EXHIBIT 10.16


UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK

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                                         :
In re:                                   :     (Chapter 11)
                                         :
RANCH *1, INC., ET AL.,                  :     Case Nos. 01-41853 (AJG)
                                         :     through 41881 (AJG)
                            Debtors.     :
                                         :     Jointly Administered
                                         :
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             FINAL ORDER AUTHORIZING DEBTORS TO OBTAIN POST-PETITION
   SECURED FINANCING PURSUANT TO SECTIONS 364(C)(1), 364 (C)(2) AND 364(C)(3)
                     OF THE BANKRUPTCY CODE, AND APPROVING
                       JOINT FRANCHISE MARKETING AGREEMENT

     THIS MATTER having come before the Court upon the Application dated July 3,
2001 (the  "APPLICATIOn") of the Debtors seeking entry of orders (a) authorizing
Ranch*1,  Inc.  (the "PARENT  DEBTOR"),  and the other  above-captioned  debtors
(collectively,  the "SUBSIDIARY  DEBTORS",  and together with the Parent Debtor,
each a "DEBTOR" and collectively the "DEBTORS") to obtain credit and incur debt,
all on a permanent  basis  pursuant to the  Bankruptcy  Code,  Title 11,  United
States Code, 11 U.S.C.  ss.ss. 101 ET SEQ. (the "BANKRUPTCY CODE"), and Sections
364(c)(1),  364(c)(2) and 364(c)(3) thereof, and the Federal Rules of Bankruptcy
Procedure (the "BANKRUPTCY RULES") and Rule 4001(c)(2) thereof, having priority,
as to administrative  expenses,  pursuant to Section 364(c)(1) of the Bankruptcy
Code (the "FINAL  ORDER"),  (b) scheduling a hearing to consider the Final Order
(the "FINAL  HEARING") and (c) pending entry of the Final Order  authorizing the
Debtors to:

     (i) On an interim  basis,  pending  the Final  Hearing on the  Application,
obtain credit and incur debt secured by liens (as defined in Section  101(37) of
the  Bankruptcy  Code and  referred  to herein as  "LIENS")  on  property of the
Debtors' estates pursuant to Sections  364(c)(2) and 364(c)(3) of the Bankruptcy
Code and with priority,  as to administrative  expenses,  as provided in Section
364(c)(1) of the Bankruptcy Code.

     (ii) Establish on an interim basis,  that emergency  financing  arrangement
(the "DIP CREDIT FACILITY") with Ranch*1 Acquisition, L.L.C., the predecessor in
interest to R1 Franchise Systems LLC (in such capacity, herein the "LENDER"), an
Arizona Limited  Liability  Company with offices at 7730 E. Greenway Road, Suite
104,    Scottsdale,    Arizona   85260,    which   is    contemplated   by   the
Debtor-In-Possession   Loan  and  Security   Agreement   (as  the  same  may  be
supplemented,  modified,  amended, restated or replaced from time to time in the
manner provided  therein and in accordance with Paragraph 29 of this Order,  the
"DIP LOAN  AGREEMENT"),  substantially in the form annexed to the Application as
EXHIBIT A, in the aggregate  principal amount of $2,500,000.00  and to incur the
liabilities  provided for in and as  contemplated by the DIP Loan Agreement (the
"DIP LIABILITIES").
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     (iii) On an interim basis,  provide the Lender with Liens upon the Debtors'
property as provided in and contemplated by the DIP Loan Agreement.

     (iv) On an interim basis, grant the Lender a Super-Priority  Claim over any
and all administrative expenses other than as set forth in Paragraph 13, below.

     (v) Set a date for the Final Hearing.

     It  appearing  that absent the relief  requested  herein,  the Debtors will
suffer immediate and irreparable  harm; and it further  appearing that notice of
the  Application is sufficient and complies with the  requirements of Bankruptcy
Rules 4001(c) and 4001(d); and the Court having considered the Application,  the
Exhibits thereto, including,  without limitation, the DIP Loan Agreement and the
affidavit filed in support of the Application; and in accordance with Bankruptcy
Rules  4001(c)(1) and (2), due and proper notice of the Application  having been
given;  and interim  hearings to  consider  approval of the DIP Credit  Facility
having been held and  concluded on July 5, 2001 and July 13,  2001;  and a final
hearing to  consider  approval of the DIP Credit  Facility  having been held and
concluded  July 31, 2001 (the "FINAL  HEARING");  and upon all of the  pleadings
filed with the Court and all of the proceedings held before the Court, and after
due deliberation and consideration and for good and sufficient cause shown;

                           THE COURT HEREBY FINDS THAT

     A. On July 3, 2001  (the  "PETITION  DATE"),  each of the  Debtors  filed a
voluntary  petition  under Chapter 11 of the  Bankruptcy  Code. The Debtors have
sought to have their cases jointly administered for procedural purposes only.

     B. The Debtors have  continued  in the  management  and  operation of their
businesses and properties as debtors in possession  pursuant to Bankruptcy  Code
Sections  1107 and 1108.  No trustee or  examiner  has been  appointed  in these
cases.  On July __,  2001,  the Office of the United  States  Trustee  formed an
official committee of unsecured creditors (the "Committee").

