<PAGE>

                        EXECUTIVE SUBSCRIPTION AGREEMENT


                  This EXECUTIVE SUBSCRIPTION AGREEMENT (this "Agreement"),
dated as of August 31, 1999, is by and between Fannie May Holdings, Inc., a
Delaware corporation (the "Company"), and Ted A. Shepherd, the President and
Chief Operating Officer of the Company (the "Executive").

                                    RECITALS

                  WHEREAS, all of the holders of the Company's common stock
are parties to that certain Shareholders Agreement dated as of October 30,
1991 and amended by the First Amendment thereto dated as of July 2, 1997 (as
may be further amended, modified or supplemented from time to time in
accordance with the terms thereof, the "Shareholders Agreement");

                  WHEREAS, in accordance with the Shareholders Agreement and
other agreements to which the Company is party, the Board of Directors of the
Company has adopted the 1998 Stock Bonus Plan (the "Plan") that allows the
Board of Directors to authorize the issuance of up to 33 shares in aggregate
of the Company's Class A Common Stock, $0.01 par value per share (the "Class
A Common Stock"), to certain management employees of the Company; and

                  WHEREAS, pursuant to the Plan, the Board of Directors of
the Company has authorized the grant to the Executive of the right to
subscribe for and acquire from the Company six and one-half (6.5) shares (the
"Shares") of Class A Common Stock in consideration for past services rendered
on the terms and conditions set forth herein;

                  NOW, THEREFORE, in order to implement the foregoing and in
consideration of the mutual representations, warranties, covenants and
agreements contained herein, the parties hereto agree as follows:

                  1.   SUBSCRIPTION FOR AND ACQUISITION OF SHARES.

                  1.1. ACQUISITION OF SHARES. (a) Upon the terms and subject
to the conditions set forth in this Agreement, the Executive hereby
subscribes for and agrees to acquire, and the Company hereby agrees to issue
to the Executive, the Shares in consideration for past services rendered.

                       (b) The Executive acknowledges to the Company that he
understands and agrees, as follows:

         (i)   THE SHARES HAVE NOT BEEN REGISTERED UNDER FEDERAL OR STATE
         SECURITIES LAWS;

         (ii)  THE SHARES ARE A HIGHLY SPECULATIVE AND RISKY INVESTMENT;

<PAGE>

         (iii) THERE IS NO PUBLIC OR OTHER MARKET FOR THE SHARES NOR IS ANY
         LIKELY TO DEVELOP; AND

         (iv)  THE EXECUTIVE MAY AND CAN AFFORD TO LOSE HIS ENTIRE INVESTMENT
         AND THAT HE UNDERSTANDS HE MAY HAVE TO HOLD THIS INVESTMENT
         INDEFINITELY.

                       (c) Each certificate evidencing the Shares being
issued pursuant to this Agreement shall bear legends reflecting (i) this
Agreement's existence and (ii) the fact that the Shares have not been
registered under Federal or state securities laws and are subject to the
limitations on transfer set forth herein. The Executive acknowledges that the
effect of these legends, among other things, is or may be to significantly
limit or diminish the value of the Shares for purposes of sale or for use as
loan collateral. The Executive consents to the notation of "stop transfer"
instructions against the Shares being acquired hereunder.

                  1.2. DOCUMENT ACCESS. The Company has afforded the
Executive and his advisors, if any, the opportunity to discuss an investment
in the Shares and to ask questions of representatives of the Company
concerning the terms and conditions of the acquisition of the Shares, and
such representatives have provided answers to all such questions concerning
the acquisition of the Shares. The Executive has consulted his own financial,
tax, accounting and legal advisors, if any, as to the Executive's investment
in the Shares and the consequences thereof and risks associated therewith.
The Executive and his advisors, if any, have examined or have had the
opportunity to examine before the date hereof all documents and other
information that the Executive deems to be material to an understanding of
the business, operations and financial condition of the Company and the
investment in the Shares contemplated hereby.

