Document:

THE
      GYMBOREE CORPORATION

     

    MANAGEMENT
      SEVERANCE PLAN

     

    Amended
      and Restated

    Effective
      April 1, 2008

     

    ARTICLE
      I

     

    PURPOSE,
      ESTABLISHMENT AND APPLICABILITY OF PLAN

     

    1. Purpose.
      The
      purpose of this Plan is to provide for the payment of severance benefits to
      Participants whose employment with the Company terminates in an Involuntary
      Termination other than in connection with a Change of Control. The Company
      believes that severance benefits of this kind will aid the Company in attracting
      and retaining the highly qualified individuals who are essential to its success.
      

     

    2. Establishment
      of Plan.
      As of
      the Effective Date, the Company hereby establishes the Plan, as set forth in
      this document.

     

    3. Applicability
      of Plan.
      Subject
      to the terms of this Plan, the benefits provided by this Plan shall be available
      to those Employees who, on or after the Effective Date, receive a Notice of
      Participation.

     

    4. Contractual
      Right to Benefits.
      This
      Plan and the Notice of Participation establish and vest in each Participant
      a
      contractual right to the benefits to which he or she is entitled pursuant to
      the
      terms and conditions thereof, enforceable by the Participant against the
      Company.

     

    ARTICLE
      II

     

    DEFINITIONS
      AND CONSTRUCTION

     

    Whenever
      used in this Plan, the following terms shall have the meanings set forth
      below.

     

    1. Base
      Compensation.
“Base
      Compensation” shall mean the gross annual cash compensation paid to each
      Participant in the form of base salary, exclusive of bonuses, other incentive
      pay, commissions, and all other pay and expense types. Base Compensation of
      a
      Participant shall be computed with reference to the greatest Base Compensation
      received by that Participant in any full payroll period during the twelve (12)
      months preceding the Participant’s termination.

     

    2. Board.
“Board”
      shall mean the Board of Directors of the Company.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    3. Cause.
“Cause”
      shall mean (i) any act of personal dishonesty taken by the Participant in
      connection with his or her responsibilities as an Employee and intended to
      result in substantial personal enrichment of the Participant, (ii) the
      Participant’s conviction of a felony that is injurious to the Company, (iii) a
      willful act by the Participant which constitutes gross misconduct and which
      is
      injurious to the Company, (iv) continued substantial violations by the
      Participant of the Participant’s employment duties which are demonstrably
      willful and deliberate on the Participant’s part after there has been delivered
      to the Participant a written demand for performance from the Company which
      specifically sets forth the factual basis for the Company’s belief that the
      Participant has not substantially performed his duties, or (v) any act that
      would constitute a material violation of the standards set forth in this Plan,
      including, without limitation, the standards of Article V.

     

    4. Change
      of Control.
“Change
      of Control” shall mean the occurrence of any of the following
      events:

     

    (i) Any
      “person” (as such term is used in Sections 13(d) and 14(d) of the
      Securities Exchange Act of 1934, as amended) becomes the “beneficial owner” (as
      defined in Rule 13d-3 under said Act), directly or indirectly, of securities
      of
      the Company representing fifty percent (50%) or more of the total voting power
      represented by the Company’s then outstanding voting securities; or

     

    (ii) A
      change
      in the composition of the Board occurring within a two-year period, as a result
      of which fewer than a majority of the directors are Incumbent Directors.
“Incumbent Directors” shall mean directors who either (A) are directors of the
      Company as of the date hereof, or (B) are elected, or nominated for election,
      to
      the Board with the affirmative votes of at least a majority of the Incumbent
      Directors at the time of such election or nomination (but shall not include
      an
      individual whose election or nomination is in connection with an actual or
      threatened proxy contest relating to the election of directors to the Company);
      or

     

    (iii) The
      consummation of a merger or consolidation of the Company with any other
      corporation, other than a merger or consolidation which would result in the
      voting securities of the Company outstanding immediately prior thereto
      continuing to represent (either by remaining outstanding or by being converted
      into voting securities of the surviving entity) more than fifty percent (50%)
      of
      the total voting power represented by the voting securities of the Company
      or
      such surviving entity outstanding immediately after such merger or
      consolidation; or 

     

    (iv) The
      consummation of the sale or disposition by the Company of all or substantially
      all of the Company’s assets.

     

    5. COBRA
      Premiums Continuation Period.
      “COBRA
      Premiums
      Continuation Period” shall mean the period set forth in a Participant’s Notice
      of Participation, which period immediately follows the Participant's Involuntary
      Termination.

     

    6. Code.
“Code”
      shall mean the Internal Revenue Code of 1986, as amended.

     

    7. Company.
      “Company” shall mean The Gymboree Corporation, any subsidiary corporations, any
      successor entities as provided in Article VII hereof, and any parent or
      subsidiaries of such successor entities.

     

    
      
         

      

      
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    8. Disability.
      “Disability” shall mean that the Participant has been unable to perform his or
      her duties as an Employee as the result of incapacity due to physical or mental
      illness, and the Participant is found to be disabled within the meaning of
      the
      Company's long-term disability plan.

     

    9. Effective
      Date.
      “Effective Date” for purposes of this most recent amendment and restatement of
      this Plan shall mean April 1, 2008.

     

    10. Employee.
      “Employee” shall mean an employee of the Company.

     

    11. ERISA.
“ERISA”
      shall mean the Employee Retirement Income Security Act of 1974, as
      amended.

     

    12. "Good
      Reason" means any of the following which occur without the Participant’s express
      written consent: (i) the material reduction of the Participant’s authority,
      duties or responsibilities relative to the Participant’s authority, duties or
      responsibilities in effect immediately prior to such reduction; provided,
      however, that a significant reduction in title, duties or responsibilities
      solely by virtue of the Company being acquired and made part of a larger entity
      (as example, when the Chief Financial Officer of The Gymboree Corporation
      remains as such following a Change of Control and is not made the Chief
      Financial Officer of the acquiring corporation) shall not constitute Good
      Reason, (ii) a material reduction by the Company in the annual base salary
      relative to the annual base salary in effect immediately prior to such
      reduction; or (iii) a material change in Participant's geographic work location
      from the location of Participant’s then current position.

     

    13. Involuntary
      Termination.
      “Involuntary Termination” shall mean (i) a termination of a Participant’s
      employment by the Company other than for Cause or (ii) by the Participant for
      Good Reason; provided, however, that an Involuntary Termination shall not occur
      for purposes of this Plan if the Participant accepts non-comparable employment
      with the Company or is offered comparable employment with the Company. A
      position will not be considered comparable under the foregoing sentence if,
      at
      the time the Participant is offered the position: (a) the annual base
      salary for the new position would result in a material reduction from the annual
      base salary of the Participant’s then current position, or (b) the new
      position involves a material change in geographic location from the location
      of
      the Participant’s then current position.

     

    14. Notice
      of Participation.
“Notice
      of Participation” shall mean an individualized written notice of participation
      in this Plan from an authorized officer of the Company.

     

    15. Participant.
      “Participant” shall mean an individual who meets the eligibility requirements of
      Article III.

     

    16. Plan.
“Plan”
      shall mean this The Gymboree Corporation Management Severance Plan.

     

    17. Plan
      Administrator.
“Plan
      Administrator” shall mean the Board of Directors of the Company, or its
      committee or designee, as shall be responsible for administering this
      Plan.

     

    
      
         

      

      
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    18. Severance
      Payment.
      “Severance Payment” shall mean the payment of severance compensation as provided
      in Article IV hereof.

     

    19. Severance
      Payment Percentage.
      “Severance Payment Percentage” shall mean, for each Participant, the Severance
      Payment Percentage set forth in such Participant’s Notice of
      Participation.

     

    ARTICLE
      III

     

    ELIGIBILITY

     

    1. Waiver.
      As a
      condition of receiving benefits under this Plan, an Employee must sign a general
      waiver and release on a form provided by the Company.

     

    2. Participation
      in Plan.
      Each
      Employee who is designated by the Board and who signs and timely returns to
      the
      Company a Notice of Participation within the time set forth in such Notice
      shall
      be a Participant in this Plan. A Participant shall cease to be a Participant
      in
      this Plan (i) upon ceasing to be an Employee, or (ii) upon receiving written
      notice from this Plan Administrator that the Participant is no longer eligible
      to participate in this Plan, unless in either case such Participant is then
      entitled to benefits hereunder. A Participant entitled to benefits hereunder
      shall remain a Participant in this Plan until the full amount of the benefits
      have been delivered to the Participant.

     

    ARTICLE
      IV

     

    SEVERANCE
      BENEFITS

     

    1. Benefits
      Upon an Involuntary Termination.
      If the
      Participant’s employment with the Company terminates as a result of Involuntary
      Termination, then, subject to Articles V and VI hereof, the Participant shall
      be
      entitled to receive severance benefits as follows:

     

    (a) Severance
      Pay Upon an Involuntary Termination.
      The
      Participant shall be entitled to receive a Severance Payment equal to the
      product obtained by multiplying the Participant’s Severance Payment Percentage
      times the Participant’s Base Compensation. Any such Severance Payment shall be
      paid in cash by the Company to the Participant in a single lump sum payment,
      less applicable withholding, within ten (10) business days of the Participant's
      termination date and shall be in lieu of any other severance or severance-type
      benefits to which the Participant may be entitled under any other
      Company-sponsored plan, practice or arrangement.

     

    EXAMPLE:
      Participant is Involuntarily Terminated as of July 1, 2008. Participant’s Base
      Compensation is $150,000. The Severance Payment Percentage set forth in the
      Participant’s Notice of Participation is 50%. The Participant is entitled to a
      Severance Payment equal to 50% x $150,000 = $75,000, payable in a lump
      sum.

     

    
      
         

      

      
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    (b) Employee
      Benefits Upon an Involuntary Termination.
      The
      Company shall continue to provide the Participant with medical, dental, vision,
      disability and life insurance coverage to the extent provided in the respective
      governing documents for each such employee benefit, including but not limited
      to
      continuation coverage pursuant to Title X of the Consolidated Budget
      Reconciliation Act of 1985 (“COBRA”). To the extent the Participant properly
      elects COBRA continuation coverage, the Company shall reimburse the Participant
      for the full cost of the premiums due for such coverage for a period that ends
      on the earliest to occur of (i) expiration or early termination of COBRA
      continuation coverage in accordance with the requirements of COBRA, and (ii)
      the
      Participant's COBRA Premiums Continuation Period. In the event the Company’s
      payment obligations end based on clause (ii) of the foregoing sentence, the
      Participant shall be responsible for properly paying the full cost of the
      premiums due for any future COBRA continuation coverage to which he or she
      is
      then entitled.

     

    2. Voluntary
      Resignation; Termination For Cause.
      If the
      Participant’s employment terminates by reason of the Participant’s voluntary
      resignation (other than for Good Reason), or if the Company terminates the
      Participant for Cause, then the Participant shall not be entitled to receive
      severance or other benefits under this Plan and shall be entitled only to those
      benefits (if any) as may be available under the Company’s then existing benefit
      plans and policies at the time of such termination.

     

    3. Disability;
      Death.
      If the
      Participant’s employment terminates by reason of the Participant’s death, or in
      the event the Company terminates the Participant’s employment following his or
      her Disability, the Participant shall not be entitled to receive severance
      or
      other benefits under this Plan and shall be entitled only to those benefits
      (if
      any) as may be available under the Company’s then existing benefits plans and
      policies at the time of such termination.

     

    4. Termination
      Following a Change of Control.
      In the
      event that a Participant’s employment terminates for any reason that entitles
      him or her to benefits under the Company’s Management Change of Control Plan, or
      any similar plan, the Participant shall not be entitled to receive severance
      benefits under this Plan and shall be entitled only to those benefits (if any)
      as may be available under the Company’s other then existing benefit plans and
      policies at the time of such termination.

     

    ARTICLE
      V

     

    FORFEITURE
      OF SEVERANCE BENEFITS

     

    1. Future
      Services with the Company.
      If a
      Participant provides services to the Company (as an employee, independent
      contractor, consultant or otherwise) during the 12-month period following his
      or
      her Involuntary Termination and does so without the prior written approval
      of
      the Company’s General Counsel or his or her delegate, the Participant shall
      repay a pro rata amount of such benefits previously paid by the Company equal
      to
      the fraction derived from the number of days remaining in such 12-month period
      divided by 365.

     

    
      
         

      

      
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    2. Violation
      of the Company’s Code of Conduct, Code of Ethics or the Participant’s
      Restrictive Covenants.
      Notwithstanding any other provision of this Plan to the contrary, if it is
      determined by the Company that a Participant has violated the Company’s code of
      conduct or code of ethics or violated any restrictive covenants contained in
      the
      Participant’s general waiver and release or any other restrictive covenants
      contained in any other Company plan or program or agreement between the Company
      and the Participant, the Participant shall be required to repay to the Company
      an amount equal to the economic value of all severance and other benefits
      already paid or provided to the Participant under this Plan and the Participant
      shall forfeit all other entitlements under this Plan. Additional forfeiture
      provisions may apply under other agreements between the Participant and the
      Company, and any such forfeiture provisions shall remain in full force and
      effect.

     

    ARTICLE
      VI

     

    EMPLOYMENT
      STATUS; WITHHOLDING

     

    1. Employment
      Status.
      This
      Plan does not constitute a contract of employment or impose on the Participant
      or the Company any obligation to retain the Participant as an Employee, to
      change the status of the Participant’s employment, or to change the Company’s
      policies regarding termination of employment. The Participant’s employment is
      and shall continue to be at-will, as defined under applicable law. If the
      Participant’s employment with the Company or a successor entity terminates for
      any reason, including (without limitation) any termination prior to a Change
      of
      Control, the Participant shall not be entitled to any payments, benefits,
      damages, awards or compensation other than as provided by this Plan, or as
      may
      otherwise be available in accordance with the Company’s established employee
      plans and practices or other agreements with the Company at the time of
      termination. 

     

    2. Taxation
      of Plan Payments.
      All
      amounts paid pursuant to this Plan shall be subject to regular payroll and
      withholding taxes.

     

    ARTICLE
      VII

     

    SUCCESSORS
      TO COMPANY AND PARTICIPANTS

     

    1. Company’s
      Successors.
      Any
      successor to the Company (whether direct or indirect and whether by purchase,
      lease, merger, consolidation, liquidation or otherwise) to all or substantially
      all of the Company’s business and/or assets shall assume the obligations under
      this Plan and agree expressly to perform the obligations under this Plan by
      executing a written agreement. For all purposes under this Plan, the term
“Company” shall include any successor to the Company’s business and/or assets
      which executes and delivers the assumption agreement described in this
      subsection or which becomes bound by the terms of this Plan by operation of
      law.

     

    2. Participant’s
      Successors.
      All
      rights of the Participant hereunder shall inure to the benefit of, and be
      enforceable by, the Participant’s personal or legal representatives, executors,
      administrators, successors, heirs, distributees, devisees and
      legatees.

     

    
      
         

      

      
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    ARTICLE
      VIII

     

    DURATION,
      AMENDMENT AND TERMINATION

     

    1. Duration.
      This
      Plan shall terminate on April 1, 2013, unless, (a) this Plan is extended by
      the
      Board, or (b) the Board terminates this Plan in accordance with this Article
      VIII.2 below. A termination of this Plan pursuant to the preceding sentences
      shall be effective for all purposes, except that such termination shall not
      affect the payment or provision of compensation or benefits earned by a
      Participant prior to the termination of this Plan.

     

    2. Amendment
      and Termination.
      The
      Board shall have the discretionary authority to amend this Plan at any time
      in
      any respect, including as to the removal or addition of Participants, or to
      terminate this Plan, in either case by resolution adopted by a majority of
      the
      Board. 

     

    ARTICLE
      IX

     

    ADMINISTRATION

     

    1. Power
      and Authority. The
      Plan
      Administrator has all power and authority necessary or convenient to administer
      this Plan, including, but not limited to, the exclusive authority and
      discretion: (a) to construe and interpret this Plan; (b) to decide all
      questions of eligibility for and the amount of benefits under this Plan;
      (c) to prescribe procedures to be followed and the forms to be used by the
      Participants pursuant to this Plan; and (d) to request and receive from all
      Participants such information as the Plan Administrator determines is necessary
      for the proper administration of this Plan.

     

    2. Section
      409A.
      The
      Company intends that this Plan not contain nonqualified deferred compensation
      subject to the requirements of Section 409A of the Code. Accordingly, this
      Plan
      will be interpreted, operated, and administered by the Company to the extent
      the
      Company deems necessary to carry out such intention and to avoid the imposition
      of any additional tax or income recognition pursuant to Section 409A, including
      any temporary or final Treasury regulations and guidance promulgated
      thereunder.

     

    
      
         

      

      
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    ARTICLE
      X

     

    CLAIMS
      PROCESS

     

    1. Claim
      for Benefits.
      A
      Participant (or any individual authorized by such Participant) has the right
      under ERISA and this Plan to file a written claim for benefits. To file a claim,
      the Participant must send the written claim to the Company’s Vice President,
      Human Resources. If
      such
      claim is denied in whole or in part, the Participant shall receive written
      notice of the decision of the Company’s Vice President, Human Resources, within
      90 days after the claim is received. Such written notice shall include the
      following information: (i) specific reasons for the denial;
      (ii) specific reference to pertinent Plan provisions on which the denial is
      based; (iii) a description of any additional material or information
      necessary for the perfection of the claim and an explanation of why it is
      needed; and (iv) steps to be taken if the Participant wishes to appeal the
      denial of the claim, including a statement of the Participant’s right to bring a
      civil action under Section 502(a) of ERISA upon an adverse decision on
      appeal. If the Company’s Vice President, Human Resources, needs more than 90
      days to make a decision, he or she shall notify the Participant in writing
      within the initial 90 days and explain why more time is required, and how long
      is needed. If a Participant (or any individual authorized by such Participant)
      submits a claim according to the procedures above and does not hear from the
      Company’s Vice President, Human Resources, within the appropriate time, the
      Participant may consider the claim denied.

     

    2. Appeals.
      The
      following appeal procedures give the rules for appealing a denied claim. If
      a
      claim for benefits is denied, in whole or in part, or if the Participant
      believes benefits under this Plan have not been properly provided, the
      Participant (or any individual authorized by such Participant) may appeal this
      denial in writing within 60 days after the denial is received. The Plan
      Administrator shall conduct a review and make a final decision within 60 days
      after receiving the Participant’s written request for review. If the Plan
      Administrator needs more than 60 days to make a decision, it shall notify the
      Participant in writing within the initial 60 days and explain why more time
      is
      required. The Plan Administrator may then take 60 more days to make a decision.
      If such appeal is denied in whole or in part, the decision shall be in writing
      and shall include the following information: (i) specific reasons for the
      denial; (ii) specific reference to pertinent Plan provisions on which the
      denial is based; (iii) a statement of the Participant’s right to access and
      receive copies, upon request and free of charge, of all documents and other
      information relevant to such claim for benefits; and (iv) a statement of
      the Participant’s (or representative’s) right to bring a civil action under
      Section 502(a) of ERISA. If the Plan Administrator does not respond within
      the applicable time frame, the Participant may consider the appeal denied.
      If a
      Participant (or any individual authorized by such Participant) submits a written
      request to appeal a denied claim, the Participant has the right to review
      pertinent Plan documents and to send a written statement of the issues and
      any
      other documents to support the claim.

     

    3. Limitations
      Period.
      A
      Participant must pursue the claim and appeal rights described above before
      seeking any other legal recourse regarding a claim for benefits. The Participant
      may thereafter file an action in a court of competent jurisdiction, but he
      or
      she must do so within 180 days after the date of the notice of decision on
      appeal or such action will be forever barred.

     

    ARTICLE
      XI

     

    NOTICE
      AND ASSIGNMENT

     

    1. General.
      Notices
      and all other communications contemplated by this Plan shall be in writing
      and
      shall be deemed to have been duly given when personally delivered or when mailed
      by U.S. registered or certified mail, return receipt requested and postage
      prepaid. In the case of the Participant, mailed notices shall be addressed
      to
      him or her at the home address which he or she most recently communicated to
      the
      Company in writing. In the case of the Company, mailed notices shall be
      addressed to its corporate headquarters, and all notices shall be directed
      to
      the attention of its Vice President, Human Resources.

     

    
      
         

      

      
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    2. Notice
      by the Participant of Potential Involuntary Termination.
      In the
      event that the Participant (a) determines that circumstances constituting Good
      Reason have occurred and (b) desires to terminate his employment with the
      Company for such Good Reason, the Participant shall give written notice to
      the
      Company of such circumstances which Participant believes constitute Good Reason
      and Participant's intent to terminate his employment. The notice shall be
      delivered by the Participant to the Company within ninety (90) calendar days
      following the date on which such circumstances constituting Good Reason
      occurred, shall indicate the specific provision or provisions in this Plan
      upon
      which the Participant relied to make such determination and shall set forth
      in
      reasonable detail the facts and circumstances claimed to provide a basis for
      such determination. The failure by the Participant to include in the notice
      any
      fact or circumstance which contributes to a showing of Good Reason shall not
      waive any right of the Participant hereunder or preclude the Participant from
      asserting such fact or circumstance in enforcing his or her rights hereunder.
      Following the notice, the Company shall have thirty (30) calendar days to remedy
      the circumstances constituting Good Reason before giving effect to such
      Involuntary Termination for purposes of this Plan.

     

    3. Assignment
      by Company.
      The
      Company may assign its rights under this Plan to an affiliate, and an affiliate
      may assign its rights under this Plan to another affiliate of the Company or
      to
      the Company; provided, however, that no assignment shall be made if the net
      worth of the assignee is less than the net worth of the Company at the time
      of
      assignment; provided, further, that the Company shall guarantee all benefits
      payable hereunder. In the case of any such assignment, the term “Company” when
      used in this Plan shall mean the corporation that actually employs the
      Participant.

     

    ARTICLE
      XII

     

    MISCELLANEOUS

     

    1. Governing
      law, Jurisdiction and Venue.
      This
      Plan
      is intended to be, and shall be interpreted as, an unfunded employee welfare
      benefit plan (within the meaning of Section 3(1) of ERISA) for a select group
      of
      management or highly compensated employees (within the meaning of Section
      2520.104-24 of Department of Labor Regulations) and it shall be enforced in
      accordance with ERISA. Any Participant or other person filing an action related
      to this Plan shall be subject to the jurisdiction and venue of the federal
      or
      state courts of the State of California.

     

    2. Severability.
      In the
      event any provision of this Plan shall be held illegal or invalid for any
      reason, the illegality or invalidity shall not affect the remaining parts of
      this Plan, and this Plan shall be construed and enforced as if the illegal
      or
      invalid provision had not been included. Further, the captions of this Plan
      are
      not part of the provisions hereof and shall have no force and
      effect.

    

    
      
         

      

      
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    3. Effect
      of Plan.
      This
      Plan, as amended, shall completely replace and supersede any prior version
      of
      this Plan and any other verbal or written document or communication concerning
      the Severance Benefits. In addition, Severance Benefits shall not be counted
      as
“compensation,” or any equivalent term, for purposes of determining benefits
      under other plans, programs or practices owing to the Participant from the
      Company, except to the extent expressly provided therein. Except as otherwise
      specifically provided for in this Plan, the Participant’s rights under all such
      agreements, plans, provisions, and practices continue to be subject to the
      respective terms and conditions thereof.

     

    
      
         

      

      
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    THE
      GYMBOREE CORPORATION

     

    MANAGEMENT
      SEVERANCE PLAN

     

    NOTICE
      OF PARTICIPATION

     

    To: Name

     

    Date: ________,
      200_

     

    The
      Board
      has designated you as a Participant in the Plan, a copy of which is attached
      hereto. The terms and conditions of your participation in the Plan are as set
      forth in the Plan and herein. The terms defined in the Plan shall have the
      same
      defined meanings in this Notice of Participation. As a condition to receiving
      benefits under the Plan, you must sign a general waiver and release in the
      form
      provided by the Company. 

     

    In
      the
      event that you are entitled to a Severance Benefits under the Plan, you will
      receive:

     

    1)
      A
      Severance Payment equal to [25%, 50% or 100%]% (the “Severance Payment
      Percentage”) of your Base Compensation payable in a lump sum, less applicable
      withholding. Notwithstanding the foregoing sentence, you will be required to
      repay the Severance Payment in the event you compete against the Company or
      violate the Company’s Code of Conduct, Code of Ethics or applicable restrictive
      covenants, as further described in Article V of the Plan.

     

    2)
      Reimbursement of premium payments for COBRA continuation coverage for a COBRA
      Premiums Continuation Period of [3, 6, 12 or 18] months.

     

    If
      you
      agree to participate in the Plan on these terms and conditions, please
      acknowledge your acceptance by signing below. Please return the signed copy
      of
      this Notice of Participation within ten (10) days of the date set forth above
      to:

     

    Vice
      President, Human Resources

    The
      Gymboree Corporation

    500
      Howard Street

    San
      Francisco, California 94105

     

    Your
      failure to timely remit this signed Notice of Participation will result in
      your
      immediate removal from the Plan. Please retain a copy of this Notice of
      Participation, along with a copy of the Plan, for your records. 

    

      
        	
                Date:__________________________________________

              	 	
                Signature:__________________________________________Exhibit
      10.1

     

     

     

     

    EXECUTION
      VERSION

     

    ASSET
      PURCHASE AGREEMENT

     

    dated
      as of

     

    April
      3, 2008

     

    by
      and among

     

    T2
      Acquisition, LLC,

     

    T1
      WDC Inc.,

     

    The
      Children's Place Services Company, LLC, 

     

    Hoop
      Retail Stores, LLC,

     

    and

     

    Hoop
      Canada, Inc.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    TABLE
      OF CONTENTS

    

      
        	
                 

              	
                 

              	 	
                Page

              
	
                ARTICLE
                  I

              	
                DEFINITIONS

              	 	
                3

              
	
                1.1

              	
                Definitions

              	 	
                3

              
	
                1.2

              	
                Interpretation

              	 	
                20

              
	 	 	 	 
	
                ARTICLE
                  II

              	
                PURCHASE
                  AND SALE OF ASSETS

              	 	
                21

              
	
                2.1

              	
                Acquired
                  Assets

              	 	
                21

              
	
                2.2

              	
                Headquarters
                  Office

              	 	
                26

              
	
                2.3

              	
                Retained
                  Assets

              	 	
                26

              
	
                2.4

              	
                Assumed
                  Liabilities

              	 	
                27

              
	
                2.5

              	
                Retained
                  Liabilities

              	 	
                28

              
	
                2.6

              	
                Inventory
                  Count

              	 	
                29

              
	
                2.7

              	
                Purchase
                  Price; Payments at Closing.

              	 	
                29

              
	
                2.8

              	
                Post-Closing
                  Adjustments.

              	 	
                31

              
	
                2.9

              	
                Setoff
                  of Amounts

              	 	
                34

              
	 	 	 	 
	
                ARTICLE
                  III

              	
                CLOSING

              	 	
                35

              
	
                3.1

              	
                Closing.

              	 	
                35

              
	
                3.2

              	
                Filings

              	 	
                36

              
	
                3.3

              	
                Closing
                  Deliveries by Seller

              	 	
                37

              
	
                3.4

              	
                Closing
                  Deliveries by USA Buyer and Canadian Buyer

              	 	
                37

              
	
                3.5

              	
                Conditions
                  Precedent to Obligations of Each Party

              	 	
                38

              
	
                3.6

              	
                Conditions
                  Precedent to Obligations of Buyer

              	 	
                39

              
	
                3.7

              	
                Conditions
                  Precedent to Obligations of Seller

              	 	
                40

              
	 	 	 	 
	
                ARTICLE
                  IV

              	
                REPRESENTATIONS
                  AND WARRANTIES OF SELLER

              	 	
                41

              
	
                4.1

              	
                Organization.

              	 	
                41

              
	
                4.2

              	
                Financial
                  Statements

              	 	
                41

              
	
                4.3

              	
                Accounting
                  Records and Accounting Controls; Minute Books.

              	 	
                41

              
	
                4.4

              	
                Tax
                  Matters.

              	 	
                42

              
	
                4.5

              	
                Contracts.

              	 	
                43

              
	
                4.6

              	
                Leases
                  and Real Property.

              	 	
                43

              
	
                4.7

              	
                Information
                  Technology

              	 	
                44

              
	
                4.8

              	
                Authorization;
                  No Conflicts.

              	 	
                45

              
	
                4.9

              	
                Legal
                  Proceedings.

              	 	
                45

              
	
                4.10

              	
                Permits

              	 	
                46

              
	
                4.11

              	
                Compliance
                  with Law

              	 	
                46

              
	
                4.12

              	
                Employee
                  Schedule

              	 	
                46

              
	
                4.13

              	
                Environmental
                  Compliance

              	 	
                46

              

      

       

      
        
          
          

        

        
          i

          
            

          

        

        
          
          

        

      

       

      
        	 	 	 	
                Page

              
	
                4.14

              	
                No
                  Brokers or Finders

              	 	
                46

              
	
                4.15

              	
                Absence
                  of Certain Changes and Events

              	 	
                46

              
	
                4.16

              	
                Title
                  to Assets

              	 	
                47

              
	
                4.17

              	
                Labor
                  Matters

              	 	
                47

              
	
                4.18

              	
                No
                  Other Agreements to Sell

              	 	
                47

              
	
                4.19

              	
                Payments

              	 	
                47

              
	 	 	 	 
	
                ARTICLE
                  V

              	
                REPRESENTATIONS
                  AND WARRANTIES OF BUYER

              	 	
                48

              
	
                5.1

              	
                Organization;
                  Capitalization.

