EXECUTION VERSION

  ASSET PURCHASE AGREEMENT

by and among

TEAVANA CORPORATION

and

TEAVANA CANADA, INC.

and

TEAOPIA LIMITED

and

THE PRINCIPALS NAMED HEREIN

Dated as of April 15, 2012

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TABLE OF CONTENTS           Page      ARTICLE I PURCHASE AND SALE OF PURCHASED
ASSETS; ASSUMPTION OF          ASSUMED LIABILITIES    1                     1.1 
  Purchase of Assets    1                     1.2    Assumption and Exclusion of
Liabilities    4                     1.3    Purchase Price    5                 
   1.4    Closing Transactions    7                     1.5    Allocation of the
Purchase Price    9                     1.6    Nonassignable Contracts    10 
ARTICLE II CONDITIONS TO CLOSING    10                     2.1    Conditions to
Obligations of Buyer    10                     2.2    Conditions to Obligations
of Seller    11  ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE PRINCIPALS
AND          SELLER    12                     3.1    Organization    12         
           3.2    Power; Authorization of Transactions    12                   
 3.3    Absence of Conflicts    12                     3.4    Subsidiaries   
13                     3.5    Indebtedness    13                     3.6   
Financial Statements    13                     3.7    Inventory    13           
         3.8    Absence of Undisclosed Liabilities    13                   
 3.9    No Material Adverse Change    14                     3.10    Absence of
Certain Developments    14                     3.11    Contracts and
Commitments    16                     3.12    Compliance with Laws; Permits;
Certain Operations    19                     3.13    Legal Proceedings, Orders 
  20                     3.14    Condition and Sufficiency of Assets    21     
               3.15    Property    22                     3.16    Tax Matters   
23                     3.17    Intellectual Property    24                   
 3.18    Computer and Technology Security    25                     3.19   
Employees    25                     3.20    Employee Benefit Plans    27       
             3.21    Environmental and Safety Matters    27                   
 3.22    Product and Service Warranty; Liability    29                     3.23 
  Suppliers    29                     3.24    Insurance    29                   
 3.25    Brokerage    29                     3.26    Affiliate Transactions   
29                     3.27    Competition Act and Investment Canada Act    29 
                   3.28    Names and Locations    30                     3.29   
Disclosure    30  ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER    30     
               4.1    Buyer Representations    30  ARTICLE V COVENANTS PRIOR TO
CLOSING    31                     5.1    General    31                     5.2 
  Access and Investigation    31 

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TABLE OF CONTENTS (continued)         Page                         5.3   
Affirmative Covenants of Seller and the Principals    32                   
 5.4    Negative Covenants of Seller and the Principals    32                   
 5.5    Exclusivity    33                     5.6    Notification    33         
           5.7    Covenants of Buyer    34  ARTICLE VI ADDITIONAL AGREEMENTS   
34                     6.1    Employee and Related Matters    34               
     6.2    Press Release and Announcements    35                     6.3   
Expenses    36                     6.4    Further Transfers; Transition
Assistance    36                     6.5    Guarantee    37                   
 6.6    Noncompetition and Nonsolicitation    37                     6.7    Use
of Seller Name    39                     6.8    Tax Matters    39               
     6.9    Use of Permits    41                     6.10    Use of Personal
Information    41                     6.11    Transition Services Agreement   
41  ARTICLE VII TERMINATION    42                     7.1    Termination    42 
                   7.2    Effect of Termination    42  ARTICLE VIII
INDEMNIFICATION    43                     8.1    Survival of Representations and
Warranties; Covenants    43                     8.2    Indemnification    43 
ARTICLE IX DEFINITIONS    46                     9.1    Definitions    46       
             9.2    Definitional References    53  ARTICLE X MISCELLANEOUS   
55                     10.1    Bulk Transfer Laws    55                   
 10.2    Amendment and Waiver    55                     10.3    Notices    55   
                 10.4    Assignment    55                     10.5   
Incorporation of Exhibits and Schedules    56                     10.6   
Severability    56                     10.7    Captions and Headings    56     
               10.8    Complete Agreement    56                     10.9   
Counterparts    56                     10.10    No Strict Construction    56   
                 10.11    Interpretation    57                     10.12   
Disclosure Schedules    57                     10.13    Governing Law    58     
               10.14    Dispute Resolution    58                     10.15   
Specific Performance    58                     10.16    No Third-Party
Beneficiaries    58                     10.17    Governing Language    58       
             10.18    Set-off    59                     10.19    Principal
Release    59        -ii- EAST\48096305.13         

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LIST OF EXHIBITS                               Exhibit A    - Bill of Sale and
Assignment; Assumption of Liabilities                       Exhibit B    - Form
of Transition Services Agreement                       Exhibit C    - Form of
Escrow Agreement                       Exhibit D    - Matters for Opinion of
Seller's Counsel    LIST OF SCHEDULES     

Accounts Receivable Schedule Affiliated Transactions Schedule Assumed Vendor
Contracts Schedule Brokerage Schedule Compliance Schedule Consents Schedule
Contracts Schedule Suppliers Schedule Developments Schedule Employees Schedule
Employee Benefits Schedule Encumbrances Schedule Environmental and Safety
Schedule Excluded Assets Schedule Financial Statements Schedule

Head Office/Warehouse Tangible Property Schedule Indebtedness Schedule Insurance
Schedule Intellectual Property Schedule Leased Real Property Schedule
Liabilities Schedule Names and Locations Schedule Net Working Capital Schedule
Offer Letter Schedule Officers and Managers Schedule Organization Schedule
Permits Schedule Proceedings and Orders Schedule Schedule of Principals Taxes
Schedule Transferred Employees Schedule Warranty Schedule Workers’ Compensation
Schedule

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ASSET PURCHASE AGREEMENT

     THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered into
as of April 15, 2012, by and among Teavana Corporation, a Georgia corporation
(“Corporation”) Teavana Canada, Inc., a British Columbia company ("Buyer"),
Teaopia Limited, a company subject to the provisions of the Business
Corporations Act (Ontario) ("Seller") and David Bellisario, Domenic Bellisario,
Patricia Bellisario and Mister Keys Limited, a company subject to the provisions
of the Business Corporations Act (Ontario) (each a "Principal" and collectively,
the "Principals").

     WHEREAS, in the manner described herein and subject to the terms and
conditions set forth herein, Buyer desires to purchase from Seller (subject to
the assumption by Buyer of certain specifically enumerated Liabilities), and
Seller desires to sell to Buyer (subject to the assumption by Buyer of such
specifically enumerated Liabilities), its business, assets and properties,
operating as a going concern, which is in the specialty retail business of
selling loose-leaf teas, teawares and other tea-related merchandise
(collectively, the "Business").

     NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:

ARTICLE I

PURCHASE AND SALE OF PURCHASED ASSETS; ASSUMPTION OF ASSUMED LIABILITIES

1.1      Purchase of Assets.     (a) Asset Purchase. On the terms and subject to
the conditions set forth in this  

Agreement, Buyer shall purchase from Seller, and Seller shall (and the
Principals shall cause Seller to) sell, convey, assign, transfer and deliver to
Buyer on the Closing Date, all of Seller's right, title and interest as of the
Closing Date in all of its properties, assets and rights of any kind, whether
tangible or intangible, real or personal, wherever located and by whomever
possessed (but excluding the Excluded Assets) (the "Purchased Assets"), free and
clear of all Liens, including the following:

     (i) all accounts receivable and notes receivable (including the Accounts
Receivable);

     (ii) all cash on hand in the Stores in the amounts listed in the Cash
Schedule, which schedule may be amended by Buyer to reduce the cash on hand
included in the Purchased Assets in one or more Stores by written notice to
Seller not less than three Business Days prior to the Closing Date (as so
adjusted, the “Cash on Hand”);

(iii)      all open sales orders;   (iv)      all finished goods inventories,
raw materials, packaging materials, work in  

process, supplies, consigned goods and finished goods (including all of the
inventories located at the Head Office/Warehouse, inventories located at the
Stores, inventories covered by purchase orders, goods in transit and returned
goods) (collectively, the "Inventory");

     (v) all Intellectual Property used by, owned by, issued to or licensed to
Seller, along with all income, royalties, damages and payments due or payable as
of the Closing Date or thereafter (including damages and payments for past,
present or future infringements or misappropriations thereof, the right to sue
and recover for past infringements or misappropriations thereof and any and all
corresponding rights that, now or hereafter, may be

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secured throughout the world), in each case including the items set forth on the
attached Intellectual Property Schedule (collectively, the "Purchased
Intellectual Property");

     (vi) all rights under Contracts, licenses, leases and other agreements,
including the Assumed Vendor Contracts and the Contracts described on the
attached Contracts Schedule and all deposits relating thereto (collectively, the
"Assumed Contracts"); provided, that the Assumed Contracts shall not include any
oral Contracts or any Contracts with suppliers of the Business (other than the
Assumed Vendor Contracts);

     (vii) all leasehold improvements and all machinery, equipment, fixtures and
trade fixtures;

     (viii) all Store location furniture, office supplies, production supplies
and any other supplies, spare parts, other miscellaneous supplies (including
telephones, data lines, circuits, fax machines, copiers and computers and
related software), and other tangible property of any kind used in a Store
location;

     (ix) all prepayments, prepaid expenses and landlord and customer cash
deposits (other than those related to Excluded Assets or Excluded Liabilities)
and advances (including employee advances);

     (x) all claims, refunds, credits, causes of action, choses in action,
rights of recovery and rights of set-off of any kind (other than those related
to Excluded Assets or Excluded Liabilities), whether arising by way of
counterclaim or otherwise;

     (xi) the right to receive and retain mail, payments of receivables and
other communications (other than those related to Excluded Assets or Excluded
Liabilities) and all telephone numbers used by the Business;

     (xii) all rights under warranties, indemnities and all similar rights
against third parties to the extent related to any Purchased Assets;

     (xiii) the right to bill and receive payment for products shipped or
delivered and/or services performed but unbilled or unpaid as of the Closing;

     (xiv) all advertising, marketing and promotional materials, all archival
materials and all other printed or written materials;

     (xv) all insurance benefits, including rights and proceeds, arising from or
relating to the Business, the Purchased Assets or the Assumed Liabilities;

     (xvi) all lists, records and other information pertaining to accounts,
Transferred Employees and referral sources; all lists and records pertaining to
suppliers and customers; and all drawings, reports, studies, plans, books,
ledgers, files and business and accounting records of every kind (including all
financial, business and marketing plans and information); in each case whether
evidenced in writing, electronic data (including by computer) or otherwise,
except in all cases those related to Excluded Assets or Excluded Liabilities;

     (xvii) all permits, licenses, franchises, orders, certifications,
authorizations and approvals from all permitting, licensing, accrediting and
certifying agencies, organizations or groups (including all of the foregoing
listed or described on the Permits Schedule and the Environmental and Safety
Schedule), and the rights to all data and records held by such agencies;

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(xviii) Seller's legal and business names (and all derivations thereof);

     (xix) all originals, or where not available, copies, of all books and
records, including books of account, ledgers and general, financial and
accounting records, machinery and equipment maintenance files, customer lists,
customer purchasing histories, price lists, distribution lists, supplier lists,
production data, quality control records and procedures, customer complaints and
inquiry files, research and development files, records and data (including all
correspondence with any Governmental Body), all Testing Records, sales material
and records (including pricing history, total sales, terms and conditions of
sale, sales and pricing policies and practices), strategic plans, internal
financial statements, marketing and promotional surveys, material and research
and intellectual property files relating to the Purchased Intellectual Property

(“Books and Records”);

     (xx) the tangible personal property described in the Head Office/Warehouse
Tangible Property Schedule;

(xxi)      all goodwill as a going concern; and   (xxii)      all other
properties, assets and rights owned by Seller as of the date hereof and  

as of the Closing Date, or in which Seller has an interest and that are not
otherwise Excluded Assets.

     (b) Excluded Assets. Notwithstanding the foregoing Section 1.1(a), the
following properties, assets, rights and interests (the "Excluded Assets") are
expressly excluded from the purchases and sales contemplated hereby and, as
such, are not included in the Purchased Assets:

     (i) cash, cash equivalents, certificates of deposit, marketable securities
and similar items, other than the Cash on Hand;

     (ii) Constating Documents, qualifications to conduct business as a foreign
company, arrangements with registered agents relating to foreign qualifications,
taxpayer and other identification numbers, seals, minute books, stock transfer
books and blank stock certificates and other documents relating to the
organization, maintenance and existence of Seller as a corporation;

     (iii) income Tax Returns relating to the Business and any notes,
worksheets, files or documents relating thereto (subject to Buyer's right to
copies thereof);

(iv)      rights of Seller under or pursuant to any Transaction Document;   (v) 
    all Books and Records that Seller is required by Law to retain, subject to
the  

right of Buyer to copies of, and, for a period of seven (7) years from the
Closing Date, access to, such Books and Records;

(vi)      capital stock or other equity interests of Seller;   (vii)     
subject to Section 6.8, claims for and rights to receive Tax refunds relating to
 

the Tax obligations of the Business due and paid prior to the Closing Date with
respect to taxable periods ending prior to the Closing Date;

(viii) insurance policies and associated prepayments and rights of recovery;

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     (ix) all Contracts between Seller, on the one hand, and any Affiliate of
Seller or any Principal, on the other hand;

     (x) except as set forth in the Transition Services Agreement, any Employee
Benefit Plan and assets and rights under and with respect thereto;

     (xi) except as set forth in the Transition Services Agreement, all rights
and title of the Seller to the Great Plains accounting software and data used by
the Seller;

     (xii) except as set forth in the Transition Services Agreement, all rights
and title of the Seller to Ceridian payroll software and data used by the
Seller;

     (xiii) except as set forth in the Transition Services Agreement, all rights
of the Seller to use the Head Office/Warehouse;

     (xiv) all tangible assets located at the Head Office/Warehouse, other than
(i) the Inventories located at the Head Office/Warehouse, and (ii) tangible
personal property described in the Head Office/Warehouse Tangible Property
Schedule; and

     (xv) all other assets, properties and Contracts specifically set forth on
the Excluded Assets Schedule.

1.2      Assumption and Exclusion of Liabilities.     (a) Assumption of
Liabilities. Subject to the conditions set forth in this Agreement,  

as part of the Purchase Price, Buyer shall assume on the Closing Date and shall,
without duplication, pay, discharge or perform when due Seller's debts,
liabilities and obligations, in each case, arising on or after the Closing, set
forth below (the "Assumed Liabilities"):

     (i) any post-Closing Liability under each third party Assumed Contract
identified on the Contracts Schedule relating to the ongoing Business, but only
to the extent such Assumed Contract is assigned to Buyer or Buyer otherwise
receives the rights and benefits of such Assumed Contract pursuant to Section
1.6, and specifically excluding any Liability relating to or arising out of any
such Assumed Contract (A) as a result of any breach of such Assumed Contract
occurring on or prior to the Closing Date, (B) as a result of any property
damage, environmental assessment, violation of Law, breach of warranty, tort or
infringement occurring on or prior to the Closing Date; and/or (C) any related
Proceeding; and

     (ii) any current Liability included in the Closing Statement with respect
to third party accounts payable in connection with the Business that are not
delinquent and are reasonably incurred in the Ordinary Course of Business (but
excluding any such Liability (A) to the extent it constitutes Indebtedness, or
(B) arising out of or in connection with a breach of any Assumed Contract).

     For the avoidance of doubt, the Assumed Liabilities shall not include any
Liabilities of any Principal or any other Person (other than Seller).

     (b) Exclusion of Liabilities. Notwithstanding anything to the contrary in
this Agreement, Buyer shall not assume or in any way become liable for any of
Seller's Liabilities other than the Assumed Liabilities (collectively, the
"Excluded Liabilities").

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     (c) For purposes of clarity, the Excluded Liabilities include all oral
Contracts and all Contracts with suppliers of the Business, other than the
Assumed Vendor Contracts.

Seller and Principals hereby acknowledge that Seller is retaining the Excluded
Liabilities, and Seller shall, and the Principals hereby agree to cause Seller
to, pay, discharge and perform all such Liabilities promptly when due.

1.3      Purchase Price.     (a) Purchase Price. The aggregate purchase price
for the Purchased Assets (the  

"Purchase Price") shall be an amount in cash equal to: Twenty-Six Million Eight
Hundred Eighty-Seven Thousand Five Hundred Dollars ($26,887,500) plus the
assumption of the Assumed Liabilities and the Prepaid Rent (if any) as
determined in accordance with Section 1.3(d), minus an amount equal to the
amount (if any) by which Closing Net Working Capital is less than One Million
Dollars Canadian (C$1,000,000), it being understood that for purposes of
Closing, the amount of Closing Net Working Capital shall be estimated in
accordance with Section 1.3(b). At the Closing, Buyer shall pay to Seller, in
the manner described in Section 1.4(b)(i), the Closing Payment and the Prepaid
Rent. The Purchase Price shall be subject to post-Closing adjustment pursuant to
Sections 1.3(c).

     (b) Estimated Closing Net Working Capital. Not more than five (5) business
days, but in no event less than three (3) business days, before the Closing
Date, Seller and Buyer will, in good faith and in accordance with GAAP, jointly
estimate Closing Net Working Capital on a reasonable basis using Seller's then
available financial information; provided, however, that if Seller and Buyer
cannot agree on an estimate of Closing Net Working Capital, such estimate will
be deemed to be equal to the average of the Seller's and Buyer's good faith
determinations thereof. The amount of Closing Net Working Capital as finally
estimated pursuant to this Section 1.3(b) is referred to herein as "Estimated
Closing Net Working Capital."

(c)      Post Closing Adjustment.   (i)      Within thirty (30) days following
the Closing Date, Buyer shall deliver to  

Seller a closing statement (in its final and binding form, the "Closing
Statement") as of the Closing Date, setting forth the Closing Net Working
Capital prepared first, in accordance with GAAP and second, to the extent
consistent with GAAP, applied in a manner consistent with the accounting
principles, procedures, methodologies and practices used in connection with the
preparation of the Latest Balance Sheet. Seller and each Principal shall
cooperate as reasonably requested in connection with the preparation of the
Closing Statement and the determination of Closing Net Working Capital, and
shall give Buyer reasonable access to Seller's applicable Books and Records (to
the extent not transferred to Buyer as part of the Purchased Assets) and its
working papers related thereto. For the purposes of the calculation of the
Inventory to be included on the Closing Statement, Buyer agrees to grant the
Seller’s authorized representatives reasonable access to observe the Inventory
count. During the twenty-one (21)-day period immediately following receipt of
the Closing Statement, Seller shall be permitted to review Buyer's Books and
Records and its working papers related to the preparation of the Closing
Statement and the determination of Closing Net Working Capital (but, for the
avoidance of doubt, working papers shall not include protected lawyer-client
communications); provided that such review shall be in a manner that does not
interfere with the normal business operations of Buyer.

     (ii) The Closing Statement and the determination of Closing Net Working
Capital shall become final and binding upon the parties twenty-one (21) days
following Seller’s receipt thereof, unless Seller shall give Buyer written
notice of its disagreement (an "Objection Notice") prior to such date. Any
Objection Notice shall specify in reasonable detail the nature and dollar

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amount of any disagreement so asserted and shall be delivered only if (and to
the extent that) Seller reasonably and in good faith determines that the Closing
Statement and the amount of Closing Net Working Capital delivered by Buyer has
not been determined in accordance with the guidelines and procedures set forth
in this Agreement. Any items not disputed in the Objection Notice shall be
deemed to have been accepted by Seller and shall be final, conclusive and
binding on the parties. If a timely Objection Notice is received by Buyer, then
the Closing Statement and the amount of Closing Net Working Capital (as revised
in accordance with clause (x) or (y) below) shall become final and binding upon
the parties on the earliest of (x) the date the parties resolve in writing any
differences they have with respect to the matters specified in the Objection
Notice or (y) the date all matters in dispute are finally resolved in writing by
the Firm (defined below). During the thirty (30) days following delivery of an
Objection Notice, Buyer and Seller shall seek in good faith to resolve in
writing any differences which they have with respect to the matters specified in
the Objection Notice. Following delivery of an Objection Notice, Buyer and its
Representatives shall be permitted to review Seller's and its Representatives'
working papers relating to the Objection Notice (but, for the avoidance of
doubt, working papers shall not include protected lawyer-client communications).

     (iii) At the end of the thirty (30)-day period referred to above, the
parties shall submit to Ernst & Young (or its successor) or such other firm as
Buyer and Seller may agree (the "Firm") for review and resolution of all matters
(but only such matters) that remain in dispute and that were properly included
in the Objection Notice. The parties shall instruct the Firm to make a final
determination of the Closing Net Working Capital calculated with reference to
such amount to the extent such amounts are in dispute, in accordance with the
definitions, guidelines and procedures set forth in this Agreement (i.e., not on
the basis of an independent review). Buyer, Seller and the Principals will
cooperate with the Firm during the term of its engagement. Buyer and Seller
shall each submit a binder to the Firm promptly (and in any event within fifteen
(15) days after the Firm's engagement), which binder shall contain such party's
computation of Closing Net Working Capital and information, arguments and
support for such party's position. The Firm shall review such binders and base
its determination solely on the information contained in them in accordance with
the terms hereof. Buyer and Seller shall instruct the Firm not to assign a value
to any item in dispute greater than the greatest value for such item assigned by
Buyer, on the one hand, or Seller, on the other hand, or less than the smallest
value for such item assigned by Buyer, on the one hand, or Seller, on the other
hand. The parties agree that all adjustments shall be made without regard to
materiality. The Closing Statement and the determination of the Closing Net
Working Capital shall become final and binding on Buyer, Seller and the
Principals on the date the Firm delivers its final resolution in writing to the
parties (which final resolution shall be requested by Buyer and Seller to be
delivered not more than thirty

(30)      days following submission of such disputed matters).     (iv) The cost
of the determination of the disputed items by the Firm shall be borne  

by Seller, on the one hand, and Buyer, on the other hand, based on the
percentage which the portion of the contested amount not awarded to each party
bears to the amount actually contested by such party. The Firm shall determine
the allocation of costs based on the foregoing sentence and bill the parties for
its fees and expenses accordingly. For example, if closing accounts receivable
is the only disputed item and Seller contests only $500 of the amount claimed by
Buyer, and if the Firm ultimately resolves the dispute by awarding Buyer $300 of
the $500 contested, then the costs and expenses of the Firm will be allocated
60% (i.e., 300 ÷ 500) to Seller and 40% (i.e., 200 ÷ 500) to Buyer.

