Document:

Exhibit
4.8

To the Board of Directors of Canetic
Resources Trust:

We have audited the consolidated financial
statements of Canetic Resources Trust as at December 31, 2006 and 2005 and
for the years then ended and have issued our reports thereon dated March 21,
2007 (which audit report expresses an unqualified opinion and includes
explanatory paragraphs relating to our consideration of internal control over
financial reporting and the issuance of separate financial statements prepared
solely under Canadian generally accepted accounting principles and includes a
separate report titled Comments by Independent Registered Chartered Accountants
on Canada-United States of America Reporting Differences pertaining to changes
in accounting principles).  Such
financial statements and our report thereon dated March 21, 2007 are included
in the Company’s Annual Report on Form 40-F for the year ended December
31, 2006. We have also audited the following Differences between Canadian and
United States Generally Accepted Accounting Principles of Canetic Resources
Trust as at December 31, 2006 and 2005 and for the years then ended which
are included herein and were prepared to comply with the requirements of
Item 18 of Form 20-F. This supplemental disclosure is the
responsibility of the Company’s management. Our responsibility is to express an
opinion based on our audits. In our opinion, the Differences between Canadian
and United States Generally Accepted Accounting Principles as at
December 31, 2006 and 2005 and for the years then ended, when considered
in relation to the 2006 and 2005 basic financial statements taken as a whole,
presents fairly, in all material respects, the information set forth therein.

/s/ Deloitte & Touche LLP

Independent Registered Chartered Accountants

Calgary, Alberta, Canada

August 3, 2007

DIFFERENCES BETWEEN
CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

The following information
should be read in conjunction with Canetic (“the Company”) audited annual
consolidated financial statements as at and for the years ended
December 31, 2006 and 2005. The Trust’s consolidated financial statements
have been prepared in accordance with Canadian generally accepted accounting
principles (“Canadian GAAP”).  These
principles, as they pertain to the Trust’s consolidated financial statements
differ from generally accepted accounting principles in the United States of
America (“U.S. GAAP”) as follows:

The application of U.S.
GAAP would have the following effects on net earnings as reported:

 

	
   

  	
   

  	
  2006

  	
   

  	
  2005

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Net earnings as
  reported for Canadian GAAP

  	
   

  	
  $ 223,101

  	
   

  	
  $    65,848

  	
   

  
	
  Adjustments:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Depletion,
  depreciation and amortization (Note a)

  	
   

  	
  (732,379

  	
  )

  	
  12,353

  	
   

  
	
  Unit-based
  compensation (Note f)

  	
   

  	
  (2,021

  	
  )

  	
  —

  	
   

  
	
  Non-cash
  interest on debentures (Note e)

  	
   

  	
  2,070

  	
   

  	
   

  	
   

  
	
  Unrealized loss
  on financial derivatives (Note b)

  	
   

  	
  —

  	
   

  	
  2,818

  	
   

  
	
  Effect of
  applicable income taxes on the above adjustments

  	
   

  	
  205,190

  	
   

  	
  (5,783

  	
  )

  
	
  Net earnings (loss) and
  comprehensive income

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   - U.S. GAAP (Note d)

  	
   

  	
  $ (304,039

  	
  )

  	
  $    75,236

  	
   

  
	
  Net earnings (loss) per
  unit

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Basic

  	
   

  	
  $      (1.48

  	
  )

  	
  $        0.84

  	
   

  
	
  Diluted

  	
   

  	
  $      (1.48

  	
  )

  	
  $        0.83

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Weighted average number
  of trust units outstanding

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Basic

  	
   

  	
  206,081

  	
   

  	
  89,331

  	
   

  
	
  Diluted

  	
   

  	
  206,081

  	
   

  	
  90,591

  	
   

  

 

The application of U.S.
GAAP would have the following effects on the balance sheets as reported:

 

	
   

  	
   

  	
  Canadian

  	
   

  	
  Increase

  	
   

  	
  U.S.

  	
   

  
	
   

  	
   

  	
  GAAP

  	
   

  	
  (Decrease)

  	
   

  	
  GAAP

  	
   

  
	
  December
  31, 2006

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Assets:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Property, plant and equipment (Note a)

  	
   

  	
  $  4,597,654

  	
   

  	
  $    (777,534

  	
  )

  	
  $ 3,820,120

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Liabilities:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Accounts payable and accrued liabilities (Note f)

  	
   

  	
  260,206

  	
   

  	
  2,768

  	
   

  	
  262,974

  	
   

  
	
  Convertible debentures (Note e)

  	
   

  	
  260,656

  	
   

  	
  4,514

  	
   

  	
  265,170

  	
   

  
	
  Future income taxes

  	
   

  	
  250,339

  	
   

  	
  (225,702

  	
  )

  	
  24,637

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Temporary equity
  (Note c)

  	
   

  	
  —

  	
   

  	
  3,103,011

  	
   

  	
  3,103,011

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Unitholders’
  equity:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Capital (Note c)

  	
   

  	
  4,224,470

  	
   

  	
  (4,224,470

  	
  )

  	
  —

  	
   

  
	
  Convertible debentures (Note e)

  	
   

  	
  6,584

  	
   

  	
  (6,584

  	
  )

  	
  —

  	
   

  
	
  Deficit (Note c)

  	
   

  	
  (724,139

  	
  )

  	
  568,929

  	
   

  	
  (155,210

  	
  )

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  December
  31, 2005

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Assets:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Property, plant and equipment (Note a)

  	
   

  	
  $  1,317,917

  	
   

  	
  (45,902

  	
  )

  	
  $ 1,272,015

  	
   

  
	
  Liabilities:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  —

  	
   

  
	
  Future income taxes

  	
   

  	
  202,110

  	
   

  	
  (15,803

  	
  )

  	
  186,307

  	
   

  
	
  Non-controlling
  interest (Note c)

  	
   

  	
  3,804

  	
   

  	
  (3,804

  	
  )

  	
  —

  	
   

  
	
  Temporary equity
  (Note c)

  	
   

  	
  —

  	
   

  	
  2,090,829

  	
   

  	
  2,090,829

  	
   

  
	
  Unitholders’
  equity:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  —

  	
   

  
	
  Capital (Note c)

  	
   

  	
  1,087,459

  	
   

  	
  (1,087,459

  	
  )

  	
   

  	
   

  
	
  Contributed surplus (Note c)

  	
   

  	
  40,836

  	
   

  	
  (40,836

  	
  )

  	
  —

  	
   

  
	
  Deficit (Note c)

  	
   

  	
  $    (363,712

  	
  )

  	
  $    (988,829

  	
  )

  	
  $ (1,352,541

  	
  )

  

 

a)              Property, plant and
equipment and depletion, depreciation and amortization:

Under U.S. GAAP, the book value of petroleum and
natural gas properties, net of deferred income taxes, is limited to the present
value of after tax future net cash flows from proven reserves, discounted at 10
percent (based on prices and costs at the balance sheet date), plus the lower
of cost and fair value of unproven properties.

Under Canadian GAAP, an impairment loss arises when
the book value of the petroleum and natural gas properties exceeds the
undiscounted future cash flow from proved reserves calculated using forecast
prices and costs.  If an impairment loss
is determined to exist, the impairment is measured as the amount by which the
net book value of the petroleum and natural gas properties exceeds the future
discounted cash flow from proved plus probable reserves at forecast prices and
costs.

For
the year ended December 31, 2006, depletion, depreciation and amortization
calculated under U.S. GAAP was $732.4 million ($520.0 million net of tax)
higher than depletion, depreciation and amortization calculated under Canadian
GAAP This amount was comprised of a ceiling test impairment totaling $739.1
million ($524.7 million net of tax) reduced by depletion, depreciation and
amortization totaling $6.7 million ($4.8 million net of tax) relating to the
reduction of depletable costs.  For the
year ended December 31, 2005, depletion, depreciation and amortization
calculated under U.S. GAAP was $12.4 million ($7.6 million net of tax) lower
than depletion, depreciation and amortization calculated under Canadian GAAP
and there was no ceiling test impairment under U.S. GAAP in 2005.

b)              Financial
derivatives and unrealized loss on financial derivatives:

Effective
January 1, 2004, the Trust prospectively adopted CICA Accounting Guideline — 13
“Hedging Relationships” (“AcG-13”) and Emerging Issues Committee Abstract 128 “Accounting
for Trading, Speculative or Non-hedging Derivative Financial Instruments”. This
effectively eliminates U.S. GAAP differences relating to financial instruments
that do not qualify for hedge accounting for future periods. The Trust enters
into numerous financial instruments to manage commodity price and foreign
exchange risk that do not qualify as hedges under the new accounting guideline.
The Trust has elected to not apply hedge accounting to any of its financial
instruments for both Canadian and U.S. GAAP.

Upon
adoption of AcG-13 the Trust recorded in 2005, $2.8 million ($1.7 million net
of tax) of a deferred financial derivative loss, which was amortized into
earnings under AcG-13. Because this amount was required to be expensed under
U.S. GAAP prior to 2005, an adjustment for this amount was made during the 2005
year.

c)              Temporary equity:

The
Trust issues units and exchangeable shares that are redeemable at the option of
the unitholder. Under Canadian GAAP, all Trust units are classified as
unitholders’ equity and all exchangeable shares are classified as
non-controlling interest. For U.S. GAAP, Trust units and exchangeable shares
that are redeemable at the option of the unitholder are valued at their
redemption value and presented as temporary equity. The redemption value of the
trust units and exchangeable shares is based on the trading value of the units
at the balance sheet date. Changes in redemption value are charged or credited
to accumulated earnings. As contributed surplus relates to trust units, it has
also been reclassified to temporary equity.

d)              Comprehensive
income:

Comprehensive
income is recognized and measured under U.S. GAAP pursuant to Statement of
Financial Accounting Standard (SFAS) 130, “Reporting Comprehensive Income”.
This standard defines comprehensive income as all changes in equity other than
those resulting from investments by owners and distributions to owners.
Comprehensive income is comprised of two components, net income and other
comprehensive income (“OCI”). OCI refers to amounts that are recorded as an
element of shareholders’ equity but are excluded from net income because these
transactions or events were attributed to changes from non-owner sources.
Comprehensive income is equivalent to net income in 2006 and 2005.

e)              Convertible
Debentures:

Under Canadian GAAP, certain of the Trust’s
convertible debentures were classified as debt with a portion, representing the
value associated with the conversion feature, being allocated to equity under
Canadian GAAP.  In addition, under
Canadian GAAP a non-cash interest expense representing the effective yield of
the debt component is recorded in the consolidated statement of earnings with a
corresponding credit to the convertible debenture liability balance to accrete
that balance to the full principal due on maturity.