     C. By Order dated July 5, 2001, the Court  authorized the Debtors to borrow
on an  interim  basis  up to  $220,000.00  under  the  DIP  Credit  Facility  in
accordance  with  the  terms  and  conditions  set  forth in the  Interim  Order
Authorizing  Debtors  To Obtain  Post-Petition  Secured  Financing  Pursuant  To
Sections  364(C)(1),  364  (C)(2)  And 364  (C)(3)  Of The  Bankruptcy  Code And
Scheduling  Final Hearing Pursuant To Bankruptcy Rule 4001(C)(2) On The Debtors'
Application  To Incur Such  Financing  On A  Permanent  Basis,  Approving  Joint
Franchise  Marketing  Agreement  And  Approving  The Form And  Method  Of Notice
Thereof (the "First Interim Order").

     D. By Order dated July 13, 2001, the Court authorized the Debtors to borrow
on an interim basis up to $500,000 under the DIP Credit  Facility  (inclusive of
the  amounts  permitted  to be  borrowed  under  the  First  Interim  Order)  in
accordance  with the terms and  conditions set forth in the Second Interim Order
Authorizing  Debtors  to Obtain  Post-Petition  Secured  Financing  Pursuant  To
Sections  364(C)(2) And 364(C)(3) Of The Bankruptcy  Code And  Scheduling  Final
Hearing  Pursuant To Bankruptcy Rule  4001(C)(2) On The Debtors'  Application To
Incur Such Financing On A Permanent Basis,  Approving Joint Franchise  Marketing
Agreement  And  Approving  The Form And Method Of Notice  Thereof  (the  "Second
Interim  Order,  and,  together  with the  First  Interim  Order,  the  "Interim
Orders").

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     E. This Court has  jurisdiction,  pursuant to 28 U.S.C.  ss.ss.  157(b) and
1334, over these proceedings, and over the persons and property affected hereby.
Consideration of the Application  constitutes a "core  proceeding" under Section
157(b)(2) of Title 28 of the United States.

     F. An immediate need exists for the Debtors to obtain  emergency funds with
which to purchase inventory,  continue their ordinary operations, and administer
and preserve the value of their  estates.  The ability of the Debtors to finance
their operations  requires the additional  availability of working capital,  the
absence of which would  immediately  and  irreparably  harm the  Debtors,  their
estates,   and  their   creditors   and  the   possibility   for  a   successful
reorganization.

     G. The Debtors are unable to obtain unsecured credit allowable solely under
Bankruptcy Code Section 503(b)(1) as an administrative expense.

     H. The Debtors are also unable to obtain  secured  credit,  allowable  only
under Bankruptcy Code Sections  364(c)(2) and 364(c)(3),  except under the terms
and conditions  provided in this Order.  The Debtors are unable to obtain credit
for borrowed money without the Debtors'  granting to the Lender (i) Liens on all
or  substantially  all of the assets of the Debtors  pursuant to Bankruptcy Code
Sections 364(c)(2) and 364(c)(3), and (ii) super-priority administrative expense
claim  status as  provided in Section  364(c)(1)  of the  Bankruptcy  Code (such
super-priority  administrative  expense claim having priority as provided herein
except with respect to the Carve Out (as  hereinafter  defined)) and as provided
by this Final Order.

     I.  The  ability  of the  Debtors  to  finance  their  operations  and  the
availability   of  sufficient   working   capital   through  the  incurrence  of
indebtedness for borrowed money and other financial  accommodations  is vital to
the  Debtors'  ability  to pay  their  operating  expenses,  including  (without
limitation)  employees'  salaries and wages,  and to preserve and maintain their
going concern value and their ability to consummate a successful reorganization.

     J. The relief  requested in the  Application is necessary,  essential,  and
appropriate  for  the  continued  operation  of the  Debtors'  business  and the
management and preservation of their property.

     K.  It is in the  best  interest  of  Debtors'  estates  to be  allowed  to
establish the DIP Credit Facility contemplated by the DIP Loan Agreement and the
other DIP Loan Documents (as defined in the DIP Loan Agreement).

     L. The terms and conditions of the DIP Credit Facility,  including, without
limitation, those which provide for the payment of interest to, and fees of, the
Lender at the times and in the manner provided under the DIP Credit Facility are
believed to be fair, reasonable,  and the best available under the circumstances
and reflect the Debtors' exercise of prudent business  judgment  consistent with
their fiduciary duties and are supported by reasonably equivalent value and fair
consideration.

     M. The DIP Credit Agreement and other DIP Loan Documents were negotiated in
good faith and at arm's  length  between the Debtors,  on the one hand,  and the
Lender,  on the  other.  Credit to be  extended  under the DIP  Credit  Facility
pursuant to this Final Order and the Interim  Orders will be so extended in good
faith,  in  consequence  of which the Lender is entitled to the  protection  and
benefits of  Bankruptcy  Code  Section  364(e).  Capitalized  terms used and not
otherwise defined herein shall have the meanings  respectively  assigned to them
in the DIP Loan Agreement.

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<PAGE>
     N. The notice of the Hearing at which this Final Order was  entered,  which
notice  was  provided  by the  Debtors to (i) the United  States  Trustee,  (ii)
counsel to the Lender,  (iii) the  Debtors'  consolidated  twenty  (20)  largest
unsecured  creditors,  (iv) counsel for the  Committee,  and (v) all parties who
have filed a notice of appearance  and request for service of pleadings in these
cases, constitutes sufficient and adequate notice in accordance with and for all
purposes under the Bankruptcy Code,  including,  without limitation,  Bankruptcy
Rule 4001(c) and Bankruptcy Code Section 102(1),  as required by Bankruptcy Code
Section 364(c), and no other notice need be given for entry of this Order.