(v) Promptly following the final and binding determination of Closing Net
Working

Capital in accordance with Section 1.3(a) above ("Final Closing Net Working
Capital"): (A) if the

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amount of Final Closing Net Working Capital is less than the amount of Estimated
Closing Net Working Capital, then Seller shall (or if Seller is unable or
otherwise fails to, the Principals shall), make payment to Buyer by wire
transfer of immediately available funds of the amount of such difference;
provided, however, that Buyer, at its option, may seek the release of such
amount from the Escrow Amount but shall have no obligation to do so; and (B) if
the amount of Final Closing Net Working Capital is greater than the amount of
Estimated Closing Net Working Capital, then Buyer shall make payment to Seller
by wire transfer to in immediately available funds of the amount of such
difference; provided that for purposes of determining such payment, Final
Closing Net Working Capital will not be deemed to exceed C$1,000,000. Any
payments made pursuant to this Section 1.3(c)(v) shall be treated as an
adjustment to the Purchase Price by the parties for Tax purposes, unless
otherwise required by Law.

     (vi) If, pursuant to this Section 1.3(c), there is a dispute as to the
final determination of Closing Net Working Capital, Buyer or Seller (and the
Principals on a joint and several basis), as the case may be, shall promptly pay
to the other party, as appropriate, the net amount of such items as are not in
dispute in accordance with Section 1.3(c)(v) (i.e., by recalculating Closing Net
Working Capital by substituting only those items not in dispute), pending final
determination of such dispute pursuant to this Section 1.3(c) (and any required
adjustment payments pursuant to the application of this Section 1.3(c) in
connection with the determination of Final Closing Net Working Capital shall be
adjusted accordingly to account for any payments of undisputed amounts made
pursuant to this Section 1.3(c)(vi)).

Following the determination of Final Closing Net Working Capital, the Closing
Payment shall be recalculated by giving effect to the Final Closing Net Working
Capital (as recalculated, the "Final Closing Payment ").

     (d) Prepaid Rent Adjustment. At the Closing, Seller will provide Buyer with
a listing of rent for Stores paid by Seller prior to the Closing Date for the
month during which the Closing Date occurs (such aggregate amount, the “Closing
Month Rent”) together with evidence of proof of payment of the Closing Month
Rent in each case satisfactory in form and substance to Buyer. Seller is
responsible for the Closing Month Rent for periods up to the day before the
Closing Date and the Purchase Price will be increased (on a pro rata basis based
on the aggregate number of days in the month) for the amount of Closing Month
Rent applicable to the number of days from and including the Closing Date to the
end of the month (such adjustment amount, the “Prepaid Rent”). For example, if
the Closing Month Rent is C$400,000, there are 30 days in the month and the
Closing Date occurs on the 4th day of the month, the Prepaid Rent will be
(C$360,000 = C$400,000 * 27/30).

1.4      Closing Transactions.     (a) Closing. The closing of the transactions
contemplated by this Agreement (the  

"Closing") shall take place at the offices of Fasken Martineau DuMoulin LLP, 333
Bay Street, Suite 2400, Bay Adelaide Centre, Box 20, Toronto, ON M5H 2T6, or at
such other place as is mutually agreeable to Buyer and Seller, on the later of
(i) June 4, 2012 and (ii) three (3) days after all conditions set forth in
ARTICLE II have been satisfied (and remain satisfied) or waived in writing
(other than conditions with respect to actions that, by their terms, the
respective parties hereto will take at the Closing itself), or at such other
place or on such other date as may be mutually agreeable to Buyer and Seller
(the "Closing Date"), and the Closing shall be deemed effective as of the
opening of business on the Closing Date.

     (b) Closing Actions and Deliveries. Subject to the conditions set forth in
this Agreement, at the Closing:

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     (i) Buyer shall deliver the Closing Payment and the Prepaid Rent by wire
transfer of immediately available funds to the account(s) designated by Seller,
such designation to be made in writing at least two (2) business days prior to
the Closing; and Buyer shall assume the Assumed Liabilities through execution of
the bill of sale and assignment and assumption of liabilities in the form
attached hereto as Exhibit A (the "Bill of Sale and Assignment and Assumption
Agreement");

     (ii) Buyer shall deposit with the Escrow Agent the Escrow Amount, to be
governed by the terms and conditions of the Escrow Agreement, by wire transfer
of immediately available funds to an account which has been designated by the
Escrow Agent to Buyer;

     (iii) Seller shall (and the Principals shall cause Seller to) convey all of
the Purchased Assets to Buyer and shall deliver to Buyer such appropriately
executed instruments of sale, transfer, assignment, conveyance and delivery,
assignments, transfer tax declarations and all other instruments of conveyance
as are necessary or desirable to effect transfer to Buyer of good and marketable
title to the Purchased Assets (free and clear of all Liens), including delivery
by Seller of:

(A)      an executed Bill of Sale and Assignment and Assumption Agreement;  
(B)      documents acceptable for recordation in the Canadian Intellectual  

Property Office and any other similar domestic or foreign office, department or
agency (it being understood that all of the foregoing shall be satisfactory in
form and substance to Buyer and its counsel);

     (C) with respect to each Lease included as part of the Purchased Assets, an
assignment and assumption of lease in form and substance satisfactory to Buyer,
acting reasonably, which will include the lessor’s consent to assignment of the
lease and will endeavour (but shall not be required) to include Buyer’s
customary use language (each, an "Assignment and Assumption of Lease") and duly
executed by Seller and the lessor under such Lease;

     (D) documentation necessary to reflect the assignment of all POS licenses
used in connection with the Business to Buyer.

(iv)      Seller shall (and the Principals shall cause Seller to) deliver to
Buyer: (A) a certificate signed by the President or a Vice President of Seller,
dated  

the date of the Closing, stating that the conditions specified in Section 2.1
below have been satisfied as of the Closing;

     (B) certified copies of resolutions of Seller's board of directors and
equityholders authorizing and approving the execution, delivery and performance
of the Transaction Documents and the consummation of the transactions
contemplated thereby;

     (C) certified copies of Seller's Constating Documents, a certificate of
status (certified by an appropriate government official of Seller's jurisdiction
of organization as of a date not more than five (5) business days prior to the
Closing Date) and a certificate of the secretary or assistant secretary of
Seller as to the incumbency of the officer(s) of Seller executing this Agreement
and the other Transaction Documents to be executed and delivered by Seller;

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     (D) all Books and Records and other materials necessary for, related to or
used in the Business (other than those that constitute Excluded Assets);

     (E) copies of all Third-Party Approvals, Consents from Governmental Bodies
and, to the extent requested by Buyer, Tax Clearance Certificates;

     (F) releases relating to all Indebtedness of Seller (including relating to
the Business or the Purchased Assets) in form and substance satisfactory to
Buyer which releases shall release all Liens on or relating to the Purchased
Assets;

(G) the Escrow Agreement duly executed by Seller;

     (H) a transition services agreement in the form of Exhibit B hereto (the
"Transition Services Agreement") and duly executed by Seller;

     (I) copies of evidence of termination of each of the agreements required to
be listed on the Affiliated Transactions Schedule;

     (J) an opinion from McMillan LLP, counsel for Seller and the Principals,
with respect to the matters set forth in Exhibit D attached hereto, which shall
be addressed to Buyer and Buyer's financing sources, dated as of the Closing
Date, and in form and substance reasonably satisfactory to Buyer; and

     (K) such other documents or instruments as are required to be delivered at
the Closing pursuant to the terms hereof or that Buyer reasonably requests prior
to the Closing Date to effect the transactions contemplated hereby.

(v)      Buyer shall deliver to Seller:     (A)      an executed Bill of Sale
and Assignment and Assumption Agreement;     (B)      a certificate signed by an
authorized officer of Buyer, dated the date of  

the Closing, stating that the condition specified in subsection (a) of Section
2.2 below has been satisfied;

(C) each Assignment and Assumption of Lease duly executed by Buyer; (D) the
Escrow Agreement duly executed by Buyer; and (E) the Transition Services
Agreement duly executed by Buyer.

     1.5 Allocation of the Purchase Price. Seller and Buyer shall cooperate in
the preparation of a joint schedule (the “Allocation Schedule”) allocating the
Purchase Price (including the Assumed Liabilities) among the Purchased Assets.
If Seller and Buyer are able to agree upon the Allocation Schedule within thirty
(30) days following the Closing Date, Seller and Buyer shall each file all U.S.
and Canadian federal, state, provincial, local and foreign tax returns, in
accordance with the Allocation Schedule. If Seller and Buyer are unable to agree
upon the Allocation Schedule within thirty (30) days following the Closing Date,
each of Seller and Buyer may file IRS Form 594 and any U.S. and Canadian
federal, state, provincial, local and foreign tax returns, allocating the
Purchase Price (including the Assumed Liabilities) among the Purchased Assets in
the manner each believes appropriate, provided such allocation is reasonable and
in accordance with Section 1060 of the Internal Revenue Code of 1986, as
amended, and the regulations thereunder.

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     1.6 Nonassignable Contracts. Anything in Section 1.2 to the contrary
notwithstanding, with respect to any Assumed Contract or governmental license,
permit or other authorization the transfer or assignment of which requires the
Consent of any authority or other Person and such Consent has not been obtained
prior to (or such Consent is not effective as of) the Closing (collectively, the
"Nonassignable Contracts"), neither this Agreement, nor any instrument of
conveyance delivered pursuant to the terms hereof, shall be deemed to constitute
an assignment of any such Nonassignable Contract if such Consent is not given or
if such assignment otherwise would constitute a breach of, or cause a loss of
contractual benefits under, any such Nonassignable Contract, and Buyer shall not
assume any Liabilities under any such Nonassignable Contract. Seller shall use
its commercially reasonable efforts to obtain any such required Consent,
license, permit or other such authorization following the Closing and shall
advise Buyer promptly in writing with respect to any Nonassignable Contract
which Seller knows or has substantial reason to believe will or may not be
subject to assignment to Buyer hereunder. Without in any way limiting Seller's
obligation to obtain all Consents and waivers necessary for the sale, transfer,
assignment and delivery of the Nonassignable Contracts and the Purchased Assets
to Buyer hereunder, if any such Consent is not obtained or if such assignment is
not permitted irrespective of Consent and the Closing hereunder is consummated,
Seller shall cooperate with Buyer following the Closing Date in any reasonable
arrangement designed to provide Buyer with the rights and benefits (subject to
the obligations) under any such Nonassignable Contract, including enforcement
for the benefit of Buyer of any and all rights of Seller against any other party
arising out of any breach or cancellation of any such Nonassignable Contract by
such other party and, if requested by Buyer, acting as an agent on behalf of
Buyer or as Buyer shall otherwise reasonably require.

ARTICLE II

CONDITIONS TO CLOSING

     2.1 Conditions to Obligations of Buyer. The obligation of Buyer to
consummate the transactions contemplated by this Agreement and the other
Transaction Documents is subject to the satisfaction of the following conditions
as of the Closing:

     (a) the representations and warranties of Seller and any Principal herein
(including those set forth in ARTICLE III hereof) shall be true and correct in
all material respects as though then made and as though the Closing Date were
substituted for the date of this Agreement throughout such representations and
warranties, except that those representations and warranties that are qualified
by materiality shall be true and correct in all respects;

     (b) Seller and each Principal shall have performed, in all material
respects, all of the covenants and agreements required to be performed by Seller
and the Principals, respectively, under this Agreement as of the Closing;

(c) there shall have been no Material Adverse Effect;

     (d) Seller shall have received or obtained all third-party Consents that
are necessary (i) for the consummation of the transactions contemplated hereby,
(ii) to prevent a breach of or default under, or a termination, modification or
acceleration of, any instrument, Contract, lease, license or other agreement
described on, or required to be described on the attached Consents Schedule or
(iii) to operate the Business as presently conducted and presently proposed to
be conducted following the Closing (collectively, the "Third-Party Approvals"),
in each case on terms satisfactory to Buyer and no less favorable than those in
effect prior to such assignment and which will also give Buyer the right to
close each Store for a period of up to five (5) days to transition the Store and
with respect to any lessor or landlord that has the right to increase rent
following a consent to assignment of any lease, a waiver from such lessor or
landlord of the ability to exercise such right;

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     (e) Buyer shall have received or obtained all Consents of Governmental
Bodies that are necessary (i) for the consummation of the transactions
contemplated hereby or (ii) for Buyer to own the Purchased Assets and to operate
the Business substantially as currently conducted following the Closing, in each
case on terms and conditions reasonably satisfactory to Buyer;

     (f) no Proceeding shall be pending or threatened before any court or
Governmental Body or any arbitrator wherein an unfavorable injunction or Order
would (i) prevent the performance of this Agreement or any other Transaction
Document or the consummation of any of the transactions contemplated hereby or
thereby or declare unlawful any of the transactions contemplated hereby or
thereby, (ii) cause any of the transactions contemplated by this Agreement or
any other Transaction Document to be rescinded following consummation or (iii)
affect adversely the right of Buyer to own the Purchased Assets or operate the
Business, and no such injunction or Order shall be in effect; no Law shall have
been enacted or shall be deemed applicable to the transactions contemplated by
the Transaction Documents that makes the consummation of the transactions
contemplated by the Transaction Documents illegal;

     (g) Seller and each Principal shall have complied with the terms of Section
1.4(b) and delivered (or be concurrently delivering) to Buyer each of the items
required to be delivered by it pursuant to Section 1.4(b);

     (h) the Escrow Agent shall have executed and delivered to Seller the Escrow
Agreement, and such agreement shall be in full force and effect at the Closing,
provided that if the Escrow Agent fails or is unable to satisfy this Section
2.1(h), the Parties shall jointly appoint another Person to act as Escrow Agent;
and

     (i) all proceedings to be taken by Seller or Principals in connection with
the consummation of the transactions contemplated hereby and all certificates,
opinions, instruments and other documents required to effect the transactions
contemplated hereby reasonably requested by Buyer shall be reasonably
satisfactory in form and substance to Buyer and its counsel.

     Any condition specified in this Section 2.1 may be waived by Buyer if such
waiver is set forth in a writing duly executed by Buyer.

     2.2 Conditions to Obligations of Seller. The obligation of Seller to
consummate the transactions contemplated by this Agreement and the other
Transaction Documents is subject to the satisfaction of the following conditions
as of the Closing:

     (a) the representations and warranties of Buyer herein (including those set
forth in ARTICLE IV hereof) shall be true and correct in all material respects
as though then made and as though the Closing Date were substituted for the date
of this Agreement throughout such representations and warranties, except that
those representations and warranties that are qualified by materiality shall be
true and correct in all respects;

     (b) Buyer shall have performed, in all material respects, all of the
covenants and agreements required to be performed by Buyer under this Agreement
as of the Closing;

     (c) no Proceeding shall be pending before any court or Governmental Body
wherein an unfavorable injunction or Order would (i) prevent the performance of
this Agreement or any other Transaction Document or the consummation of any of
the transactions contemplated hereby or thereby or declare unlawful any of the
material transactions contemplated hereby or thereby or (ii) cause any of the
transactions contemplated by this Agreement or any other Transaction Document to
be rescinded following consummation, and no such injunction or Order shall be in
effect;

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     (d) the Escrow Agent shall have executed and delivered to Seller the Escrow
Agreement, and such agreement shall be in full force and effect at the Closing,
provided that if the Escrow Agent fails or is unable to satisfy this Section
2.2(d), the Parties shall jointly appoint another Person to act as Escrow Agent;
and

     (e) all proceedings to be taken by Buyer in connection with the
consummation of the transactions contemplated hereby and all documents required
to be delivered by Buyer to effect the transactions contemplated hereby
reasonably requested by Seller shall be reasonably satisfactory in form and
substance to Seller and its legal counsel.

     Any condition specified in this Section 2.2 may be waived by Seller if such
waiver is set forth in a writing duly executed by Seller.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE PRINCIPALS AND SELLER

     As an inducement to Buyer to enter into this Agreement, each Principal and
Seller hereby jointly and severally represent and warrant to Buyer, as of the
date hereof and as of the Closing Date, that:

     3.1 Organization. Seller is a corporation organized, validly existing and
in good standing under the Laws of the province of Ontario and is qualified to
do business in every jurisdiction in which its ownership of property or conduct
of business requires it to qualify, all of which jurisdictions are set forth on
the Organization Schedule. Seller possesses all requisite power and authority
and all licenses, permits and authorizations necessary to own and operate its
properties, to carry on its business as now conducted and as presently proposed
to be conducted and to carry out the transactions contemplated by this Agreement
and the other Transaction Documents. The copies of Seller's Constating Documents
that have been furnished to Buyer’s counsel reflect all amendments made thereto
at any time prior to the Closing Date and are correct and complete. Seller is
not in default under or in violation of any provision of its Constating
Documents. All of the outstanding equity interests of Seller are owned by the
Principals in the amounts set forth on the Organization Schedule. The Officers
and Managers Schedule sets forth a list all of the officers and
directors/managers of Seller. Seller has not granted to any Person, and there is
not outstanding, any power of attorney in respect of any Purchased Assets or
Assumed Liabilities.

     3.2 Power; Authorization of Transactions. The Seller and each Principal has
the absolute, unrestricted and full right, power, authority and legal capacity
to enter into this Agreement and the other Transaction Documents to which it is
a party and to perform its obligations hereunder and thereunder. The execution,
delivery and performance of this Agreement and other Transaction Documents to be
executed and delivered by the Principals and Seller and the consummation of the
transactions contemplated hereby and thereby have been duly and validly
authorized by all requisite corporate action on the part of Seller, and no other
corporate proceedings on the part of Seller is necessary to authorize the
execution, delivery or performance of this Agreement or any other Transaction
Document. This Agreement and the other Transaction Documents to be executed
and/or delivered by the Principals and Seller constitute valid and binding
obligations of each Principal and Seller, enforceable in accordance with their
respective terms.

     3.3 Absence of Conflicts. Except as set forth on the Consents Schedule, the
execution, delivery and performance of this Agreement and the other Transaction
Documents to be executed and/or delivered by each Principal and Seller and the
consummation of the transactions contemplated hereby and thereby does not and
shall not (i) conflict with or result in any breach of any of the provisions of,
constitute a default under, result in a violation of, or give any third party
the right to terminate or to accelerate any obligation under, Seller's
Constating Documents or any indenture, mortgage, lease, loan

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agreement, Contract, commitment or other agreement or instrument to which any
Principal or Seller is bound or affected, or any Law to which any Principal or
Seller is subject, (ii) result in the creation of any Lien upon any of the
Purchased Assets or (iii) require any Consent, exemption or other action by or
notice to or filing with any court or other Governmental Body. Without limiting
the generality of the foregoing, except for Buyer pursuant hereto, there are no
agreements, options, commitments or rights with, of or to any Person to purchase
or otherwise acquire any of the Purchased Assets or any interests therein.

     3.4 Subsidiaries. Seller has no Subsidiaries. Seller does not own or holds
the right to acquire any shares of stock or any other security or interest in
any other Person. Seller does not have any obligation to make any Investments.

     3.5 Indebtedness. Except as set forth on the Indebtedness Schedule, Seller
does not have any outstanding Indebtedness and is not a party to any Contract
providing for the creation, incurrence or assumption thereof.

     3.6 Financial Statements. Attached hereto as the Financial Statements
Schedule are the following financial statements:

     (a) the balance sheet of Seller as of May 31, 2011 (the "Year-End Balance
Sheet"), and the balance sheets of Seller as of May 31, 2010 and May 31, 2009
and the related statements of income, cash flow and shareholders’ equity for the
fiscal years then ended; and

     (b) the unaudited balance sheet of Seller as of January 1, 2012 (the
"Latest Balance Sheet") and the related statements of income, cash flow and
shareholders’ equity for the period then ended.

Each of the foregoing financial statements (including in all cases the notes
thereto, if any) has been based upon the information contained in Seller's books
and records (which, in turn, are accurate and complete in all material respects)
and presents fairly the financial condition and results of operations of Seller
as of the times and for the periods referred to therein, and such financial
statements have been prepared in accordance with GAAP, consistently applied
throughout the periods indicated (except for the unaudited interim financial
statements, which have been prepared on a basis consistent with past practices
of Seller, do not contain footnotes and are subject to customary year-end
adjustments (none of which is or could reasonably be expected to be material)
for receiving accruals). No financial statements of any Person other than Seller
are required by GAAP to be included in the consolidated financial statements of
Seller. Attached hereto as part of the Financial Statements Schedule is a
complete and accurate list of all compensation and other amounts (including
salary, bonuses and rent) paid to the Principals (or any of their respective
Affiliates) for each of the periods covered by the statements of income and cash
flows required hereunder.

     3.7 Inventory. All Inventory, whether or not reflected in the Latest
Balance Sheet, consists of a quality and quantity usable and salable in the
Ordinary Course of Business and is not stale, obsolete or damaged, is
merchantable and fit for its intended use, and is not defective, except for
obsolete items and items of below-standard quality, all of which have been
written off or written down to net realizable value in the Latest Balance Sheet.
All Inventories not written off have been priced at the lower of cost or market.
The quantities of each item of Inventory are not excessive, but are reasonable
in the present circumstances of Seller. All of such Inventory is located at the
Real Property or Head Office/Warehouse or with SCR China Trade Inc. or in
transit to the Real Property or Head Office and no Inventory is held on a
consignment basis.

3.8 Absence of Undisclosed Liabilities. Except as set forth on the Liabilities
Schedule, Seller

does not have any Liabilities arising out of any transactions entered into at or
prior to the Closing Date, or

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any action or inaction at or prior to the Closing Date, or any state of facts
existing at or prior to the Closing Date, except for (a) Liabilities
appropriately reflected on the liability side of the Latest Balance Sheet, (b)
Liabilities under Contracts described on the Contracts Schedule (but not
Liabilities for breaches thereof occurring on or prior to the Closing Date) and
(c) Liabilities that have arisen entirely after the date of the Latest Balance
Sheet in the Ordinary Course of Business, none of which relates to a breach of
Contract (other than customer write-offs, discounts or adjustments in the
Ordinary Course of Business), breach of warranty, tort, infringement, violation
of Law, any Proceeding (including any Proceeding in eminent domain or other
similar Proceeding affecting any portion of any real property) or Order
affecting the ownership, lease, occupancy or operation of any real property or
any environmental Liability.

     3.9 No Material Adverse Change. Except as set forth on the Developments
Schedule, since the date of the Year-End Balance Sheet, there has been no
Material Adverse Change, and no event has occurred or circumstance exists that
could result in a Material Adverse Change.