                  1.3. REPRESENTATIONS AND WARRANTIES OF THE EXECUTIVE. The
Executive represents, warrants and covenants to the Company as follows:

                       (a) the Executive has the legal capacity to execute
and deliver this Agreement and to perform his obligations hereunder and this
Agreement has been duly executed and delivered by the Executive and is valid,
binding and enforceable against the Executive in accordance with its terms;

                       (b) none of the execution, delivery or performance of
this Agreement by the Executive will result in any material breach of any
terms or provisions of, or constitute a material default under, any material
contract, agreement or instrument to which the Executive is a party or by
which the Executive is bound; and

                       (c) the Executive will complete, execute and file a
form of election with respect to the Shares under Section 83(b) of the
Internal Revenue Code of 1986, as amended, with the Internal Revenue Service
not later than thirty (30) days after the date hereof.

                  1.4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The
Company represents and warrants to the Executive as follows:


                                      -2-

<PAGE>

                       (a) the Company is duly incorporated, validly existing
and in good standing in the State of Delaware, with full power to enter into
this Agreement and to perform its obligations hereunder;

                       (b) the Company has duly and validly executed and
delivered this Agreement, and this Agreement is valid, binding and
enforceable against the Company in accordance with its terms;

                       (c) the execution, delivery and performance of this
Agreement by the Company will not (i) violate, conflict with, or result in
the breach, acceleration, default or termination of, or otherwise give any
other contracting party the right to terminate, accelerate, modify or cancel
any of the terms, provisions or conditions of any agreement or instrument to
which the Company is a party or by which it or its assets are bound, or (ii)
constitute a violation of any applicable law, rule or regulation, or of any
judgment, order, injunction, award or decree of any court, administrative
agency or other governmental authority applicable to it;

                       (d) prior to the issuance of the Shares, the
authorized capital stock of the Company consists of (i) 2,000 shares of Class
A Common Stock, $0.01 par value, of which 715.013 shares are issued and
outstanding, (ii) 2,000 shares of Class B Common Stock, $0.01 par value, none
of which are issued and outstanding, (iii) 1,000 shares of Class C Common
Stock, $0.01 par value, of which 294.737 shares are issued and outstanding,
(iv) 1,000 shares of Class D Common Stock, $0.01 par value, of which 10
shares are issued and outstanding, (v) 1,500 shares of 5% Senior Preferred
Stock, no par value, of which 1,198.718888 shares are issued and outstanding,
(vi) 625 shares of 8% Junior A PIK Preferred Stock, no par value, of which
492.8669 shares are issued and outstanding, and (vii) 62 shares of 8% Junior
B PIK Preferred Stock, no par value, of which 49.2866 shares are issued and
outstanding; and

                       (e) the authorized capital stock of Archibald Candy
Corporation consists of 25,000 shares of common stock, $0.01 par value,
19,200 shares of which are issued and outstanding and all of which are owned
by the Company.

                  2.   INVESTMENT REPRESENTATIONS OF THE EXECUTIVE.

                  2.1. INVESTMENT INTENTION. The Executive hereby represents
and warrants to the Company that the Executive is acquiring the Shares for
investment solely for his own account and not with a view to, or for resale
in connection with, the distribution or other disposition thereof.

                  2.2. LEGEND. Each certificate representing Shares shall
bear substantially the following legend:

                  "THIS CERTIFICATE IS SUBJECT TO, AND IS TRANSFERABLE ONLY UPON
                  COMPLIANCE WITH, THE PROVISIONS OF AN EXECUTIVE SUBSCRIPTION
                  AGREEMENT, DATED AUGUST 31, 1999, BETWEEN THE COMPANY AND THE
                  ORIGINAL HOLDER OF THE CLASS A COMMON STOCK REPRESENTED BY
                  THIS CERTIFICATE (THE "SUBSCRIPTION AGREEMENT"). THE


                                      -3-

<PAGE>

                  SUBSCRIPTION AGREEMENT GRANTS CERTAIN PURCHASE RIGHTS TO THE
                  COMPANY (OR ITS ASSIGNEES) UPON TERMINATION OF SUCH HOLDER'S
                  SERVICE WITH THE COMPANY. A COPY OF THE ABOVE REFERENCED
                  AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY.

                  THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
                  REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
                  ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED,
                  ASSIGNED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
                  REGISTRATION STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES
                  UNLESS THE ISSUER RECEIVES AN OPINION OF COUNSEL FOR THE
                  HOLDER OF THESE SECURITIES REASONABLY SATISFACTORY TO THE
                  ISSUER STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR
                  HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS
                  DELIVERY REQUIREMENTS OF SUCH ACT OR THE SALE IS MADE IN
                  ACCORDANCE WITH RULE 144 UNDER THE ACT.

