Document:

Exhibit 10.53

CONSULTING AGREEMENT

          The
following agreement dated as of April 30, 2008 (this “Agreement”), contains the
terms by which Edward A. Dayoob (“Consultant”) will provide consulting services
to Whitehall Jewelers, Inc. (“Whitehall”).

          1.
Term. This Agreement shall commence on the date first written above and
shall continue for an initial term of one (1) year (the “Initial Term”), unless
earlier terminated by Consultant or Whitehall at any time during the Initial
Term by giving the other party at least 30 days’ prior written notice. If this
Agreement has not been terminated by either party prior to the expiration of
the Initial Term (or any renewal term), the Initial Term (or any subsequent
renewal term) shall be automatically extended for an additional thirty (30)
days. This Agreement shall immediately terminate upon the death, disability,
incapacity or adjudication of incompetency of Consultant as determined in the
sole discretion of Whitehall.

          2.
Scope of Services. Consultant shall report to the Chief Executive
Officer (“CEO”) of Whitehall. Consultant shall provide consulting services in
the areas of merchandising, marketing and corporate strategy (including, but
not limited to mergers and acquisitions). For the consideration designated in
Section 5.1, Consultant shall be generally available at mutually agreeable
times for telephonic consultations with Whitehall management and vendors not to
exceed eight (8) hours per week. 

          3.
Relationship.

                    3.1.
The services of Consultant shall be performed by Edward Dayoob unless otherwise
agreed to by Whitehall. 

                    3.2.
Consultant shall render the services in a diligent, conscientious manner in his
capacity as an independent contractor, not as an employee of Whitehall.
Consultant is and shall be deemed for all purposes to be an independent
contractor of Whitehall. Consultant acknowledges that this Agreement is not an
employment contract. Consequently, the consideration paid to Consultant hereunder
shall not be deemed to be wages, and therefore, shall not be subject to any
withholdings or deductions. Consultant shall have no authority to bind
Whitehall or to incur other obligations on behalf of Whitehall.

                    3.3.
Nothing contained herein shall be construed to create a relationship of
employer and employee between Whitehall and Consultant. Subject to the terms of
this Agreement, Consultant shall have the sole discretion to determine the
manner and means by which Consultant shall perform his duties, the specific
hours of work and where such services are to be performed. Except as
specifically agreed to by Consultant, Whitehall acknowledges and agrees that
Consultant may render all services via telephone and/or email and that no travel
(other than specifically agreed to by Consutlant) will be required. Consultant
shall be solely responsible for all wages, salaries and benefits of any
employees of the Consultant. 

                    3.4.
Whitehall shall have no ownership interest in Consultant’s business.

                    3.5
Consultant agrees that Whitehall shall have a right of first refusal on all
investment opportunities, potential mergers or acquisitions or other strategic
initiatives or alternatives

(collectively
“Investment Opportunities”) identified by Consultant during the term of this
Agreement. Consultant shall present Whitehall with each Investment Opportunity
that Consultant identifies prior to discussing such Investment Opportunity with
any other prospective investor and Whitehall shall have the right to pursue any
such Investment Opportunity on terms determined by Whitehall. If Whitehall does
not opt to pursue such Investment Opportunity within 30 days after Consultant
presents Whitehall, in writing, with such Investment Opportunity, Consultant
may discuss such Investment Opportunity with other prospective investors.
Consultant shall be entitled to retain or take on assignments for other
clients, provided that Consultant does so in accordance with his obligations hereunder
and Consultant is available to perform his duties hereunder. 

          4.
Exculpation; Indemnification.

                    4.1
Whitehall shall indemnify and hold harmless Consultant from any and all
liabilities, claims, costs (including, but not limited to reasonable attorneys’
fees and expenses and including any investigative, legal and other expenses
incurred in connection with, and any amounts paid in, any settlement, provided
that Whitehall shall have approved such settlement), damages and expenses
arising from, related to or otherwise connected with the performance by
Consultant of his obligations under this Agreement, except in the case of
Consultant’s material breach of this Agreement, violation of law, gross
negligence, willful misconduct or reckless disregard of such obligations.

                    4.2
Consultant shall indemnify and hold harmless Whitehall, its affiliates and
Whitehall’s and its affiliates’ members, partners, officers, agents and
employees from any and all liabilities, claims, losses, costs (including, but
not limited to reasonable attorneys’ fees and expenses and including any
investigative, legal and other expenses incurred in connection with, and any
amounts paid in, any settlement, provided Consultant shall have approved such
settlement), damages and expenses arising from, related to or otherwise
connected with Consultant’s activities performed for persons other than
Whitehall.

          5.
Consideration.

                    5.1.
Compensation.

	
 

	
 

	
 

	
          (a)
 Whitehall agrees to pay Consultant for the Services the amount of five
 thousand dollars ($5,000) per month. Such payment shall be made by Whitehall
 on the first day of each month. 

	
 

	
 

	
 

	
          (b)
 Additionally, Whitehall agrees to pay Consultant an additional fee of $5,000
 per day for any special projects or assignments as mutually agreed to by
 Whitehall and Consultant. 

                    5.2
Stock Options. It is agreed and acknowledged by Whitehall that there
shall be a continuation of vesting of Consultant’s previously granted stock
options in accordance with the terms of the July 20, 2007 Stock Option
Agreement between Whitehall and Consultant.

                    5.3
Bonus Award: It is agreed and acknowledged by Whitehall that there shall
be a continuation of vesting of Consultant’s Bonus Award in accordance with the
terms of the July 20, 2007 Bonus Award Agreement between Whitehall and
Consultant. 

-2-

                    5.4.
Whitehall shall issue an Internal Revenue Service Form 1099 to account for any
payments pursuant to paragraph 5.1.

                    5.5.
Whitehall shall reimburse Consultant monthly for all documented and reasonable
out-of-pocket expenses and travel expenses associated with performing his
duties for Whitehall during the term hereof; provided that Consultant shall
obtain the prior written consent of Whitehall in any month in which such
expenses are expected to exceed $2,000. 

          6.
Representation. Consultant expressly represents and warrants to
Whitehall that as of the date of signing this Agreement, Consultant is not and
will not become a party to any contract or agreement) that will or may restrict
in any way his ability to fully perform his duties and responsibilities under
this Agreement. 

          7.
Confidential Information. Consultant agrees that he shall not at any
time, without limitation, knowingly divulge, furnish, or make available to any
third person, without Whitehall’s prior written consent, any trade secrets or
other confidential information concerning Whitehall or its affiliates or any of
their clients or investors, including, without limitation, information
concerning the operations, systems, services, clients, customers, suppliers,
vendors, personnel, legal and financial affairs, marketing, investment and trading
performance, positions, philosophies, pricing information, strategies and
techniques, structure, products, product development, research analyses,
technology, computer access codes, valuation models and analysis (collectively
“Confidential Information”). Notwithstanding the foregoing, nothing herein
shall prevent Consultant from responding to lawful subpoenas or court orders
without Whitehall’s prior written consent; provided that Consultant shall have
given Whitehall prior written notice of any such subpoena promptly following
receipt thereof. The term Confidential Information shall not include
information that is or becomes generally available to the public, other than as
a result of a disclosure by Consultant.

          8.
Ownership of the Whitehall’s Property. All written materials, records
and documents made by Consultant or coming into his possession concerning
Whitehall and all tangible items provided to Consultant by Whitehall shall be
the sole property of Whitehall, and, upon the termination of the Agreement or
upon the request of Whitehall, Consultant shall promptly deliver the same to
Whitehall. At no time will Consultant remove or cause to be removed from the
premises of Whitehall any record, file, memorandum, document, equipment or
other item relating to the business of Whitehall or its affiliates, including
but not limited to any computer data related to the foregoing, except in
furtherance of Consultant’s duties to Whitehall or its affiliates. 

          9.
Work Product. 

                    9.1
Whitehall and Consultant each acknowledge that performance of this Agreement
may result in the discovery, creation or development of inventions,
combinations, machines, methods, formulae, techniques, processes, improvements,
software designs, computer programs, strategies, specific computer-related
know-how, data and original works of authorship (collectively, the “Work
Product”). Consultant agrees that it will promptly and fully disclose to
Whitehall any and all Work Product generated, conceived, reduced to practice or
learned by Consultant or any of its employees, either solely or jointly with
others, during the term of this Agreement, which in any way relates to the
business of Whitehall. Consultant further agrees that neither Consultant or

-3-

Consultant’s
employees, nor any party claiming through Consultant or Consultant’s employees,
will, other than in the performance of this Agreement, make use of or disclose
to others any proprietary information relating to the Work Product.

                    9.2
Consultant agrees that, whether or not the Services are considered works made
for hire or an employment to invent, all Work Product discovered, created or
developed under this Agreement shall be and remain the sole property of
Whitehall and its assigns. Except as specifically set forth in writing and
signed by both Whitehall and Consultant, Consultant agrees that Whitehall shall
have all copyright and patent rights with respect to any Work Product
discovered, created or developed under this Agreement without regard to the
origin of the Work Product. 

                    9.3
If and to the extent that Consultant may, under applicable law, be entitled to
claim any ownership interest in the Work Product, Consultant hereby transfers,
grants, conveys, assigns and relinquishes exclusively to Whitehall any and all
right, title and interest it now has or may hereafter acquire in and to the
Work Product under patent, copyright, trade secret and trademark law in
perpetuity or for the longest period otherwise permitted by law. If any moral
rights are created, Consultant waives such rights in the Work Product.
Consultant further agrees as to the Work Product to assist Whitehall in every
reasonable way to obtain and, from time to time, enforce patents, copyrights, trade
secrets and other rights and protection relating to said Work Product, and to
that end, Consultant and its employees will execute all documents for use in
applying for and obtaining such patents, copyrights, trade secrets and other
rights and protection with respect to such Work Product, as Whitehall may
desire, together with any assignments thereof to Whitehall or persons
designated by it. Consultant’s and its employees’ obligations to assist
Whitehall in obtaining and enforcing patents, copyrights, trade secrets and
other rights and protection relating to the Work Product shall continue beyond
the termination of this Agreement.

          10.
Non-solicitation or Hire. Consultant agrees that during the term of this
Agreement and for a period of six (6) months following the termination of the
Agreement, the Consultant shall not directly or indirectly, (a) solicit or
attempt to solicit or induce any supplier of Whitehall or any subsidiary to
terminate, reduce or alter negatively its relationship with Whitehall or any
subsidiary or in any manner interfere with any agreement or contract between
Whitehall or any subsidiary and such supplier or (b) solicit or attempt to
solicit or induce any employee of Whitehall or any of its subsidiaries or any
person who was an employee of Whitehall or any of its subsidiaries during the
twelve (12) month period immediately prior to the date the Agreement terminates
(a “Former Employee”) to terminate such employee’s employment
relationship with Whitehall in order, in either case, to enter into a similar
relationship with the Consultant, or any other person or entity, or hire any
employee of Whitehall or any of its subsidiaries or any Former Employee on
Consultant’s own behalf or on behalf of any other person or entity.