     3.10 Absence of Certain Developments. Since the date of the Year-End
Balance Sheet, Seller has conducted the Business and its operations in the
Ordinary Course of Business, and except as set forth and itemized by category on
the Developments Schedule, Seller has not (voluntarily or involuntarily):

     (a) suffered any theft, damage, destruction or casualty loss, in the
aggregate, in excess of $25,000, to any of its assets or properties (tangible or
intangible, including the Real Property and the other Purchased Assets), whether
or not covered by insurance, or suffered any destruction of its Books and
Records;

     (b) sold, assigned, leased, licensed, transferred or otherwise disposed of
or encumbered any of its tangible assets or properties, except in the Ordinary
Course of Business for fair consideration, or sold, assigned, leased, licensed,
transferred or otherwise disposed of or encumbered any Purchased Intellectual
Property or other intangible assets, or disclosed any proprietary confidential
information to any Person;

     (c) declared, paid, made, or otherwise effectuated any dividends or
distributions, redemptions, equity repurchases, or other transactions involving
its capital stock or other equity interests, as the case may be, or rights to
control the same or permitted any other withdrawal or distribution of funds or
other assets from Seller by any Principals, their Affiliates or any other third
party (other than normal and reasonable salaries and the payments of normal
expenses in the Ordinary Course of Business);

     (d) changed Seller's authorized or issued capital stock or other equity
interests, as the case may be, or granted, issued, sold or transferred any
capital stock or other equity interests, as the case may be, any securities
convertible, exchangeable or exercisable into shares of capital stock or other
equity interest, as the case may be, or warrants, options or other rights to
acquire shares of capital stock or other equity interest, as the case may be, or
granted any stock appreciation, phantom stock or other similar rights;

     (e) amended, modified, replaced, supplemented or otherwise changed (or
authorized any of the foregoing in respect of) its Constating Documents;

     (f) incurred or become subject to any material Liabilities, except
Liabilities incurred in the Ordinary Course of Business;

     (g) borrowed any money or issued or exchanged any notes or other evidences
of any Indebtedness, except current Liabilities incurred in the Ordinary Course
of Business, or mortgaged, pledged or subjected to (voluntarily or
involuntarily) any Lien any assets (including the Real Property and other
Purchased Assets);

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     (h) made any loans or advances to, or guarantees for the benefit of, any
Person or canceled any Indebtedness or other claims or rights owing to or held
by it;

     (i) incurred intercompany charges (other than transactions with Affiliates
listed on the Affiliated Transactions Schedule);

     (j) failed to promptly pay and discharge any current Liabilities or became
liable to repay any loan or Indebtedness in advance of its stated maturity;

     (k) made or granted any bonus, wage, salary or other compensation increase
to any (or to any group of) current or former equityholders, directors or
managers (or equivalent governing personnel), officers, partners, executives or
(except in the Ordinary Course of Business) other employees, or entered into any
employment, severance, or similar Contract with any current or former
equityholders, directors or managers (or equivalent governing personnel),
officers, partners, executives or (except in the Ordinary Course of Business)
other employees;

     (l) made any other change in employment terms for any of its equityholders,
directors or managers (or equivalent governing personnel), officers, partners,
executives or (except in the Ordinary Course of Business) other employees;

     (m) adopted, or granted any increase in the payments to or benefits under,
any profit sharing, bonus, deferred compensation, savings, insurance, pension,
retirement, or other Employee Benefit Plan, program, policy, Contract or
arrangement, or amended, supplemented, modified, replaced or terminated any of
the foregoing;

    (n)    suffered any resignation, termination or removal of any officer or
material loss of  personnel;                (o)    entered into, amended,
terminated (voluntarily or involuntarily) or received 

notice (written or oral) of termination of, any material Contract or commitment
(including all Contracts disclosed on, required to be disclosed on, or that
would have been required to be disclosed on but for such termination or notice
of termination, the Contracts Schedule);

     (p) entered into any Contract prohibiting or restricting the ability of
Seller to compete with any Person, engage in any business or operate in any
geographical area;

     (q) engaged in any promotional sales or discount or other activity with
customers that has or would reasonably be expected to have the effect of
accelerating to pre-Closing periods sales that would otherwise be expected to
occur in post-Closing periods;

     (r) conducted its cash management customs and practices other than in the
Ordinary Course of Business (including with respect to collection of accounts
receivable, purchases of supplies, repairs and maintenance, payment of accounts
payable and accrued expenses, levels of capital expenditures and operation of
cash management practices generally);

     (s) made a material change in its accounting methods or made or rescinded
any Tax election or changed any method of accounting for foreign, federal or
state income Tax purposes;

     (t) acquired any other business or entity (or any significant portion or
division thereof), whether by merger, consolidation or reorganization or by the
purchase of its assets and/or equity;

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     (u) made any capital expenditures or commitments therefor, in the
aggregate, in excess of $50,000, except in connection with the opening of new
Stores as set forth in the Developments Schedule;

     (v) caused or permitted (nor has any insiders, agents, advisors,
consultants or contractors caused or permitted) any of its policies of insurance
to lapse or become violable or has done or omitted to do anything whereby it
might be denied indemnity in respect of any actual, potential or pending claim;

     (w) instituted, compromised or settled any claim or lawsuit involving
equitable or injunctive relief or the payment by or on behalf Seller;

     (x) terminated or modified any governmental license, permit or other
authorization, other than in the Ordinary Course of Business;

    (y)    made any charitable contributions or pledges, in the aggregate, in
excess of  $10,000;                (z)    entered into any other material
transaction other than in the Ordinary Course of 

Business or materially changed any business practice;

     (aa) made or committed to make any payments or other transfers in
connection with, or in contemplation of, the transactions contemplated by this
Agreement or the other Transaction Documents; or

(bb) committed, either in writing or orally, to take any of the foregoing
actions or

activities.

3.11      Contracts and Commitments.     (a) Except for the Contracts listed on
the Contracts Schedule, which Contracts  

Schedule itemizes by category the Contracts subject to Sections 3.11(a)(iii),
(vii), (viii), (xi) and (xix), Seller is not party to, bound by or otherwise
subject to any:

     (i) Contract or group of related Contracts with the same party for the
purchase or sale of raw materials, commodities, supplies, products or other
personal property or for the furnishing or receipt of services, in any case,
under which the undelivered balance of such products and services has a selling
price in excess of $25,000;

     (ii) Contract or group of related Contracts with the same party continuing
over a period of more than six months from the date or dates thereof, not
terminable by Seller upon thirty (30) days' or less notice without penalty;

     (iii) Contract that was not entered into in the Ordinary Course of Business
and that involves expenditures or receipts of Seller in excess of $25,000;

     (iv) lease, rental or occupancy agreement, license, installment and
conditional sale agreement, and other Contract affecting the ownership of,
leasing of, title to, use of, or any leasehold or other interest in, any real or
personal property, whether Seller is lessor, lessee or a party in any other
capacity;

(v) licensing agreement or other Contract with respect to patents, trademarks,

copyrights, or other intellectual property, including agreements with current or
former employees,

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consultants, or contractors regarding the appropriation or the non-disclosure of
Seller's Intellectual Property or any royalty Contract;

     (vi) collective bargaining agreement or other Contract to or with any labor
union or other employee representative of a group of employees;

     (vii) bonus (including retention or sale bonus), pension, profit sharing,
retirement or any other form of deferred compensation plan or any stock or
equity purchase, stock or equity option or similar plan or practice, whether
formal or informal, or any severance Contract;

     (viii) consulting or management Contract for the employment of any officer,
partner, individual employee or other individual on a full-time, part-time or
consulting basis providing annual compensation in excess of $10,000 or providing
for the payment of any cash or other compensation or benefits upon the
consummation of the transactions contemplated by the Transaction Documents or
prohibiting competition or the disclosure of trade secrets or confidential
information;

     (ix) Contract relating to (A) the acquisition by Seller of any interest in
another Person (whether by purchase of assets, purchase of stock, merger,
consolidation, recapitalization, share exchange or otherwise) or (B) the sale or
other divestiture by Seller of any division or entity owned or previously owned
by Seller (whether by sale of assets, sale of stock, merger, consolidation,
recapitalization, share exchange or otherwise);

     (x) joint venture, partnership, or other Contract (however named) involving
a sharing of profits, losses, costs, or liabilities by Seller with any other
Person and any other Contracts relating to ownership of or investments in any
business or enterprise;

     (xi) Contract containing covenants that in any way purport to restrict the
business activity of Seller, any Affiliate of Seller or the Business or limit
the freedom of Seller, any Affiliate of Seller or the Business to engage in any
line of business or to compete with any Person anywhere in the world;

(xii) nondisclosure or confidentiality Contracts;

     (xiii) Contract providing for payments to or by any Person based on sales,
purchases, or profits, other than direct payments for goods;

  (xiv) power of attorney;

     (xv) Contract entered into other than in the Ordinary Course of Business
that contains or provides for an express undertaking by Seller to be responsible
for consequential damages;

(xvi) Contract for capital expenditures in excess of $25,000;

     (xvii) indenture or other Contract relating to the borrowing of money or
other assets or to mortgaging, pledging or otherwise placing a Lien on Seller's
assets;

(xviii)      letter of credit or similar arrangement;   (xix)      guaranty of
any obligation for borrowed money or otherwise;  

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     (xx) Contract with respect to the lending or investing of funds in or to
other Persons;

     (xxi) Contract relating to the distribution, marketing, sale, advertising
or promotion of its products or services (including any sales representative
Contract, distributor Contract or similar Contract);

     (xxii) warranty Contract or similar obligation with respect to products
sold or services rendered or Contract that contains return of product provisions
or any provisions that could result in an obligation to buy back products that
were previously sold by Seller;

(xxiii)      settlement, conciliation or similar Contract;   (xxiv)     
franchise or agency Contract;   (xxv)      hedging, swap, derivative or similar
Contract (whether in respect of currency,  

interest rates, commodities or otherwise);

     (xxvi) Contract to purchase or sell a stated portion of the requirements or
outputs of the Business or containing "take or pay" provisions;

(xxvii)      Contract with any Governmental Body;   (xxviii)      Contract with
any equityholder, insider or Affiliate;   (xxix)      Contract relating to the
subcontracting to another Person of any Seller's rights  

and/or obligations under any agreement identified or required to be identified
on the Contracts Schedule;

     (xxx) Contract under which the consequences of a default or termination
could have a Material Adverse Effect;

     (xxxi) other Contract material to the Business or Seller, whether or not
entered into in the Ordinary Course of Business; or

     (xxxii) amendment, supplement, and modification (whether oral or written)
in respect of any of the foregoing.

(b) Except as disclosed on the Contracts Schedule:

     (i) each Contract identified on or required to be identified on the
Contracts Schedule is legal, valid, binding, enforceable and in full force and
effect and will continue as such following the consummation of the transactions
contemplated by the Transaction Documents;

     (ii) to Seller's Knowledge, no Contract identified on or required to be
identified on the Contracts Schedule has been breached in any respect or
canceled by the other party thereto;

     (iii) since the date of the Year-End Balance Sheet, none of Seller's
significant suppliers or outside service providers has indicated that it will
stop or decrease the rate of business done with Seller with respect to the
Business;

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     (iv) there have been no renegotiations of, attempts to renegotiate, or
outstanding rights to renegotiate any material amounts paid or payable to Seller
under current or completed Contracts with any Person and no such Person has made
written demand for such renegotiation;

     (v) Seller has performed all obligations under the Contracts identified on
or required to be identified on the Contracts Schedule; and

     (vi) there is no breach of or default by Seller under any Contract to which
Seller is a party or is otherwise subject or any event which, upon giving of
notice or lapse of time or both, would constitute such a breach or default.

     (c) The Contracts Schedule sets forth each Contract of Seller that is
secured by a letter of credit or guarantee (including guarantees by the
Principals or any of their Affiliates) and the nature and amount of such
security. Except as set forth on the Contracts Schedule, Seller is not obligated
to (i) purchase any property or services at a price greater than the prevailing
market price, (ii) sell any property or services at a price less than the
prevailing market price, (iii) pay rentals or royalties at a rate greater than
the prevailing market price or (iv) act as lessor or licensor at a rate less
than the prevailing market price. Buyer has been supplied with a true and
correct copy of all written Contracts which are identified on the Contracts
Schedule, together with all amendments, exhibits, attachments, waivers or other
changes thereto. The Contracts Schedule contains an accurate and complete
description of all material terms of all oral Contracts referred to thereon. No
party has repudiated any provision of any Contract. All Contracts relating to
the sale, design, manufacture, or provision of products or services by Seller
have been entered into in the Ordinary Course of Business and have been entered
into without the commission of any act alone or in concert with any other
Person, or any consideration having been paid or promised, that is or would be
in violation of any Law.

     (d) No insider, agent, advisor, consultant or contractor of Seller is bound
by any Contract that purports to limit the ability of such insider, agent,
advisor, consultant or contractor to (i) engage in or continue any conduct,
activity, or practice relating to the Business, or (ii) assign to Seller or to
any other Person any rights to any invention, improvement, or discovery.

     (e) The Contracts Schedule sets forth all material Contracts used in
connection with the Business on the date of this Agreement.

3.12      Compliance with Laws; Permits; Certain Operations.     (a)      Except
as set forth on the Compliance Schedule:     (i)      Seller is and at all times
during the five (5) years preceding the date hereof has  

been, in full compliance with each Law that is or was applicable to it or to the
conduct or operation of the Business or the ownership or use of any of its
assets (including the Purchased Assets);

     (ii) no event has occurred or circumstance exists that (with or without
notice or lapse of time) (A) may constitute or result in a violation by Seller
of, or a failure on the part of Seller to comply with, any Law, or (B) may give
rise to any obligation on the part of Seller to undertake, or to bear all or any
portion of the cost of, any remedial action of any nature; and

     (iii) Seller has not received, at any time during the five (5) years
preceding the date hereof, any notice or other communication (whether oral or
written) from any Governmental Body or any other Person regarding (A) any
actual, alleged, possible, or potential violation of, or failure to comply with,
any Law, or (B) any actual, alleged, possible, or potential obligation on

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the part of Seller to undertake, or to bear all or any portion of the cost of,
any remedial action of any nature.

     (b) Seller holds all permits, licenses, certificates, accreditations or
other authorizations of Governmental Bodies required for the conduct of the
Business and operation of the Real Property, and the Permits Schedule and the
Environmental and Safety Schedule set forth a list of all of such permits,
licenses, certificates, accreditations and other authorizations. Seller is in
compliance with all terms and conditions of any such required permits, licenses,
accreditations and authorizations.

     (c) Seller and each Principal understands the Corruption of Foreign Public
Officials Act (Canada) (“CFPOA”) and the United States Foreign Corrupt Practices
Act of 1977 (15 U.S.C. §§ 78dd-1, et seq. ("FCPA"). Neither Seller, nor any
Principal, insider, agent, advisor, consultant or contractor of Seller, or any
other Person associated with or acting for or on behalf of Seller, has directly
or indirectly (i) made or received (or been authorized to make or receive) any
contribution, gift, bribe, rebate, payoff, influence payment, kickback, or other
payment to any Person, private or public, regardless of form, whether in money,
property, or services (A) to obtain favorable treatment in securing business,
(B) to pay for favorable treatment for business secured, (C) to obtain special
concessions or for special concessions already obtained, for or in respect of
Seller or any Affiliate of Seller, or (D) in violation of any Law (including the
FCPA) or (ii) established or maintained any fund or asset that has not been
recorded in the Books and Records of Seller.

     (d) The Seller has complied with all Canadian food safety laws applicable
to the Business (collectively, “Canadian Food Safety Laws”), and no claim has
been filed by or before any Governmental Body against Seller alleging a
violation of any Canadian Food Safety Laws. There have been no recalls or
withdrawals of any of the Seller's products or any seizure, criminal referral,
or other similar federal, provincial, state or private enforcement actions with
respect to such products and no facts or circumstances exist that could be
reasonably expected to result in such actions. All packaging and labeling,
including ingredient statements, related to the Seller's products complies in
all respects with applicable provisions of the Canadian Food Safety Laws and all
other Legal Requirements applicable to any Products intended for sale or resale
in Canada.

     (e) All products currently being manufactured, sold or distributed by or on
behalf of Seller that are subject to the jurisdiction of the Canadian Food
Inspection Agency or any other provincial or foreign Governmental Body are
formulated, manufactured, processed, labeled, stored, tested, packed,
transported, distributed, marketed, advertised, sold and promoted by the Seller
in compliance with all applicable requirements under the Canadian Food Safety
Laws, including the Canada Consumer Product Safety Act. The Seller's products
are not adulterated or misbranded within the meaning of the Canadian Food Safety
Laws. None of the Seller's products are the subject of any warning letter,
notice of violation, seizure, injunction, regulatory enforcement action, or
criminal action issued, initiated, or threatened in writing by Canadian Food
Inspection Agency or any comparable state or foreign Governmental Body. All teas
sold by Seller are EU Compliant, and Seller has documentation that all such teas
meet the standards set forth by EC 852/2004 and EC 834/2007 (“Testing Records”).
All statements and publications made by Seller about the health benefits of tea
are accurate and in compliance with all applicable governmental regulations, and
Seller has received no inquiry from any Governmental Body or other third party
regarding the same.

3.13      Legal Proceedings, Orders.     (a) Except as set forth on the
Proceedings and Orders Schedule, there is no (and,  

during the five (5) years preceding the date hereof, there has not been any)
Proceeding: (i) that has been commenced by or against Seller or that otherwise
relates to or may affect the Business or any of the assets (tangible or
intangible) owned or used by Seller (including the Purchased Assets); or (ii)
that challenges,

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or that may have the effect of preventing, delaying, making illegal, or
otherwise interfering with, any of the transactions contemplated by the
Transaction Documents. To Seller's Knowledge, (1) no such Proceeding has been
threatened, and (2) no event has occurred or circumstance exists that may give
rise to or serve as a basis for the commencement of any such Proceeding. Seller
has delivered to Buyer copies of all pleadings, correspondence, and other
documents relating to each Proceeding identified on the Proceedings and Orders
Schedule. The Proceedings and Orders Schedule sets forth accurately and
completely the following information with respect to each Proceeding identified
or required to be identified thereon: the name of and parties to the Proceeding,
the date of the commencement of the proceeding, the status of the proceeding
(e.g., in settlement talks, discovery, trial, appeal, etc.), a brief statement
of the nature of the claim, the amount being claimed and/or the nature of other
relief sought, the amount of reserves taken, if any, on the Latest Balance Sheet
in respect of such Proceeding, an evaluation of the merit of such claim, and the
current settlement range, if any, among the parties, and any other material
information related to such proceeding. The Proceedings identified on or
required to be identified on the Proceedings and Orders Schedule have not have,
will not have and could not reasonably be expected to have a Material Adverse
Effect.

     (b) Except as set forth on the Proceedings and Orders Schedule: (i) there
is no Order to which Seller, the Business, or any of the assets owned or used by
Seller (including the Purchased Assets), is subject; and (ii) no insider, agent,
advisor, consultant or contractor of Seller is subject to any Order that
prohibits such insider, agent, advisor, consultant or contractor from engaging
in or continuing any conduct, activity, or practice relating to the Business.
Except as set forth on the Proceedings and Orders Schedule: (i) Seller is, and
at all times during the five (5) years preceding the date hereof has been, in
full compliance with all of the terms and requirements of each Order to which
it, or any of the assets owned or used by it, is or has been subject; (ii) no
event has occurred or circumstance exists that may constitute or result in (with
or without notice or lapse of time) a violation of or failure to comply with any
term or requirement of any Order to which Seller, the Business, or any of the
assets owned or used by Seller (including the Purchased Assets), is subject; and
(iii) Seller has not received, at any time during the five (5) years preceding
the date hereof, any notice or other communication (whether oral or written)
from any Governmental Body or any other Person regarding any actual, alleged,
possible, or potential violation of, or failure to comply with, any term or
requirement of any Order to which Seller, the Business, or any of the assets
owned or used by Seller (including the Purchased Assets), is or has been
subject.

     (c) Seller has not received any opinion or legal advice in writing, within
the five (5) years preceding the date hereof, to the effect that Seller is
exposed from a legal standpoint to any Liability or disadvantage. Seller is
fully insured with respect to each of the matters set forth on the Proceedings
and Orders Schedule.

3.14      Condition and Sufficiency of Assets.     (a) Seller owns good and
valid title to all of the Purchased Assets, free and clear of  

all Liens, except for Liens described on the Encumbrances Schedule, all of which
will be released on the Closing Date. Except as disclosed in the Affiliated
Transactions Schedule, none of the Principals, nor any of their Affiliates
(other than the Seller), own any properties or assets (whether real, personal,
or mixed and whether tangible or intangible) which are used in the Business.

     (b) The Purchased Assets and the services to be provided pursuant to the
Transition Services Agreement constitute all of the assets, whether tangible or
intangible, real or personal, that are necessary or useful for the conduct of
the Business as currently conducted and as presently proposed to be conducted by
Seller and all of the material assets, whether tangible or intangible as used by
Seller in its business during the past 12 months, except for Inventory sold in
the Ordinary Course of Business and except for the Excluded Assets.

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     (c) All of the buildings, improvements, fixtures, machinery, equipment and
other tangible assets (whether owned or leased) which are included in the
Purchased Assets are, except for ordinary wear and tear, in good condition and
repair and are usable in the Ordinary Course of Business, and all such assets
have been installed and maintained in accordance with all Law. Seller owns or
leases under valid leases all buildings, machinery, equipment, and other
tangible assets necessary for the conduct of the Business (all of which are
included in the Purchased Assets).

3.15      Property.     (a)      Seller does not own any real property.     (b) 
    The Leased Real Property Schedule sets forth the location of each Leased
Real  

Property and a list of all Leases for each Leased Real Property, as well as the
expiration date, renewal terms and applicable rent for each such Lease. Seller
delivered to Buyer on or before April 4, 2012 a true and complete copy of each
such Lease document set forth in the Leased Real Property Schedule (including
all amendments, extensions, renewals, guaranties and other agreements with
respect thereto), and in the case of any oral Lease, a written summary of the
basic terms of such Lease. Except as set forth on the attached Leased Real
Property Schedule, with respect to each of the Leases: (i) such Lease is legal,
valid, binding, enforceable and in full force and effect; (ii) neither Seller
nor, to Seller's Knowledge, any other party to the Lease is in breach or default
under such Lease, and no event has occurred or circumstance exists which, with
the delivery of notice, passage of time or both, would constitute such a breach
or default or permit the termination, modification or acceleration of rent under
such Lease; (iii) there are no disputes with respect to such Lease; (iv) Seller
has not assigned, subleased, mortgaged, deeded in trust or otherwise transferred
or encumbered such Lease or any interest therein; (v) none of the Leases contain
any prohibition on assignment or other terms or conditions that will become
applicable or inapplicable as a result of the transactions contemplated by this
Agreement and the other Transaction Documents, and no Consent of any third party
under any such Lease is required in connection with the transactions
contemplated hereby, (vi) Seller has valid title to the leasehold estate under
each Lease, free and clear of all Liens other than those which will be obtained
prior to the Closing; and (vii) Seller enjoys peaceful and undisturbed
possession of the Leased Real Property under the Leases. The Buyer acknowledges
that the Seller is not preparing the Yorkdale or Kildonan stores for opening and
that this will be the obligation of the Buyer following Closing.