Under U.S. GAAP, the convertible debentures in their
entirety are classified as debt.  The
difference between the fair value and the face value of the debentures is
amortized over the life of the debentures using the effective yield method.

f)                Unit-Based
Compensation:

The Trust has a Unit Award Incentive Plan for
directors, officers, employees and consultants of the Trust.  Under the terms of the plan, a holder may
elect, subject to consent of the Trust, to receive cash upon vesting in lieu of
the number of rights held.  Under
Canadian GAAP, compensation expense associated with rights granted under the
plan is measured at the date of exercise or at the date of the financial
statement for unexercised rights. 
Compensation expense on unexercised rights is determined on the rights
as the excess of the market price over the exercise price of the rights at the
end of each reporting period and is deferred and recognized in income over the
vesting period of the rights.

U.S. GAAP, SFAS 123R “Share Based Payments” eliminates
the ability to account for share-based compensation using APB 25, “Accounting
for Stock Issued to Employees” and generally requires instead, that such
transactions be accounted for using a fair-value-based method.  The methodology for determining the fair
value of equity instruments issued in exchange for employee services prescribed
by SFAS 123R differs from that prescribed by Canadian GAAP.  Under U.S. GAAP, the Trust unit liability is
calculated based on the RTUs’ and PTUs’ fair value at each reporting date until
the date of settlement.  Compensation
cost for each period is based on the change in the fair value of the RTUs and
PTUs for each reporting period.  When the
RTUs and PTUs vest, the amounts recorded as a trust unit rights liability, are
recorded to mezzanine equity.

For the period ended December 31, 2005, the Trust
recorded share-based compensation using APB 25, and for the 2006 fiscal year
the Trust used SFAS 123R.

The Trust adopted SFAS 123R using the modified
prospective approach.  As at and during
the year ended December 31, 2006 the Trust has recorded additional unit-based
compensation expense totalling $2 million, additional PP&E totalling $1
million and an additional liability totalling $3 million under U.S. GAAP
relating to difference in methodology in determining the fair value of certain
equity instruments.  As the Trust adopted
SFAS 123R using the modified prospective approach, prior periods 

have not been restated, as required by the
standard.  SFAS 123R, under the modified
prospective approach, requires the cumulative impact of a change in an
accounting policy to be presented in the current years statement of
earnings.  As no PTUs were outstanding as
at December 31, 2005, there was no impact of adopting SFAS 123R.

Assumptions

We used the Binomial
Lattice model to estimate the fair value of our stock-based compensation, with
the following assumptions:

	
  Expected Annual Distribution
  per Unit ($/unit)

  	
   

  	
  2.76

  	
   

  
	
  Expected
  Volatility

  	
   

  	
  36

  	
  %

  
	
  Risk-Free
  Interest Rate

  	
   

  	
  4.5

  	
  %

  
	
  Fair Value per Option
  Grant

  	
   

  	
  $ 24.34

  	
   

  

 

The basis for our assumptions, among other things, is as follows:

·                  Annual
distribution expectations take into account historical distribution payments
and reflect our expectation for future payments.

·                  Volatility
expectations are based on our historical unit price volatility.

·                  Our
risk-free interest rate assumption is the three month Canadian treasury bill
rate.

·                  We
assume forfeiture rates based on historical experience.

(g)           Additional U.S. GAAP disclosures:

	
  ($000s)

  	
   

  	
  2006

  	
   

  	
  2005

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Components of
  accounts receivable

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Trade

  	
   

  	
  $ 86,813

  	
   

  	
  $   38,571

  	
   

  
	
  Accruals

  	
   

  	
  168,376

  	
   

  	
  85,606

  	
   

  
	
  Other accruals

  	
   

  	
  6,309

  	
   

  	
  16,731

  	
   

  
	
   

  	
   

  	
  $ 261,498

  	
   

  	
  $ 140,908

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Components of
  prepaid expenses and deposits

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Prepaid expenses

  	
   

  	
  $   3,101

  	
   

  	
  $        828

  	
   

  
	
  Prepaid interest

  	
   

  	
  3,949

  	
   

  	
  —

  	
   

  
	
  Prepaid inventory

  	
   

  	
  6,131

  	
   

  	
  —

  	
   

  
	
  Funds on deposit

  	
   

  	
  21,466

  	
   

  	
  10,802

  	
   

  
	
   

  	
   

  	
  $ 34,647

  	
   

  	
  $   11,630

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Components of
  accounts payable

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Accounts payable

  	
   

  	
  $ 125,230

  	
   

  	
  $   43,498

  	
   

  
	
  Capital accrual

  	
   

  	
  59,100

  	
   

  	
  31,028

  	
   

  
	
  Operating accrual

  	
   

  	
  42,080

  	
   

  	
  28,233

  	
   

  
	
  Other liabilities

  	
   

  	
  33,796

  	
   

  	
  54,609

  	
   

  
	
   

  	
   

  	
  $ 260,206

  	
   

  	
  $ 157,368

  	
   

  

 

(h)         The net change in
non-cash working capital balances comprises the following:

	
  ($000s)

  	
   

  	
  2006

  	
   

  	
  2005

  	
   

  
	
  Accounts receivable

  	
   

  	
  $ 75,172

  	
   

  	
  $ (29,008

  	
  )

  
	
  Prepaid expenses and deposits

  	
   

  	
  (17,174

  	
  )

  	
  1,975

  	
   

  
	
  Deferred financing charges

  	
   

  	
  —

  	
   

  	
  2,622

  	
   

  
	
  Accounts payable

  	
   

  	
  (87,246

  	
  )

  	
  17,830

  	
   

  
	
  Income taxes payable

  	
   

  	
  (32,966

  	
  )

  	
  —

  	
   

  
	
  Distributions payable

  	
   

  	
  11,436

  	
   

  	
  —

  	
   

  
	
   

  	
   

  	
  $ (50,778

  	
  )

  	
  $   (6,581

  	
  )

  
	
  Relating to:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Operating
  activities

  	
   

  	
  $ (50,778

  	
  )

  	
  $   (7,812

  	
  )

  
	
  Financing
  activities

  	
   

  	
  —

  	
   

  	
  1,231

  	
   

  
	
  Investing
  activities (1)

  	
   

  	
  —

  	
   

  	
  —

  	
   

  
	
   

  	
   

  	
  $ (50,778

  	
  )

  	
  $   (6,581

  	
  )

  

(1) Non-cash working capital
included in capital expenditures was $65.3 million (2005 - $78.0 million).

(i)                                    Additional
disclosure

The Trust presents oil and natural gas sales and royalty amounts gross
in the Consolidated Statement of Earnings. 
These line items would be combined and presented net in a statement of
earnings prepared in accordance with U.S. GAAP. 
This difference does not result in an adjustment to the financial
results as reported under Canadian GAAP.

 (j)           StarPoint
Acquisition

The merger was
accounted for as an acquisition of StarPoint by Acclaim using the purchase
method of accounting.  Goodwill paid was
attributable to the fair value assigned to the reserves acquired and the
knowledge and business relationships acquired through the management team and
employees of StarPoint.  The amount of
Goodwill deductible for tax purposes is nil.

The consolidated
financial statements reflect the operations of StarPoint from January 5,
2006.  If the acquisition had occurred on
January 1, 2005 the following pro forma results would have been realized by the
Trust in 2005:

 

	
  ($000s except per unit amounts)

  	
   

  	
  2005

  	
   

  
	
   

  	
   

  	
  (unaudited)

  	
   

  
	
  Revenue

  	
   

  	
  $ 1,170,928

  	
   

  
	
  Net income

  	
   

  	
  $    123,915

  	
   

  
	
  Net income per
  Trust unit - basic

  	
   

  	
  $          0.63

  	
   

  
	
  Net income per
  Trust unit - diluted

  	
   

  	
  $          0.63

  	
   

  

 

(k)                                Samson
Acquisition

The consolidated
financial statements reflect the operations of Samson from August 31,
2006.  If the acquisition had occurred on
January 1, 2005 and January 1, 2006 the following pro forma results would have
been realized by the Trust in 2005 and 2006:

	
  ($000s except per unit amounts)

  	
   

  	
  2006

  	
   

  	
  2005

  	
   

  
	
   

  	
   

  	
  (unaudited)

  	
   

  
	
  Revenue

  	
   

  	
  $ 1,289,500

  	
   

  	
  $    802,348

  	
   

  
	
  Net income

  	
   

  	
  $  234,474

  	
   

  	
  $    134,626

  	
   

  
	
  Net income per
  Trust unit - basic

  	
   

  	
  $         1.03

  	
   

  	
  $          1.22

  	
   

  
	
  Net income per Trust
  unit - diluted

  	
   

  	
  $         1.01

  	
   

  	
  1.21

  	
   

  

 

RECENT ACCOUNTING PRONOUNCEMENTS

In September 2006,
the FASB issued SFAS No. 158, Employers’ Accounting for Defined Benefit
Pension and Other Postretirement Plans — an amendment of SFAS Nos. 87, 88, 106
and 132R. This statement requires the an entity to recognize in its
consolidated balance sheet the overfunded or underfunded status of its defined
benefit plans as an asset or liability and to recognize changes in that funded
status in the year in which the changes occur through comprehensive income.
This statement also requires that the entity measure the funded status of a
plan as of December 31 rather than September 30 as previously
permitted. The adoption of this standard at December 31, 2006 had no
impact on the Trust’s financial statements.