              	 	
                48

              
	
                5.2

              	
                Authorization;
                  No Conflicts.

              	 	
                48

              
	
                5.3

              	
                Legal
                  Proceedings

              	 	
                49

              
	
                5.4

              	
                No
                  Brokers or Finders

              	 	
                49

              
	
                5.5

              	
                GST

              	 	
                49

              
	 	 	 	 
	
                ARTICLE
                  VI

              	
                COVENANTS

              	 	
                49

              
	
                6.1

              	
                Tax
                  Matters.

              	 	
                49

              
	
                6.2

              	
                Other
                  Cooperation

              	 	
                52

              
	
                6.3

              	
                Effect
                  of Due Diligence and Related Matters

              	 	
                53

              
	
                6.4

              	
                Employee
                  Matters.

              	 	
                53

              
	
                6.5

              	
                Wind-Down
                  of Stores Other than Acquired Stores; Termination of License Agreement;
                  Preservation of Buyer Claims.

              	 	
                55

              
	
                6.6

              	
                Additional
                  Covenants of Seller Prior to the Applicable Closing

              	 	
                59

              
	
                6.7

              	
                Reimbursement
                  of Prepaid Rent

              	 	
                61

              
	
                6.8

              	
                Transitional
                  Services Agreement

              	 	
                61

              
	 	 	 	 
	
                ARTICLE
                  VII

              	
                TERMINATION

              	 	
                61

              
	
                7.1

              	
                Termination

              	 	
                61

              
	
                7.2

              	
                Procedure
                  and Effect of Termination.

              	 	
                62

              
	 	 	 	 
	
                Article
                  VIII

              	
                GENERAL

              	 	
                63

              
	
                8.1

              	
                Non-Survival

              	 	
                63

              
	
                8.2

              	
                Entire
                  Agreement

              	 	
                63

              
	
                8.3

              	
                Annexes
                  and Schedules

              	 	
                63

              
	
                8.4

              	
                Amendments

              	 	
                63

              
	
                8.5

              	
                Assignment

              	 	
                63

              
	
                8.6

              	
                Effect
                  of Headings

              	 	
                64

              
	
                8.7

              	
                Counterparts;
                  Facsimile and Electronic Signatures

              	 	
                64

              
	
                8.8

              	
                Publicity
                  and Reports

              	 	
                64

              
	
                8.9

              	
                Confidentiality

              	 	
                64

              
	
                8.10

              	
                No
                  Third Party Beneficiaries

              	 	
                65

              
	
                8.11

              	
                Notices

              	 	
                65

              
	
                8.12

              	
                Expenses

              	 	
                67

              
	
                8.13

              	
                Interest

              	 	
                67

              

      

       

      
        
          
          

        

        
          ii

          
            

          

        

        
          
          

        

      

       

      
        	 	 	 	
                Page

              
	
                8.14

              	
                Waivers

              	 	
                67

              
	
                8.15

              	
                Construction

              	 	
                67

              
	
                8.16

              	
                Severability

              	 	
                67

              
	
                8.17

              	
                Governing
                  Law; Venue; Remedies; Waiver of Jury Trial.

              	 	
                67

              
	
                8.18

              	
                Limitation
                  of Liability

              	 	
                68

              
	
                8.19

              	
                Release
                  Agreement

              	 	
                69

              

      

    

    

    
      
        
        

      

      
        iii

        
          

        

      

      
        
        

      

    

    ASSET
      PURCHASE AGREEMENT

     

    This
      ASSET
      PURCHASE AGREEMENT
      (this
      "Agreement")
      is
      entered into as of April 3, 2008, by and among Hoop Retail Stores, LLC, a
      Delaware limited liability company ("USA
      Seller"),
      Hoop
      Canada, Inc., a corporation incorporated under the laws of the Province of
      New
      Brunswick, Canada ("Canadian
      Seller"
      and,
      together with USA Seller, collectively, "Seller"),
      The
      Children's Place Services Company, LLC, a Delaware limited liability company
      ("TCP
      Services Co.",
      but
      only with respect to the specific matters relating to TCP Services Co. as set
      forth herein), T2 Acquisition, LLC, a Delaware limited liability company
      ("USA
      Buyer"),
      and
      T1 WDC Inc., a corporation incorporated under the laws of the Province of Nova
      Scotia, Canada ("Canadian
      Buyer"
      and,
      together with USA Buyer, collectively, "Buyer")
      (Seller and TCP Services Co., on the one hand, and Buyer, on the other hand,
      are
      sometimes referred to each as a "party"
      and
      collectively as the "parties").
      

     

    WITNESSETH:

     

    WHEREAS,
      USA Seller and Canadian Seller, which are wholly owned Subsidiaries of The
      Children's Place Retail Stores, Inc., a Delaware corporation ("TCP"),
      are
      engaged in the operation of a chain of specialty retail stores operated under
      the "Disney Store" name in the United States and Canada pursuant to the License
      Agreement;

     

    WHEREAS,
      (i) Buyer desires to acquire certain of such specialty retail stores by way
      of
      the purchase by USA Buyer of the USA Acquired Assets from USA Seller and by
      Canadian Buyer of the Canadian Acquired Assets from Canadian Seller, and (ii)
      USA Seller and Canadian Seller wish to transfer such specialty retail stores
      by
      way of the sale of the USA Acquired Assets by USA Seller to USA Buyer and the
      sale of the Canadian Acquired Assets by Canadian Seller to Canadian Buyer,
      all
      in accordance with the terms and subject to the conditions of this Agreement;
      

     

    WHEREAS,
      Seller's authority to operate the Stores using the "Disney Store" name and
      trademarks owned by Disney Enterprises, Inc., a Delaware corporation
      ("DEI"),
      and
      its Affiliates, including TDSF, and to sell the Disney Merchandise that is
      subject to copyrights and trademarks owned by DEI and its Affiliates derives
      solely from the License Agreement, a nonexclusive copyright and trademark
      license;

     

    WHEREAS,
      TDSF alleges that the License Agreement is nonassignable as a matter of federal
      copyright and trademark law, and therefore nonassumable by Seller in the
      Bankruptcy Case pursuant to Section 365(c)(1) of the Bankruptcy
      Code;

     

    WHEREAS,
      a Private Sale will be in the best interests of Seller;

     

    WHEREAS,
      this Agreement was negotiated and documented with the understanding of all
      of
      the parties hereto that Seller would be filing a bankruptcy case and that the
      transactions contemplated herein would be carried out in such bankruptcy case;
      and

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    WHEREAS,
      TCP, DEI and TDSF have entered into a Mutual Release Agreement, dated as of
      March 17, 2008 (the "Mutual
      Release"),
      and
      concurrently herewith, TCP, DEI and TDSF
      are
      entering into a Support Agreement, dated as of even date herewith, pursuant
      to
      which, among other things, TCP has agreed to support this Agreement and the
      transactions contemplated hereby, including the filings with the Bankruptcy
      Court described in Section
      3.2
      (the
      "Support
      Agreement").

     

    NOW,
      THEREFORE, in consideration of the representations, warranties, covenants and
      agreements contained herein, the parties agree as follows:

     

    ARTICLE
      I

     

    DEFINITIONS

     

    1.1 Definitions.
      As used
      in this Agreement, the following defined terms shall have the respective
      meanings set forth below:

     

    "Acquired
      Agreements"
      has the
      meaning specified in Section
      2.1.6.

     

    "Acquired
      Assets"
      has the
      meaning specified in Section
      2.1.

     

    "Acquired
      Car Leases"
      has the
      meaning specified in Section
      2.1.10.

     

    "Acquired
      Inventory"
      means
      the USA Acquired Inventory and the Canadian Acquired Inventory. 

     

    "Acquired
      Leases"
      means
      any and all Contracts under which the premises of the Acquired Stores (and
      related storage space, if any) are leased to USA Seller or Canadian
      Seller.

     

    "Acquired
      Store Employees"
      has the
      meaning specified in Section
      6.4.1.

     

    "Acquired
      Stores"
      means
      the specialty retail stores leased and operated by USA Seller or Canadian Seller
      under the "Disney
      Store"
      name
      and set forth on the Acquired Stores Schedule (as such schedule may be amended
      pursuant to Section
      2.1).

     

    "Acquired
      Stores Schedule"
      means
Annex
      A,
      which
      sets forth the Acquired Stores by store number, location (by mall name or
      otherwise), city, state/province and country and such other information as
      the
      parties may desire (as such schedule may be amended pursuant to Section
      2.1).

     

    "Acquired
      Supplies"
      means
      the USA Acquired Supplies and the Canadian Acquired Supplies.

     

    "Action"
      means
      any action, lawsuit, charge, complaint, claim (including a letter authored
      by an
      attorney on behalf of his client alleging a Loss), counterclaim, arbitration,
      order, decree, judgment, investigation or any legal, administrative or Tax
      Proceeding, whether civil or criminal, in law or in equity, or before any
      arbitrator or Governmental Entity. 

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    "Adjustment
      Statement"
      has the
      meaning specified in Section 2.8.1.

     

    "Adjustment
      Statement Due Date"
      has the
      meaning specified in Section 2.8.1.

     

    "Adjustment
      Statement Objection"
      has the
      meaning specified in Section 2.8.2.

     

    "Affiliate"
      means,
      with respect to any Person, any other natural person or Entity that directly
      or
      indirectly, through one or more intermediaries, controls, is controlled by
      or is
      under common control with such Person. For the purposes of this definition,
      the
      term "control" (including, with correlative meanings, the terms "controlling,"
      "controlled by," and "under common control with") means the possession, directly
      or indirectly, of the power to direct or cause the direction of the management
      and policies of a Person, whether through the ownership of voting Securities,
      by
      Contract, or otherwise; provided,
      that
      (i) in no event shall Seller or any of its Affiliates be deemed an
      Affiliate of Buyer or any of its Affiliates or vice versa and (ii) for purposes
      of this Agreement, in no event shall any of the following entities or any of
      their respective Affiliates be deemed an Affiliate of Buyer: (A) Euro Disney
      Investments, Inc., EDL S.N.C. Corporation, Euro Disney Associes S.N.C., Euro
      Disneyland SNC, Euro Disney SCA, Euro Disneyland Participations S.A., Euro
      Disney S.A., EDL Holding Company, EDL Participations S.A., Centre de Congres
      Newport S.A.S., Euro Disneyland Imagineering S.a.r.l., Societe de Gerance d'Euro
      Disneyland SA and any other entity commonly known as "Euro Disney," "Euro
      Disneyland" or "Disneyland Resort Paris," and (B) Hongkong International Theme
      Parks Limited, Hong Kong Disneyland Management Limited, and Walt Disney Holdings
      (Hong Kong) Limited and any other entity commonly known as "Hong Kong Disney,"
      "Hong Kong Disneyland" or "Disneyland Resort Hong Kong." 

     

    "Agreement"
      means
      this Agreement by and among the parties as amended, restated or supplemented
      from time to time.

     

    "Applicable Closing"
      means
      the USA Closing or the Canadian Closing, as applicable or as the context may
      require.

     

    "Applicable
      Closing Date"
      means
      the USA Closing Date or the Canadian Closing Date, as applicable or as the
      context may require.

     

    "Applicable
      Petition Date"
      means
      the USA Petition Date or the Canadian Petition Date, as applicable or as the
      context may require. 

     

    "Assumed
      Liabilities"
      has the
      meaning specified in Section
      2.4.
      

     

    "Assumed
      Real Estate Taxes"
      means
      the portion of any real estate and personal property Taxes with respect to
      the
      Acquired Assets listed in Sections
      2.1.1
      through
2.1.14
      that
      relate to and accrue during periods after the Applicable Closing, based on
      an
      allocation between the number of days in the period before the Applicable
      Closing and the number of days in the period after the Applicable Closing,
      notwithstanding when such Taxes are payable or become a lien on the property.
      Such allocation will be determined based upon the number of days in each
      respective period divided by the total number of days in both
      periods.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    "Bankruptcy
      Case"
      means
      the case commenced by USA Seller by the filing of a voluntary petition under
      chapter 11 of the Bankruptcy Code.

     

    "Bankruptcy
      Code" means
      11
      U.S.C. § 101 et seq.

     

    "Bankruptcy
      Court" means
      the
      court presiding over the Bankruptcy Case. 

     

    "Bankruptcy
      Proceedings"
      means
      the Bankruptcy Case and the Canadian Insolvency Proceeding,
      collectively.

     

    "Bankruptcy
      Sale Motion" means
      the
      motion in the Bankruptcy Case seeking court approval of this Agreement and
      the
      Designation Rights Agreement. 

     

    "Bankruptcy
      Sale Order"
      means
      the Bankruptcy Court's order or orders approving the transactions set forth
      in
      this Agreement substantially in the form to be attached hereto as Annex
      B
      after
      the preparation thereof and approval thereof by the parties in their respective
      business judgment, which shall provide, among other things, that (i) other
      than
      the USA Assumed Liabilities, the sale of the USA Acquired Assets shall be free
      and clear of any and all liens, claims, or interests as permitted pursuant
      to
      Bankruptcy Code § 363(f), (ii) the sale of the USA Acquired Assets qualifies as
      a "good faith" sale within the meaning of Bankruptcy Code § 363(m) and (iii)
      Seller is authorized to enter into and consummate the Designation Rights
      Agreement and the transactions contemplated thereby.

     

    "Base
      Amount"
      means
      Fifty Two Million Five Hundred Twelve Thousand Five Hundred Dollars
      ($52,512,500).

     

    "Bifurcated
      Closing"
      has the
      meaning specified in Section
      3.1.1.

     

    "Bill
      of Sale and Assignment and Assumption Agreement"
      has the
      meaning specified in Section
      3.3.1.

     

    "Book
      Value"
      means,
      with respect to any item, the book value thereof as of the Applicable Closing,
      determined in accordance with GAAP, consistently applied.

     

    "Business"
      means
      all operations and conduct in connection with (i) operating the Acquired
      Stores, (ii) developing, manufacturing or causing the manufacture of,
      offering for sale and selling merchandise within the Acquired Stores,
      (iii) warehousing and distributing such merchandise to and among the
      Acquired Stores, (iv) corporate administration of the foregoing activities,
      and (v) other comparable activities related to the Acquired Stores. For
      purposes of clarification, the "Business" does not include any conduct or
      operations related to or in connection with the USA Remaining Stores or the
      Canadian Retained Stores or
      any
      other Retained Assets or Retained Liabilities, but rather consists solely of
      the
      conduct and operation of the business pertaining to the Acquired Stores.

     

    "Business
      Day"
      means
      any day except Saturday, Sunday or any day on which banks in the State of
      California are permitted to be closed.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    "Business
      Records"
      has the
      meaning specified in Section
      2.1.8.

     

    "Business
      Software"
      has the
      meaning specified in Section
      2.1.9.

     

    "Buyer"
      has the
      meaning specified in the preamble to this Agreement.

     

    "Canadian
      Acquired Assets"
      has the
      meaning specified in Section
      2.1.

     

    "Canadian
      Acquired Inventory"
      has the
      meaning specified in Section
      2.1.3.

     

    "Canadian
      Acquired Stores"
      has the
      meaning specified in Section
      2.1.

     

    "Canadian
      Acquired Supplies"
      has the
      meaning specified in Section
      2.1.5.

     

    "Canadian
      Assumed Liabilities"
      has the
      meaning specified in Section
      2.4.

     

    "Canadian
      Buyer"
      has the
      meaning specified in the preamble to this Agreement.

     

    "Canadian
      Cash-On-Hand"
      has the
      meaning specified in Section
      2.1.11.

     

    "Canadian
      Closing"
      has the
      meaning specified in Section
      3.1.1.

     

    "Canadian
      Closing Date"
      has the
      meaning specified in Section
      3.1.1.

     

    "Canadian
      Closing Date Estimate"
      has the
      meaning specified in Section
      2.7.3(c).
      

     

    "Canadian Disney
      Dollars and Tickets"
      has the
      meaning specified in Section
      2.1.4.

     

    "Canadian
      Dollars/Theme Park Amount"
      means
      the total amount paid therefor by Seller (if any) with respect to all Canadian
      Disney Dollars and Tickets.

     

    "Canadian
      Estimated Cash-On-Hand"
      has the
      meaning specified in Section
      2.7.3(b).

     

    "Canadian
      Estimated Dollars/Theme Park Amount"
      has the
      meaning specified in Section
      2.7.3(b).

     

    "Canadian
      Estimated Inventory Amount"
      has the
      meaning specified in Section
      2.7.3(b).

     

    "Canadian
      Final Closure Date"
      has the
      meaning specified in Section
      6.5.2.

     

    "Canadian
      Insolvency Court"
      means
      the Ontario Superior Court of Justice (Commercial List) in Toronto,
      Ontario.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    "Canadian
      Insolvency Laws"
      means
      the Companies' Creditors Arrangement Act, R.S.C. 1985, c. C-36, as amended,
      and
      any order, decree, judgment, rule or regulation made thereunder or in accordance
      therewith.

     

    "Canadian
      Insolvency Proceeding"
      means
      the voluntary proceeding commenced by Canadian Seller under Canadian Insolvency
      Laws.

     

    "Canadian
      Inventory"
      means
      all: (i) inventory (excluding any Supplies) that (A) is located in or on the
      premises of any Canadian Acquired Store (or any storage facility located at
      or
      near a Canadian Acquired Store), (B) is located in or on the premises of the
      Canadian Warehouse or (C) is in transit to the Canadian Acquired Stores from
      the
      Canadian Warehouse or in transit from a manufacturer to the Canadian Warehouse;
      and (ii) all Canadian Retained Stores Inventory.

     

    "Canadian
      Inventory Amount"
      has the
      meaning specified in Section
      2.7.3(a).

     

    "Canadian
      Petition Date"
      means
      the date on which the Canadian Insolvency Proceeding was commenced, which was
      March 27, 2008.

     

    "Canadian
      Retained Leases"
      means
      any Leases under which the premises of the Canadian Retained Stores (and related
      storage space, if any) are leased.

     

    "Canadian
      Retained Stores"
      means
      any Stores located in Canada that are not Canadian Acquired Stores, which
      Canadian Retained Stores are set forth on Annex
      C
      by store
      number, location (by mall name or otherwise), city, state/province and country
      and such other information as the parties may desire (as such annex may be
      amended to add any Stores that are removed from the Acquired Stores Schedule
      pursuant to Section
      2.1
      or to
      remove any Stores that are added to the Acquired Stores Schedule pursuant to
      Section
      2.1).
      

     

    "Canadian
      Retained Stores Dollars and Tickets"
      has the
      meaning specified in Section
      2.3.5.

     

    "Canadian
      Retained Stores Inventory"
      means
      all inventory (excluding any Supplies) that (i) is located in or on the premises
      of any Canadian Retained Store (or any storage facility located at or near
      a
      Canadian Retained Store) or (ii) is in transit to the Canadian Retained Stores
      from the Canadian Warehouse.

     

    "Canadian
      Retained Stores Supplies"
      means
      all Supplies that (i) are located in or on the premises of any Canadian Retained
      Store (or any storage facility located at or near a Canadian Retained Store)
      or
      (ii) are in transit to the Canadian Retained Stores from the Canadian
      Warehouse.

     

    "Canadian
      Sale Motion" means
      the
      motion in the Canadian Insolvency Court seeking approval of the transactions
      set
      forth in this Agreement.

     

    "Canadian
      Sale Order"
      means
      the Canadian Insolvency Court's order or orders approving the transactions
      set
      forth in this Agreement, including an order vesting in Canadian Buyer all right,
      title and interest of Canadian Seller in and to the Canadian Acquired Assets,
      free and clear of any and all Encumbrances (except the Permitted Encumbrances).
      

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    "Canadian
      Seller"
      has the
      meaning specified in the preamble to this Agreement.

     

    "Canadian
      Supplies"
      means:
      (i) all Supplies (A) located in or on the premises of any Canadian Acquired
      Store (or any storage facility located at or near a Canadian Acquired Store),
      (B) located in or on the premises of the Canadian Warehouse or (C) in transit
      to
      the Canadian Acquired Stores from the Canadian Warehouse or in transit from
      a
      manufacturer or other seller thereof to the Canadian Warehouse and (ii) all
      Canadian Retained Stores Supplies.

     

    "Canadian
      Warehouse"
      means
      the Warehouse located in Canada.

     

    "Canadian
      Wind-Down Commencement"
      has the
      meaning specified in Section
      6.5.2.

     

    "Carrying
      Costs"
      has the
      meaning specified in Section
      6.5.1.

     

    "Cash-On-Hand"
      means
      the USA Cash-On-Hand plus, if there is a Canadian Closing, the Canadian
      Cash-On-Hand.

     

    "Closing
      Date Estimate"
      means
      the sum of the USA Closing Date Estimate plus,
      if
      there is a Canadian Closing, the Canadian Closing Date Estimate.

     

    "Closing
      Date Payments"
      has the
      meaning specified in Section
      2.7.3(c).

     

    "COBRA"
      means
      the benefit continuation provisions of Section 4980B of the Tax Code and Section
      601 et. seq. of ERISA and the related regulations and published
      interpretations.

     

    "Competition
      Act"
      means
      the Competition Act, R.S.C. 1985, c-34.

     

    "Competition
      Act Approval"
      means
      the receipt of an Advance Ruling Certificate or a no-action letter from the
      Commissioner of Competition under the Competition Act, on terms acceptable
      to
      Buyer.

     

    "Confidential
      Information"
      has the
      meaning specified in Section 8.9.

     

    "Consent"
      means
      any approval, consent, waiver or comparable form of authorization that is
      required to be obtained from any Person, other than any Governmental Entity,
      with respect to any Contract of Seller or TCP Services Co. (including the
      Acquired Leases and the Headquarters Lease).

     

    "Contract"
      means
      any agreement, lease, sublease, license, evidence of debt, mortgage,
      hypothecation, charge, deed of trust, note, bond, indenture, security agreement,
      commitment, instrument, understanding, or other contract, obligation or
      arrangement of any kind, whether written or oral, including all amendments,
      renewals, extensions or other modifications thereof.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    "CPA
      Firm"
      has the
      meaning specified in Section 2.8.2.

     

    "DEI" has
      the
      meaning specified in the recitals to this Agreement. 

     

    "Designation
      Rights"
      has the
      meaning specified in the Designation Rights Agreement.

     

    "Designation
      Rights Agreement"
      means
      an agreement, by and between USA Seller and USA Buyer, to be dated as of the
      USA
      Closing Date, substantially in the form to be attached hereto as Annex
      D
      after
      the preparation thereof and approval thereof by the parties in their respective
      business judgment. 

     

    "Disney
      Dollars"
      means
      instruments commonly referred to and known as of the date hereof as "Disney
      Dollars" that may be purchased from DEI or its Affiliates and used as a method
      of payment comparable to cash to purchase a variety of products and services
      at
      the Stores and certain venues owned, leased, licensed, controlled and/or
      operated by DEI or its Affiliates.

     

    "Disney
      Dollars and Tickets"
      means
      the USA Disney Dollars and Tickets and the Canadian Disney Dollars and
      Tickets.

     

    "Disney
      Merchandise"
      has the
      meaning specified in the License Agreement. 

     

    "Disney
      Store Headquarters"
      has the
      meaning specified in Section
      2.2.

     

    "Disney
      Theme Park Passports"
      means
      general admission tickets and passes and other admission media for the
      entertainment, recreation and lodging complexes located in Anaheim, California,
      known as DISNEYLAND®
      Resort,
      and in Orange County and Osceola County, Florida, known as the WALT DISNEY
      WORLD® Resort, including paper Disney Theme Park Passports used in
      Canada.

     

    "Dollars/Theme
      Park Amount"
      means
      the USA Dollars/Theme Park Amount plus,
      if
      there is a Canadian Closing, the Canadian Dollars/Theme Park Amount.

     

    "Employee
      Benefit Plan"
      means
      (i) any employee benefit plan within the meaning of Section 3(3) of
      ERISA (regardless of whether or not such plan is subject to ERISA),
      (ii) any similar employment, consulting, severance agreement, contract,
      commitment, program or other arrangement or policy (whether written or oral)
      providing for insurance coverage (including self-insured arrangements), workers'
      compensation, disability benefits, supplemental unemployment benefits, vacation
      benefits, fringe benefits, retirement benefits, life, health or accident
      benefits (including any "voluntary employees' beneficiary association" as
      defined in Section 501(c)(9) of the Tax Code providing for the same or other
      benefits), or profit-sharing, deferred compensation, bonuses, stock options,
      stock appreciation rights or other stock-based awards, or other forms of
      incentive compensation or post-retirement insurance, compensation or benefits,
      (iii) any pension fund, or (iv) any Multiemployer Plan. 

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    "Encumbrance"
      means
      any easement, encumbrance, lease, trust or deemed trust, mortgage, security
      interest, lien, claim, interest, execution, levy, other financial or monetary
      claim, hypothecation, charge, pledge, or comparable restriction.

     

    "Entire
      Disney Store Business"
      means
      all operations and conduct in connection with (i) operating the Stores
      (including the Acquired Stores), (ii) developing, manufacturing or causing
      the manufacture of, offering for sale and selling merchandise within the Stores,
      (iii) warehousing and distributing such merchandise to and among the
      Stores, (iv) corporate administration of the foregoing activities, and
      (v) other comparable activities related to the Stores.

     

    "Entity"
      means
      any corporation, partnership, limited partnership, limited liability company,
      unlimited liability company, trust or other form of legal entity.

     

    "Environmental
      Requirements"
      means
      all federal, state, provincial and local government or agency Laws relating
      to
      pollution or protection of human health and safety or the environment (including
      air, surface water, ground water, land surface and subsurface strata), including
      Laws relating to emissions, discharges, releases or threatened releases of
      Hazardous Substances, or otherwise relating to the manufacture, processing,
      distribution, use, treatment, storage, disposal, transportation or handling
      of
      Hazardous Substances.

     

    "ERISA"
      means
      the Employee Retirement Income Security Act of 1974, as amended, and the related
      regulations and published interpretations. 

     

    "ERISA
      Affiliate"
      means
      USA Seller, Canadian Seller and all trades or businesses (whether or not
      incorporated) that are members of a group of which USA Seller or Canadian Seller
      is a member and that are (i) a "controlled group" within the meaning of
      Section 414(b) of the Tax Code, (ii) a group "under common control"
      within the meaning of Section 414(c) of the Tax Code, or (iii) an
      "affiliated service group" within the meaning of Section 414(m) or (o) of
      the Tax Code. 

     

    "Escrow
      Agent"
      means
      an escrow agent to be selected and mutually agreed upon by Buyer and Seller
      in
      their respective business judgment.

     

    "Escrow
      Agreement"
      means
      an Escrow Agreement by and among Buyer, Seller and the Escrow Agent, to be
      dated
      as of the USA Closing Date, substantially in the form to be attached hereto
      as
Annex
      E
      after
      the preparation thereof and approval thereof by the parties in their respective
      business judgment. 

     

    "Estimated
      Cash-On-Hand"
      means
      the USA Estimated Cash-On-Hand plus,
      if
      there is a Canadian Closing, the Canadian Estimated Cash-On-Hand.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    "Estimated
      Dollars/Theme Park Amount"
      means
      the USA Estimated Dollars/Theme Park Amount plus,
      if
      there is a Canadian Closing, the Canadian Estimated Dollars/Theme Park
      Amount.

     

    "Estimated
      Inventory Amount"
      means
      USA Estimated Inventory Amount plus,
      if
      there is a Canadian Closing, the Canadian Estimated Inventory
      Amount.

     

    "Excess
      Amount"
      has the
      meaning specified in Section
      2.8.3(c).

     

    "Existing
      Environmental Requirements"
      means
      those applicable provisions of any Environmental Requirements relating to the
      Business that are both in effect and required to be met by Seller prior to
      the
      Applicable Closing. 

     

    "Expiration
      Date" has
      the
      meaning specified in Section
      3.1.3.

     

    "Final
      Amount"
      means
      an amount equal to the sum of the following: (i) the Final Inventory Amount,
      plus
      (ii) the
      Final Dollars/Theme Park Amount, plus
      (iii)
      the Final Cash-On-Hand.

     

    "Final
      Cash-On-Hand"
      has the
      meaning specified in Section
      2.8.2.
      

     

    "Final
      Dollars/Theme Park Amount"
      has the
      meaning specified in Section
      2.8.2.

     

    "Final
      Inventory Amount"
      has the
      meaning specified in Section
      2.8.2.

     

    "Financial
      Statements"
      has the
      meaning specified in Section 4.2.

     

    "GAAP"
      means
      generally accepted accounting principles in the United States or in Canada,
      as
      applicable, as in effect from time to time, consistently applied. Where more
      than one alternative treatment is permitted by GAAP as of any date, GAAP shall
      be deemed to refer, as of such date, to the treatment actually utilized by
      Seller on a consistent basis prior to the Applicable Closing.

     

    "Governmental
      Entity"
      means
      any government or any agency, bureau, board, commission, court, department,
      official, political subdivision, tribunal or other instrumentality of any
      government, whether federal, state, provincial, territorial, municipal, or
      local, domestic or foreign, exercising or purporting to exercise executive,
      legislative, judicial, regulatory or administrative functions of, or pertaining
      to, government. 

     

    "GST"
      means
      goods and services tax or harmonized sales tax imposed under Part IX of the
      GST
      Act.

     

    "GST
      Act"
      means
      the Excise
      Tax Act
      (Canada).