     (c) Seller has no Knowledge of and has never received any notice of the
existence of any pending or contemplated condemnation or eminent domain
Proceeding with respect to the Real Property. To Seller’s Knowledge, all of the
Real Property and all plants, buildings, fixtures and other improvements located
on such Real Property, has unqualified access to public roads and to all
utilities (including electricity, sanitary and storm sewers, potable water and
natural gas) necessary for the operation of the Business. Seller does not owe
any amounts to any architect, contractor, subcontractor or materialman for labor
or materials performed, rendered or supplied to, or in connection with, any Real
Property within the past twelve months. There is no work being done at, or
materials being supplied to, any parcel of Real Property at the date hereof
other than routine maintenance projects having aggregate costs through
completion of not more than $10,000. No portion of the Real Property has
suffered any material damage by fire or other casualty which has not heretofore
been completely repaired and restored to its original condition. To Seller’s
Knowledge, no portion of the Real Property is located in a special flood hazard
area as designated by any Governmental Body.

     (d) To Seller’s Knowledge, the current use of the Real Property does not
violate any instrument of record or agreement affecting the Real Property. To
Seller’s Knowledge, there is no violation of any covenant, condition,
restriction, easement, agreement or Order of any Governmental Body having
jurisdiction over the Real Property that affects the use or occupancy thereof.
To Seller’s

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Knowledge, none of the Real Property is classified as a "permitted
non-conforming use" or "permitted non-conforming structure" under applicable
zoning ordinances. To Seller’s Knowledge, there are no encroachments upon any of
the parcels comprising the Real Property, and no portion of any improvement
thereon encroaches upon any property not included within the Real Property or
upon the area of any easement affecting the Real Property. Seller and the
Principals do not have any Knowledge of any pending or contemplated reassessment
of any parcel included in the Real Property.

     (e) The Real Property constitutes all of the real property leased, used or
occupied by the Business and necessary or desirable for the conduct of the
Business as currently conducted and as currently proposed to be conducted, other
than the Head Office/Warehouse.

  (f) Seller does not own or lease any vehicles.

3.16      Tax Matters.     (a) Seller has timely filed all Tax Returns required
to be filed by it, each such Tax  

Return has been prepared in compliance with all Laws, and all such Tax Returns
are complete, true and accurate in all respects. All Taxes due and payable by
Seller have been paid and Seller has withheld and paid over to the appropriate
taxing authority all Taxes which Seller is required to withhold from amounts
paid or owing to any employee, stockholder, partner, creditor or other third
party, whether or not such Taxes have been reported as due on an applicable Tax
Return. All Taxes accrued but not yet due are either accrued on the Latest
Balance Sheet or have been accrued in the Ordinary Course of Business since the
date of the Latest Balance Sheet and will be accrued as of the Closing Date.

  (b) Except as set forth on the Taxes Schedule:

     (i) Seller has properly classified all service providers as employees or
independent contractors for Tax purposes and there have been no notices from or
claims by any Governmental Body relating to such classification;

     (ii) Seller has withheld and paid each Tax required to have been withheld
and paid in connection with amounts paid or owing to any employee, independent
contractor, creditor, customer, shareholder or other party, and complied with
all information reporting and backup withholding provisions of applicable Law;

     (iii) there is no action, suit, taxing authority Proceeding or audit now in
progress, pending or, to Seller's Knowledge, threatened against or with respect
to Seller;

     (iv) no deficiency or proposed adjustment which has not been settled or
otherwise resolved for any amount of Tax has been proposed, asserted or assessed
by any taxing authority against Seller;

     (v) no claim has ever been made by a taxing authority in a jurisdiction
where Seller does not file Tax Returns claiming that Seller is or may be subject
to Taxes assessed by such jurisdiction;

     (vi) there are no Liens or potential Liens for Taxes (other than for
current Taxes not yet due and payable) upon the assets of Seller, nor is any
taxing authority in the process of imposing any Liens for Taxes on any of the
Purchased Assets; and

(vii) Seller is not a non-resident of Canada for purposes of the Income Tax Act.

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3.17      Intellectual Property.     (a) The Intellectual Property Schedule
contains a complete and accurate list of all  

(i) all patented or registered Intellectual Property owned or used by Seller,
(ii) pending applications for other registrations of Intellectual Property filed
by or on behalf of Seller, (iii) all Internet domain names registered/owned by
Seller; (iv) all trade names presently or previously used by Seller (or any
predecessors); (v) material unregistered Intellectual Property owned or used by
Seller and (vi) all licenses or similar Contracts to which Seller is a party,
either as licensee or licensor, for Intellectual Property. Seller owns and
possesses all right, title and interest to, or have the right to use pursuant to
a valid and enforceable license, all of the Purchased Intellectual Property, and
such Purchased Intellectual Property constitute all of the Intellectual Property
used in, related to or necessary for the operation of the Business as presently
conducted and as presently proposed to be conducted, free and clear of all
Liens. All necessary registration, maintenance, renewal, and annuity fees and
Taxes have been paid, and all necessary documents have been filed, in connection
with Seller's registered Intellectual Property. In connection with the
registered Intellectual Property, all registrations are in force and all
applications for the same are pending in good standing and without any adverse
Proceedings pending or threatened by or before the Governmental Body in which
the registrations or applications are issued or filed.

     (b) Except as set forth on the Intellectual Property Schedule, (i) neither
the conduct of the business of Seller nor Seller's creation, use, license or
other transfer of Seller's Intellectual Property violate, infringe or
misappropriate any other person's Intellectual Property, (ii) there have been no
claims made against Seller asserting the violation, invalidity, misuse or
unenforceability of any of the Intellectual Property owned or used by Seller
and, to Seller's Knowledge, there is no basis for any such claim, (iii) Seller
has not received any notices of, and Seller has no Knowledge of any facts which
indicate a likelihood of, any violation, infringement or misappropriation by, or
conflict with, any third party with respect to any Intellectual Property
(including any offer, demand or request that Seller license any rights from a
third party) and (iv) none of the Intellectual Property of Seller has been
declared invalid or unenforceable or been limited in any material respect by any
official body, and no such Proceedings are pending or threatened. The
transactions contemplated by this Agreement and the other Transaction Documents
will not have a material effect on Buyer's right, title or interest in and to
the Purchased Intellectual Property, and all of such Purchased Intellectual
Property shall be owned or available for use by Buyer on identical terms and
conditions immediately after the Closing.

(c)      Privacy.   (i)      The Intellectual Property Schedule identifies and
describes each electronic or  

other database containing (in whole or in part) any Personal Information that is
maintained by or for the Seller. Seller has provided true and accurate
information to Buyer of (A) the types of Personal Information collected by or
for the Seller; (B) the purposes for which such Personal Information was
collected, used and disclosed by the Seller; and (C) how such Personal
Information is collected, processed, used, stored, secured, and/or disclosed.
Further, all Personal Information is collected, processed, used, stored,
secured, and/or disclosed by or on behalf of the Seller for reasonable and
legitimate purposes in compliance with all applicable Laws, and the Seller's
privacy policies and security policies. Further, the Seller has used
commercially reasonable efforts to ensure that all third parties that have
provided Personal Information to the Seller have collected, processed, used,
stored, secured, and/or disclosed such Personal Information in compliance with
all applicable Laws. Except as disclosed in the Intellectual Property Schedule,
the Seller has not transferred Personal Information to any agent or other third
party service provider for any purpose. All information protection agreements
entered into by the Seller with an agent or third party service provider are
disclosed in the Intellectual Property Schedule.

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(ii)      Except as disclosed in the Intellectual Property Schedule:     (A)
there are no current or unresolved requests for access to Personal  

Information, nor is the Seller the subject of a complaint, audit, review,
investigation or inquiry or similar proceeding, made under any Privacy Law;

     (B) no order has been issued, nor any recommendations made, by any Privacy
Commissioner or other data protection authority, in respect of the Seller, the
Business or its authorized agents, of Personal Information held by or on behalf
of the Seller or of any privacy practices or procedures of the Seller;

     (C) the Seller has not been charged with or convicted of an offence for
non-compliance with or breach of any Privacy Law, has not been fined or
otherwise sentenced for non-compliance with or breach of any Privacy Law, nor
has the Seller settled any prosecution short of conviction for non-compliance
with or breach of any Privacy Law;

     (D) the Seller has not received any notice of judgment or commencement of
proceedings of any nature, or experienced any search and seizure related to, any
breach or alleged breach of or non-compliance with any Privacy Law; and

     (E) there are no facts or circumstances that could give rise to breach or
alleged breach of, or non-compliance with, any Privacy Law.

     3.18 Computer and Technology Security. Seller has taken all reasonable
steps to safeguard the information technology systems utilized in the operation
of the Business, including the implementation of procedures to ensure that such
information technology systems are free from any disabling codes or
instructions, timer, copy protection device, clock, counter or other limiting
design or routing and any "back door," "time bomb," "Trojan horse," "worm,"
"drop dead device," "virus," or other software routines or hardware components
that in each case permit unauthorized access or the unauthorized disablement or
unauthorized erasure of data or other software by a third party, and to date
there have been no successful unauthorized intrusions or breaches of the
security of the information technology systems.

3.19      Employees.     (a) The Employees Schedule contains the following
information (i) the names and  

titles (to the extent applicable) of all employees of Seller together with the
location of their employment and whether the employees are employed on a full
time or part time basis; (ii) the date each employee was hired; (iii) a list of
all written employment contracts between the Seller and each employee, and sets
out any termination entitlements; (iv) the rate of current compensation for each
employee; (v) bonus eligibility and any bonuses paid since the end of the
Seller’s last completed financial year, sick and paid-time-off; (vi) particulars
of all other material terms and conditions of employment or engagement of the
employees; and (vii) for each employee, whether such employee is active or
inactive, and if inactive, the reason inactive, the nature of any benefits to
which such inactive employee is entitled, and any expected return to work date.
No employee is employed under a contract which cannot be terminated by the
Seller with appropriate notice.

     (b) With respect to Seller and the Business: (i) there is and within the
past five (5) years has been no collective bargaining agreement or relationship
with any labour organization; (ii) within the past five (5) years no labour
organization or group of employees has filed any representation petition or made
any written or oral demand for certification or voluntary recognition; (iv) to
Seller's Knowledge, no union organizing or decertification efforts are underway
or threatened and no other

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question concerning representation exists; (v) within the past five (5) years no
labour strike, picketing, lockout, work stoppage, slowdown, or other material
labour dispute has occurred, and none is underway or, to Seller's Knowledge,
threatened that might adversely affect the Business or lead to an interruption
of operations and the Seller has not committed any unfair labour practice nor is
there any pending or threatened complaint regarding any alleged unfair labour
practice; (vi) there is and within the past five (5) years there has been no
employment-related Proceeding, charge, demand, complaint, grievance,
investigation, inquiry or obligation of any kind, pending or threatened in any
forum, relating to an alleged violation or breach by Seller (or its or their
officers or directors) of any Law or contract; and (vii) no employee or agent of
Seller has committed any act or omission giving rise to material liability for
any violation or breach identified in subsection (vi) above.

     (c) Except as set forth on the Employees Schedule, (i) there are no
employment contracts or severance agreements (including change in control
agreements) with any employees of Seller or the Business; (ii) there are no
written personnel policies, rules, or procedures applicable to employees of
Seller or the Business; (iii) there is no commitment or agreement to increase
wages or bonuses or modify the terms and conditions of employment of any
employee; and (iv) to Seller's Knowledge, no executive or manager (A) has any
intention to terminate his or her employment with the Business, or (B) is a
party to any confidentiality, non-competition/non-solicitation, proprietary
rights or other such agreement between such employee and any Person or entity
that would be material to the ongoing performance of such employee's employment
duties, or the ability of such Person or entity (including the Buyer) to employ
such employee. True and complete copies of all such documents have been provided
to Buyer prior to the date of this Agreement. All bonuses and other incentives
earned by any employees of Seller for calendar year 2011 have been paid in full.

     (d) With respect to the transactions contemplated by the Transaction
Documents, any notice required under any law or collective bargaining agreement
has been given, and all bargaining obligations with any employee representative
have been, or prior to the Closing Date will be, satisfied.

     (e) Except as set forth on the Employees Schedule, the Seller is in
material compliance with all applicable Laws respecting labour relations,
employment practices and standards, terms and conditions of employment, wages
and hours, occupational health and safety, immigration, whistle-blowing, human
rights, pay equity and workers’ compensation relating to the employees and there
are no outstanding claims, complaints, grievances, investigations, prosecutions
or orders under such legislation.

     (f) The Seller has provided all inspection reports under Occupational
Health and Safety legislation relating to the Business. There are no outstanding
inspection orders nor any pending or threatened charges made under any
Occupational Health and Safety legislation relating to the Business. There have
been no fatal or critical accidents within the last five (5) years which might
lead to charges involving the Seller under Occupational Health and Safety
legislation. The Seller has complied in all respects with any orders issued
under Occupational Health and Safety legislation. There are no appeals of any
orders under Occupational Health and Safety legislation relating to the Business
that are currently outstanding.

     (g) Within the last five (5) years and currently there are no notices of
assessment, provisional assessment, reassessment, supplementary assessment,
penalty assessment or increased assessment (for the purpose of this paragraph
(g), collectively, “assessments”) or any other communications related thereto
which the Seller has received from any workers’ compensation or workplace safety
and insurance board or similar authorities in any jurisdictions where the
Business is carried on and there are no assessments which are unpaid on the date
hereof or which will be unpaid at the Closing Date and there are no facts or
circumstances which may result in an increase in liability to the

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Business from any applicable workers’ compensation or workplace safety and
insurance legislation, regulations or rules after the Closing Date. The Seller’s
accident cost experience relating to its business is such that there are no
pending or possible assessments and there are no claims or potential claims
which may adversely affect the Business’ accident cost experience. The Workers’
Compensation Schedule contains an accurate and complete listing of all of
Seller's workers’ compensation Liabilities, experiences and matters and the
corresponding amounts with respect to such workers’ compensation Liabilities,
experiences and matters.

3.20      Employee Benefit Plans.     (a) The Employee Benefits Schedule
contains a true and complete list of all  

employee benefit plans, agreements and arrangements (whether oral or written,
formal or informal, funded or unfunded) maintained for, available to or
otherwise relating to any employees of Seller or in respect of which the Seller
is obligated to contribute or is in any way liable, whether or not insured and
whether or not subject to any Law, including bonus, deferred compensation,
incentive compensation, share purchase, share appreciation, share option,
severance and termination pay, hospitalization, health and other medical
benefits, life and other insurance, dental, vision, legal, long-term and
short-term disability, salary continuation, vacation, supplemental unemployment
benefits, education assistance, profit-sharing, mortgage assistance, employee
loan, employee assistance and pension, retirement and supplemental retirement
plans, programs and agreements (including any defined benefit or defined
contribution pension plan and any group registered retirement savings plan), but
excluding any statutory plans with which the Seller is required to comply,
including the Canada/Quebec Pension Plan and plans administered pursuant to
applicable provincial health tax, workers’ compensation and workers’ safety and
employment insurance legislation (“Employee Benefit Plans”). Seller has
delivered or made available to Buyer true and complete copies of the document or
documents establishing the current terms of each Employee Benefit Plan. Seller
has not made any promise, proposal or commitment, whether legally binding or
not, to create any additional Employee Benefit Plan or to modify or change any
existing Employee Benefit Plan that would affect any Employee.

     (b) Each Employee Benefit Plan has been administered in compliance in all
material respects with, and is in good standing under, Applicable Law and the
terms of the Employee Benefit Plan and any associated funding arrangement. All
assets held in any funding arrangement associated with an Assignable Employee
Benefit Plan have been held, invested and otherwise dealt with in compliance in
all material respects with Applicable Law and the terms of the Employee Benefit
Plan and the associated funding arrangement.

     (c) No Employee Benefit Plan is a “registered pension plan” as that term is
defined in subsection 248(1) of the Income Tax Act.

     (d) No Employee Benefit Plan provides benefits, including death or medical
benefits (whether or not insured), with respect to employees or former employees
of the Seller beyond retirement or other termination of service, other than
coverage required by Applicable Law or benefits the full cost of which is borne
by the employees or former employees (or their respective beneficiaries).

     3.21 Environmental and Safety Matters. Except as set forth in the
Environmental and Safety Schedule attached hereto:

    (a)    Seller has complied and is in compliance with all Environmental and
Safety  Requirements;                (b)    without limiting the generality of
the foregoing, Seller has obtained and complied 

with, and is in compliance with, all permits, licenses and other authorizations
that may be required

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pursuant to Environmental and Safety Requirements for the occupation of the
Business and all such permits, licenses and authorizations are transferrable to
(without cost, penalty or delay) and may be relied upon by Buyer for lawful
operation of the Business on and after the Closing without reissuance or other
governmental action. A list of all such permits, licenses and other
authorizations is set forth on the Environmental and Safety Schedule;

     (c) Seller has not received any written or oral notice, report or other
information regarding any Liabilities, including any material investigatory,
remedial or corrective obligations, relating to the Business or the Real
Property and arising under Environmental and Safety Requirements and Seller is
not the subject of any pending, or, to Seller's Knowledge, threatened litigation
or Proceeding in any forum, judicial or administrative, involving a demand for
damages, injunctive relief, penalties or other potential remedy with respect to
Liability under, or violations of any, Environmental and Safety Requirements;

     (d) to Seller’s Knowledge, none of the following exists at any property or
facility owned or operated by Seller:

(i)      underground storage tanks or surface impoundments;   (ii)     
asbestos-containing material in any form or condition;   (iii)      materials or
equipment containing polychlorinated biphenyls; or   (iv)      landfills,
surface impoundments, or disposal areas;   (e)      neither Seller nor any of
its predecessors or Affiliates has treated, stored,  

disposed of, arranged for or permitted the disposal of, transported, handled, or
released any substance, including any hazardous substance, or owned or operated
any facility or property, so as to give rise to Liabilities (including any
obligations for response costs, natural resource damages or lawyers’ fees),
including pursuant to Environmental and Safety Requirements;

     (f) neither any of the Transaction Documents nor the consummation of the
transactions contemplated by any of the Transaction Documents will result in any
obligations for site investigation or cleanup, or notification to or Consent of
Government Bodies or third parties, pursuant to any of the so-called
"transaction-triggered" or "responsible property transfer" Environmental and
Safety Requirements;

     (g) Seller has not, either expressly or by operation of law, assumed or
undertaken any Liability (including any obligation for corrective or remedial
action) of any other Person relating to Environmental and Safety Requirements;

     (h) without limiting the foregoing, no facts, events or conditions relating
to the past or present facilities, properties or operations of Seller or the
Business will prevent, hinder or limit continued compliance with Environmental
and Safety Requirements by Seller or Buyer, give rise to any investigatory,
remedial or corrective obligations pursuant to Environmental and Safety
Requirements, affect the value of any property, or give rise to any other
Liabilities pursuant to Environmental and Safety Requirements, (including any
relating to onsite or offsite releases or threatened releases of hazardous
materials, substances or wastes, personal injury, property damage or natural
resource damage); and

     (i) Seller has furnished to Buyer all environmental audits, reports and
other material environmental documents relating to its, or its Affiliates' or
predecessors' past or current properties, facilities or operations which are or
have been in its possession or under its control.

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     3.22 Product and Service Warranty; Liability. Each product manufactured,
sold, leased, or delivered by, and each service rendered by, Seller has been in
conformity with all applicable contractual commitments and all express and
implied warranties, and Seller has no Liability (and there is no basis for any
present or future Proceeding against any of them giving rise to any such
Liability) for replacement or repair thereof, or provision of additional
services in respect thereof, or other damages in connection therewith. No
product manufactured, sold, leased, or delivered by, and no service rendered by,
Seller is subject to any guaranty, warranty, or other indemnity beyond the
applicable standard terms and conditions of sale, lease or services Contract
(all of which terms and conditions are contained on the Warranty Schedule
attached hereto). Seller has no Liability (and there is no basis for any present
or future Proceeding against any of them giving rise to any Liability) arising
out of any injury to individuals or property as a result of the ownership,
possession, or use of any product manufactured, sold, leased, or delivered by,
or any services rendered by, Seller.

     3.23 Suppliers. Set forth on the Suppliers Schedule is a complete and
correct consolidated list of the ten (10) largest suppliers of the Business (in
terms of the dollar volume of purchases made during the last fiscal year). No
such supplier has canceled or otherwise terminated, or threatened to cancel or
otherwise terminate its relationship with Seller or the Business. Neither Seller
nor any Principal has received written notice or have any Knowledge that any
supplier intends to cancel or adversely modify its relationship with Seller or
the Business.

     3.24 Insurance. The Insurance Schedule contains a list of each insurance
policy maintained by Seller with respect to the Business setting forth the type
of coverage therefor, and each such policy is in full force and effect as of the
Closing Date. Seller is not in default with respect to its obligations under any
insurance policy maintained by it, and Seller has not been denied insurance
coverage. The insurance coverage of Seller is of a kind and type routinely
carried by corporations of similar size engaged in similar lines of business.
Except as set forth on the Insurance Schedule, Seller does not have any
self-insurance or co-insurance programs or any pending claims.

     3.25 Brokerage. Except as set forth on the Brokerage Schedule (it being
understood that all fees, expenses, commissions or other amounts set forth on or
required to be set forth on the Brokerage Schedule shall be borne entirely by
Seller), no broker, finder or similar agent has been employed by or on behalf of
any Seller or any Principal (or any of their respective Affiliates), and there
are no claims for brokerage commissions, finders' fees, bonuses or similar fees
or compensation in connection with the transactions contemplated by the
Transaction Documents based on any arrangement or other Contract made by or on
behalf of Seller, the Principals or their Affiliates.

     3.26 Affiliate Transactions. Except as set forth on the Affiliated
Transactions Schedule, no officer, director, manager, employee, shareholder or
Affiliate of Seller or a Principal, nor any individual related by blood,
marriage or adoption to any such individual nor any entity in which any such
Person or individual maintains an Investment (a) owns any beneficial interest in
Seller, (b) is a party to any agreement, Contract, commitment or transaction
with Seller or (c) has any interest in any property used by Seller (including
any Intellectual Property). The Affiliated Transactions Schedule sets forth each
individual employed by Seller that is related by blood, marriage or adoption to
any officer, director, manager, or Affiliate of Seller.

3.27      Competition Act and Investment Canada Act.     (a) Neither the value
of the Purchased Assets in Canada, nor the gross revenues from  

sales generated from such Purchased Assets, exceeds C$77 million, in either
case, as determined in accordance with the Competition Act and the regulations
thereunder.

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     (b) The Business does not carry on a “cultural business” as defined in the
Investment Canada Act and the value of the Purchased Assets, calculated in the
manner prescribed by the Investment Canada Act and the regulations thereunder,
does not exceed C$330 million.

     3.28 Names and Locations. Except as set forth on the Names and Locations
Schedule, during the five (5)-year period prior to the execution and delivery of
this Agreement, neither Seller or Principal has used any name or names under
which it has invoiced account debtors, maintained records concerning its assets
or otherwise conducted business, other than the exact name under which it has
executed this Agreement. All of the tangible assets and properties of Seller are
located at the locations set forth on the Leased Real Property Schedule. During
the five-year period ending on the date of this Agreement, the Persons
comprising the Business have not reincorporated or reorganized in a different
jurisdiction.