In September 2006,
the U.S. Securities and Exchange Commission released Staff Accounting Bulletin
No. 108, Considering the Effects of Prior Year Misstatements when
Quantifying Misstatements in Current Year Financial Statements (SAB 108), which
provides interpretive guidance on the SEC’s views regarding the process of
quantifying materiality of financial statement misstatements. SAB 108 was
effective for fiscal years ending after November 15, 2006, with early
application for the first interim period ending after November 15, 2006.
The adoption of this standard at December 31, 2006 had no impact on the
Trust’s financial statements.

In June 2006, the
EITF finalized Issue 06-3, How Taxes Collected from Customers and Remitted to
Governmental Authorities Should Be Presented in the Income Statement. The Task
Force reached a consensus that this EITF applied to any tax assessed by a
governmental authority that is directly imposed on a revenue-producing
transaction between a seller and a customer and may include, but is not limited
to sales, use, value added, and some excise taxes. The EITF concluded that the
presentation of taxes within the scope of this issue may be either gross
(included in revenues and costs) or net (excluded from revenues and costs) and
is an accounting policy decision that should be disclosed by the Trust.  The Trust is considering the effect of
adoption of EITF 06-03.

SFAS No. 151,
Inventory Costs, was issued by the FASB in November 2004. This statement amends
Accounting Research Bulletin No. 43, to clarify that abnormal amounts of
idle facility expense, freight, handling costs and wasted materials should be
recognized as current-period charges, and it also requires that allocation of
fixed production overheads be based on the normal capacity of the related
production facilities. This statement was adopted by the Trust on
January 1, 2006 and it did not have a material impact on the Trust’s
financial statements.

In June 2006, the
FASB issued FASB Interpretation No. 48, Accounting for Uncertainty in Income
Taxes. This interpretation clarifies the criteria for recognizing income tax
benefits under FASB Statement No. 109, Accounting for Income Taxes, and
requires additional financial statement disclosures about uncertain tax
positions. The interpretation is effective beginning January 1, 2007. The
Trust is currently evaluating this interpretation and does not expect a
material impact on its financial statements.

In September 2006,
the FASB issued SFAS No. 157, Fair Value Measurements. This Statement defines
fair value, establishes a framework for measuring fair value in generally
accepted accounting principles (GAAP), and expands disclosures about fair value
measurements. This Statement applies under other accounting pronouncements that
require or permit fair value measurements, and where applicable simplifies and
codifies related guidance within GAAP and does not require any new fair value
measurements. The Statement is effective for fiscal years beginning
January 1, 2008. Provisions of the Statement are to be applied
prospectively except in limited situations. The Trust does not expect the
initial adoption of this Statement to have a material impact on its financial
statements.

In June 2005, the
FASB issued SFAS 154, Accounting Changes and Error Corrections, which replaces
APB Opinion 20 and FASB Statement 3. 
Statement 154 changes the requirements for the accounting and reporting
of a change in accounting principle. 
Opinion 20 previously required that most voluntary changes in accounting
principle be recognized by including the cumulative effect of the new
accounting principle in net income of the period of the change.  Statement 154 now requires retrospective
application of changes in accounting principle to prior period financial
statements, unless it is impracticable to determine either the period-specific
effects or the cumulative effect of the change. 
The adoption of this standard at January 1, 2006 had no impact on the
Trust’s financial statements.

In February 2006,
FASB issued SFAS 155, Accounting for Certain Hybrid Financial Instruments — an
amendment of SFAS 133 and 140.  This
statement amends SFAS 133, Accounting for Derivative Instruments and Hedging
Activities, and SFAS 140, Accounting for Transfers and Servicing of Financial
Assets and Extinguishments of Liabilities. 
This Statement resolves issues addressed in SFAS 133 Implementation
Issue No. D1, Application of Statement 133 to Beneficial Interests in
Securitized Financial Assets.  The
Statement a) permits fair value remeasurement for any hybrid financial
instrument that contains an embedded derivative that otherwise would require
bifurcation, b) clarifies which interest-only strips and principal-only strips
are not subject to the requirements of SFAS 133, c) establishes a requirement
to evaluate interests in securitized financial assets to identify interests
that are freestanding derivatives or that hybrid financial instruments that
contain an embedded derivative requiring bifurcation, d) clarifies that
concentrations of credit risk in the form of subordination are not embedded
derivatives, and e) amends SFAS 140 to eliminate the prohibition on a
qualifying special-purpose entity from holding a derivative financial
instrument that pertains to a beneficial interest other than another derivative
financial instrument.  This Statement is
effective for all financial instruments acquired or issued after the beginning
of an entity’s first fiscal year that begins after September 15, 2006 with
early adoption permitted.  The Trust is
considering the effect of adoption of SFAS 155.

In December 2004,
the FASB issued Statement 153, Exchanges of Non-Monetary Assets, an amendment
of APB Opinion 29, Accounting for Non-Monetary Transactions.  This amendment eliminates the exception for
Non-Monetary exchanges of similar productive assets and replaces it with a
general exception for exchanges of non-monetary assets that do not have
commercial substance.  Under Statement
153, if a non-monetary exchange of similar productive assets meets a
commercial-substance test and fair value is determinable, the transaction must
be accounted for at fair value resulting in the recognition of a gain or
loss.  This statement is effective for
non-monetary transactions in fiscal periods that begin after June 15, 2005 The
adoption of this standard at January 1, 2006 had no impact on the Trust’s
financial statements.

In February 2007,
the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and
Financial Liabilities — Including an Amendment of FASB Statement No. 115.”  This pronouncement permits entities to use
the fair value method to measure certain financial assets and liabilities by
electing an irrevocable option to use the fair value method at specified
election dates.  After election of the
option, subsequent changes in fair value would result in the recognition of
unrealized gains or losses as period costs during the period the change
occurred.  SFAS No. 159 becomes effective
as of the beginning of the first fiscal year that begins after November 15,
2007, with early adoption permitted. 
However, entities may not retroactively apply the provisions of SFAS No.
159 to fiscal years preceding the date of adoption.  We are currently evaluating the impact of
SFAS No. 159 may have on our financial position, results of operations and cash
flows.

Effective January 1,
2007, the Trust will apply the following new CICA Handbook sections: Section
1530 — Comprehensive Income; Section 3251 — Equity; Section 3855 — Financial
Instruments — Recognition and Measurement; Section 3865 — Hedges.  The new accounting pronouncements are
effective for the first quarter of 2007, and address the recognition and
measurement of financial assets, financial liabilities and non-financial
derivatives.  The Trust has assessed the
requirements under these sections, and has noted no current impact on the
financial statements.  Financial assets,
financial liabilities and non-financial derivatives acquired in future periods
will be evaluated under the framework set forth in the new pronouncements.

SUPPLEMENTARY OIL AND GAS
INFORMATION — SFAS 69 (UNAUDITED)

The tables in this
section set forth oil and gas information prepared by the Registrant in
accordance with U.S disclosure standards, pertaining to SFAS 69, “Disclosure
about Oil and Gas Producing Activities”.

Standardized Measure of
Discounted Future Net Cash Flows and Changes Therein

In calculating the
standardized measure of discounted future net cash flows, year-end constant
prices and cost assumptions were applied to Canetic’s annual future production from
proved reserves to determine cash inflows. Future production and development
costs are based on constant price assumptions and assume the continuation of
existing economic, operating and regulatory conditions. Future income taxes are
calculated by applying statutory income tax rates to future pre-tax cash flows
after provision for the tax cost of the oil and natural gas properties based
upon existing laws and regulations. The Trust is currently not taxable. The
discount was computed by application of a 10 percent discount factor to the
future net cash flows. The calculation of the standardized measure of
discounted future net cash flows is based upon the discounted future net cash
flows prepared by Canetic’s independent qualified reserves evaluators in relation
to the reserves they respectively evaluated, and adjusted by Canetic is to
account for management’s estimates of risk management activities, asset
retirement obligations and future income taxes.

Canetic cautions that the
discounted future net cash flows relating to proved oil and gas reserves are an
indication of neither the fair market value of the Registrant’s oil and gas
properties, nor of the future net cash flows expected to be generated from such
properties. The discounted future cash flows do not include the fair market
value of exploratory properties and probable or possible oil and gas reserves,
nor is consideration given to the effect of anticipated future changes in crude
oil and natural gas prices, development, asset retirement and production costs
and possible changes to tax and royalty regulations. The prescribed discount
rate of 10 percent may not appropriately reflect interest rates.

Capitalized
Costs Relating to Oil and Gas Producing Activities

($
000s)

	
  As At December 31,

  	
   

  	
  2006

  	
   

  	
  2005

  	
   

  
	
  Proved oil and
  gas properties

  	
   

  	
  $ 5,584,737

  	
   

  	
  $ 1,913,013

  	
   

  
	
  Unproved oil and
  gas properties

  	
   

  	
  294,786

  	
   

  	
  42,459

  	
   

  
	
  Total capital
  costs

  	
   

  	
  5,879,523

  	
   

  	
  1,955,472

  	
   

  
	
  Accumulated
  depletion and depreciation

  	
   

  	
  1,281,864

  	
   

  	
  637,555

  	
   

  
	
  Net capitalized costs

  	
   

  	
  $ 4,597,659

  	
   

  	
  $ 1,317,917

  	
   

  

 

Costs Incurred in Oil and Gas
Property Acquisition,

Exploration and Development
Activities

($
000s)

	
  For the years ended December 31,(1)

  	
   

  	
  2006

  	
   

  	
  2005

  	
   

  
	
  Property
  acquisition costs (1)

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Proved oil and gas properties

  	
   

  	
  $ 3,237,969

  	
   

  	
  $        8,944

  	
   

  
	
  Unproved oil and gas properties

  	
   

  	
  237,530

  	
   

  	
  —

  	
   

  
	
  Exploration
  costs (2)

  	
   

  	
  2,783

  	
   

  	
  3,139

  	
   

  
	
  Development
  costs (3)

  	
   

  	
  348,505

  	
   

  	
  169,082

  	
   

  
	
  Total

  	
   

  	
  $ 3,826,787

  	
   

  	
  $ 181,165

  	
   

  

(1)          Acquisitions are net of
disposition of properties.