     O. Good and  sufficient  cause has been  shown for the entry of this  Final
Order. Among other things, the entry of this Final Order will enable the Debtors
to continue the operation of their  businesses,  increase the  possibility for a
successful reorganization, and is therefore in the best interest of the Debtors,
their creditors, and their estates.

     NOW, THEREFORE, on the Application of the Debtors and the record before the
Court with respect to the  Application,  and with the consent of the Debtors and
the Lender to the form and entry of this Final Order, and good cause appearing,

     IT IS ON THIS 31st day of July, 2001, ORDERED, ADJUDGED AND DECREED that:

                  APPROVAL OF AND AUTHORIZATION AS TO BORROWING

     1. The Application is hereby  granted,  and the terms and the conditions of
the DIP Credit  Facility are hereby  approved.  The Debtors are  authorized on a
permanent basis, to:

          (a) Establish the DIP Credit Facility;

          (b) Execute and deliver each of the DIP Loan  Agreement and other Loan
     Documents  referred to (and as defined) in the DIP Loan Agreement (the "DIP
     LOAN DOCUMENTS") therein; and

          (c)  Borrow  up  to  $2,000,000.00   under  the  DIP  Credit  Facility
     (inclusive of amounts borrowed in accordance with the Interim Orders).

     2. Upon  execution and delivery of the DIP Loan Agreement and the other DIP
Loan Documents,  such  agreements,  documents and instruments  shall  constitute
valid,  binding  obligations  of the  Debtors,  enforceable  against each of the
Debtors who are parties  thereto in accordance with their  respective  terms and
provisions. The Debtors are hereby authorized, empowered, and directed to do and
perform all acts and to make, execute, and deliver all instruments and documents
that may be requisite, necessary or desirable for the performance by the Debtors
of  their  obligations  under  the  DIP  Loan  Documents  and the  creation  and
perfection of the Liens described in and provided for by the DIP Loan Documents,
having  the  priority  contemplated  hereby,  with  respect  to  the  borrowings
authorized herein.

     3. The Debtors are hereby  authorized  to grant,  and are hereby  deemed to
have  granted,  to the  Lender  in  order  to  secure  the  prompt  payment  and
performance in full of the DIP  Liabilities,  valid,  binding,  enforceable  and
perfected  Liens in and to all real  (except  that,  with  respect to  leasehold
interests,  such liens shall extend only to the  proceeds  thereof) and personal

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<PAGE>
assets of the Debtors  including,  without  limitation,  as described in the DIP
Loan  Agreement or below (the  "COLLATERAL"),  exclusive  of  Avoidance  Actions
defined below:

     All  inventory,   accounts,  equipment,  general  intangibles,   investment
     property,  franchise  agreements and franchise fees, chattel paper, deposit
     accounts,  rights  to  payment  under  letters  of credit  (whether  or not
     written),  insurance claims,  tort claims, and goods, in each case, whether
     now owned or in which the Debtors have any interest (and without  regard to
     whether  acquired  prior or subsequent  to the Petition  Date) or hereafter
     acquired or in which the Debtors obtain an interest; all present and future
     real property and proceeds of leasehold interests in which the Debtors have
     an interest (and without regard to whether  acquired prior or subsequent to
     the Petition Date); and the products and proceeds thereof.

     The term "AVOIDANCE ACTIONS",  as used herein, shall mean avoidance actions
by or on behalf of the  Debtors or their  estates  pursuant  to Chapter 5 of the
Bankruptcy  Code and the proceeds  thereof with the exception of actions brought
pursuant to  Bankruptcy  Code  Section 549 to recover  any  transfers  after the
Petition  Date of the  Collateral,  or proceeds  thereof.  The  foregoing  first
priority  security interest and Liens shall be subject only to (i) the Permitted
Liens (as  hereinafter  defined) and (ii) the Carve-Out.  Except as specifically
provided  herein,  the security  interests and Liens granted to the Lender shall
not be made on a parity with, or subordinated to, any other security interest or
lien under Section 364(d) of the Bankruptcy Code or otherwise.

     4. The automatic stay imposed under  Bankruptcy  Code Section  362(a)(4) is
hereby  lifted to permit the  Debtors  to grant and the  Lender to  perfect  the
aforesaid  Liens  and to  otherwise  consummate  and  perform  their  respective
liabilities and rights under the DIP Credit Facility and in respect of the other
DIP Loan  Documents,  all pursuant to and subject to the terms and provisions of
this Final Order.

     5. Without  limiting the  independence  of each of the Debtors  acting as a
single entity,  each officer of the Parent Debtor as may be so authorized by its
Board of  Directors,  and each officer of the Debtors as may be so authorized by
the  respective  Boards of  Directors  of each of the  Debtors or Parent  Debtor
(acting on behalf of the Parent Debtor or all of the Debtors as  contemplated in
the DIP Loan Agreement),  acting singly,  is hereby  authorized and empowered to
execute and deliver all the DIP Loan  Documents to which such Debtor (or each of
the Debtors in the case of a signing  officer of the Parent  Debtor) is a party,
such  execution and delivery to be conclusive of their  respective  authority to
act in the name of and on behalf of the Debtors.