     

    "Hazardous
      Substances"
      means
      substances that are defined or listed in, or otherwise classified under, any
      applicable Laws as "hazardous substances," "hazardous materials," "hazardous
      wastes" or "toxic substances," or any other formulation intended to define,
      list
      or classify substances by reason of deleterious properties such as ignitibility,
      corrosivity, reactivity, carcinogenicity, reproductive toxicity or "EP
      toxicity," and petroleum.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    "Headquarters
      Assets"
      has the
      meaning specified in Section
      2.2.

     

    "Headquarters
      Assets Purchase Price"
      has the
      meaning specified in Section
      2.7.1.

     

    "Headquarters
      Assignment and Assumption Agreement"
      has the
      meaning specified in Section
      2.2.

     

    "Headquarters
      Lease"
      means
      the Contract under which the premises of the Disney Store Headquarters are
      leased to TCP Services Co. 

     

    "HSR
      Act"
      means
the
      Hart
      Scott Rodino Antitrust Improvements Act of 1976, as amended. 

     

    "Indebtedness"
      of any
      Person means, without duplication, (i) all indebtedness of such Person for
      borrowed money or for the deferred purchase price of property or services
      (including reimbursement and all other obligations with respect to surety bonds,
      letters of credit and bankers' acceptances, whether or not matured, but not
      including obligations to trade creditors incurred in the ordinary course of
      business), (ii) all obligations of such Person evidenced by notes, bonds,
      debentures or similar instruments, (iii) all indebtedness of such Person created
      or arising under any conditional sale or other title retention agreements with
      respect to property acquired by such Person (even though the rights and remedies
      of the seller or lender under such agreement in the event of default are limited
      to repossession or sale of such property), (iv) all capital lease obligations
      of
      such Person, (v) all Indebtedness of other Persons guaranteed by such Person,
      (vi) all Indebtedness referred to in clause (i), (ii), (iii), (iv) or (v) above
      secured by (or for which the holder of such Indebtedness has an existing right,
      contingent or otherwise, to be secured by) any lien upon or in property
      (including accounts and contract rights) owned by such Person, even though
      such
      Person has not assumed or become liable for the payment of such Indebtedness,
      (vii) any hedging obligations with respect to the Indebtedness referred to
      in
      clause (i), (ii), (iii), (iv), (v), or (vi) above and (viii) any interest on
      or
      fees or costs with respect to the Indebtedness referred to in clause (i), (ii),
      (iii), (iv), (v), (vi) or (vii) above.

     

    "Independent
      Third Party"
      has the
      meaning specified in Section
      2.6.

     

    "Information
      Technology"
      means
      hardware, software and/or other technology constituting part of any digital
      or
      electronic information system, together with all services and Contracts related
      thereto.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    "Inventory
      Adjustment Amount"
      means
      one of the following:

     

    (i)
       if
      the
      Book Value of the USA Acquired Inventory is less than Seventy Million Three
      Hundred Fifty Thousand Dollars ($70,350,000), then the "Inventory Adjustment
      Amount" shall mean a
      subtraction from
      the Base
      Amount equal to the sum of the following: (A) seventy-five percent (75%) of
      any
      amount of such shortfall that is over Fifty Eight Million Three Hundred Fifty
      Thousand Dollars ($58,350,000) and up to Seventy Million Three Hundred Fifty
      Thousand Dollars ($70,350,000), (B) if applicable, ninety percent (90%) of
      any
      amount of such shortfall that is over Fifty Two Million Three Hundred Fifty
      Thousand Dollars ($52,350,000) and up to and including Fifty Eight Million
      Three
      Hundred Fifty Thousand Dollars ($58,350,000) and (C) if applicable, one hundred
      percent (100%) of any amount of such shortfall that is over the Book Value
      of
      the USA Acquired Inventory and up to and including Fifty Two Million Three
      Hundred Fifty Thousand Dollars ($52,350,000); or

     

    (ii)
       if
      the
      Book Value of the USA Acquired Inventory equals or exceeds Seventy Million
      Three
      Hundred Fifty Thousand Dollars ($70,350,000), then the "Inventory Adjustment
      Amount" shall mean an
      addition to the Base
      Amount equal to the sum of the following: (A) seventy-five percent (75%) of
      any
      amount of such excess that is over Seventy Million Three Hundred Fifty Thousand
      Dollars ($70,350,000) and up to Eighty Million Three Hundred Fifty Thousand
      Dollars ($80,350,000) and (B) if applicable, sixty-five percent (65%) of any
      amount of such excess that is equal to or greater than Eighty Million Three
      Hundred Fifty Thousand Dollars ($80,350,000).

     

    "Inventory
      Adjustment Escrow
      Amount"
      has the
      meaning specified in Section
      2.7.2.

     

    "Inventory
      Adjustment Escrow
      Fund"
      has the
      meaning specified in Section
      2.7.2.

     

    "Inventory
      Amount"
      means
      the USA Inventory Amount plus,
      if
      there is a Canadian Closing, the Canadian Inventory Amount.

     

    "Inventory
      Report"
      has the
      meaning specified in Section
      2.6.

     

    "Investment
      Canada Act"
      means
      the Investment Canada Act, R.S.C. 1985, c-29.

     

    "Investment
      Canada Act Approval"
      means
      approval from the Minister under the Investment Canada Act, on terms acceptable
      to Buyer.

     

    "IRS"
      means
      the Internal Revenue Service or any successor entity.

     

    "Knowledge"
      means
      the actual knowledge of the applicable Person (if such Person is a natural
      person) or the actual knowledge of any executive officer of the applicable
      Person (if such Person is an Entity) as of the date specified; provided,
      that
      with respect to Seller, "Knowledge" means the actual knowledge of Perry
      Mandarino and Glenn Reisch.

     

    "Landlord"
      means
      the party that, as of the Applicable Closing, holds the landlord's or lessor's
      interest in a Lease.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    "Law"
      or
      "Laws"
      means
      any law, statute, order, decree, judgment, rule, regulation, code,
      administrative requirement, ordinance or other pronouncement of any Governmental
      Entity or having the effect of law.

     

    "Lease"
      means
      (i) any Contract pursuant to which any real property is leased to USA Seller
      or
      Canadian Seller, including the Acquired Leases, the USA Remaining Leases, the
      Canadian Retained Leases, and any lease constituting a Retained Asset and (ii)
      the Headquarters Lease. 

     

    "License
      Agreement"
      means
      the License and Conduct of Business Agreement, dated as of November 21, 2004,
      by
      and among TDSF, USA Seller (as successor to The Disney Store, LLC, a California
      limited liability company) and Canadian Seller (as successor to The Disney
      Store
      (Canada), Ltd., a corporation incorporated under the laws of the Province of
      Ontario, Canada), as amended to date.

     

    "Loss"
      means
      any and all claims, damages, losses, liabilities, obligations, settlements,
      injunctions, suits, actions, proceedings, liens, demands, charges, fines, Taxes,
      penalties, costs and expenses of every kind and nature (whether based on tort,
      breach of contract, product liability, patent or copyright infringement or
      otherwise), including reasonable fees and expenses of attorneys and other
      professionals.

     

    "Material
      Adverse Event"
      means
      any fact, event or condition that has or would reasonably be expected to have
      a
      material adverse effect on the Business taken as a whole; provided that none
      of
      the following events or occurrences, singly or in the aggregate, shall be deemed
      to constitute a Material Adverse Event: (i) the loss of any employees of
      the Business, whether arising from or related to the transactions contemplated
      by this Agreement or otherwise, unless any such losses of employees in the
      aggregate make it impracticable for Buyer to operate the Acquired Stores or
      the
      USA Remaining Stores as determined by Buyer in its business judgment;
      (ii) subject to Section
      3.6.8, the
      closure of any Store or Stores or the financial or operational performance
      of
      any Store or Stores; (iii) the failure to order inventory subsequent to the
      order of merchandise for the fall season or the failure to take possession of
      On-Order Unpaid Merchandise that is not owned by Seller at the time of filing
      of
      the Bankruptcy Case unless such merchandise is paid in advance at the time
      Seller takes possession; (iv) events or conditions affecting TCP or any of
      its Affiliates other than Seller, provided that such events do not materially
      adversely affect the Bankruptcy Proceedings or the transactions contemplated
      by
      this Agreement; (v) any events generally affecting the economy or world
      events generally, including terrorist activities or potential or actual military
      conflicts so long as they do not have a disproportionate effect on the Business
      in relation to other industry participants; (vi) events generally affecting
      the
      industry in which Seller does business so long as they do not have a
      disproportionate effect on the Business in relation to other industry
      participants; or (vii) events or conditions arising from the announcement
      of the transactions contemplated by this Agreement or the Bankruptcy
      Proceedings. 

     

    "Material Acquired
      Contract"
      has the
      meaning specified in Section
      4.5.1.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    "Material
      Contract"
      means
      any Contract that is material to the Business or to which Seller is a party,
      including any such Contracts of the following types: (i) distributor, supplier,
      vendor and manufacturing Contracts, (ii) marketing or promotional Contracts,
      (iii) franchise, license, sales, commission, consulting or agency Contracts,
      (iv) personal property leases, (v) any Contract relating to the sale or
      disposition of material assets of the Business, (vi) any joint venture Contract
      or any other Contract involving the sharing of profits, losses, costs or
      liabilities by Seller with any other Person, (vii) any Contract that relates
      to
      any Indebtedness of Seller or any other Person, (viii) any Contract that imposes
      on Seller an obligation to pay amounts in connection with termination of such
      Contract and (ix) any Contract that limits Seller's ability to conduct any
      business or to enter into transactions with third parties. In addition, Material
      Contracts shall specifically (i) exclude Acquired Leases, USA Remaining Leases,
      Canadian Retained Leases and the Headquarters Lease, Employee Benefit Plans
      and
      the License Agreement and (ii) include all of the Acquired Agreements, the
      Acquired Car Leases and any other Material Acquired Contracts (other than
      Acquired Leases, USA Remaining Leases, Canadian Retained Leases, the
      Headquarters Lease and Employee Benefit Plans).  

     

    "Multiemployer
      Plan"
      means
      any "multiemployer plan" as defined in Section 4001(a)(3) of ERISA that is
      (or
      was) subject to Title IV of ERISA.

     

    "Mutual
      Release"
      has the
      meaning specified in the recitals to this Agreement.

     

    "On-Order
      Unpaid Merchandise"
      means
      all Disney Merchandise that has been ordered by Seller for sale through the
      Stores but that has not yet been received by and is not in the possession of
      Seller or its Affiliates and has not yet been paid for by Seller or its
      Affiliates (whether in cash, by issuance of a trade letter of credit or by
      other
      means), wherever located and in whatever stage of development, but specifically
      excluding the Acquired Inventory. A detailed listing of the On-Order Unpaid
      Merchandise has been made available to Buyer.

     

    "Original
      Sale Date"
      means
      November 21, 2004.

     

    "Other
      Store Employees"
      has the
      meaning specified in Section
      6.4.1.

     

    "Outstanding
      Royalty Amounts"
      has the
      meaning specified in Section
      2.9.

     

    "Permits"
      means
      any approval, authorization, consent, qualification, registration, license,
      permit, franchise, certificate of authority or order, or any waiver of the
      foregoing, including Investment Canada Act Approval and Competition Act
      Approval, required to be obtained from or issued by, or any notice, statement
      or
      other communication required to be filed with or delivered to, any Governmental
      Entity.

     

    "Permitted
      Encumbrance"
      means
      (i) any Encumbrance that is a lease for personal property and is reflected
      on Seller
      Schedule 1.1(a)
      or
      entered into in the ordinary course of business or (ii) easements,
      rights-of-way, restrictions and other similar charges or Encumbrances on real
      property, in each case that do not materially detract from the value of Seller's
      interest in the property in question or materially detract from or interfere
      with the use of such property in the ordinary conduct of the Business as
      currently conducted.

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    "Person"
      means
      any natural person or Entity.

     

    "Prime
      Rate"
      means
      the base rate on corporate loans at large United States money center commercial
      banks as such rate is reported under "prime rate" in The Wall Street Journal
      from time to time.

     

    "Private
      Sale"
      means a
      sale in the Bankruptcy Proceedings that is to be approved on notice and hearing
      that is not subject to any auction, overbidding, or shopping; provided,
      however,
      that, if
      notwithstanding Seller's commercially reasonable efforts to achieve a sale
      on
      such terms, a court shall order a sale by auction, overbidding, shopping or
      other form of public sale, then "Private Sale" shall include such sale in the
      form and manner as ordered by the court. 

     

    "Related
      Agreements"
      means
      the Bill of Sale and Assignment and Assumption Agreement, Designation Rights
      Agreement, the Escrow Agreement, the Headquarters Assignment and Assumption
      Agreement, the Mutual Release, the Release Agreement, the Support Agreement
      and
      the Transitional Services Agreement. 

     

    "Release
      Agreement"
      has the
      meaning specified in Section
      8.19.

     

    "Representatives"
      means,
      with respect to any Person, the officers, directors, employees, managers,
      partners, agents, consultants, advisors (including legal advisors, financial
      advisors and accountants), contractors and subcontractors of such
      Person.

     

    "Retained
      Assets"
      has the
      meaning specified in Section
      2.3.

     

    "Retained
      Employees" means
      all
      employees of Seller, TCP and their respective Affiliates, including all
      employees of the Entire Disney Store Business, but excluding the Transferred
      Employees.

     

    "Retained
      Liabilities"
      has the
      meaning specified in Section
      2.5.

     

    "Sale
      Motions"
      has the
      meaning specified in Section
      3.2

     

    "Sale
      Orders"
      means
      the Bankruptcy Sale Order and the Canadian Insolvency Sale Order,
      collectively.

     

    "Securities"
      means
      any and all debt and equity securities and other ownership interests in whatever
      form, including common stock or shares, preferred stock or shares or other
      capital stock, membership, partnership or participation interests or units,
      and
      notes, bonds, debentures or other similar debt instruments, including any
      securities, warrants, options or rights convertible into or exercisable for
      any
      of the foregoing.

     

    "Seller"
      has the
      meaning specified in the preamble to this Agreement.

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    "Seller
      Information Technology"
      means
      any Information Technology included in the Acquired Assets. 

     

    "Seller
      Only Taxes"
      has the
      meaning specified in Section
      6.1.1.

     

    "Seller
      Schedules"
      means
      those certain disclosure schedules in final form that have been separately
      delivered by Seller to Buyer not later than five (5) Business Days after the
      date of execution of this Agreement.

     

    "Severance
      Escrow Amount"
      has the
      meaning specified in Section
      2.7.2.

     

    "Severance
      Escrow Expiration Date"
      means
      the date that is ninety (90) days following the earlier to occur of the
      Expiration Date and the Canadian Closing, provided that, upon Buyer's reasonable
      request made in writing to Seller at any time prior to the Severance Escrow
      Expiration Date, the Severance Escrow Expiration Date will be extended by an
      additional ninety (90) days for a total of one hundred eighty (180)
      days.

     

    "Severance
      Escrow Fund"
      has the
      meaning specified in Section
      2.7.2.

     

    "Severance
      Fund Election"
      has the
      meaning specified in Section
      2.7.2.

     

    "Stores"
      means
      the specialty retail stores operated by Seller under the "Disney
      Store"
      name on
      the date of this Agreement. For purposes of clarification, the Stores include
      the Acquired Stores, the USA Remaining Stores and the Canadian Retained
      Stores.

     

    "Store
      Closing Sales"
      has the
      meaning specified in Section
      6.5.1.
      

     

    "Subsidiaries",
      as to
      any Person, means an Entity of which equity Securities having ordinary voting
      power (other than Securities having such power only by reason of the happening
      of a contingency) to elect a majority of the directors, managers, trustees
      or
      other comparable controlling persons of such Entity are at the time owned,
      or
      the management of which is otherwise controlled, directly or indirectly through
      one or more intermediaries, or both, by such Person. 

     

    "Supplies"
      means
      all supplies used in the Stores but not offered for sale in the Stores to the
      public, including bags, register tapes and hangers.

     

    "Support
      Agreement"
      has the
      meaning specified in the recitals to this Agreement.

     

    "Tax"
      or
      "Taxes"
      means
      (i) any and all federal, state, provincial, territorial, local, municipal
      and foreign taxes, assessments and other governmental charges, duties,
      impositions, levies, fees, surtaxes, withholdings, dues and liabilities of
      any
      kind, including taxes or other charges based upon or measured by gross receipts,
      income, profits, sales, capital, use and occupation, and value added, goods
      and
      services, GST, consumption, anti-dumping, countervail, net worth, stamp,
      registration, education, business, school, local improvement, development,
      ad
      valorem, transfer, franchise, withholding, payroll, recapture, employment,
      personal property, excise, duty, customs and real estate taxes, and, in addition
      to the foregoing, with respect to Canadian Seller, Canada Pension Plan and
      provincial pension plan contributions, employment and unemployment insurance
      contributions and premiums, worker's compensation and deductions at source,
      together, in each case, with all interest, penalties and additions imposed
      with
      respect to such amounts; (ii) any liability for the payment of any amounts
      of the type described in subparagraph (i) as a result of being a member of
      an affiliated, consolidated, combined or unitary group for any period (including
      pursuant to Section 1.1502-6 of the Treasury Regulations or comparable provision
      of state, provincial, local or foreign Tax law); and (iii) any liability
      for the payments of the amounts of the types described in subparagraph (i)
      or (ii) as a result of being a transferee of, or a successor in interest to,
      any
      Person or as a result of an express or implied obligation to indemnify any
      Person including any obligations under any agreements or arrangements with
      any
      person with respect to the liability for, or sharing of, Taxes (other than
      an
      indemnification obligation arising under this Agreement). 

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    "Tax
      Code"
      means
      the Internal Revenue Code of 1986, as amended.

     

    "Tax
      Escrow Expiration Date"
      means
      the date that is nine (9) months after the USA Closing (or, in the case of
      a
      Bifurcated Closing, the Canadian Closing, if applicable).

     

    "Tax
      Proceeding"
      has the
      meaning specified in Section
      6.1.2.

     

    "Tax
      Return"
      means a
      report, return or other information or form required to be supplied to a
      Governmental Entity with respect to Taxes, including, where permitted or
      required, combined or consolidated returns for any group of entities that
      includes any Affiliate. 

     

    "TCP"
      has
      the
      meaning specified in the recitals to this Agreement.
      

     

    "TCP
      Services Co."
      has the
      meaning specified in the preamble to this Agreement.

     

    "TDSF"
      means
      TDS Franchising, LLC, a California limited liability company. 

     

    "Transaction
      Taxes"
      has the
      meaning specified in Section
      6.1.1.

     

    "Transaction
      Taxes Escrow
      Amount"
      has the
      meaning specified in Section
      2.7.2.

     

    "Transaction
      Taxes Escrow
      Fund"
      has the
      meaning specified in Section
      2.7.2.

     

    "Transfer"
      means
      any issuance, sale, transfer, assignment, subletting, licensing, hypothecation,
      pledge as security or collateral, Encumbrance or other disposition, in whole
      or
      in part, whether voluntarily or involuntarily, whether by gift, bequest or
      otherwise. In the case of a hypothecation, pledge or Encumbrance, the Transfer
      shall be deemed to occur both at the time of the initial pledge and at any
      pledgee's sale, any sale by any secured creditor, or any retention by any
      secured creditor of the pledged assets in complete or partial satisfaction
      of
      the indebtedness for which such assets are security.

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    "Transferred
      Employees"
      has the
      meaning specified in Section
      6.4.1.
      

     

    "Transferred
      Employee Severance Costs"
      has the
      meaning specified in Section
      6.4.2(a).

     

    "Transitional
      Services Agreement"
      means a
      Transitional Services Agreement to be dated as of the USA Closing Date and
      entered into by and between Buyer and TCP Services Co., substantially
      in the form to be attached hereto as Annex
      F
      after
      the preparation thereof and approval thereof by Buyer and TCP Services Co.
      as
      contemplated by Section
      6.8.

     

    "USA
      Acquired Assets"
      has the
      meaning specified in Section
      2.1.

     

    "USA
      Acquired Inventory"
      has the
      meaning specified in Section
      2.1.3.

     

    "USA
      Acquired Stores"
      has the
      meaning specified in Section
      2.1.

     

    "USA
      Acquired Supplies"
      has the
      meaning specified in Section
      2.1.5.

     

    "USA
      Assumed Liabilities"
      has the
      meaning specified in Section
      2.4.

     

    "USA
      Buyer"
      has the
      meaning specified in the preamble to this Agreement.

     

    "USA
      Cash-On-Hand"
      has the
      meaning specified in Section
      2.1.11.

     

    "USA
      Closing"
      has the
      meaning specified in Section
      3.1.1.

     

    "USA
      Closing Date"
      has the
      meaning specified in Section
      3.1.1.

     

    "USA
      Closing Date Estimate"
      has the
      meaning specified in Section
      2.7.3(c).

     

    "USA Disney
      Dollars and Tickets"
      has the
      meaning specified in Section
      2.1.4.
      

     

    "USA
      Dollars/Theme Park Amount"
      means
      the total amount paid therefor by Seller (if any) with respect to all USA Disney
      Dollars and Tickets.

     

    "USA
      Estimated Dollars/Theme Park Amount"
      has the
      meaning specified in Section
      2.7.3(b).

     

    "USA
      Estimated Cash-On-Hand"
      has the
      meaning specified in Section
      2.7.3(b).

     

    "USA
      Estimated Inventory Amount"
      has the
      meaning specified in Section
      2.7.3(b).

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    "USA
      Inventory"
      means
      all inventory (excluding any Supplies), other than Canadian Inventory,
      consisting of the following: (i) all inventory (including Disney Merchandise)
      that is in the possession of Seller, wherever located and in whatever stage
      of
      development, including any such inventory that is located in or on the premises
      of any Store (or any storage facility located at or near a Store), located
      in or
      on the premises of any USA Warehouse, in transit to the Stores from a USA
      Warehouse or in transit from a manufacturer to a USA Warehouse, and (ii) all
      inventory (including Disney Merchandise) other than any inventory described
      in
      subparagraph (i), that has been paid for by Seller (whether in cash, by issuance
      of a trade letter of credit or by other means), wherever located and in whatever
      stage of development, including any such inventory that is in the possession
      of
      a manufacturer, whether in the form of raw materials and supplies, goods in
      process or finished goods, or in transit from a manufacturer to a USA
      Warehouse.

     

    "USA
      Inventory Amount"
      has the
      meaning specified in Section
      2.7.3(a).

     

    "USA
      Petition Date"
      means
      the date on which the Bankruptcy Case was commenced, which was March 26,
      2008.

     

    "USA Remaining
      Leases"
      means
      any Leases under which premises of the USA Remaining Stores (and related storage
      space, if any) are leased. 

     

    "USA
      Remaining Stores"
      means
      any Stores located in the United States that are not USA Acquired Stores, which
      USA Remaining Stores are set forth on Annex
      G
      by store
      number, location (by mall name or otherwise), city, state/province and country
      and such other information as the parties may desire (as such annex may be
      amended to add any Stores that are removed from the Acquired Stores Schedule
      pursuant to Section
      2.1
      or to
      remove any Stores that are added to the Acquired Stores Schedule pursuant to
      Section
      2.1).
      

     

    "USA
      Seller"
      has the
      meaning specified in the preamble to this Agreement.

     

    "USA
      Supplies"
      means
      all Supplies, other than Canadian Supplies, consisting of the following: (i)
      all
      Supplies that are in the possession of Seller, wherever located, including
      any
      Supplies that are located in or on the premises of any Store (or any storage
      facility located at or near a Store), located in or on the premises of any
      USA
      Warehouse, in transit to the Stores from a USA Warehouse or in transit from
      a
      manufacturer or other seller thereof to a USA Warehouse, and (ii) all Supplies,
      other than any Supplies described in subparagraph (i), that have been paid
      for
      by Seller (whether in cash, by issuance of a trade letter of credit or by other
      means), wherever located, including any Supplies that are in the possession
      of a
      manufacturer or other seller thereof or in transit from a manufacturer or other
      seller thereof to a USA Warehouse.

     

    "USA
      Warehouses"
      means
      all Warehouses other than the Canadian Warehouse.

     

    "Warehouses"
      has the
      meaning specified in Section
      2.3.1.

     

    "Wind-down
      Period"
      has the
      meaning specified in Section
      6.5.1.

     

    1.2 Interpretation.
      Except
      as otherwise expressly provided in this Agreement, the following rules shall
      apply hereto: (i) the singular includes the plural and the plural includes
      the singular; (ii) "or" is not exclusive, and "include" and "including" are
      not limiting; (iii) a reference to any Contract includes any permitted
      modifications, supplements, amendments, restatements, renewals, extensions
      and
      replacements; (iv) a reference in this Agreement to a section or annex is
      to the section of or annex to this Agreement unless otherwise expressly
      provided; (v) a reference to a section or paragraph in this Agreement
      shall, unless the context clearly indicates to the contrary, refer to all
      sub-parts or sub-components of any said section or paragraph; (vi) words
      such as "hereunder," "hereto," "hereof" and "herein," and other words of like
      import shall, unless the context clearly indicates to the contrary, refer to
      the
      whole of this Agreement and not to any particular clause hereof; (vii) a
      reference in this Agreement to a "party" (whether in the singular or the plural)
      shall (unless otherwise indicated herein) include both natural persons and
      Entities; (viii) references herein to "Dollars" or "$" shall mean United
      States dollars unless otherwise specifically stated; and (ix) with respect
      to any matter requiring the approval or consent of either party hereunder,
      if no
      other standard for granting or denying such approval or consent is provided
      in
      this Agreement, such determination shall be made by the respective party in
      its
      sole discretion.