(2)          Cost of geological and
geophysical capital expenditures.

(3)          Development and
facilities capital expenditures and drilling and completion costs.

Results of Operations for
Producing activities

($
000s)

	
  For the years ended December 31,

  	
   

  	
  2006

  	
   

  	
  2005

  	
   

  
	
  Oil and gas
  sales, net of royalties and commodity contracts

  	
   

  	
  $ 1,149,494

  	
   

  	
  $    624,526

  	
   

  
	
  Lease operating,
  costs and capital taxes

  	
   

  	
  263,978

  	
   

  	
  137,682

  	
   

  
	
  Transportation
  costs

  	
   

  	
  18,968

  	
   

  	
  9,897

  	
   

  
	
  Depletion,
  depreciation and accretion

  	
   

  	
  656,613

  	
   

  	
  238,253

  	
   

  
	
  Operating income

  	
   

  	
  209,935

  	
   

  	
  238,694

  	
   

  
	
  Income taxes

  	
   

  	
  5,567

  	
   

  	
  —

  	
   

  
	
  Results of
  operations from producing activities

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (excluding corporate
  overhead and interest costs)

  	
   

  	
  $    204,368

  	
   

  	
  $    238,694

  	
   

  

(1)          Canetic is currently not
taxable, current income tax disclosed for the years 2005 through 2006 represent
Large Corporation Tax, which is calculated by reference to balance sheet items
(debt and equity) and not by income items.

Reserve Quantity Information for
the Year Ended December 31, 2005

Constant
Prices and Costs

	
   

  	
   

  	
  Light and

  	
   

  	
   

  	
   

  	
  Natural

  	
   

  	
  Natural Gas

  	
   

  	
  Barrels of Oil

  	
   

  
	
  Net proved

  	
   

  	
  Medium oil

  	
   

  	
  Heavy Oil

  	
   

  	
  Gas

  	
   

  	
  Liquids

  	
   

  	
  Equivalent

  	
   

  
	
  Reserves

  	
   

  	
  (mbbls)

  	
   

  	
  (mbbls)

  	
   

  	
  (bcf)

  	
   

  	
  (mbbls)

  	
   

  	
  (mboe)

  	
   

  
	
  December
  31, 2004

  	
   

  	
  34,604

  	
   

  	
  7,439

  	
   

  	
  151,085

  	
   

  	
  5,621

  	
   

  	
  72,845

  	
   

  
	
  Extensions

  	
   

  	
  543

  	
   

  	
  468

  	
   

  	
  25,381

  	
   

  	
  592

  	
   

  	
  5,848

  	
   

  
	
  Improved
  recovery

  	
   

  	
  111

  	
   

  	
  564

  	
   

  	
  1,781

  	
   

  	
  157

  	
   

  	
  943

  	
   

  
	
  Technical
  revisions

  	
   

  	
  2,405

  	
   

  	
  116

  	
   

  	
  7,920

  	
   

  	
  433

  	
   

  	
  4,540

  	
   

  
	
  Discoveries

  	
   

  	
  65

  	
   

  	
  415

  	
   

  	
  2,310

  	
   

  	
  31

  	
   

  	
  760

  	
   

  
	
  Acquisitions

  	
   

  	
  27

  	
   

  	
  —

  	
   

  	
  52

  	
   

  	
  2

  	
   

  	
  40

  	
   

  
	
  Dispositions

  	
   

  	
  (261

  	
  )

  	
  —

  	
   

  	
  (1,743

  	
  )

  	
  (19

  	
  )

  	
  (608

  	
  )

  
	
  Economic Factors

  	
   

  	
  473

  	
   

  	
  204

  	
   

  	
  2,275

  	
   

  	
  86

  	
   

  	
  1,130

  	
   

  
	
  Infill Drilling

  	
   

  	
  640

  	
   

  	
  —

  	
   

  	
  3,428

  	
   

  	
  60

  	
   

  	
  1,359

  	
   

  
	
  Production

  	
   

  	
  (4,197

  	
  )

  	
  (1,585

  	
  )

  	
  (29,203

  	
  )

  	
  (1,328

  	
  )

  	
  (11,976

  	
  )

  
	
  Change for the
  year

  	
   

  	
  (194

  	
  )

  	
  182

  	
   

  	
  12,201

  	
   

  	
  14

  	
   

  	
  2,036

  	
   

  
	
  December 31, 2005

  	
   

  	
  34,410

  	
   

  	
  7,621

  	
   

  	
  163,286

  	
   

  	
  5,635

  	
   

  	
  74,881

  	
   

  

 

Reserve Quantity Information for
the Year Ended December 31, 2006

Constant
Prices and Costs

	
   

  	
   

  	
  Light and

  	
   

  	
   

  	
   

  	
  Natural

  	
   

  	
  Natural Gas

  	
   

  	
  Barrels of Oil

  	
   

  
	
  Net proved

  	
   

  	
  Medium oil

  	
   

  	
  Heavy Oil

  	
   

  	
  Gas

  	
   

  	
  Liquids

  	
   

  	
  Equivalent

  	
   

  
	
  Reserves

  	
   

  	
  (mbbls)

  	
   

  	
  (mbbls)

  	
   

  	
  (bcf)

  	
   

  	
  (mbbls)

  	
   

  	
  (mboe)

  	
   

  
	
  December
  31, 2005

  	
   

  	
  34,410

  	
   

  	
  7,621

  	
   

  	
  163,286

  	
   

  	
  5,635

  	
   

  	
  74,881

  	
   

  
	
  Starpoint

  	
   

  	
  41,199

  	
   

  	
  10,440

  	
   

  	
  127,325

  	
   

  	
  1,951

  	
   

  	
  74,811

  	
   

  
	
  Extensions

  	
   

  	
  1,261

  	
   

  	
  365

  	
   

  	
  11,191

  	
   

  	
  732

  	
   

  	
  4,223

  	
   

  
	
  Improved
  recovery

  	
   

  	
  —

  	
   

  	
  2,749

  	
   

  	
  3,437

  	
   

  	
  169

  	
   

  	
  3,491

  	
   

  
	
  Technical
  revisions

  	
   

  	
  5,489

  	
   

  	
  (2,596

  	
  )

  	
  6,216

  	
   

  	
  514

  	
   

  	
  4,443

  	
   

  
	
  Discoveries

  	
   

  	
  291

  	
   

  	
  0

  	
   

  	
  547

  	
   

  	
  49

  	
   

  	
  432

  	
   

  
	
  Acquisitions

  	
   

  	
  834

  	
   

  	
  —

  	
   

  	
  106,555

  	
   

  	
  1,881

  	
   

  	
  20,474

  	
   

  
	
  Dispositions

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  (535

  	
  )

  	
  (85

  	
  )

  	
  (174

  	
  )

  
	
  Economic Factors

  	
   

  	
  103

  	
   

  	
  32

  	
   

  	
  263

  	
   

  	
  10

  	
   

  	
  189

  	
   

  
	
  Infill Drilling

  	
   

  	
  2,211

  	
   

  	
  835

  	
   

  	
  3,364

  	
   

  	
  46

  	
   

  	
  3,653

  	
   

  
	
  Production

  	
   

  	
  (10,012

  	
  )

  	
  (2,305

  	
  )

  	
  (54,034

  	
  )

  	
  (1,536

  	
  )

  	
  (22,859

  	
  )

  
	
  Change for the
  year

  	
   

  	
  41,376

  	
   

  	
  9,520

  	
   

  	
  204,329

  	
   

  	
  3,731

  	
   

  	
  88,683

  	
   

  
	
  December 31, 2006

  	
   

  	
  75.786

  	
   

  	
  17,141

  	
   

  	
  367,615

  	
   

  	
  9,366

  	
   

  	
  163,564

  	
   

  

 

(1)          Definitions:

(a)          “Net” reserves are the
remaining reserves of Canetic after deduction of estimated royalties and
including royalty interest

(b)         “Proved” reserves are the
estimated quantities of crude oil, natural gas and NGL’s which geological and
engineering data demonstrate with reasonable certainty to be recoverable in
future years from known reservoirs under existing economic and operating
conditions, i.e., prices and costs as of the date the estimate is made.

(2)          Canetic does not file
any estimates of total net proved crude oil or natural gas reserves with any
U.S federal authority or agency other than the SEC.

Standardize Measure of Discounted
Future Net Cash Flows

Relating to Proved Oil and Gas
Reserves

($
000s)

	
   

  	
   

  	
  2006

  	
   

  	
  2005

  	
   

  
	
  Future Cash
  inflows

  	
   

  	
  $ 9,581,387

  	
   

  	
  $ 5,228,165

  	
   

  
	
  Future
  production costs

  	
   

  	
  4,262,896

  	
   

  	
  2,129,770

  	
   

  
	
  Future
  development costs

  	
   

  	
  398,264

  	
   

  	
  124,645

  	
   

  
	
  Future income
  taxes (1)

  	
   

  	
  —

  	
   

  	
  —

  	
   

  
	
  Future net cash
  flows

  	
   

  	
  4,920,227

  	
   

  	
  2,973,750

  	
   

  
	
  Less 10% annual
  discount factor

  	
   

  	
  1,910,962

  	
   

  	
  1,180,624

  	
   

  
	
  Standardize measure of
  discounted future net cash flows

  	
   

  	
  $ 3,009,265

  	
   

  	
  $ 1,793,126

  	
   

  

(1)          Canetic is currently not
taxable

Reconciliation of Changes in Net
Present Values of Future Net Revenue

Discounted at 10% Per Year

Proved Reserves- Constant Prices
and Costs

($
000s)

	
   

  	
   

  	
  2006

  	
   

  	
  2005

  	
   

  
	
  Opening Balance

  	
   

  	
  1,793,127

  	
   

  	
  1,122,818

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Acquisition of StarPoint

  	
   

  	
  1,597,905

  	
   

  	
   

  	
   

  
	
  Sales and Transfers of Oil and Gas Produced, Net of Production Costs
  and Royalties

