AGENCY AGREEMENT

Exhibit 2.1

AGENCY AGREEMENT

This Agency Agreement (the “ Agreement ”) is made as of this September 22, 2006, by and between STOREHOUSE, INC. , with a principal place of business located at 4200 Perimeter Park So., Chamblee, GA 30341 (“ Merchant ”), and HUDSON CAPITAL PARTNERS, LLC, with a principal place of business located at 403C Towne Center Blvd., Suite 3, Ridgeland, MS 39157 (the “ Agent ”).

RECITALS

WHEREAS, Merchant has filed a voluntary petition for relief under Title 11 of the United States Code (the “ Bankruptcy Code ”), in the United States Bankruptcy Court for the Eastern District of Virginia (the “ Bankruptcy Court ”);

WHEREAS, Merchant is continuing to manage its affairs as a debtor and debtor in possession pursuant to §§ 1107 and 1108 of the Bankruptcy Code;

WHEREAS, Merchant desires that Agent act as Merchant’s exclusive agent for the limited purpose of: (a) selling, by conducting a “going out of business,” “store closing” “bankruptcy liquidation” or similar themed sale (the “ Sale ”), of all of the Merchandise (as hereinafter defined) located or to be located in: (i) those 70 Merchant retail store locations identified in Exhibit 1A annexed hereto, and (ii) Merchant’s warehouse/distribution center and cross dock locations identified on Exhibit 1B annexed hereto (each location identified on Exhibit 1A and 1B is sometimes referred to herein as a “ Closing Store ”, and collectively all such locations are referred to as the “ Closing Stores ”); and (b) disposing of Merchant’s owned FF&E located at the Closing Stores, subject to the terms and conditions set forth herein; and

WHEREAS, Agent is willing to serve as Merchant’s exclusive agent to conduct the Sale in accordance with the terms and conditions of this Agreement.

NOW THEREFORE, in consideration of the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Agent and Merchant hereby agree as follows:

Section 1 . Definitions and Exhibits

1.1 Defined Terms . The terms set forth below are defined in the Sections referenced of this Agreement:

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1.2 Exhibits . The Exhibits and Schedules annexed to this Agreement, as listed below, are an integral part of this Agreement:

1.3 Currency . Unless otherwise specified, all references to monetary amounts refer to United States dollars.

Section 2 . Appointment of Agent .

2.1 Merchant hereby appoints Agent, and Agent hereby agrees to serve, as Merchant’s exclusive agent for the limited purpose of conducting the Sale in accordance with the terms and conditions of this Agreement. Merchant’s and Agent’s obligations hereunder are subject to the approval of the Bankruptcy Court and shall be of no force and effect in the event that the Approval Order (as defined in Section 2.3 below) is not entered on or before the date set forth in Section 10(d) hereof.

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2.2 Except for incurring Expenses in connection with the Sale and as otherwise specifically provided in this Agreement, Agent shall have no authority to enter into any contract, agreement or other arrangement or take any other action, by or on behalf of Merchant, that would have the effect of creating any obligation or liability, present or contingent, on behalf of or for the account of Merchant without Merchant’s prior written consent, which consent shall not be unreasonably withheld.

2.3 Merchant has or will file an expedited motion with the Bankruptcy Court for entry of an order approving this Agreement and authorizing Merchant and Agent to conduct the Sale in accordance with the terms hereof (the “ Approval Order ”). The Approval Order shall provide, in substantially the form of Exhibit 10 attached hereto and in any event in form reasonably satisfactory to the Merchant and Agent, among other things, that:

(a) the terms of this Agreement (and each of the transactions contemplated hereby) are approved;

(b) Merchant and Agent shall be authorized to continue to take any and all actions as may be necessary or desirable to implement this Agreement and each of the transactions contemplated hereby, including, without limitation, the actions contemplated in Sections 8.9 and 8.10 of this Agreement;

(c) Agent shall be entitled to sell all Merchandise hereunder free and clear of all liens, claims and encumbrances thereon (collectively, “ Liens ”), with any presently existing Liens encumbering all or any portion of the Merchandise or the Proceeds attaching only to the Guaranteed Amount and other amounts to be received by Merchant under this Agreement;

(d) Agent shall have the right to use the Closing Stores and all related store and distribution center services, furniture, fixtures, equipment and other assets of Merchant as designated hereunder for the purpose of conducting the Sale, free of any interference from any entity or person;