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      II

     

    PURCHASE
      AND SALE OF ASSETS

     

    2.1 Acquired
      Assets.
      On
      the
      terms and subject to the conditions set forth in this Agreement (i) at the
      USA
      Closing, USA Seller shall, in accordance with the Bankruptcy Sale Order and
      pursuant to sections 363 and 365 of the Bankruptcy Code, assume and assign
      to
      USA Buyer, and USA Buyer shall acquire, (A) those Stores set forth and listed
      on
Part
      1
      of Annex A
      hereto
      (the "USA
      Acquired Stores"),
      and
      (B) all of USA Seller's rights, title, and interest in each of its executory
      contracts, assets, properties, operations and businesses and other rights and
      privileges directly used in connection with or related to the USA Acquired
      Stores and, to the extent set forth below in subparagraphs 2.1.1
      through
2.1.14
      , the
      USA Remaining Stores (subparagraphs (A) and (B), collectively, the "USA
      Acquired Assets"),
      and
      (ii) at the Canadian Closing, Canadian Seller shall, in accordance with the
      Canadian Sale Order and pursuant to Canadian Insolvency Laws, sell, convey,
      assign, transfer and deliver to Canadian Buyer, and Canadian Buyer shall
      acquire, (A) those Stores set forth and listed on Part
      2
      of Annex A hereto
      (the "Canadian
      Acquired Stores"),
      and
      (B) all of Canadian Seller's rights, title, and interest in each of its
      executory contracts, assets, properties, operations and businesses and other
      rights and privileges directly used in connection with or related to the
      Canadian Acquired Stores (subparagraphs (A) and (B) collectively, the
      "Canadian
      Acquired Assets,"
      and
      together with the USA Acquired Assets and the Headquarters Assets, collectively,
      the "Acquired
      Assets"),
      including Seller's right, title and interest in:

     

    2.1.1 the
      Acquired Leases (and no other real property leases, except as may be otherwise
      provided in the Designation Rights Agreement);

     

    2.1.2 all
      furniture, fixtures, equipment and other tangible personal property in all
      Stores (other than the Canadian Retained Stores), including machinery,
      computers, cash registers, tools, parts, supplies and motor vehicles, subject
      to
      Permitted Encumbrances;

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    2.1.3 all
      (i)
      USA Inventory in existence as of the USA Closing Date (the "USA
      Acquired Inventory")
      and
      (ii) Canadian Inventory, other than any Canadian Retained Stores Inventory,
      in
      existence as of the Canadian Closing Date (the "Canadian
      Acquired Inventory");

     

    2.1.4 all
      (i)
      Disney Dollars and Disney Theme Park Passports held for sale by Seller as of
      the
      USA Closing Date in or with respect to the Stores other than the Canadian
      Retained Stores, the Canadian Acquired Stores and the Canadian Warehouse (the
      "USA
      Disney Dollars and Tickets")
      and
      (ii) the Disney Dollars and Disney Theme Park Passports held for sale by Seller
      as of the Canadian Closing Date in or with respect to the Canadian Acquired
      Stores and the Canadian Warehouse (the "Canadian Disney
      Dollars and Tickets");

     

    2.1.5 all
      (i)
      USA Supplies in existence as of the USA Closing Date (the "USA
      Acquired Supplies")
      and
      (ii) Canadian Supplies, other than any Canadian Retained Stores Supplies, in
      existence as of the Canadian Closing Date (the "Canadian
      Acquired Supplies");

     

    2.1.6 all
      Contracts listed on Annex
      H,
      which
      annex will be prepared by Buyer after the date of this Agreement and will be
      attached hereto (the "Acquired
      Agreements")
      (provided that Seller shall have the right to maintain copies thereof to the
      extent required by Law or Seller's existing recordkeeping policies), but no
      other Contracts (other than the Acquired Leases and the Acquired Car
      Leases);

     

    2.1.7 all
      Permits, and all pending applications therefor or renewals thereof, in each
      case
      to the extent transferable, relating to the use or operation of all of the
      Stores (other than the Canadian Retained Stores) and the Acquired Assets;

     

    2.1.8 all
      data,
      manuals, files, computer tapes, databases, correspondence, lists and other
      books
      and records for the Entire Disney Store Business to the extent not related
      exclusively to TCP or its Affiliates other than Seller, including client and
      customer lists and records, price lists or pricing structures, research and
      development reports and records, production reports and records, product designs
      and drawings, operating guides and manuals, financial and accounting records,
      plans, budgets, forecasts and projections, creative materials, advertising
      materials, promotional materials, studies, reports, correspondence and other
      similar documents and records but, with respect to personnel records, only
      length of service information and not other personnel records (the "Business
      Records")
      (provided that Seller shall have the right to maintain copies thereof to the
      extent required by law or Seller's existing recordkeeping policies and (i)
      to
      the extent any such materials (other than client and customer lists and records)
      are required for the operation of TCP's business (other than the Business)
      and
      (ii) in the case of a Bifurcated Closing, to the extent such materials are
      required for the operation of the Stores located in Canada until the Canadian
      Final Closure Date); 

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

    2.1.9 all
      intellectual, proprietary and intangible rights and property related to the
      Entire Disney Store Business, in any and all media, anywhere in the world,
      including, (i) going concern value, (ii) goodwill, (iii) telephone, telecopy,
      internet and e-mail addresses, listings websites and domain names, (iv) names,
      trade names, trademarks, service marks, trade dress, logos, slogans, symbols
      and
      emblems, in each case including all registrations, applications for registration
      and common law rights and all goodwill associated therewith, (v) all patents
      and
      patent applications, (vi) all computer software (including source code, object
      code, user interfaces, templates, menus and related technology) that is used
      primarily in connection with the Entire Disney Store Business and not primarily
      used by TCP or any Affiliate thereof in connection with any business other
      than
      the Entire Disney Store Business (and specifically excluding the SAS/Market
      Max
      software) (the "Business
      Software"),
      subject to obtaining, at no cost to Seller or its Affiliates, any required
      third
      party Consent and provided that Buyer acknowledges that a material amount of
      the
      Business Software may be subject to "umbrella" license agreements granted to
      TCP
      or TCP Services Co. for itself and its Affiliates, such that Seller is entitled
      to use such Business Software in the Entire Disney Store Business only in its
      capacity as an Affiliate of TCP or TCP Services Co., and, in such situations,
      although the parties will use good faith efforts (without incurring material
      fees or expenses to the licensor) to transfer rights in such Business Software
      to Buyer, if such transfer is not possible through such efforts, then such
      Business Software will not be transferred to Buyer but Buyer's needs for such
      Business Software will be addressed in a commercially reasonable and mutually
      approved manner through the Transitional Services Agreement until such time
      as
      Buyer is able to make arrangements for replacement software, (vii) all works
      of
      authorship (whether or not copyrightable) and all registered and unregistered
      copyrights (whether in published or unpublished works), excluding copyrights
      in
      software that is not Business Software, (viii) all ideas, inventions, know-how,
      trade secrets, confidential or proprietary information, techniques, processes,
      plans, designs, concepts, works in progress, drawings and blue prints, (ix)
      moral rights and rights of attribution and integrity, (x) all licenses and
      assignments of any kind relating to any of the foregoing, and (xi) all
      documentation and tangible embodiments of or relating to any of the foregoing,
      in each case relating to the operation of the Entire Disney Store
      Business;

     

    2.1.10 the
      leases for cars that are leased by Seller and set forth on Annex
      I,
      which
      annex will be prepared by Buyer after the date of this Agreement and will be
      attached hereto (the "Acquired
      Car Leases"),
      but
      no other leases for cars;

     

    2.1.11 (i)
      all
      cash-on-hand in the USA Acquired Stores and USA Remaining Stores as of the
      USA
      Closing (the "USA Cash-On-Hand")
      and
      (ii) all cash-on-hand in the Canadian Acquired Stores as of the Canadian Closing
      ("Canadian
      Cash-On-Hand");

     

    2.1.12 all
      claims (other than Tax claims) against third parties (other than TCP or its
      Affiliates) from or related to the use or operation of the Acquired Assets;
      

     

    2.1.13 subject
      to Section
      6.7,
      all
      rights relating to deposits, prepaid rent and other prepaid expenses, claims
      for
      refunds and rights to offset in respect thereof related to the Acquired Assets;
      and

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    2.1.14 the
      Internet Store (as
      defined in the License Agreement) (which is currently operated by certain
      Affiliates of TDSF and currently occupies a portion of the website owned by
      certain Affiliates of TDSF located at www.disneyshopping.com) and the
      properties, assets, businesses and operations relating thereto, but specifically
      excluding any Warehouses.

     

    Notwithstanding
      the foregoing:

     

    (i) If,
      at
      any time prior to the Applicable Closing, with respect to any Store set forth
      on
      the Acquired Stores Schedule, Buyer discovers (through its due diligence
      investigation, Landlord negotiations or otherwise) that: (A) such Store is
      no
      longer operating in the ordinary course of business, consistent with the past
      practice of such Store, other than as a result of the failure to order or
      replenish inventory, (B) there is, prior to the Applicable Petition Date, either
      (x) outstanding unpaid rent under the Lease relating to such Store that is
      forty-five (45) days or more past due or (y) outstanding unpaid rent or other
      unpaid occupancy-related expenses or other amounts due (other than year-end
      adjustments) under the Lease relating to such Store that are in excess of an
      aggregate of $30,000 that would be required to be assumed or cured by Buyer
      if
      the Store were an Acquired Store, (C) one-third (1/3) or more of the management
      employees for such Store have resigned, been terminated or been reassigned
      to
      another position (whether within such Store, to another Store or otherwise)
      and
      have not been replaced by qualified individuals in accordance with the Seller's
      past and customary management employee hiring and replacement procedures, (D)
      there are outstanding remodel obligations for such Store that have been agreed
      to with the Landlord thereof and/or other outstanding repair, maintenance or
      remodel requirements or obligations for such Store that, in the aggregate,
      exceed One Hundred Thousand Dollars ($100,000), (E) the sales for such Store
      for
      the March 2008 retail month have decreased as compared with the sales for such
      Store for the January 2008 retail month, provided that this subparagraph (E)
      shall not apply to any Store that was opened after October 31, 2007, any Store
      for which a remodel was completed on or after October 31, 2007, or any Store
      that is undergoing a substantial remodel as of the Applicable Petition Date,
      (F)
      the actual sales or operating income for such Store for the March 2008 retail
      month are less than Seller's forecast for such Store for the March 2008 retail
      month by fifteen percent (15%) or more, provided that this subparagraph (F)
      shall not apply to any Store that was opened after October 31, 2007, any Store
      for which a remodel was completed on or after October 31, 2007, or any Store
      that is undergoing a substantial remodel as of the Applicable Petition Date,
      and/or (G) either the book value of the inventory in such Store, or the number
      of units of inventory in such Store, measured as of the date that is three
      (3)
      Business Days prior to the Applicable Closing Date, has decreased by more than
      thirty percent (30%) from the book value of the inventory or the number of
      units
      of inventory in such Store, respectively, measured as of March 1, 2008,
then,
      Buyer
      may, at any time prior to the Applicable Closing, at its option and in its
      sole
      discretion, determine that such Store shall be deleted from the Acquired Stores
      Schedule. If Buyer determines that any Store shall be deleted from the Acquired
      Stores Schedule, then (I) Buyer shall provide written notice of such deletion
      to
      Seller, (II) the Acquired Stores Schedule shall, upon such notice, be
      automatically amended to delete any such Store therefrom and (III) such Store
      shall not be included in the Acquired Assets, shall not constitute an Acquired
      Store and the Lease therefor shall not constitute an Acquired Lease, and instead
      such Store shall be included in the USA Remaining Stores (if such Store is
      located in the United States) or the Canadian Retained Stores (if such Store
      is
      located in Canada), and the Lease therefor shall constitute a USA Remaining
      Lease (if such Lease is for a Store located in the United States), or a Canadian
      Retained Lease (if such Lease is for a Store located in Canada), in each case,
      for all purposes of this Agreement.

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

     

    (ii)
       At
      any
      time prior to the Applicable Closing, Buyer may elect, in its sole discretion
      by
      providing written notice to Seller, to add any Store to the Acquired Stores
      Schedule, in which event the Acquired Stores Schedule shall, upon such notice,
      be automatically amended to add any such Store thereto and such Store shall
      no
      longer constitute a USA Remaining Store or a Canadian Retained Store, as
      applicable, and the Lease therefor shall no longer constitute a USA Remaining
      Lease or a Canadian Retained Lease, as applicable, and instead such Store shall
      be included in the Acquired Stores, and the Lease therefor shall constitute
      an
      Acquired Lease, in each case, for all purposes of this Agreement; provided,
      however, that, in addition to Buyer's Store removal rights under the preceding
      subparagraph (i), if any addition of a Store under this subparagraph (ii)
      results in there being more than Two Hundred Twenty (220) Acquired Stores on
      the
      Acquired Stores Schedule, then
      Buyer
      may, from time to time, prior to the Applicable Closing, in its sole discretion
      and without specifying any reason (including not specifying any reason set
      forth
      in the preceding subparagraph (i)), by providing written notice to Seller,
      remove any one or more of the Acquired Stores from the Acquired Stores Schedule
      up to a number of removed Acquired Stores that would result in the total number
      of Acquired Stores not exceeding Two Hundred Twenty (220), in which event the
      Acquired Stores Schedule shall, upon such notice, be automatically amended
      to
      remove such Store or Stores and such Store or Stores shall not be included
      in
      the Acquired Assets, shall not constitute Acquired Store(s) and the Lease(s)
      therefor shall not constitute Acquired Lease(s), and instead such Store or
      Stores shall be included in the USA Remaining Stores (if such Stores are located
      in the United States) or Canadian Retained Stores (if such Stores are located
      in
      Canada), and the Lease(s) therefor shall constitute USA Remaining Lease(s)
      (if
      such Stores are located in the United States) or Canadian Retained Leases (if
      such Stores are located in Canada), in each case, for all purposes of this
      Agreement.

     

    (iii) If
      at any
      time prior to the Applicable Closing, Buyer, at its option and in its sole
      discretion, determines not to assume any of the Acquired Agreements on
Annex
      H
      or the
      Acquired Car Leases on Annex
      I,
      then
      Buyer shall, at any time prior to the Applicable Closing, provide written notice
      thereof to Seller, and upon any such notice (A) Annex
      H
      or
Annex
      I,
      as
      applicable, shall automatically be amended to delete any such Contract therefrom
      and (B) any such Contract shall not constitute an Acquired Agreement or an
      Acquired Car Lease (as applicable), and therefore shall not constitute an
      Acquired Asset (and the liabilities relating thereto shall not constitute
      Assumed Liabilities), and shall instead constitute a Retained Asset (and the
      liabilities relating thereto shall constitute Retained Liabilities), in each
      case, for all purposes of this Agreement. 

     

    
      
        
        

      

      
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    (iv) Buyer
      hereby agrees that, with respect to the Lease for any Acquired Store (after
      taking into account any amendments to the Acquired Stores Schedule pursuant
      to
      this Section
      2.1),
      prior
      to the Applicable Closing, Buyer shall not terminate the existing Lease for
      such
      Acquired Store or renegotiate a new Lease with the Landlord thereof (and shall
      instead assume such Lease, either as it exists or with modifications agreed
      to
      between Buyer and the Landlord thereof), unless in connection with any such
      termination, the Landlord releases Seller from all liabilities and obligations
      under such Lease. 

     

    2.2 Headquarters
      Office.
      On the
      terms and subject to the conditions set forth in this Agreement, at the USA
      Closing, TCP Services Co. shall, and hereby agrees to, sell, convey, assign,
      transfer and deliver to USA Buyer its interests in the headquarters office
      located at 443 S. Raymond Avenue, Pasadena, California (the "Disney
      Store Headquarters"),
      together with all assets relating specifically thereto, including the
      Headquarters Lease, deposits and prepaid expenses, furniture, fixtures,
      equipment, and supplies and Information Technology located therein and owned,
      leased or licensed by Seller on the USA Closing Date (collectively, the
      "Headquarters
      Assets"),
      pursuant to an Assignment and Assumption Agreement, by and between TCP Services
      Co. and USA Buyer, to be dated as of the USA Closing Date, substantially in
      the
      form to be attached hereto as Annex
      J
      after
      the preparation thereof and approval thereof by the parties in their respective
      business judgment (the "Headquarters
      Assignment and Assumption Agreement"). 

     

    2.3 Retained
      Assets.
      Notwithstanding anything to the contrary contained in this Agreement or in
      any
      other agreement or instrument, and other than as provided in the Headquarters
      Assignment and Assumption Agreement and the Designation Rights Agreement, Seller
      shall not sell, assign, transfer, convey or deliver to Buyer, and Buyer shall
      neither purchase nor acquire from Seller or its Affiliates, any of the following
      assets (collectively, the "Retained
      Assets"):

     

    2.3.1 any
      warehouse facility used by Seller in connection with the Entire Disney Store
      Business (collectively, the "Warehouses")
      and
      the assets relating specifically thereto, including Contracts, deposits and
      prepaid expenses, insurance policies, furniture, fixtures, equipment, supplies
      and Information Technology located in the Warehouses on the Applicable Closing
      Date, but excluding the Acquired Inventory, Acquired Supplies and Disney Dollars
      and Tickets located in the Warehouses;

     

    2.3.2 the
      Canadian Retained Stores and all furniture, fixtures, equipment and other
      tangible personal property in the Canadian Retained Stores, including machinery,
      computers, cash registers, tools, parts, supplies and motor
      vehicles;

     

    2.3.3 Canadian
      Retained Stores Inventory as of the Canadian Closing;

     

    2.3.4 Canadian
      Retained Stores Supplies as of the Canadian Closing;

     

    2.3.5 Disney
      Dollars and Disney Theme Park Passports held for sale by Seller as of the
      Canadian Closing in or with respect to the Canadian Retained Stores (and
      specifically excluding Disney Dollars and Tickets) ("Canadian
      Retained Stores Dollars and Tickets");

     

    
      
        
        

      

      
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    2.3.6 any
      office space used by Seller in connection with the Entire Disney Store Business
      and the assets relating specifically thereto, including any Contracts, deposits
      and prepaid expenses, insurance policies, and furniture, fixtures, equipment,
      supplies and Information Technology located therein on the Applicable Closing
      Date, other than the Headquarters Assets as provided in Section
      2.2
      and the
      Headquarters Assignment and Assumption Agreement;

     

    2.3.7 all
      accounts receivable;

     

    2.3.8 all
      rights to refunds of Taxes for periods prior to the Applicable Closing (whether
      actually refunded or applied as a credit against future Tax liabilities), which,
      if paid or credited to Buyer, shall promptly be paid by Buyer to Seller, and
      all
      Tax benefits resulting from losses incurred by Seller and its Affiliates before
      the Applicable Closing; 

     

    2.3.9 all
      rights in software, other than the Business Software;

     

    2.3.10 all
      cash
      and cash equivalents, other than Cash-on-Hand; and 

     

    2.3.11 except
      as
      may otherwise be provided in the Designation Rights Agreement, any other assets,
      properties, operations or businesses of TCP, Seller or their Affiliates other
      than the Acquired Assets.

     

    2.4 Assumed
      Liabilities.
      Buyer
      shall assume the following liabilities of Seller and its Affiliates, and no
      others (collectively, the "Assumed
      Liabilities"),
      with
      USA Buyer assuming the following Assumed Liabilities that relate to the USA
      Acquired Assets (such Assumed Liabilities, the "USA
      Assumed Liabilities"),
      and
      Canadian Buyer assuming the following Assumed Liabilities that relate to the
      Canadian Acquired Assets (such Assumed Liabilities, the "Canadian
      Assumed Liabilities"):

     

    2.4.1 all
      liabilities relating to the Acquired Assets listed in Sections
      2.1.1
      through
2.1.14
      to the
      extent arising after the Applicable Closing, including any such liabilities
      arising under the Acquired Leases, the Acquired Car Leases and the Acquired
      Agreements and any Assumed Real Estate Taxes; 

     

    2.4.2 all
      amounts necessary to cure any arrearages prior to the Applicable Petition Date
      under the Acquired Car Leases, the Acquired Agreements and the Acquired Leases,
      but specifically excluding (i) any monthly rents and other amounts for the
      period from the Applicable Petition Date to the Applicable Closing, which shall
      be Retained Liabilities and which shall be paid by Seller when due and (ii)
      any
      intercompany liabilities arising between Seller and TCP or its Affiliates,
      whether arising before or after the Applicable Petition Date, which shall be
      Retained Liabilities; 

     

    2.4.3 all
      obligations to honor, as a means of payment in the Stores (other than the
      Canadian Retained Stores), outstanding Disney-branded Gift Cards (as defined
      in
      the License Agreement) and Disney Dollars sold by Seller to consumers prior
      to
      the Applicable Closing Date; and

     

    
      
        
        

      

      
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    2.4.4 the
      Carrying Costs, as provided in Section
      6.5.1
      and, if
      applicable, Section
      6.5.4.

     

    For
      purposes of clarification, the Assumed Liabilities shall specifically exclude
      any accounts payable of Seller, all of which shall be Retained Liabilities.
      Other than the Assumed Liabilities and the Permitted Encumbrances, the sale
      of
      the Acquired Assets to Buyer shall be free and clear of any and all liens,
      claims, interests or Encumbrances pursuant to Bankruptcy Code § 363(f) and the
      Canadian Sale Order. 

     

    In
      addition, with respect to any Acquired Car Leases, Acquired Agreements and
      Acquired Leases for which Seller or its Affiliates have provided a letter of
      credit, to the extent necessary, upon the assumption thereof or as soon as
      reasonably practicable thereafter, Buyer shall provide a replacement letter
      of
      credit therefor.

     

    2.5 Retained
      Liabilities.
      Notwithstanding anything to the contrary contained in this Agreement or in
      any
      other agreement or instrument, other than as provided in the Headquarters
      Assignment and Assumption Agreement and other than the Assumed Liabilities,
      Buyer shall not assume or be liable with respect to any liability or obligation
      of Seller or its Affiliates of whatever nature (collectively, the "Retained
      Liabilities"),
      and
      Seller and its Affiliates, as applicable, shall remain solely responsible and
      liable for all Retained Liabilities, including any liability or obligation
      of
      Seller or its Affiliates relating to or arising from the following: 

     

    2.5.1 any
      Leases, including Canadian Retained Leases, other than the Acquired
      Leases;

     

    2.5.2 
      any
      arrearages of Seller, including any arrearages relating to Canadian Retained
      Leases, other than those specifically set forth in Section
      2.4.2;

     

    2.5.3 any
      and
      all Taxes, whether imposed by Contract, Law or otherwise, other than as set
      forth in Section
      6.1
      and the
      Assumed Real Estate Taxes; 

     

    2.5.4 other
      than as set forth below in Section
      6.4.2(b)
      with
      respect to the Transferred Employees, any and all employee obligations,
      including salary, bonus, equity, payroll taxes, benefits arising under Employee
      Benefit Plans, severance, accrued vacation, COBRA obligations and
      Contracts;

     

    2.5.5 any
      escheat liability relating to Seller's operations; 

     

    2.5.6 all
      accounts payable, intercompany debt (including any intercompany debt between
      Seller and TCP or its Affiliates) and other liabilities;

     

    2.5.7 any
      monthly rents and other amounts for the period from the Applicable Petition
      Date
      to the Applicable Closing (which amounts shall be paid by Seller when
      due);

     

    
      
        
        

      

      
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    2.5.8 any
      Retained Asset (including the Canadian Retained Stores), including any liability
      or obligation arising out of a claim by any party to any Contract that does
      not
      constitute an Acquired Asset arising out of the determination not to transfer
      such Contract; 

     

    2.5.9 any
      Action arising against Seller at any time; provided,
      however,
      that,
      with respect to any Action relating to or arising out of the Acquired Assets
      or
      the USA Remaining Stores, the Retained Liabilities shall only include such
      Actions that relate to the operation of the Acquired Assets or the USA Remaining
      Stores prior to the Applicable Closing; and

     

    2.5.10 any
      claim
      or assertion that Buyer has transferee liability (other than for the Assumed
      Liabilities) or successor liability, including for any Tax claims or Actions,
      whether such claims or Actions are made by any Taxing authority where Seller
      currently files Tax Returns or by any other Taxing authority in any other
      jurisdiction (whether located in the United States, Canada, or any other
      country). 

     

    2.6 Inventory
      Count.
      The
      parties agree that prior to the USA Closing, they shall engage an independent
      third party that is in the business of conducting physical inventory counts,
      to
      be mutually agreed upon by Buyer and Seller (the "Independent
      Third Party"),
      to
      conduct a physical inventory of (i) the USA Acquired Inventory as of the USA
      Closing and (ii) the Canadian Acquired Inventory as of the Canadian Closing
      (if
      there is a Canadian Closing). Seller and Buyer shall each pay one half (1/2)
      of
      the fees of such Independent Third Party for each of the foregoing physical
      inventories. Such Independent Third Party shall deliver to Buyer and Seller
      a
written
      inventory report, describing the quantity of the USA Acquired Inventory and,
      if
      there is a Canadian Closing, then the Canadian Acquired Inventory (such reports,
      the "Inventory
      Report"),
      as
      promptly as possible following the Applicable Closing, but in no event later
      than five (5) Business Days following the Applicable Closing Date.

     

    2.7 Purchase
      Price; Payments at Closing. 

     

    2.7.1 Purchase
      Price for Headquarters Assets and Closing Payment for Headquarters
      Assets.
      The
      Purchase Price payable to TCP Services Co. for the Headquarters Assets shall
      be
      an amount equal to Four Million Dollars ($4,000,000) (the "Headquarters
      Assets Purchase Price").
      At
      the USA Closing, Buyer shall pay to TCP Services Co. an amount equal to the
      Headquarters Assets Purchase Price, which shall be apportioned between TCP
      Services Co. and Seller in the manner, and shall be paid to the accounts,
      specified in written instructions provided to Buyer by TCP Services Co. at
      least
      two (2) Business Days prior to the USA Closing. 

     

    2.7.2 Deposit
      by Buyer into Escrow.
      At the
      USA Closing, (i) Seller and Buyer shall execute and deliver to each other and
      the Escrow Agent the Escrow Agreement and (ii) Buyer shall deliver to the Escrow
      Agent the following amounts: (A) Six Million Dollars ($6,000,000) (the
      "Inventory
      Adjustment Escrow Amount,"
      which
      amount, together with all interest or any other earnings or income generated
      on
      or in respect of the foregoing funds or any proceeds therefrom shall constitute
      the "Inventory
      Adjustment Escrow Fund"),
      (B)
      Five Hundred Thousand Dollars ($500,000) (the "Transaction
      Taxes Escrow Amount,"
      which
      together with all interest or any other earnings or income generated on or
      in
      respect of the foregoing funds or any proceeds therefrom shall constitute the
      "Transaction
      Taxes Escrow
      Fund"),
      and
      (C) One Million Dollars ($1,000,000) (the "Severance
      Escrow Amount,"
      which
      amount, together with all interest or any other earnings or income generated
      on
      or in respect of the foregoing funds or any proceeds therefrom shall constitute
      the "Severance
      Escrow Fund");
      provided, that, at the election of Canadian Seller in its sole discretion,
      to be
      made by providing written notice to Buyer at least five (5) Business Days prior
      to the USA Closing, the Severance Escrow Amount may be paid and delivered by
      Canadian Seller, rather than Buyer, to the Escrow Agent (such election, if
      made
      and if the Severance Escrow Amount is actually paid and delivered by Canadian
      Seller, the "Severance
      Fund Election").
      The
      Escrow Agreement shall provide for the Inventory Adjustment Escrow Fund, the
      Transaction Taxes Escrow Fund and the Severance Escrow Fund to be held by the
      Escrow Agent in accordance with the terms thereof (which, among other things,
      shall provide for the expiration of the Inventory Adjustment Escrow Fund
      following the completion of all procedures and the payment of all amounts due
      under Section
      2.8,
      the
      expiration of the Transaction Taxes Escrow Fund on the Tax Escrow Expiration
      Date and the expiration of the Severance Escrow Fund on the Severance Escrow
      Expiration Date).

     

    
      
        
        

      

      
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    2.7.3 Purchase
      Price for Acquired Assets Other than Headquarters Assets; Delivery of Seller
      Estimates; Additional Closing Payments.
      

     

    (a) Purchase
      Price for Acquired Assets Other than Headquarters Assets.
      The
      purchase price for (i) the USA Acquired Assets shall equal the following: (x)
      the Base Amount, as adjusted pursuant to the Inventory Adjustment Amount as
      of
      the USA Closing (the "USA
      Inventory Amount"),
      plus
      (y) the
      USA Dollars/Theme Park Amount, plus
      (z) the
      USA Cash-On-Hand, and (ii) the Canadian Acquired Assets shall equal the
      following: (x) the Book Value of the Canadian Acquired Inventory as of the
      Canadian Closing, multiplied by 0.75 (the "Canadian
      Inventory Amount"),
      plus
      (y) the
      Canadian Dollars/Theme Park Amount, plus
      (z) the
      Canadian Cash-On-Hand. Such purchase price for the USA Acquired Assets and
      the
      Canadian Acquired Assets will be paid by Buyer to Seller in accordance with
      Sections
      2.7.3(c)
      and
2.8
      and will
      be subject to adjustment, as applicable, pursuant to Section
      2.8.

     

    (b) Delivery
      of Seller Estimates.
      

     

    (i) USA
      Closing.
      At
      least two (2) Business Days prior to the USA Closing Date, Seller shall deliver
      to Buyer Seller's good faith estimate of (i) the USA Inventory Amount (the
      "USA
      Estimated Inventory Amount"),
      (ii)
      the USA Dollars/Theme Park Amount (the "USA Estimated
      Dollars/Theme Park Amount")
      and
      (iii) the USA Cash-On-Hand (the "USA
      Estimated Cash-On-Hand").
      Each
      of such estimates shall be subject to Buyer's approval, which approval shall
      not
      be unreasonably withheld. 

     

    (ii) Canadian
      Closing.
      At
      least two (2) Business Days prior to the Canadian Closing Date, Seller shall
      deliver to Buyer Seller's good faith estimate of (i) the Canadian Inventory
      Amount (the "Canadian
      Estimated Inventory Amount"),
      (ii)
      the Canadian Dollars/Theme Park Amount (the "Canadian Estimated
      Dollars/Theme Park Amount")
      and
      (iii) the Canadian Cash-On-Hand (the "Canadian
      Estimated Cash-On-Hand").
      Each
      of such estimates shall be subject to Buyer's approval, which approval shall
      not
      be unreasonably withheld. 

     

    
      
        
        

      

      
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    (c) Closing
      Payments for Acquired Assets Other Than Headquarters Assets.
      

     

    (i) USA
      Closing.
      At the
      USA Closing, USA Buyer shall pay to USA Seller, by wire transfer of immediately
      available funds pursuant to wire instructions previously delivered by USA Seller
      to USA Buyer, an amount in cash equal to (i) the sum of the USA Estimated
      Inventory Amount, the USA Estimated Dollars/Theme Park Amount and the USA
      Estimated Cash-On-Hand (collectively, the "USA
      Closing Date Estimate"),
      minus
      (ii) the
      sum of the Inventory Adjustment Escrow Amount, the Transaction Taxes Escrow
      Amount and, unless Canadian Seller makes the Severance Fund Election, the
      Severance Escrow Amount. 

     

    (ii) Canadian
      Closing.
      At the
      Canadian Closing, Canadian Buyer shall pay to Canadian Seller, by wire transfer
      of immediately available funds pursuant to wire instructions previously
      delivered by Canadian Seller to Canadian Buyer, an amount in cash equal to
      the
      sum of the Canadian Estimated Inventory Amount, the Canadian Estimated
      Dollars/Theme Park Amount and the Canadian Estimated Cash-On-Hand (collectively,
      the "Canadian
      Closing Date Estimate").
      

     

    The
      payments made under this Section
      2.7.3(c)
      are
      referred to herein collectively as the "Closing
      Date Payments."
      

     

    2.8 Post-Closing
      Adjustments. 

     

    2.8.1 Adjustment
      Statement.
      Not
      later
      than thirty (30) days after (a) if there is no Canadian Closing, the Expiration
      Date, or (b) if there is a Canadian Closing, the receipt of the Inventory Report
      for both the USA Acquired Inventory and the Canadian Acquired Inventory (either
      (a) or (b), the "Adjustment
      Statement Due Date"),
      at
      Buyer's election in its sole discretion, Buyer may cause to be prepared and
      delivered to Seller Buyer's good faith estimate of the calculation of each
      of
      the Inventory Amount, the Dollars/Theme Park Amount and the Cash-On-Hand (to
      the
      extent delivered by Buyer, the "Adjustment
      Statement,"
      which
      Adjustment Statement shall also include supporting documentation with respect
      to
      the matters set forth therein).  