  	
   

  	
  (923,545

  	
  )

  	
  (201,813

  	
  )

  
	
  Net Change in Prices, Production Costs and Royalties Related to
  Future Production

  	
   

  	
  (442,994

  	
  )

  	
  551,948

  	
   

  
	
  Changes in Previously Estimated Development Costs incurred During the
  Period

  	
   

  	
  —

  	
   

  	
  —

  	
   

  
	
  Changes in Estimated Future Development Costs

  	
   

  	
  (20,535

  	
  )

  	
  (33,532

  	
  )

  
	
  Extensions, Infill Drilling and Improved Recovery

  	
   

  	
  236,271

  	
   

  	
  153,210

  	
   

  
	
  Discoveries

  	
   

  	
  9,380

  	
   

  	
  14,288

  	
   

  
	
  Acquisition of Reserves

  	
   

  	
  325,475

  	
   

  	
  752

  	
   

  
	
  Dispositions of Reserves

  	
   

  	
  (17,167

  	
  )

  	
  (12,177

  	
  )

  
	
  Net change Resulting from Revisions in Quantity Estimates

  	
   

  	
  112,246

  	
   

  	
  85,351

  	
   

  
	
  Accretion of Discount

  	
   

  	
  339,103

  	
   

  	
  112,282

  	
   

  
	
  Net Change in Income Taxes

  	
   

  	
  —

  	
   

  	
  —

  	
   

  
	
  Closing Balance

  	
   

  	
  3,009,266

  	
   

  	
  1,793,127Exhibit 10.1

Execution
Copy

ASSET PURCHASE AGREEMENT

BY AND AMONG

NEXCEN ASSET ACQUISITION, LLC,

PRETZEL TIME FRANCHISING, LLC,

PRETZELMAKER FRANCHISING, LLC,

NEXCEN BRANDS, INC.,

and

MRS.
FIELDS FAMOUS BRANDS, LLC,

DATED AS OF AUGUST 7, 2007

TABLE OF CONTENTS

	
  

  	
   

  	
   

  	
  Page

  
	
  ARTICLE I Definitions and Usage 

  	
  1

  
	
  1.1

  	
   

  	
  Definitions

  	
  1

  
	
  1.2

  	
   

  	
  Usage

  	
  10

  
	
  ARTICLE II Purchase and Sale of Businesses and
  Assets

  	
  11

  
	
  2.1

  	
   

  	
  Purchase and Sale of Assets

  	
  11

  
	
  2.2

  	
   

  	
  Excluded Assets

  	
  11

  
	
  2.3

  	
   

  	
  Assumed Liabilities

  	
  12

  
	
  2.4

  	
   

  	
  Excluded Liabilities

  	
  12

  
	
  ARTICLE III Purchase Price; Payment; Assumption
  of Obligations

  	
  13

  
	
  3.1

  	
   

  	
  The Closing

  	
  13

  
	
  3.2

  	
   

  	
  Purchase Price

  	
  14

  
	
  3.3

  	
   

  	
  Payment

  	
  15

  
	
  3.4

  	
   

  	
  Allocation

  	
  16

  
	
  3.5

  	
   

  	
  Nonassignable Contracts

  	
  16

  
	
  3.6

  	
   

  	
  Escrow

  	
  17

  
	
  3.7

  	
   

  	
  Accounts Receivable

  	
  18

  
	
  ARTICLE IV Representations and Warranties of the
  Sellers and MFFB

  	
  19

  
	
  4.1

  	
   

  	
  Organization and Good Standing

  	
  19

  
	
  4.2

  	
   

  	
  Enforceability; Authority

  	
  20

  
	
  4.3

  	
   

  	
  Consents; Approvals

  	
  20

  
	
  4.4

  	
   

  	
  Financial Statements

  	
  20

  
	
  4.5

  	
   

  	
  Real Property

  	
  21

  
	
  4.6

  	
   

  	
  Title to Assets

  	
  21

  
	
  4.7

  	
   

  	
  Sufficiency of Assets

  	
  21

  
	
  4.8

  	
   

  	
  Accounts Receivable

  	
  21

  
	
  4.9

  	
   

  	
  Insolvency Proceedings

  	
  22

  
	
  4.10

  	
   

  	
  Taxes

  	
  22

  
	
  4.11

  	
   

  	
  Labor Relations; Compliance

  	
  23

  
	
  4.12

  	
   

  	
  Employee Benefits

  	
  23

  
	
  4.13

  	
   

  	
  Litigation; Orders

  	
  23

  
	
  4.14

  	
   

  	
  Compliance With Laws; Permits

  	
  23

  
	
  4.15

  	
   

  	
  Operations of the Sellers

  	
  24

  
	
  4.16

  	
   

  	
  Material Contracts

  	
  24

  
	
  4.17

  	
   

  	
  Insurance

  	
  25

  
	
  4.18

  	
   

  	
  Environmental Matters

  	
  26

  
	
  4.19

  	
   

  	
  Intellectual Property

  	
  27

  
	
  4.20

  	
   

  	
  Affiliate Transactions

  	
  27

  
	
  4.21

  	
   

  	
  Brokers or Finders

  	
  29

  
	
  4.22

  	
   

  	
  Suppliers

  	
  30

  
	
  4.23

  	
   

  	
  Franchise Matters

  	
  30

  
	
  4.24

  	
   

  	
  Powers of Attorney

  	
  36

  
	
  4.25

  	
   

  	
  Investment

  	
  36

  
	
  4.26

  	
   

  	
  Deferred Revenue Liability

  	
  36

  
	
  4.27

  	
   

  	
  Indenture Payment

  	
  36

  

 

 

	
  4.28

  	
   

  	
  Right of First Refusal

  	
  36

  
	
  4.29

  	
   

  	
  Other Contracts

  	
  36

  
	
  ARTICLE V Representations and Warranties of Buyer
  and Parent 

  	
  37

  
	
  5.1

  	
   

  	
  Existence and Good Standing; Authorization

  	
  37

  
	
  5.2

  	
   

  	
  Consents and Approvals; No Violations

  	
  37

  
	
  5.3

  	
   

  	
  SEC Documents and Other Reports

  	
  38

  
	
  5.4

  	
   

  	
  Litigation

  	
  38

  
	
  5.5

  	
   

  	
  Brokers’ or Finders’ Fees

  	
  38

  
	
  5.6

  	
   

  	
  Parent Shares

  	
  38

  
	
  ARTICLE VI Developing Agent Liabilities 

  	
  39

  
	
  ARTICLE VII Post-Closing Covenants

  	
  39

  
	
  7.1

  	
   

  	
  Intentionally Omitted

  	
  39

  
	
  7.2

  	
   

  	
  Taxes Related to Purchase of Assets; Tax Cooperation

  	
  40

  
	
  7.3

  	
   

  	
  Noncompetition and Nonsolicitation

  	
  41

  
	
  7.4

  	
   

  	
  Further Assurances

  	
  42

  
	
  7.5

  	
   

  	
  Audit

  	
  42

  
	
  7.6

  	
   

  	
  Confidentiality

  	
  42

  
	
  7.7

  	
   

  	
  Solvency

  	
  43

  
	
  7.8

  	
   

  	
  Restrictions on Sale of Parent Shares

  	
  43

  
	
  7.9

  	
   

  	
  Registration

  	
  43

  
	
  7.10

  	
   

  	
  Agreement to Vote

  	
  43

  
	
  7.11

  	
   

  	
  Access to Records

  	
  43

  
	
  7.12

  	
   

  	
  Product Formulation Royalties

  	
  43

  
	
  7.13

  	
   

  	
  Lease Obligations

  	
  44

  
	
  7.14

  	
   

  	
  Business Plan

  	
  45

  
	
  7.15

  	
   

  	
  Change of Name

  	
  45

  
	
  7.16

  	
   

  	
  Intellectual Property

  	
  46

  
	
  7.17

  	
   

  	
  Franchise Business

  	
  46

  
	
  ARTICLE VIII Conditions Precedent to Parent’s and
  Buyer’s Obligation to Close 

  	
  46

  
	
  8.1

  	
   

  	
  Truth of Representations and Warranties

  	
  46

  
	
  8.2

  	
   

  	
  Performance of Agreements

  	
  47

  
	
  8.3

  	
   

  	
  Certificate

  	
  47

  
	
  8.4

  	
   

  	
  No Injunction

  	
  47

  
	
  8.5

  	
   

  	
  Governmental and Other Approvals

  	
  47

  
	
  8.6

  	
   

  	
  Indenture Lien Release

  	
  47

  
	
  8.7

  	
   

  	
  Transition Services

  	
  47

  
	
  8.8

  	
   

  	
  Escrow Agreement

  	
  47

  
	
  8.9

  	
   

  	
  Registration Rights Agreement

  	
  47

  
	
  8.10

  	
   

  	
  Voting Agreement

  	
  48

  
	
  8.11

  	
   

  	
  Closing Deliverables

  	
  48

  
	
  ARTICLE IX Conditions Precedent to the Sellers’
  Obligation to Close 

  	
  48

  
	
  9.1

  	
   

  	
  Truth of Representations and Warranties

  	
  48

  
	
  9.2

  	
   

  	
  Performance of Agreements

  	
  48

  
	
  9.3

  	
   

  	
  Certificate

  	
  49

  
	
  9.4

  	
   

  	
  No Injunction

  	
  49

  
	
  9.5

  	
   

  	
  Governmental and Other Approvals

  	
  49

  

 

 ii
 

 

	
  9.6

  	
   

  	
  Escrow Agreement

  	
  49

  
	
  9.7

  	
   

  	
  Registration Rights Agreement

  	
  49

  
	
  9.8

  	
   

  	
  Closing Deliverables

  	
  49

  
	
  ARTICLE X Termination

  	
  50

  
	
  10.1

  	
   

  	
  Right to Terminate

  	
  50

  
	
  10.2

  	
   

  	
  Effect of Termination

  	
  50

  
	
  ARTICLE XI Indemnification; Remedies

  	
  51

  
	
  11.1

  	
   

