          Payment
Upon Termination by the Company For “Cause” or by Executive without “Good Reason”. If the Company terminates
Executive’s employment hereunder pursuant to Section 4.3 or if Executive terminates his employment hereunder without
Good Reason pursuant Section 4.4, the Company shall have no further obligations to the Executive hereunder, except the Company
shall pay to Executive the Base Salary, all valid expense reimbursements and all unused vacation pay required by law through the
date of termination.

 

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(d)          Payment
Upon Termination by Company Without Cause or by Executive for “Good Reason” or Following Expiration of Term. In
the event that Executive’s employment is terminated pursuant to Section 4.4 or 4.5, or if the Company does not continue
Executive’s employment at the end of the Term and thereafter upon terms substantially similar to the terms of this Agreement
(excluding the Series B Unit Grant provided for in Section 3.3 and the commitment to offer employment for a specified term),
the Company shall have no further obligations to Executive hereunder except for: (i) the Base Salary due Executive pursuant
to Section 3.1 hereof through the end of the Term; (ii) any Pro-Rated Bonus which would have become payable under Section 3.2
for the year in which the employment was terminated, which Pro-Rated Bonus will be calculated and paid after the Company’s
fiscal year end, but in any event no later than the December 31st following the end of such fiscal year, and in accordance
with the Company’s customary procedures; (iii) all earned and previously approved but unpaid Incentive Bonuses and other
discretionary bonuses; (iv) all valid expense reimbursements; (v) all accrued but unused vacation pay; (vi) the
benefits set forth in Section 3.5 through the end of the Term; (vii) the sum of $450,000.00; and (viii) medical
coverage at the Company’s expense for one year commencing on either (a) the last day of the Term if Executive’s
employment is terminated during the Term or (b) the date of termination if Executive’s employment is terminated at any
time after the end of the Term; provided, however, that Executive’s medical coverage shall terminate upon the Executive becoming
covered under a similar program by reason of employment elsewhere. The provisions of this Section 4.6(d)(iii), (iv), (v),
(vii) and (viii) shall survive termination of this Agreement, as applicable. The amounts payable pursuant to this Section
4.6(d)(iii), (vi), and (vii) shall be paid within thirty (30) days following the date on which Executive’s employment with
the Company terminates.

 

Notwithstanding any
other provision or subsection of this Section 4.6, all payments and benefits due to Executive under this Section 4.6, above, except
for amounts which are required to be paid to Executive by law, shall be expressly conditioned on, and shall be payable or continued
only if, Executive (or, to the extent applicable, Executive’s personal representative) delivers to the Company (and does
not revoke within seven (7) days after the execution thereof) a general release of all claims in form and substance which is acceptable
to the Company.

 

4.7.        Resignation
as Director Upon Termination of Employment. If Executive’s employment hereunder is terminated for any reason, then Executive
shall, at the Company’s request, resign as a director of the Company and all of its subsidiaries, effective upon the occurrence
of such termination.

 

5.            Executive
Indemnity. The Company agrees to indemnify Executive and hold Executive harmless against all costs, expenses (including, without
limitation, reasonable attorneys’ fees) and liabilities (other than settlements to which the Company does not consent, which
consent shall not be unreasonably withheld) (collectively, “Losses”) reasonably incurred by Executive in connection
with any claim, action, proceeding or investigation brought against or involving Executive with respect to, arising out of or in
any way relating to Executive’s employment with the Company or Executive’s service as a director of the Company; provided,
however, that the Company shall not be required to indemnify Executive for Losses incurred as a result of Executive’s intentional
misconduct or gross negligence (other than matters where Executive acted in good faith and in a manner he reasonably believed to
be in and not opposed to the Company’s best interests). Executive shall promptly notify the Company of any claim, action,
proceeding or investigation under this paragraph and the Company shall be entitled to participate in the defense of any such claim,
action, proceeding or investigation and, if it so chooses, to assume the defense with counsel selected by the Company; provided
that Executive shall have the right to employ counsel to represent him (at the Company’s expense) if Company counsel would
have a “conflict of interest” in representing both the Company and Executive. The Company shall not settle or compromise
any claim, action, proceeding or investigation without Executive’s consent, which consent shall not be unreasonably withheld;
provided, however, that such consent shall not be required if the settlement entails only the payment of money and the Company
fully indemnifies Executive in connection therewith. The Company further agrees to advance any and all expenses (including, without
limitation, the fees and expenses of counsel) reasonably incurred by the Executive in connection with any such claim, action, proceeding
or investigation, provided Executive first enters into an appropriate agreement for repayment of such advances if indemnification
is found not to have been available.

 

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6.            Protection
of Confidential Information; Non-Solicitation.

 

6.1.        Acknowledgement.
Executive acknowledges that:

 

(a)          As
a result of his employment with the Company, Executive has obtained and will obtain secret and confidential information concerning
the business of FOHG, the Company and its subsidiaries and affiliates (referred to collectively in this Section 6 as the “Company”),
including, without limitation, financial information, designs and other proprietary rights, trade secrets and “know-how,”
customers and sources (“Confidential Information”).