                  THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
                  THE RESTRICTIONS CONTAINED IN A SHAREHOLDERS AGREEMENT DATED
                  AS OF OCTOBER 30, 1991, AS AMENDED, A COPY OF WHICH IS ON FILE
                  AT THE OFFICE OF THE SECRETARY OF THE COMPANY."

                  2.3. RISK FACTORS.

                       (a) The Executive acknowledges that he knows and
understands that it is unlikely the Company will pay dividends on the Shares;
there is no legal requirement or promise made by the Company to declare or
pay such dividends and such dividends may not in any event be paid if such
payment would violate any term of any agreement binding on the Company. The
ability of the Company to make any dividend or other payments or
distributions in respect of the Shares may be restricted by future agreements
or instruments binding on the Company. If the Executive ceases to be an
employee of the Company, the Shares may be subject to certain rights of the
Company to redeem or purchase such Shares under this Agreement.

                       (b) The Executive acknowledges that any financial
projections or forecasts with respect to the Company are subject to many
assumptions and factors beyond the Company's control, and that there are no
assurances that these projections or forecasts will be realized.

                       (c) The Executive acknowledges that he knows and
understands that his acquisition of the Shares is a speculative investment
which involves a high risk of loss and that on and after the date hereof
there will be no public market for the Shares, and that such a public market
may never develop.


                                      -4-

<PAGE>

                       (d) The Executive understands that Jordan Industries,
Inc. ("Jordan Industries") and its affiliates own a significant percentage of
the outstanding capital stock of the Company and may have sufficient voting
power to exercise control over the business, policies and affairs of the
Company. The Company has entered, and from time to time may enter, into
various agreements and arrangements with Jordan Industries and its affiliates
in exchange for the provision of services to the Company or to provide
financing to the Company. Further, the Executive acknowledges that Jordan
Industries and its affiliates, including The Jordan Company ("Jordan"), are
engaged in the business of investing in, acquiring and/or managing businesses
for their own accounts, the accounts of their affiliates and associates and
for the account of unaffiliated third parties. No aspect or element of such
activities shall be deemed to be engaged in for the benefit of the Company or
its subsidiaries nor to constitute a conflict of interest. Jordan Industries
and its affiliates shall have no obligation to present any investment or
business opportunities to the attention of the Company or its subsidiaries or
stockholders and the Executive hereby waives any claim he may have against
Jordan Industries or its affiliates for the failure of Jordan Industries or
its affiliates to present any such opportunity to the Company, its
subsidiaries or stockholders or to pursue such opportunity for the benefit of
such parties.

                  2.4. SECURITIES LAW MATTERS. (a) The Executive represents
and warrants that he did not use a "purchaser's representative" (as that term
is used in Regulation D as promulgated by the Securities and Exchange
Commission) in connection with the transactions contemplated by this
Agreement. The Executive represents and warrants that neither Jordan, Jordan
Industries nor any of their respective employees or affiliates has acted as a
representative of the Executive in connection with such transactions. The
Executive hereby releases Jordan, Jordan Industries, and each of their
respective partners, principals, directors, officers, employees, agents and
representatives (collectively, the "Jordan Entities") from and against any
claims in respect of the Executive's subscription for the Shares and any
related transactions hereunder. The Executive represents and warrants that
his decision to acquire the Shares has been made by the Executive independent
of any statements, disclosures or judgments as to the properties, business,
prospects or condition (financial or otherwise) of the Company which may have
been made or given by any person, including any of the Jordan Entities.