          11.
Remedies.

                    11.1.
Injunctive Relief. Consultant acknowledges that the provisions of
paragraphs 7 through 10 are reasonable and necessary for the protection of
Whitehall and its affiliates. Consultant further acknowledges that Whitehall
and its affiliates will be irreparably harmed if such covenants are not
specifically enforced. Accordingly, Consultant agrees that, in addition to any
other relief to which Whitehall may be entitled, including monetary damages,
Whitehall shall be entitled to seek and obtain injunctive relief (without the
requirement of any bond) from a court of competent jurisdiction for the purpose
of restraining Consultant from an actual or threatened breach of such
provisions.

-4-

                    11.2.
Severability. If any provision of this Agreement is determined to be
invalid or unenforceable, the balance of this Agreement shall remain in effect.

                    11.3.
Judicial Modification. If any court or arbitrator determines that any of
the covenants in paragraphs 7 through 10, or any part of any of them, are
invalid or unenforceable, the remainder of such covenants and parts thereof
shall not thereby be affected and shall be given full effect, without regard to
the invalid portion. If any court or arbitrator determines that any of such
covenants, or any part thereof, are invalid or unenforceable because of the
temporal scope of such provision, such court or arbitrator shall reduce such
scope to the extent necessary to render such covenants valid and enforceable.

                    11.4.
Governing Law and Venue. This Agreement will be governed by and
construed in accordance with the laws of the State of Illinois without giving
effect to the principles of conflicts of laws. The parties agree to and consent
to the exclusive jurisdiction and venue of the courts in Cook County, Illinois.
Consultant irrevocably waives, in connection with any such action or
proceeding, any objection, (including without limitation, any objection to
venue or based on the grounds of forum non conveniens), which it may now or
hereafter has to the bringing of any such action or proceedings in such
respective jurisdictions. 

                    11.5.
Notices. All notices and other communications that are required or may
be given under this Agreement must be in writing and will be deemed to have
been duly given when delivered in person, upon delivery by a nationally
recognized overnight courier service, or by facsimile to the party to whom the
notice is being given, as follows:

	
 

	
 

	
 

	
If to
 Whitehall: 

	
 

	
 

	
 

	
Whitehall
 Jewelers, Inc.

	
 

	
125 South
 Wacker Drive.

	
 

	
Suite 2600

	
 

	
Chicago, IL
 60606

	
 

	
Attention:
 General Counsel

	
 

	
 

	
 

	
If to
 Consultant:

	
 

	
 

	
 

	
Edward Dayoob

	
 

	
3013 North West
 MichaelBrook Lane

	
 

	
Camas, WA 98607

          Either
party may change the address provided above by delivering written notice of
such change of address to the other party.

                    11.6.
Assignability. This Agreement, and the rights and obligations hereunder,
may not be assigned by either party without the express written consent of the
other party.

                    11.7.
Counterparts. This Agreement may be executed in multiple counterparts,
each of which shall be deemed an original but all of which shall constitute one
and the same

-5-

instrument, and
it shall not be necessary in making proof of this Agreement to produce or
account for more than one such counterpart.

                    11.8.
Entire Agreement and Amendment. This Agreement may be amended only by an
agreement in writing signed by the parties. This Agreement contains the entire
agreement between the parties with respect to the subject matter of this
Agreement and supersedes all prior agreements and understandings, oral or
written, between the parties with respect to the subject matter of this
Agreement. This Agreement may be amended only by an agreement in writing signed
by the parties.

                    11.9.
Pronouns. All pronouns shall be deemed to refer to the masculine,
feminine, singular or plural, as the identity of the person or persons may
require in the context thereof.

                    11.10.
Survival. Except as otherwise set forth in the applicable Section, the
obligations under Sections 4, 7, 8, 9, 10 and 11 of this Agreement shall
survive the termination of this Agreement.

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

	
 

	
 

	
 

	
     /s/
 Edward Dayoob

	
 

	

	
 

	
Name: Edward
 Dayoob

	
 

	
 

	
 

	
WHITEHALL
 JEWELERS, INC. 

	
 

	
 

	
 

	

	
 

	
Name: 

	
 

	
Title: 

-6-Exhibit
10.54

ASSET PURCHASE AGREEMENT

dated as of April 11, 2008

by and among

FRIEDMAN’S INC., and

CRESCENT JEWELERS, as SELLERS

and

WHITEHALL JEWELERS, INC., as
BUYER

ASSET PURCHASE
AGREEMENT

          This Asset
Purchase Agreement (this “Agreement”) is dated as of April 11, 2008, by
and among Whitehall Jewelers, Inc., a Delaware Corporation (the “Buyer”),
and Friedman’s Inc., a Delaware corporation (“Friedman’s”), and Crescent
Jewelers, a California corporation and wholly-owned subsidiary of Friedman’s (“Crescent”
and together with Friedman’s, each a “Seller” and collectively the “Sellers”).
The Buyer and the Sellers are referred to collectively herein as the “Parties.”

          WHEREAS,
each of the Sellers is engaged in the business of selling jewelry and
incidental services from leased specialty stores (the “Business”);

          WHEREAS, on
January 22, 2008 (the “Petition Date”), an involuntary petition for
relief (Case No. 08-10161 (CSS)) (the “Friedman’s Case”) under chapter 7
of Title 11, U.S.C. (as amended as of the Petition Date) (the “Bankruptcy
Code”), was filed against Friedman’s in the United States Bankruptcy Court
for the District of Delaware (the “Bankruptcy Court”); 

          WHEREAS, on
January 28, 2008 (the “Relief Date”), by Order of the Bankruptcy Court,
the Friedman’s Case was converted to a voluntary proceeding under chapter 11 of
the Bankruptcy Code;

          WHEREAS, on
January 28, 2008 (the “Crescent Petition Date”), a voluntary petition
for relief (the “Crescent Case”, and collectively with the Friedman’s
Case, the “Bankruptcy Case”) under chapter 11 of the Bankruptcy Code was
filed by Crescent in the Bankruptcy Court;

          WHEREAS, on
January 28, 2008, an Order was entered by the Bankruptcy Court jointly
consolidating the Friedman’s Case and the Crescent Case for procedural
purposes;

          WHEREAS,
upon the terms and subject to the conditions set forth in this Agreement, and
as authorized under Sections 105, 363, 365 and 1146 of the Bankruptcy Code,
each of the Sellers desires to sell, transfer and assign to Buyer, and Buyer desires to purchase from Sellers, all of Sellers’
right, title and
interest in certain properties and assets associated with the Business or
ancillary thereto, on the terms and subject to the conditions hereinafter set
forth; and

          WHEREAS,
Sellers and Buyer are
entering into this Agreement to evidence their respective duties, obligations
and responsibilities in respect of the purchase and sale and related
transactions contemplated by this Agreement and the Ancillary Agreements as
defined in Article 1 (the “Transactions”).

          NOW,
THEREFORE, in consideration of the premises and the mutual promises herein
made, and in consideration of the representations, warranties, and covenants
herein contained, the Parties agree as follows:

1. Definitions.

	
 

	
 

	
 

	
“Acquired Stores” means the Stores listed on Schedule A.

1

          “Affiliate”
has the meaning set forth in Rule 12b-2 of the regulations promulgated under
the Securities Exchange Act.

          “Agreement”
has the meaning set forth in the preface above.

          “Ancillary
Agreements” means the Bill of Sale, and the Assignment and Assumption
Agreement. 

          “Assets”
means, with respect to any Person, all assets of every kind, nature, character
and description (whether real, personal or mixed, whether tangible or
intangible, whether absolute, accrued, contingent, fixed or otherwise and
wherever situated), including the goodwill related thereto, operated, owned or
leased by such Person, including without limitation, chattel paper, documents,
instruments, general intangibles, real estate, equipment, inventory, goods and
intellectual property.

          “Assumed
Liabilities” has the meaning set forth in Section 2(d).

          “Assumption
Agreement” has the meaning set forth in Section 7(a)(vi). 

          “Assumption
Order” means the order to be entered by the Bankruptcy Court, in form and
substance acceptable to the Buyer, approving the assumption and assignment of
the Purchased Leases by the Sellers to the Buyer. 

          “Bankruptcy
Case” has the meaning set forth in the preface above.

          “Bankruptcy
Code” has the meaning set forth in the preface above.

          “Bankruptcy
Court” has the meaning set forth in the preface above.

          “Bill of
Sale” has the meaning set forth in Section 7(a)(v).

          “Books
and Records” has the meaning set forth in Section 2(a)(vi).

          “Business”
has the meaning set forth in the preface above.

          “Business
Employees” mean all store-level employees of the Sellers for the Acquired
Stores employed by the Sellers immediately prior to the Closing.

          “Buyer”
has the meaning set forth in the preface above.

          “Cash”
means cash and cash equivalents.

          “Cash on
Hand” means Cash in the cash registers at the Acquired Stores or otherwise
held at the Acquired Stores.

          “Closing”
has the meaning set forth in Section 2(j)(i).

          “Closing
Date” has the meaning set forth in Section 2(j)(i).

2

          “Consignment
Goods” means and refers to goods being held by Sellers for sale on
consignment from Sellers’ vendors pursuant to consignment agreements,
consignment memoranda, and/or terms of consignment.

          “Consignment
Order” means and refers to Final Order Pursuant to 11 U.S.C. Sections 105
and 363 Authorizing Payment of Prepetition Claims of Consignment Vendors,
Providing Adequate Protection and Approving Procedures Regarding Consigned
Goods. 

          “Contract”
means any binding contract, agreement, arrangement, license, lease, commitment,
sale and purchase order, and other instrument or understanding of any kind,
whether written or oral, express or implied.

          “Cost File” means Sellers’ master
cost
file as represented in the Sellers’ financial stock ledger as of the Closing
Date.

          “Cost
Value” means, with respect to each item of Inventory (other than Defective
Inventory) on the Closing Date, the average standard cost (determined by
applicable merchant accounting unit for such item of Inventory as reflected in
Sellers’ Cost File), which average standard cost is inclusive of freight and
shipping charges. With respect to Defective Inventory, “Cost Value” shall mean
the value the Sellers and Buyer agree upon for such item during the Inventory
Taking. 

          “Cure
Amounts” means all pre-petition and post-petition cure amounts
under Purchased Leases including amounts which accrued prior to the Closing
Date which are not payable until after the Closing Date.

          “Defective
Inventory” means any item of inventory agreed upon and identified by Buyer
and Sellers as damaged or defective or otherwise not salable in the ordinary
course because it is dented, worn, scratched, broken, broken sets, faded, torn,
mismatched, non-redeemed or layaway altered merchandise or merchandise affected
by other similar defects rendering it not first quality (such as, for example,
watches that are not running, watches without boxes, watches without applicable
instructions, and pierced earrings without backs). 