     6. The Liens to be created and  granted to the Lender as  security  for the
DIP  Liabilities,  as provided in  Paragraph 3, above,  are created  pursuant to
Bankruptcy Code Sections 364(c)(2) and 364(c)(3).  With the exception of (a) the
Carve Out (as described below) (b) those Liens expressly permitted under the DIP
Loan Agreement,  (c) valid,  perfected and unavoidable  Liens existing as of the
Petition  Date  (collectively,  the items in (a),  (b) and (c),  the  "PERMITTED
LIENS"),  and (d) the statutory fees of the United States Trustee as provided in
28  U.S.C.   ss.  1930(a)  and  fees  to  the  clerk  of  the  Bankruptcy  Court
(collectively, the "MANDATORY FEES"), the Liens to be created and granted to the
Lender,  as provided in Paragraph 3, above,  are first,  prior,  perfected,  and
superior to any security,  mortgage,  or collateral interest or Lien or claim to
the Collateral.  The Liens securing the DIP Liabilities  shall not be subject to
Section 551 of the Bankruptcy Code.

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<PAGE>
     7. This Final  Order shall be  sufficient  and  conclusive  evidence of the
creation,  attachment,  validity, perfection, and priority of the Lender's Liens
upon the Collateral,  without the necessity of filing or recording any financing
statement or other  instrument or document that may otherwise be required  under
the law of any  jurisdiction  or the taking of any other  action to  validate or
perfect  the Liens of the  Lender in and to the  Collateral  or to  entitle  the
Lender  to  the  priorities  granted  herein,  which  Liens  and  the  financing
statements in respect  thereof shall be deemed to have been recorded at the time
and on the  date of the  commencement  of  these  Chapter  11  cases,  PROVIDED,
HOWEVER,  that the  Debtors  shall,  if  requested  by the Lender (the Lender is
hereby granted relief from the automatic stay imposed by Bankruptcy Code Section
362 in order to make such  request),  execute  and the Lender may file or record
financing statements,  mortgages, deeds of trust or other instruments in respect
of the Liens authorized hereby,  PROVIDED FURTHER,  HOWEVER, that no such filing
or  recordation  shall be necessary or required in order to create,  evidence or
perfect any such Lien.

     8. The Lender, in its discretion,  may file a copy of this Final Order as a
financing  statement,  mortgage,  or deed of trust  with any  recording  officer
designated to file financing statements or with any registry of deeds or similar
office in any jurisdiction in which the Debtors have real or personal  property,
and in such event,  the subject  filing or recording  officer is authorized  and
directed to file or record such copy of this Final Order.

     9. The DIP Loan Agreement and each of the DIP Loan Documents, respectively,
shall constitute and evidence the valid and binding  obligations of the Debtors,
as applicable,  which  obligations  shall be enforceable  against the respective
parties in accordance with their respective terms and provisions, subject to the
provisions of this Final Order.

     10.  Pursuant to Sections  363(b)(1) and 364(c)(2) of the Bankruptcy  Code,
any  provisions  in any of the Leasehold  Interests  that require the consent or
approval of one or more of the  Debtors'  landlords  in order for the Debtors to
pledge or mortgage proceeds of such Leasehold Interests, are and shall be deemed
to be  inconsistent  with the provisions of the Bankruptcy  Code as provided for
below and are and shall have no force and effect with respect to the granting of
the Liens, security interests,  mortgages,  and/or deeds of trust by the Debtors
in favor of the Lender in accordance  with the terms of the DIP Loan  Agreement,
the Interim Orders, and this Final Order.

                              ADMINISTRATIVE CLAIM

     11.  The  liabilities  under the DIP  Credit  Facility  shall be an allowed
administrative  expense claim (the  "SUPER-PRIORITY  CLAIM") with priority under
Bankruptcy Code Section 364(c)(1) and otherwise over all administrative  expense
claims and  unsecured  claims  against the  Debtors,  now  existing or hereafter
arising,  of any  kind  or  nature  whatsoever  including,  without  limitation,
administrative  expenses  of the  kinds  specified  in or  ordered  pursuant  to
Bankruptcy Code Sections 105, 326, 330, 331,  503(a),  503(b),  506(c),  507(a),
507(b),  546(c), 726 and 1114, subject only to the Mandatory Fees, the Carve Out
and recoveries on Avoidance Actions.

     12.  Except for  Mandatory  Fees and the Carve Out no costs or  expenses of
administration  including,  without  limitation,  professional  fees allowed and
payable  under  Bankruptcy  Code  Sections  330 and 331 that have been or may be
incurred in these Chapter 11 cases,  or in any case or cases pursuant to Chapter
7 of the Bankruptcy Code into which this case may be converted,  or in any other
proceeding  related thereto  (hereinafter,  any "SUCCESSOR  CASE"), and no other

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claims  to the  Collateral  are,  or will be,  prior to or on a parity  with the
liabilities under the DIP Credit Facility.