(e) Agent, as agent for Merchant, is authorized to conduct, advertise, post signs and otherwise promote the Sale without further consent of any person (other than Merchant as provided for herein), in accordance with the terms and conditions of this Agreement and the Sale Guidelines (as the same may be modified and approved by the Bankruptcy Court), and without further compliance with applicable federal, state or local laws governing, inter alia , the conduct of store closing sales, other than those designed to protect public health and safety (the “ GOB Laws ”);

(f) Agent shall be granted a limited license and right to use until the Sale Termination Date the trade names, logos and mailing lists relating to and used in connection with the operation of the Closing Stores, solely for the purpose of advertising the Sale in accordance with the terms of the Agreement;

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(g) all newspapers and other advertising media in which the Sale is advertised shall be directed to accept the Approval Order as binding and to allow Merchant and Agent to consummate the transactions provided for in this Agreement, including, without limitation, the conducting and advertising of the Sale in the manner contemplated by this Agreement;

(h) all utilities, landlords, creditors and all persons acting for or on their behalf shall not interfere with or otherwise impede the conduct of the Sale, institute any action in any court (other than in the Bankruptcy Court) or before any administrative body which in any way directly or indirectly interferes with or obstructs or impedes the conduct of the Sale;

(i) the Bankruptcy Court shall retain jurisdiction over the parties to enforce this Agreement;

(j) Agent shall not be liable for any claims against the Merchant other than as expressly provided for in this Agreement, and Agent shall have no successorship liabilities whatsoever; and

(k) Agent shall have a valid, duly perfected first priority lien and security interest in the Merchandise and any Proceeds to which Agent is entitled in accordance with the terms of this Agreement, which lien shall be subject and subordinate to the lien of Merchant’s secured lender(s) to the extent of any unpaid portion of the Guaranteed Amount, the Recovery Amount (if any), the Augment Recovery Amount (to the extent greater than the Minimum Augment Recovery Amount), and Expenses due from Agent to Merchant under this Agreement.

Section 3 . Guaranteed Amount and Other Payments

3.1 Payments to Merchant and Agent .

(a) As a guaranty of Agent’s performance hereunder, in addition to the payment of Expenses as provided for in Section 4.1 hereof, Agent guarantees that Merchant shall receive the sum of eighty-five and sixteen one hundredths percent (85.16%) (the “ Guaranty Percentage ”) of the aggregate Cost Value of Merchandise located in Closing Stores (the “ Guaranteed Amount ”). The Guaranteed Amount will be calculated based upon the aggregate Cost Value of the Merchandise as determined by (A) the final certified report of the Inventory Taking Service after verification and reconciliation thereof by Agent and Merchant, and (B) the aggregate amount of Gross Rings (as adjusted for shrinkage per this Agreement).

(b) To the extent that Proceeds exceed the sum of: (x) the Guaranteed Amount, (y) Expenses of the Sale, and (z) six percent (6%) of the aggregate Cost Value of the Merchandise (the “ Agent’s Fee ”) (the sum of (x), (y) and (z), the “ Sharing Threshold ”), then all remaining Proceeds of the Sale above the Sharing Threshold shall be shared fifty percent (50%) to Merchant and fifty percent (50%) to Agent. All amounts, if any, to be received by Merchant from Agent in excess of the Sharing Threshold shall be referred to as the “ Recovery Amount ”.

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(c) In addition to the Guaranteed Amount, Agent hereby guarantees that the Merchant shall receive the greater of (x) nine percent (9%) from the net proceeds of the sale of Additional Agent Merchandise in the Closing Stores (subject to the terms of Section 8.9 hereof), or (y) $200,000 (the “ Minimum Augment Recovery Amount ”; the greater of (x) or (y), the “ Augment Recovery Amount ”). For purposes of this Section 3.1(c), “net proceeds” shall be deemed to exclude Sales Taxes, charges to customers for delivery services, and credit card fees associated with the sale of Additional Agent Merchandise.

(d) Agent shall pay to Merchant the Guaranteed Amount, the Recovery Amount, and the Augment Recovery Amount in the manner and at the times specified in Section 3.3 below.