          “Delayed
Assumption Date” is defined in Section 2(l).

          “Distribution
Center” means the Sellers’ distribution center located at 4550 Excel
Parkway, Addison, Texas.

          “Employee
Plan” means all plans, practices and arrangements, written or unwritten,
formal or informal, whether applicable to a group of individuals or a single
individual, and whether active, frozen or terminated, providing compensation
(other than salary or wages) or other benefits of any type or nature with
respect to the Business Employees, including but not limited to all plans
providing benefits for such employees that are employee benefit plans as
defined in Section 3(3) of ERISA.

          “ERISA”
means the Employee Retirement Income Security Act of 1974, as amended.

          “Excluded
Assets” has the meaning set forth in Section 2(b).

3

          “Excluded
Consignment Goods” has the meaning set forth in Section 2(c). 

          “Expedited
Procedures Motion” means Motion of the Debtors and
Debtors-in-Possession for an Order, Pursuant to Sections 105, 363 and 365(a) of
the Bankruptcy Code and Bankruptcy Rules 2002, 6004 and 6006, (A) Approving
Expedited Procedures for Rejection of Executory Contracts and Unexpired Leases;
(B) Approving Expedited Procedures for Assumption and Assignment of Executory
Contracts and Unexpired Leases; and (C) Authorizing the Debtors to Conduct
Store Closing Sales or “Going Out of Business Sales”.

          “Expedited
Procedures Order” means that order entered by the Bankruptcy Court, in form
and substance acceptable to the Buyer, approving the relief requested by the
Expedited Procedures Motion. 

          “Final
Inventory Reconciliation” has the meaning set forth in Section 2(g)(i)(B).

          “Final
Order” shall mean an order or judgment, the operation or effect of which is
not stayed, and as to which order or judgment (or any revision, modification or
amendment thereof), the time to appeal or seek review or rehearing has expired,
and as to which no appeal or petition for review or motion for reargument has
been taken or been made and is pending for argument.

          “Government
Agreements” means collectively (i) that certain Superseding Agreement
between Friedman’s Inc. and the United States Attorney’s Office for the Eastern
District of New York, dated as of December __, 2005, (ii) that certain
Agreement Between Crescent Jewelers and the United States Attorney’s Office for
the Eastern District of New York, dated as of July 13, 2006, and (iii) any
other agreement between Friedman’s Inc. or Crescent Jewelers and any
Governmental Entity.

          “Governmental
Entity” means any federal, state, local or foreign court, administrative or
regulatory agency or commission or other governmental authority or
instrumentality, or any arbitral tribunal.

          “Gross
Rings” has the meaning set forth in Section 2(i)(iii).

          “Interim
Sale Period” has the meaning set forth in Section 2(i)(iii).

          “Internal
Revenue Code” means the Internal Revenue Code of 1986, as amended.

          “Inventory”
means all supplies and items of inventory owned by Sellers (including, Layaway
Inventory and Defective Inventory for which Buyer and Sellers can agree upon a
Cost Value), located in the Acquired Stores as of the Closing Date and
Purchased Consignment Goods. 

          “Inventory
Date” has the meaning set forth in Section 2(i)(i).

          “Inventory
Completion Date” has the meaning set forth in Section 2(i)(i).

          “Inventory
Dispute Period” has the meaning set forth in Section 2(i)(iv).

4

          “Inventory
Taking” has the meaning set forth in Section 2(i)(i).

          “Inventory
Taking Instructions” has the meaning set forth in Section 2(i)(i).

          “Inventory
Taking Service” has the meaning set forth in Section 2(i)(i).

          “Interim
Sale Period” has the meaning set forth in Section 2(i)(iii).

          “Layaway
Deposits” means the aggregate amount of all customer deposits (based upon
the Sellers’ books and records) in respect of Layaway Inventory.

          “Layaway
Inventory” means all items of inventory held at the Acquired Stores on
layaway, in each case, where the goods subject to layaway are properly
identified, segregated, and in a condition as described in the documentation.

          “Leases”
means all real property leases, including all written amendments, modifications
and renewals thereto, to which either Seller is a party as a lessee.

          “Lease
Assumption Documents” has the meaning set forth in Section 2(l).

          “Lenders”
means each of the lenders of the Sellers for borrowed money.

          “Letter
of Credit” has the meaning set forth in Section 2(g)(i)(C).

          “Liability”
means any debt, liability, duty, responsibility, obligation, assessment, cost,
expense, loss, expenditure, charge, fee, penalty, fine, contribution, premium
or obligation of any kind, whether known or unknown, asserted or unasserted,
absolute or contingent, accrued or unaccrued, liquidated or unliquidated, or
due or to become due, and regardless of when sustained, incurred or asserted or
when the relevant events occurred or circumstances existed, including all costs
and expenses relating thereto.

          “Lien”
means any and all claims, liens, encumbrances, interests, obligations, security
interests, judgments, and charges of every nature whatsoever.

          “Lowest Store
Price” has the meaning set forth in
Section 2(i)(ii).

          “Ordinary
Course of Business” means the ordinary course of business consistent with
past custom and practice (including with respect to quantity and frequency).

          “Parties”
has the meaning set forth in the preface above.

          “Permitted
Liens” means (i) liens for Property Taxes and other governmental charges
and assessments which are not yet due and payable, (ii) Liens described in Schedule
B which will be and are discharged or released either prior to, or
simultaneously with, the Closing, (iii) retention of title agreements with
suppliers entered into in the Ordinary Course of Business,
(iv) encroachments, overlaps, Liens and other title defects, easements and
encroachments that do not, individually or in the aggregate, materially impair
the marketability of title to Purchased Leases or the continued use as
currently conducted of the assets to which such Liens or other title 

5

defects, easements or encroachments relate and (v) Liens with respect
to any of the Purchased Assets and created by or resulting from the acts or
omissions of Buyer or this Agreement.

          “Person”
means an individual, a partnership, a corporation, a limited liability company,
an association, a joint stock company, a trust, a joint venture, an
unincorporated organization, any other business entity or a Governmental Entity
(or any department, agency, or political subdivision thereof).

          “PLU”
means price look up.

          “Property
Tax” means any Tax resulting from and relating to the assessment of real or
personal property by any Governmental Entity (to include specifically ad
valorem property or real estate taxes and any payments made to a Government
Entity in lieu of such ad valorem property or real estate taxes).

          “Purchased
Assets” has the meaning set forth in Section 2(a).

          “Purchased
Consignment Goods” means (i) first quality, finished, saleable Consignment
Goods located in the Acquired Stores as of Closing Date the purchase of which
is designated by the Sellers, at the Sellers’ sole option, prior to
commencement of the Inventory Taking and consented to by the subject vendor, at
its sole option, as of the Closing Date, and (ii) first quality, finished,
saleable Consignment Goods located in any of the Sellers’ Stores consigned by
Bulova (excluding Wittnaur), Rosy Blue and Summit; provided, that Sellers’
request and such vendors consent to the Buyer’s purchase of such goods prior to
Closing Date. 

          “Purchased
Leases” means all Leases of Sellers for the Acquired Stores that are
assumed and assigned to Buyer on or after the Closing Date, together with all
security deposits related thereto and all permanent fixtures, improvements and
appurtenances thereto and associated with such Purchased Leases, subject to the
rejection of up to fifteen (15) Leases by the Buyer on or prior to the Delayed
Assumption Date pursuant to Section 2(l) hereof.

          “Purchased
Permits” has the meaning set forth in Section 2(a)(v).

          “Remaining
Cash Payment” means the Cash Payment less the Initial Cash Payment.

          “Retail
Value” shall mean, with respect to each item of Inventory,
the lower of (x) the lowest ticketed or marked price of such item in the Store
Closing Location on the Closing Date, and (y) the price for such item as
reflected in Sellers PLU file.

          “Retained
Liabilities” shall mean all of the claims, liabilities, obligations or
indebtedness of any nature whatsoever of the Sellers other than the Assumed
Liabilities, including without limitation, all liabilities indicated as
Retained Liabilities in Section 2(d).

          “Sale
Motion” has the meaning set forth in Section 5(e)(i).

          “Sale
Order” has the meaning set forth in Section 5(e)(ii).

          “Securities
Act” means the Securities Act of 1933, as amended.

6

          “Securities
Exchange Act” means the Securities Exchange Act of 1934, as amended.

          “Sellers”
has the meaning set forth in the preface above.

          “SKU”
means the unique stock keeping unit identifier assigned to identical pieces of
Inventory.

          “Stores”
means the Sellers’ retail locations where the Seller conducts its business.

          “Tangible
Personal Property” has the meaning set forth in Section 2(a)(i).

          “Tax”
or “Taxes” means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Internal
Revenue Code §59A), customs duties, capital stock, franchise, profits,
withholding, social security (or similar), unemployment, disability, real
property, personal property, sales, use, transfer, registration, value added,
alternative or add-on minimum, estimated, or other tax of any kind whatsoever,
including any interest, penalty, or addition thereto, whether disputed or not.

          “Tax
Return” means any all federal, state, county and local tax returns and
other returns and reports which were required to be filed in respect of all
Taxes, levies, license, registration and permit fees, charges or withholding of
any nature whatsoever.

          “Ten-Day
Notice” means that 10-day notice to landlords of the Buyers’ intention to
assume the subject Purchased Lease required pursuant to the Expedited
Procedures Motion.

          “Transactions”
has the meaning set forth in the preface above.

          “Transaction
Consideration” has the meaning set forth in Section 2(g).

          “Transferred
Employees” has the meaning set forth in Section 5(g)(i).

          “Transition
Period” means the period of 90 days following the Closing Date.

          “Warranties”
has the meaning set forth in Section 2(a)(vii).