     3.29 Disclosure. Neither this Agreement nor any other Transaction Document
(including the representations and warranties contained herein and therein), nor
any of the schedules, exhibits or certificates to be delivered in connection
herewith or therewith contain any untrue statement of a material fact or omit a
material fact necessary to make the statements contained herein or therein not
misleading or that might, if disclosed, affect the decision of a Person offering
to acquire the Business, the Purchased Assets or the Assumed Liabilities. No
notice given pursuant to Section 5.6 will contain any untrue statement or omit
to state a material fact necessary to make the statements therein or in this
Agreement, in light of the circumstances in which they were made, not
misleading.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF BUYER

     4.1 Buyer Representations. As an inducement to Seller to enter into this
Agreement, Buyer hereby represents and warrants to Seller, as of the date hereof
and as of the Closing Date, that:

     (a) Corporate Organization and Power. Buyer has full corporate power and
authority to enter into this Agreement and the other Transaction Documents to
which it is a party and to perform its obligations hereunder and thereunder.

     (b) Authorization. The execution, delivery and performance of this
Agreement and the other Transaction Documents to be executed and delivered by
Buyer and, subject to satisfaction of the conditions to Closing set forth in
Section 2.1 above, the consummation of the transactions contemplated hereby and
thereby have been duly and validly authorized by all requisite corporate action
on the part of Buyer and no other corporate proceedings on the part of Buyer are
necessary to authorize the execution, delivery or performance of this Agreement
or the other Transaction Documents. Each of this Agreement and the other
Transaction Documents to be executed and delivered by Buyer constitute a valid
and binding obligation of Buyer, enforceable in accordance with its respective
terms, except as such enforceability may be subject to bankruptcy, insolvency,
moratorium, reorganization, arrangement, voidable preference, fraudulent
conveyance and other similar Laws relating to or affecting the rights of
creditors and except as the same may be subject to the effect of the general
principles of equity.

     (c) No Violation. Buyer is not subject to or obligated under its Constating
Documents, any Law, or any agreement or instrument, or authorization of a
Government Body, or subject to any Order, which would be breached or violated by
its execution, delivery or performance of this Agreement and the other
Transaction Documents to which it is a party, except to the extent valid
Consents have been obtained.

(d) Governmental Bodies and Consents. Buyer is not required to submit any
notice,

report or other filing with any Governmental Body in connection with the
execution or delivery by it of

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the Transaction Documents or the consummation of the transactions contemplated
thereby. No Consent of any Governmental Body is required to be obtained by Buyer
in connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby.

     (e) Investment Canada Act. Buyer is a “WTO Investor” for purposes of the
Investment Canada Act, as that term is defined in the Investment Canada Act and
the regulations thereunder.

     (f) Brokerage. Except for North Point Advisors, there are no claims for
brokerage commissions, finders' fees or similar compensation in connection with
the transactions contemplated hereby based on any arrangement or agreement made
by or on behalf of Buyer.

ARTICLE V

COVENANTS PRIOR TO CLOSING

     5.1 General. Subject to the terms of this Agreement, Seller and the
Principals shall cooperate with Buyer and use their commercially reasonable
efforts to cause the Closing to occur as promptly as practicable (including to
cause the conditions to Buyer's obligation to consummate the transactions
contemplated by the Transaction Documents as set forth in Section 2.1 to be
satisfied). In furtherance of the foregoing:

     (a) Seller shall, and the Principals shall cause Seller to, (i) obtain as
promptly as reasonably practicable all Consents required to be obtained from any
third party to consummate the transactions contemplated hereby and (ii) promptly
provide all necessary notices to such third parties (with Buyer first approving
such Consents and notices before they are distributed);

     (b) Seller shall, and the Principals shall cause Seller to, use
commercially reasonable efforts to prevent the entry, enactment or promulgation
of any threatened or pending Order that would adversely affect the ability of
the parties to consummate the transactions contemplated by the Transaction
Documents, and to lift or rescind any Order adversely affecting the ability of
the parties to consummate the transactions contemplated by the Transaction
Documents; and

     (c) Seller shall, and the Principals shall cause Seller to, use
commercially reasonable efforts to assist Buyer in obtaining the financing
contemplated by Buyer in order to consummate the transactions contemplated by
the Transaction Documents by promptly preparing and providing all financial and
other information as Buyer or their financing sources may reasonably request
with respect to the Business, Seller or any of the transactions contemplated by
the Transaction Documents, including but not limited to financial projections
relating to the foregoing.

     5.2 Access and Investigation. Between the date of this Agreement and the
Closing, on reasonable notice Seller shall (a) afford Buyer and its
Representatives and prospective financing sources and their Representatives
(collectively, the "Buyer’s Advisors") reasonable access to Seller's personnel,
Representatives, business relations, suppliers, partners, assets, properties,
Contracts, Books and Records and other documents and data, (b) furnish Buyer and
the Buyer’s Advisors with copies of all such Contracts, Books and Records, and
other documents and data as Buyer may reasonably request, (c) furnish Buyer and
the Buyer’s Advisors with such additional financial, legal, tax, operating, and
other data and information as Buyer may reasonably request; and (d) furnish
Buyer and the Buyer’s Advisors detailed store plans in the format maintained by
Seller. Prior to and for a reasonable period of time following the Closing,
Seller will cause Kevin Kirby on behalf of the Seller and not in his personal
capacity to assist with the completion of audits and tax returns covering any
period prior to the Closing, including if requested signing representation
letters, each in a form and substance reasonably acceptable

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to the Seller and Kevin Kirby on behalf of the Seller, to the Buyer’s public
accountants in connection with such audit.

     5.3 Affirmative Covenants of Seller and the Principals. Except as expressly
consented to in writing by Buyer, prior to the Closing, Seller shall, and the
Principals shall cause Seller to, and in the case of Section 5.3(a), 5.3(b) and
5.3(c), the Principals also shall:

     (a) conduct the Business only in the Ordinary Course of Business,
including, the payment of Indebtedness, collection of receivables, purchase of
Inventory, provision of services, payment of payables and incurrence of and
payment or financing of capital expenditures (and notify Buyer of any event or
occurrence not in the Ordinary Course of Business);

     (b) preserve intact the current business organization of Seller, keep
available the services of the current officers, employees, and agents of Seller,
and maintain the relations and goodwill with suppliers, customers, landlords,
creditors, employees, agents, and others having business relationships with the
Business and/or Seller;

     (c) confer with Buyer concerning operational matters of a material nature,
and without limiting the obligations contained in Section 5.2, otherwise report
periodically to Buyer concerning the status of the business, operations, and
finances of Seller;

     (d) maintain the assets of Seller (including the Real Property) in good
operating condition and repair, maintain insurance reasonably comparable to that
in effect on the date hereof, maintain Inventory, supplies and spare parts at
customary operating levels consistent with past practices, replace in accordance
with past practice any inoperable, worn out or obsolete assets with assets of
comparable quality and, in the event of a casualty, loss or damage to any of the
property or assets of Seller prior to the Closing for which Seller is insured,
either repair or replace such assets or, if Buyer agrees, transfer the proceeds
of such insurance to Buyer;

     (e) maintain books, accounts and records in accordance with past custom and
practice and GAAP as used in the preparation of the Latest Balance Sheet and the
financial statements described in Section 3.6;

     (f) maintain in full force and effect the existence of all Intellectual
Property and cooperate with Buyer in addressing any chain of title issues or
other issues relating to Intellectual Property;

     (g) comply with all requirements of Law and all Contract obligations
applicable to Seller or the Business and pay all applicable Taxes as and when
such become due and payable; and

(h) promptly following the date of this Agreement (and in any event within
twenty

(20)      days), transfer all Inventory held by any third party to the Home
Office/Warehouse or the Stores. 5.4 Negative Covenants of Seller and the
Principals. Prior to the Closing, unless Buyer  

otherwise agrees in writing, Seller shall not, and the Principals shall cause
Seller to not, and in the case of subsection 5.4(a), 5.4(b), and 5.4(c), the
Principals also shall not:

(a) take or omit to take (or commit to take or omit to take) any action that
could be

reasonably expected to have a Material Adverse Effect;

(b) sell, assign, lease, license, transfer, pledge, encumber or otherwise
dispose of any

shares of capital stock (or other equity interests) of Seller;

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     (c) amend, modify, supplement, replace or otherwise change (or authorize
any of the foregoing in respect of) any Constating Documents of the Seller;

     (d) with respect to any Real Property used by the Business that is not
subject to a formal Lease on the date hereof, enter into any written Lease
containing any term less favourable to Seller (or Buyer after the Closing Date)
than the terms disclosed to Buyer prior to the date hereof; or

     (e) except as otherwise expressly permitted by this Agreement, take (or
commit to take) or omit to take any action, engage in any practice or enter into
any transaction or Contract that would require disclosure on the Developments
Schedule pursuant to Section 3.10 hereof (assuming no prior disclosures thereon
and disregarding any dollar thresholds contained in Section 3.10) if each
representation and warranty contained therein were remade as of the time of such
action or omission; provided, however Seller may distribute available cash to
the Principals prior to the Closing.

     5.5 Exclusivity. In consideration of the covenants, commitments and
obligations of Buyer contained herein, and Buyer’s willingness to continue to
pursue the transactions contemplated by the Transaction Documents and to spend
the time and resources necessary for such purpose, Seller shall, and the
Principals shall cause Seller to, and the Principals shall immediately cease and
terminate any solicitation, initiation, encouragement, activity, discussion or
negotiation with any person or entity with respect to any proposed, potential or
contemplated Alternative Transaction. Further, unless and until this Agreement
is terminated in accordance with its terms or until the Closing, as applicable
(the "Exclusivity Period"), Seller shall not, and the Principals shall cause
Seller to not, and the Principals also shall not directly or indirectly, (a)
solicit or initiate, or encourage the submission of, any proposal or indication
of interest relating to an Alternative Transaction, (b) participate in any
discussion or negotiation regarding, or furnish to any person or entity any
information with respect to, or take any other action to facilitate any
inquiries or the making of any proposal that constitutes, or may reasonably be
expected to lead to, any Alternative Transaction or (c) authorize, approve,
consummate, engage in, or enter into any agreement with respect to, any
Alternative Transaction. Seller and the Principals shall immediately notify
Buyer in writing of any solicitation of information, proposal, indication of
interest or other communication (and the terms of such) of which it may become
aware relating to a possible Alternative Transaction.

5.6      Notification.     (a) Prior to the Closing, Seller and each Principal
shall promptly (and in any event  

within 24 hours) notify Buyer in writing if Seller or such Principal is or
becomes aware of any fact or condition that causes or constitutes a breach of
any representations and warranties of Seller and/or the Principals as of the
date of this Agreement, or if such Seller or Principal becomes aware of the
occurrence after the date of this Agreement of any fact or condition that would
cause or constitute a breach of any such representation or warranty had such
representation or warranty been made as of the time of occurrence or discovery
of such fact or condition (each such pre-Closing notification, a
"Notification"). Each Notification shall describe in detail, to the extent known
to Seller or such Principal, the facts or conditions giving rise to the breach,
and shall specifically identify the representation and warranty (or
representations and warranties) implicated (including subparts thereof). Seller
and the Principals shall promptly provide subsequent Notifications to Buyer to
the extent they become aware of additional information with respect to any
matter contained in any Notification. For the avoidance of doubt, no
Notification to Buyer shall constitute an update to, modification to or a cure
of any provision of this Agreement (including the representations and warranties
therein) or any schedules or exhibits thereto.

     (b) Prior to the Closing, Seller and each Principal shall promptly (and in
any event within 24 hours) notify Buyer in writing of any breach by Seller or
any Principal of any covenant contained in this Agreement. For the avoidance of
doubt, no such written notification to Buyer shall constitute a cure of any
covenant breach.

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5.7      Covenants of Buyer. Prior to the Closing, Buyer shall:     (a)
cooperate with Seller and use its commercially reasonable efforts to cause the  

conditions to Seller's obligation to close to be satisfied (including the
execution and delivery of all agreements contemplated hereunder to be so
executed and delivered and the making and obtaining of all third party and
governmental filings, Consents, releases and terminations);

     (b) promptly (once it obtains knowledge thereof) inform Seller in writing
of any fact or condition known to Buyer that would cause or constitute a breach
of the representations and warranties contained in ARTICLE IV or any breach of
any covenant hereunder by Buyer; and

     (c) to the extent that it is provided access to any Personal Information
that is maintained by or for the Seller in connection with this Agreement, only
use and disclose that Personal Information for purposes related to the
prospective business transaction contemplated hereby; provided that if Closing
does not occur, Buyer shall destroy or return to Seller any of the foregoing
Personal Information that is about the employees, customers, directors, officers
and shareholders of Seller.

ARTICLE VI

ADDITIONAL AGREEMENTS

6.1      Employee and Related Matters.     (a) Transferred Employees. As of the
Closing Date, each of the Senior Management  

Employees who are actively employed by Seller in connection with the Business as
of the Closing Date and who are identified on the Transferred Employees Schedule
(the "Active Senior Management Employees") shall be offered employment by Buyer
on terms and conditions in the aggregate substantially similar to the Active
Senior Management Employee as he or she currently enjoys with Seller. As of the
Closing Date, each of the employees of Seller (other than Senior Management
Employees) who are actively employed by Seller in connection with the Business
as of the Closing Date and who are identified on the Transferred Employees
Schedule (the "Active Employees") shall be offered employment by Buyer on terms
and conditions set forth on the Offer Letter Schedule. Buyer shall not offer
employment to any employees of Seller who, as of the Closing Date, are absent
from active employment with Seller as of the Closing Date for any reason
(including as a result of layoff, leave of absence, maternity leave, disability,
illness or injury) (the "Inactive Employees" and, together with the Active
Employees and Active Senior Management Employees, the "Business Employees")
unless the Inactive Employee was absent from active employment with Seller as of
the Closing Date solely on account of a short-term disability, and such Inactive
Employee qualifies to be actively employed by Buyer and applies for employment
with Buyer within a period of ninety (90) days following the Closing Date.
Seller shall assist Buyer in sending offer of employment letters to Active
Employees offering employment as set forth on the Offer Letter Schedule. The
Active Employees who accept employment with Buyer by signing the offer letter,
the Active Senior Management Employees who continue their employment with Buyer,
and Inactive Employees who are hired by Buyer as provided in this Section 6.1,
shall be referred to herein as "Transferred Employees." The Business Employees
who are not offered employment with, or who do not accept employment from, Buyer
shall be referred to herein as "Non-Transferred Employees." Nothing in this
Agreement shall limit Buyer 's ability to modify the salary or wage level or
terminate the employment of any Transferred Employee at any time after the
Closing Date and for any reason, including without cause, confer upon any
employee of Seller any rights or remedies, or constitute or be considered an
amendment to any Seller Employee Benefit Plans. Buyer shall not have any
Liability with respect to any Non-Transferred Employee or former employee of
Seller. The obligations of Buyer with respect to any Transferred Employee shall
commence on (and not before) the date such Transferred Employee starts work for
the Buyer. Seller shall, on the request of the Buyer (but on no more than three

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occasions) and on the first Business Day prior to the Closing Date, provide
Buyer with a supplement to the Transferred Employees Schedule to indicate the
changes in the Active Employees and Active Senior Management Employees as of
such time; provided, however, that no employee shall be added to the Transferred
Employees Schedule unless such employee is actively employed by a Store and was
hired or returned to active employment with Seller (including as a result of a
return from leave of absence, disability, illness or injury) after the date of
this Agreement in the ordinary course of business, consistent with Seller’s past
practices, and on terms and conditions of employment consistent with Seller’s
usual business practices.

     (b) Up to thirteen (13) weeks after the Closing Date, but not later, Buyer
shall offer employment to Inactive Employees on terms and conditions set forth
on the Offer Letter Schedule, such offer of employment to be made (i) in the
case of Inactive Employees who are absent for medical reasons, if such Inactive
Employees provide to Buyer, within such thirteen (13) week period, reasonable
medical evidence that they are fit for work, or (ii) in the case of Inactive
Employees who are on a non-medical leave of absence, when such leave expires if
it expires within such thirteen (13) week period.

     (c) Buyer shall not have any Liability, including notice of termination,
termination pay, severance pay with respect to any Non-Transferred Employee or
former employee of Seller, whether under contract, common law, statute or
otherwise, and the Seller shall indemnify and save the Buyer Indemnified Parties
harmless in respect of all such obligations. Except to the extent permitted to
be included in Closing Net Working Capital, the Seller shall be responsible for
all wages, bonuses, vacation pay, sick leave, termination and severance pay and
other remuneration benefits (collectively, “Wages”) for all of the employees
earned or accrued up to and including the Closing Date, whether or not paid or
payable before or after the Closing Date. Buyer shall be responsible for all
Wages with respect to the Inactive Employees accrued and earned after they start
work for Buyer.

     (d) Seller shall provide promptly to Buyer, at Buyer's request, any
information or copies of personnel records (including addresses, dates of birth,
dates of hire and dependent information) relating to the Transferred Employees
or relating to the service of Transferred Employees to Seller (and predecessors
of Seller, as applicable) prior to the Closing Date. Seller and Buyer shall each
cooperate with the other and shall provide to the other such documentation,
information and assistance as is reasonably necessary to effect the provisions
of this Section 6.1.

     (e) Except to the extent included in Closing Net Working Capital, the
Seller shall pay to all Transferred Employees the Employee Liabilities as of the
Closing Date. Except to the extent included in Closing Net Working Capital,
Buyer shall not have any Liability for any Employee Liabilities.

     (f) On Closing, the Seller shall deliver a purchase certificate issued by
the workers’ compensation or workplace safety and insurance board or similar
authorities in any jurisdiction where the Business is carried on which will
certify to the Buyer that there are no assessments that are unpaid at the time
of Closing and any applicable clearance certificate issued by the workers’
compensation or workplace safety and insurance board.

6.2      Press Release and Announcements.     (a) Prior to or in connection with
the Closing, Seller and the Principals shall not  

issue any press release or public announcement concerning this Agreement or the
transactions contemplated hereby without obtaining the prior written approval of
Buyer. Seller and the Principals acknowledge that Buyer or its Affiliates may be
required to disclose this Agreement and the terms hereof pursuant to the
applicable rules of the United States Securities Exchange Commission (the “SEC”)
or the New York Stock Exchange.

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     (b) The terms of this Agreement shall not be disclosed or otherwise made
available to the public by Seller or the Principals, and copies of this
Agreement shall not be publicly filed or otherwise made available to the public
by Seller or the Principals, except where such disclosure, availability or
filing is in the reasonable judgment of the Seller required by applicable Law
and then only to the extent required by such Law.

     6.3 Expenses. Except as otherwise expressly provided for in this Agreement,
Buyer will pay the fees and expenses incurred or authorized by Buyer (and its
Affiliates) incident to this Agreement and in preparing to consummate and
consummating the transactions contemplated by this Agreement, including
reasonable out-of-pocket costs and expenses (including the out-of-pocket fees,
disbursements, and other charges of its legal counsel, consultants, accountants
and other representatives) (the “Buyer Defined Expenses”). The Seller and the
Principals shall bear their own fees and expenses, and the fees and expenses of
the Seller, incurred or authorized by the Seller, the Principals or their
respective Affiliates incident to this Agreement, in preparing to consummate and
consummating the transactions contemplated by this Agreement, and in obtaining
any Third-Party Approvals, including reasonable out-of-pocket costs and expenses
(including the out-of-pocket fees, disbursements, and other charges of their
respective legal counsel, consultants, accountants and other representatives)
(the “Seller Defined Expenses”). If the Closing does not occur, each Party to
this Agreement will pay its own fees and expenses incurred incident to this
Agreement, except, that, (i) if the Closing does not occur and this Agreement is
terminated and the Seller or the Principals have breached any representation,
warranty, covenant or agreement contained in this Agreement or any of the
conditions set forth in Section 2.1 was not satisfied, then the Seller shall
reimburse Buyer for the Buyer Defined Expenses and any other losses incurred by
Buyer as a result of such breach; and (ii) if the Closing does not occur and
this Agreement is terminated and Buyer has breached any representation,
warranty, covenant or agreement contained in this Agreement or any of the
conditions set forth in Section 2.2 was not satisfied, then Buyer shall
reimburse the Seller for the Seller Defined Expenses and any other losses
incurred by Seller as a result of such breach.

6.4      Further Transfers; Transition Assistance.     (a) Seller shall execute
and deliver such further instruments of conveyance and  

transfer and take such additional action as Buyer may reasonably request to
effect, consummate, confirm or evidence the transfer to Buyer of the Purchased
Assets, including the Purchased Intellectual Property, the assumption by Buyer
of the Assumed Liabilities and the conduct by Buyer of the Business (including
with respect to obtaining and maintaining all licenses, permits, authorizations,
accreditations and other Consents necessary or desirable in connection
therewith), and Seller shall execute such documents as Buyer may reasonably
request to assist Buyer in preserving or perfecting its rights in the Purchased
Assets and its ability to conduct the Business. Buyer shall execute and deliver
such further instruments of assumption and take such additional action as Seller
may reasonably request to effect, confirm or evidence the assumption by Buyer of
the Assumed Liabilities. Following the Closing, Seller and Buyer agree to
cooperate with each other and to provide each other with all information and
documentation reasonably necessary to permit the preparation and filing of (i)
the audited financial statements required by the rules and regulations of the
SEC and (ii) all Tax Returns with respect to the Business as set forth in
Section 6.8.

     (b) No Principal nor Seller shall in any manner take or cause to be taken
any action that is designed or intended to discourage, or would be reasonably
anticipated to have the effect of discouraging, brokers, distributors,
customers, suppliers, referral sources, Governmental Bodies, insurance
companies, lessors, consultants, advisors and other business associates from
maintaining the same business relationships with Buyer or the Business after the
Closing Date as were maintained with the Business prior to the date of this
Agreement. Seller and the Principals agree that subsequent to the

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Closing they shall use commercially reasonable efforts to refer all customer
inquiries with respect to the Business to Buyer.

     (c) After the Closing, Seller shall not interfere with Buyer's collection
efforts and Seller shall permit Buyer to collect, in the name of the Business,
all accounts and notes receivable and to endorse with the name of the Business
for deposit in Buyer's accounts any checks or drafts received in payments
thereof. Seller shall promptly deliver to Buyer any cash, checks or other
property that it may receive after the Closing in respect of any accounts or
notes receivable relating to the Business that were part of the Purchased
Assets.

     (d) In furtherance of the foregoing, if after the Closing a claim with
respect to the Business arises from an occurrence prior to the Closing and such
claim relates to an Assumed Liability then, if Buyer reasonably believes such
claim may be covered by insurance maintained by Seller or any of their
Affiliates (and such insurance policies have not been assigned to Buyer
hereunder), Seller (or their applicable Affiliates) shall, upon the request of
Buyer, seek recovery on behalf of and remit any recovery under such insurance to
Buyer.