  	
  Survival

  	
  51

  
	
  11.2

  	
   

  	
  Indemnification by the Sellers and MFFB

  	
  51

  
	
  11.3

  	
   

  	
  Indemnification by Buyer

  	
  52

  
	
  11.4

  	
   

  	
  Limitation on Liability

  	
  52

  
	
  11.5

  	
   

  	
  Other Indemnification Provisions

  	
  53

  
	
  11.6

  	
   

  	
  Procedure for Indemnification

  	
  53

  
	
  11.7

  	
   

  	
  Non-Third Party Claims

  	
  54

  
	
  11.8

  	
   

  	
  Indemnification Payments

  	
  55

  
	
  ARTICLE XII Miscellaneous

  	
  55

  
	
  12.1

  	
   

  	
  Public Disclosure or Communications

  	
  55

  
	
  12.2

  	
   

  	
  Notices

  	
  55

  
	
  12.3

  	
   

  	
  Entire Agreement; Nonassignability; Parties in
  Interest

  	
  56

  
	
  12.4

  	
   

  	
  Bulk Sales Law

  	
  57

  
	
  12.5

  	
   

  	
  Expenses

  	
  57

  
	
  12.6

  	
   

  	
  Waiver and Amendment

  	
  57

  
	
  12.7

  	
   

  	
  Severability

  	
  57

  
	
  12.8

  	
   

  	
  Remedies Cumulative

  	
  57

  
	
  12.9

  	
   

  	
  Counterparts

  	
  57

  
	
  12.10

  	
   

  	
  Governing Law; Jurisdiction

  	
  58

  
	
  12.11

  	
   

  	
  Specific Performance

  	
  58

  

 

 iii
 

Annexes, Exhibits and Schedules

	
  Annexes

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Estimate Statement

  	
  Annex A

  	
   

  	
   

  
	
   

  	
  Purchase Price Allocation

  	
  Annex B

  	
   

  	
   

  
	
  Exhibits

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Pretzel Time, Pretzelmaker and Hot Sam’s Logos

  	
  Exhibit A

  	
   

  	
   

  
	
   

  	
  Form of Transition Services Agreement

  	
  Exhibit B

  	
   

  	
   

  
	
  Schedules

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Assumed Contracts

  	
   

  	
  1.1A

  
	
   

  	
  Deferred Revenue Liability

  	
   

  	
  1.1B

  
	
   

  	
  Developing Agent Agreements

  	
   

  	
  1.1C

  
	
   

  	
  Vendor Agreements

  	
   

  	
  1.1D

  
	
   

  	
  Assumed Liabilities

  	
   

  	
  2.3

  
	
   

  	
  Allocation Schedule

  	
   

  	
  3.4

  
	
   

  	
  Seller Accounts Receivable

  	
   

  	
  3.7

  
	
   

  	
  Consents and Approvals

  	
   

  	
  4.3

  
	
   

  	
  Sellers’ Material Liabilities and Obligations

  	
   

  	
  4.4(b)

  
	
   

  	
  Sufficiency of Assets

  	
   

  	
  4.7

  
	
   

  	
  Accounts Receivable and Encumbrances

  	
   

  	
  4.8

  
	
   

  	
  Sellers’ Tax Returns Subject to Audit

  	
   

  	
  4.10

  
	
   

  	
  Labor Relations; Compliance

  	
   

  	
  4.11

  
	
   

  	
  Litigation Proceedings

  	
   

  	
  4.13(a)

  
	
   

  	
  Orders

  	
   

  	
  4.13(b)

  
	
   

  	
  Compliance With Laws; Permits

  	
   

  	
  4.14

  
	
   

  	
  Operation of Sellers; Material Adverse Effect

  	
   

  	
  4.15

  
	
   

  	
  Material Contracts

  	
   

  	
  4.16

  
	
   

  	
  Affiliated Contracts

  	
   

  	
  4.16(c)

  
	
   

  	
  Insurance

  	
   

  	
  4.17

  
	
   

  	
  Intellectual Property

  	
   

  	
  4.19(a)

  
	
   

  	
  IT Software and Other Licensed Intellectual Property

  	
   

  	
  4.19(b)

  
	
   

  	
  Sellers’ Intellectual Property Rights

  	
   

  	
  4.19(c)

  
	
   

  	
  Sellers’ Intellectual Property Infringements

  	
   

  	
  4.19(d)

  
	
   

  	
  Validity of Intellectual Property Rights

  	
   

  	
  4.19(e)

  
	
   

  	
  Third Party Intellectual Property Infringements

  	
   

  	
  4.19(f)

  
	
   

  	
  Intellectual Property Development and Acquisition

  	
   

  	
  4.19(g)

  
	
   

  	
  Intellectual Property Restrictions

  	
   

  	
  4.19(h)

  
	
   

  	
  Affiliate Transactions

  	
   

  	
  4.20

  
	
   

  	
  Suppliers

  	
   

  	
  4.22

  
	
   

  	
  Franchise Matters

  	
   

  	
  4.23(a)-(z)

  
	
   

  	
  Powers of Attorney

  	
   

  	
  4.24

  
	
   

  	
  Consents and Approvals

  	
   

  	
  5.2

  
	
   

  	
  Vendor Allocation Schedule

  	
   

  	
  7.12

  
	
   

  	
  Lease Locations

  	
   

  	
  7.13(a)

  
	
   

  	
  Foreign Trademarks

  	
   

  	
  7.16

  
	
   

  	
  Governmental and Other Approvals

  	
   

  	
  8.5

  
								

 

 iv

ASSET PURCHASE AGREEMENT

This Asset Purchase
Agreement (“Agreement”) is entered into as of August 7, 2007, by and
among, NexCen Asset Acquisition, LLC, a Delaware limited liability company (“Buyer”),
NexCen Brands, Inc., a Delaware corporation (“Parent”), Pretzel Time
Franchising, LLC, a Delaware limited liability company (“Pretzel Time”),
Pretzelmaker Franchising, LLC, a Delaware limited liability company (“Pretzelmaker,”
and with Pretzel Time, each individually, a “Seller,” and collectively,
the “Sellers”), and Mrs. Fields Famous Brands, LLC, a Delaware limited
liability company (“MFFB”).

RECITALS

WHEREAS, the Sellers are
directly engaged in the Businesses;

WHEREAS, the Sellers
desire to sell to Buyer, and Buyer desires to purchase from the Sellers, certain
of the assets of the Businesses, and to assume certain liabilities associated
therewith, on the terms and subject to the conditions set forth in this
Agreement so as to permit Buyer to operate the Businesses.

NOW, THEREFORE, in
consideration of the representations, warranties, covenants and agreements set
forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:

ARTICLE I

Definitions and Usage

1.1 Definitions.  For purposes of this Agreement, the following
terms and variations thereof have the meanings specified or referred to in this
Section 1.1:

“Accounts Receivable”
means (a) all trade accounts receivable, franchise royalty accounts receivable
and other rights to payment from franchisees and customers of the Sellers, (b)
all advertising accounts receivable of the Sellers related to advertising or
marketing funds, (c) all other accounts or notes receivable of the Sellers and
the full benefit of all security for such accounts or notes, and (d) any claim,
remedy or other right related to any of the foregoing.

“Accredited Investor”
has the meaning set forth in Regulation D promulgated under the Securities Act.

“Adjusted Developing
Agents Escrow Amount” means, as of any date, the Developing Agents Escrow
Amount, less amounts (if any) distributed to any Buyer Indemnified Party prior
to the Developing Agents Escrow Release Date in accordance with Section
3.6(b).

“Affiliate” of any
Person means any Person which, directly or indirectly controls or is controlled
by that Person, or is under common control with that Person.  For the purposes of this definition, “control”
(including, with correlative meaning, the terms “controlled by” and “under
common control with”), as used with respect to any Person, shall mean the
possession,

directly or indirectly of
the power to direct or cause the direction of the management and policies of
such Person, whether through ownership of voting securities or by contract or
otherwise.

“Assumed Contracts”
means all Franchise Agreements (including, without limitation, the right to
collect any and all amounts due and payable thereunder that are unpaid to
either Seller as of the Closing Date, other than the Seller Accounts Receivable)
and, subject to Section 3.5, all other Contracts to which either Seller
is a party that relate to the operation of the Businesses and all security
deposits relating thereto, all of which are listed on Schedule 1.1A.  For the avoidance of doubt, the Developing
Agent Agreements are not Assumed Contracts.

“Assumed Liabilities”
is defined in Section 2.3.

“Books and Records”
means all books and records of the Sellers relating exclusively to and
necessary for the operation of the Businesses as they are currently operated,
including files, documents, correspondence, cost and pricing information,
accounting records, supplier lists and records, operating manuals, operating
procedures, marketing research, training materials, training records,
maintenance and inspection reports, equipment lists, repair notes and archives,
sales and marketing materials; provided, that “Books
and Records” will not include any corporate records of the Sellers or their
Affiliates.

“Brands” means the
“Pretzel Time,” “Pretzelmaker” and “Hot Sam’s Pretzel Bakery” brands, together
with the logos shown on Exhibit A, each of which are the subject of
certain trademark and service mark registrations with the United States Patent
and Trademark Office, or any other similar Government Authority responsible for
trademark or service mark registration.

“Businesses” means
the businesses that relate to the operation of the “Pretzel Time” franchise
business, the “Pretzelmaker” franchise business and the “Hot Sam’s Pretzel
Bakery” license business, including the use of any of the Purchased Assets in
connection with the operation thereof.

“Business Day”
means any day other than (a) Saturday or Sunday or (b) any other day on which
banks in New York, New York are permitted or required to be closed.

“Buyer Accounts
Receivable” is defined in Section 3.7(a).

“Buyer Indemnified
Parties” is defined in Section 11.2.

“CERCLA” means the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
as amended (42 U.S.C. § 9601, et
seq.).

“Closing” is
defined in Section 3.1.

“Closing Date”
means the date on which the Closing actually takes place.

“Closing Date
Reference Price” means $7.35.

“Code” means the
Internal Revenue Code of 1986, as amended from time to time.