	
 

	
 

	
2. Purchase and Sale of Assets; Assumption of Liabilities.

          (a) Purchased
Assets. On the terms and subject to the conditions set forth herein, on the
Closing Date, the Sellers shall sell, transfer, assign, convey and deliver to
the Buyer, and the Buyer shall purchase and accept from the Sellers, free and
clear of all Liens (other than the Permitted Liens), all of the Sellers’ right,
title and interest in and to the Assets of the Sellers described below
(hereinafter, collectively referred to as the “Purchased Assets”):

	
 

	
 

	
 

	
          (i) All
 furniture and furnishings, computers, office supplies, fixtures, leased
 personal property and other tangible personal property of every kind and
 description located in the Acquired Stores (collectively, the “Tangible
 Personal Property”);

7

	
 

	
 

	
 

	
          (ii) All
 Inventory (other than Purchased Consignment Goods) located in the Acquired
 Stores (the “Purchased Inventory”);

	
 

	
 

	
 

	
          (iii) All
 Purchased Consignment Goods, wherever located; 

	
 

	
 

	
 

	
          (iv) All
 of Sellers’ right, title and interest in and to the Purchased Leases;

	
 

	
 

	
 

	
          (v) The
 Licenses and Permits listed or described in Schedule C required for the operation of the
 Acquired Stores (the “Purchased Permits”), if and to the extent
 legally transferable by sale;

	
 

	
 

	
 

	
          (vi) All
 books, records, data on hard drives, documents, drawings, reports, data,
 designs, policies and procedures, and safety, operations, instruction and/or
 maintenance manuals exclusively or principally relating to the Purchased
 Assets or the Acquired Stores (collectively, “Books and Records”),
 provided that Sellers shall retain the rights to inspect, copy and use such
 Books and Records in connection with the claims and causes of action
 constituting Excluded Assets pursuant to Sections 2(b)(viii) and 2(b)(ix)
 below or to the extent otherwise reasonably necessary for the operation or
 wind down of the remainder of the Sellers’ estates;

	
 

	
 

	
 

	
          (vii) All
 unexpired warranties, indemnities, and guarantees made or given by
 manufacturers, overhaulers, assemblers, refurbishers, vendors, service
 providers and other comparable third parties to the extent relating to the
 Purchased Assets, whether provided in connection with the purchase of
 equipment or entered into independently of such purpose, in each case to the
 extent permitted by the terms of such warranty, indemnity or guarantee
 (collectively, the “Warranties”); 

	
 

	
 

	
 

	
          (viii)
 all prepaid assets and deposits exclusively or principally relating to the
 Purchased Assets; 

	
 

	
 

	
 

	
          (ix)
 All goodwill and other intangible
 assets associated exclusively or principally with the Purchased Assets; and

	
 

	
 

	
 

	
          (x)
 all originals and/or copies of all customer, mailing and supplier lists and
 other books, records, reports, studies, files, advertising materials and
 documents of Sellers related exclusively to the customers of any of the
 Acquired Stores.

          (b) Excluded
Assets. Notwithstanding anything to the contrary in this Agreement, all
Assets which are not Purchased Assets (herein referred to as the “Excluded
Assets”), shall be retained by the Sellers and are not being sold or
transferred to the Buyer hereunder (including, without limitation, all Cash).

          (c)
Special Provision for Consignment
Goods. Prior to the Closing,
the Sellers shall be solely responsible for segregating and securing all
Consignment Goods. After the Closing, the Sellers and Buyer shall cooperate in
the segregating, inventorying, securing, removal, reconciling and any other
handling of the Excluded Consignment Goods. Sellers shall be responsible for
the allocation and distribution of that portion of the Cash Payment allocable
to Purchased Consignment Goods. Buyer shall permit Consignment Goods to be
stored at the

8

Acquired Stores, and Buyer shall establish reasonable policies and
procedures to safeguard the Consignment Goods. Any Consignment Goods which are
not Purchased Consignment Goods shall be excluded from Purchased Assets
hereunder (“Excluded Consignment Goods”) ; IT BEING EXPRESSLY UNDERSTOOD
THAT CONSIGNMENT GOODS SHALL ONLY BE DEEMED TO BE PURCHASED CONSIGNMENT GOODS
IN THE SOLE DISCRETION OF THE SELLERS AND WITH THE CONSENT OF THE VENDOR THAT
SUPPLIED SUCH CONSIGNMENT GOODS. Within thirty (30) days of the Closing Date,
Sellers shall cause all Excluded Consignment Goods to be removed from all
Acquired Stores. Buyer shall have no liability for segregating, securing,
removing or any other handling of the Excluded Consignment Goods, but shall
take commercially reasonable means to secure and safeguard such goods while in
Buyer’s possession. Buyer shall have no authority to sell any Excluded
Consignment Goods, but shall timely remit to the Sellers the payments required
to be made by the Consignment Order to the extent any Excluded
Consignment Goods are inadvertently sold or otherwise knowingly disposed of.
Vendors of Consignment Goods shall have recourse solely against the Sellers
with respect to Excluded Consignment Goods pursuant to the terms of the
Consignment Order. 

          (d) Assumed
Liabilities. Except for Assumed Liabilities, Buyer shall not assume any
obligations or liabilities of Sellers, including but not limited
to environmental and employment-related liabilities and obligations, whether
known or unknown, disputed or undisputed, contingent or non-contingent,
liquidated or unliquidated or otherwise. Effective
as of the Closing Date, the Buyer shall assume and thereafter in due course
pay, fully satisfy, discharge and perform the Liabilities of Sellers
specifically referred to in this Section 2(d) hereinafter, collectively, the “Assumed
Liabilities”), as follows: 

	
 

	
 

	
 

	
          (i) All
 Liabilities of Sellers under Purchased Leases arising after the Closing Date; provided, however, Buyers
 shall be responsible for all Cure Amounts with respect to Purchased Leases as
 ultimately determined by the Bankruptcy Court. 

	
 

	
 

	
 

	
          (ii) All
 Liabilities relating to ownership or use of the Purchased Assets by the Buyer
 or otherwise relating to the Buyer’s operation of the Acquired Stores, in
 each case solely to the extent arising after the Closing.

	
 

	
 

	
 

	
          (iii)
 All Liabilities relating to the Purchased Consignment Goods, solely to the
 extent arising after the Closing.

          (e) Retained
Liabilities. Buyer shall not assume or agree to pay, satisfy, discharge or
perform, or take or agree to take any of the Purchased Assets subject to, and
shall not be deemed by virtue of the execution and delivery of this Agreement
or any document delivered to the Buyer at the Closing pursuant hereto, or as a
result of the consummation of the transactions contemplated hereby, to have
assumed, or to have agreed to assume, pay, satisfy, discharge or perform, or
take, or to have agreed to take, any of the Retained Liabilities and such
Retained Liabilities shall remain the responsibility of the Sellers. Buyers
shall be, and the Sale Order shall expressly provide that Buyers
shall not be considered a successor employer and shall not have successor
employer liability with respect to any employee benefits, collective bargaining
agreement, the WARN Act, COBRA, and/or any severance or key employee retention
bonus program.

9

          (f)
Reserved. 

          (g)
Transaction Consideration. In consideration of the Transactions
contemplated hereunder (the “Transaction Consideration”), Buyer shall:

	
 

	
 

	
 

	
          (i)
 pay in respect of Inventory, other than
 Purchased Consignment Goods, an all cash amount (such amount, as the
 same may be adjusted after the Closing in accordance with this Agreement, the
 “Cash Payment”) to Sellers in
 the aggregate amount equal to the sum of (i) sixty-three (63%) percent of the
 aggregate Cost Value of the Inventory as of the Closing Date (other than
 Layaway Inventory) and (ii) sixty-three (63%) percent of the aggregate Cost
 Value of Layaway Inventory as of the Closing Date less the amount of Layaway
 Deposits, payable as follows:

	
 

	
 

	
 

	
 

	
 

	
 

	
(A)

	
On the
 Closing Date, Buyer shall (i) deliver to Sellers an aggregate of sixty-seven
 percent (67%) of the Cash Payment less 50% of the fees and expenses of the
 Inventory Taking Service (the “Initial Cash Payment”), (ii) deliver to
 Seller a Letter of Credit pursuant to Section 2(g)(i)(C), and (iii) shall
 deliver to Sellers an additional amount in cash equal to $40,000 as
 reimbursement for certain expenses incurred in connection with planned
 closing sales. For the purposes of determining the amount of the Cash Payment
 on the Closing Date, the Cost Value of the Inventory as of the Closing Date
 shall be calculated based upon the Sellers’ Cost Value of such Inventory
 (other than Purchased Consignment Goods), provided, that the final amount of
 the Cash Payment shall be determined following the Final Inventory
 Reconciliation. 

	
 

	
 

	
 

	
 

	
 

	
 

	
(B)

	
Following
 the Closing and after completion and verification of the Inventory Taking in
 the Acquired Stores (the “Final Inventory Reconciliation”), Buyer and
 Sellers shall determine the amount of the Cash Payment after accounting for
 the Final Inventory Reconciliation and any adjustments provided for in this
 Section 2(i). 

	
 

	
 

	
 

	
 

	
 

	
 

	
(C)

	
To secure
 its obligations to tender payment of the Remaining Cash Payment, Buyer shall
 deliver to Sellers an irrevocable standby letter of credit in an original
 face amount equal to Remaining Cash Payment, naming Sellers (or their
 designee) as beneficiary (substantially in the form of Exhibit A, the
 “Letter of Credit”), which shall be issued by a bank selected by Buyer
 and reasonably acceptable to Sellers, and shall contain terms, provisions and
 conditions mutually acceptable to Buyer and Sellers. In the event that Buyer
 fails to timely pay the undisputed portion of the Remaining Cash Payment
 within two (2) business days after the Final Inventory Reconciliation,
 Sellers shall be entitled to draw on the Letter of Credit to fund such amount
 or obligation following five (5) days’ written notice to Buyer of Sellers’
 intention to do so 

10

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
(which
 notice shall not be required if Buyer shall be a debtor under title 11,
 United States Code). The Letter of Credit shall expire on the date sixty (60)
 days after the Closing Date, provided, however, in the event
 that Buyer shall have paid to Sellers the Remaining Cash Payment (net of any
 adjustments as provided for herein), Sellers agree to surrender the original
 Letter of Credit to the issuer thereof together with written notification
 that the Letter of Credit may be terminated.

	
 

	
 

	
 

	
 

	
 

	
 

	
(D)

	
To the
 extent that at the expiration of the Inventory Dispute Period the Final
 Inventory Reconciliation shows that the amounts paid to Sellers in respect of
 the Cash Payment exceeded the amount due Sellers in respect of the Cash
 Payment, then Sellers shall cause any overpayment to be immediately refunded
 to Buyer. 

	
 

	
 

	
 

	
          (ii)
 subject to the consent required
 pursuant to Section 2(c), pay in respect of Purchased Consignment Goods, after
 completion and verification of the Inventory Taking of Purchased Consignment
 Goods, an all cash amount to Sellers in
 an amount equal to such amount agreed to among the Buyer, Sellers and the
 respective vendors of such Purchased Consignment Goods. Except for Buyer’s
 obligation to remit such payment, it is
 expressly understood that Buyer shall have no liability for segregating,
 securing, inventorying or any other handling of the Purchased Consignment
 Goods, or the proceeds thereof, and Seller hereby indemnifies Buyer for all
 claims and causes of action arising therefrom (including, without limitation,
 reasonably attorney’s fees of Buyer).

          (h)
Petty Cash. Buyer shall reimburse Sellers for the actual Cash on Hand
located in each of the registers located in the Acquired Stores, it being
understood that at the close of business on the date immediately preceding the
Closing Date, Sellers shall count the Cash on Hand in each of the registers in
the Acquired Stores.