     (e) The Parties will use commercially reasonable efforts to cause
Paymentech (or any other applicable credit card processor) to pay Seller for all
credit card settlements accrued prior to the Closing Date and to pay Buyer for
all credit card settlements accrued on or after the Closing Date.

6.5      Guarantee. From and after the date of this Agreement:     (a)
Corporation, an Affiliate of Buyer, hereby irrevocably and unconditionally  

guarantees in favour of the Seller the prompt and complete observance,
performance and payment of (i) the Purchase Price required to be paid by Buyer
at Closing and (ii) the Seller Defined Expenses, if any, required to be paid by
Buyer pursuant to Section 6.3 (collectively, the “Obligations”). Corporation
shall perform the Obligations on written demand by the Seller if Buyer or any of
its nominees, successors or permitted assigns has failed to do so on a timely
basis in accordance with this Agreement.

     (b) Seller must exhaust its recourse against Buyer before being entitled to
payment or performance from Corporation under this Agreement. The rights and
remedies of the Seller under this Section 6.5 are in addition to and not in
substitution for any other rights or remedies which the Seller has at any time
against Buyer or their respective nominees, successors or permitted assigns with
respect to the Obligations, provided, however, that the liabilities and
obligations of Corporation under this Section 6.5 shall not exceed the aggregate
Obligations.

     (c) Corporation’s obligations under Section 6.5 and all rights and benefits
provided by Section 6.5 shall inure to the benefit of the Seller and its
successors and permitted assigns and shall be binding upon Corporation and its
successors and assigns. Notwithstanding anything to the contrary contained in
this Section 6.5, Seller hereby agrees that to the extent Buyer is relieved of
its payment obligations under and pursuant to this Agreement (other than due to
rejection of this Agreement in the context of the bankruptcy or insolvency of
Buyer), Corporation shall be similarly relieved of its Obligations under this
Section 6.5.

6.6      Noncompetition and Nonsolicitation. From and after the Closing:     (a)
Noncompetition. Each Principal and Seller hereby acknowledges that it is  

familiar with the trade secrets and other confidential information relating to
the Business. Each Principal and Seller acknowledges and agrees that Buyer would
be irreparably damaged if it were to provide services to or otherwise
participate in the business of any Person competing with the Business and that
any such competition by such Principal or Seller would result in a significant
loss of goodwill by the

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Business and Buyer. Each Principal and Seller further acknowledges and agrees
that the covenants and agreements set forth in this Section 6.6(a) were a
material inducement to Buyer to enter into this Agreement and to perform its
obligations hereunder, and that Buyer would not obtain the benefit of the
bargain set forth in this Agreement as specifically negotiated by the parties
hereto if such Principal or Seller breached the provisions of this Section
6.6(a). In consideration of the mutual covenants provided for, and the
consideration paid or conveyed to, the Principals and Seller pursuant to the
transactions contemplated hereby, none of the Principals, Seller or any of their
Subsidiaries or Affiliates shall (and each Principal shall cause Seller to not)
engage (whether as an owner, operator, stockholder, partner, joint venturer,
manager, employee, officer, director/manager, consultant, advisor,
Representative, or otherwise) directly or indirectly in the Business during the
period beginning on the Closing Date and ending on the third anniversary of the
Closing Date (the "Restricted Period") within a 20 kilometer radius of any
location in which the Business is conducted as of the Closing Date; provided
that ownership of less than 3% of the outstanding stock of any publicly traded
corporation shall not be deemed to be engaging solely by reason thereof in the
Business; provided further that the foregoing restriction will apply to any
jurisdiction in which the Principals or Seller conduct, or have plans to
conduct, an internet or mail-order business in connection with the Business, as
of the Closing Date. The parties hereto agree that the covenant set forth in
this Section 6.6(a) is reasonable with respect to its duration, geographical
area, and scope. If the final judgment of a court of competent jurisdiction
declares that any term or provision of this Section 6.6(a) is invalid or
unenforceable, the parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or phrases,
or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified after the expiration of the time within
which the judgment may be appealed.

     (b) Nonsolicitation. Each Principal and Seller agrees that, during the
Restricted Period, it will not (and each Principal shall cause Seller and its
Affiliates to not) (i) directly or indirectly contact, approach, or solicit for
the purpose of offering employment to (whether as an employee, consultant,
agent, independent contractor, or otherwise) or actually hire any Transferred
Employee, without the prior written consent of Buyer or (ii) induce or attempt
to induce any customer, supplier or other business relation of the Business into
any business relationship that might materially harm Buyer or the Business, or
discourage such customer, supplier or business relation from doing business with
Buyer or any of its Affiliates after the Closing.

     (c) Confidentiality. As an owner of the Purchased Assets or an Affiliate of
Seller, as the case may be, Seller and each Principal has had access to and
contributed to information and materials of a highly sensitive nature (including
Confidential Information) of Seller, its current and future, direct and
indirect, subsidiaries, parents, and related entities. Seller and each Principal
agrees that unless he, she or it first secures the written consent of an
authorized Representative of Buyer, such Person shall not (and each Principal
shall cause Seller to not) use for his, her or itself or anyone else, and shall
not disclose to others, any Confidential Information, except to the extent such
use or disclosure is required by Law or any Order (in which event such
Interested Person shall, to the extent practicable, inform Buyer in advance of
any such required disclosure, shall cooperate with Buyer in all reasonable ways
in obtaining a protective Order or other protection in respect of such required
disclosure, and shall limit such disclosure to the extent reasonably possible
while still complying with such requirements). Each such Person shall use
reasonable care to safeguard Confidential Information and to protect it against
disclosure, misuse, espionage, loss and theft.

     (d) Non-Disparagement. After the Closing Date, neither Seller nor any
Principal will, and each of them will cause their respective agents and
Affiliates not to, disparage Buyer,,

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Corporation, the Business, or any of their principal stockholders, directors,
officers, employees, agents or Affiliates.

     (e) Remedy for Breach. Seller and each Principal acknowledges and agrees
that in the event of a breach of any of the provisions of this Section 6.6,
monetary damages shall not constitute a sufficient remedy. Consequently, in the
event of any such breach, Buyer may, in addition to other rights and remedies
existing in its favor and, without limiting the provisions of Section 10.15
hereof, apply to any court of Law or equity of competent jurisdiction for
specific performance and/or injunctive or other relief in order to enforce or
prevent any violations of the provisions hereof, in each case without the
requirement of posting a bond or proving actual damages.

     (f) Seller/Principal Acknowledgement and Agreement. Each of the Seller and
each Principal represents and warrants that he, she or it is familiar with the
covenants not to compete and not to solicit contained herein and is fully aware
of his, her or its obligations hereunder and agrees that the length of time,
scope and geographic coverage of these covenants is reasonable given the
benefits received by him, her or it hereunder.

     6.7 Use of Seller Name. From and after the Closing Date, Seller shall cease
and discontinue all uses of (a) the "Teaopia" name either alone or in
combination with other words; (b) all trademarks, service marks, trade dress,
trade names, corporate names, logos and slogans (and all translations,
adaptations, derivations and combinations of the foregoing) and Internet domain
names that are Purchased Intellectual Property and (c) any trademarks, service
marks, trade dress, trade names, corporate names, logos and slogans confusingly
similar to any of the foregoing Immediately following the Closing Date, Seller
shall file, and shall cause their Affiliates to file, all documentation
necessary to change their respective names so as to comply with the requirements
of this Section 6.7 and shall, and shall cause their Affiliates to, remove from
their respective assets, properties, stationery, literature and Internet
websites (to the extent not included in the Purchased Assets) any and all such
names.

6.8      Tax Matters.     (a) All amounts payable by Buyer to Seller pursuant to
this Agreement do not  

include any value-added, sales, use, consumption, multi-staged, personal
property, customs, excise, stamp, transfer, or similar taxes, duties, or
charges, (collectively, “Sales Taxes”), and all such Sales Taxes are,
notwithstanding anything to the contrary in applicable legislation, the
responsibility of and for the account of Seller. With respect to any Sales Taxes
exigible pursuant to Part IX of the Excise Tax Act

(“ETA”) and any equivalent provincial value added tax ("GST/HST”), the Parties
agree to make the election described at Section 6.8(c) such that no GST/HST will
be collected from Buyer. In the event that such election is found to be invalid
or otherwise inapplicable by the applicable Government Body, Seller agrees to
pay all resulting GST/HST (plus any applicable interest and penalties) directly
to the appropriate Governmental Body. Seller shall present to Buyer, on an
invoice for such GST/HST amounts, sufficient particulars to allow Buyer to claim
recovery of such GST/HST amounts by way of input tax credits (“ITCs”) or other
applicable means under Part IX of the ETA or other applicable Law. Buyer shall
make good faith efforts, acting in a commercially reasonable manner, to claim
and recover expeditiously from the appropriate Government Body, such amounts of
GST/HST by way of ITC claim or other available means under Part IX of the ETA or
other applicable Law. To the extent that Buyer is successful in recovering such
amounts of GST/HST from the appropriate Governmental Body, whether by credits or
offsets against, or reductions of, tax liabilities, or by refunds, Buyer agrees
to reimburse Seller for such recovered amounts of GST/HST within ten (10) days
of such recovery. Such indemnity/reimbursement is not subject to any Caps,
Thresholds or other restrictions and shall survive indefinitely. If Buyer is
assessed directly or indirectly for, or otherwise is required to pay, any
amounts of GST/HST in respect of the transactions described herein, and is
unable to recover such amounts of

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GST/HST in the ordinary course by way of ITC claim or other available means
under Part IX of the ETA or other applicable Law, Seller and the Principals,
jointly and severally, shall fully indemnify and reimburse Buyer forthwith for
such unrecoverable GST/HST and for any interest, penalties and reasonable
professional fees associated with such unrecovered GST/HST incurred by Buyer.
Such indemnity/reimbursement is not subject to any Caps, Thresholds or other
restrictions and shall survive indefinitely. Notwithstanding the foregoing,
Buyer shall, at Seller’s expense, if so requested by Seller, permit Seller to
contest on behalf of Buyer any assessment (“Assessment”) by any Government Body
against Buyer for GST/HST payable on the transactions described herein, or
disallowance or denial of a claim by Buyer to recover any GST/HST payable on
these transactions. Seller shall have the right, with legal counsel or other
representation of its choice, to determine, in good faith, how to best dispute
the Assessment. To the extent that Seller succeeds in overturning the
Assessment, Buyer shall, within ten (10) days of receipt of the GST/HST and any
associated interest and penalties recovered, reimburse Seller for such amounts
recovered. Such indemnity/reimbursement is not subject to any Caps, Thresholds
or other restrictions and shall survive indefinitely.

     (b) With respect to Sales Taxes other than the GST/HST (“Other Sales
Taxes”) that are exigible in respect of the transactions described in this
Agreement, Seller agrees to report and remit all such Other Sales Taxes in
accordance with the applicable Law, but shall not seek to recover any such
amounts of Other Sales Taxes from Buyer. Buyer agrees to take reasonable steps
to cooperate with Seller to minimize such Other Sales Taxes. If Buyer is
assessed directly or indirectly for, or otherwise pays, amounts of Other Sales
Taxes, Seller and the Principals, jointly and severally, shall fully indemnify
and reimburse Buyer forthwith for such Other Sales Taxes (plus any applicable
interest, penalties and associated professional fees) and such
indemnity/reimbursement is not subject to any Caps, Thresholds or other
restrictions and shall survive indefinitely. Where Seller is not required by Law
or by administration thereof to collect applicable Other Sales Taxes, Seller
agrees to pay to Buyer such amounts, plus any Sales Taxes applicable to such
amounts, as would be necessary for Buyer to report and pay such Other Sales
Taxes directly to the appropriate Governmental Body. To the extent that any
interest, penalties and/or other liabilities result from Buyer’s non-compliance
with its obligations to report and pay such Other Sales Taxes, the Buyer shall
be solely responsible for these liabilities.

     (c) Buyer and Seller acknowledge that under this Agreement, Seller is
transferring a business or part of a business, constituting the Business, that
was carried on by Seller, and Buyer is acquiring hereunder ownership, possession
or use of all or substantially all the property that is reasonably necessary for
Buyer to carry on the Business as a business. Seller and Buyer agree to make the
joint election(s) in prescribed form pursuant to section 167 of the ETA (and any
equivalent provincial legislation) such that no GST/HST is payable by Buyer in
respect of the purchase of the Purchased Assets. Buyer shall file such
election(s) with the appropriate Government Body within the time required under
subsection 167(1.1) of the ETA (and any equivalent provincial legislation).

     (d) For purposes of the GST/HST under Part IX of the ETA, Seller is
registered as number 82375 2274.

     (e) For the purposes of the GST/HST under Part IX of the ETA, Buyer is a
registered as number is 80274 9002 RT0001.

     (f) Seller and Buyer shall elect jointly in prescribed form under Section
22 of the Income Tax Act (and under any corresponding provision of applicable
provincial Law) as to the sale of the Accounts Receivable and shall designate in
such election(s) an amount equal to the portion of the Purchase Price allocated
to such assets determined in accordance with Section 1.5 hereof as the
consideration paid by the Buyer therefore.

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     (g) Seller and each Principal shall (and each Principal shall cause each
Seller to) each cooperate fully with, and as and to the extent reasonably
requested by, Buyer in connection with the preparation and filing of any Tax
Return, statement, report or form or any audit, litigation or other Proceeding
with respect to Taxes. Such cooperation shall include the retention of all Tax
Returns (including supporting work papers) and (upon Buyer's request) the
provision of records and information which are reasonably relevant to any such
audit, litigation or other Proceeding or any tax planning. Seller and each
Principal agrees to (and each Principal shall cause Seller to) (1) retain all
Tax Returns, Books and Records with respect to Tax matters pertinent to Seller
relating to any taxable period or portion thereof ending on or prior to the
Closing Date in such Person's possession at the time of Closing, and to abide by
all record retention agreements entered into with any taxing authority, and (2)
give Buyer reasonable written notice prior to destroying or discarding any such
Books and Records and, if the other party so requests, such equityholder shall
allow Buyer to take possession of such Tax Returns, Books and Records.

     (h) For the avoidance of doubt, in the case that a Tax claim is made
against Buyer which would, if successful, result in an indemnification of Buyer
by Seller or the Principals under Section 8.2(a) or 8.2(b), the procedures set
forth in Section 8.2(e) shall apply.

     (i) Tax Clearance Certificates. At or before the Closing Date, Seller will
deliver to Buyer a duplicate copy of a certificate issued pursuant to section 6
of the Retail Sales Tax Act (Ontario) and will deliver any other documents or
evidence required under any equivalent or corresponding provisions contained in
any similar legislation of any province in which the Seller carries on business
or has a fixed place of business, in connection with the completion of the
transactions provided in this Agreement (all such certificates and documents to
collectively be referred to as “Tax Clearance Certificates”).

     6.9 Use of Permits. Seller agrees to (and each Principal shall cause Seller
to) make available for use by Buyer all of the Permits, to the extent the
Permits are registered in the name of Seller, and to use commercially reasonable
efforts to make available for use to Buyer all of the Permits that are not in
the name of Seller, including, but not limited to, the Permits set forth on the
Permits Schedule.

6.10      Use of Personal Information.     (a) Seller covenants that the
disclosure of Personal Information by it to Buyer at  

Closing is limited to Personal Information that relates directly to the part of
the business that is to be sold to Buyer at Closing.

     (b) Buyer covenants that the Personal Information disclosed to it by Seller
at Closing shall only be used or disclosed by it for the same purposes for which
it was collected, used or disclosed by Seller, or such other use or disclosure
as is permitted by Privacy Law.

     (c) Buyer agrees to notify the employees, customers, directors, officers
and shareholders whose Personal Information is disclosed to it by the Seller
that:

(i)      the Closing has taken place; and   (ii)      the Personal Information
about them has been disclosed to the Buyer.  

     6.11 Transition Services Agreement. Prior to Closing, Buyer may ask Seller
to provide additional services under the Transition Services Agreement, of a
nature similar to the services provided by Seller, or its affiliates, to the
Business prior to the Closing. If so, Seller shall propose a fee for such

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services and Buyer and Seller shall each make commercially reasonable efforts to
reach agreement on the terms on which such additional services will be provided.

ARTICLE VII

TERMINATION

7.1      Termination. This Agreement may be terminated at any time prior to the
Closing:     (a)      by the mutual written consent of Buyer and Seller; or    
(b)      by Buyer if (i) there has been a material, breach or misstatement of
representation  

or warranty or material breach of a covenant by Seller, Buyer or any Principal
of the representations, warranties or covenants set forth in this Agreement
and/or the schedules and exhibits hereto, which, in the case of any breach of
covenant hereunder, has not been cured within ten (10) business days after
written notification thereof by Buyer (provided, however, that, no cure period
will be permitted for any such breach that by its nature cannot be cured);
provided that any representation, warranty, covenant or agreement of Seller or
any Principal contained herein that is subject to a materiality, Material
Adverse Effect or similar qualification will not be so qualified for purposes of
determining the existence of any breach thereof on the part of Seller or such
Principal) or (ii) events have occurred which have made it impossible to satisfy
a condition precedent to Buyer’s obligations to consummate the transactions
contemplated hereby prior to the date set forth in Section 7.1(d) (unless
Buyer's willful or knowing breach of this Agreement has caused the condition to
be unsatisfied); or

     (c) by Seller if (i) there has been a material breach or misstatement of
representation or warranty or material breach of a covenant by Buyer of the
representations, warranties or covenants set forth in this Agreement and/or the
schedules and exhibits hereto, which, in the case of any breach of covenant
hereunder, has not been cured within ten (10) business days after written
notification thereof by Seller (provided, however, that, no cure period will be
permitted for any such breach that by its nature cannot be cured); provided that
any representation, warranty, covenant or agreement of Buyer contained herein
that is subject to a materiality, Material Adverse Effect or similar
qualification will not be so qualified for purposes of determining the existence
of any breach thereof on the part of Buyer or (ii) events have occurred which
have made it impossible to satisfy a condition precedent to Seller's obligations
to consummate the transactions contemplated hereby prior to the date set forth
in Section 7.1(d) (unless Seller's or any Principal's willful or knowing breach
of this Agreement has caused the condition to be unsatisfied); or

     (d) by either Buyer or Seller if the Closing has not been consummated by
August 5, 2012; provided, however, that neither Seller nor Buyer shall be
entitled to terminate this Agreement pursuant to this Section 7.1(d) if such
party's breach of this Agreement has prevented the consummation of the
transactions contemplated by this Agreement at or before such time.

     In the event of termination by Seller or Buyer pursuant to Sections 7.1(b),
7.1(c) or 7.1(d), written notice thereof (describing in reasonable detail the
basis therefor) shall promptly be delivered to the other party.

     7.2 Effect of Termination. In the event of termination of this Agreement by
either Buyer or Seller as provided above, this Agreement shall immediately
become void and of no further force and effect, except that the provisions of
Section 7.1, Section 7.2, Section 6.2, Section 6.3 and ARTICLE X (together with
any defined terms herein to the extent used in any of the foregoing provisions)
shall continue in full force and effect and except that nothing in this ARTICLE
VII shall be deemed to release any party from any Liability for any breach by
such party of the terms and provisions of this Agreement

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prior to such termination or to impair the right of any party to compel specific
performance by another party of its obligations under this Agreement. Each of
Buyer’s and Seller's right of termination under Section 7.1 is in addition to
any other rights it may have under this Agreement or otherwise, and the exercise
of a right of termination will not be an election of remedies.

ARTICLE VIII

INDEMNIFICATION

     8.1 Survival of Representations and Warranties; Covenants. The
representations and warranties in this Agreement and in any certificate,
instrument or writing delivered by Buyer, any Principal or Seller to any other
party in connection with this Agreement shall survive the Closing as follows:

     (i) the representations and warranties in Sections 3.1 (Organization), 3.2
(Power; Authorization of Transactions), 3.3 (Absence of Conflicts) 3.4
(Subsidiaries); 3.14(a) (Condition and Sufficiency of Assets), 3.25 (Brokerage)
(each, a “Seller Fundamental Representation”) shall not terminate:

     (ii) the representations and warranties in Sections 4.1(a) (Corporate
Organization and Power) and 4.1(b) (Authorization) (each, a “Buyer Fundamental
Representation”) shall not terminate;

     (iii) the representations and warranties in Sections 3.16 (Tax Matters),
3.20 (Employee Benefit Plans) and 3.21 (Environmental and Safety Matters) shall
terminate on the 60th day after the expiration of the applicable statute of
limitations (including any extensions thereto to the extent that such statute of
limitations may be tolled); and

     (iv) all other representations and warranties shall terminate on the date
that is fifteen (15) months following the Closing Date;

provided that each representation or warranty, and the related indemnification
rights and other available remedies with respect thereto, shall survive the time
at which it would otherwise terminate pursuant to this Section 8.1 (until fully
resolved) if notice of an inaccuracy or breach or potential inaccuracy or breach
thereof is given to (A) Seller, in the case of a representation or warranty made
by Seller or any Principal or (B) Buyer, in the case of a representation or
warranty made by Buyer. The representations and warranties in this Agreement and
in any certificate, instrument or writing delivered by Buyer, any Principal or
Seller to any other party in connection with this Agreement, and the rights of
any party in connection with a breach or inaccuracy thereof, shall in no event
be affected by (A) any investigation, inquiry or examination made by, for or on
behalf of Buyer, any Principal or Seller, (B) the actual or constructive
knowledge of any of Buyer, any Principal or Seller, or any of Buyer's, any
Principal's or Seller's Representatives or (C) the acceptance by Buyer, any
Principal or Seller of any certificate or opinion hereunder. All covenants and
agreements of the parties contained in this Agreement shall survive the Closing
indefinitely or for the period explicitly specified therein.

8.2      Indemnification.     (a) Indemnification of Seller for Benefit of
Buyer. Seller shall indemnify Buyer and  

its Affiliates, members, officers, managers, employees, agents, Representatives,
successors and permitted assigns (collectively, the "Buyer Indemnified Parties")
and save and hold each of them harmless against and pay on behalf of or
reimburse such Buyer Indemnified Parties as and when incurred for any and all
Losses which any such Buyer Indemnified Party may suffer, sustain or become
subject to, as a result of,

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in connection with, relating or incidental to or by virtue of any breach of any
representation or warranty, other than a Seller Fundamental Representation, of
any Principal or Seller under this Agreement or in any certificate, instrument
or writing delivered by any Principal or Seller to Buyer in connection with this
Agreement (in each case disregarding, for purposes of determining the inaccuracy
or breach thereof and the amount of Losses relating thereto, any qualifications
as to materiality, Material Adverse Effect, or qualifications of similar import
contained in, or otherwise directly or indirectly applicable to, such
representation or warranty); provided that Seller shall not have Liability under
this Section 8.2(a) in excess of $6,000,000 (the "Cap") (other than with respect
to the representations contained in Section 3.15 (Property)) and unless the
aggregate of all Losses under this Section 8.2(a) for which the Seller would,
but for this proviso, be liable exceeds on a cumulative basis an amount equal to
$100,000 (the "Threshold") (other than with respect to the representations
contained in Section 3.15 (Property)), at which point Seller will be obligated
to indemnify the Buyer Indemnified Parties for all such Losses from the first
dollar of such Losses (i.e., not just the amount in excess of the Threshold),
but not in excess of the Cap (it being understood that the Cap and Threshold
shall not apply to the indemnity obligations under Section 8.2(b) or in respect
of the representations contained in Section 3.15 (Property)).