 2
 

“Contingent Initial
Franchise Fees” means, in the aggregate, the Initial Franchise Fees that
have been paid pursuant to Section 6.1 of those Franchise Agreements
executed by either Seller prior to or on the Closing Date for stores not opened
for business on or prior to the Closing Date.

“Contingent Initial
Franchise Fee Refunds” means, in the aggregate any portion of the
Contingent Initial Franchise Fees that become due and payable to any Franchisee
upon the termination of any Franchise Agreement pursuant to the terms of such
Franchise Agreement.

“Contract” means
any contract, license, sublicense, franchise, permit, mortgage,  purchase orders, indenture, loan agreement,
note, lease, sublease, agreement, obligation, commitment, understanding,
instrument or other arrangement or any commitment to enter into any of the
foregoing (in each case, whether written or oral).

“Damages” means
any loss, liability, claim, damage, expense (including reasonable attorneys’
fees and costs), whether or not involving a third party claim, provided, however, that
other than with respect to Damages payable to a Third Party pursuant to a third
party claim, Damages shall not include any special, consequential, punitive or
treble damages.

“Deferred
Revenue Cash” means cash in an amount equal to the Deferred Revenue Liability.

“Deferred
Revenue Liability” means, in the aggregate, the amount of deferred revenue
allocated to Franchise Agreements on an itemized basis, that would be required
under GAAP to be shown on a balance sheet of each Seller as of the Closing
Date, as set forth on Schedule 1.1B.

“Developing Agent
Agreements” means those Contracts listed on Schedule 1.1C  or any other Contract (other than the
Developing Agent Franchise Agreements) pursuant to which any Developing Agent
acts on behalf of Pretzel Time.

“Developing Agent
Lawsuits” means those lawsuits set forth on Schedule 4.13(a) under
the heading “Developing Agent Lawsuits,” and shall include any subsequent
actions, including re-filing or appeals, related to such lawsuits.

“Developing Agents”
means, collectively, KAL Enterprises, Inc., Erie, Pennsylvania (Alan Gick,
principal); Mid-Continent Enterprises, Inc., Overland Park, Kansas (Bernard
Mazzone, principal); Pretzel Time of New York, Inc., Smithtown, New York (Alan
Fleisher, principal); and Pretzel Time of North Carolina, Inc., Summerfield,
North Carolina (Stuart Miller, principal).

“Developing Agents
Escrow Amount” means the number of Parent Shares set forth in Column IV of Annex
B.

“Developing Agents
Escrow Release Date” means the earlier of (i) the Business Day following
the date on which the Sellers or their Affiliates either (a) obtain a final
non-appealable judgment or (b) reach a final binding settlement with each
Developing Agent, which settlement or judgment does not, or could not
reasonably be expected to, result in any liability or

 3
 

loss to the Buyer or its
Affiliates, including any loss due to a Developing Agent terminating its
Developing Agent Franchise Agreements or (ii) fifteen (15) months after the
Closing Date.

“Developing Agent
Franchise Agreements” means those Franchise Agreements pursuant to which
any Developing Agents own and operate a Franchise.

“Domestic
UFOC” means the Uniform Franchise Offering Circular of each Seller, as
applicable, prepared in accordance with the UFOC Guidelines.

“Employee Benefit Plan”
means any “employee benefit plan” as defined in Section 3(3) of ERISA and any
other material employee benefit or fringe benefit plan, program or arrangement
of any kind (whether written or oral).

“Encumbrances”
means any pledges, claims, encumbrances, mortgages, charges, options,
preemptive rights, rights of first refusal or similar rights, title retention
agreements, easements, encroachments, leases, subleases, covenants, security
interests and restrictions and encumbrances of any kind or nature whatsoever.

“Environmental and
Safety Requirements” means all federal, state, local and foreign statutes,
regulations, ordinances, codes and other provisions having the force and effect
of law, all judicial and administrative orders and determinations, all
contractual 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, or exposure to, 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, as previously, now or hereafter in effect.

“ERISA” means the
Employee Retirement Income Security Act of 1974.

“ERISA Affiliate”
means, with respect to any entity, any trades or business (whether or not
incorporated) that are treated as a single employer with such entity under
Sections 414(b), (c), (m) or (o) of the Code.

“Escrow Amount”
means the aggregate amount of the Indemnity Escrow Amount plus
the Developing Agents Escrow Amount.

“Exchange Act”
means the Securities Exchange Act of 1934, as amended, together with the rules
and regulations promulgated thereunder.

“Excluded Assets”
is defined in Section 2.2.

“Excluded Liabilities”
is defined in Section 2.4.

“Final Purchase Price”
is defined in Section 3.2(b).

 4
 

“Franchise Agreements”
means any Contract (and any written or oral amendment or modification thereto)
between a Seller or any of their predecessors and a Franchisee pertaining to
and evidencing the grant of a Franchise.

“Franchisee” means
a Person who has entered into and as of the Closing Date is a party to a
Franchise Agreement with either Seller or any of their predecessors.

“Franchise”  means the grant by either Seller to a Franchisee of the
rights to establish and operate a “Pretzel Time” or “Pretzelmaker” location, as
applicable, or outlet thereof including subfranchise agreements, master
development agreements, area representative agreements, area development agreements,
master franchise agreements, development agreements, license agreements, and
any other similar agreements, together with all ancillary agreements related
thereto.

“GAAP” means
generally accepted accounting principles for financial reporting in the United
States.

“Government Authority”
means any domestic or foreign national, state, multi-state or municipal or
other local government, any subdivision, agency, commission or authority
thereof, including any quasi-governmental or private body exercising any
regulatory or taxing authority thereunder or any judicial authority (or any
department, bureau or division thereof).

“Government
Authorization” means any approval, consent, license, permit, waiver, or
other authorization issued, granted, given or otherwise made available by or
under the authority of any Government Authority or pursuant to any Legal
Requirement.

“Indemnity Escrow
Amount” means, for each Seller, the number of Parent Shares set forth in
Column III of Annex B.

“Indebtedness”
means (a) indebtedness of either Seller for borrowed money or with respect to
deposits or advances of any kind (other than advances due from customers
incurred in the ordinary course of business and consistent with past practice),
(b) all obligations of either Seller evidenced by bonds, debentures, notes or
similar instruments, (c) all obligations of either Seller upon which interest
charges are paid, (d) all obligations of either Seller in respect of
capitalized leases that, individually, involve an aggregate future liability in
excess of $5,000 and obligations of either Seller for the deferred purchase
price of goods or services (other than trade payables or accruals incurred in
the ordinary course of business and consistent with past practice), (e) all
obligations in respect of banker’s acceptances or letters of credit issued or
created for the account of either Seller, (f) all indebtedness or obligations
of the types referred to in the preceding clauses (a) through (e) of any other
Person secured by any Encumbrance on any assets of either Seller, even though
such Seller has not assumed or otherwise become liable for the payment thereof,
(g) all guarantees by either Seller of obligations of the type described in
clauses (a) through (f) above of any other Person, and (h) payment obligations
in respect of interest under any interest rate swap or other hedge agreement or
arrangement entered into by either Seller with respect to any Indebtedness
described in clauses (a) through (g) above.

“Indenture” means
that certain Indenture, dated as of March 16, 2004, among inter alia, MFFB, Mrs. Fields Financing
Company, Inc. and The Bank of New York.

 5
 

“Initial Franchise
Fees” means, in the aggregate, the nonrecurring initial franchise fees
payable pursuant to Section 6.1 of the Franchise Agreements.

“Initial Purchase
Price” is defined in Section 3.2(a).

“Intellectual Property
Rights” means all of the following in any jurisdiction throughout the
world: (i) patents, patent applications and patent disclosures; (ii)
trademarks, service marks, recipes and proprietary food processes, trade dress,
trade names, product configuration, corporate names, logos and slogans (and all
translations, adaptations, derivations and combinations of the foregoing) and
Internet domain names, Internet websites, and URLs; (iii) copyrights and
copyrightable works; (iv) registrations and applications for any of the
foregoing; (v) trade secrets and confidential information (including
inventions, ideas, formulae, compositions, know-how, manufacturing and
production processes and techniques, research and development information,
drawings, specifications, designs, plans, proposals, technical data, financial,
business and marketing plans, and customer and supplier lists and related
information); (vi) all other intellectual property; and (vii) any goodwill
associated with each of the foregoing.

“Inventory” means
the consumable inventory of each Seller, wherever located, including, without
limitation, all finished goods, work in process, raw materials, spare parts and
all other materials and supplies to be used or intended for use by the
Businesses.

“IRS” means the
United States Internal Revenue Service and, to the extent relevant, the United
States Department of the Treasury.

“Knowledge”  means, with respect to the Sellers and/or MFFB, as the case
may be, the actual knowledge, after reasonable due inquiry, of Stephen Russo,
Greg Barber, Michael Ward and Dale Thompson.  The terms “know” and “knows” and
like terms will have correlative meanings.

“Lease Locations”
is defined in Section 7.13(a).

“Legal Requirement”
means any federal, state, local, municipal, foreign, international,
multinational or other administrative order, constitution, law, ordinance,
principle of common law, regulation, rule, statute or treaty.

“Marketing Fees”
means, in the aggregate, the amount of marketing fees collected by each Seller
under the Franchise Agreements.

“Marketing Fees
Balance” is defined in Section 4.23(w).

“Marketing Fees Cash”
means cash in an amount equal to the Marketing Fees Balance.

“Marketing Fees
Reconciliation” is defined in Section 4.23(w).

“Material Adverse
Effect” means any change, effect, event, occurrence, state of facts or
development that is, or would reasonably be expected to be, materially adverse
to the assets, business, liabilities, prospects, results of operations or
condition (financial or otherwise)

 6
 

of  the Sellers taken as a whole or that prevents
or materially impedes, or would reasonably be expected to prevent or materially
impede, the consummation by  Sellers of
the transactions contemplated by this Agreement.

“MFFB Other Franchise
Brands” means any of the following brands owned by MFFB as of the date of
this Agreement: “Mrs. Fields Cookies,” “Yovana,” “Great American Cookies” and “TCBY,”
or any other brand other than the Brands under which MFFB or any of its
Affiliates conducts a franchise business.