     

    
      
        
        

      

      
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    2.8.2 Adjustment
      Statement Objection.
      If
      Buyer delivers an Adjustment Statement pursuant to the preceding Section
      2.8.1,
      then
      during the thirty (30) day period following Buyer's delivery thereof, Seller
      and
      its Representatives shall have, upon request during normal business hours
      subject to reasonable prior notice, (i) the right to examine the Adjustment
      Statement and all records and documentation used to prepare the Adjustment
      Statement, (ii) access to copies of all other books, records and accounts and
      such other information relating to the Adjustment Statement in the possession
      of
      Buyer, its Affiliates and/or their respective accountants and other
      Representatives as Seller reasonably requests, and (iii) access to the
      employees, accountants and other Representatives of Buyer and its Affiliates
      who
      were responsible for preparing the Adjustment Statement as Seller reasonably
      requests, to allow Seller to examine the accuracy of the Adjustment Statement.
      In the event Seller disputes any matter described in the Adjustment Statement,
      Seller shall so inform Buyer in writing (the "Adjustment
      Statement Objection"),
      setting forth a reasonably detailed description of the basis of the Adjustment
      Statement Objection on or before the last day of the thirty (30) day period
      referred to above in this Section
      2.8.2.
      For
      purposes of clarification, Seller may examine the accuracy of any matter
      described in the Adjustment Statement and submit the Adjustment Statement
      Objection regardless of whether Buyer's estimates of the Inventory Amount,
      Dollars/Theme Park Amount or Cash-On-Hand as set forth in the Adjustment
      Statement are more than, less than or equal to the Estimated Inventory Amount,
      Estimated Dollars/Theme Park Amount or Estimated Cash-On-Hand. 
      If
      Seller delivers an Adjustment Statement Objection, then Buyer and Seller shall
      attempt in good faith to resolve such objection within thirty (30) days
      following Buyer's receipt thereof. If Seller and Buyer are unable to resolve
      the
      objection within such thirty (30) day period, then they shall refer their
      remaining differences to Grant Thornton LLP (unless otherwise mutually agreed
      in
      Buyer's and Seller's respective sole discretion) (the "CPA
      Firm"),
      who
      shall, acting as experts in accounting and not as arbitrators or legal experts,
      resolve only those accounting disagreements specifically submitted to the CPA
      Firm. Buyer and Seller shall cooperate in good faith to agree upon the specific
      accounting disagreements to be submitted to the CPA Firm, the method for
      submitting such accounting disagreements, applicable guidelines to govern
      communications with the CPA Firm and other procedural rules with respect to
      the
      engagement of, the submission of accounting differences to, and the resolution
      of such accounting differences by, the CPA Firm. In no event shall Buyer or
      Seller submit to the CPA Firm, nor shall the CPA Firm resolve, any legal
      disagreements. For purposes of clarification, the parties agree that it is
      their
      intent that the Final Inventory Amount, Final Dollars/Theme Park Amount and
      Final Cash-On-Hand be calculated in substantially the same manner and form
      as
      the Estimated Inventory Amount, Estimated Dollars/Theme Park Amount and
      Estimated Cash-On-Hand, but with respect to the Final Inventory Amount, taking
      into account the Inventory Report. Buyer and Seller shall make readily available
      to the CPA Firm all relevant books and records and any work papers relating
      to
      the Adjustment Statement, the Adjustment Statement Objection, the Inventory
      Report, the employees, accountants and other Representatives of Buyer and
      Seller, and all other items reasonably requested by the CPA Firm. Buyer and
      Seller shall jointly engage the CPA Firm, and the fees and expenses of the
      CPA
      Firm shall be shared equally by Buyer and Seller. The CPA Firm shall be directed
      to deliver in writing its resolution of any disputed items from the Adjustment
      Statement to Seller and Buyer no later than the twentieth (20th)
      Business Day after the remaining differences underlying the Adjustment Statement
      Objection are referred to the CPA Firm. Upon completion of the foregoing
      procedures:

     

    (a) If
      Buyer
      elects in its sole option and discretion not to submit an Adjustment Statement
      by the Adjustment Statement Due Date, then the "Final
      Inventory Amount,"
      "Final
      Dollars/Theme Park Amount" and
      "Final
      Cash-On-Hand,"
      respectively, shall be deemed to be the Estimated Inventory Amount, the
      Estimated Dollars/Theme Park Amount and the Estimated Cash-On-Hand;

     

    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

    

     

    (b) If
      Buyer
      submits an Adjustment Statement by the Adjustment Statement Due Date, and Seller
      does not object thereto within the thirty (30) day time period specified in
      Section
      2.8.2,
      then
      the "Final
      Inventory Amount,"
      "Final
      Dollars/Theme Park Amount" and
      "Final
      Cash-On-Hand,"
      respectively, shall be deemed to be Buyer's estimates of the Inventory Amount,
      the Dollars/Theme Park Amount and the Cash-On-Hand, respectively, as set forth
      in the Adjustment Statement; and

     

    (c) If
      Buyer
      submits an Adjustment Statement by the Adjustment Statement Due Date, then
      the
      "Final
      Inventory Amount,"
      "Final
      Dollars/Theme Park Amount" and
      "Final
      Cash-On-Hand,"
      respectively, shall be deemed to be (A) as agreed upon by Seller and Buyer,
      if
      Seller submits and Adjustment Statement Objection but Seller and Buyer are
      able
      to resolve such objection, (B) as determined or resolved by the CPA Firm,
      if Seller submits an Adjustment Statement Objection and Buyer and Seller are
      unable to resolve all such objections, or (C) as applicable, a combination
      of the preceding subparagraphs (A) and (B).

     

    2.8.3 Final
      Payments and Release of Escrow Amounts.
      Following
      completion of the foregoing procedures:

     

    (a) If
      the
      Final Amount is equal to the Closing Date Estimate, then (i) within three (3)
      Business Days following the completion of such procedures, the parties shall
      provide joint written instructions to the Escrow Agent to pay to USA Seller
      the
      amount in the Inventory Adjustment Escrow Fund, by wire transfer of immediately
      available funds pursuant to wire instructions to be delivered by USA Seller
      to
      the Escrow Agent and (ii) within three (3) Business Days following the Tax
      Escrow Expiration Date and the Severance Escrow Expiration Date, respectively,
      the parties shall provide joint written instructions to the Escrow Agent to
      pay
      to USA Seller the amount, if any, remaining in the Transaction Taxes Escrow
      Fund
      (after giving effect to the release of any funds therefrom pursuant to
Section
      6.1.1)
      and the
      Severance Escrow Fund (after giving effect to the release of any funds therefrom
      pursuant to Section
      6.4.2(a)),
      respectively;

     

    (b) If
      the
      Final Amount is greater than the Closing Date Estimate, then (i) within three
      (3) Business Days following the completion of such procedures, (A) the parties
      shall provide joint written instructions to the Escrow Agent to pay to USA
      Seller the amount in the Inventory Adjustment Escrow Fund, by wire transfer
      of
      immediately available funds pursuant to wire instructions to be delivered by
      USA
      Seller to the Escrow Agent and (B) USA Buyer shall pay to USA Seller an amount
      equal to the following, by wire transfer of immediately available funds pursuant
      to wire instructions to be delivered by USA Seller to USA Buyer:
      (I)
      the
      Final Amount, minus
      (II) an
      amount equal to the sum of the Closing Date Payments, minus
      (III)
      the amounts released from the Inventory Adjustment Escrow Fund pursuant to
      the
      preceding subparagraph (i)(A), minus
      (IV) the
      Transaction Taxes Escrow Amount, minus
      (V) the
      Severance Escrow Amount, and (ii) within three (3) Business Days following
      the
      Tax Escrow Expiration Date and the Severance Escrow Expiration Date,
      respectively, the parties shall provide joint written instructions to the Escrow
      Agent to pay to USA Seller the amount, if any, remaining in the Transaction
      Taxes Escrow Fund (after giving effect to the release of any funds therefrom
      pursuant to Section
      6.1.1)
      and the
      Severance Escrow Fund (after giving effect to the release of any funds therefrom
      pursuant to Section
      6.4.2(a)),
      respectively; and

     

    
      
        
        

      

      
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    (c) If
      the
      Closing Date Estimate exceeds the Final Amount (such excess, the "Excess
      Amount"),
      then
      within three (3) Business Days following the completion of such procedures,
      the
      Excess Amount shall be paid to USA Buyer in the following manner and order:
      (i)
      the parties shall provide joint written instructions to the Escrow Agent to
      pay
      the Excess Amount to USA Buyer from the Inventory Adjustment Escrow Fund by
      wire
      transfer of immediately available funds pursuant to wire instructions to be
      delivered by USA Buyer to the Escrow Agent (and, if there remain any amounts
      in
      the Inventory Adjustment Escrow Fund following payment of the Excess Amount,
      such joint written instructions to the Escrow Agent shall also provide for
      the
      payment of such remainder to USA Seller by wire transfer of immediately
      available funds pursuant to wire instructions to be delivered by USA Seller
      to
      the Escrow Agent), (ii) any remaining unpaid portion of the Excess Amount after
      the payment in the preceding subparagraph (i) shall be paid by USA Seller to
      USA
      Buyer via wire transfer of immediately available funds pursuant to wire
      instructions delivered by USA Buyer to USA Seller, and the amount payable by
      USA
      Seller under this subparagraph (ii) shall constitute a superpriority
      administrative expense in the Bankruptcy Case, shall be secured by a
      court-ordered charge in the Canadian Insolvency Proceeding and shall be payable
      without any further notice, hearing or court approval, and (iii) if for any
      reason there remains any unpaid portion of the Excess Amount after the payments
      required under the preceding subparagraphs (i) and (ii), the parties shall,
      at
      Buyer's direction provide joint written instructions to the Escrow Agent to
      pay
      to USA Buyer the remainder of the Excess Amount from the Transaction Taxes
      Escrow Fund and/or the Severance Escrow Fund (as elected by Buyer in its sole
      discretion) by wire transfer of immediately available funds pursuant to wire
      instructions to be delivered by USA Buyer to the Escrow Agent. 

     

    For
      purposes of clarification, in the event of a Canadian Closing, any recipient
      of
      funds under this Section
      2.8.3
      shall be
      responsible for providing its Canadian counterpart with its allocable share
      thereof, and any payer of funds under this Section
      2.8.3
      shall be
      entitled to reimbursement from its Canadian counterpart of its allocable share
      thereof, and its Canadian counterpart shall be jointly and severally liable
      for
      the payment of such amount. 

     

    2.9 Setoff
      of Amounts.
      If at
      the time that any amounts are owed or otherwise payable to Seller by Buyer
      under
      this Agreement (whether at the Applicable Closing or thereafter) there are
      any
      Outstanding Royalty Amounts owed or owing by Seller to TDSF, then Buyer, in
      its
      sole discretion, may reduce any amounts owed or payable to Seller under this
      Agreement by an amount equal to any such Outstanding Royalty Amounts owed by
      Seller to TDSF at such time in satisfaction of such Outstanding Royalty Amounts.
      For purposes of this Agreement, "Outstanding
      Royalty Amounts"
      means
      any royalty amounts owed to TDSF under the License Agreement in respect of
      the
      period from the Applicable Petition Date to the Applicable Closing
      Date. 

     

    
      
        
        

      

      
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    ARTICLE
      III

     

    CLOSING

     

    3.1 Closing. 

     

    3.1.1 The
      closing of the transactions contemplated by this Agreement shall take place
      (i)
      as to the USA Acquired Assets (which, for purposes of clarification, will
      include the Internet Store), the Headquarters Assets and the USA Assumed
      Liabilities (the "USA
      Closing"),
      on
      the date that is three (3) Business Days following the satisfaction or waiver
      of
      all of the closing conditions set forth in this Article
      III
      that are
      applicable to USA Buyer, USA Seller, the USA Acquired Assets, the Headquarters
      Assets and the USA Assumed Liabilities (other than those conditions that by
      their nature are to be satisfied at the USA Closing, but subject to the
      satisfaction or waiver of those conditions) or at such other date as Buyer
      and
      Seller shall agree in writing (such date, the "USA
      Closing Date"),
      and
      (ii) as to the Canadian Acquired Assets and the Canadian Assumed Liabilities
      (the "Canadian
      Closing"),
      on
      the date that is three (3) Business Days following the satisfaction or waiver
      of
      all of the closing conditions set forth in this Article
      III
      that are
      applicable to Canadian Buyer, Canadian Seller, the Canadian Acquired Assets
      and
      the Canadian Assumed Liabilities (other than those conditions that by their
      nature are to be satisfied at the Canadian Closing, but subject to the
      satisfaction or waiver of those conditions) or at such other date as Buyer
      and
      Seller shall agree in writing (such date, the "Canadian
      Closing Date");
      provided that (a) the Canadian Closing shall under no circumstances occur prior
      to the USA Closing, (b) if all of the conditions to the USA Closing and the
      Canadian Closing set forth in this Article
      III
      have
      been satisfied or waived as of the same date, then both closings with respect
      to
      all of the Acquired Assets and the Assumed Liabilities shall occur on the same
      date, and (c) if the USA Closing occurs before the Canadian Closing (a
      "Bifurcated
      Closing"),
      then
      Buyer may elect, at any time in its sole discretion by providing written notice
      to Seller, not to acquire any of the Canadian Acquired Assets or assume any
      of
      the Canadian Assumed Liabilities, in which event the Acquired Assets and Assumed
      Liabilities hereunder shall be deemed to consist solely of the USA Acquired
      Assets, the Headquarters Assets and the USA Assumed Liabilities, and Buyer
      shall
      have no further rights or obligations whatsoever with respect to the Canadian
      Acquired Assets or the Canadian Assumed Liabilities, all of which shall be
      and
      be deemed to be part of the Retained Assets and the Retained Liabilities,
      respectively, for all purposes hereunder and at all times thereafter.

     

    3.1.2 Each
      closing hereunder shall take place at the offices of Dewey & LeBoeuf LLP,
      New York, New York, or such other place as may be agreed to by the parties,
      with
      an effective time of 12:01 a.m. on the Applicable Closing Date. 

     

    3.1.3 Neither
      Buyer nor Seller shall have any obligation to consummate either the USA Closing
      or the Canadian Closing if it has not occurred by April 30, 2008 (the
      "Expiration
      Date"),
      provided that, in the case of a Bifurcated Closing, at any time on or after
      the
      USA Closing, Buyer may elect, in its sole discretion by providing written notice
      to Seller, to extend the Expiration Date by up to ninety (90) days.

     

    
      
        
        

      

      
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    3.1.4 Following
      the USA Closing, unless otherwise specifically provided herein, all
      representations, warranties, covenants, termination provisions and other
      agreements contained herein that relate to the Canadian Acquired Assets and/or
      the Canadian Assumed Liabilities shall remain in full force and effect through
      the Canadian Closing Date (or, if applicable, the Expiration Date).

     

    3.1.5 If
      the
      USA Closing occurs but the Canadian Closing has not occurred by the Expiration
      Date (including any extension thereof elected by Buyer), then there shall be
      no
      Canadian Closing, and Buyer shall have no further rights or obligations
      whatsoever with respect to the Canadian Acquired Assets or the Canadian Assumed
      Liabilities, all of which shall be and be deemed to be part of the Retained
      Assets and the Retained Liabilities, respectively, for all purposes hereunder
      and at all times thereafter. 

     

    3.2 Filings.
      Seller
      shall cause a Bankruptcy Sale Motion and a Canadian Sale Motion (collectively,
      the "Sale
      Motions")
      seeking approval of the transactions contemplated in this Agreement as a Private
      Sale to be filed with the Bankruptcy Court and the Canadian Insolvency Court
      within ten (10) days of the date of this Agreement. Seller shall use its
      commercially reasonable efforts to obtain hearings and court approvals on
      shortened notice, if necessary, so that each of the USA Closing and the Canadian
      Closing can occur no later than April 30, 2008. The Sale Motions shall include
      a
      request for an order authorizing Seller to file with the Bankruptcy Court and
      the Canadian Insolvency Court and serve on all non-Seller parties to the
      Acquired Car Leases, Acquired Leases and the Acquired Agreements notice of
      Seller's intent to assume and assign that party's Acquired Car Leases, Acquired
      Leases and the Acquired Agreements, which order shall also provide that (i)
      the
      notice shall include the cure amount (if any) for such Acquired Leases and
      Acquired Agreements, (ii) any non-Seller party shall have until such date as
      is
      specified by the Bankruptcy Court and the Canadian Insolvency Court to object
      to
      the cure amount listed and must state in its objection with specificity what
      the
      proper cure amount is alleged to be, supported by sufficient documentation
      and
      (iii) if no objection is timely received, then the cure amount payable by Buyer
      shall be the amount listed in Seller's notice.

     

    3.2.1 Efforts
      to Secure Approval.
      Seller
      shall use its commercially reasonable efforts to secure entry of the Bankruptcy
      Sale Order on or before April 22, 2008 and the Canadian Sale Order as soon
      as
      reasonably practicable. Seller shall not file any pleadings or take any position
      before the Bankruptcy Court or Canadian Insolvency Court contrary to the
      approval of the Bankruptcy Sale Order or Canadian Sale Order and the
      consummation of the transactions contemplated hereby, unless Buyer shall have
      previously approved such pleading or position in writing. In the event that
      any
      orders of the Bankruptcy Court or Canadian Insolvency Court relating to this
      Agreement shall be appealed by any Person (or a petition for certiorari or
      motion for reconsideration, amendment, clarification, modification, vacation,
      stay, rehearing or reargument shall be filed with respect to any such order),
      Seller will cooperate in diligently defending against any such appeal, petition
      or motion, and Seller shall use commercially reasonable efforts to obtain an
      expedited resolution of any such appeal, petition or motion. Seller shall not
      be
      required to comply with any provision of the second and third sentences of
      this
Section
      3.2.1
      to the
      extent (but only to the extent) Seller in good faith determines (after
      consultation with bankruptcy counsel) that such compliance with such provision
      of this Section
      3.2.1 would
      violate Seller's fiduciary duties in respect of the Bankruptcy Case or Canadian
      Insolvency Proceeding.

     

    
      
        
        

      

      
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    3.2.2  Bankruptcy
      Filings.
      Seller
      shall use commercially reasonable efforts to provide to Buyer, for informational
      purposes only, copies of all pleadings, motions, notices and applications
      relating to Buyer and this Agreement or the transactions contemplated hereby
      that Seller intends to file with the Bankruptcy Court or in the Canadian
      Insolvency Proceeding. The foregoing provisions of this Section
      3.2.2
      shall
      not apply to proposed Bankruptcy Sale Order and Canadian Sale Order, which
      both
      must be submitted in a form approved by Buyer. Seller shall not be required
      to
      comply with any provision of this Section
      3.2.2
      to the
      extent (but only to the extent) Seller in good faith determines (after
      consultation with outside bankruptcy counsel), that compliance with such
      provision of this Section
      3.2.2
      would
      violate Seller's fiduciary duties in respect of the Bankruptcy Case or Canadian
      Insolvency Proceeding. 

     

    3.3 Closing
      Deliveries by Seller.
      At
      the
      Applicable Closing, USA Seller and/or Canadian Seller (as applicable) shall
      deliver or cause to be delivered the following: 

     

    3.3.1 Bill
      of Sale and Assignment and Assumption Agreement.
      To
      Buyer, a Bill of Sale and Assignment and Assumption Agreement by and among
      USA
      Seller and/or Canadian Seller, on the one hand, and USA Buyer and/or Canadian
      Buyer, on the other, substantially in the form to be attached hereto as
Annex
      K
      after
      the preparation thereof and approval thereof by the parties in their respective
      business judgment (the "Bill
      of Sale and Assignment and Assumption Agreement"),
      executed on behalf of USA Seller and/or Canadian Seller, as applicable;

     

    3.3.2 Related
      Agreements.
      To
      Buyer, the Designation Rights Agreement, the Escrow Agreement, the Headquarters
      Assignment and Assumption Agreement, the Release Agreement and the Transitional
      Services Agreement, each executed on behalf of Seller, TCP or TCP Services
      Co.,
      as applicable; and

     

    3.3.3 FIRPTA
      Certificate.
      To
      Buyer, a properly executed statement in a form reasonably acceptable to Buyer
      satisfying the requirements of Treasury Regulation
      Section 1.1445-2(b)(2).

     

    3.4 Closing
      Deliveries by USA Buyer and Canadian Buyer.
      At
      the
      Applicable Closing, USA Buyer and/or Canadian Buyer (as applicable) shall
      deliver or cause to be delivered the following: 

     

    3.4.1 Closing
      Payments.
      To
      Seller and/or TCP Services Co. (as applicable) any amounts required pursuant
      to
Sections
      2.7.1
      and
      2.7.3;

     

    
      
        
        

      

      
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    3.4.2 Bill
      of Sale and Assignment and Assumption Agreement.
      To
      Seller, the Bill of Sale and Assignment and Assumption Agreement, executed
      on
      behalf of USA Buyer and/or Canadian Buyer, as applicable; and

     

    3.4.3 Related
      Agreements.
      To
      Seller, the Designation Rights Agreement, the Escrow Agreement, the Headquarters
      Assignment and Assumption Agreement, the Release Agreement and the Transitional
      Services Agreement, each executed on behalf of USA Buyer and/or Canadian Buyer
      or their Affiliates, as applicable.

     

    3.5 Conditions
      Precedent to Obligations of Each Party.
      The
      respective obligations of each party to effect the transactions contemplated
      by
      this Agreement is subject to the satisfaction or waiver of the following
      conditions; provided,
      however,
      that in
      the case of a Bifurcated Closing, the conditions precedent with respect to
      the
      Canadian Acquired Assets shall be applicable only in the event of a Canadian
      Closing:

     

    3.5.1 Entry
      by
      the Bankruptcy Court and Canadian Insolvency Court, as applicable, of all
      necessary orders approving this transaction (each in a form acceptable to Buyer
      in its reasonable discretion), including:

     

    (a) the
      Bankruptcy Sale Order (i) approving the sale of the USA Acquired Assets on
      the
      terms set forth in this Agreement, free and clear of any and all liens, claims,
      interests, or Encumbrances (other than the USA Assumed Liabilities and Permitted
      Encumbrances), to the broadest extent permitted by Bankruptcy Code § 363(f);
      (ii) approving the assumption by USA Seller and assignment to USA Buyer of
      all
      Acquired Leases, Acquired Car Leases and Acquired Agreements that constitute
      USA
      Acquired Assets; (iii) authorizing the execution, delivery and performance
      by
      USA Seller of this Agreement, and the other instruments and agreements
      contemplated hereby; (iv) authorizing USA Seller's performance of its
      obligations under this Agreement; (v) approving the Release Agreement as a
      settlement pursuant to Fed. R. Bankr. Proc. 9019, and (vi) finding that the
      sale
      of the USA Acquired Assets qualifies as a "good faith" sale within the meaning
      of Bankruptcy Code § 363(m); and

     

    (b) the
      Canadian Sale Order (i) approving the terms of this Agreement and the sale
      of
      the Canadian Acquired Assets on the terms set forth in this Agreement, free
      and
      clear of any and all liens, claims, interests, or Encumbrances (other than
      the
      Canadian Assumed Liabilities and Permitted Encumbrances); (ii) vesting
      absolutely all the right, title and interest of Canadian Seller in the Canadian
      Acquired Assets free and clear of any and all Encumbrances other than the
      Assumed Liabilities and Permitted Encumbrances; (iii) subject to the consent
      of
      the lessors to the extent required by applicable Law, approving the assignment
      to Buyer of all Acquired Leases, Acquired Car Leases and Acquired Agreements
      that constitute Canadian Acquired Assets; (iv) authorizing the execution,
      delivery and performance by Canadian Seller of this Agreement, the Related
      Agreements (other than the Designation Rights Agreement) and the other
      instruments and agreements contemplated hereby and thereby; (v) authorizing
      and
      directing Canadian Seller to perform Canadian Seller's acts and obligations
      under this Agreement, including the acts and obligations set forth in
Section
      6.6
      with
      respect to the Canadian Acquired Stores and the Canadian Retained
      Stores;
      and (vi)
      approving all rights and protections granted to the Buyer under this Agreement,
      including the rights and protections set forth in Section
      6.5
      as it
      applies to Canadian Seller, the Canadian Acquired Assets and the Canadian
      Retained Stores. 

     

    
      
        
        

      

      
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    All
      of
      which orders described in this Section
      3.5.1
      shall be
      in full force and effect and shall not have been stayed, vacated, modified
      or
      amended in any respect, except with the express consent of Buyer.

     

    3.5.2 All
      required filings under the HSR Act shall have been made and the applicable
      waiting period thereunder shall have expired or been terminated;

     

    3.5.3 A
      favorable net benefit ruling under the Investment Canada Act from the Minister
      of Canadian Heritage in respect of the acquisition by the Canadian Buyer of
      the
      Canadian Acquired Assets;

     

    3.5.4 All
      necessary Permits of any Governmental Entity required for consummation of the
      transactions contemplated by this Agreement (other than as set forth in
Section
      3.5.2),
      shall
      have been obtained; and

     

    3.5.5 There
      shall not be in effect any Law of any Governmental Entity of competent
      jurisdiction restraining, enjoining or otherwise preventing the consummation
      of
      the transactions contemplated by this Agreement.

     

    3.6 Conditions
      Precedent to Obligations of Buyer.
      The
      obligation of Buyer to effect the transactions contemplated by this Agreement
      is
      subject to the satisfaction or waiver of the following conditions; provided,
      however,
      that in
      the case of a Bifurcated Closing, the conditions precedent with respect to
      the
      Canadian Acquired Assets shall be applicable only in the event of a Canadian
      Closing:

     

    3.6.1 The
      representations and warranties of Seller in this Agreement shall be true and
      correct in all material respects (without regard for any Material Adverse Event
      or materiality qualifiers contained in any such representation or warranty)
      as
      of the date hereof and at and as of the Applicable Closing with the same effect
      as though such representations and warranties had been made at and as of such
      time, other than representations and warranties that speak as of another
      specific date or time prior to the date hereof (which need only be true and
      correct as of such date or time);

     

    3.6.2 All
      of
      the terms, covenants and conditions to be complied with and performed by Seller
      and its Affiliates on or prior to the Applicable Closing Date shall have been
      complied with or performed in all material respects;

     

    3.6.3 Buyer
      shall have received a certificate, dated as of the Applicable Closing Date,
      executed on behalf of Seller, by an authorized executive officer thereof,
      certifying in such detail as Buyer may reasonably request that the conditions
      specified in Sections 3.6.1
      and
3.6.2
      have
      been fulfilled;

     

    3.6.4 All
      Consents necessary to the assignment of the Acquired Leases for the Canadian
      Acquired Stores or for the assignment of the other Canadian Acquired Assets
      (including any Consents from the Landlords thereof or any lenders to the
      Landlords that may have a charge or secured interest in the lands of which
      the
      premises covered by such Acquired Leases forms a part) shall have been obtained
      (or Sale Orders containing authorization for the assignment of such Acquired
      Leases or other Acquired Assets without the prior consent of such parties shall
      have been issued); 

     

    
      
        
        

      

      
        39

        
          

        

      

      
        
        

      

    

     

    3.6.5 There
      shall not have occurred any events that have had, or are, individually or in
      the
      aggregate, reasonably likely to have a Material Adverse Event;

     

    3.6.6 Seller
      shall have delivered to Buyer, on or prior to the Applicable Closing Date,
      the
      Related Agreements and the other agreements, certificates and documents
      specified in Section
      3.3,
      duly
      executed and in full force and effect;

     

    3.6.7 Seller
      shall have delivered to Buyer a Purchase Certificate issued under section 146
      of
      the Workplace Safety and Insurance Act (Ontario) and any similar certificates
      issued under similar statutory regulations in the other jurisdictions in which
      seller has employees; and

     

    3.6.8 The
      Acquired Stores set forth on the Acquired Stores Schedule, as amended under
      Section
      2.1,
      as of
      the USA Closing Date, shall equal or exceed One Hundred Eighty (180) Stores
      (provided that Seller acknowledges and agrees that under no circumstances shall
      the number of Acquired Stores exceed Two Hundred Six (206) Acquired Stores
      located in the United States or Two Hundred Twenty (220) Acquired Stores located
      in the United States and Canada combined, unless otherwise agreed by Buyer
      in
      writing in its sole discretion). 

     

    3.7 Conditions
      Precedent to Obligations of Seller.
      The
      obligation of Seller to effect the transactions contemplated by this Agreement
      are subject to the satisfaction or waiver of the following
      conditions:

     

    3.7.1 The
      representations and warranties of Buyer in this Agreement shall be true and
      correct in all material respects (without regard for any Material Adverse Event
      or materiality qualifiers contained in any such representation or warranty)
      as
      of the date hereof and at and as of the Applicable Closing with the same effect
      as though such representations and warranties had been made at and as of such
      time, other than representations and warranties that speak as of another
      specific date or time prior to the date hereof (which need only be true and
      correct as of such date or time);

     

    3.7.2 All
      of
      the terms, covenants and conditions to be complied with and performed by Buyer
      on or prior to the Applicable Closing Date shall have been complied with or
      performed in all material respects;

     

    3.7.3 Seller
      shall have received a certificate, dated as of the Applicable Closing Date,
      executed on behalf of Buyer by an authorized executive officer thereof,
      certifying in such detail as Seller may reasonably request that the conditions
      specified in Section 3.7.1
      and
Section 3.7.2
      have
      been fulfilled; 

     

    
      
        
        

      

      
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    3.7.4 Buyer
      shall have delivered to Seller or TCP Services Co. (as applicable) the payments
      required under Sections
      2.7.1
      and
2.7.3
      on or
      prior to the Applicable Closing Date;

     

    3.7.5 Buyer
      shall have delivered to Seller on or prior to the Applicable Closing Date the
      Related Agreements and the other agreements, certificates and documents
      specified in Section
      3.4,
      in each
      case duly executed and in full force and effect; and 

     

    3.7.6 The
      Acquired Stores set forth on the Acquired Stores Schedule, as amended under
      Section
      2.1,
      as of
      the USA Closing Date, shall equal or exceed One Hundred Sixty Three (163)
      Stores.