                       (b) The Executive acknowledges and represents and
warrants to the Company that he has been advised by the Company that (i) the
Shares have not been registered under the Securities Act of 1933, as amended
(the "Securities Act"); (ii) the Shares must be held indefinitely and the
Executive must continue to bear the economic risk of the investment in the
Shares unless an offer and sale of such Shares is subsequently registered
under the Securities Act and all applicable state securities laws or an
exemption from such registration is available; (iii) there is no established
market for the Shares and it is not anticipated that there will be any public
market for the Shares in the foreseeable future; (iv) Rule 144 promulgated
under the Securities Act is not presently available with respect to the sale
of any securities of the Company, and the Company has made no covenant to
make such Rule available; (v) when and if Shares may be disposed of without
registration under the Securities Act in reliance on Rule 144, such
disposition can be made only in limited amounts and in accordance with the
terms and conditions of such Rule; (vi) if the Rule 144 exemption is not
available, public offer or sale without registration will require the
availability of an exemption under the Securities Act; (vii) a restrictive
legend in the form heretofore set forth shall be placed on the certificates
representing the Shares; and (viii) a notation shall be made in the
appropriate records of the Company


                                      -5-

<PAGE>

indicating that the Shares are subject to restrictions on transfer and, if
the Company should at some time in the future engage the services of a
securities transfer agent, appropriate stop-transfer instructions will be
issued to such transfer agent with respect to the Shares.

                  2.5. ADDITIONAL INVESTMENT REPRESENTATIONS. The Executive
represents and warrants that (a) the Executive's financial situation is such
that he can afford to bear the economic risk of holding the Shares for an
indefinite period of time, has adequate means for providing for his current
needs and personal contingencies, and can afford to suffer complete loss of
his investment in the Shares; (b) the Executive's knowledge and experience in
financial and business matters are such that he is capable of evaluating the
merits and risks of the investment in the Shares as contemplated by this
Agreement; (c) the Executive understands that the Shares are a speculative
investment which involve a high degree of risk of loss of his investment
therein, there are substantial restrictions on the transferability of the
Shares, and, on the date hereof and for an indefinite period, there will be
no public market for the Shares and, accordingly, it may not be possible for
the Executive to liquidate his investment in case of emergency, if at all;
(d) in making his decision to acquire the Shares hereby acquired, the
Executive has relied upon independent investigations made by him and, to the
extent believed by the Executive to be appropriate, his representatives,
including his own professional, financial, tax and other advisors; (e) the
Executive and his representatives have been given the opportunity to examine
all documents and to ask questions of, and to receive answers from, the
Company and their representatives concerning the terms and conditions of the
acquisition of the Shares and to obtain any additional information which the
Executive or his representatives deem necessary; (f) the Executive is a
management employee of the Company and as such has a high level of
familiarity with the business, operations, financial condition and prospect
of the Company; and (g) the Executive understands that no dividends are
expected to be paid on the Shares in the foreseeable future.

                  2.6. SHAREHOLDERS AGREEMENT. The Executive hereby
acknowledges and agrees that he is a party to the Shareholders Agreement and
is bound by the terms and conditions of the Shareholders Agreement as a
"Shareholder" and as a "Holder" thereunder for all purposes thereof
(including, without limitation, Articles 4 and 5 thereof), for so long as the
Executive owns shares of the Company's Common Stock.

                  3.   RESTRICTIONS ON TRANSFER.

                  3.1. GENERAL RESTRICTIONS ON TRANSFER. (a) The Executive
agrees that he will not sell, transfer, assign, pledge, hypothecate or
otherwise dispose of ("Transfer") all or any portion of the Shares otherwise
than (i) to a Permitted Transferee or (ii) in accordance with the terms of
the Plan, this Agreement and the Shareholders Agreement. Notwithstanding this
Section 3.1(a), the provisions of Section 4 with regard to the termination of
employment of the Executive shall continue in full force and effect and shall
apply to the rights contained herein whether then held by the Executive or
any transferee of the Executive.

                       (b) The Company shall not be required (i) to reflect
on its books any purported Transfer of Shares in violation of any of the
provisions set forth in this Agreement, (ii) to treat any purported
transferee of such Shares as a record owner of such Shares or (iii) to afford
such purported transferee any right to vote, or to receive dividends in
respect of, such Shares.


                                      -6-

<PAGE>

                  3.2. CERTAIN PERMITTED TRANSFERS. As a condition to any
Transfer to a Permitted Transferee, the Permitted Transferee shall execute
and deliver to the Company a valid and binding agreement satisfactory to the
Company and its legal counsel to the effect that any Shares so Transferred
shall continue to be subject to all of the provisions and conditions of this
Agreement and that such Permitted Transferee agrees to be jointly and
severally bound with the Executive hereby as if an original party hereto; and
further provided that no Transfer to any Permitted Transferee shall relieve
the Executive of any obligation or liability under this Agreement.

