August explains that he was in the same foster home with Emma when they were kids. He promised to take care of her, but he thought she'd be safe in the system. When Neal says he and Emma promised to take care of each other, August says, "You love her! Good. That means you have to do right by her." When Neal says that's all he wants to do, August says then he should leave her. Emma has a destiny and Neal and this life will keep her from it. He then asks Neal, "Do you believe in magic?" Neal doesn't react the way a grown man from our world would when he's asked this. He looks down for a moment, then back up at August. "I take it you do." August: "So will you. Trust me. I'm gonna show you something -- something that's going to make you look at everything differently." August's bike is already conveniently parked in Exposition Alley. His mysterious box is strapped to the back. He lays his hand on it and says, "Now listen, you're going to believe every word I say." Neal mumbles, "Yeah, right," but when August opens the box, he bends over and looks into it. We, of course, don't get to see what's in the box. Because of that Chanel commercial, I already feel like I'm too often dipping into the Brad Pitt well, but WHAT'S IN THE BOX? [Note: ABC is really into box-related mysteries on Sunday nights, these days.] Whatever it is, it's enough to convince Neal. He sniffs that he's listening. August: "There's a curse, and it needs to be broken. I was tasked with keeping her on track. And you, my friend, just got caught in the crossfire. Now I'm going to tell you a story, and at the end of it, you're going to have to make a decision. Will you do the right thing, or not? Are you ready?"
Emma's waiting for Neal. When he doesn't show, she calls him and gets an "out of service" message. A male voice yells out that she's been set up. It's a cop and he's arresting her for possession of stolen goods. He says her boyfriend called the cops with a tip to look at the train station surveillance camera footage. He orders her to give him the watch and then asks if she knows her rights. When Emma says she does, he says, "Good girl, then turn around." I don't think that counts as reading her her rights, Officer. He's too busy to stand on procedure, I guess, and wants to know where the rest of the watches are. Devastated, Emma says, "Gone. They're not coming back."