          (i)
Taking of Inventory. 

                    (i)
Inventory Taking. Commencing as of the Closing Date, Buyer and Sellers
shall cause to be taken a SKU Cost Value and Retail Value physical inventory
(the “Inventory Taking”) of the Inventory located in the Acquired
Stores, which Inventory Taking shall be completed within fifteen (15) days of
the Closing Date (the “Inventory Completion Date”, and the date of the
Inventory Taking at each Inventoried Location being the “Inventory Date”).
Sellers and Buyer shall jointly employ RGIS or another mutually acceptable
independent inventory taking service (the “Inventory Taking Service”) to
conduct the Inventory Taking. Prior to the Closing Date, Buyer and Seller shall
agree upon the appropriate Inventory Taking Schedule. Buyer and Seller have
agreed upon the procedures and instructions for the conduct of the Inventory
Taking, which are attached hereto as Exhibit B (the “Inventory Taking
Instructions”). Buyer and Sellers shall each be responsible for 50% of the
fees and expenses of the Inventory Taking Service. Except as provided in the
immediately preceding sentence, Buyer and Sellers shall each bear their
respective costs and expenses relative to the Inventory Taking. Buyer and
Sellers shall each have representatives present during the Inventory Taking, and
shall each have the right to review and verify the listing and tabulation of
the Inventory Taking 

11

Service.
During the conduct of the Inventory Taking in each of the Acquired Stores, the
applicable Acquired Stores shall be closed to the public and no sales or other
transactions shall be conducted. The Cost Value of any item of Inventory shall
be determined as provided for by this Agreement in accordance with the
Inventory Taking Instructions. In the event of a conflict between this
Agreement and the Inventory Taking Instructions, the terms of this Agreement
shall control. 

                    (ii)
Ticket Prices. Sellers represent that the ticketed prices of items of
Inventory do not and shall not include any sales taxes. If an item of Inventory
has more than one ticketed price, or if multiple items of the same SKU are
ticketed, at different prices, or have a different SKU or PLU price, the lowest
ticketed, marked, SKU or PLU price on any such item shall prevail for such item
or for all such items within the same SKU, as the case may be, that are located
within the same Store (the “Lowest Store Price”), unless it is
reasonably determined by Sellers and Buyer that the applicable Lowest Store
Price was mismarked or such item was priced because it was damaged or marked as
“as is”, in which case the higher price shall control. 

                    (iii)
Data Files. Sellers agree to make their SKU data files and related
computer hardware and software available to Buyer and the Inventory Taking
Service commencing prior to the applicable Inventory Date for an Acquired
Store. During the period between the Closing Date and the Inventory Date at
each of the Acquired Stores (the “Interim Sale Period”), Sellers and
Buyer, as the case may be, shall jointly keep (i) a strict count of gross
register receipts less applicable sales taxes (“Gross Rings”), and (ii)
cash reports of sales within such Acquired Stores. Register receipts shall show
for each item sold the Cost Value for such item and the markdown or discount,
if any, specifically granted by Buyer. All such records and reports shall be
made available to Buyer and Sellers during regular business hours upon
reasonable notice. Inventory shall include all Inventory sold during the
Interim Sale Period calculated on the Gross Rings basis, on the basis of one
hundred percent (100%) of the aggregate Cost Value of Inventory sold during the
Interim Sale Period (without taking into account any point of sale discounts or
point of sale markdowns). 

                    
(iv) Procedures Regarding Inventory Taking. With respect to the
reconciliation of the Inventory Taking, each of Sellers and Buyer shall have
fifteen (15) days to review and raise any objections with respect to
reconciliation of the Inventory Taking following the delivery thereof (the “Inventory
Dispute Period”), during which time, each party may dispute any amounts
reflected in the reconciliation of the Inventory Taking by giving notice in
writing to the other party specifying each of the disputed items and setting
forth in reasonable detail the basis for such dispute. Failure by Sellers or
Buyer to dispute amounts or items reflected in the Inventory Taking before the
expiration of the Inventory Dispute Period shall be deemed an acquiescence
thereto by such party. 

                    (v)
Special Provisions for Inventory Taking of Purchased Consignment Goods
Located in Stores Other Than Acquired Stores. Notwithstanding anything
contained herein to the contrary, Sellers, at their expense, shall cause
Purchased Consignment Goods located in Stores other than the Acquired Stores to
be transferred to the Distribution Center within thirty (30) days of the
Closing Date. Upon completion of the transfer of all such Purchased Consignment
Goods to the Distribution Center, Buyer and Sellers shall cause to be taken a
SKU

12

Cost Value and
Retail Value physical inventory of such goods pursuant to the Inventory Taking
Procedures set forth herein. 

          (j) Closing.
If the Sale Order is entered, then, subject to the satisfaction
or waiver by the parties of the conditions to their respective obligations set
forth in Section 7 below, the closing of
the transactions contemplated by this Agreement (the “Closing”)
shall take place at the offices of Sellers’ counsel, Kilpatrick Stockton LLP, 31
West 52nd Street, 14th Floor, New York, New York, 10019
at 10:00 a.m. prevailing Eastern Time on April 11, 2008 or at such other place,
date and time as the parties may agree in writing. The time and date upon which
the Closing occurs is referred to herein as the “Closing Date.” All
transactions at the Closing shall be deemed to take place simultaneously and
none shall be deemed to have taken place until all shall have taken place.

          (k) Deliveries
at Closing. At the Closing, (i) the Sellers shall deliver to the Buyer the
various instruments and documents referred to in Section 7(a) below, (ii) the
Buyer shall deliver to the Sellers the various instruments, and documents
referred to in Section 7(b) below, and (iii) the Buyer shall deliver to the Sellers
the Initial Cash Payment and the Letter of Credit. 

          (l) Assumption
of Purchased Leases. Upon entry of the Expedited Procedures Order or as soon as reasonably
practicable thereafter, Sellers shall serve copies of the Ten-Day Notice, the
form of Assumption and Assignment Agreement, and form of Assumption Order (the
“Lease Assumption Documents”) to each of the landlords for the Purchased
Leases (other than Purchased Leases the assumption of which the Buyer elects to
delay pursuant to the terms of this Section). Buyers shall prepare the Lease
Assumption Documents at their cost and shall timely provide such Lease
Assumption Documents to Sellers for Sellers to serve pursuant to this
paragraph. Sellers shall assign to Buyer and Buyer shall assume from
Sellers, the Purchased Leases pursuant to Section 365 of the Bankruptcy Code
and the Expedited Procedures Order, provided, that, notwithstanding anything contained herein to the
contrary, Buyer may elect to defer the assumption of up to fifteen (15) Purchased
Leases until May 15, 2008 (the “Delayed Assumption Date”). On or prior
to the Delayed Assumption Date, Sellers shall assign to Buyer such of the
remaining Purchased Leases as the Buyer may from time to time elect to have
assigned, subject to Section 365 of the Bankruptcy Code, the Expedited
Procedures Order and the provisions of this paragraph. Any Purchased Leases not
assumed by the Buyer on or prior to the Delayed Assumption Date shall be deemed
not to be assumed by the Buyer and shall be immediately rejected by the Sellers
(except with respect to the Acquired Stores referred to in the last sentence of
this paragraph that are rejected upon conclusion of the liquidation by Great
American); provided, that, Buyer shall pay all rent and other store occupancy
and store-level costs for such Stores from the Closing Date through the date of
rejection by the Sellers. Sellers shall operate the Acquired Stores for which
the Purchased Leases the Buyer delays assumption pursuant to this section for
Buyer’s benefit for the period between the Closing Date and the Delayed
Assumption Date, and Buyer shall reimburse Seller for all Store-level costs of
such operations. At Buyer’s request, Sellers shall cause its agent, Great
American, to conduct, at Buyer’s expense, the liquidation of any Inventory in
any Acquired Store for which the Purchased Lease is not assumed by Buyer on or
prior to the Delayed Assumption Date, provided, that the proceeds of such
liquidation shall be remitted to and retained by the Buyer.

13

          (m) Payment
of April Rent. On the Closing Date,
Buyer shall reimburse Sellers for all rent and other occupancy expenses paid by
the Sellers for the month of April for the Acquired Stores. 

	
 

	
 

	
3. Buyer’s Representations and Warranties. The Buyer represents
 and warrants to the Sellers that the statements contained in this Section 3
 are correct and complete as of the date of this Agreement and will be correct
 and complete as of the Closing Date (as though made on and as of the Closing
 Date).

          (a) Organization
and Standing. The Buyer is a corporation or limited liability company, as
applicably, duly organized, validly existing and in good standing under the
laws of its state of organization.

          (b) Authorization.
The Buyer has full right, power and authority to enter into this Agreement and
the Ancillary Agreements and to perform its obligations hereunder. All
corporate and other proceedings required to be taken by the Buyer to authorize
the execution, delivery and performance of this Agreement and the Ancillary
Agreements and the consummation of the transactions contemplated hereby have
been duly and properly taken. This Agreement and the Ancillary Agreements have
been duly and validly executed and delivered by the Buyer and constitute a legal,
valid and binding obligation of such party, enforceable in accordance with its
terms (except as limited by bankruptcy, insolvency and other laws of general
application relating to the enforcement of creditors’ rights and by general
equitable principles). No consent of any lender, trustee, security holder or
any other person or entity is required to be obtained by the Buyer in
connection with the execution, delivery and performance of this Agreement or
the Ancillary Agreements by the Buyer and the consummation of the transaction
contemplated hereby. The execution, delivery and performance of this Agreement
and the Ancillary Agreements by the Buyer: (i) does not violate or constitute a
breach of or default under any contract, agreement or commitment to which the
Buyer is a party, under which it is obligated or to which the Buyer is subject;
and (ii) does not violate any judgment, order, statute, rule or regulation to
which the Buyer is subject or the certificate of incorporation or by-laws of
the Buyer. No consent, approval, license, permit or authorization of, or
registration, declaration or filing with, any Governmental Entity or any third
party is required to be obtained or made by or with respect to the Buyer in
connection with the execution and delivery of this Agreement or the Ancillary
Agreements or the consummation by the Buyer of the transactions contemplated
hereby.

          (c) Litigation.
There are no actions, suits, proceedings or investigations pending in any court
or before any Governmental Entity (or, to the knowledge of the Buyer,
threatened) against the Buyer which would adversely affect its performance
under this Agreement or the Ancillary Agreements.

          (d) Financing.
The Buyer has sufficient cash, available lines of credit or other sources of
immediately available funds to enable it to purchase the Purchased Assets, pay
any other amounts to be paid by it hereunder and to otherwise carry out the
duties required of it pursuant to this Agreement.

14

	
 

	
 

	
4. Sellers’ Representations and Warranties. Each of the
 Sellers represents and warrant to the Buyer that the statements contained in
 this Section 4 are correct and complete as of the date of this Agreement and
 will be correct and complete as of the Closing Date (as though made on and as
 of the Closing Date).