(e) If and to the extent that Agent over-funds any amounts due hereunder, then Merchant agrees to promptly reimburse such undisputed over-payment amounts to Agent. In the event that Merchant fails to reimburse such undisputed over-payment amount to Agent within five (5) days after Agent’s demand therefor, the Lender shall pay or reimburse Agent for such amount to the extent actually received by the Lender; provided , however , the Lender’s obligation to make repayment of any amount to Agent pursuant to this subclause 3.1(e) shall be limited in an amount not to exceed ten percent (10%) of the Estimated Guaranteed Amount (calculated in accordance with Section 3.3(a) hereof).

(f) Merchant agrees that any amounts due by Agent to Merchant pursuant to this Section 3 may in Agent’s discretion be offset by the undisputed amount of Proceeds which have not, as of the applicable date of payment by Agent to Merchant been transferred by Merchant to Agent.

(g) To insure accurate sales audit functions, as well as accurate calculations of the Recovery Amount and Augment Recovery Amount, if any, Agent shall be required to utilize Merchant’s existing point-of-sale system for recording all sales of goods and Additional Merchandise in the Closing Locations, provided , however , to the extent the existing point-of-sale system is inadequate to or not capable of processing all sales and transactions contemplated by this Agreement the Agent may install and use its own point-of-sale system in connection with the sale.

3.2 Payments to Agent . After payment in full of the Guaranteed Amount, the Recovery Amount, the Augment Recovery Amount, and the payment of all Expenses, Agent shall be entitled to retain any remaining Proceeds of the Sale. Provided that no Event of Default has occurred and continues to exist on the part of the Agent, all Merchandise remaining at the conclusion of the Sale shall become the property of Agent, free and clear of all liens, claims and encumbrances of any kind or nature (“ Remaining Merchandise ”); provided , however , the proceeds realized upon a sale or other disposition of the Remaining Merchandise shall constitute Proceeds hereunder for purposes of, inter alia , calculating the Recovery Amount due Merchant.

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3.3 Time of Payments; Control of Proceeds

(a) Payment of Guaranteed Amount . On the first business day following entry of the Approval Order, provided such Approval Order has not been stayed, Agent shall pay General Electric Capital Corporation, in its capacity as Merchant’s secured lender and designee (the “ Lender ”), ninety (90%) of the estimated Guaranteed Amount (the “ Initial Guaranty Payment ”), calculated based upon the estimated aggregate Cost Value of the Merchandise to be included in the Sale, as reflected on Merchant’s books and records on the last business day immediately preceding the Sale Commencement Date and after giving effect to the Global Inventory Adjustment (the “ Estimated Guaranteed Amount ”), with such Initial Guaranty Payment being made by wire transfer to such account(s) as are designated on Exhibit 3.3(a) . The balance of the Guaranteed Amount, if any, shall be paid by Agent to the Lender, as Merchant’s designee, on the first business day following the issuance of the final audited report of the aggregate Cost Value of the Merchandise by the Inventory Taking Service, after verification and reconciliation thereof by Agent, Merchant and Lender (the “ Final Inventory Report ”). Agent’s failure to pay such balance shall entitle the Lender to draw upon the Guaranty L/C to the extent of such balance. In the event that the Final Inventory Report is issued after payment of the Estimated Guaranteed Amount, the Agent or Merchant, as the case may be, shall pay to the Merchant or Agent, as the case may be, the amount (the “ Adjustment Amount ”) by which the actual Guaranteed Amount exceeds or is less than the Estimated Guaranteed Amount actually paid as set forth above, within two (2) business days after the Final Inventory Report has been issued. In the event that Merchant shall fail to reimburse Agent for any Adjustment Amount within five (5) days after Agent’s demand therefor, the Lender shall pay or reimburse Agent for such amount to the extent actually received by the Lender; provided , however , the Lender’s obligation to make repayment to Agent in respect of the Adjustment Amount, or any portion thereof, shall be limited in amount as provided under section 3.1(e) hereof.

(b) Payment of Augment Recovery Amount . Agent shall tender payment of an amount equal to the Minimum Augment Recovery Amount to the Lender, as Merchant’s designee, on the first business day after the Sale Commencement Date. The balance, if any, of the Augment Recovery Amount shall be paid by Agent to Merchant (or its designee) as part of the weekly reconciliation conducted pursuant to Section 8.7(a), and subject to the Final Reconciliation under Section 8.7(b).

(c) Payment of Recovery Amount . Agent shall tender payment of an amount equal to the Recovery Amount to the Lender, as Merchant’s designee, on the first business day after the completion of the Final Reconciliation conducted pursuant to Section 8.7(b).