     13. The term  "Carve  Out"  means the sum of  $320,000.00,  which  shall be
deposited  following  entry of this Final Order by the  Debtors  into a separate
account  ("RESERVE  ACCOUNT")  maintained  with  Buchanan  Ingersoll,  P.C. (the
"ESCROW  LENDER") and which shall be available for distribution to (A) (x) total
accrued and unpaid and future fees and  disbursements  incurred by the  Debtors'
professionals and the Committee's  professionals and (y) the expenses of members
of  the  Committee,  as  allowed  by the  Bankruptcy  Court  (collectively,  the
"PROFESSIONALS"),  and (B) Mandatory Fees, in each case following the occurrence
of an Event of  Default  under the DIP Loan  Agreement  (a "CARVE  OUT  EVENT").
Notwithstanding  anything  contained herein to the contrary,  the Lender's Liens
granted pursuant to this Order in the Reserve Account shall be second and junior
only to the claims of the  Professionals  and the U.S.  Trustee  therein for the
fees referred to in (A) and (B), above.  The Lender shall not have any duties or
responsibilities with respect to the distribution of the Carve Out by the Escrow
Lender  and  shall   have  no   liability   on  account  of  any   distribution,
misdistribution,  or nondistribution thereof. Upon the later of: (i) the date on
which all  Professionals  are granted a final  allowance of fees and expenses or
(ii) the  occurrence of any of the events set forth in clauses  18(a),  18(b) or
18(c) hereof,  the balance of the Carve Out (if any) not distributed or required
to be distributed on account of such fees and expenses of the  Professionals and
the Mandatory Fees shall be distributed to the Lender, to the extent of any then
remaining  deficiency  in the  DIP  Liabilities  and  then  as  this  Court  may
determine.  Any amounts paid to the  Professionals  prior to the occurrence of a
Carve Out Event  shall not be  credited  or applied  against  the Carve Out.  No
amount of the Carve Out and no amounts  advanced  under the DIP Credit  Facility
shall be used in any event to pay any fees and  expenses  (x)  arising out of or
related to the prosecution of any claims or causes of action against the Lender,
including without limitation relating to (a) preventing,  hindering, or delaying
the Lender's  enforcement or realization  upon any of the Collateral,  (b) using
cash collateral or selling any other Collateral without the Lender's consent, or
(c) objecting to or  contesting  in any manner,  or raising any defenses to, the
validity,  extent,  perfection,  priority, or enforceability of the Lender's DIP
Liabilities or any mortgages,  liens, or security interests with respect thereto
or any other  rights or interests  of  Lender's,  or in asserting  any claims or
causes of action,  including without limitation,  any actions under Chapter 5 of
the Bankruptcy Code,  against the Lender and (y) arising after conversion of the
Chapter  11 Cases to cases  under  Chapter 7 of the  Bankruptcy  Code or arising
after the appointment of a chapter 11 trustee.

     14.  Notwithstanding  the  foregoing,  as long as a Carve Out Event has not
occurred,  the Debtors shall be permitted to pay compensation and  reimbursement
of  expenses  allowed  and  payable  under  Sections  330,  331,  503(b)(2)  and
503(b)(3)(F) of the Bankruptcy Code, as the same may become due and payable. The
foregoing  shall not be construed  as consent to the  allowance of any such fees
and  expenses  and shall not  affect  the  rights of the Lender to object to the
allowance and payment of any such amounts,  nor shall the foregoing obligate the
Lender to make loans and  advances  under the DIP Credit  Agreement  for payment
thereof. Upon the occurrence of a Carve Out Event, the fees of Professionals and
the  Mandatory  Fees shall be paid  solely out of the  Reserve  Account  and the
proceeds of recoveries on Avoidance Actions,  unless the Lender has provided its
prior written consent to payment from an alternative source.

     15. No cost or expense which is incurred in  connection  with or on account
of the  preservation  and/or  disposition of any  Collateral or which  otherwise
could be chargeable to the Lender or the Collateral  pursuant to Bankruptcy Code

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Section  506(c)  or  otherwise,  shall  be  chargeable  to  the  Lender  or  the
Collateral.  16. Unless the Lender has provided its prior written consent or all
DIP  Liabilities  to the  Lender  have  been  irrevocably  paid in full  and the
commitment to extend credit under the DIP Credit Facility has been terminated in
accordance with the terms thereof, no order entered in these proceedings,  or in
any Successor Case, shall have the effect of permitting or authorizing:

          (a) the obtaining of credit or the incurring of indebtedness by any of
     the  Debtors  that is (i) secured by a security,  mortgage,  or  collateral
     interest or other Lien on all or any portion of the Collateral,  other than
     the Permitted Liens, and/or (ii) entitled to priority administrative status
     which is equal or senior to that granted to Lender  herein,  other than the
     indebtedness  or  credit  expressly  permitted  by the DIP  Loan  Agreement
     ("PERMITTED INDEBTEDNESS"); or

          (b) the  enforcement  (i.e.  the granting of relief from the automatic
     stay) of any claimed security,  mortgage,  or collateral  interest or other
     Lien of any person  other  than of the Lender on all or any  portion of the
     Collateral, other than by the holder of a senior Permitted Lien against the
     subject asset or property; or

          (c) the Debtors' return of goods constituting  Collateral  pursuant to
     Sections  546(h) and Section 546(g) of the  Bankruptcy  Code other than for
     returns for damaged  goods in the  ordinary  course of business  consistent
     with  historical  practices or consent to any  creditor  taking any set-off
     against any claim  arising  prior to the Petition  Date based upon any such
     return pursuant to Section 553(b)(1) of the Bankruptcy Code or otherwise.

     17. Without limiting the provisions and protections of Paragraph 16, above,
if at any time  prior to the  repayment  in full in cash of all DIP  Liabilities
under the DIP Credit Facility and the termination of the Lender's  obligation to
make loans and extend credit under the DIP Loan  Agreement,  including  (without
limitation)  subsequent  to the  confirmation  of  any  plan  of  reorganization
respecting the Debtors, the Debtors or any Trustee subsequently  appointed shall
obtain credit or incur debt pursuant to Bankruptcy Code Sections 364(b),  364(c)
or 364(d) (other than Permitted  Liens),  then all of the consideration for such
credit or debt shall  immediately be turned over to the Lender to reduce the DIP
Liabilities.

     18. All DIP  Liabilities  of the  Debtors to the Lender are due and payable
upon the earliest to occur on:

          (a) JULY 5, 2002;

          (b) The  acceleration of the DIP  Liabilities by the Lender  following
     the occurrence of an Event of Default; or

          (c) The effective  date of any plan of  reorganization  for any of the
     Debtors in these Chapter 11 Cases.