          (a) Title
to Assets; Liens and Encumbrances. On the Closing Date, the Sellers shall
have good and marketable title to and be the sole owners of (or have valid and
enforceable leases for) the Purchased Assets, as applicable. All of such
tangible personal property included the Purchased Assets is being sold “as-is”
“where-is” and with all faults, if any. 

          (b) Inventory.

	
 

	
 

	
 

	
          (i)
 On the date of the Inventory Taking, the Cost Value of the Inventory
 (exclusive of Purchased Consignment Goods) will be no less than $18,000,000
 or more than $24,000,000. 

	
 

	
 

	
 

	
          (ii)
 Sellers have not and shall not purchase, or transfer to or from the Acquired
 Stores, any merchandise or goods (other than Excluded Consignment Goods)
 outside the Ordinary Course of Business in anticipation of the Closing or of
 the Inventory Taking. Following the date of this Agreement, Sellers shall not
 transfer to any of the Acquired Stores any merchandise or goods from the
 Distribution Center or the vault.

	
 

	
 

	
 

	
(c) Purchased
 Leases. 

	
 

	
 

	
 

	
          (i)
 To the knowledge of the Chief Executive Officer, Chief Financial Officer,
 Chief Operating Officer, and General Counsel of the Sellers, (i) each of the
 Purchased Leases is legal, valid, binding, enforceable and in full force and
 effect, and subject to the entry of the Sale Order, no event of default
 currently exists other than an event of default triggered solely by the
 insolvency of the Sellers, commencement of the Bankruptcy Case, or that
 cannot be cured with the payment of money, and no event has occurred
 thereunder that after the giving of notice and the passage of any applicable
 cure period would constitute an event of default and (ii) Sellers have
 neither delivered nor received any notice from the other party to any such
 lease of the termination thereof (excluding in each case defaults to be cured
 by Bankruptcy Court order). True, complete and correct copies of the Leases
 have been made available to Buyer. Subject to entry of the Sale Order, each of
 the Purchased Leases may be freely assigned (without third party consent) by
 Sellers to Buyer.

	
 

	
 

	
 

	
          (ii)
 Sellers have provided or will provide access at or before the Closing Date to
 the following items to the extent same, or the information from which same
 can be prepared (and permit Buyers to make copies thereof) are in the
 possession or control of Sellers:

	
 

	
 

	
 

	
 

	
 

	
          (A)
 True, complete and accurate copies of all Purchased Leases, including,
 without limitation, all amendments to and assignments of them and all notices
 delivered pursuant to them; and

15

	
 

	
 

	
 

	
 

	
 

	
          (B)
 True, complete and accurate copies of all environmental inspection reports
 with respect to the Acquired Stores in Sellers’ possession. Without in any
 way modifying the obligations of Sellers pursuant to this Agreement, Buyer
 acknowledges that this Section 4(c) imposes no obligation on Sellers to
 obtain new environmental inspection reports, surveys, title policies or
 commitments or site plans with respect to the Acquired Stores.

          (d)
Fixed Assets. Schedule 4(d) hereto contains a complete and
accurate list of all Tangible Personal Property of Sellers in all material
respects.

          (e)
No Brokers. Other than Rothschild Inc., Sellers have not taken any
action that would cause Buyer or Sellers to have any obligation or liability to
any person for finders’ fees, brokerage fees, agents’ commissions or like
payments in connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby.

          (f) Disclaimer
of Other Representations and Warranties. Except as expressly set forth in
this Section 4, the Sellers make no representation or warranty, statutory,
express or implied, at law or in equity, in respect of Sellers or any of their
respective assets, liabilities or operations, including with respect to
merchantability or fitness for any particular purpose or any other warranty of
quality, and any such other representations or warranties are hereby expressly
disclaimed, and there are no other warranties, statutory, express, or implied
that extend beyond the warranties contained in this Agreement. The Buyer hereby
acknowledges and agrees that, except to the extent specifically set forth in
this Section 4, the Buyer is purchasing the Purchased Assets on an “as-is,
where-is” basis and “with all faults.” 

	
 

	
 

	
5. Pre-Closing Covenants. The Parties agree as follows with
 respect to the period between the execution of this Agreement and the
 Closing.

          (a) General.
Each of the Parties will use its commercially reasonable efforts to take all
action and to do all things necessary, proper, or advisable in order to
consummate and make effective the transactions contemplated by this Agreement
(including satisfaction, but not waiver, of the Closing conditions set forth in
Section 7 below).

          (b) Reserved.

          (c) Operation
of Acquired Stores. Until the Closing Date, and except as consented to, in
writing, by the Buyer which consent shall not be unreasonably withheld, in
respect of the Acquired Stores, the Sellers will not engage in any practice,
take any action, or enter into any transaction outside the Ordinary Course of
Business, the Sellers will maintain the Inventory in the Ordinary Course of
Business, and the Sellers will use commercially reasonable efforts to preserve
their relationships with their customers, suppliers, lessors, employees and
other Persons having business relations with them. Prior to the Closing Date, Sellers shall not reject any Purchased Lease.

          (d) Access.
Up to and including the Closing Date, the Sellers will permit representatives
of the Buyer (including legal counsel and accountants) to have reasonable
access at all times to all Sellers’ premises, personnel, books, records (including
Tax records), contracts, and documents of or pertaining to the Acquired Stores.
In addition, prior to the Closing Date, the 

16

Sellers will permit authorized representatives and professionals of the
Buyer reasonable access to all management personnel of the Sellers during
normal business hours, provided, that such access shall not unreasonably
interfere with the Sellers’ ability to conduct it operations or business. The
Buyer and its representatives shall coordinate all requests for access and information
with the Sellers. In accordance with the Confidentiality Agreement among the
Buyer and the Sellers, the Buyer shall treat and hold as confidential any
Confidential Information it receives from the Sellers in the course of the
reviews contemplated by this Section 5(d), including, without limitation, any
Confidential Information it received prior to the date hereof, shall not use
any of the Confidential Information except in connection with this Agreement,
and, if this Agreement is terminated for any reason whatsoever, shall return to
the Sellers all tangible embodiments (and all copies) of the Confidential
Information which are in its possession.

          (e) Bankruptcy
Court Approval and Related Matters. The Parties acknowledge and agree as
follows:

	
 

	
 

	
 

	
          (i)
 Sellers shall, in accordance with all applicable requirements of, and
 procedures under, the Bankruptcy Code (a) file with the Bankruptcy Court a
 motion (the “Sale Motion”) seeking approval of the Sale Order (as
 defined below) and thereafter take all actions as may be reasonably necessary
 to cause such Sale Order to be issued, entered and become a Final Order, and
 (b) timely serve copies of the notices setting forth the hearing date on the
 Sale Order upon any and all parties in interest entitled or required to
 receive notice under all applicable laws, rules and regulations and orders of
 the Bankruptcy Court prior to the hearing on such motions (all such motions
 and actions relating to the Sale Order will be in form and substance
 reasonably satisfactory to Buyer).

	
 

	
 

	
 

	
          (ii)
 Sellers shall use their best efforts so that the Bankruptcy Court approves
 the Transactions by order, substantially in the form attached hereto as Exhibit
 C (and which, as entered by the Bankruptcy Court, in a form and substance
 reasonably acceptable to Buyer’s counsel) (the “Sale Order”).

	
 

	
 

	
 

	
          (iii)
 Buyer agrees to cooperate with Sellers in connection with furnishing
 information pertaining to the satisfaction of the requirement of adequate
 assurances of future performance of the Purchased Leases as required under
 Section 365 of the Bankruptcy Code. 

	
 

	
 

	
 

	
          (iv)
 Sellers will notify, as is required by the Bankruptcy Code and as reasonably
 requested by the Buyer, all parties entitled to notice of all motions,
 notices and orders required to consummate the transactions contemplated by
 this Agreement, including, without limitation, the Sale Procedures Order
 and/or the Sale Order, as modified by orders in respect of notice which may
 be issued at any time and from time to time by the Bankruptcy Court.

          (f) Reserved.

          (g) Employees
and Employee Benefits Matters. 

	
 

	
 

	
 

	
          (i) For
 each Acquired Store as to which a Purchased Lease is assumed and assigned to
 Buyer as of the Closing Date, all Employees employed at such Acquired 

17

	
 

	
 

	
 

	
Store shall
 be terminated by the Sellers effective immediately prior to the Closing Date
 and prior to the assumption and assignment of such Purchased Lease. On the
 Closing Date, Buyer shall offer employment to those employees of Sellers that
 Buyer elects to employ (such employees who actually commence employment after
 the Closing Date, the “Transferred Employees”).

	
 

	
 

	
 

	
          (ii)
 Buyer shall either maintain the current compensation and benefit arrangements
 of the Transferred Employees or provide compensation and benefits to such
 employees that Buyer determines in good faith are, in the aggregate, at least
 as favorable as the prevailing industry standard or comparable employees of
 Buyer and its affiliates. For purposes of eligibility, vesting and the
 calculation of the amount of vacation, severance or other benefits under the
 employee benefit plans of Buyer providing benefits to Transferred Employees,
 Buyer shall credit each Transferred Employee with his or her years of service
 with Sellers to the same extent as such Transferred Employee was entitled
 immediately prior to the Closing to credit for such service under any similar
 Employee Plan.

	
 

	
 

	
 

	
          (iii)
 Sellers shall be responsible for providing or discharging any (if any) and
 all notifications, benefits and liabilities to Employees and governmental
 entities under the Worker Adjustment and Retraining Notification Act of 1988,
 if applicable, or by any other applicable law relating to plant closings or
 employee separations or severance pay, including pre-closing notice or
 liabilities if actions by Buyer on or after the Closing Date result in a
 notice requirement under such laws.

	
 

	
 

	
 

	
          (iv) Other
 than as set forth in this Section 5(g), nothing contained in this Agreement
 shall be construed to require, or prevent the termination of, employment of
 any individual, require minimum benefit or compensation levels or prevent any
 change in the employee benefits provided to any individual Transferred Employee.

          (h) Government
Agreements. At all times prior to the Closing Date, Buyers shall be
authorized to communicate with any Government Entity regarding any Government
Agreements and matters pertaining thereto, solely in respect to the Purchased Assets,
provided, however, that Buyers shall have no authority to, and shall not, make
any representations, warranties or agreements on behalf of Sellers without
Sellers’ prior written consent.

	
 

	
 

	
6. Post-Closing Covenants.

          (a) General.
In case at any time after the Closing any further action is necessary to carry
out the purposes of this Agreement, each of the Parties will take such further
action (including the execution and delivery of such further instruments and
documents) as any other Party may reasonably request, all at the sole cost and
expense of the requesting Party.