(d) Guaranty Security . To secure payment of the balance of any unpaid portion of the Guaranteed Amount, Recovery Amount, Augment Recovery Amount, if any, Agent shall deliver to the Lender, as Merchant’s designee, an irrevocable standby letter of credit in the original face amount equal to ten percent (10%) of the Estimated Guaranteed Amount, naming the Lender, as Merchant’s designee, as the beneficiary, substantially in the form of Exhibit 3.3(d) attached hereto (the “ Guaranty

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L/C ”). The Guaranty L/C shall be delivered to the Lender, as Merchant’s designee, one (1) business day following the Sale Commencement Date, and shall be issued by a U.S. national bank selected by Agent and reasonably acceptable to Merchant and the Lender. Provided no Event of Default by Merchant has occurred, in the event that Agent shall fail to pay to the Lender, as Merchant’s designee, any portion of the Guaranteed Amount, Recovery Amount, or Augment Recovery Amount, if any, as required under this Agreement, or fail to perform any obligation hereunder, the Lender, as Merchant’s designee, shall be entitled to draw on the Guaranty L/C to fund such amount or obligation following five (5) days written notice to Agent of the Lender’s intention to do so. The Guaranty L/C shall expire no earlier than sixty (60) days after the Sale Termination Date; provided , that , in the event that at the scheduled expiration date of the Guaranty L/C there remains any unresolved dispute as to the amount of the Guaranteed Amount, Recovery Amount, Augment Recovery Amount, if any, the Lender, as Merchant’s designee, may, in its discretion, exercise the right to require Agent to have the expiration date of the Guaranty L/C extended for thirty (30) day intervals (or such other longer duration as Merchant, the Lender and Agent may agree) until such time as the subject dispute has been resolved and any additional amounts due hereunder on account of the Guaranteed Amount, Recovery Amount, Augment Recovery Amount, if any, paid to the Lender, as Merchant’s designee; it being agreed that if Agent has for any reason not so extended the expiry date of the Guaranty L/C by the date which is five (5) days prior to the then expiry date, the Lender shall have the right to make a drawing under the Guaranty L/C in an amount equal to the amounts Merchant asserts are then owing to Merchant. Merchant, the Lender, and Agent agree that the face amount of the Guaranty L/C shall be reduced from time-to-time in an amount(s) to be agreed upon by Merchant, the Lender and Agent to account for payment made by the Agent in respect of the Guaranteed Amount, Recovery Amount, if any, and Augment Recovery Amount, as the case may be. Merchant and the Lender further agree that after payment of the Guaranteed Amount, Recovery Amount, Augment Recovery Amount, if any, in full, the Lender shall surrender the original Guaranty L/C to the issuer thereof together with written notification that the Guaranty L/C may be terminated.

(e) Control of Proceeds . (i) Within seven (7) business days after the Sale Commencement Date, Agent shall establish its own accounts, dedicated solely for the deposit of the Proceeds and the disbursement of amounts payable to Agent hereunder (the “ Agency Accounts ”) and Merchant shall promptly upon Agent’s request execute and deliver all necessary documents to open and maintain the Agency Accounts. Agent shall exercise sole signatory authority and control with respect to the Agency Accounts; provided , however , upon request, Agent shall deliver to Merchant copies of all bank statements and other information relating to such accounts. Merchant shall not be responsible for and Agent shall pay as an Expense hereunder, all bank fee and charges, including wire transfer charges, related to the Agency Accounts, whether received during or after the Sale Term. Upon Agent’s designation of the Agency Accounts, all Proceeds of the Sale (including credit card proceeds) shall be deposited into the Agency Accounts.

(ii) During the period between the Sale Commencement Date and the date Agent designates the Agency Accounts, all Proceeds of the Sale (including credit card proceeds), shall be collected by Agent and deposited on a daily basis into

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depository accounts designated by Merchant for the Closing Stores, which accounts shall be designated solely for the deposit of Proceeds of the Sale (including credit card proceeds), and the disbursement of amounts payable by Agent hereunder (the “ Designated Deposit Accounts ”). Commencing on the first business day following the payment of the Initial Guaranty Amount and the posting of the Guaranty L/C, and on each business day thereafter (or as soon thereafter as is practicable), Merchant shall promptly pay to Agent by wire funds transfer all collected funds constituting Proceeds deposited into the Designated Deposit Accounts (but not any other funds, including, without limitation, any proceeds of Merchant’s inventory sold prior to the Sale Commencement Date).