     Unless  and until the DIP  Liabilities  are  repaid in full in cash and the
obligations  of the Lender to make loans and extend credit are  terminated,  the
protection  afforded to Lender under the DIP Loan Documents,  the Interim Orders
and this Final Order, and any actions taken pursuant thereto,  shall survive the
entry of any order confirming a plan of  reorganization  or converting this case
into  a  Successor  Case,  and  the  Liens  in and to  the  Collateral  and  the
Super-Priority  Claim  shall  continue  in these  Chapter  11  Cases  and in any
Successor Case, and such security,  mortgage, and collateral interests and other

                                       8
<PAGE>
Liens,  and  Super-Priority  Claim shall  maintain  their status and priority as
provided by this Order.

     19. The time and manner of payment of the DIP  Liabilities  pursuant to the
DIP Loan Agreement and the creation, scope, perfection and priority of the Liens
in and to  the  Collateral  (with  the  priorities  specified  herein)  and  the
Super-Priority   Claim  shall  not  be  altered  or  impaired  by  any  plan  of
reorganization  that may hereafter be confirmed or by any further order that may
hereafter be entered.

                                EVENTS OF DEFAULT

     20.  Any  automatic  stay  otherwise  applicable  to the  Lender  is hereby
modified so that upon the occurrence of any Event of Default and acceleration of
the DIP  Liabilities and at any time  thereafter,  after five (5) business days'
notice of such  occurrence,  which notice by the Lender is filed with this Court
(with a copy to chambers), together with proof of service thereof, and served by
telecopy and overnight  courier service on the Debtors,  counsel to the Debtors,
counsel to the Committee  appointed in these Chapter 11 cases, the United States
Trustee,  and any other person filing a notice of  appearance  and a request for
service of pleadings  in these  cases,  the Lender shall be entitled to exercise
the Lender's  rights and remedies  upon such Event of Default as provided in the
DIP Loan Documents and applicable  non-bankruptcy  law.  Following the giving of
notice by the Lender of the  occurrence of an Event of Default and  acceleration
of the DIP Liabilities:

          (a) The Debtors  shall  continue to deliver and cause the  delivery of
     the  proceeds  of  Collateral  to the  Lender,  as provided in the DIP Loan
     Agreement;

          (b) The Lender  shall  continue to apply such  proceeds in  accordance
     with the provisions of this Order and the DIP Loan Agreement;

          (c) Except as to the Carve Out, the Debtors shall have no right to use
     any of  such  proceeds,  nor any  other  cash  collateral  (as  defined  in
     Bankruptcy  Code  Section  363(a)) of the Lender  other  than  towards  the
     satisfaction of the DIP Liabilities; and

          (d) Any obligation otherwise imposed on the Lender to provide any loan
     or advance  to the  Debtors  pursuant  to the DIP Loan  Agreement  shall be
     suspended.

     21. In the  Lender's  exercise of its rights and  remedies  upon default in
accordance with the DIP Loan Agreement and this Order,  the Debtors are directed
to cooperate with the Lender in the exercise of such rights and remedies (unless
the Court orders  otherwise).  Without  limitation of the foregoing,  the Lender
shall  have  the  right to  cause,  in a  commercially  reasonable  manner,  the
immediate sale or other  disposition of the Collateral  constituting real estate
or leasehold  interests by directing the Debtors to file an application with the
Court for authorization to assume,  assign,  sell or otherwise dispose of any or
all of such real estate or leasehold Collateral pursuant to Sections 363 and 365
of the Bankruptcy  Code. The Liens shall attach to the proceeds of any such sale
or other disposition of the real estate or leasehold Collateral,  which proceeds
shall be  immediately  turned over to the Lender for  application  in accordance
with the provisions of the DIP Loan  Agreement.  In no event shall the Lender be
subject to the equitable  doctrine of "marshaling" or any other similar doctrine
with respect to any of the Collateral or otherwise.

     22. Nothing  included herein shall prejudice,  impair,  or otherwise affect
the Lender's  right to seek any other or  supplemental  relief in respect of the
Debtors'  or the  Lender's  right,  as provided  in the DIP Loan  Agreement,  to
suspend or terminate the making of loans under the DIP Loan Agreement.

                                       9
<PAGE>
                            MISCELLANEOUS PROVISIONS

     23. If any provision of this Order is hereafter modified, vacated or stayed
by  subsequent  order  of  this  or  any  other  Court  for  any  reason,   such
modification,  vacation,  or stay shall not affect the validity of any liability
incurred  pursuant  to this Order nor the  validity,  perfection,  priority,  or
enforceability  of any Lien  granted by the  Debtors to the Lender  prior to the
later of (a) the effective date of such modification,  vacation, or stay, or (b)
the entry of the order pursuant to which such  modification,  vacation,  or stay
was  established.  The binding  effect of this Order is an integral part of this
Order.

     24. Debtors shall compensate  Lender a commission of fifty percent (50%) of
the entire  initial  franchise  fee and fifty  percent  (50%) of the entire area
development  agreement  fee (as such  terms are  defined  in  Debtors'  standard
franchise   agreement)  (the  "IFF   Commission"   and  the  "ADA   Commission",
respectively),  collected from any newly executed post-petition franchise and/or
area  development  agreement  initiated by Lender,  irrespective  of whether the
third  party  franchisee  is a current  franchisee  of one of  Lender's  current
franchise concepts ("Lender Initiated Franchisees").  The IFF Commissions or ADA
Commissions  shall be paid to Lender  within  fifteen  (15) days of  receipt  by
Debtors of the initial franchise fee or area development  agreement fee from the
Lender Initiated Franchisees.  Debtors and Lender shall coordinate any franchise
sales  during  the term of the Loan  Agreement  and  Lender  and  Debtors  shall
mutually  agree on any new sale of a franchise  or area  development  agreement.
Debtors further agree to consummate  sales to all qualified  prospective  Lender
Initiated Franchisees.