     (b) Indemnification by Seller and Principals for Benefit of Buyer. Each
Principal and Seller shall jointly and severally indemnify the Buyer Indemnified
Parties and save and hold each of them harmless against and pay on behalf of or
reimburse such Buyer Indemnified Parties as and when incurred for any and all
Losses which any such Buyer Indemnified Party may suffer, sustain or become
subject to, as a result of, in connection with, relating or incidental to or by
virtue of:

     (i) any breach of any Seller Fundamental Representation of any Principal or
Seller under this Agreement or in any certificate, instrument or writing
delivered by any Principal or Seller to Buyer in connection with this Agreement
(in each case disregarding, for purposes of determining the inaccuracy or breach
thereof and the amount of Losses relating thereto, any qualifications as to
materiality, Material Adverse Effect, or qualifications of similar import
contained in, or otherwise directly or indirectly applicable to, such
representation or warranty);

     (ii) any non-fulfillment or breach of any covenant, agreement or other
provision by Seller or any Principal under this Agreement or the Transaction
Documents;

     (iii) any Liability that is an Excluded Liability (including, for the
avoidance of doubt, any such Liabilities, or related Liabilities, that become
Liabilities of Buyer or any Affiliate of Buyer by operation of Law) and any
Liability related to an Excluded Asset; or

     (iv) any third party claim based upon, resulting from or arising out of the
business, operations, properties, assets or obligations of Seller or any of its
Affiliates (other than the Purchased Assets or Assumed Liabilities) conducted,
existing or arising on or prior to the Closing Date.

     (c) Indemnification for Benefit of Seller. Buyer shall indemnify Seller and
their Affiliates, stockholders, officers, directors/managers, employees, agents,
Representatives, successors and permitted assigns (collectively, the "Seller
Indemnified Parties") and save and hold each of them harmless against and pay on
behalf of or reimburse each Seller Indemnified Party as and when incurred any
Losses that the Seller Indemnified Parties may suffer, sustain or become subject
to, as the result of, in connection with, relating or incidental to or by virtue
of (i) any breach of any representation or warranty of Buyer under this
Agreement or in any certificate, instrument or writing delivered by Buyer to
Seller in connection with this Agreement (in each case disregarding, for
purposes of determining the inaccuracy or breach thereof and the amount of
Losses relating thereto, any qualifications as to materiality, Material Adverse
Effect, Knowledge or qualifications of similar import contained in, or otherwise
directly or indirectly applicable to, such representation or warranty) or (ii)
any nonfulfillment or breach of any

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covenant, agreement or other provision by Buyer under this Agreement or the
Transaction Documents; provided that Buyer shall have no Liability under clause
(i) above in excess of the Cap (other than with respect to the Buyer Fundamental
Representations) and unless the aggregate of all Losses relating thereto for
which Buyer would, but for this proviso, be liable exceeds on a cumulative basis
an amount equal to the Threshold (other than with respect to the Buyer
Fundamental Representations), at which point Buyer shall be obligated to
indemnify the Seller Indemnified Parties for all such Losses from the first
dollar of such Losses (i.e., not just the amount in excess of the Threshold),
but not in excess of the Cap (it being understood that the Cap and Threshold
shall not apply to the indemnity obligations under clause (ii) above or in
respect of any Buyer Fundamental Representations).

     (d) Manner of Payment. Any indemnification of the Buyer Indemnified Parties
pursuant to this Section 8.2 shall be paid on behalf of a Principal or Seller by
wire transfer of immediately available funds from such Principal or Seller,
respectively, to an account designated by Buyer, within fifteen (15) days after
the determination thereof. Any indemnification of the Seller Indemnified Parties
pursuant to this Section 8.2 shall be effected by wire transfer of immediately
available funds from Buyer to an account designated by Seller, within fifteen
(15) days after the determination thereof. Any such indemnification payments
shall include interest at the Applicable Rate calculated on the basis of the
actual number of days elapsed over 365, from the date any such Loss is suffered
or sustained to the date of payment.

     (e) Defense of Third Party Claims. Any party making a claim for
indemnification under this Section 8.2 (an "Indemnitee") shall notify the
indemnifying party (an "Indemnitor") of the claim in writing promptly after
receiving written notice of any action, lawsuit, Proceeding, investigation or
other claim against it (if by a third party), describing the claim, the amount
thereof (if known and quantifiable), and the basis thereof; provided that the
failure to so notify an Indemnitor shall not relieve the Indemnitor of its
obligations hereunder except to the extent that (and only to the extent that)
such failure shall have caused the Losses for which the Indemnitor is obligated
to be greater than such Losses would have been had the Indemnitee given the
Indemnitor prompt notice hereunder. Any Indemnitor shall be entitled to
participate in the defense of such action, lawsuit, Proceeding, investigation or
other claim giving rise to an Indemnitee's claim for indemnification at such
Indemnitor's expense, and at its option (subject to the limitations set forth
below) shall be entitled to assume the defense thereof by appointing a
nationally recognized and reputable counsel reasonably acceptable to the
Indemnitee to be the lead counsel in connection with such defense; provided
further, that:

     (i) the Indemnitee shall be entitled to participate in the defense of such
claim and to employ counsel of its choice for such purpose; provided that the
fees and expenses of such separate counsel shall be borne by the Indemnitee
(other than any fees and expenses of such separate counsel that are incurred
prior to the date the Indemnitor effectively assumes control of such defense
which, notwithstanding the foregoing, shall be borne by the Indemnitor);

     (ii) the Indemnitor shall not be entitled to assume control of such defense
and shall pay the fees and expenses of counsel retained by the Indemnitee if (A)
the claim for indemnification relates to or arises in connection with any
criminal Proceeding, action, indictment, allegation or investigation; (B) the
Indemnitee reasonably believes, based on written advice from a nationally
recognized and reputable counsel, the action, lawsuit, investigation, Proceeding
or other claim giving rise to such claim for indemnification would be materially
detrimental to or materially injure the Indemnitee's reputation or future
business prospects; (C) the claim seeks an injunction or equitable relief
against the Indemnitee, (D) upon petition by the Indemnitee, the appropriate
court rules that the Indemnitor failed or is failing to vigorously prosecute or
defend such claim; or (E) the Indemnitee reasonably believes, based on written
advice from a nationally recognized and reputable counsel, that the Loss
relating to such claim for

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indemnification could exceed the maximum amount that such Indemnitee could then
be entitled to recover under the applicable provisions of this Section 8.2; and

     (iii) if the Indemnitor shall control the defense of any such claim, the
Indemnitor shall obtain the prior written consent of the Indemnitee (which shall
not be unreasonably withheld, delayed or conditioned) before entering into any
settlement of a claim or ceasing to defend such claim.

If the Indemnitee shall control the defense of any such claim, the Indemnitee
shall obtain the prior written consent of the Indemnitor (which shall not be
unreasonably withheld, delayed or conditioned) before entering into any
settlement of a claim or ceasing to defend such claim.

(f)      Other Indemnification Provisions.   (i)      Except as set forth in
Section 6.8 and for remedies that cannot be waived as a  

matter of law and injunctive and provisional relief (including specific
performance) and except for claims of fraud or willful misconduct, if the
Closing occurs, the rights of indemnity set forth in this ARTICLE VIII are the
sole and exclusive remedy of each party in respect of any misrepresentation,
breach of warranty or breach of covenant by the other party hereunder but it
shall not be the sole remedy for a breach by a party of any other agreement
executed in connection with this Agreement. This ARTICLE VIII shall remain in
full force and effect in all circumstances and shall not be terminated by any
breach (fundamental, negligent or otherwise) by any party of its
representations, warranties or covenants hereunder or under any documents
delivered pursuant hereto or by any termination or rescission of this Agreement
by any party.

     (ii) All indemnification payments under this ARTICLE VIII shall be treated
as an adjustment to the Purchase Price by the parties for Tax purposes, unless
otherwise required by Law.

     (iii) Nothing in this Agreement shall limit any Person's right to seek and
obtain any relief (including equitable relief) to which any Person shall be
entitled or to seek any remedy on account of any Person's fraudulent, criminal
or intentional misconduct.

     (iv) Each Principal hereby agrees that he, she or it will not make any
claim for indemnification against Buyer by reason of the fact that prior to
Closing he, she or it was a director/manager, officer, employee, or agent of
Seller or was serving at the request of any such entity as a partner, trustee,
director, manager, officer, employee, or agent of another entity (whether such
claim is for judgments, damages, penalties, fines, costs, amounts paid in
settlement, losses, expenses, or otherwise and whether such claim is pursuant to
any statute, Organizational Document, agreement, or otherwise) with respect to
any Proceeding brought by Buyer against such Principal (whether such Proceeding
is pursuant to this Agreement, Law, or otherwise).

ARTICLE IX

DEFINITIONS

     9.1 Definitions. For purposes of this Agreement, the following terms shall
have the meanings set forth below:

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     "Accounts Receivable" means all notes and accounts receivable of Seller
(other than credit card settlements) that are reflected on the Latest Balance
Sheet or on the accounting records of Seller as of the Closing Date and to be
reflected on the Closing Balance Sheet.

     "Affiliate" or "Affiliates" means, with respect to a specified Person, any
other Person that, directly or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, the specified
Person. For purpose of the foregoing, "controls," "controlling," "controlled by"
and "under common control with" means the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of a
Person, whether through ownership of voting securities, by Contract, or
otherwise.

     "Alternative Transaction" means any (i) reorganization, dissolution,
liquidation or recapitalization of or involving Seller or the Business, (ii)
merger, consolidation, share exchange or acquisition of or involving Seller or
the Business, (iii) sale of any material amount of (or any significant) assets
of Seller or the Business, (iv) direct or indirect purchase, sale or other
disposition of any capital stock or other equity interests of Seller or the
Business, or any tender offer or exchange offer, that if consummated would
result in any person beneficially owning 5% or more of any class of equity
securities of Seller (or any successor of Seller), (v) similar transaction or
business combination involving Seller or its capital stock (or other equity
interests) or the Business or assets or (vi) other transaction the consummation
of which would prevent, impede or delay the consummation of the transactions
contemplated by the Transaction Documents.

     "Applicable Rate" means, as of the date of determination, the rate per
annum equal to the prime rate of interest then reported by The Wall Street
Journal.

     “Assumed Vendor Contracts” means the vendor contracts set forth on the
Assumed Vendor Contracts Schedule, to the extent any such vendor contract
remains unfulfilled as of the Closing Date, in an amount not to exceed, in the
aggregate, €237,271 plus C$477,644.

     "Closing Net Working Capital" means the Net Working Capital of the Business
as of the opening of business on the Closing Date as shown on the Closing
Statement.

     "Closing Payment" means an amount in cash equal to $26,887,500, minus an
amount equal to the amount by which Estimated Closing Net Working Capital (as
determined pursuant to Section 1.3(b)) is less than C$1,000,000 minus the Escrow
Amount.

"Competition Act" means the Competition Act (Canada).

     "Confidential Information" means all information of a confidential or
proprietary nature (whether or not specifically labeled or identified as
"confidential"), in any form or medium, that relates to the products, services
or research or development of Seller or their respective suppliers,
distributors, customers, independent contractors or other business relations.
Confidential Information includes, but is not limited to, the following: (i)
internal business information (including information relating to strategic and
staffing plans and practices, business, training, marketing, promotional and
sales plans and practices, cost, rate and pricing structures and accounting and
business methods); (ii) identities of, individual requirements of, specific
contractual arrangements with, and information about, Seller's suppliers,
distributors, customers, independent contractors or other business relations and
their confidential information; (iii) trade secrets, know-how, compilations of
data and analyses, techniques, systems, research, records, reports, manuals,
documentation, models, data and data bases relating thereto; (iv) inventions,
innovations, improvements, developments, methods, designs, analyses, drawings,
reports and all similar or related information (whether or not patentable); and
(v) other Intellectual Property.

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     "Consent" means any approval, consent, release, filing, exemption,
accreditation, qualification, ratification, registration, waiver, or other
authorization, and any permit or notification required to be obtained from,
filed with or delivered to any Person (including any Consent issued, granted,
given, or otherwise made available by or under the authority of any Governmental
Body or pursuant to any Law).

     “Constating Documents” means the incorporating instrument and by-laws of
any Person and any other similar governing document adopted or filed in
connection with the creation, formation or organization of any Person and any
amendment, modification, supplement or replacement to any of the foregoing.

     "Contract" means any agreement, contract, commitment, understanding,
obligation, promise, guarantee, instrument, lease, license or other undertaking
(including any amendments, supplements, modifications thereto and whether
written or oral, whether express or implied and whether contingent or absolute)
to which any Person is a party or by which any Person is bound or to which any
assets of a Person are subject (and includes each matter or item required to be
disclosed on the Contracts Schedule pursuant to Section 3.11(a)).

     “Employee Liabilities” means any Liability to any Transferred Employees for
vacation pay, sick pay or salary, including any bonuses, severance payments,
contributions to any Employee Benefit Plan or payments arising as a result of
the transactions contemplated hereby.

     “Employees Schedule” means the list of employees of the Seller, dated April
[15], 2012, provided by the Seller to Buyer.

     "Environmental and Safety Requirements" means all federal, provincial,
state, local and foreign statutes, regulations, ordinances and other provisions
having the force or effect of law, all judicial and administrative orders and
determinations, all Contract obligations and all common law concerning public
health and safety, worker health and safety, and pollution or protection of the
environment, including all those relating to the presence, use, production,
generation, handling, transportation, treatment, storage, disposal,
distribution, labeling, testing, processing, discharge, release, threatened
release, control, or cleanup of any hazardous materials, substances or wastes,
chemical substances or mixtures, pesticides, pollutants, contaminants, toxic
chemicals, petroleum products or byproducts, asbestos, polychlorinated
biphenyls, noise or radiation.

  "Escrow Agent" means Regions Bank.

     "Escrow Agreement" means the Escrow Agreement by and among Buyer, Seller
and the Escrow Agent dated as of the date hereof in the form of Exhibit C
hereto.

"Escrow Amount" means Two Million Five Hundred Thousand Dollars ($2,500,000).

“Excise Tax Act” means the Excise Tax Act (Canada).

     "GAAP" means generally accepted accounting principles in effect in Canada
from time to time, approved by the Canadian Institute of Chartered Accountants
and as set out in the Handbook of the Canadian Institute of Chartered
Accountants.

     "Governmental Body" means any foreign or domestic: (a) nation, state,
province, county, city, town, village, district, tribal region or other
jurisdiction of any nature; (b) federal, state, province, local, municipal or
other government, including any department, agency or political subdivision
thereof; (c) governmental or quasi-governmental authority of any nature
(including any governmental agency,

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branch, department, official, commission, board, bureau, instrumentality or
entity and any court or other tribunal); (d) multi-national organization or
body; or (e) body exercising, or entitled to exercise, any administrative,
executive, judicial, legislative, police, regulatory, or taxing authority or
power of any nature.

     “Head Office/Warehouse” means the head office and warehouse of the Seller
located at 161 N. Rivermede Road, Suite 5, Concord, Ontario L4K 2V3.

"Income Tax Act" means the Income Tax Act (Canada).

     "Indebtedness" means at a particular time, without duplication, (i) any
indebtedness for borrowed money or issued in substitution for or exchange of
indebtedness for borrowed money, (ii) any indebtedness evidenced by any note,
bond, debenture or other debt security, (iii) any indebtedness for the deferred
purchase price of properties or services with respect to which a Person is
liable, contingently or otherwise, as obligor or otherwise (other than trade
payables incurred in the Ordinary Course of Business that are not more than
ninety (90) days past due based on their invoice date), (iv) any commitment by
which a Person assures a creditor against loss (including contingent
reimbursement obligations with respect to letters of credit), (v) any
indebtedness guaranteed in any manner by a Person (including guarantees in the
form of an agreement to repurchase or reimburse), (vi) any obligations under
capitalized leases with respect to which a Person is liable, contingently or
otherwise, as obligor, guarantor or otherwise, or with respect to which
obligations a Person assures a creditor against loss, (vii) any indebtedness
secured by a Lien on a Person's assets, and (viii) any accrued interest,
penalties, prepayment fees or expenses related to the foregoing.

     "Intellectual Property" means all of the following in any jurisdiction
throughout the world: (i) all inventions (whether patentable or unpatentable and
whether or not reduced to practice), all improvements thereto, and all patents,
patent applications, and patent disclosures, together with all reissuances,
continuations, continuations-in-part, revisions, extensions, and reexaminations
thereof, (ii) all trademarks, service marks, trade dress, logos, slogans, trade
names, corporate names, Internet domain names, and rights in telephone numbers,
together with all translations, adaptations, derivations, and combinations
thereof and including all goodwill associated therewith, and all applications,
registrations, and renewals in connection therewith, (iii) all copyrightable
works, all copyrights, and all applications, registrations, and renewals in
connection therewith, (iv) all mask works and all applications, registrations,
and renewals in connection therewith, (v) all trade secrets and confidential and
proprietary business information (including ideas, research and development,
know-how, formulas, compositions, manufacturing and production processes and
techniques, technical data, designs, drawings, specifications, customer and
supplier lists, pricing and cost information, and business and marketing plans
and proposals), (vi) all computer software (including source code, executable
code, data, databases, and related documentation), (vii) all advertising and
promotional materials, (viii) all other proprietary rights and (ix) all copies
and tangible embodiments thereof (in whatever form or medium).

     "Investment" or "Investments" means (i) any direct or indirect purchase or
other acquisition of any notes, obligations, instruments, stock, securities or
ownership interest (including limited liability company interests, partnership
interests and joint venture interests) of any other Person and (ii) any capital
contribution to any other Person.

"Investment Canada Act" means the Investment Canada Act (Canada).

     "Law" means any federal, state, provincial, local, municipal, tribal,
international, or multinational (including, in respect of each of the foregoing,
any agencies, commissions, departments, committees or political subdivisions
thereof) constitutions, laws, treaties, principles of common law,

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statutes, ordinances, rules, statutes, statutory instruments, requirements,
regulations, ordinances, decrees, injunctions, judgments, codes of conduct or
writs.

     "Lease" means all leases, subleases, licenses, concessions and other
agreements (written or oral), including all amendments, extensions, renewals,
guaranties, and other agreements with respect thereto, pursuant to which Seller
holds any Leased Real Property.

     "Leased Real Property" means all leasehold or subleasehold estates and
other rights to use or occupy any land, buildings, structures, improvements,
fixtures, or other interest in real property held by Seller.

     "Liability" means any liability, debt, obligation, deficiency, Lien, Tax,
penalty, fine, claim, cause of action or other loss, cost or expense of any kind
or nature whatsoever, whether asserted or unasserted, absolute or contingent,
accrued or unaccrued, liquidated or unliquidated, and whether due or become due
and regardless of when asserted.

     “Lien" or "Liens" means any encumbrance of any kind whatever, which secures
payment or the performance of an obligation (registered or unregistered) and
includes a security interest, mortgage, conditional sale, lien (including any
mechanics’ liens), hypothec, pledge, deposit by way of security, hypothecation,
charge, prior claim, security under section 426 or section 427 of the Bank Act
(Canada), voting trust or pooling agreement with respect to publicly traded
securities, any grant of any exclusive licence or sole licence, moral right
(including any conditional sale or other title retention agreement and any lease
having substantially the same effect as any of the foregoing and any assignment
or deposit arrangement in the nature of a security device) and any rights or
privileges capable of becoming any of the foregoing.

     "Loss" means, with respect to any Person, any diminution in value,
consequential or other damage, Liability, demand, claim, action, cause of
action, cost, damage, deficiency, Tax, penalty, fine or other loss or expense,
whether or not arising out of a third party claim, including all interest,
penalties, reasonable lawyers’ fees and expenses and all amounts paid or
incurred in connection with any Proceeding by any third party (including any
Governmental Bodies) against or affecting such Person or which, if determined
adversely to such Person, would give rise to, evidence the existence of, or
relate to, any other Loss and the investigation, defense or settlement of any of
the foregoing.

     "Material Adverse Effect" or "Material Adverse Change" means a change,
event, fact, circumstance or occurrence, or a series of changes, events, facts,
circumstances or occurrences, which, individually or in the aggregate, has had,
will have or could reasonably be expected to have a material adverse effect or
development on (a) the Purchased Assets, Assumed Liabilities or the Business,
including on operations, results of operations, condition (financial or
otherwise), prospects of, or customer, supplier, employee or public relations
of, the Purchased Assets, Assumed Liabilities or the Business, in each case,
whether or not covered by insurance (including as a consequences of the loss or
pending or threatened loss, alone or in the aggregate, of any customer,
supplier, source of referrals, right pursuant to any license, permit,
accreditation or other Contract or Consent) or (b) the ability of any of the
parties hereto to consummate the transactions contemplated by the Transaction
Documents; provided, however, that "Material Adverse Effect" shall not include
any change, event, fact, circumstance or occurrence, or a series of changes,
events, facts, circumstances or occurrences attributable to: (i) any changes,
conditions or effects in the Canadian or United States economies or securities
or financial markets in general; (ii) conditions caused by acts of terrorism or
war (whether or not declared); provided further, however, that any event,
occurrence, fact, condition, or change referred to in clauses (i) or (ii)
immediately above shall be taken into account in determining whether a Material
Adverse Effect has occurred or could reasonably be expected to occur to the
extent that such event, occurrence, fact, condition, or change has, will have or
could reasonably be expected to have a disproportionate effect on (y) the
Business compared to other

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participants in the industries in which the Business operates or (z) the
industries in which the Business operates relative to economy generally in the
United States or Canada.

     "Net Working Capital" means an amount equal to (A) the current assets
included in the Purchased Assets, which shall include (i) Accounts Receivable
(provided such Accounts Receivable are collected within thirty (30) days
following the Closing); (ii) the Cash on Hand (iii) Inventory and (iv) prepaid
expenses, but shall exclude for purposes of such calculation: (x) Prepaid Rent,
(y) deferred income tax assets, and (z) any asset included in the Excluded
Assets; minus (B) the current Liabilities included in the Assumed Liabilities,
which shall include, but not be limited to, (i) accounts payable (except that
which constitutes Indebtedness), (ii) accrued liabilities, which shall include
employee incentive pay only for the last quarter of the 2012 financial year of
the Seller and accrued employee incentive pay up to the Closing Date; provided,
however, if the Closing Date occurs after the end of the first salary payment
date in the 2013 financial year of the Seller, accrued liabilities shall include
only accrued employee incentive pay for the first quarter of the 2013 financial
year of the Seller and all other accrued employee incentive pay shall be paid by
the Seller prior to Closing, and (iii) vacation pay of Transferred Employees
accrued in the ordinary course of business, but shall exclude for purposes of
such calculation: (x) the current portion of any Indebtedness (including accrued
interest expense), (y) deferred income Tax Liabilities and (z) any Liability
included in the Excluded Liabilities; in each case determined in accordance with
GAAP applied in a manner consistent with the preparation of the Latest Balance
Sheet and the Net Working Capital Schedule.