     

    ARTICLE
      IV

     

    REPRESENTATIONS
      AND WARRANTIES OF SELLER

     

    Except
      as
      disclosed on the Seller Schedules, Seller represents and warrants to Buyer
      the
      following.

     

    4.1 Organization.

     

    4.1.1 Incorporation
      and Authority of Seller.
      USA
      Seller is a limited liability company duly organized and validly existing under
      the laws of the State of Delaware. Canadian Seller is a corporation duly
      organized and validly existing under the laws of the Province of New Brunswick,
      Canada. Subject to approval by the Bankruptcy Court and the Canadian Insolvency
      Court, each of USA Seller and Canadian Seller has the requisite power and
      authority (i) to own its properties and assets and carry on the Business and
      the
      operation of the USA Remaining Stores as currently conducted
      and (ii)
      to execute and deliver this Agreement, the Related Agreements and the documents
      and instruments contemplated hereby and thereby and to perform and comply with
      all of the terms, conditions and covenants to be performed and complied with
      by
      it hereunder and thereunder.

     

    4.1.2 Subsidiaries.
      Except
      as set forth on Seller
      Schedule 4.1.2,
      neither
      Canadian Seller nor USA Seller has any Subsidiaries or any equity interests
      in
      any other Person.

     

    4.2 Financial
      Statements. Seller
      Schedule 4.2
      contains
      the unaudited balance sheet and statement of operations of Seller as of and
      for
      the twelve (12) months ended January 31, 2008 (the "Financial
      Statements").
      The
      Financial Statements have been prepared in all material respects in conformity
      with GAAP and consistent with Seller's past practices (except that the Financial
      Statements may not contain notes required by GAAP). The Financial Statements
      fairly present the financial condition and results of operations of Seller
      as of
      and for the periods ending on the respective dates thereof.  

     

    4.3 Accounting
      Records and Accounting Controls; Minute Books. Seller
      maintains books and records that accurately reflect in all material respects
      the
      transactions relating to the Business and the USA Remaining Stores and
      accounting controls sufficient to ensure that such transactions are executed
      in
      accordance with management's general or specific authorization and recorded
      in
      conformity with GAAP, including with respect to the periods for which the
      Financial Statements were being prepared. Such books and records are true and
      complete in all material respects. Copies of the original minute books of USA
      Seller and Canadian Seller have been made available to Buyer for review and
      contain records that are true and complete in all material respects of all
      meetings held of, and corporate or limited liability company action taken by,
      the member, the shareholder, the board of directors (or comparable governing
      body) and committees of the board of directors (or comparable governing body)
      of
      USA Seller and Canadian Seller. 

     

    
      
        
        

      

      
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    4.4 Tax
      Matters. 

     

    4.4.1 General.
      All
      material Tax Returns required to be filed by or with respect to Seller or its
      income, operations or assets have been timely filed. All such Tax Returns were
      true, correct and complete in all material respects. All material Taxes due
      and
      payable by or with respect to Seller or its income, operations or assets
      (whether or not shown or required to be shown on any Tax Return) have been
      paid
      other than Taxes being contested in good faith and disclosed on Seller
      Schedule 4.4.
      All
      material Taxes required to have been withheld and paid by or with respect to
      Seller or its operations have been withheld and paid and all material forms
      required with respect thereto, including IRS Forms W-2 and 1099 and Canadian
      Forms NR-4 and NR-4 Summary, have been properly completed and filed. Adequate
      provision in accordance with GAAP has been made in the books and records of
      Seller and in the Financial Statements for all Taxes required to be paid or
      withheld (but not yet paid or withheld) by Seller. Except as set forth on
Seller
      Schedule 4.4,
      Seller
      is not in the process of being examined by any Governmental Entity with respect
      to any Tax Returns of or relating to Seller or its income, operations or assets
      (other than the issuance of original notices of assessment to Canadian Seller
      by
      Canadian revenue authorities). Except as set forth on Seller
      Schedule 4.4,
      no
      Governmental Entity has proposed, asserted or assessed, in each case in writing,
      any deficiency, assessment or claim for material Taxes of or relating to Seller
      or its income, operations or assets that remain unpaid. Except as set forth
      on
Seller
      Schedule 4.4,
      Seller
      has not waived any statute of limitations in respect of Taxes of or relating
      to
      Seller or its income, operations or assets or agreed to any extension of time
      with respect to any assessment or deficiency relating to Taxes of or with
      respect to Seller or its income, operations or assets. Except as set forth
      on
Seller
      Schedule 4.4,
      there
      are no liens on any of the assets of Seller that arose in connection with any
      failure (or alleged failure) to pay any Tax.

     

    4.4.2 GST.
      Canadian
      Seller is, or will be prior to the Canadian Closing, registered for the purposes
      of Part IX of the GST Act, and Canadian Seller shall communicate its GST
      registration number to Buyer by written notice on or prior to the Canadian
      Closing.

     

    4.4.3
      Residency.
      Canadian
      Seller is not a non-resident of Canada within the meaning of the Income
      Tax Act (Canada).

     

    
      
        
        

      

      
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    4.5 Contracts.

     

    4.5.1 Contracts;
      No Breach or Default.
      Seller
      has provided or otherwise made available to Buyer true copies of all Material
      Contracts, including all amendments and supplements thereto. Except as set
      forth
      on Seller
      Schedule 4.5.1:
      (i) each Material Contract that constitutes an Acquired Asset (each, a
      "Material
      Acquired Contract")
      is in
      effect to the extent of its terms; and (ii) except as set forth on
Seller
      Schedule 4.5.1,
      Seller
      does not have Knowledge of, nor has Seller received written notice declaring,
      a
      breach or default by Seller or its Affiliates party thereto under any Material
      Acquired Contract, which breach or default remains uncured beyond the applicable
      cure period set forth therein, and, to the Knowledge of Seller, no breach or
      default by any other party or obligor with respect to any Material Acquired
      Contract has occurred thereunder.

     

    4.5.2 Authorization
      and Enforceability.
      Except
      as
      set forth on Seller
      Schedule 4.5.2,
      each
      Material Acquired Contract: (i) entered into since the Original Sale Date
      has been duly authorized, executed and delivered by Canadian Seller, USA Seller
      or its Affiliates party thereto, as applicable, and, to the Knowledge of Seller,
      the other parties thereto, (ii) remains in full force and effect to the
      extent of its terms without amendments or modifications not reflected on
Seller
      Schedule 4.5.2
      and made
      available to Buyer; and (iii) is binding on USA Seller, Canadian Seller or
      its Affiliates party thereto, as applicable, and, to the Knowledge of Seller,
      the other parties thereto in accordance with its terms and applicable Laws,
      subject to bankruptcy, insolvency, reorganization, moratorium or other similar
      laws and legal and equitable principles affecting, limiting or relating to
      creditors rights generally, and general principles of equity, including
      unconscionability, reasonableness and good faith and fair dealing.

     

    4.6 Leases
      and Real Property.

     

    4.6.1 Leases.

     

    (a) Acquired
      Leases; Headquarters Lease; No Breach or Default.
      True
      copies of the Acquired Leases, the USA Remaining Leases and the Headquarters
      Lease, including all amendments, collateral agreements, supplements and material
      correspondence related thereto, have been made available to Buyer, and a list
      thereof is set forth on Seller
      Schedule 4.6.1.
      Except
      as set forth on Seller
      Schedule 4.6.1:
      (i) each of the Acquired Leases, the USA Remaining Leases and the
      Headquarters Lease is in effect to the extent of its terms; and (ii) Seller
      does not have Knowledge of, nor has Seller received written notice declaring,
      a
      breach or default by USA Seller or Canadian Seller under any Acquired Lease
      or
      any USA Remaining Lease or by TCP Services Co. under the Headquarters Lease,
      which breach or default remains uncured beyond the applicable cure period set
      forth in the applicable Lease, and, to the Knowledge of Seller, no breach or
      default by any other party or obligor with respect to any Acquired Lease, any
      USA Remaining Lease or the Headquarters Lease (including the Landlord
      thereunder) has occurred thereunder. 

     

    (b) Authorization
      and Enforceability. Except
      as
      set forth on Seller
      Schedule 4.6.1,
      each of
      the Acquired Leases and the Headquarters Lease: (i) entered into after the
      Original Sale Date has
      been
      duly authorized, executed and delivered by USA Seller, Canadian Seller or TCP
      Services Co., as applicable, and, to the Knowledge of Seller, the other parties
      thereto, (ii) remains in full force and effect to the extent of its terms
      without amendments or modifications not reflected on Seller
      Schedule 4.6.1
      and made
      available to Buyer; and (iii) is binding on USA Seller, Canadian Seller or
      TCP Services Co., as applicable, and, to the Knowledge of Seller, the other
      parties thereto, in accordance with its terms and applicable Laws, subject
      to
      bankruptcy, insolvency, reorganization, moratorium or other similar laws and
      legal and equitable principles affecting, limiting or relating to creditors
      rights generally, and general principles of equity, including unconscionability,
      reasonableness and good faith and fair dealing.

     

    
      
        
        

      

      
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    (c) Eminent
      Domain.
       Neither
      Seller nor any of its Affiliates has received written notice of any proceedings
      in eminent domain, expropriation, condemnation or other similar proceedings
      that
      are pending, and, to the Knowledge of Seller, there are no such proceedings
      threatened, affecting any portion of the real property leased under the Acquired
      Leases, the USA Remaining Leases or the Headquarters Lease.

     

    (d) No
      Assignment. USA
      Seller or Canadian Seller is the tenant under each Acquired Lease and each
      USA
      Remaining Lease and TCP Services Co. is the tenant under the Headquarters Lease.
      Neither USA Seller nor Canadian Seller has Transferred its rights or interests
      under any Acquired Lease or any USA Remaining Lease and TCP Services Co. has
      not
      Transferred its rights or interests under the Headquarters Lease.

     

    (e) Guarantees.
      Other
      than any guarantees of any Acquired Leases or USA Remaining Leases listed on
      Seller
      Schedule 4.6.1,
      none of
      the Acquired Leases, the USA Remaining Leases or the Headquarters Lease is
      the
      subject of any guarantee by any Person.

     

    4.6.2 Owned
      Real Property.
      Seller
      does not own any real property used in the Business.

     

    4.7 Information
      Technology.
      Seller
      owns or possesses adequate and enforceable rights to use the Seller Information
      Technology in connection with the Business and the USA Remaining Stores as
      currently conducted. Except as set forth on Seller
      Schedule 4.7,
      Seller
      has not granted to any unrelated Person any license, sublicense or other similar
      right to use the Seller Information Technology (other than any uses for the
      benefit of or to provide services to Seller). Except as set forth on
Seller
      Schedule 4.9,
      no
      Action against Seller or its Affiliates alleging that Seller's use of the Seller
      Information Technology infringes in any material respect upon or violates in
      any
      material respect the rights of any Person in or to such Seller Information
      Technology is pending or, to the Knowledge of Seller, threatened against USA
      Seller or Canadian Seller or any of their respective properties or assets.
      To
      the Knowledge of Seller, Seller has not received written notice that its use
      of
      the Seller Information Technology infringes upon or violates the rights of
      any
      Person in or to such Seller Information Technology. 

     

    
      
        
        

      

      
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    4.8 Authorization;
      No Conflicts.

     

    4.8.1 Authorization.
      Subject
      to the approval of the Bankruptcy Court and the Canadian Insolvency Court,
      all
      necessary action on the part of Seller and its Affiliates has been duly and
      validly taken to authorize the execution, delivery and performance of this
      Agreement, the Related Agreements and any other agreements and instruments
      to be
      executed and delivered by such parties in connection herewith. This Agreement
      has been duly executed and delivered by Seller and constitutes the legally
      valid
      and binding obligation of Seller, enforceable against Seller in accordance
      with
      its terms, and the Related Agreements, when executed and delivered by Seller
      or
      its Affiliates (as applicable) will constitute the legally valid and binding
      obligation of Seller or its Affiliates (as applicable), enforceable against
      Seller or its Affiliates (as applicable) in accordance with their respective
      terms, in each case subject to bankruptcy, insolvency, reorganization,
      moratorium or other similar laws and legal and equitable principles affecting,
      limiting or relating to creditors rights generally, and general principles
      of
      equity, including unconscionability, reasonableness and good faith and fair
      dealing.

     

    4.8.2 No
      Conflicts.
      Provided that, prior to the Applicable Closing, (a) the Consents required
      to be obtained from third Persons listed on Seller
      Schedule 4.8.2
      (which
      do not include any Consents with respect to Acquired Leases, the USA Remaining
      Leases, Acquired Car Leases or Acquired Agreements that are USA Acquired Assets
      or subject to the Designation Rights Agreement) and the Permits required to
      be
      obtained from any Governmental Entity listed on Seller
      Schedule 4.8.2
      and the
      Investment Canada Act Approval are obtained, and (b) any required filings
      under the Hart-Scott-Rodino Act have been made and the applicable waiting period
      thereunder shall have expired or been terminated, neither the execution,
      delivery and performance by Seller or its Affiliates of this Agreement, the
      Related Agreements or any other agreements and instruments to be executed and
      delivered by Seller or its Affiliates in connection herewith or therewith nor
      the consummation of the transactions contemplated hereby or thereby will:
      (i) violate any provision of the charter, articles, bylaws, operating
      agreement or similar organizational or governing documents of Seller or its
      Affiliates; (ii) violate in any material respect any Law to which Seller or
      its Affiliates is subject; (iii) violate in any material respect any
      Material Contract, Acquired Lease, USA Remaining Lease or other Contract to
      which Seller is a party or by which Seller is bound; or (iv) result in the
      imposition of any Encumbrance (other than Permitted Encumbrances) against Seller
      or any of its properties. 

     

    4.9 Legal
      Proceedings. Except
      as
      set forth on Seller
      Schedule 4.9,
      there
      is no Action pending or, to the Knowledge of Seller, threatened against Seller
      (i) the sole purpose of which is to obtain equitable relief to enjoin Seller
      from engaging in any particular activity, (ii) seeking damages in excess of
      $750,000, (iii) that otherwise would constitute a Material Adverse Event or
      (iv)
      that has or might reasonably be expected to have a material adverse effect
      on
      the ability of Seller or any of its Affiliates to perform their respective
      obligations under this Agreement or the Related Agreements, as applicable,
      or
      the transactions contemplated hereby or thereby. 

     

    
      
        
        

      

      
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    4.10 Permits.
      Seller
      holds all Permits that are required to permit Seller to conduct the Business
      and
      to operate the USA Remaining Stores, other than Permits the absence of which
      would not constitute a Material Adverse Event.

     

    4.11 Compliance
      with Law.
      The
      Business and the USA Remaining Stores are being conducted in accordance with
      applicable Laws, except for such noncompliance as would not constitute a
      Material Adverse Event. Except as set forth on Seller
      Schedule 4.11,
      to the
      Knowledge of Seller, Seller has not received a material notice of non-compliance
      with applicable Laws from any Governmental Entity (that has not been cured)
      since the
      Original Sale Date.

     

    4.12 Employee
      Schedule.
      Seller
      Schedule 4.12
      sets
      forth, for each of the Acquired Store Employees and the Other Store Employees,
      the current position, length of service, full time or part time status, country
      of employment and rate of pay for such employee. Such information contained
      on
Seller
      Schedule 4.12
      is true
      and complete in all material respects. 

     

    4.13 Environmental
      Compliance.
      Except
      as set forth on Seller
      Schedule 4.13,
      to the
      Knowledge of Seller, the Business and the USA Remaining Stores are in compliance
      with Existing Environmental Requirements, except for such noncompliance as
      would
      not constitute a Material Adverse Event.

     

    4.14 No
      Brokers or Finders.
      Neither
      Buyer nor its Affiliates shall have any liability for any broker's or finder's
      or similar fee or other commission with respect to any agent, broker, finder,
      investment or commercial banker or other Person or firm engaged by or acting
      on
      behalf of Seller or its Affiliates in connection with the negotiation, execution
      or performance of this Agreement, the Related Agreements or the transactions
      contemplated hereby or thereby.

     

    4.15 Absence
      of Certain Changes and Events.
      Since
      January 31, 2008, except as set forth on Seller
      Schedule 4.15: 

     

    4.15.1 Seller
      has not Transferred any assets of the Business or the USA Remaining Stores
      to
      any other party other than inventory sold in the ordinary course of
      business;

     

    4.15.2 Seller
      has not granted any increase in the salary or benefits of any Acquired Store
      Employees and the Other Store Employees, other than (i) regularly scheduled
      salary or benefit increases in the ordinary course of business, (ii) increases
      in salary and benefits in the ordinary course of business in connection with
      promotions and/or increases of responsibilities or duties, and (iii) payment
      or
      agreement to pay regularly scheduled bonuses in the ordinary course of
      business;

     

    4.15.3 there
      has
      not occurred any Material Adverse Event;

     

    4.15.4 there
      has
      not been any other damage, destruction or loss (whether or not covered by
      insurance) materially and adversely affecting the Acquired Assets, the USA
      Remaining Leases or the Headquarters Assets; and

     

    
      
        
        

      

      
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    4.15.5 Seller
      has not agreed to take (or cause to be taken) any actions described in
Sections
      4.15.1
      and
4.15.2.
      

     

    4.16 Title
      to Assets.
      Seller
      has good and valid title to, or a valid leasehold interest in, all of the
      Acquired Assets (other than the Headquarters Assets and other than intangible
      assets) and the USA Remaining Leases, free and clear of any Encumbrances, except
      for Permitted Encumbrances.
      TCP
      Services Co. has good and valid title to, or a valid leasehold interest in,
      all
      of the Headquarters Assets, free and clear of all Encumbrances, except for
      Permitted Encumbrances.

     

    4.17 Labor
      Matters. 

     

    4.17.1 Except
      as
      set forth on Seller
      Schedule 4.17,
      in
      connection with the Business and the USA Remaining Stores, (i) Seller is not
      a
      party to any labor agreement with respect to the Transferred Employees with
      any
      labor organization, group or association and (ii) since the Original Sale Date,
      Seller has not experienced any attempt by a labor organization to organize
      or
      represent any of the Transferred Employees. In connection with the Business
      and
      the USA Remaining Stores, except as set forth on Seller
      Schedule 4.17,
      Seller
      is in compliance in all material respects with all applicable labor and
      employment Laws, including those respecting employment practices and standards,
      terms and conditions of employment, wages and hours, worker's compensation,
      human rights, and occupational health and safety, and Seller is not engaged
      in
      any unfair labor practice. Except as set forth on Seller
      Schedule 4.17,
      there
      is no unfair labor practice charge or complaint against Seller pending before
      the National Labor Relations Board or any other labor relations board having
      jurisdiction over Seller's employees, arising out of Seller's activities with
      respect to the Business or the USA Remaining Stores and, to the Knowledge of
      Seller, there are no facts that would give rise thereto. There is no labor
      strike or labor disturbance pending or, to the Knowledge of Seller, threatened
      against Seller in connection with the Business or the USA Remaining Stores.
      Seller has not experienced any material work stoppage in connection with the
      Business or the USA Remaining Stores since the Original Sale Date. 

     

    4.17.2 There
      are
      no collective bargaining agreements currently in effect that cover any employees
      of the Business or the USA Remaining Stores or any retired employees of the
      Business or the USA Remaining Stores. 

     

    4.18 No
      Other Agreements to Sell.
      Neither
      Seller nor its Affiliates has any legal obligation, absolute or contingent,
      to
      any Person other than Buyer to sell the Acquired Assets or the Designation
      Rights or to enter into any agreement with respect to the sale or transfer
      thereof.

     

    4.19 Payments.
      During
      the twelve (12) month period immediately preceding the date hereof and the
      Applicable Closing Date, to the Knowledge of Seller, neither Seller nor any
      of
      its officers or directors has, directly or indirectly, in connection with the
      Business or the USA Remaining Stores, made any material payment to any supplier
      of Seller or any officer, director, partner, employee or agent of any such
      supplier or any governmental official that, when made, was illegal under
      applicable Law.

     

    
      
        
        

      

      
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    ARTICLE
      V

     

    REPRESENTATIONS
      AND WARRANTIES OF BUYER

     

    Buyer
      represents and warrants to Seller as follows:

     

    5.1 Organization;
      Capitalization.

     

    5.1.1 Organization
      and Authority of USA Buyer.
      USA
      Buyer is a limited liability company duly formed and validly existing under
      the
      laws of the State of Delaware. USA Buyer has the requisite power and authority
      to (a) execute and deliver this Agreement, the Related Agreements to which
      it is a party and the documents and instruments contemplated hereby and thereby,
      (b) perform and comply with all of the terms, conditions and covenants to
      be performed and complied with by it hereunder and thereunder and (c) own
      its properties and assets and carry on its business as contemplated by this
      Agreement.  

     

    5.1.2 Incorporation
      and Authority of Canadian Buyer.
      Canadian Buyer is a corporation duly incorporated, validly existing and in
      good
      standing under the Laws of the Province of Nova Scotia. Canadian Buyer has
      the
      requisite power and authority to (a) execute and deliver this Agreement,
      the Related Agreements and the documents and instruments contemplated hereby
      and
      thereby, (b) perform and comply with all of the terms, conditions and
      covenants to be performed and complied with by it hereunder and thereunder
      and
      (c) own its properties and assets and carry on its business as contemplated
      by this Agreement. 

     

    5.2 Authorization;
      No Conflicts.

     

    5.2.1 Authorization.
      All
      necessary action on the part of Buyer has been duly and validly taken to
      authorize the execution, delivery and performance of this Agreement, the Related
      Agreements and any other agreements and instruments to be executed and delivered
      by it in connection herewith. This Agreement and the Related Agreements to
      which
      Buyer is party have been duly executed and delivered by Buyer and constitute
      the
      legally valid and binding obligations of Buyer, enforceable against Buyer in
      accordance with their respective terms, in each case subject to bankruptcy,
      insolvency, reorganization, moratorium or other similar Laws and legal and
      equitable principles affecting, limiting or relating to creditors rights
      generally, and general principles of equity, including unconscionability,
      reasonableness and good faith and fair dealing.   

     

    5.2.2 No
      Conflicts.
      Provided that, prior to the Applicable Closing, (a) the Permits required to
      be
      obtained from any Governmental Entity listed on Seller
      Schedule 4.8.2
      (including any required approval under the Investment Canada Act) are obtained,
      and (b) any required filings under the Hart-Scott-Rodino Act have been made
      and the applicable waiting period thereunder shall have expired or been
      terminated, neither the execution, delivery and performance by Buyer of this
      Agreement, the Related Agreements or any other agreements or instruments to
      be
      executed and delivered by it in connection herewith or therewith nor the
      consummation of the transactions contemplated hereby or thereby will:
      (i) violate any provision of Buyer's articles, charter, bylaws, operating
      agreement or similar organizational or governing documents; (ii) violate
      any Law to which Buyer is subject that would have a material adverse effect
      on
      Buyer's ability to perform its obligations hereunder or thereunder;
      (iii) violate any material Contract to which Buyer is a party or is bound;
      or (iv) result in the imposition of any material Encumbrance against Buyer
      or any of its properties. 

     

    
      
        
        

      

      
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    5.3 Legal
      Proceedings.
      There
      is no Action pending or, to the Knowledge of Buyer, threatened against or
      affecting Buyer or any of its Affiliates or any of their respective properties
      or assets that has or might reasonably be expected to have a material adverse
      effect on the ability of Buyer to perform its obligations under this Agreement
      or the Related Agreements or the transactions contemplated hereby or
      thereby. 

     

    5.4 No
      Brokers or Finders.
      No
      agent, broker, finder, investment or commercial banker or other Person or firm
      engaged by or acting on behalf of Buyer or any of its Affiliates in connection
      with the negotiation, execution or performance of this Agreement, the Related
      Agreements or the transactions contemplated hereby or thereby is or will be
      entitled to any broker's or finder's or similar fees or other commission as
      a
      result of this Agreement, the Related Agreements or such
      transactions.

     

    5.5 GST.
      Canadian Buyer is, or will be prior to the Canadian Closing, registered for
      the
      purposes of Part IX of the GST Act, and Canadian Buyer shall communicate its
      GST
      registration number to Seller by written notice on or prior to the Canadian
      Closing.

     

    ARTICLE
      VI

     

    COVENANTS

     

    6.1 Tax
      Matters.

     

    6.1.1 Transaction
      Taxes.
      Except
      for (i) any GST payable as a result of the transactions contemplated by this
      Agreement, which shall be Buyer's sole responsibility, and (ii) any interest,
      penalties or other amounts payable as a result of Seller's delay in remitting
      Transaction Taxes collected from Buyer, which shall be Seller's sole
      responsibility ("Seller
      Only Taxes"),
      Buyer
      and Seller shall each bear and pay one-half of any and all sales, use, transfer,
      documentary and other similar taxes and fees (and any related interest,
      penalties or additions thereto) imposed by any Governmental Entity with respect
      to the sale and transfer of the Acquired Assets (including the transfer of
      the
      tangible personal property in connection with the Headquarters Assets) as
      contemplated by this Agreement ("Transaction
      Taxes"),
      regardless of which party or its Affiliates the tax authority seeks to collect
      such Transaction Taxes from, and each party will provide reasonable cooperation
      to the other party in order to minimize the amount of Transaction Taxes. With
      respect to any Transaction Taxes or expenses that are required to be shared
      by
      Buyer and Seller under this Section
      6.1.1,
      except
      for those Transaction Taxes described in Section
      6.1.4
      that are
      imposed directly on Canadian Buyer, Seller will determine the amount of such
      Transaction Taxes (subject to Buyer's review and approval in its reasonable
      discretion), file all necessary Tax Returns and other documentation in
      connection with such Transaction Taxes, remit such Transaction Taxes to the
      relevant Governmental Entities within thirty (30) days of the Applicable Closing
      and provide Buyer with copies of all necessary Tax Returns and documentation
      filed and proof of payment of such Transaction Taxes, and Buyer shall pay the
      amount of such Transaction Taxes or expenses to Seller (subject to receipt
      of
      prompt written notice from Seller), and the parties shall provide joint written
      instructions to the Escrow Agent to pay to Buyer an amount equal to one-half
      of
      such Transaction Taxes from the Transaction Taxes Escrow Fund, by wire transfer
      of immediately available funds pursuant to wire instructions to be delivered
      by
      Buyer to the Escrow Agent, provided that if the amount of the Transaction Taxes
      Escrow Fund is insufficient to pay such amount, the shortfall shall be paid
      by
      Seller. With respect to Seller Only Taxes, Seller shall provide Buyer with
      written notice thereof, and the parties shall provide joint written instructions
      to the Escrow Agent to pay the amount of such Seller Only Taxes to Seller from
      the Transaction Taxes Escrow Fund, by wire transfer of immediately available
      funds pursuant to wire instructions to be delivered by Seller to the Escrow
      Agent, and Seller shall pay the Seller Only Taxes to the applicable taxing
      authority, provided that if the amount of the Transaction Taxes Escrow Fund
      is
      insufficient to pay the Seller Only Taxes, then the shortfall shall be paid
      by
      Seller. With respect to those Transaction Taxes described in Section
      6.1.4
      that are
      imposed directly on Canadian Buyer, Buyer shall determine the amount of such
      Transaction Taxes (subject to Seller's review and approval in its reasonable
      discretion), file all necessary Tax Returns and other documentation in
      connection with such Transaction Taxes, remit such Transaction Taxes to the
      relevant Governmental Entities within thirty (30) days of the Applicable Closing
      and provide Seller with copies of all necessary Tax Returns and documentation
      filed and proof of payment of such Transaction Taxes, and the parties shall
      provide joint written instructions to the Escrow Agent to pay to Buyer an amount
      equal to one-half of such Transaction Taxes from the Transaction Taxes Escrow
      Fund, by wire transfer of immediately available funds pursuant to wire
      instructions to be delivered by Buyer to the Escrow Agent, provided that if
      the
      amount of the Transaction Taxes Escrow Fund is insufficient to pay such amount,
      the shortfall shall be paid by Seller.  If
      either
      party desires to dispute any Transaction Taxes imposed upon it or its
      Affiliates, it shall notify the other party, and if both parties agree to
      dispute such Transaction Taxes (which decision shall be made by each party
      in
      its sole discretion), then the parties shall share equally the expenses incurred
      in connection with such dispute (with Seller's portion being paid from the
      Transaction Taxes Escrow Fund, provided
      that if
      the amount of the Transaction Taxes Escrow Fund is insufficient to pay such
      amount, then the shortfall shall be paid by Seller), but if both parties do
      not
      so agree, then the party desiring to dispute such Transaction Taxes may do
      so
      but only at its sole cost and expense (and the Transaction Taxes Escrow Fund
      may
      not be used for such purpose). The party against whom any Transaction Tax is
      imposed shall control the conduct of any dispute proceedings related thereto.
      Each party shall give prompt written notice to the other of any proposed
      adjustment of any Transaction Taxes or of any examination of the transactions
      contemplated hereby in an audit pertaining to Transaction Taxes. Neither party
      shall negotiate a settlement or compromise of any Transaction Taxes without
      the
      written consent of the other, which consent shall not be unreasonably withheld.
      