                  4.   TERMINATION OF EMPLOYMENT

                  (a)  If the Executive ceases to be employed by the Company
or any of its subsidiaries at any time prior to the completion of the fifth
anniversary of January 20, 1998, for any reason other than his death or
Disability or termination for Cause, then (i) the Company shall have the
right to redeem, for a redemption price equal to $1.00 per Share redeemed, a
number of Shares equal to the product of (A) 6.5 MULTIPLIED BY (B) the
applicable "Percentage of Shares Redeemable" set forth in the following table
based on the number of anniversaries of January 20, 1998 elapsed prior to
such employment termination and (ii) all of the Executive's rights and
interests hereunder and under the Shareholders Agreement shall automatically
and without further action terminate and be of no further force or effect
upon any such redemption to the extent relating to any Shares redeemed.


<TABLE>
<CAPTION>
                  ----------------------------------------------------- -----------------------------------
                               NUMBER OF ANNIVERSARIES OF                         PERCENTAGE OF
                                JANUARY 20, 1998 ELAPSED                        SHARES REDEEMABLE
                  ----------------------------------------------------- -----------------------------------
                  <S>                                                   <C>
                    less than one                                                        100.00%
                  ----------------------------------------------------- -----------------------------------
                    one but less than two                                                 77.56%
                  ----------------------------------------------------- -----------------------------------
                    two but less than three                                               55.13%
                  ----------------------------------------------------- -----------------------------------
                    three but less than four                                              32.69%
                  ----------------------------------------------------- -----------------------------------
                    four but less than five                                               10.53%
                  ----------------------------------------------------- -----------------------------------
                    five or more                                                           0.00%
                  ----------------------------------------------------- -----------------------------------
</TABLE>

                  (b)  If the Executive ceases to be employed by the Company
or any of its subsidiaries on account of his death or Disability or due to
any reason other than termination for Cause, then the Company shall have an
option (the "Call Option") exercisable upon 30 days notice given at any time
within six months after such termination (the "Option Period") to purchase
from the Executive all or any portion of his Shares, to the extent remaining
after the application of Section 4(a) above, at a purchase price per Share
equal to the difference between: (i) the result obtained by taking the
greater of:

         (A)      the Company's book value (as of the most recent quarterly
                  financial statement of the Company) at the time the Call
                  Option is exercised; or

         (B)      four times the Company's earnings before interest and taxes
                  for its last completed fiscal year prior to the date of the
                  exercise of the Call Option less the amount of the Company's
                  funded debt as of the end of such fiscal year (in each case as
                  determined from the most recent annual financial statement of
                  the Company);


                                      -7-

<PAGE>

divided, in either case, by the number of shares of Common Stock (as
hereinafter defined) Outstanding (as hereinafter defined) as at the end of
such quarter or year, as the case may be; minus (ii) the quotient of the sum
of $17,700,000 plus any accrued and unpaid dividends on the shares of the
Preferred Stock (as hereinafter defined) of the Company and Common Stock as
of the date of exercise divided by the number of shares of Common Stock
Outstanding. The Call Option shall be exercised by the Company by tendering
to the Executive the purchase price for his Shares, by certified or official
bank check, prior to the expiration of the period of the notice provided
above. The Company at its option may instead deliver a promissory note,
payable in three equal annual installments (the first installment shall by
payable on the first anniversary of the purchase of such Shares), which note
shall be subordinated to all other debt and creditors of the Company, and
shall bear interest at 8.0% per annum payable semiannually.

                  (c)  If the Executive ceases to be employed by the Company
or any of its subsidiaries at any time due to termination for Cause, then (A)
the Company shall have the right to redeem any or all of the Shares for a
redemption price equal to $1.00 per Share redeemed and (B) all of the
Executive's rights and interests hereunder and under the Shareholders
Agreement shall automatically and without further action terminate and be of
no further force or effect upon any such redemption to the extent relating to
any Shares redeemed.

                  (d)  All determinations under this Section 4 shall be made
by the Board of Directors (as hereinafter defined), whose decision will be
final and binding.

                  (e)  The Executive shall have a "put" option on the same
time and price provisions as the "Call Option".