4.1 Expenses . Agent shall be unconditionally responsible for all Expenses incurred in conducting the Sale during the Sale Term, which expenses shall be paid by Agent in accordance with Section 4.2 below. As used herein, “ Expenses ” shall mean all Closing Store-level operating expenses of the Sale which arise during the Sale Term, limited to the following:

(a) Actual Occupancy Expenses for the Closing Stores on a per location and per diem basis in an amount up to the aggregate per diem totals set forth on Exhibit 4.1(a) hereto plus (i) the portion of any percentage rent obligations allocable to the sale of Merchandise during the Sale and (ii) all of the percentage rent obligations attributable to the sale of Additional Merchandise during the Sale (as determined in the manner described in the definition of “Occupancy Expenses” below in this Section 4.1) incurred by Merchant under applicable leases or occupancy agreements.

(b) payroll and commissions, if applicable, for all Closing Store-level Retained Employees used in conducting the Sale as well as payroll for any of Merchant’s former employees hired by Agent for the Sale as independent contractors;

(c) any amounts payable by Merchant for benefits for Retained Employees (including FICA, unemployment taxes, workers’ compensation and health care insurance benefits, but excluding Excluded Benefits) for Retained Employees used in the Sale, in an amount equal to 19.5% of base payroll for each Retained Employee in the Closing Stores (the “ Benefits Cap ”);

(d) Retention Bonuses for Retained Employees, as provided for in Section 9.4 below;

(e) actual costs of Agent’s employees, independent contractors, on-site supervision, supervisor travel and supervisor bonuses, on-site living/housing expenses and all other reasonable compensation paid to such persons;

(f) banners and in-Store signs which are produced for the Sale;

(g) promotional costs including, without limitation, advertising, and direct mail;

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(h) the costs and expenses of obtaining additional supplies as may be required by Agent in the conduct of the Sale;

(i) long distance telephone, postage/overnight delivery/courier charges;

(j) credit card and bank card fees, chargebacks and discounts;

(k) costs of moving, transferring or consolidating Merchandise between the Closing Stores;

(l) Distribution Center Transfer Costs;

(m) a pro rata portion for the Sale Term of Merchant’s premiums in respect of casualty, property, inventory, boiler, earthquake and other insurance policies attributable to the Merchandise and the Closing Stores;

(n) third party payroll processing fees;

(o) armored car service, security personnel and monthly alarm services;

(p) actual cost of Agent’s capital and letter of credit fees;

(q) reasonable fees of Agent’s legal counsel incurred in implementing the transactions contemplated by this Agreement (for the avoidance of doubt, not including any attorneys’ fees incurred by Agent in connection with any dispute with Merchant unless Agent prevails in a dispute with Merchant);

(r) trash removal and ordinary course third party cleanings;

(s) Closing Store security and building alarm service;

(t) Agent’s 50% of cost of the physical inventory taking by the Inventory Taking Service;

(u) costs and expenses of delivery, assembly, repair and touch-up services;

(v) Central Service Expenses in an amount equal to $10,000 per week for the Sale Term;

(w) cash shortfalls in registers;

(x) third party payroll processing fees;

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(y) routine repair and maintenance costs, solely to the extent such costs result from the Agent’s acts or omissions during the term of the Sale; and

(z) costs and expenses associated with the acquisition, handling and delivery of any Additional Agent Merchandise.

“Expenses” shall not include: (i) Central Service Expenses in excess of the amount set forth in Section 4.1(u); (ii) Excluded Benefits; (iii) any rent or other occupancy expenses other than Occupancy Expenses in accordance with Section 4.1(a) hereof; (iv) any costs, expenses or liabilities arising during the Sale Term in connection with the Sale of Merchandise, other than the Expenses listed above, all of which shall be paid by Merchant promptly when due during the Sale Term. Notwithstanding anything herein to the contrary, to the extent that any Expense listed in Section 4.1 is also included on Exhibit 4.1(a), then Exhibit 4.1(a) shall control and such Expense shall not be double counted.

As used herein, the following terms have the following respective meanings:

“ Central Services Expenses ” means costs and expenses for Merchant’s central administrative services necessary for the Sale including but not limited to (a) Merchant’s inventory control system; (b) payroll system; and (c) accounting system.