     

    
      
        
        

      

      
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    6.1.2 Cooperation
      on Tax Matters.
      Each
      party shall cooperate fully, as and to the extent reasonably requested by the
      other party, in connection with any audit, examination, litigation, or other
      proceeding with respect to Taxes relating to the Business (a "Tax
      Proceeding").
      Such
      cooperation shall include the retention and (upon the other party's request)
      the
      provision of records and information that are reasonably relevant to any such
      Tax Proceeding and the availability of employees on a mutually convenient basis
      to provide additional information and explanation of any material provided
      hereunder. The parties agree (A) to retain all books and records with respect
      to
      Tax matters pertinent to the Business relating to any taxable period beginning
      before the Applicable Closing until the expiration of the statute of limitations
      or, in the case of Canadian Seller, the expiration of any period during which
      a
      recognized document assessing liability for Tax may be issued by a Governmental
      Entity (and, to the extent notified by a party, any extensions thereof) of
      the
      respective taxable periods, and to abide by all record retention agreements
      entered into with any taxing authority, and (B) to give the other party
      reasonable written notice prior to transferring, destroying or discarding any
      such books and records and, if the other party so requests, the first party
      shall allow the other party to take possession of such books and records to
      the
      extent they would otherwise be destroyed or discarded. Each party shall bear
      its
      respective costs and expenses in connection with any Tax Proceeding. Any
      information obtained under this Section
      6.1.2
      or under
      any other Section hereof providing for the sharing of information or the review
      of any Tax Return or other schedule relating to Taxes shall be subject to
Section
      8.9.

     

    
      
        
        

      

      
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    6.1.3
      GST
      Election.
      Canadian
      Buyer and Canadian Seller shall make the appropriate joint tax election pursuant
      to subsection 167(1) of the GST Act in order to effect the sale of the Canadian
      Acquired Assets by Canadian Seller without payment of GST. Notwithstanding
      such
      election, in the event it is determined by Canada Revenue Agency that there
      is a
      liability of Canadian Buyer to pay, or of Canadian Seller to collect and remit,
      GST on all or part of the transfer of the Canadian Acquired Assets under this
      Agreement, such GST, including any interest and penalties, if any, shall be
      forthwith paid by Canadian Buyer to Canada Revenue Agency or to Canadian Seller
      for remittance to Canada Revenue Agency. Canadian Buyer shall file the election
      form referred to above, along with any documentation necessary or desirable
      to
      give effect thereto, with Canada Revenue Agency on or before the due date for
      Canadian Buyer's GST return for the reporting period of Canadian Buyer in which
      the tax would, but for this election, have become payable in respect of the
      supply of Canadian Acquired Assets.

     

    6.1.4
      Provincial
      Retail Sales Taxes.
      Without
      in any way compromising Canadian Buyer's rights and entitlements pursuant to
      Section
      6.1.1,
      Canadian Buyer shall pay directly to the applicable Governmental Entity any
      Transaction Taxes payable under the Retail
      Sales Tax Act (Ontario),
      the Social
      Service Tax Act (British
      Columbia), The
      Retail Sales Tax Act (Manitoba)
      or any similar provincial statute in connection with the transfer of the
      Canadian Acquired Assets under this Agreement, all in accordance with the
      provisions of those statutes, the Regulations
      made
      thereunder, and the applicable Governmental Entity's administrative policies.
      Canadian Buyer shall provide to Canadian Seller as reasonably requested such
      documentation as may be necessary to substantiate any provincial sales tax
      exemptions relied upon by Canadian Buyer, including exemptions with respect
      to
      inventories of goods held for resale or for incorporation into goods to be
      held
      for sale. On or before the Canadian Closing, Canadian Seller shall provide
      Canadian Buyer with a clearance certificate under section 6 of the Retail
      Sales Tax Act (Ontario),
      section 99 of the Social
      Services Tax Act (British
      Columbia), section 45 of The
      Tax Administration and Miscellaneous Taxes Act (Manitoba)
      and any other similar applicable provincial statute providing, in each case,
      that Canadian Seller has no unpaid and overdue Tax liabilities under the
      applicable legislation as of the Canadian Closing Date.

     

    
      
        
        

      

      
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    6.2 Other
      Cooperation.

     

    6.2.1 Buyer.
      After
      the Applicable Closing, Buyer will afford to Seller, its Affiliates and its
      Representatives reasonable access during normal business hours upon reasonable
      prior notice to the books and records relating solely to the operation of the
      Business prior to the Applicable Closing to the extent such access is required
      in connection with the legitimate business purposes of Seller. Seller, its
      Affiliates and its Representatives may, at the expense of Seller, make copies
      of
      such books and records.

     

    6.2.2 Seller.
      After
      the Applicable Closing, Seller will (i) deliver and cause its Affiliates to
      deliver to Buyer the books and records relating solely to the Business that
      were
      not delivered to Buyer at or prior to the Applicable Closing and that were
      not,
      as of the Applicable Closing Date, located at the premises that were transferred
      to Buyer on such Applicable Closing Date and (ii) afford Buyer, its Affiliates
      and its Representatives reasonable access, during normal business hours upon
      reasonable prior notice, to financial information for the periods prior to
      the
      Applicable Closing relating solely to the Business that is readily available
      (without diligence or expenditure of money) and in the possession and control
      of
      Seller and its Affiliates and not already delivered to Buyer pursuant to the
      preceding subparagraph (i).

     

    6.2.3 Commercially
      Reasonable Efforts.
      Upon
      the terms and subject to the conditions of this Agreement, Seller shall use
      its
      commercially reasonable efforts to take, or cause to be taken, all actions,
      and
      to do, or cause to be done, all things necessary, proper or advisable under
      applicable Laws to consummate and make effective the transactions contemplated
      by this Agreement and the Related Agreements as promptly as practicable,
      including (i) the prompt preparation and filing of all forms, registrations
      and
      notices required to be filed to consummate the transactions contemplated by
      this
      Agreement and the Related Agreements and the taking of such reasonable actions
      as are necessary, proper or advisable to obtain any requisite Permits, Consents,
      orders, exemptions or waivers by any Governmental Entity or any other Person,
      including filings pursuant to the HSR Act, the Competition Act and the
      Investment Canada Act (in each case, as applicable) and (ii) using its
      commercially reasonable efforts to cause the satisfaction of all conditions
      to
      the USA Closing and the Canadian Closing, as applicable; provided
      that
      nothing contained herein shall require Buyer to hold separate or divest
      (including through an independent trustee, if necessary) particular assets
      or
      categories of assets, or operations, of the Business, Buyer or any of its
      Affiliates or agree to any limitations or restrictions on its conduct in order
      for the Applicable Closing to occur. Each party shall promptly consult with
      the
      other with respect to, provide any necessary information with respect to and
      provide the other (or its counsel) copies of, all filings made by such party
      with any Governmental Entity or any other Person or any other information
      supplied by such party to a Governmental Entity or any other Person in
      connection with this Agreement and the transactions contemplated by this
      Agreement. Seller shall promptly inform Buyer of any communication from any
      Governmental Entity regarding any of the transactions contemplated by this
      Agreement and the Related Agreements. If Seller receives a request for
      additional information or documentary material from any such Governmental Entity
      with respect to the transactions contemplated by this Agreement, then Seller
      will endeavor in good faith to make, or cause to be made, as soon as reasonably
      practicable and after consultation with Buyer, an appropriate response in
      compliance with such request.
      

     

    
      
        
        

      

      
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    6.3 Effect
      of Due Diligence and Related Matters.
      Each
      party represents that it is a sophisticated entity that was advised by
      knowledgeable counsel and financial and accounting advisors and, to the extent
      it deemed necessary, other advisors in connection with this Agreement.
      Accordingly, each party agrees that (i) there are no representations or
      warranties by or on behalf of the other party except for those expressly set
      forth in this Agreement and the Related Agreements, and, except as stated herein
      or therein, it has not relied and will not rely upon any document or written
      or
      oral information (including any projections or other financial data) furnished
      to or discovered by it or its Representatives, and (ii) to the fullest extent
      permitted by Law, the rights and obligations of each party with respect to
      the
      transactions contemplated hereby will be solely as set forth in this Agreement
      and the Related Agreements.

     

    6.4 Employee
      Matters. 

     

    6.4.1 Offer
      to Certain Seller Employees.
      Prior to
      the Applicable Closing, and conditioned upon and effective as of the Applicable
      Closing, Buyer (i) will make an offer of employment, on terms to be determined
      by Buyer in its sole discretion, to all employees of Seller located in the
      Acquired Stores being acquired on the Applicable Closing (the "Acquired
      Store Employees")
      and
      (ii) in its sole discretion, may (but shall not be required to) make an offer
      of
      employment, on terms to be determined by Buyer in its sole discretion, to
      certain employees of Seller who are (a) district or field managers with
      responsibility for the Acquired Stores being acquired on the Applicable Closing,
      (b) located in the Disney Store Headquarters and/or (c) located in the USA
      Remaining Stores (such employees described in clauses (a), (b) and (c) being
      referred to herein as the "Other
      Store Employees"). Acquired
      Store Employees and Other Store Employees who have accepted such offers of
      employment in accordance with the terms of such offers, in each case conditioned
      upon and effective as of the Applicable Closing, shall constitute "Transferred
      Employees."
      Any
      employees of Seller located in the USA Remaining Stores who are not Transferred
      Employees will be terminated by Seller or transferred to a business of Seller
      or
      its Affiliates other than the USA Remaining Stores, in either case effective
      upon the USA Closing, and Seller will be responsible for all costs associated
      with such employees as provided in Section
      6.4.2(a).

     

    6.4.2 Obligations
      to Transferred Employees and Retained Employees.
      

     

    (a) Seller
      Obligations.
      With
      respect to each Transferred Employee, Seller shall be solely responsible for
      all
      liabilities and payment obligations, if required to be paid (including salary,
      bonus, accrued vacation, equity, health and welfare benefits, contracts, fringe
      benefits, payroll taxes, severance and other payments), incurred in respect
      of
      or relating to periods ending on or before the Applicable Closing Date, and,
      in
      order to facilitate payment of such obligations, Seller shall issue, on the
      Applicable Closing Date or as soon as reasonably practicable thereafter, a
      final
      payroll check to each Transferred Employee for the period through and including
      the Applicable Closing Date. In furtherance of and without limiting the
      foregoing, Seller shall be solely responsible for all termination and severance
      costs (as applicable) that relate to a Transferred Employee's period of service
      on or prior to the Applicable Closing Date, whether such costs arise under
      statute (including applicable employment standards legislation), Contract,
      Law
      or otherwise, and regardless of whether the Transferred Employee's
      employment is terminated after the Applicable Closing Date by Buyer
      (collectively, "Transferred
      Employee Severance Costs").
      Prior
      to the Severance Escrow Expiration Date, any Transferred Employee Severance
      Costs payable to a Transferred Employee who is located in or a resident of
      Canada shall be paid from (and secured by a court-ordered charge in the Canadian
      Insolvency Proceeding against) the Severance Escrow Fund, and Buyer and Seller
      shall provide joint written instructions to the Escrow Agent to pay the amount
      thereof to Seller for remittance to the applicable employees, by wire transfer
      of immediately available funds pursuant to wire instructions to be delivered
      by
      Seller to the Escrow Agent, provided that if the amount of the Severance Escrow
      Fund is insufficient to pay such amount, the shortfall shall be paid by Seller.
      Following the Severance Escrow Expiration Date, all such Transferred Employee
      Severance Costs shall be paid solely by Seller. With respect to each Retained
      Employee, Seller shall remain solely responsible for all liabilities and payment
      obligations (including salary, bonus, accrued vacation, equity, health and
      welfare benefits, contracts, fringe benefits, payroll taxes, severance and
      other
      payments) owed to or incurred in respect of each such Retained Employee,
      including to the extent applicable, compliance with the Worker Adjustment and
      Retraining Notification Act, and Seller shall be entitled, in its sole
      discretion, to offer or cause its Affiliates to offer employment to and hire
      any
      Retained Employee in or for any business of Seller or its
      Affiliates.

     

    
      
        
        

      

      
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    (b) Buyer
      Obligations.
      With
      respect to each Transferred Employee, Buyer shall be solely responsible for
      all
      liabilities and payment obligations, if required to be paid (including salary,
      bonus, accrued vacation, equity, health and welfare benefits, contracts, fringe
      benefits, payroll taxes, severance and other payments), incurred in respect
      of
      or relating to periods after the Applicable Closing Date or, if a Transferred
      Employee commences employment on a date after the Applicable Closing Date,
      on
      the date such Transferred Employee commences employment with Buyer or its
      Affiliate. 

     

    6.4.3 COBRA
      Continuation Coverage.
      From
      and after the USA Closing, USA Seller shall be solely responsible (apart from
      COBRA premiums required to be paid by or with respect to "qualified
      beneficiaries" as such term is defined in COBRA) for any and all COBRA
      continuation coverage costs, liabilities and obligations with respect to any
      Transferred Employees who, at any time before the USA Closing, have lost
      coverage under any Employee Benefit Plan sponsored or maintained by USA Seller
      or its ERISA Affiliates or to which USA Seller or its ERISA Affiliates are
      obligated to contribute, which is subject to COBRA, as a result of a "qualifying
      event" (as defined in COBRA) that occurred on or before the USA Closing
      Date.
      

     

    
      
        
        

      

      
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    6.4.4 Park
      Passes.
      Seller
      acknowledges and agrees that, as of the USA Closing Date, (i) all "Purple
      Passes" and other free or complementary admission tickets, passes or other
      benefits pertaining to the entertainment, recreation and lodging complexes
      located in Anaheim, California, known as DISNEYLAND®
      Resort,
      and in Orange County and Osceola County, Florida, known as the WALT DISNEY
      WORLD® Resort that have been issued to any Retained Employees or Transferred
      Employees shall be cancelled, and (ii) all such "Purple Passes" or other free
      or
      complementary admission tickets, passes or other benefits in the possession
      of
      Seller or its Affiliates shall be promptly returned to Buyer.

     

    6.4.5 Wage
      Reporting.
      Seller
      and Buyer agree to utilize, or cause their respective Affiliates to utilize,
      the
      standard procedure set forth in Revenue Procedure 2004-53 with respect to wage
      reporting for the Transferred Employees. 

     

    6.4.6 No
      Third Party Beneficiaries.
      Nothing
      in this Section
      6.4
      or
      elsewhere in this Agreement will be deemed to make any Transferred Employee
      or
      any Retained Employee a third party beneficiary of this Agreement.

     

    6.5 Wind-Down
      of Stores Other than Acquired Stores; Termination of License Agreement;
      Preservation of Buyer Claims. 

     

    6.5.1 Wind-Down
      of USA Remaining Stores. 

     

    (a) As
      of the
      USA Closing Date, Buyer (directly or through an agent or designated
      representative) shall take possession and control of each of the USA Remaining
      Stores for a period of up to two hundred ten (210) days following the filing
      of
      the Bankruptcy Case (the "Wind-down
      Period")
      for
      purposes of conducting inventory reduction sales (the "Store
      Closing Sales")
      of all
      inventory located therein. During the Wind-down Period, (i) Buyer shall have
      sole and absolute discretion regarding the manner in which the Store Closing
      Sales may be conducted, subject to any applicable Lease covenants or
      restrictions, (ii) Buyer shall be responsible for paying all obligations that
      are specifically attributable to the USA Remaining Stores that accrue during
      the
      Wind-down Period, including rent, ground lease rent, common area maintenance,
      utilities, real estate taxes, insurance, security, obligations under the
      Transitional Services Agreement and other actual out-of-pocket costs under
      the
      USA Remaining Leases (collectively, the "Carrying
      Costs"),
      and
      (iii) Buyer shall be entitled to receive and retain all revenues from the Store
      Closing Sales.

     

    (b) Designation
      Rights.
      On the
      terms and subject to the conditions contained in the Designation Rights
      Agreement, on the USA Closing Date, USA Seller shall convey, assign, transfer
      and deliver to USA Buyer, and USA Buyer shall accept the conveyance, assignment,
      transfer and delivery from USA Seller, of the Designation Rights in respect
      of
      the USA Remaining Stores identified in the Designation Rights Agreement.

     

    
      
        
        

      

      
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    6.5.2 Wind-Down
      of Canadian Retained Stores.
      Commencing immediately following the earlier to occur of the Canadian Closing
      and the Expiration Date (the "Canadian
      Wind-Down Commencement")
      and
      ending no later than three (3) months following the Canadian Wind-Down
      Commencement (such date that is 3 months following the Canadian Wind-Down
      Commencement or, if earlier, the date of the closure of the last Canadian
      Retained Store, the "Canadian
      Final Closure Date"),
      Canadian Seller shall wind down and terminate the operation of all of the
      Canadian Retained Stores in accordance with the wind-down provisions contained
      in Sections
      16.4
      and
16.6
      of the
      License Agreement, provided that Canadian Seller agrees that (a) for purposes
      of
      clarification, for this purpose, the Liquidation Period (as defined in the
      License Agreement) shall be three (3) months following the Canadian Wind-Down
      Commencement, (b) during such wind-down period, Buyer shall permit Canadian
      Seller to use the Business Records and the Business Software to the extent
      reasonably required by Seller to operate the Canadian Retained Stores and to
      complete the wind-down, and (c) Canadian Seller shall bear all costs and
      expenses associated with the wind-down of the Canadian Retained Stores,
      including any and all landlord consent or termination fees. Prior to the closing
      of the Canadian Retained Stores, Canadian Seller will, to the maximum extent
      permitted by applicable Canadian Law, operate the Canadian Retained Stores
      in
      compliance with the terms of the License Agreement that survive early
      termination thereof as specified in the first sentence of Section
      16.2
      of the
      License Agreement, including payment of all royalties due under Section
      7
      thereof,
      provided that, following the Canadian Wind-Down Commencement, (i) royalties
      shall be payable weekly to TDSF by wire transfer of immediately available funds,
      and (ii) the refurbishment obligations of Seller under Section A of the
      Refurbishment Amendment to License and Conduct of Business Agreement dated
      August 29, 2007 (effective as of June 6, 2007), among TDSF, TCP and Seller
      shall
      be, and shall be deemed to be, terminated without any further demand, notice
      or
      other action on the part of Buyer, TDSF, Seller or their respective Affiliates,
      and Canadian Seller shall, as of the Canadian Wind-Down Commencement, be
      released by Buyer, TDSF and their respective Affiliates from any and all
      obligations pertaining thereto. Canadian Seller shall continue to accept Disney
      Dollars as a means of payment at the Canadian Retained Stores in accordance
      with
      the License Agreement through the wind-down and closure of the Canadian Retained
      Stores.

     

    6.5.3 Termination
      of License Agreement.
      The
      License Agreement shall terminate for all purposes (i) as to all Stores located
      in the United States and as to the territory of the United States and its
      territories and possessions as of the USA Closing Date and (ii) as to all
      Canadian Retained Stores and as to the territory of Canada as of the Canadian
      Final Closure Date. Following such termination of the License Agreement, neither
      Seller nor any of its Affiliates shall have any rights or obligations under
      the
      License Agreement, including no right or license to use the Licensed Materials
      (as defined in the License Agreement), to sell Disney Merchandise, to operate
      any Facilities (as defined in the License Agreement) or to exercise, use or
      enjoy any of the other rights or licenses granted by TDSF under the License
      Agreement. For purposes of clarification, the parties acknowledge that,
      following the Canadian Final Closure Date, as a result of such termination
      of
      the License Agreement, Seller shall no longer be obligated to maintain the
      Two
      Million Dollar ($2,000,000) TDSF Self-Help Fund letter of credit required under
      the License Agreement. 

     

    
      
        
        

      

      
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    6.5.4 Alternative
      Canadian Retained Stores Wind-Down.
      Notwithstanding the other provisions of this Section
      6.5,
      at the
      election of Canadian Buyer in its sole discretion to be exercised by providing
      written notice to Canadian Seller at least two (2) Business Days prior to the
      Canadian Closing, Canadian Buyer may treat the Canadian Retained Stores in
      the
      same manner as the USA Remaining Stores hereunder, such that Canadian Buyer
      shall take possession and control of each of the Canadian Retained Stores upon
      the Canadian Closing for purposes of conducting Store Closing Sales of the
      inventory located therein, with the obligation of Canadian Buyer to pay Carrying
      Costs incurred in connection therewith and the right of Canadian Buyer to
      receive and retain all revenues therefrom, subject to the following adjustments
      and modifications to the terms and conditions of this Agreement to take effect
      only in the event of Canadian Buyer's election under this Section
      6.5.4:

     

    (a) The
      Acquired Assets would include (i) the furniture, fixtures, equipment and other
      tangible personal property located in the Canadian Retained Stores, (ii) the
      Canadian Retained Stores Inventory as of the Canadian Closing Date, (iii) the
      Canadian Retained Stores Dollars and Tickets as of the Canadian Closing Date,
      (iv) cash-on-hand in the Canadian Retained Stores as of the Canadian Closing
      Date, (v) the Canadian Retained Stores Supplies as of the Canadian Closing
      Date,
      and (vi) Permits for the Canadian Retained Stores;

     

    (b) The
      purchase price for the Canadian Acquired Assets as specified under Section
      2.7.3(a)
      (and as
      paid and adjusted under Sections
      2.7.3(c)
      and
2.8)
      would
      be adjusted to include Canadian Buyer's purchase of the Canadian Retained Stores
      Inventory, the Canadian Retained Stores Dollars and Tickets and the cash-on-hand
      in the Canadian Retained Stores as of the Canadian Closing;

     

    (c) Canadian
      Buyer would be provided with the opportunity (but not the obligation) to offer
      employment to the employees of Seller located in the Canadian Retained Stores,
      subject to and in accordance with the provisions of Section
      6.4;

     

    (d) The
      representations, warranties and covenants of the parties hereunder applicable
      to
      the USA Remaining Stores would apply equally to the Canadian Retained Stores
      (except as otherwise provided in the following subparagraph (e)), and the terms
      of the Transitional Services Agreement would be applicable to the Canadian
      Retained Stores in addition to any other Stores specified therein;

     

    (e) For
      purposes of clarification, the Designation Rights and the Designation Rights
      Agreement would not
      apply to
      the Canadian Retained Stores, but it would be explicitly understood and agreed
      with respect to the Canadian Retained Leases that by taking possession and
      control of the Canadian Retained Stores during the Wind-Down Period, Canadian
      Buyer would not be assuming any Leases or other Contracts with respect thereto
      and, to the maximum extent permitted by applicable Canadian Law, Canadian Buyer
      would only be responsible to Landlords under the Canadian Retained Leases for
      (i) payment of minimum and other direct occupation costs pursuant to the
      Canadian Retained Leases, solely for the Wind-Down Period; (ii) any damage
      to
      the Canadian Retained Stores as a result of the negligence of Canadian Buyer
      or
      for those whom Canadian Buyer is responsible at law; (iii) complying with the
      reasonable rules and regulations of the Landlords under the Canadian Retained
      Leases applicable to the Canadian Retained Stores provided that the same do
      not
      interfere with Store Closing Sales; and (iv) complying with reasonable insurance
      requirements of Landlords with respect to Canadian Buyer's activities in the
      Canadian Retained Stores during the Wind-Down Period. Without limiting the
      generality of the foregoing, (1) Canadian Buyer would not be responsible for
      paying any amounts with respect to arrears of rent or accelerated rent no matter
      how arising under the Canadian Retained Leases, (2) Canadian Buyer would be
      permitted to remove all remaining inventory and all furniture, fixtures,
      equipment and other tangible personal property in the Canadian Retained Stores,
      including machinery, computers, cash registers, tools, parts, supplies and
      motor
      vehicles from the Canadian Retained Stores, free and clear of all claims and
      interference of and from the Landlords and those claiming under them, provided
      that Canadian Buyer would remain responsible for any damage caused to the
      Canadian Retained Stores as a result of such removal, and (3) Canadian Buyer
      would have no obligation to restore the Canadian Retained Stores to the state
      that existed when the original tenant(s) under the Canadian Retained Leases
      took
      possession thereof at the commencement of the term(s) of the Canadian Retained
      Leases;

     

    
      
        
        

      

      
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    (f) The
      License Agreement would terminate immediately upon the Canadian Closing Date
      with no obligation on the part of Seller to wind-down the operation of the
      Canadian Retained Stores; and

     

    (g) Any
      other
      appropriate adjustments or modifications to the terms and conditions of this
      Agreement as would be reasonably necessary in order to give effect to the
      election by Canadian Buyer to treat the Canadian Retained Stores in the same
      manner as the USA Remaining Stores and as would be satisfactory to Buyer and
      Seller in their respective business judgment.

     

    Canadian
      Seller will use commercially reasonable efforts to obtain, as promptly as
      practicable following the date hereof, the approval of the Canadian Insolvency
      Court of the terms of this Section
      6.5.4,
      including subparagraph (e).

     

    6.5.5 Preservation
      of Claims.
      Notwithstanding any provision of this Section
      6.5
      or any
      other provision of this Agreement, the Mutual Release or the Release Agreement
      to the contrary, Seller acknowledges and agrees that nothing contained in this
      Agreement, the Mutual Release or the Release Agreement shall constitute a
      release, discharge or waiver of any claim against Seller that Buyer, TDSF,
      DEI
      or their respective Affiliates are entitled to make as an unsecured creditor
      in
      the Bankruptcy Proceedings, including claims for royalties due by Seller to
      TDSF
      or its Affiliates arising under the License Agreement before the Applicable
      Petition Date and third party indemnity claims for which Seller is liable to
      TDSF or its Affiliates under the License Agreement that are pending before
      the
      Applicable Petition Date or for which Seller or Buyer has received notice before
      the Applicable Petition Date (but excluding other claims for other amounts
      due
      under the License Agreement arising before the Applicable Petition Date), all
      of
      which claims of Buyer, TDSF, DEI and their respective Affiliates are hereby
      expressly reserved and maintained. 

     

    
      
        
        

      

      
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    6.6 Additional
      Covenants of Seller Prior to the Applicable Closing. During
      the period from the date of this Agreement and continuing until the earlier
      of
      the termination of this Agreement and the Applicable Closing Date, except as
      otherwise consented to or approved by Buyer in writing, Seller covenants and
      agrees that: 

     

    6.6.1 Seller
      will provide its full cooperation in all regards necessary to effectuate the
      closing of the Private Sale, including: (a) preparing and executing transfer
      and
      other documents necessary and appropriate to the Private Sale; (b) collecting,
      compiling, and providing all reasonably available information, books and
      records, and documents that may be requested by Buyer regarding all aspects
      of
      Seller's activities and assets; (c) consistent with its fiduciary duty, opposing
      any claims by third-parties that may materially adversely affect or interfere
      with the effectuation and closing of the Private Sale; and (d) preparing and
      filing all necessary and appropriate pleadings and documents to obtain approval
      of the Private Sale, and supporting such approval, in any Bankruptcy
      Proceeding;

     

    6.6.2 Seller
      shall provide Buyer and its Representatives full access
      to
      the offices, properties (including all Stores, Warehouses and Acquired Assets),
      books and records, and Representatives of Seller and its Affiliates (including
      Acquired Store Employees and the Other Store Employees) pertaining to the Entire
      Disney Store Business for purposes of conducting due diligence and ensuring
      the
      compliance by Seller with its obligations under this Agreement;

     

    6.6.3 Seller
      shall use commercially reasonable efforts to maintain good relationships with
      licensors, suppliers and others having business dealings with Seller or its
      Affiliates with respect to the Entire Disney Store Business;
      

     

    6.6.4 Seller
      shall not transfer, assign, dispose of or otherwise create any Encumbrances
      on
      any Acquired Assets or the USA Remaining Stores; 

     

    6.6.5 Seller
      shall use commercially reasonable efforts to cause the Acquired Assets and
      the
      USA Remaining Stores to be maintained, preserved and operated in all material
      respects in the ordinary course of business in accordance with past practices,
      including using commercially reasonable efforts to maintain (and not permit
      to
      terminate or lapse in any manner) each trade letter of credit issued in respect
      of any Acquired Inventory until such Acquired Inventory has been paid for in
      full either by Seller or by the issuer of such trade letter of credit, subject
      to the following: (i) Seller shall not be required to order new inventory,
      (ii)
      Seller shall not be required to pay for On-Order Unpaid Merchandise, but, with
      respect to all On-Order Unpaid Merchandise, if, by April 14, 2008, Buyer has
      provided Seller with written notice that Buyer desires to acquire any particular
      On-Order Unpaid Merchandise as selected by Buyer in its sole discretion, then
      Seller shall permit and authorize Buyer to acquire such On-Order Unpaid
      Merchandise in such manner as Buyer may determine in its sole discretion
      (whether by assumption of the vendor contract or purchase order pursuant to
      which such merchandise has been ordered, cancellation of the vendor contract
      or
      purchaser order pursuant to which such merchandise has been ordered and entering
      into a replacement thereof, or otherwise), and, upon Buyer's request, Seller
      will provide reasonable cooperation to Buyer in its negotiations and efforts
      to
      acquire such On-Order Unpaid Merchandise, including authorizing in writing
      any
      applicable vendor to permit the assumption or replacement by Buyer of any vendor
      contract or purchase order pertaining to On-Order Unpaid Merchandise (for
      purposes of clarification, any On-Order Unpaid Merchandise not selected by
      Buyer
      by written notice to Seller on or prior to April 14, 2008 for purchase hereunder
      may, at Seller's election in its sole discretion, be cancelled at any time
      following April 14, 2008), (iii) Seller shall cease the sale and distribution
      of
      Disney-branded Gift Cards (as defined in the License Agreement); and (iv) Seller
      shall not relocate any USA Acquired Inventory or Canadian Acquired Inventory
      in
      anticipation of a Bifurcated Closing;

     

    
      
        
        

      

      
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    6.6.6 Seller
      shall maintain insurance now in force with respect to the Acquired Assets and
      the USA Remaining Stores, and pay or cause to be paid all costs and expenses
      with respect thereto; 

     

    6.6.7 Except
      to
      the extent unenforceable under the ipso
      facto
      clause
      under the Bankruptcy Code, Seller shall perform its obligations under the
      Acquired Agreements, including the timely payment of all rents, fees, accounts
      payable and other obligations that accrue after the Applicable Petition Date
      until the Applicable Closing Date, and Seller shall not enter into any new
      Contract, or amend, modify or terminate any Acquired Agreement without the
      prior
      written consent of Buyer;

     

    6.6.8 Seller
      shall maintain and protect all of the Seller Information Technology;

     

    6.6.9 Seller
      shall disclose the Mutual Release to the Bankruptcy Court, the Canadian
      Insolvency Court, and any and all creditor committees formed in connection
      with
      the Bankruptcy Proceedings;

     

    6.6.10 Seller
      shall, as soon as reasonably practicable following the Applicable Petition
      Date,
      provide (i) actual notice of the Private Sale to every known creditor of Seller,
      including all taxing authorities, and (ii) public notice of the Private Sale
      in
      a manner designed to provide notice throughout the United States and Canada
      (e.g., via national newspapers, national editions of newspapers, etc.), each
      such notice in subparagraphs (i) and (ii) to include a statement that the
      Private Sale will be free and clear of all Encumbrances, including successor
      liability;

     

    6.6.11 Seller
      shall not take, or agree to take, any action that would make any representation
      or warranty of Seller contained in this Agreement untrue or incorrect as of
      the
      date when made or as of any future date (as if made as of such date) or that
      could prevent the satisfaction of any closing condition set forth in
Article
      III;
      and

     

    6.6.12 Seller
      shall provide Buyer and its Representatives with reasonable cooperation and
      shall use commercially reasonable efforts to enable Buyer to negotiate and
      place
      orders for new inventory, at Buyer's sole expense, with licensors, suppliers
      and
      others having business dealings with Seller or with TCP with respect to the
      Entire Disney Store Business.