                  5.   RIGHT OF SET OFF. The Company shall be entitled to set
off and reduce any amounts payable to the Executive upon the purchase of
Shares pursuant to Section 4 for any other obligations or liabilities of the
Executive to the Company under this Agreement or any other written agreement
between the Company and the Executive.

                  6.   DEFINITIONS.

                       (a) "BOARD OF DIRECTORS" means the Company's Board of
Directors or any properly constituted committee thereof.

                       (b) "CAUSE" means material injury to the Company
resulting from the Executive's gross negligence in the performance of, or the
Executive's willful failure after written notice to perform, any of his
duties as an employee of the Company; the Executive's willful or intentional
injury of the Company; or any act of the Executive involving moral turpitude
which results in material injury to the name or the goodwill of the Company.

                       (c) "COMMON STOCK" means the Company's common stock,
par value $.01 per share, of whatever class, whether voting or non-voting.

                       (d) "DISABILITY" means the inability of the Executive
to perform substantially his duties to the Company by reason of physical or
mental disability or infirmity that, in the reasonable judgment of the Board
of Directors, is documented by medical evidence.


                                      -8-

<PAGE>

                       (e) "OUTSTANDING" means, with respect to the Common
Stock, the issued and outstanding Common Stock, shares of Common Stock
issuable pursuant to options, convertible securities or other rights, and
stock appreciation rights in respect of Common Stock.

                       (f) "PERMITTED TRANSFEREE" means the Executive's
spouse and/or descendants, any trust or similar entity all of the
beneficiaries of which are, or a corporation, partnership or limited
liability company all of the stockholders, partners or members of which are,
the Executive and/or the Executive's spouse and descendants.

                       (g) "PREFERRED STOCK" means the Company's preferred
stock, of whatever class, whether voting or non-voting.

                  7.   MISCELLANEOUS.

                  7.1. BINDING EFFECT. The provisions of this Agreement shall
be binding upon the parties hereto and their respective heirs, legal
representatives, successors and permitted assigns. Neither this Agreement nor
any purchase or sale of Shares pursuant hereto shall create, or be construed
or deemed to create, any right to employment in favor of the Executive or any
other person by the Company or any of its subsidiaries. The language used in
this Agreement will be deemed to be the language chosen by the parties hereto
to express their mutual intent, and no rule of strict construction will be
applied against any person.

                  7.2. SEVERABILITY. The invalidity, illegality or
unenforceability of one or more of the provisions of this Agreement in any
jurisdiction shall not affect the validity, legality or enforceability of the
remainder of this Agreement in such jurisdiction or the validity, legality or
enforceability of this Agreement, including any such provision, in any other
jurisdiction, it being intended that all rights and obligations of the
parties hereunder shall be enforceable to the fullest extent permitted by law.

                  7.3. AMENDMENT. This Agreement may be amended only by a
written instrument signed by the Company and the Executive.

                  7.4. NOTICES. All notices and other communications provided
for herein shall be dated and in writing and shall be deemed to have been
duly given when delivered, if delivered personally, sent by registered or
certified mail, return receipt requested, postage prepaid or sent by
confirmed telecopy and when received if delivered otherwise, to the party to
whom it is directed:

                 (a)      If to the Company, to it at the following address:

                          Fannie May Holdings, Inc.
                          ArborLake Centre, Suite 550
                          1751 Lake Cook Road
                          Deerfield, Illinois  60015
                          Attention:  Thomas H. Quinn

                 (b)      If to the Executive, to him at the following address:


                                      -9-

<PAGE>

                          Ted A. Shepherd
                          Fannie May Holdings, Inc.
                          1137 W. Jackson Blvd.
                          Chicago, IL 60607

or at such other address as the parties hereto shall have specified by notice
in writing to the other parties (provided that such notice of change of
address shall be deemed to have been duly given only when actually received).

                  7.5.  APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
CONSTRUED, APPLIED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
DELAWARE, WITHOUT REGARD TO CONFLICT OF LAW PROVISIONS OF ANY STATE.