 

(b)          The
Company will suffer substantial damage which will be difficult to compute if, during the period of his employment with the Company
or thereafter, Executive should divulge Confidential Information.

 

(c)          The
provisions of this Agreement are reasonable and necessary for the protection of the business of the Company.

 

6.2.        Confidentiality.
Executive agrees that he will not at any time, either during the Term or thereafter, divulge to any person or entity any Confidential
Information obtained or learned by him as a result of his employment with, or prior retention by, the Company, except: (i) in
the course of performing his duties hereunder; (ii) with the Company’s express written consent; (iii) to the extent
that any such information is in the public domain other than as a result of Executive’s breach of any of his obligations
hereunder; or (iv) where required to be disclosed by court order, subpoena or other government process. If Executive shall
be required to make disclosure pursuant to the provisions of clause (iv) of the preceding sentence, Executive promptly, but
in no event more than two (2) business days after learning of such subpoena, court order, or other government process, shall
notify, by personal delivery or by electronic means, confirmed by mail, the Company and, at the Company’s expense, Executive
shall: (a) take all reasonably necessary and lawful steps required by the Company to defend against the enforcement of such
subpoena, court order or other government process and (b) permit the Company to intervene and participate with counsel of
its choice in any proceeding relating to the enforcement thereof.

 

6.3.        Documents.
Upon termination of employment with the Company, Executive will promptly deliver to the Company all memoranda, notes, records,
reports, manuals, drawings, blueprints and other documents (and all copies thereof) relating to the business of the Company and
all property associated therewith, which Executive may then possess or have under Executive’s control; provided, however,
that Executive shall be entitled to retain copies of such documents reasonably necessary to document Executive’s financial
relationship (both past and future) with the Company.

 

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6.4.        Non-Solicitation.
During the period commencing on the date hereof and ending on the date which is one year after the date upon which Executive’s
employment hereunder is terminated, Executive, without the prior written permission of the Company, shall not, anywhere in the
world, (i) employ or retain, or have or cause any other person or entity to employ or retain, any person who was employed
or retained by the Company at any time within 180 days prior to the termination of Executive’s employment; or (ii) solicit,
interfere with, or endeavor to entice away from the Company, for the benefit of any person, firm or corporation engaged in any
business which is directly or indirectly in competition with the Company, any of its suppliers, vendors or customers or any other
persons with whom the Company has a contractual relationship.

 

6.5.        Non-Disparagement.
Executive shall not make any negative, disparaging, detrimental or derogatory remarks or statements (written, oral, telephonic,
electronic, or by any other method) about the Company or its Subsidiaries or any of their respective owners, partners, managers,
directors, officers, employees or agents, including, without limitation, any remarks or statements that could be reasonably expected
to adversely affect in any manner (a) the conduct of the Company’s or its Subsidiaries’ businesses or (b) the business
reputation or relationships of the Company or its Subsidiaries and/or any of their past or present officers, directors, agents,
employees, attorneys, successors and assigns. Similarly, the Company shall not make any negative, disparaging, detrimental or derogatory
remarks or statements (written, oral, telephonic, electronic, or by any other method) about Executive.

 

6.6.        Injunctive
Relief. If Executive commits a breach, or threatens to commit a breach, of any of the provisions of Sections 6.2, 6.3,
6.4 or 6.5, the Company shall have the right and remedy to seek to have the provisions of this Agreement specifically enforced
by any court having equity jurisdiction, it being acknowledged and agreed by Executive that the services being rendered hereunder
to the Company are of a special, unique and extraordinary character and that any such breach or threatened breach will cause irreparable
injury to the Company and that money damages will not provide an adequate remedy to the Company. The rights and remedies enumerated
in this Section 6.6 shall be in addition to, and not in lieu of, any other rights and remedies available to the Company under
law or equity. In connection with any legal action or proceeding arising out of or relating to this Agreement, the prevailing party
in such action or proceeding shall be entitled to be reimbursed by the other party for the reasonable attorneys’ fees and
costs incurred by the prevailing party.

 

6.7.        Arbitration.
Any controversy, claim or dispute between the parties relating to Executive’s employment or termination of employment, whether
or not the controversy, claim or dispute arises under this Agreement, shall be resolved by arbitration in New York County, New
York, in accordance with the Employment Arbitration Rules and Mediation Procedures (“Rules”) of the American Arbitration
Association through a single arbitrator selected in accordance with the Rules. The decision of the arbitrator shall be rendered
within thirty (30) days of the close of the arbitration hearing and shall include written findings of fact and conclusions of law
reflecting the appropriate substantive law. Judgment upon the award rendered by the arbitrator may be entered in any court having
jurisdiction thereof in the State of New York. In reaching his or her decision, the arbitrator shall have no authority (a) to authorize
or require the parties to engage in discovery (provided, however, that the arbitrator may schedule the time by which the parties
must exchange copies of the exhibits that, and the names of the witnesses whom, the parties intend to present at the hearing),
(b) to change or modify any provision of this Agreement, (c) to base any part of his or her decision on the common law principle
of constructive termination, or (d) to award punitive damages or any other damages not measured by the prevailing party’s
actual damages and may not make any ruling, finding or award that does not conform to this Agreement. Each party shall bear all
of his or its own legal fees, costs and expenses of arbitration to the fullest extent permitted by applicable law, and one-half
(1⁄2) of the costs of the arbitrator.