“ Excluded Benefits ” means vacation days or vacation pay, sick days or sick leave, maternity leave or other leaves of absence, termination or severance pay, ERISA coverage and similar contributions (including pension and 401(k) contributions) and benefits in excess of the Benefits Cap percentage limitation provided in Section 4.1(c) above.

“ Distribution Center Transfer Costs ” means, the costs of transferring Merchandise (including, but not limited to freight and labor) to the Exhibit 1A Closing Stores from the warehouse/distribution center identified in Exhibit 1B.

“ Occupancy Expenses ” means rent, percentage rent, CAM, real estate and use taxes, HVAC, utilities, base telephone charges and all other categories of expenses at the Closing Stores as set forth on Exhibit 4.1(a) attached hereto, up to the specific amounts set forth on Exhibit 4.1(a) attached hereto plus, to the extent not already included in Exhibit 4.1(a) , (i) the portion of any percentage rent obligations allocable to the sale of Merchandise during the Sale and (ii) all of the percentage rent obligations attributable to the sale of Additional Agent Merchandise during the Sale (as determined in the manner described in the definition of “Occupancy Expenses” below in this Section 4.1) incurred by Merchant under applicable leases or occupancy agreements.

“ Third party ” means, with reference to any Expenses to be paid to a “third party”, a party that is not affiliated with or related to Merchant.

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(a) All Expenses incurred during each week of the Sale ( i.e. , Sunday through Saturday) shall be paid by Agent to or on behalf of Merchant, or offset by Merchant from Proceeds held by Merchant, immediately following the weekly Sale reconciliation by Merchant and Agent pursuant to Section 8.7(a) below, based upon invoices and other documentation reasonably satisfactory to Agent; provided , however , Agent shall be obligated to pre-fund any Occupancy Expenses and payroll-related expenses consistent with Merchant’s customary rent and payroll funding practices and timing.

(b) To secure Agent’s obligations to pay Expenses, Agent shall deliver to the Lender, as Merchant’s designee, an irrevocable and unconditional standby letter of credit (the “ Expense L/C ”) in an original face amount representing an amount equal to three (3) weeks’ estimated Expenses, naming the Lender, as Merchant’s designee, as beneficiary (substantially in the form of Exhibit 4.2(b) ). The Expense L/C shall be delivered to the Lender, as Merchant’s designee, no later than one (1) business day after the Sale Commencement Date, shall be issued by a U.S. national bank selected by Agent and reasonably acceptable to Merchant and Lender. Merchant, the Lender, and Agent agree that at the point where there is less than two (2) weeks remaining in the Sale Term, the face amount of the Expense L/C shall be reduced in amount(s) to be agreed upon by Merchant, the Lender, and Agent; provided , however , the face amount of the Expense L/C shall not be reduced to an amount less than $250,000 until all Expenses shall have been paid by Agent; provided , further , that , in the event that Agent shall have paid to the Lender, as Merchant’s designee, all amounts due in respect of Expenses prior to the expiration date of the Expense L/C, the Lender agrees to surrender the original Expense L/C to the issuer thereof together with written notification that the Expense L/C may be terminated.

(b) In the event that Agent fails to pay any Expense(s) or other amounts payable hereunder when due, or within three (3) business days after Merchant and/or the Lender notifies Agent that any Expense(s) or other undisputed amounts are unpaid and past due, or in the event the Expense L/C will expire within five (5) business days and one or more Expenses or other amounts hereunder are then unpaid, the Lender, as Merchant’s designee, shall be entitled to draw on the Expense L/C to fund such unpaid amount. The Expense L/C shall expire not earlier than the date that is sixty (60) days after the Sale Termination Date; provided that , in the event that at the scheduled expiration date of the Expense L/C there remains any unresolved dispute as to the amount of any unpaid Expense hereunder, the Lender, as Merchant’s designee, may, in its discretion, exercise the right to cause Agent to have the expiration date of the Expense L/C extended for additional thirty day (30) intervals (or such other longer duration as the Merchant, Lender and Agent may agree) until such time as the dispute has been resolved and any additional amounts due hereunder have been paid to Merchant.

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5.1 Inventory Taking .