     "Order" means any award, decree, writ, decision, injunction (preliminary or
permanent), temporary restraining order, judgment, order, ruling, subpoena, or
verdict entered, issued, made, or rendered by any court, administrative agency,
or other Governmental Body or by any arbitrator.

     "Ordinary Course of Business" will be deemed from an action taken by a
Person only if: (i) such action is consistent with the past practices of such
Person and is taken in the ordinary course of the normal day-to-day operations
of such Person; (ii) such action is not required to be authorized by the board
of directors of such Person (or by any Person or group of Persons exercising
similar authority) and is not required to be specifically authorized by the
parent company (if any) of such Person; and (iii) such action is similar in
nature and magnitude to actions customarily taken, without any authorization by
the board of directors (or by any Person or group of Persons exercising similar
authority), in the ordinary course of the normal day-to-day operations of other
Persons that are in the same line of business as such Person.

     "Person" means an individual, a partnership (including a limited
partnership and a limited liability partnership), a corporation, a limited
liability company, an association, a joint stock company, an estate, a trust, a
joint venture, labor union, an unincorporated organization or society or other
entity, and including a Government Body, the executors, administrators or other
legal representatives of an individual or of a legal entity acting in such
capacity and any other entity recognized by law, and pronouns have a similarly
extended meaning.

     “Personal Information” means information about an identifiable individual
which is protected by any Privacy Law.

     “Privacy Law” means any applicable Law relating to the protection of
Personal Information including the Personal Information Protection and
Electronic Documents Act (Canada), the Personal Information Protection Act
(Alberta) and the Personal Information Protection Act (British Columbia).

     "Proceeding" means any claim (including but not limited to any claims,
notices or entitlements asserted or tendered pursuant to indemnities that Seller
may have granted or may be deemed

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to have been granted to any third party, whether or not they are the subject of
any formal or actual court, mediation or arbitration action or other dispute
resolution procedure), charge, complaint, action, arbitration, audit, hearing,
investigation, demand, litigation, or suit (whether civil, criminal,
administrative, investigative, or informal and whether at law, in equity or
otherwise) commenced, brought, conducted, or heard by or before, or otherwise
involving, any Governmental Body or arbitrator.

  "Real Property" means the Leased Real Property.

     "Representative" means with respect to a particular Person, any director,
manager, officer, employee, agent, consultant, advisor, or other representative
of such Person, including legal counsel, accountants, and financial advisors.

     "Seller's or Principal's Knowledge" (or words of similar import) shall mean
the actual knowledge of any Principal, Kevin Kirby, Phil Guida, Frank Sturino or
Nelson Cabral, in each case after reasonable consultation with employees of
Seller who are knowledgeable about the representations and warranties of Seller
and Principals set forth herein, and who have shall conducted a reasonable
investigation of files.

     “Senior Management Employees” means Tammy Foss, Brenda Mooney-Storrie,
Frank Sturino and Katherine Wood.

     “Stores” means the locations where the Seller operates a store related to
the Business, and “Store” shall mean any one of them.

     "Subsidiary" means, with respect to any Person, any corporation, limited
liability company, partnership, association, or other business entity of which
(i) if a corporation, a majority of the total voting power of shares of stock
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers, or trustees thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof or (ii) if a limited
liability company, partnership, association, or other business entity (other
than a corporation), a majority of partnership or other similar ownership
interest thereof is at the time owned or controlled, directly or indirectly, by
that Person or one or more Subsidiaries of that Person or a combination thereof
and for this purpose, a Person or Persons own a majority ownership interest in
such a business entity (other than a corporation) if such Person or Persons
shall be allocated a majority of such business entity's gains or losses or shall
be or control any managing director or general partner of such business entity
(other than a corporation). The term "Subsidiary" shall include all Subsidiaries
of such Subsidiary.

     "Tax" or "Taxes" means federal, state, provincial, county, local, foreign
or other income, foreign withholding, gross receipts, ad valorem, franchise,
profits, value added, sales or use, transfer, registration, excise, utility,
Sales Tax, environmental, communications, real or personal property, capital
stock, license, payroll, employment insurance premiums, Canada or Quebec pension
plan contributions, wage or other withholding, employment, social security,
severance, stamp, occupation, alternative or add-on minimum, estimated and other
taxes of any kind whatsoever (including deficiencies, penalties, additions to
tax, and interest attributable thereto) whether disputed or not.

     "Tax Returns" means returns, declarations, reports, claims for refund,
payee statements, information returns or other documents (including any related
or supporting schedules, statements or information) filed or required to be
filed in connection with the determination, assessment or collection of Taxes of
any party or the administration of any Laws relating to any Taxes.

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     "Transaction Documents” means this Agreement (including any schedules and
exhibits hereto), the Bill of Sale and Assignment and Assumption Agreement and
all other conveyance and assumption documents and agreements (including all
Assignments and Assumptions of Leases, subordination, non-disturbance and
attornment agreements, landlord lien waivers and collateral access agreements,
deeds and intellectual property assignments), the Escrow Agreement, the
Releases, the Transition Services Agreement, all other agreements, certificates,
instruments and documents required to be delivered at the Closing together with
all of the other agreements, instruments and documents contemplated herein and
therein.

9.2    Definitional References. Each of the following terms has the meaning
ascribed to such  term on the page set forth opposite such term:               
Term        Page               Term    Page    Accounts Receivable    46       
       Closing Net Working Capital    47  Active Employees    34             
 Closing Payment    47  Active Senior Management Employees    34             
 Closing Statement    5  Affiliate        46               Competition Act   
47  Agreement        1               Confidential Information    47  Allocation
Schedule    9               Consent    47  Alternative Transaction    46       
       Constating Documents    47  Applicable Rate    47               Contract 
  47  Arbitration Notice    57               Corporation    1  Arbitrator       
57               Dispute    57  Assessment        39               Employee
Benefit Plans    27  assessments        26               Employee Liabilities   
48  Assignment and Assumption of Lease    8               Employees Schedule   
48  Assumed Contracts    2               Environmental and Safety Requirements 
  48  Assumed Liabilities    4               Escrow Agent    48  Assumed Vendor
Contracts    47               Escrow Agreement    48  Bill of Sale and
Assignment and Assumption                   Escrow Amount    48  Agreement    7 
             Estimated Closing Net Working Capital    5  Books and Records    3 
             ETA    39  Business        1               Excise Tax Act    48 
Business Employees    34               Excluded Assets    3  Buyer        1     
         Excluded Liabilities    4  Buyer Defined Expenses    36             
 Exclusivity Period    33  Buyer Fundamental Representation    43             
 FCPA    19  Buyer Indemnified Parties    43               Final Closing Net
Working Capital    6  Buyer's Advisors    31               Final Closing
Payment    7  Canadian Food Safety Laws    20               Firm    6  Cap     
  43               GAAP    48  Cash on Hand    1               Governmental
Body    48  CFPOA        19               GST/HST    39  Closing        7       
       Head Office/Warehouse    48  Closing Date    7               Inactive
Employees    34    EAST\48096305.13        53     

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Term    Page    Term    Page    Income Tax Act    48    Seller    1 
Indebtedness    48    Seller Defined Expenses    36  Indemnitee    45    Seller
Fundamental Representation    43  Indemnitor    45    Seller Indemnified
Parties    44  Intellectual Property    49    Seller's or Principal's Knowledge 
  51  Inventory    1    Senior Management Employees    52  Investment    49   
Stores    52  Investment Canada Act    49    Subsidiary    52  ITC    39    Tax
Clearance Certificate    41  Latest Balance Sheet    13    Tax or Taxes    52 
Law    49    Tax Returns    52  Lease    49    Testing Records    20  Leased
Real Property    49    Third-Party Approvals    10  Liability    49   
Threshold    43  Lien    50    Transaction Documents    52  Loss    50   
Transferred Employees    34  Material Adverse Change    50    Transition
Services Agreement    9  Material Adverse Effect    50    Wages    35  Net
Working Capital    50    WTO Investor    30  Nonassignable Contracts    9   
Year-End Balance Sheet    13  Non-Transferred Employees    34         
Notification    33          Objection Notice    5          Obligations    37   
      Order    51          Ordinary Course of Business    51          Other
Sales Taxes    40          Person    51          Personal Information    51     
    Principal    1          Principals    1          Privacy Law    51         
Proceeding    51          Purchase Price    5          Purchased Assets    1   
      Purchased Intellectual Property    2          Real Property    51         
Representative    51          Restricted Period    38          Sales Taxes   
39          SEC    35         

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ARTICLE X

MISCELLANEOUS

     10.1 Bulk Transfer Laws. Buyer does not intend to comply with and hereby
waives compliance by Seller with the provisions of any so called bulk transfer
Laws of any jurisdiction in connection with the sale of the Purchased Assets.
The Principals and Seller agree to jointly and severally indemnify Buyer against
all Liability, damage or expense which Buyer may suffer due to the failure to so
comply or to provide notice required by any such Law.

     10.2 Amendment and Waiver. This Agreement may be amended, or any provision
of this Agreement may be waived, so long as any such amendment or waiver is set
forth in a writing executed by Buyer and Seller. No course of dealing between or
among the parties shall be deemed effective to modify, amend or discharge any
part of this Agreement or any rights or obligations of any party under or by
reason of this Agreement and no failure or delay by any party in exercising any
right or privilege hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. Any consent may
be given subject to satisfaction of conditions stated therein.

     10.3 Notices. All notices, demands and other communications given or
delivered under this Agreement shall be in writing and shall be deemed to have
been given when personally delivered, mailed by first class mail, return receipt
requested, or delivered by express courier service or telecopied or
electronically delivered (with hard copy to follow). Notices, demands and
communications to Seller shall be sent to the below address for the Seller, and
notices, demands and communications to Buyer shall, unless another address is
specified in writing, be sent to the applicable address or telecopy number
indicated below:

Notices to Seller or any Principal:    with a copy to (which shall not
constitute notice):    Teaopia Limited    McMillan LLP  Attn: David Bellisario 
  Attn: Frank Archibald  161 N. Rivermede Road, Suite 5    Brookfield Place, 181
Bay Street, Suite 4400  Concord, Ontario L4K 2V3    Toronto, Ontario M5J 2T3 
Telephone: (905) 738-1811    Telephone: (416) 865-7187  Facsimile/e-mail: (905)
738-9021    Facsimile: (416) 865-7048  david@teaopia.ca            Notices to
Buyer and Corporation:    with a copy to (which shall not constitute notice):   
c/o Teavana Corporation    DLA Piper LLP (US)  Attn: David Christopherson   
Attn: Richard Greenstein and Joseph Silver  3630 Peachtree Road, Suite 1480   
1201 W. Peachtree Street, Suite 2800  Atlanta, GA 30326    Atlanta, GA 30309 
Telephone: (404) 995-8200    Telephone:    (404) 736-7816  Facsimile/e-mail:   
Facsimile:    (404) 682-7800  dchristopherson@teavana.com         

     10.4 Assignment. This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties and their respective
successors and permitted assigns; provided, however, that neither this Agreement
nor any of the rights, interests or obligations hereunder may be

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assigned by Seller or any Principal without the prior written consent of Buyer,
or by Buyer (except as otherwise provided in this Agreement) without the prior
written consent of Seller. Notwithstanding the foregoing:

     (a) Buyer may, at its sole discretion, assign, in whole or in part, its
rights and obligations pursuant to this Agreement to Buyer or one or more of its
wholly-owned Subsidiaries. Buyer's "wholly-owned Subsidiaries" include
Subsidiaries which may be organized subsequent to the date hereof;

     (b) Buyer may assign its rights under this Agreement for collateral
security purposes to any lender providing financing to Buyer or any of their
respective Affiliates and any such lender may exercise all of the rights and
remedies of Buyer hereunder; and

     (c) Buyer may assign its rights under this Agreement, in whole or in part,
to any subsequent buyer of Buyer or any material portion of their assets
(whether such sale is structured as a sale of stock, a sale of assets, a merger
or otherwise).

     10.5 Incorporation of Exhibits and Schedules. The exhibits and schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.

     10.6 Severability. Without limiting the provisions of Section 6.6, whenever
possible, each provision of this Agreement shall be interpreted in such manner
as to be effective and valid under Law, but if any provision of this Agreement
is held to be prohibited by or invalid under Law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provisions or the remaining provisions of
this Agreement.

     10.7 Captions and Headings. The captions, headings and table of contents
used in this Agreement are for convenience of reference only and do not
constitute a part of this Agreement and shall not be deemed to limit,
characterize or in any way affect any provision of this Agreement, and all
provisions of this Agreement shall be enforced and construed as if no caption or
heading had been used in this Agreement.

     10.8 Complete Agreement. This Agreement and Transaction Documents contain
the complete agreement between the parties and supersede any prior
understandings, agreements or representations by or between the parties, written
or oral, which may have related to the subject matter hereof in any way, except
for the Confidentiality Agreement which shall continue in full force and effect
until Closing in accordance with its terms, and which shall be terminated and
shall cease to have any force and effect as of Closing (and the parties hereby
agree to cause their Affiliates and Representatives to take all necessary or
desirable actions to terminate the Confidentiality Agreement as of the Closing).

     10.9 Counterparts. This Agreement may be executed in multiple counterparts
(including by means of telecopied or electronically transmitted signature pages)
all of which taken together shall constitute one and the same agreement. In
pleading or proving any provision of this Agreement, it shall not be necessary
to produce more than one set of such counterparts.

     10.10 No Strict Construction. Notwithstanding the fact that this Agreement
has been drafted and prepared by one of the parties, each of Buyer, the
Principals and Seller confirm that both they and their respective counsel have
reviewed, negotiated and adopted this Agreement as the joint agreement and
understanding of the parties, and the language used in this Agreement shall be
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction shall be applied against any Person,
but this Agreement shall be construed and interpreted rather in accordance with
the fair meaning thereof, having due regard to the benefits and rights intended
to be conferred upon

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the parties hereto and the limitations and restrictions upon such rights and
benefits intended to be provided.

10.11      Interpretation.     (a) Any capitalized terms used in any schedule or
exhibit attached hereto and not  

otherwise defined therein shall have the meanings set forth in this Agreement.

     (b) Whenever required by the context, any pronoun used in this Agreement
shall include the corresponding masculine, feminine or neuter forms, and the
singular form of nouns, pronouns and verbs shall include the plural and vice
versa.

     (c) The parties intend that each representation, warranty and covenant
contained herein shall have independent significance. If any party has breached
any representation, warranty or covenant contained herein in any respect, the
fact that there exists another representation, warranty or covenant relating to
the same subject matter (regardless of the relative levels of specificity) which
such party has not breached shall not detract from or mitigate the fact that
such party is in breach of the first representation, warranty or covenant.

     (d) Any reference to any particular Law will be interpreted to include any
revision of or successor to that section regardless of how it is numbered or
classified.

     (e) Unless otherwise specifically referenced, all references to immediately
available funds or currency amounts contained in this Agreement shall mean
United States dollars (provided, however, that, for purposes of any threshold
dollar amounts contained in the representations and warranties herein, any such
threshold dollar amounts shall also be deemed to refer all applicable foreign
currency equivalent amounts based on the exchange rate for such currency as
published by the Wall Street Journal on the first Business Day immediately
preceding the date hereof).

     (f) The terms "hereof," "herein" and "hereunder" and terms of similar
import are references to this Agreement as a whole and not to any particular
provision of this Agreement.

     (g) Section, clause, schedule and exhibit references contained in this
Agreement are references to sections, clauses, schedules and exhibits in or to
this Agreement, unless otherwise specified.

     (h) Accounting terms which are not otherwise defined in this Agreement
shall have the meanings given to them under GAAP.

     (i) The term "including" as used herein shall be by way of example and
shall not be deemed to constitute a limitation of any term or provision
contained herein (e.g., shall mean "including, without limitation" unless
"without limitation" (or words of similar import) are already provided).

     (j) A reference to a party to this Agreement or any other document or
agreement shall include such party's predecessors, successors and permitted
assigns.

     10.12 Disclosure Schedules. Notwithstanding anything to the contrary
contained herein, nothing in any of the schedules referenced herein shall be
deemed adequate to disclose an exception to a representation or warranty made by
any party unless such schedule identifies the exception with reasonable
particularity and describes the relevant facts in reasonable detail. Without
limiting the generality of the foregoing, the mere listing (or inclusion of a
copy) of a document or other item on any of the schedules attached hereto shall
not be deemed adequate to disclose an exception to a representation or warranty
made herein (unless the representation or warranty has to do with the existence
of the document

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or other item itself). No exceptions to any representations or warranties
disclosed on one schedule shall constitute an exception to any other
representations or warranties made in this Agreement unless such exception is
disclosed as provided herein on each such other applicable schedule.

     10.13 Governing Law. This Agreement and each document contemplated to be
delivered under or in connection with this Agreement shall be governed by and
interpreted in accordance with the laws of the Province of Ontario and the laws
of Canada applicable therein, and each of the parties irrevocably attorns to the
non-exclusive jurisdiction of the courts of Ontario.

     10.14 Dispute Resolution. In the event of breach or alleged breach of this
Agreement (the “Dispute”), whether arising before or after termination, and any
such Dispute is not resolved in the normal course of business, the Parties will
resolve the Dispute, not by litigation or other judicial means; but through
dispute resolution process consisting of a progression of (a) direct
negotiations between designated personnel of Seller and Buyer; and (b) binding
arbitration. All Disputes shall initially be handled by David Christopherson or
his designee, as representative of Buyer and David Bellisario as representative
of Seller and the Principals, and if a resolution cannot be reached within sixty
(60) days, any Party may, by notice to the other Parties (the “Arbitration
Notice”), require such Dispute to be referred to binding arbitration under the
Arbitration Act, 1991 (Ontario). Unless otherwise agreed by the Parties, any
such arbitration shall be conducted in accordance with the laws of the Province
of Ontario in force at the date of this Agreement. Within 10 days after a Party
gives the Arbitration Notice, the Parties shall jointly appoint a single
arbitrator (the “Arbitrator”). If the Parties fail to appoint an Arbitrator
within such time, an Arbitrator shall be designated by a judge of the Ontario
Superior Court of Justice upon application by either Party. The decision of the
Arbitrator shall be final and binding upon the Parties in respect of all matters
relating to the arbitration, the conduct of the Parties during the proceedings,
and the final determination of the issues in the arbitration without any right
of further appeal and judgment upon any award rendered by the Arbitrator may be
entered in any court having appropriate jurisdiction. The costs of any
arbitration as provided under this Agreement or the enforcement of rights
hereunder, each Party shall bear its own costs and expense relating to such
arbitration, including reasonable attorneys’ fees and expenses.

     10.15 Specific Performance. Seller and Principals acknowledge and agree
that Buyer would be damaged irreparably in the event any of the provisions of
this Agreement are not performed in accordance with their specific terms or
otherwise are breached. Accordingly, Seller and the Principals agree that Buyer
shall be entitled to an injunction or injunctions to prevent breaches of the
provisions of this Agreement and to enforce specifically this Agreement and the
terms and provisions hereof in any action instituted in any court of the United
States or any state thereof having jurisdiction over the parties and the matter
in addition to any other remedy to which they may be entitled, at law or in
equity. Seller and each Principal hereby waive any requirement for security or
the posting of any bond or other surety in connection with any temporary or
permanent award of injunctive, mandatory or other equitable relief.

     10.16 No Third-Party Beneficiaries. This Agreement is for the sole benefit
of the parties and their permitted assigns, and nothing herein expressed or
implied shall give or be construed to give any Person (other than the parties
hereto and such assigns) any legal or equitable rights hereunder provided,
however, that, in the case of ARTICLE VIII, the Buyer Indemnified Parties and
the Seller Indemnified Parties and their respective heirs, executors,
administrators, legal representatives, successors and assigns, are permitted
third party beneficiaries and shall have the right to enforce the provisions of
ARTICLE VIII in their own names.

     10.17 Governing Language. This Agreement and the other Transaction
Documents have been negotiated and executed by the parties in English. In the
event any translation of this Agreement or any

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other Transaction Document is prepared for convenience or any other purpose, the
provisions of the English version shall prevail.

     10.18 Set-off. To the extent that any Seller has any obligation to a Buyer
Indemnified Party (including any indemnification obligation pursuant to ARTICLE
VIII), any Buyer Indemnified Party may set off the amount of such
indemnification against any amounts then due and unpaid to any of the Seller
Indemnified Parties by any of the Buyer Indemnified Parties within the time
period allowed for payment to such Seller Indemnified Party. Neither the
exercise of nor the failure to exercise such right of set-off or to give a
notice of a claim under the Escrow Agreement will constitute an election of
remedies or limit any Buyer Indemnified Party in any manner in the enforcement
of any other remedies that may be available to it.

  10.19 Principal Release.

Each Principal hereby agrees that such Person shall not make any claim
(including an indemnification claim pursuant to Section 8.2(c)) against Buyer or
any of their respective Affiliates or the Business related to or arising out of
his, her or its role as a director/manager, shareholder (or other equityholder),
officer, employee, or agent of any such entity or was serving at the request of
any such entity as a partner, member, trustee, director, officer, employee, or
agent of another entity (whether such claim is for any form of Losses and
whether such claim is pursuant to any Law).

* * * * *

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59

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     IN WITNESS WHEREOF, the parties hereto have caused this Asset Purchase
Agreement to be duly executed as of the date and year first written above.

BUYER

TEAVANA CANADA, INC.

By /s/ Andrew T. Mack
Name: Andrew T. Mack
Its: President

SELLER

TEAOPIA LIMITED

By /s/ David Bellasario
Name: David Bellasario
Its: President

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PRINCIPALS

MISTER KEYS LIMITED

By /s/ David Bellasario _______________________
Name: David Bellasario Its: President

DAVID BELLASARIO

/s/ David Bellasario__________________________

DOMENIC BELLISARIO

/s/ Domenic Bellisario
________________________

PATRICIA BELLISARIO

/s/ Domenic Bellisario
________________________

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     IN WITNESS WHEREOF, the undersigned has executed this Asset Purchase
Agreement as of the date and year first written above solely for the purposes of
guaranteeing the Obligations of Buyer.

CORPORATION

TEAVANA CORPORATION

By: /s/ Andrew T. Mack
Name: Andrew T. Mack
Its: President and Chief Executive Officer

EAST\48096305.13

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