          (b) Transaction
Consideration Allocation. The Transaction Consideration and
the Assumed Liabilities shall be allocated among the Purchased Assets in
accordance with an allocation proposed by Buyer and reasonably acceptable to
Sellers, which shall be prepared in accordance with Section 1060 of the Code
and delivered by Sellers to Buyer within sixty (60) calendar days after the
Transaction Consideration has been determined. Sellers (and their 

18

Affiliates)
will file Internal Revenue Service Form 8594 and all other Tax returns,
consistently with the allocation of the Transaction Consideration and the
Assumed Liabilities to the Purchased Assets as provided in accordance with this
paragraph as necessary for Sellers or their Affiliates’ tax filings. Each party
agrees promptly to provide the other with any additional information and
reasonable assistance required to complete Form 8594 or as may be required
under applicable law to report such allocation

          (c) Mail.
From and after the Closing Date, (a) the Sellers shall promptly forward to the
Buyer all mail, including checks, which the Sellers may receive and which
relate exclusively or principally to the operation of the Purchased Assets and
Assumed Liabilities and (b) the Buyer shall promptly forward to the Sellers all
mail, including checks, which the Buyer may receive and which relate to the
Excluded Assets or Retained Liabilities. 

          (d) Access
and Transition. During the Transition Period, the Sellers will permit
representatives of the Buyer to have reasonable access during normal business
hours to Sellers’ books, records (including Tax records), contracts, and
documents of or pertaining to the Acquired Stores. The Buyer shall (at its
expense) be permitted to make abstracts from, or copies of, all such documents.
During the Transition Period, Sellers will permit representative of the Buyer
to have reasonable access during normal business hours to Sellers’ headquarters
and headquarter personnel to effect a transition of operations of the Acquired
Stores to the Buyer including, without limitation, to switch over systems, and
Sellers shall provide Buyers with daily data feeds (including, without
limitation, sales tenders, warranty credits, and other operational data for the
Acquired Stores) and Sellers shall otherwise reasonably cooperate with Buyers
to effect an orderly transition of the operations of the Acquired Stores. Each
Party shall bear its own cost in respect of such access and transition provided
therein. 

          (e) License.
The Buyer shall have a royalty free license to use the Sellers’ name for the
sale of Inventory and other operation of the Acquired Stores for a period of
ninety (90) days following the Closing. After such 90 day period, Buyer shall
have no right to any further use of Sellers’ names or any of its tradenames,
trademarks or related intellectual property.

	
 

	
 

	
7. Conditions to Obligation to Close. 

          (a) Conditions
to the Buyer’s Obligation. The Buyer’s obligation to consummate the
transactions to be performed by it in connection with the Closing is subject to
satisfaction of the following conditions:

	
 

	
 

	
 

	
          (i) the
 representations and warranties set forth in Section 4 above shall be true and
 correct in all material respects at and as of the Closing Date, except to the
 extent that such representations and warranties are qualified by terms such
 as “material” and the representation contained in Section 4(b)(i), in which
 case such representations and warranties shall be true and correct in all
 respects at and as of the Closing Date;

	
 

	
 

	
 

	
          (ii) the
 Sellers shall have performed and complied with all of their covenants
 hereunder in all material respects through the Closing, except to the extent
 that such covenants are qualified by terms such as “material”, in which case
 the Sellers shall have performed and complied with all of such covenants in
 all respects through the Closing;

19

	
 

	
 

	
 

	
          (iii) the
 Sellers shall have delivered to the Buyer a certificate, dated the Closing
 Date, certifying the conditions specified in subsections (i) and (ii) above;

	
 

	
 

	
 

	
          (iv)
 there shall not be any injunction, judgment, order, decree, ruling, or charge
 in effect preventing consummation of any of the transactions contemplated by
 this Agreement;

	
 

	
 

	
 

	
          (v) the
 Parties shall have entered into a general bill of sale and assignment,
 substantially in the form of Exhibit E hereto (the “Bill of Sale”),
 with respect to the Purchased Assets, executed by the Sellers, which shall be
 in full force and effect;

	
 

	
 

	
 

	
          (vi) the
 Parties shall have entered into an assignment and assumption agreement,
 substantially in the form of Exhibit F hereto (the “Assumption
 Agreement”), pursuant to which the Buyer shall be assigned and shall
 assume the Assumed Liabilities from the Sellers, executed by the Sellers,
 which shall be in full force and effect;

	
 

	
 

	
 

	
          (vii) the
 Bankruptcy Court shall have entered the Sale Order, and such order shall not
 have been appealed, rescinded, reversed, modified or stayed;

	
 

	
 

	
 

	
          (viii) the
 Bankruptcy Court shall have entered one or more orders finding that Buyer has
 demonstrated adequate assurance of future performance as required by Section
 365 with respect to the Purchased Leases and the Bankruptcy Court shall have
 entered the Expedited Procedures Order;

	
 

	
 

	
 

	
          (ix)
 the Bankruptcy Court shall have entered an order in form and substance
 satisfactory to Buyer providing that (i) the Anti-Assignment Provisions (as
 defined in the Expedited Procedures Motion) are unenforceable; and (ii) that
 Buyer shall be entitled to exercise any and all unexpired renewal and
 extension options, rights of first refusal, non-disturbance rights and
 protections and similar provisions.

The Buyer may waive any condition specified in this Section 7(a) if it
executes a writing so stating at or prior to the Closing.

          (b) Conditions
to Sellers’ Obligation. The Sellers’ obligation to consummate the
transactions to be performed in connection with the Closing is subject to
satisfaction of the following conditions:

	
 

	
 

	
 

	
          (i) the
 representations and warranties set forth in Section 3 above shall be true and
 correct in all material respects at and as of the Closing Date except to the
 extent that any such representations and warranties are qualified by terms
 such as “material”, in which case such representations and warranties shall
 be true and correct in all respects at and as of the Closing Date;

	
 

	
 

	
 

	
          (ii) the
 Buyer shall have performed and complied with all of its covenants hereunder
 in all material respects through the Closing, except to the extent that such
 covenants are qualified by terms such as “material”, in which case the Buyer
 shall have performed and complied with all of such covenants in all respects
 through the Closing;

20

	
 

	
 

	
 

	
          (iii)
 there shall not be any injunction,
 judgment, order, decree, ruling, or charge in effect preventing consummation
 of any of the transactions contemplated by this Agreement; 

	
 

	
 

	
 

	
          (iv) the
 Sellers shall have received the Initial Cash Payment, the $40,000 payment
 referred to in Section 2(g)(i)(A)(iii), and the Letter of Credit;

	
 

	
 

	
 

	
          (v) the
 Parties shall have duly executed the Bill of Sale and the Assumption
 Agreement, which shall be in full force and effect; 

	
 

	
 

	
 

	
          (vi) the
 Bankruptcy Court shall have entered the Sale Order, and such order shall not
 have been rescinded, reversed, modified or stayed;

	
 

	
 

	
 

	
          (vii)
 that certain settlement agreement and release by and among Sellers, the
 Official Committee of Unsecured
 Creditors of Sellers, the members of such Committee identified therein, and
 Harbinger Capital Partners Master Fund I, Ltd., shall have been entered into
 by such parties and filed with the Bankruptcy Court.

The Sellers may waive any condition specified in this Section 7(b) if
they execute a writing so stating at or prior to the Closing.

	
 

	
 

	
8. Survival of Representations and Warranties. 

	
 

	
 

	
 

	
The
 representations and warranties of the parties set forth in this Agreement
 shall survive until Final Inventory Reconciliation, at which point such
 representations and warranties shall terminate. Sellers shall indemnify and
 hold harmless, the Buyer and its designees from any loss, liability, damage
 or expense relating to or arising from the Retained Liabilities.

	
 

	
 

	
9. Termination. 

	
 

	
 

	
 

	
 

	
 

	
 

	
(a)

	
Termination of Agreement. This Agreement may be terminated as
 follows:

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
(i)

	
By the Buyer, by its giving written notice to the Sellers:

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
(A)

	
at any time after April 11, 2008, if the Sale Order approving the
 sale of the Purchased Assets to the Buyer on the terms and conditions set
 forth in this Agreement hereof has not been entered on or before such date;

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
(B)

	
at any time after April 11, 2008, if the Closing has not occurred for
 any reason other than the Buyer’s material breach of its obligations
 hereunder;

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
(C)

	
if there shall have been a material breach of any of the
 representations or warranties set forth in Section 4 of this Agreement, which
 breach is not cured within five (5) days following written notice to the
 Sellers; or 

21

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
(D)

	
if there shall have been a breach by the Sellers of their covenants
 to be performed on or before the Closing Date.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
(ii)

	
by the Sellers, by their giving written notice to the Buyer:

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
(A)

	
if there shall have been a material breach of any of the
 representations or warranties set forth in Section 3 of this Agreement, which
 breach is not cured within five (5) days following written notice to the
 Buyer;

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
(B)

	
if there shall have been a breach by the Buyer of its covenants to be
 performed on or before the Closing Date, which breach is not cured within
 five (5) days following written notice to the Buyer; or

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
(C)

	
at any time after April 18, 2008, if the Closing has not occurred for
 any reason other than the Sellers’ material breach of their obligations
 hereunder.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
(iii)

	
pursuant to Section 5(f) hereof.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
(iv)

	
by the mutual written agreement of Buyer and Sellers.

          (b) Effect
of Termination. If this Agreement is terminated pursuant to Section 9(a)
above, all rights and obligations of the Parties hereunder shall terminate. 

	
 

	
 

	
10. Taxes Related To Purchased Assets and Assumed Liabilities.
 

          (a) All
stamp taxes, transfer taxes or similar taxes arising from the transfer of the
Purchased Assets and the assumption of the Assumed Liabilities, and delivery of
the Purchased Assets, and all recording and filing fees that may be imposed by
reason of the sale, transfer, assignment of the Purchased Assets shall be paid
by the Sellers on or prior to their due date. The Sellers shall file final
sales tax returns within the time periods as may be prescribed by the laws of
the jurisdictions in which Sellers are required and supply certificates of tax
clearance to the Buyer as soon as possible thereafter.

          (b) The
Sellers shall be liable for and pay all Taxes that are attributable to taxable
years or periods prior to the Closing Date. The Buyer shall be liable for and
pay all Taxes applicable to the Purchased Assets and Assumed Liabilities that
are attributable to taxable years or periods beginning on the Closing Date. 

          (c) Cooperation
on Tax Matters. The Sellers and the Buyer shall (and shall cause any
respective Affiliates to) cooperate fully with each other and make available or
cause to be made available to each other for consultation, inspection and
copying (at such other Party’s expense) in a timely fashion such personnel, Tax
data, relevant Tax Returns or portions thereof and filings, files, books,
records, documents, financial, technical and operating data, computer records
and other information as may be reasonably required (i) for the preparation by
such other Party of any Tax Returns or (ii) in connection with any Tax audit or
proceeding including one Party (or

22

an Affiliate thereof) to the extent such Tax audit or proceeding
relates to or arises from the transactions contemplated by this Agreement.