     25. The payments made, and the Liens and  Super-Priority  Claims granted to
the Lender  under the DIP  Credit  Facility  and this  Order,  and the  priority
thereof,  shall be binding on the  Debtors,  the  Lender,  and their  respective
successors and assigns, any successor trustee for the Debtors, and all creditors
of the Debtors  (whether  appointed in these Chapter 11 cases or in the event of
the  conversion of any Chapter 11 case to a  liquidation  under chapter 7 of the
Bankruptcy  Code), as provided in Bankruptcy  Code Section 364(e),  even if this
Order is reversed, vacated, stayed by subsequent order, or modified on appeal.

     26. Any  request by the  Debtors  for entry of an Order,  to the extent the
Debtors obtain Lender's prior written  consent,  authorizing the Debtors to sell
any of the Collateral outside the ordinary course of business shall provide that
all proceeds of such Collateral  after  satisfaction  of other senior  Permitted
Liens shall be remitted  directly to the Lender for application  against the DIP
Liabilities until all the DIP Liabilities have been indefeasibly paid in full.

     27. The Debtors are  authorized but not directed  (unless  requested by the
Lender) to: (i) continue  existing or establish and maintain various  lockboxes,
concentration  accounts and blocked accounts in favor of the Lender and to enter
into similar  arrangements  with other banks as are designated for such purposes
pursuant to the DIP Loan Agreement (collectively,  the "BLOCKED ACCOUNTS"); (ii)
deposit or cause to be deposited, or to remit, in kind, immediately and directly
to the Lender, all monies,  checks, credit card sales drafts, credit card sales,
or charge slips or receipts,  or other forms of store  receipts,  drafts and any
other  payment  or  proceeds  of  the  Collateral  into  the  Blocked   Accounts
established  for the benefit of the Lender;  (iii)  instruct  all parties now or
hereafter in possession of monies,  claims, or other payments for the account of
the Debtors or other  property of the Debtors'  estate in which the Lender has a
Lien to remit such  payments to the Blocked  Accounts;  and (iv) enter into such
normal and customary agreements as may be necessary to effectuate the foregoing.

                                       10
<PAGE>
     28. The Lender's  failure to seek relief or  otherwise  exercise its rights
and  remedies  under the DIP  Credit  Facility,  or this Final  Order  shall not
constitute  a waiver of any of the rights and  remedies of the  Lender's  rights
thereunder, hereunder or otherwise.

     29. The Debtors and the Lender may amend or waive any  provision of the DIP
Loan  Agreement and the other DIP Loan  Documents in  accordance  with the terms
thereof,  PROVIDED that such amendment or waiver, in the judgment of the Debtors
and the Lender,  is either  nonprejudicial  to the rights of third parties or is
not material. Except as otherwise provided herein, no waiver,  modification,  or
amendment of any of the provisions of the DIP Loan Documents  shall be effective
unless set forth in writing,  signed by the parties  hereto and  approved by the
Court.

     30. Any notice required to be made by the Debtors  pursuant to the DIP Loan
Documents  shall  also be made  to  Committee's  counsel.  Debtors  shall  serve
Committee's counsel, VIA hand delivery or facsimile, with any notice it receives
from the Lender pursuant to the DIP Loan Documents within twenty-four (24) hours
of receiving such notice from the Lender.

     31. This Order shall be without prejudice to the Committee to assert,  upon
the occurrence of an Event of Default, that the Lender's application of proceeds
of  Collateral  received by Lender and all other  payments in respect of the DIP
Liabilities were not authorized or permitted by this Final Order or the DIP Loan
Documents.

     32. Except as specifically  set forth in the Budget,  Debtors shall make no
expenditures   without   Debtors  giving  prior  notice  to  Committee,   unless
individually  each is less  than  $2,500.00,  and  cumulatively  the same do not
exceed the sum of  $20,000.00  in any thirty (30) day period.  Debtors shall not
request  any  advances  from  Lender in excess of those set forth in the  Budget
without Debtors giving prior notice to the Committee.

     33. With  respect to any advances  made by the Lender to the Debtors  under
the DIP Loan Documents by wire transfer, or otherwise,  all such transfers shall
be remitted directly to Court approved accounts as the Debtor shall from time to
time designate

     34.  This Final  Order  does not  create any rights for the  benefit of any
third party, creditor, or any direct, indirect, or incidental beneficiary (other
than the Lender or the Committee as expressly provided for herein).

     35. In the event of any  inconsistency  between the terms and conditions of
any DIP Loan  Document  and of this Order,  the  provisions  of this Final Order
shall  govern and  control.  This Final Order  constitutes  findings of fact and
conclusions  of law and takes  effect and become  enforceable  immediately  upon
execution hereof.