(a) Commencing on the Sale Commencement Date, Merchant and Agent shall cause to be taken a SKU level physical inventory of the Merchandise located in the Closing Stores (collectively, the “ Inventory Taking ”), which Inventory Taking shall be completed in each of the Closing Stores and the Distribution Centers no later than fifteen (15) days after the Sale Commencement Date (the “ Inventory Completion Date ”, and the date of the Inventory Taking at each Closing Store being the “ Inventory Date ” for each such Closing Store). Merchant and Agent shall jointly employ RGIS or another mutually acceptable independent inventory taking service (the “ Inventory Taking Service ”) to conduct the Inventory Taking, or if Merchant and Agent mutually agree, shall jointly conduct the Inventory Taking without utilizing a third party inventory taking service. The Inventory Taking shall be conducted in accordance with the procedures and instructions to be mutually agreed by Merchant and Agent and made a part of this Agreement as Exhibit 5.1(a) (the “ Inventory Taking Instructions ”). As an Expense, Agent shall be responsible for 50% of the fees and expenses of the Inventory Taking Service, if such service is utilized. The balance of such fees and expenses, if applicable, shall be paid by Merchant. In the event that no third party Inventory Taking Service is utilized, then each of Merchant and Agent shall bear their respective expenses incurred in the Inventory Taking. Except as provided in the immediately preceding sentence as concerns allocation of the costs of the Inventory Taking Service, Merchant and Agent shall each bear their respective costs and expenses relative to the Inventory Taking. Merchant, Agent and Lender shall each have the right to have representatives present during the Inventory Taking, and shall each have the right to review and verify the listing and tabulation of the Inventory Taking Service. Merchant agrees that during the conduct of the Inventory Taking in each of the Closing Stores, the applicable Closing Store shall be closed to the public and no sales or other transactions shall be conducted until the Inventory Taking has been completed, as agreed by Merchant and Agent. Merchant and Agent further agree that until the Inventory Taking in each particular Closing Store is completed, Agent shall not (i) transfer any Merchandise to or from that Closing Store, (ii) deliver any Additional Agent Merchandise to such Closing Store, and/or (iii) move Merchandise within or about the Closing Stores and/or (iv) remove any Merchant hang tags, price tickets, or inventory control tags affixed to any Merchandise. The Inventory Taking, including, but not limited to, the determination of the aggregate Cost Value of the Merchandise, shall be reconciled by Merchant and Agent within ten (10) days after its completion, and the Agent and Merchant shall use their reasonable best efforts to accomplish such reconciliation within such ten (10) day period; provided , further , that the Final Inventory Report shall be completed not later than thirty (30) days after the Sale Commencement Date. In the event there is any dispute with respect to the reconciliation of the aggregate Cost Value of the Merchandise following completion of the Inventory Taking, then any such dispute shall be resolved in the manner and at the times set forth in Section 8.7(b)(ii) hereof.

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5.2 Merchandise Subject to this Agreement .

(a) For purposes of this Agreement, including, without limitation, the calculation of the Guaranteed Amount, “ Merchandise ” shall mean: all finished goods inventory that is owned by Merchant and customarily sold to customers in the ordinary course of Merchant’s business, including, but not limited to, (w) Defective Merchandise, (x) Reallocated Fulfillment Merchandise, (y) In Transit Merchandise, and (z) Merchandise subject to Gross Rings. Notwithstanding the foregoing, “Merchandise” shall not include: (i) Fulfillment Merchandise (except to the extent such merchandise is later re-designated by Merchant as Reallocated Fulfillment Merchandise as provided in Section 8.10 hereof), (ii) goods which belong to sublessees, licensees or concessionaires of Merchant; (iii) goods held by Merchant on memo, on consignment, or as bailee; (iv) furnishings, trade fixtures furniture and equipment and improvements to real property which are located in the Closing Stores.

(b) As used herein, the following terms shall have the respective meanings set forth below:

(i) “ Defective Merchandise ” means either (a) inventory that is intended to be sold as part of a set and cannot be sold as an individual piece, and not all of the set is available for sale, or (b) such item(s) of inventory is non-first quality inventory, incomplete sets, mismatched, damaged, dented, scratched, broken, faded, torn, shopworn or soiled inventory, returned, used or previously owned inventory (subject to the limitation provided in section 5.3(b)), and parts (provided that they have assigned to them a SKU in the ordinary course of business).

(ii) “ In Transit Merchandise ” means the merchandise on order and not yet received as of the Sale Commencement Date, whether prepaid or not.