 

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Execution Copy

 

6.8.        Modification.
If any provision of this Section 6 is held to be unenforceable because of the scope, duration or area of its applicability,
the tribunal making such determination shall have the power to modify such scope, duration, or area, or all of them, and such provision
or provisions shall then be applicable in such modified form.

 

6.9.        Survival.
The provisions of this Section 6 shall survive the termination of this Agreement for any reason, except in the event Executive
is terminated by the Company without “Cause”, or if Executive terminates this Agreement with “Good Reason,”
in either of which events, Section 6.4 shall be null and void and of no further force or effect.

 

7.            Miscellaneous
Provisions.

 

7.1.        Notices.
All notices provided for in this Agreement shall be in writing, and shall be deemed to have been duly given when (i) delivered
personally to the party to receive the same, or (ii) when mailed first class postage prepaid, by certified mail, return receipt
requested, addressed to the party to receive the same at his or its address set forth below, or such other address as the party
to receive the same shall have specified by written notice given in the manner provided for in this Section 7.1. All notices
shall be deemed to have been given as of the date of personal delivery or mailing thereof.

 

If to Executive:

 

Mr. Thomas Lynch

14 Harnden Road

Foxboro, Massachusetts 02035

 

If to the Company:

 

Frederick’s of Hollywood Group Inc.

6255 Sunset Boulevard

Hollywood, California 90028

Attn: General Counsel

 

7.2.        Entire
Agreement; Waiver. This Agreement, the Grant Agreement and the FOHG set forth the entire agreement of the parties relating
to the employment of Executive and are intended to supersede all prior negotiations, understandings and agreements. No provisions
of this Agreement or the Grant Agreement may be waived or changed except by a writing by the party against whom such waiver or
change is sought to be enforced. The failure of any party to require performance of any provision hereof shall in no manner affect
the right at a later time to enforce such provision.

 

    	9

    	 

    

 

Execution Copy

 

7.3.        Governing
Law. All questions with respect to the construction of this Agreement, and the rights and obligations of the parties hereunder,
shall be determined in accordance with the law of the State of New York applicable to agreements made and to be performed entirely
in New York.

 

7.4.        Binding
Effect; No Assignment. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of the Company.
This Agreement shall not be assignable by Executive, but shall inure to the benefit of and be binding upon Executive’s heirs
and legal representatives.

 

7.5.        Severability.
Should any provision of this Agreement become legally unenforceable, no other provision of this Agreement shall be affected, and
this Agreement shall continue as if the Agreement had been executed absent the unenforceable provision.

 

7.6.        Certain
Defined Terms. Capitalized terms used, but not otherwise defined, herein shall have the meaning ascribed to them in that certain
Amended and Restated Limited Liability Company Agreement of FOHG Holdings, LLC, dated as of December 18, 2013 (the “FOHG LLC Agreement”).

 

7.7.        Section 409A.

 

(a)          This
Agreement is intended to comply with the provisions of Internal Revenue Code Section 409A (“Section 409A”).
To the extent that any payments and/or benefits provided hereunder are not considered compliant with Section 409A, the parties
agree that the Company shall take all actions necessary to make such payments and/or benefits become compliant.

 

(b)          Notwithstanding
any other provisions of this Agreement, if Executive is deemed on the date of termination to be a “specified employee”
within the meaning of that term under Internal Revenue Code Section 409A(a)(2)(B), then with regard to any payment or the provision
of any benefit that is considered nonqualified deferred compensation under Section 409A payable on account of a “separation
from service,” such payment or benefit shall be made or provided at the date which is the earlier of (A) the expiration of
the six (6) month period measured from the date of such “separation from service” of Executive, and (B) the date of
Executive’s death (either such period, the “Delay Period”). Upon the expiration of the Delay Period, all payments
and benefits delayed pursuant to Section 4.6(d) (whether they would have otherwise been payable in a single sum or in installments
in the absence of such delay) shall be paid or reimbursed on the first business day following the expiration of the Delay Period
to Executive in a lump sum, and any remaining payments and benefits due under this Agreement shall be paid or provided in accordance
with the normal payment dates specified for them herein.

 

 

 

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

 

	 	/s/ Thomas Lynch
	 	THOMAS LYNCH
	 	 	 
	 	FREDERICK’S OF HOLLYWOOD GROUP INC.
	 	 
	 	By:	/s/ Thomas Rende
	 	 	Name: Thomas Rende
	 	 	Title: Chief Financial Officer
	 	 	 
	 	FOHG HOLDINGS, LLC
	 	 
	 	By:	/s/ Philip Falcone
	 	 	Name:  Philip Falcone
	 	 	Title:  Manager

 

[Signature Page to Thomas Lynch Amended
and Restated Employment Agreement]

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