          (d) Retention
of Tax Records. After the Closing Date and until the expiration of all
statutes of limitation applicable to the Sellers’ liabilities for Taxes, the
Buyer shall retain possession of all accounting, business, financial and Tax
records and information that (i) relate to the Purchased Assets and are in
existence on the Closing Date and (ii) come into existence after the Closing
Date but relate to the Purchased Assets before the Closing Date, and the Buyer
shall give the Sellers notice and an opportunity to retain any such records in
the event that the Buyer determines to destroy or dispose of them during such
period. In addition, from and after the Closing Date, the Buyer shall provide
to the Sellers (after reasonable notice and during normal business hours and
without charge to the Sellers) access to the books, records, documents and
other information relating to the Purchased Assets as the Sellers may
reasonably deem necessary to properly prepare for, file, prove, answer,
prosecute and defend any Tax Return, claim, filing, tax audit, tax protest,
suit, proceeding or answer. Such access shall include reasonable access to any
computerized information systems that contain data regarding the Purchased
Assets.

	
 

	
 

	
11. Miscellaneous.

          (a) Third
Person Beneficiaries. Except for the members, partners, stockholders,
equity participants or joint ventures of Buyer and their respective successors
and assigns, each of which shall be an intended third person beneficiary of
this Agreement, this Agreement shall not confer any rights or remedies upon any
Person other than the Parties, and their respective successors and permitted
assigns

          (b) Entire
Agreement. This Agreement (including the documents referred to herein)
constitutes the entire agreement among the Parties and supersedes any prior
understandings, agreements, or representations by or among the Parties, written
or oral, to the extent they relate in any way to the subject matter hereof.

          (c) Succession
and Assignment. This Agreement shall be binding upon and inure to the
benefit of the Parties named herein and their respective successors and
permitted assigns. No Party may assign either this Agreement or any of his,
her, or its rights, interests, or obligations hereunder without the prior
written approval of the Buyer and the Sellers; provided, however,
that the Buyer may assign any or all of its rights, interests and obligations
hereunder to (i) a wholly-owned subsidiary, provided that any
such subsidiary agrees in writing to be bound by all of the terms, conditions
and provisions contained herein; (ii) any post-Closing purchaser of all of the
issued and outstanding stock of the Buyer or a substantial part of its Assets;
and (iii) any financial institution providing debt or equity financing to the
Buyer from time to time, but no such assignment shall relieve the Buyer of its
obligations hereunder. 

          (d) Counterparts.
This Agreement may be executed in one or more counterparts (including by means
of facsimile), each of which shall be deemed an original but all of which
together will constitute one and the same instrument.

23

          (e) Headings.
The section headings contained in this Agreement are inserted for convenience
only and shall not affect in any way the meaning or interpretation of this
Agreement.

          (f) Notices.
All notices, requests, demands, claims, and other communications hereunder will
be in writing. Any notice, request, demand, claim, or other communication
hereunder shall be deemed duly given (i) when delivered personally to the
recipient, (ii) one (1) business day after being sent to the recipient by
reputable overnight courier service (charges prepaid), (iii) one (1) business
day after being sent to the recipient by facsimile transmission or electronic
mail, or (iv) four (4) business days after being mailed to the recipient by
certified or registered mail, return receipt requested and postage prepaid, and
addressed to the intended recipient as set forth below:

	
 

	
 

	
 

	
 

	
Friedman’s
 Inc.

	
 

	
4550 Excel
 Parkway, Suite 100

	
 

	
Addison, TX
 75001

	
 

	
Attention: 

	
Steve Moore

	
 

	
Fax: 

	
(972)
 892-9608

	
 

	
 

	
 

	
 

	
with a copy
 to:

	
 

	
 

	
 

	
Kilpatrick
 Stockton LLP

	
 

	
1100
 Peachtree Street, NE

	
 

	
Suite 2800

	
 

	
Atlanta, GA
 30309-4530

	
 

	
Attention: 

	
Dennis Meir
 and Ben Barkley

	
 

	
Fax: 

	
(404)
 541-3121

	
 

	
 

	
 

	
 

	
Moses &
 Singer LLP

	
 

	
405
 Lexington Avenue

	
 

	
12th
 Floor

	
 

	
New York, NY
 10174

	
 

	
Attention: 

	
Lawrence L.
 Ginsburg and Alan Kolod

	
 

	
Fax: 

	
(212)
 554-7700

	
 

	
 

	
 

	
 

	
Harbinger
 Capital Partners Master Fund I, Ltd.

	
 

	
c/o
 Harbinger Capital Partners Funds

	
 

	
555 Madison
 Avenue, 16th Floor

	
 

	
New York,
 New York 10022

	
 

	
Attention: 

	
Jeffrey
 Kirshner, Esq.

	
 

	
Telecopier
 No.: 

	
(212)
 508-3721

	
 

	
 

	
 

	
 

	
-and-

	
 

24

	
 

	
 

	
 

	
 

	
Harbinger
 Management Corporation

	
 

	
One
 Riverchase Parkway South

	
 

	
Birmingham,
 Alabama 35244

	
 

	
Attention: 

	
General
 Counsel

	
 

	
Telecopier
 No.: 

	
(205)
 987-5568

	
 

	
 

	
 

	
 

	
Bingham
 McCutchen LLP

	
 

	
One State
 Street

	
 

	
Hartford, CT
 06103

	
 

	
Attention: 

	
Jonathan B.
 Alter, Esq.

	
 

	
Telecopier
 No.: 

	
(860)
 240-2969

	
 

	
 

	
 

	
 

	
and,

	
 

	
 

	
 

	
Whitehall
 Jewelers, Inc.

	
 

	
125 South
 Wacker Drive

	
 

	
Suite 2600

	
 

	
Chicago, IL
 60606

	
 

	
Attention: 

	
Robert Nachwalter, Esq

	
 

	
Fax: 

	
(312) 469-5683

	
 

	
 

	
 

	
 

	
with a copy
 to:

	
 

	
 

	
 

	
Proskauer
 Rose LLP

	
 

	
One
 International Place

	
 

	
Boston, MA
 02210

	
 

	
Attention: 

	
Peter J.
 Antoszyk

	
 

	
Email: 

	
pantoszyk@proskauer.com

	
 

	
Fax:

	
(617) 526-9899

          Any Party
may change the address to which notices, requests, demands, claims, and other
communications hereunder are to be delivered by giving the other Parties notice
in the manner herein set forth.

          (g) Governing
Law. This Agreement shall be construed, performed and
enforced in accordance with, and governed by, the laws of the State of Delaware
(without giving effect to the principles of conflicts of laws thereof), except
to the extent that the laws of such State are superseded by the Bankruptcy
Code; provided that the validity and enforceability of all conveyance
documents or instruments executed and delivered pursuant to this Agreement
insofar as they affect title to real property shall be governed by and
construed in accordance with the laws of the jurisdiction in which such
property is located. For so long as Sellers are subject to the jurisdiction of
the Bankruptcy Court, the parties hereto irrevocably elect as the sole judicial
forum for the adjudication of any matters arising under or in connection with
the Agreement, and consent to the exclusive jurisdiction of, the Bankruptcy
Court. After Sellers are no longer subject to the jurisdiction of the
Bankruptcy Court, any legal action or proceeding with respect to this Agreement
or the transactions contemplated hereby may be brought in the courts of the
State of Delaware or of the United States for the District of Delaware, and by
execution and delivery

25

 of this Agreement, each of the Parties
consents to the non-exclusive jurisdiction of those courts. Each of the Parties
irrevocably waives any objection, including any objection to the laying of
venue or based on the grounds of forum non conveniens, which it may now or
hereafter have to the bringing of any action or proceeding in such jurisdiction
in respect of this Agreement or the transactions contemplated hereby.

          (h) Amendments
and Waivers. No amendment of any provision of this Agreement shall be valid
unless the same shall be in writing and signed by the Buyer and the Sellers. No
waiver by any Party of any provision of this Agreement or any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be valid unless the same shall be in writing and
signed by the Party making such waiver, nor shall such waiver be deemed to
extend to any prior or subsequent default, misrepresentation, or breach of
warranty or covenant hereunder or affect in any way any rights arising by
virtue of any prior or subsequent such occurrence.

          (i) Severability.
Any term or provision of this Agreement that is invalid or unenforceable in any
situation in any jurisdiction shall not affect the validity or enforceability
of the remaining terms and provisions hereof or the validity or enforceability
of the offending term or provision in any other situation or in any other
jurisdiction.

          (j) Expenses.
Except as set forth elsewhere in this Agreement, each of the Parties will bear
its own costs and expenses (including legal fees and expenses) incurred in
connection with this Agreement and the Transactions contemplated hereby.

          (k) Construction.
The Parties have participated jointly in the negotiation and drafting of this
Agreement. In the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by the Parties
and no presumption or burden of proof shall arise favoring or disfavoring any
Party by virtue of the authorship of any of the provisions of this Agreement.
Any reference to any federal, state, local, or foreign statute or law shall be
deemed also to refer to all rules and regulations promulgated thereunder,
unless the context requires otherwise. The word “including” shall mean
including without limitation.

          (l) Incorporation
of Exhibits and Schedules. The Exhibits and Schedules identified in this
Agreement are incorporated herein by reference and made a part hereof.

[SIGNATURES ON FOLLOWING PAGE]

26

          IN WITNESS
WHEREOF, the Parties hereto have executed this Asset Purchase Agreement as of
the date first above written.

	
 

	
 

	
 

	
 

	
BUYER:

	
 

	
 

	
 

	
WHITEHALL JEWELERS, INC.

	
 

	
 

	
 

	
By: 

	
 

	
 

	

	
 

	
Name:

	
 

	
Title:

	
 

	
 

	
 

	
SELLERS:

	
 

	
 

	
 

	
FRIEDMAN’S
 INC.,

	
 

	
a
 Delaware corporation

	
 

	
 

	
 

	
By

	
 

	
 

	

	
 

	
Name: 

	
 

	
Title: 

	
 

	
 

	
 

	
CRESCENT
 JEWELERS,

	
 

	
a
 California corporation

	
 

	
 

	
 

	
By

	
 

	
 

	

	
 

	
               Name:
 

	
 

	
               Title:
 

27

Schedule 4(d)

Tangible
Personal Property

All of the
Tangible Personal Property located on the premises of each Purchased Lease or
associated with each Purchased Lease, including without limitation, all of the
categories of assets listed below:

Asset Type

Furniture
& Fixtures (including display cases, racks, shelving and signage)

Leasehold Improvements

Miscellaneous Equipment

Computer Equipment 

Computer Software 

Point of Sale Equipment

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00142-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00142-of-00352.parquet"}]]