(iii) “ Fulfillment Merchandise ” means those items of merchandise located in the Closing Stores that have been fully or partially reserved from available merchandise and designated by Merchant for fulfillment of customer orders that were received prior to the Sale Commencement Date. Prior to the Inventory Taking at each Closing Store, Merchant shall identify to Agent and segregate from other Merchandise all items of Fulfillment Merchandise at each Closing Store, and the Inventory Taking Instructions shall provide that any Fulfillment Merchandise located in a Closing Store on the Inventory Date shall be counted as part of the Inventory Taking.

(iv) “ Reallocated Fulfillment Merchandise ” means those items of Fulfillment Merchandise that Merchant reallocates as Merchandise available for the Sale, as provided in Section 8.10 hereof.

5.3 Valuation .

(a) For purposes of this Agreement, “ Cost Value ” shall mean with respect to each item of Merchandise, the landed actual cost for such item of Merchandise (including Reallocated Fulfillment Merchandise, if applicable), as reflected in Merchant’s

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master cost file as of the Sale Commencement Date (the “ Cost File ”); which landed actual cost values Merchant hereby represents and warrants to be inclusive of freight, customs duties and fees, and shipping charges. Items of In Transit Merchandise received in the Closing Stores on or prior the date that is twenty one (21) days after the Sale Commencement Date (excluding the Sale Commencement Date for purposes of such calculation), will be included in Merchandise at the applicable Cost Value for each such item; provided , however , that items of In Transit Merchandise received at the Closing Stores on or after the date that is twenty two (22) days after the Sale Commencement Date (excluding the Sale Commencement Date for purposes of such calculation) shall be included in Merchandise at the Cost Value for each such item multiplied by the inverse of the prevailing discount on similar such items of Merchandise as of the date of receipt in the Closing Stores. The Cost File does not account for any volume discounts, advertising co-op allowances, or discounts associated with expedited payment terms offered by any vendor, and further the Cost Value of any item of Merchandise shall not be adjusted for any such amounts. Merchant and Agent further agree that the Cost File does not account for any Excluded Pricing Adjustments, and no such adjustments shall be taken into account in determining the Cost Value of any item of Merchandise. For purposes of this Agreement, “ Excluded Pricing Adjustments ” shall mean the following discounts or price adjustments offered by the Merchant: (i) point of sale discounts or similar adjustments, regardless of duration; (ii) employee discounts; (iii) member or customer appreciation points or coupons; (iv) multi-unit purchase discounts: (v) adjustments for damaged, defective, or “as-is” items: (vi) coupons, catalog, website, or circular prices, or “buy one get one” type discounts; and (vii) customer savings pass discounts or “bounce back” coupons, or discounts for future purchases based on dollar value of past purchases, or similar customer specific, temporary, or employee non-product specific discounts or pricing accommodations.

(b) With respect to Defective Merchandise, for purposes of determining the Cost Value thereof, and in lieu of any other adjustments to the Cost Value of Merchandise under this Agreement (e.g., adjustments for Defective Merchandise, clearance merchandise, mis-mates and near-mates, sample merchandise, and/or Excluded Pricing Adjustments), the aggregate Cost Value of the Merchandise shall be adjusted ( i.e. , reduced) by means of a single global downward adjustment equal to one and three-quarters percent (1.75%) of the aggregate Cost Value of the Merchandise (the “ Global Inventory Adjustment ”); provided , however , in the event (x) during the Inventory Taking Agent identifies to Merchant certain Defective Merchandise that (i) applicable law precludes the sale thereof or (ii) is wholly unsaleable in its current condition (as distinguished from saleable at a reduced retail price), and (y) the aggregate Cost Value of those items identified under subclauses (i) and (ii) exceeds $25,000, Agent and Merchant agree negotiate in good faith concerning a further adjustment of the Cost Value attributable to such items of Defective Merchandise in excess of an aggregate $25,000 Cost Value.

5.4 Excluded Goods . Merchant shall retain all rights and responsibility for any goods not included as “Merchandise” hereunder and shall remove such goods from the Closing Stores prior to the Sale Commencement Date, or as soon thereafter as reasonably practicable. If Merchant elects at the beginning of the Sale Term, Agent shall

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accept those goods not included as “Merchandise” hereunder and as identified by Merchant for sale as “ Merchant Consignment Goods ”. The Agent shall retain twenty percent (20%) of the sale price (less Sales Taxes) for all sales of Merchant Consignment Goods, and Merchant shall receive eighty percent (80%) of the sale price (less Sales Taxes) in respect of such sales. Merchant shall receive its share of the receipts of sales of Merchant Consignment Goods on a weekly basis,