     

    
      
        
        

      

      
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    6.7 Reimbursement
      of Prepaid Rent.
      In the
      event that, prior to the Applicable Closing, Seller prepaid monthly rent for
      the
      Acquired Stores being acquired at the Applicable Closing for the month in which
      the Applicable Closing occurred, Buyer will, within sixty (60) days following
      the Applicable Closing, reimburse Seller for the portion of such prepaid rent
      that is allocable (on a daily, pro rata basis) to the period following the
      Applicable Closing, as determined in good faith by Buyer.

     

    6.8 Transitional
      Services Agreement.
      Prior
      to the USA Closing, TCP Services Co. and Buyer will negotiate in good faith
      with
      respect to, and use their commercially reasonable efforts to agree upon, terms
      and conditions of the Transitional Services Agreement that are satisfactory
      to
      each such party in its respective business judgment, provided that the
      Transitional Services Agreement shall (i) authorize
      Buyer to obtain from TCP Services Co. transitional services for up to six (6)
      months following the USA Closing (or in the case of a Bifurcated Closing, the
      Canadian Closing, if applicable) with respect to distribution, point-of-sale,
      financing and accounting in substantially the manner and form currently provided
      (or as otherwise mutually agreed by Buyer and TCP Services Co.), (ii) terminate
      all or any part of such transitional services upon thirty (30) days prior
      written notice to TCP Services Co., and (iii) provide that Buyer shall pay
      TCP
      Services Co. an amount of consideration for such services to compensate TCP
      Services Co. for providing such services.
      Upon
      the USA Closing, TCP Services Co. and Buyer shall enter into the Transitional
      Services Agreement, which is a condition precedent to the USA Closing as set
      forth in Sections
      3.6.6
      and
3.7.5. 

     

    ARTICLE
      VII

     

    TERMINATION

     

    7.1 Termination.
      This
      Agreement may be terminated and the transactions contemplated by this Agreement
      may be abandoned at any time prior to the USA Closing:

     

    7.1.1 by
      written consent of each of Seller and Buyer;

     

    7.1.2 by
      either
      Seller or Buyer if:

     

    (a) a
      Governmental Entity shall have issued an order, decree or ruling or taken any
      other action (which order, decree or ruling the parties shall use their
      commercially reasonable efforts to lift), in each case permanently restraining,
      enjoining or otherwise prohibiting the transactions contemplated by this
      Agreement and such order, decree, ruling or other action shall have become
      final
      and nonappealable; or

     

    (b) the
      USA
      Closing shall not have occurred on or before the Expiration Date (other
      than due principally to the failure of the party seeking to terminate this
      Agreement to perform any obligations under this Agreement required to be
      performed by it at or prior to the USA Closing);
      

     

    
      
        
        

      

      
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    7.1.3 by
      Buyer
      if there is a default or breach by Seller with respect to the due and timely
      performance of any of its covenants or agreements contained herein, or if the
      representations or warranties of Seller contained in this Agreement shall have
      become inaccurate, in either case such that the conditions set forth in
Section
      3.6
      would
      not be satisfied and such breach or default or inaccuracy is not curable or,
      if
      curable, has not been cured or waived within five (5) Business Days after
      written notice to Seller specifying, in reasonable detail, such claimed default,
      breach or inaccuracy and demanding its cure or satisfaction;

     

    7.1.4 by
      Seller
      if there is a default or breach by Buyer with respect to the due and timely
      performance of any of its covenants or agreements contained herein, or if the
      representations or warranties of Buyer contained in this Agreement shall have
      become inaccurate, in either case such that the conditions set forth in
Section 3.7
      would
      not be satisfied and such breach or default or inaccuracy is not curable or,
      if
      curable, has not been cured or waived within five (5) Business Days after
      written notice to Buyer specifying, in reasonable detail, such claimed default,
      breach or inaccuracy and demanding its cure or satisfaction;

     

    7.1.5 by
      Buyer,
      at any time on or before 12:00 noon, Pacific Time, on April 14, 2008, if Buyer
      is dissatisfied with the results of its due diligence investigation of Seller,
      the Entire Disney Store Business, the Acquired Stores, the Acquired Assets,
      the
      transactions contemplated hereby or any related matters as determined by Buyer
      in its sole discretion (and without obligation to specify any reason for such
      determination); or

     

    7.1.6 by
      Buyer,
      at any time commencing upon the later of (x) Seller's delivery of the Seller
      Schedules to Buyer in final form and (y) the date of this Agreement and, in
      either case, ending on the fifth (5th) Business Day thereafter,
      if Buyer is dissatisfied with any of the disclosures contained in the Seller
      Schedules as determined by Buyer in its sole discretion (and without obligation
      to specify any reason for such determination). 

     

    7.2 Procedure
      and Effect of Termination. 

     

    7.2.1 In
      the
      event of termination and abandonment of the transactions contemplated by this
      Agreement pursuant to Section
      7.1,
      written
      notice thereof shall forthwith be given to the other parties to this Agreement
      and this Agreement shall terminate and the transactions contemplated by this
      Agreement shall be abandoned, without further action by any of the parties.
      

     

    7.2.2 In
      the
      event of the termination and abandonment of this Agreement pursuant to
Section
      7.1,
      this
      Agreement shall forthwith become void and have no effect, without any liability
      on the part of any party hereto or its Affiliates, directors, officers or
      stockholders, other than the provisions of Article
      VIII
      (except
      for Sections
      8.1, 8.8
      and
8.19),
      which
      shall survive the termination of this Agreement. Nothing contained in this
      Section
      7.2.
      shall
      relieve any party from liability for any breach of this Agreement.

     

    
      
        
        

      

      
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    ARTICLE
      VIII

     

    GENERAL

     

    8.1 Non-Survival.
      Except
      for the covenants and conditions to be performed after the Applicable Closing,
      the representations, warranties, covenants and agreements of the parties hereto
      contained in this Agreement or in any certificate delivered pursuant hereto
      shall expire upon the Applicable Closing Date. Effective upon the Applicable
      Closing Date, each of Seller and Buyer shall be deemed to have waived any
      breaches of representations and warranties contained in this Agreement that
      pertain to the assets acquired pursuant to the Applicable Closing. 

     

    8.2 Entire
      Agreement.
      The
      provisions contained herein (including any annexes, schedules and documents
      attached hereto or delivered herewith), in the Related Agreements and/or in
      any
      other agreement or document entered into or delivered in connection with the
      consummation of the transactions contemplated by this Agreement, constitute
      the
      entire agreement among the parties hereto with respect to the subject matter
      hereof and supersede and replace any and all previous agreements among the
      parties, whether written or oral, with respect to such subject matter. No
      statement or inducement with respect to the subject matter hereof by any party
      hereto or by any agent or representative of any party hereto that is not
      contained in this Agreement or such related annexes, schedules, agreements
      and
      documents shall be valid or binding among the parties. 

     

    8.3 Annexes
      and Schedules.
      The
      annexes and schedules to this Agreement, as designated herein and attached
      hereto or delivered separately under the terms hereof (including the Seller
      Schedules), shall each be deemed to form an integral part of this Agreement
      and
      to be incorporated herein as if herein set out in full. Capitalized terms used
      in the annexes and schedules (including the Seller Schedules) and not otherwise
      defined therein shall have the respective meanings ascribed to them in this
      Agreement. The inclusion of any information in any Seller Schedules shall not
      be
      deemed to be an admission or acknowledgment by any party that such information
      is required to be listed on such Seller Schedules or is material to or outside
      the ordinary course of the Business. In addition, no information included in
      any
      of the Seller Schedules shall change the characterization of any liability
      as a
      Retained Liability.

     

    8.4 Amendments.
      Except
      as otherwise provided herein, no provision of this Agreement may be modified,
      supplemented, or amended except by a written instrument duly executed by each
      of
      the parties hereto. Any such modifications, supplements or amendments shall
      not
      require additional consideration to be effective.

     

    8.5 Assignment.
      Neither
      this Agreement nor any rights or obligations under it are Transferable
      (directly, indirectly, by operation of law, change of control (e.g.,
      merger,
      consolidation, amalgamation, stock (or share) sale, sale of substantially all
      assets), pledge, hypothecation or otherwise) by any party without the prior
      written consent of the other parties, which consent may be granted or withheld
      in each party's sole discretion. Subject to the foregoing, this Agreement shall
      be binding upon, shall inure to the benefit of and shall be enforceable by
      the
      parties hereto and their respective successors and assigns. No assignment shall
      release the assignor from any of its obligations hereunder.

     

    
      
        
        

      

      
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    8.6 Effect
      of Headings.
      The
      headings and subheadings of the sections of this Agreement are inserted for
      convenience of reference only and shall not control or affect the meaning or
      construction of any of the agreements, terms, covenants or conditions of this
      Agreement in any manner.

     

    8.7 Counterparts;
      Facsimile and Electronic Signatures.
      This
      Agreement and any other agreement or document delivered hereunder may be
      executed in two or more counterparts, each of which shall be deemed an original
      but all of which together shall constitute one and the same instrument.
      Facsimile signatures to this Agreement and any other agreement or document
      delivered hereunder (or signatures to such agreements delivered by importable
      document format or other similar electronic format) shall be
      effective.

     

    8.8 Publicity
      and Reports.
      Seller
      and Buyer shall coordinate all publicity relating to the transactions
      contemplated by this Agreement, and no party shall issue, or permit its
      Affiliates to issue, any press release, publicity statement or other public
      notice relating to this Agreement, or the transactions contemplated by this
      Agreement, without obtaining the prior written consent of the other party;
      provided,
      that
      nothing herein will prohibit either party from issuing or causing publication
      of
      any press release, publicity statement or other public notice to the extent
      that
      such action is required by, or is determined to be advisable by such party
      in
      its business judgment under, applicable Law or the regulations of any securities
      exchange, securities trading system or similar regulatory body applicable to
      such party or its Affiliates.

     

    8.9 Confidentiality.
      Except
      as otherwise required by any applicable Law or any regulation of any securities
      exchange, securities trading system or similar regulatory body, Buyer, on the
      one hand, and Seller, on the other hand, agree not to disclose to any third
      party (other than to their Affiliates and their and their Affiliates'
      Representatives on a need-to-know basis only) or permit any third party to
      disclose or use (other than the right of Seller or Buyer or their Affiliates
      or
      their and their Affiliates' respective Representatives to use for purposes
      of
      this Agreement and the Related Agreements) any non-public, confidential or
      proprietary information (the "Confidential
      Information")
      that
      either party or its Affiliates or any of its or its Affiliates' Representatives
      makes available to the other party or its Affiliates or any of its or its
      Affiliates' Representatives in connection with this Agreement, including any
      Confidential Information disclosed by one party to the other party in connection
      with this Agreement at any time prior to the date hereof. Each of Buyer, on
      the
      one hand, and Seller, on the other hand, further agree not to use any such
      Confidential Information of the other in violation of any applicable securities
      Laws, including prohibitions thereunder pertaining to trading on material inside
      information. Such Confidential Information shall include the negotiations
      leading to this Agreement and the Related Agreements, the terms and conditions
      (including economic, legal and other terms) of this Agreement, the Related
      Agreements and any agreement referred to herein or therein, information that
      one
      party may have caused to deliver to the other party that the delivering party
      has designated as "Confidential" or "Proprietary" or in like words or
      information that is generally treated as proprietary (such as financial and
      operational information), whether or not in written form and whether or not
      designated as confidential. Confidential Information shall not include
      information that: (i) is or becomes publicly known (other than as a result
      of a
      breach of this Agreement or any other legal duty by the receiving party, its
      Affiliates or its or its Affiliates' Representatives), (ii) is lawfully received
      by the receiving party from a third party on a non-confidential basis, which
      third party is not to the knowledge of the receiving party bound in a
      confidential relationship with the disclosing party, (iii) is generated
      independently by or for the receiving party without the use of Confidential
      Information of the disclosing party, or (iv) is required by law to be disclosed.
      If a receiving party, its Affiliates or its or its Affiliates' Representatives
      are requested or required to disclose any of the Confidential Information of
      a
      disclosing party in an investigatory, legal, regulatory or administrative
      proceeding, such receiving party will, to the extent possible, provide the
      disclosing party with prompt notice thereof and, except in the case of a Tax
      Proceeding or the Bankruptcy Proceedings, the disclosing party may seek a
      protective order or other appropriate remedy. If no such order or remedy is
      obtained, then the receiving party may, without liability hereunder, disclose
      in
      such proceeding that portion of the Confidential Information of the disclosing
      party that the receiving party's legal counsel has advised the receiving party
      it is legally required to disclose. Each of the parties hereto agrees that
      it
      shall be responsible for any disclosure of Confidential Information by its
      Affiliates and its and its Affiliates' Representatives that would constitute
      a
      breach of this Section
      8.9.

     

    
      
        
        

      

      
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    8.10 No
      Third Party Beneficiaries.
      Nothing
      in this Agreement is intended, or shall be deemed, to confer any rights or
      benefits upon any Person other than the parties hereto or to make or render
      any
      such other Person a third-party beneficiary of this Agreement, except to the
      extent that an Affiliate of either party or any officers, directors, agents,
      representatives, employees, successors or assigns of a party or any of its
      Affiliates have any rights under this Agreement.

     

    8.11 Notices.
      Unless
      otherwise specified herein, all notices, requests, demands, consents and other
      communications hereunder shall be transmitted in writing and shall be deemed
      to
      have been duly given when hand delivered, or upon delivery when sent by express
      mail, courier or other recognized overnight mail or next day delivery service,
      charges prepaid, or three (3) Business Days following the date mailed when
      sent
      by registered or certified United States mail, postage prepaid, return receipt
      requested, or when deposited with a public telegraph company for immediate
      transmittal, charges prepaid, or when sent by facsimile, with a confirmation
      copy sent by recognized overnight mail or next day delivery, charges prepaid,
      addressed as follows:

     

    If
      to Buyer, addressed to:

     

    T2
      Acquisition, LLC

    T1
      WDC
      Inc.

    c/o
      The
      Walt Disney Company

    500
      South
      Buena Vista Street

    Burbank,
      California 91521-1030

    Facsimile: (818)
      569-5146

    Attention: General
      Counsel 

     

    
      
        
        

      

      
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    with
      copies (which shall not constitute notice) to:

     

    The
      Walt
      Disney Company

    500
      South
      Buena Vista Street

    Burbank,
      California 91521-1018

    Facsimile: (818)
      556-3889

    Attention: Chief
      Financial Officer

     

    and

     

    The
      Walt
      Disney Company

    500
      South
      Buena Vista Street

    Burbank,
      California 91521-1018

    Facsimile: (818)
      562-1813

    Attention: Jim
      Kapenstein, Managing Vice President

     

    If
      to Seller, addressed to: 

     

    Hoop
      Retail Stores, LLC

    c/o
      Hoop
      Holdings LLC

    915
      Secaucus Road

    Secaucus,
      NJ 07094

    Facsimile:
       (201)
      808-5637

    Attention:
       General
      Counsel

    

    and

    

    Traxi
      LLC

    120
      West
      45th Street

    New
      York,
      New York 10036

    Facsimile: (212)
      465-1919

    Attention: Perry
      Mandarino

    

    with
      copies (which shall not constitute notice) to:

     

    Hoop
      Retail Stores, LLC

    c/o
      Hoop
      Holdings LLC

    915
      Secaucus Road

    Secaucus,
      NJ 07094

    Facsimile:
       (201)
      808-5637

    Attention:
       Chief
      Financial Officer

    

    or
      such
      other address or facsimile number as may be designated by either party hereto
      by
      written notice to the other in accordance with this Section
      8.11.

     

    
      
        
        

      

      
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    8.12 Expenses.
      Except
      as otherwise expressly provided in this Agreement, including in the following
      sentence, each of Seller and Buyer shall pay its own expenses incident to the
      negotiation, preparation and performance of this Agreement and the transactions
      contemplated hereby and the fees, expenses and disbursements of their respective
      accountants and counsel. Seller and Buyer shall each pay one-half of any filing
      fees under the HSR Act.

     

    8.13 Interest.
      All
      arrearages in the payment of any sums due to either party hereto under the
      provisions of this Agreement shall bear interest from the due date until paid
      at
      the lesser of (i) the per annum amount that is equal to two percent (2%)
plus
      the
      Prime Rate and (ii) the highest rate of interest then allowable pursuant to
      applicable Law.

     

    8.14 Waivers.
      No
      release, discharge or waiver of any provision hereof shall be enforceable
      against or binding upon any party hereto unless in writing and executed by
      a
      duly authorized officer of each of the parties hereto. Neither the failure
      to
      insist upon strict performance of any of the agreements, terms, covenants or
      conditions hereof, nor the acceptance of monies due hereunder with knowledge
      of
      a breach of this Agreement, shall be deemed a waiver of any rights or remedies
      that either party hereto may have or a waiver of any subsequent breach or
      default in any of such agreements, terms, covenants and conditions.

     

    8.15 Construction.
      This
      Agreement has been fully reviewed and negotiated by the parties hereto and
      their
      respective counsel. Accordingly, in interpreting this Agreement, no weight
      shall
      be placed upon which party hereto or its counsel drafted the provision being
      interpreted and prior drafts of this Agreement shall be disregarded and
      inadmissible as proof or indication of the intent of the parties or for any
      other purpose in the event of any other controversy regarding the meaning,
      construction or interpretation of this Agreement.

     

    8.16 Severability.
      If any
      term or provision of this Agreement shall be found to be void or contrary to
      applicable Law, such term or provision shall be deemed to be severable from
      the
      other terms and provisions hereof, but only to the extent necessary to bring
      this Agreement within the requirements of such Law, and the remainder of this
      Agreement shall be given effect as if the parties had not included the severed
      term herein; provided,
      that if
      the party that would be adversely affected by such severance demonstrates that
      a
      material inducement to its entering into this Agreement would be materially
      impaired, such party shall be entitled to seek an adjudication that this
      Agreement should be terminated on that ground.

     

    8.17 Governing
      Law; Venue; Remedies; Waiver of Jury Trial.

     

    8.17.1 Except
      to
      the extent that certain matters may be governed by United States federal law,
      this Agreement shall be deemed to have been entered into in the State of
      California and shall be interpreted and construed in accordance with the laws
      of
      the State of California applicable to agreements executed and to be performed
      therein by each party hereto. 

     

    
      
        
        

      

      
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    8.17.2 After
      the
      Applicable Closing Date, any legal proceeding arising in connection with this
      Agreement, the Related Agreements or any other related agreement shall be
      submitted for trial exclusively before the United States Bankruptcy Court for
      the Central District of California with respect to matters relating to USA
      Seller or USA Buyer and before the Ontario Superior Court of Justice with
      respect to matters relating to Canadian Seller or Canadian Buyer, and the
      parties hereby submit to the jurisdiction of each such court and consent to
      service of process outside of the State of California and the Province of
      Ontario pursuant to the requirements of each such court in any matter subject
      to
      it. 

     

    8.17.3 Each
      party hereby acknowledges and agrees that, in the event of any breach or
      prospective breach of this Agreement, the remedies of each party shall include,
      without limitation, money damages (if and to the extent available), any form
      of
      equitable relief, including any temporary restraining order, preliminary
      injunction, permanent injunction, specific performance or any other form of
      relief in equity (if such relief is available and such party is able to satisfy
      the requirements necessary to obtain such relief), and any other right or remedy
      available to such party as a result of such breach under this Agreement, at
      law,
      in equity or otherwise. The parties acknowledge and agree that money damages
      may
      not be an adequate remedy for a breach of this Agreement and that a
      non-breaching party may, in its sole discretion, apply for a temporary
      restraining order, a preliminary injunction, a permanent injunction, specific
      performance or other form of equitable relief (without the posting of any bond
      or other security) as may be just and proper in order to enforce the applicable
      provision of this Agreement or prevent any violation thereof. Any such equitable
      relief shall not be exclusive and any party seeking such relief shall also
      be
      entitled to seek and enforce any other right or remedy available to it,
      including money damages.

     

    8.17.4 WITH
      RESPECT TO ANY DISPUTE ARISING UNDER OR IN CONNECTION WITH THIS AGREEMENT,
      EACH
      PARTY HEREBY IRREVOCABLY WAIVES ALL RIGHTS IT MAY HAVE TO DEMAND A JURY TRIAL.
      THIS WAIVER IS KNOWINGLY, INTENTIONALLY AND VOLUNTARILY MADE BY EACH PARTY.
      EACH
      PARTY ACKNOWLEDGES THAT IT HAS BEEN REPRESENTED IN THE MAKING OF THIS WAIVER
      BY
      INDEPENDENT LEGAL COUNSEL AND THAT IT HAS HAD THE OPPORTUNITY TO DISCUSS THIS
      WAIVER WITH SUCH COUNSEL. EACH PARTY FURTHER ACKNOWLEDGES THAT IT HAS READ
      AND
      UNDERSTANDS THE MEANING AND RAMIFICATIONS OF THIS WAIVER. 

     

    8.18 Limitation
      of Liability.
      Notwithstanding anything contained herein to the contrary, no party shall be
      liable under this Agreement to the other party for any punitive, exemplary,
      consequential, incidental, indirect or special damages (including loss of
      profits) based upon breach of warranty, breach of contract, negligence, strict
      liability and tort, or any other legal theory. 

     

    
      
        
        

      

      
        68

        
          

        

      

      
        
        

      

    

     

    8.19 Release
      Agreement.
      Seller
      and Buyer shall, on or prior to the USA Closing Date, enter into a mutual
      release agreement (the "Release
      Agreement"),
      by
      and between Buyer and Seller, substantially in the form to be attached hereto
      as
Annex
      L
      after
      the preparation thereof and approval thereof by the parties in their respective
      business judgment.

     

    [Signature
      Page Follows]

    

    
      
        
        

      

      
        69

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF,
      each of
      the parties hereto has caused this Agreement to be executed by its duly
      authorized officers all as of the day and year first above written.

     

    
      	"USA
              BUYER"	 	"CANADIAN
              BUYER"
	 	 	 
	T2 ACQUISITION, LLC	 	T1 WDC INC.
	 	 	 	 	 
	 	 	 	 	 
	By:	/s/
              James M.
              Kapenstein	 	By:	/s/
              James M.
              Kapenstein
	 	
              
Name:
              James M. Kapenstein	 	 	
              
Name:
              James M. Kapenstein
	 	Title:
              Vice
              President	 	 	Title:
              Vice
              President

    

    
       

      
        	"USA SELLER"	 	"CANADIAN
                SELLER"
	 	 	 
	HOOP RETAIL STORES, LLC	 	HOOP CANADA, INC.
	 	 	 	 	 
	 	 	 	 	 
	By:	/s/
                Perry M.
                Mandarino	 	By:	/s/
                Perry M.
                Mandarino
	 	
                
Name:
                /s/ Perry M. Mandarino	 	 	
                
Name:
                /s/ Perry M. Mandarino
	 	Title:
                Chief
                Restructuring Officer 	 	 	Title:
                Chief
                Restructuring Officer

      

    

     

    Only
      with respect to the specific matters relating to TCP Services Co. as set forth
      herein:

    
      
         

        
          	"TCP
                  SERVICES CO."	 	
                
	 	 	 
	THE CHILDREN'S PLACE
                  SERVICES
                  COMPANY, LLC	 	
                
	 	 	 	 	 
	 	 	 	 	 
	By:	/s/
                  Charles
                  Crovitz	 	
                	
                
	 	
                  
Name:
                  Charles Crovitz	 	 	
                
	 	Title:
                  Chief
                  Executive Officer	 	 	
                

        

      

       

      
        
          
          

        

        
          70

          
            

          

        

        
          
          

        

      

    

    GUARANTEE
      BY DEI

     

    Disney
      Enterprises, Inc., a Delaware corporation ("Guarantor"),
      acknowledges that it owns a material interest, directly or indirectly, in USA
      Buyer and Canadian Buyer and therefore stands to benefit substantially from
      the
      transactions contemplated by this Agreement. Accordingly, as a material
      inducement to Seller to enter into this Agreement, which Seller would not have
      done in the absence of this guarantee, Guarantor hereby absolutely and
      unconditionally guarantees to Seller the full and timely performance of all
      of
      the financial obligations of Buyer under the terms and conditions of this
      Agreement, including any amendments, modifications, extensions or compromises
      thereof, required to be performed by Buyer (collectively, the "Obligations").
      Guarantor acknowledges and agrees that: (i) Upon demand from Seller, the
      obligations of Guarantor shall become immediately due and payable, without
      demand, presentment, protest, notice of acceptance, or notice of any obligations
      incurred, each of which is expressly waived by Guarantor; (ii) this
      guarantee shall be binding upon Guarantor notwithstanding the addition,
      substitution or release of any Person primarily or secondarily liable for any
      Obligation, the bankruptcy, insolvency or other inability to pay or perform
      of
      Buyer, or any other act or omission that might in any manner or to any extent
      vary the risk of Guarantor or otherwise operate as a release or discharge of
      Guarantor; and (iii) Guarantor shall not, until the final payment and
      performance in full of all Obligations, exercise any rights against Buyer
      arising as a result of payment by Guarantor hereunder, by way of subrogation,
      reimbursement, restitution, setoff, recoupment, counterclaim or otherwise.
      Guarantor represents and warrants to Seller that this guarantee has been duly
      and validly executed by Guarantor and constitutes the legally valid and binding
      obligation of Guarantor, enforceable against Guarantor in accordance with its
      terms. Capitalized terms used herein without definition have the meanings
      assigned thereto in the Agreement. The terms of Article
      VIII
      of the
      Agreement are hereby incorporated into this guarantee as if set forth in full
      herein, with the exception that references to "Buyer" therein shall be deemed
      to
      be references to "Guarantor" for purposes of this guarantee. This guarantee
      shall terminate and be rendered null and void (i) in the event of the
      termination of this Agreement prior to the USA Closing or (ii) one (1) year
      following the USA Closing Date.

     

    
      	 	 	 
	 	
              Disney
                Enterprises, Inc.,

              a Delaware corporation

            
	 
 	 
 	 
 
	
            	By:  	/s/
              David K. Thompson
	 	
              
Name:
              David K. Thompson
	 	
              Title:
                Senior Vice President

              Assistant
                General
                Counsel and Secretary

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    List
      of Annexes

     

    
      	
              Annex
                A

            	 	
              Acquired
                Stores Schedule

            
	 	 	 
	
              Annex
                B

            	 	
              Bankruptcy
                Sale Order

            
	 	 	 
	
              Annex
                C

            	 	
              Canadian
                Retained Stores Schedule

            
	 	 	 
	
              Annex
                D

            	 	
              Form
                of Designation Rights Agreement

            
	 	 	 
	
              Annex
                E

            	 	
              Form
                of Escrow Agreement

            
	 	 	 
	
              Annex
                F

            	 	
              Form
                of Transitional Services Agreement

            
	 	 	 
	
              Annex
                G

            	 	
              USA
                Remaining Stores Schedule

            
	 	 	 
	
              Annex
                H

            	 	
              Acquired
                Agreements

            
	 	 	 
	
              Annex
                I

            	 	
              Acquired
                Car Leases

            
	 	 	 
	
              Annex
                J

            	 	
              Form
                of Headquarters Assignment and Assumption Agreement

            
	 	 	 
	
              Annex
                K

            	 	
              Form
                of Bill of Sale and Assignment and Assumption Agreement

            
	 	 	 
	
              Annex
                L

            	 	
              Form
                of Release Agreement

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