                  7.6.  ARBITRATION. Any dispute between or among the parties
to this Agreement relating to or in respect of this Agreement, its
negotiation, execution, performance, subject matter, or any course of conduct
or dealing or actions under or in respect of this Agreement, including
without limitation any claim under the Securities Act, the Securities
Exchange Act of 1934, as amended, any other state or federal law relating to
securities or fraud or both, shall be submitted to, and resolved exclusively
pursuant to, arbitration in accordance with the commercial arbitration rules
of the American Arbitration Association. Such arbitration shall take place in
Chicago, Illinois. Decisions as to findings of fact pursuant to such
arbitration shall be final, conclusive and binding on the parties. Within
thirty (30) days following the award of any arbitrator hereunder, any party
may apply to a court of competent jurisdiction for a resolution of any
questions of law bearing on such award, and no such award shall be binding
and enforceable unless the arbitrator's determinations as to such questions
of such law have been judicially approved or until the passage of such thirty
(30) day period without such application having been made. Any final award
shall be enforceable as a judgment of a court of record.

                  7.7.  INTEGRATION. This Agreement and the documents referred
to herein or delivered pursuant hereto which form a part hereof contain the
entire understanding of the parties with respect to the subject matter
hereof. There are no restrictions, agreements, promises, representations,
warranties, conditions, covenants or undertakings with respect to the subject
matter hereof other than those expressly set forth herein. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to the subject matter referred to herein and therein.

                  7.8.  DESCRIPTIVE HEADINGS. The headings in this Agreement
are for convenience of reference only and shall not limit or otherwise affect
the meaning of terms contained herein.

                  7.9.  COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
shall constitute one and the same instrument.

                  7.10. EXPENSES. Unless otherwise agreed, the Company and
the Executive shall each pay their own costs in connection with the
preparation, negotiation, execution and delivery of this Agreement and in
connection with the issuance of the Shares, including, but not limited


                                      -10-

<PAGE>

to, all transfer taxes, fees or other charges which may be payable in
connection with the acquisition or issuance of the Shares pursuant to this
Agreement and all costs in connection with the preparation, execution and
delivery of any waiver, amendment or consent (whether or not executed)
relating to this Agreement, including reasonable fees and disbursements of
counsel.

                  7.11. RIGHTS CUMULATIVE; WAIVER. The rights and remedies of
the Executive and the Company under this Agreement shall be cumulative and
not exclusive of any rights or remedies which either would otherwise have
hereunder or at law or in equity or by statute, and no failure or delay by
either party in exercising any right or remedy shall impair any such right or
remedy or operate as a waiver of such right or remedy, nor shall any single
or partial exercise of any power or right preclude such party's other or
further exercise or the exercise of any other power or right. The waiver by
any party hereto of a breach of any provision of this Agreement shall not
operate or be construed as a waiver of any preceding or succeeding breach and
no failure by either party to exercise any right or privilege hereunder shall
be deemed a waiver of such party's rights or privileges hereunder or shall be
deemed a waiver of such party's rights to exercise the same at any subsequent
time or times hereunder.

                  7.12. SPECIFIC PERFORMANCE. Each of the parties hereto
acknowledges and agrees that in the event of any breach of this Agreement,
the non-breaching party would be irreparably harmed and could not be made
whole by monetary damages. It is accordingly agreed that the parties hereto
will waive the defense in any action for specific performance that a remedy
at law would be adequate and that the parties hereto, in addition to any
other remedy to which they may be entitled at law or in equity, shall be
entitled to compel specific performance of this Agreement in any action
instituted in the United States District Court for any District located in
the State of Illinois, or, in the event such court would not have
jurisdiction of such action, in any court of the United States or any state
thereof having subject matter jurisdiction of such action.

                  7.13. LIMITED OBLIGATION. The Executive acknowledges and
agrees that the obligations of the Company under this Agreement are solely
the obligations of the Company, and that none of the Company's stockholders,
directors, officers or lenders will have any obligation or liability,
contingent or otherwise, in respect of this Agreement and the subject matter
hereof.

                            [signature page follows]








                                      -11-

<PAGE>

                  IN WITNESS WHEREOF, the parties have executed this
Executive Subscription Agreement as of the date first above written.

                            FANNIE MAY HOLDINGS, INC.


                            By:   /s/ Thomas H. Quinn
                                 ----------------------------------
                                 Name:   Thomas H. Quinn
                                 Title:  Chairman of the Board of Directors




                             /s/ Ted A. Shepherd
                            ---------------------------------------
                            TED A. SHEPHERD