     36. The  provisions  of this Final  Order and any  actions  taken  pursuant
hereto  shall  survive  the  entry  of any  order:  (a)  confirming  any plan of
reorganization  under  any of the  Chapter  11  cases  (and  to the  extent  not
satisfied in full, the  obligations  shall not be discharged by the entry of any
such order,  or pursuant to  Bankruptcy  Code  section  1141(d)(4),  each of the
Debtors having hereby waived such discharge);  (b) converting any of the Chapter
11 Cases to a chapter 7 case; or (c) dismissing any of the Chapter 11 Cases, and
the terms and provisions of this Order as well as the  Super-Priority  Clams and
Liens  granted  pursuant  to this Final Order and the DIP Loan  Documents  shall

                                       11
<PAGE>
continue  in full force and effect  notwithstanding  the entry of any such order
and such  super-priority  claims and liens  shall  maintain  their  priority  as
provided by this Final Order and to the maximum  extent  permitted  by law until
all of the DIP Liabilities are indefeasibly paid in full and discharged.

     37. Except as otherwise  provided in this Final Order,  pursuant to Section
552(a) of the Bankruptcy  Code,  all property  acquired by the Debtors after the
Petition Date,  including,  without  limitation,  all Collateral  pledged to the
Lender pursuant to the DIP Loan Agreement and this Final Order, is not and shall
not be subject to any lien of any entity  resulting from any security  agreement
entered  into by the Debtors  prior to the Petition  Date,  except to the extent
that such  property  constitutes  proceeds of  property  of the Debtors  that is
subject to a valid,  enforceable,  perfected and unavoidable lien existing as of
the Petition Date.

     38. The DIP  Liabilities  of the Debtors  hereunder  and under the DIP Loan
Documents shall be joint and several.

     39. Upon entry of this Final Order, the Lender shall be and shall be deemed
to be,  without any further  action or notice,  named as additional  insured and
loss payee on each  insurance  policy  maintained by the Debtors that in any way
relates to the Collateral.

     40. R1  Franchise  Systems  L.L.C.  shall be deemed to be the  successor in
interest to Ranch*1 Acquisition, L.L.C as Lender pursuant to the Interim Orders,
and all rights and benefits granted to Ranch*1  Acqusition,  L.L.C.  pursuant to
the Interim Orders , the DIP Loan  Agreement and the other Loan Documents  shall
inure to the  benefit of R1  Franchise  Systems  L.L.C.  All  references  in the
Interim  Orders to "Lender"  shall be deemed to refer to "R1  Franchise  Systems
L.L.C.",  and, in that  regard,  among  other  things,  all  amounts  heretofore
advanced to the Debtors  pursuant to the Interim  Orders shall be deemed to have
been advanced by R1 Franchise Systems L.L.C. as Lender, the superpriority claims
and security interests granted pursuant to the Interim Orders shall be deemed to
have  been  granted  to R1  Franchise  Systems  L.L.C.  as  Lender,  and all DIP
Liabilities shall be payable to R1 Franchise Systems L.L.C.

     41.  Service of a copy of this Final  Order by hand  delivery,  first class
mail, or deposit with a reputable  overnight  courier  service  within three (3)
days after entry hereof, upon (i) the Office of the United States Trustee,  (ii)
Kaye  Scholer,  LLP,  attorneys  for the Lender,  (iii)  Silverman,  Perlstein &
Acampora LLP, attorneys for the Committee, (iv) the Debtors' consolidated twenty
(20) largest  unsecured  creditors,  (v) the District  Director for the Internal
Revenue  Service,  and (v) all parties  having filed requests for notices in the
Debtors' cases shall constitute good and sufficient service of this Final Order,
the Application, the Final Hearing, and all proceedings held thereon.

Dated: July 31, 2001

       New York, New York

                                    /s/ ARTHUR J. GONZALEZ
                                    ----------------------------------------
                                    HONORABLE ARTHUR J. GONZALEZ
                                    UNITED STATES BANKRUPTCY JUDGE

                                       12
<PAGE>
                                   SCHEDULE I
                               SCHEDULE OF DEBTORS

                                                 BORROWER OR GUARANTOR
DEBTOR                                         UNDER DIP CREDIT FACILITY
------                                         -------------------------

Ranch*1, Inc.                                          Borrower
Ranch*1 Group, Inc.                                    Borrower
Ranch*1 Metro, Inc.                                    Borrower
Ranch*1 Pearl, Inc.                                    Borrower
Ranch*1 of America, Inc.                               Borrower
Ranch *1 Downtown, Inc.                                Borrower
Ranch*1 Eighth Avenue, Inc.                            Borrower
Ranch*1 of Broadway, Inc.                              Borrower
Ranch*1 on 34th Street, Inc.                           Borrower
Ranch*1 Fashion, Inc.                                  Borrower
Ranch*1 Metro Tech, Inc.                               Borrower
Ranch*1 52nd, Inc.                                     Borrower
Ranch*1 Palisades, Inc.                                Borrower
Ranch*1 Number 0135, Inc.                              Borrower
Ranch*1 Number 0202, Inc.                              Borrower
Ranch*1 Number 0117, Inc.                              Borrower
Ranch*1 Number 0125, Inc.                              Borrower
Ranch*1 Number 0112, Inc.                              Borrower
Ranch*1 Number 0113, Inc.                              Borrower
Ranch*1 Number 0128, Inc.                              Borrower
Ranch*1 Number 0150, Inc.                              Borrower
Ranch*1 Number 1701, Inc.                              Borrower
Ranch*1 Number 0207, Inc.                              Borrower
Ranch*1 Number 0118, Inc.                              Borrower
Ranch*1 Number 0137, Inc.                              Borrower
Ranch*1 Number 1904, Inc.                              Borrower
OME, Inc.                                              Borrower
Dome Enterprises, Inc.                                 Borrower
Morgrho, Inc.                                          Borrower
Franchise Concepts Group, Inc.                         Borrower