“NASAA” means the
North American Securities Administrators Association.

“Notice of Default”
means a formal, written notice of default under a Franchise Agreement issued with
the approval of the senior management of either Seller. A “Notice of Default”
does not include a notice of operating deficiencies issued by the staff
personnel of either Seller contained in a field inspection report or other
similar writing.

“Order” means any
award, decision, injunction, judgment, order, ruling, subpoena or verdict
entered, issued, made or rendered by any court, administrative agency or other
Government Authority or by any arbitrator.

“Organizational
Documents” means with respect to any entity, the certificate of
incorporation, bylaws, certificate of formation, operating agreement or other
governing documents of such entity.

“Parent Shares”
means the shares of common stock, par value $0.01 per share, of Parent.

“Permitted
Encumbrances” means any liens for current Taxes, assessments or
governmental charges which are not yet due and payable.

“Person” means an
individual, partnership, corporation, business trust, limited liability
company, limited liability partnership, joint stock company, trust,
unincorporated association, joint venture or other entity or a Government
Authority.

“Personal Property”
means the equipment, furniture, machinery, computer hardware, motor vehicles
and other tangible personal property owned by either Seller and used or
intended for use in the Businesses as currently operated.

“Prepaid Expenses”
as of any date means payments made by either Seller or any of their Affiliates
with respect to the Businesses or the Purchased Assets, which constitute
prepaid expenses in accordance with GAAP.

“Proceeding” means
any action, arbitration, audit, hearing, investigation, litigation or suit
(whether civil, criminal, administrative, judicial or investigative, whether
formal or informal, whether public or private) commenced, brought, conducted or
heard by or before, or otherwise involving, any Government Authority or
arbitrator.

 7
 

“Product Formulation
Royalties” means in the aggregate, all of the payments to be paid by the
counterparty to any Assumed Contract to either Seller or to MFFB or one of its
Affiliates and allocated to either Seller by MFFB or such Affiliate pursuant to
any Vendor Agreement.

“Purchase Price
Formula” means an amount equal to the sum of (i) 4.5 times the TTM Period
Continuing Royalties generated by each Seller, plus
(ii) 4.5 times the TTM Period Product Formulation Royalties generated by each
Seller, plus (iii) 2.0 times the TTM Period
Initial Franchise Fees generated by each Seller, minus
(iv) two hundred thousand dollars ($200,000).

“Purchased Assets”
means all right, title, and interest in and to all of the assets that are used
exclusively or primarily in the Businesses, whether tangible or intangible,
real or personal and wherever located and by whomever possessed (other than the
Excluded Assets), including, without limitation, (i) Personal Property, (ii)
Assumed Contracts, (iii) the Marketing Fees Balance (if a positive amount),
(iv) Government Authorizations, (v) Intellectual Property Rights, (vi)
Inventory, maintenance and operating supplies, (vii) Prepaid Expenses, (viii)
Books and Records, (ix) all claims, causes of action, chooses in action, rights
of recovery and rights of set-off of any kind against the Franchisees, (x) all
proceeds actually recovered under insurance policies and, to the extent transferable,
all rights of recovery under such insurance policies, (xi) the Deferred Revenue
Cash, (xii) all of the files of Sellers’ counsel (in-house and outside counsel)
relating to the Franchise Agreements, the Seller UFOCs, the registration,
exemption and notice filings made by each Seller and the Intellectual Property
Rights of each Seller, (xiii) all other properties, assets and rights owned by
either Seller as of the Closing Date, or in which either Seller has an
interest, and which are not otherwise Excluded Assets, and (xiv) an assignment
of the license rights of each Seller with respect to the property owned by
third parties and used by either Seller under license.

“Real Property Lease”
means all leases, subleases, licenses, concessions and other agreements
(written or oral) pursuant to which a Person holds a leasehold or subleasehold
estate in, or is granted the right to use or occupy any land, buildings,
structures, improvements, fixtures or other interest in real property.

“Registration Laws”
is defined in Section 4.23(i).

“Representative”
means, with respect to a particular Person, any director, officer, manager,
employee, agent, consultant, advisor, accountant, financial advisor, legal
counsel or other representative of that Person.

“Securities Act”
means the Securities Act of 1933, as amended, together with the rules and
regulations promulgated thereunder.

“Seller Accounts
Receivable” is defined in Section 3.7(b).

“Seller Information”
means any data and information relating to the Businesses, customers, financial
statements, conditions or operations of the Businesses, in each case which is
confidential in nature and not generally known to the public.

 8
 

“Sellers” is
defined in the first paragraph of this Agreement.

“Seller UFOC”
means the Domestic UFOC(s) and all other forms of disclosure documents used by
either Seller to offer and sell Franchises in the United States and throughout
the world.

“Sellers’ Developing
Agents Liabilities Formula” is defined in Article VI.

“Subsidiary”
means, with respect to any Person, any corporation or other Person of which
securities or other interests having the power to elect a majority of that
corporation’s or other Person’s board of directors or similar governing body,
or otherwise having the power to direct the business and policies of that
corporation or other Person (other than securities or other interests having
such power only upon the happening of a contingency that has not occurred), are
held by such Person or one or more of its Subsidiaries.

“Tax” means (i)
any tax (including, without limitation, any income tax, franchise tax, margin
tax, branch profits tax, capital gains tax, alternative or add-on minimum tax,
estimated tax, value-added tax, sales tax, use tax, property tax, transfer tax,
payroll tax, social security tax or withholding tax, escheat or abandoned
property liability), and any related fine, penalty, interest or addition to tax
with respect thereto, imposed, assessed or collected by or under the authority
of any Government Authority or payable pursuant to any tax-sharing agreement
relating to the sharing or payment of any such tax and (ii) any transferee,
successor or other liability in respect of the taxes of another Person (whether
by contract or otherwise).

“Tax Return” means
any return (including any information return), report, statement, schedule,
notice, form or other document or information filed with or submitted to, or
required to be filed with or submitted to, any Government Authority in
connection with the determination, assessment, collection or payment of any
Tax.

“Territorial Rights”
means a protected territory, exclusive territory, covenant not to compete,
right of first refusal, option or other similar arrangement granted by either
Seller to any Franchisee.

“Third Party”
means a Person that is not a party to this Agreement.

“TTM Period” means
the period consisting of the trailing twelve months ended June 30, 2007.

“TTM Period Continuing
Royalties” means, in the aggregate, the continuing fees payable pursuant to
Section 6.2 of the Franchise Agreements payment of which was
actually received by either Seller during the TTM Period.

“TTM
Period Initial Franchise Fees” means, in the aggregate, Initial Franchise
Fees payable pursuant to Section 6.1 of the Franchise Agreements
executed and delivered during the TTM Period in respect of which (i) payment
was actually received by either Seller and (ii) the stores were opened for
business, during the TTM Period, on an accrual basis, but excepting and
excluding therefrom any Contingent Initial Fee Refunds that became due and
payable during the TTM Period regardless of the date upon which payment thereof
is actually made.

 9
 

“TTM Period Product
Formulation Royalties” means in the aggregate, all of the payments actually
received (and not by way of amortization of prior period payments) by either
Seller, or by MFFB or one of its Affiliates and allocated to either Seller by
MFFB or such Affiliate in a manner and pursuant to a formula acceptable to
Buyer in its reasonable discretion, during the TTM Period pursuant to any of
the Assumed Contracts or any Vendor Agreement.

“UFOC Guidelines”
means the Uniform Franchise Offering Circular Guidelines published by NASAA as
in effect from time to time.

“UFOCs” means all
of the uniform franchise offering circulars used by either Seller since March
4, 2004, in its efforts to comply with the laws pertaining to the offer and
sale of the Franchises.

“Vendor Agreements”
means those agreements listed on Schedule 1.1D pursuant to which MFFB or
one of its Affiliates (other than Sellers) collects TTM Period Product
Formulation Royalties.

“WARN Act” means
the Worker Adjustment and Retraining Notification Act.

1.2  Usage

(a)   Interpretation.  In this Agreement, unless a clear contrary
intention appears:  (i) the singular
number includes the plural number and vice versa;  (ii) reference to any Person includes such
Person’s successors and assigns but, if applicable, only if such successors and
assigns are not prohibited by this Agreement, and reference to a Person in a
particular capacity excludes such Person in any other capacity or individually;
(iii) reference to any gender includes each other gender; (iv) reference to any
agreement, document or instrument means such agreement, document or instrument
as amended or modified and in effect from time to time in accordance with the
terms thereof; (v) reference to any Legal Requirement means such Legal
Requirement as amended, modified, codified, replaced or reenacted, in whole or
in part, and in effect from time to time, including rules and regulations
promulgated thereunder, and reference to any section or other provision of any
Legal Requirement means that provision of such Legal Requirement from time to
time in effect and constituting the substantive amendment, modification,
codification, replacement or reenactment of such section or other provision;
(vi) “hereunder,” “hereof,” “hereto,” 
and words of similar import shall be deemed references to this Agreement
as a whole and not to any particular Article, Section or other provision
hereof; (vii) “including” (and with correlative meaning “include”) means
including without limiting the generality of any description preceding such
term; (viii) “or” is used in the inclusive sense of “and/or”; (ix) with respect
to the determination of any period of time, “from” means “from and including”
and “to” means “to but excluding”; and (x) references to documents, instruments
or agreements shall be deemed to refer as well to all addenda, exhibits,
schedules or amendments thereto.

(b)   Legal Representation of the Parties.  This Agreement was negotiated by the parties
with the benefit of legal representation, and any rule of construction or
interpretation otherwise requiring this Agreement to be construed or
interpreted against any party shall not apply to any construction or
interpretation hereof.

 10
 

ARTICLE
II

Purchase and Sale of
Businesses and Assets.

2.1   Purchase
and Sale of Assets.  Subject to the
terms and conditions of this Agreement, each Seller agrees to sell, assign,
convey, transfer and deliver to Buyer as of the Closing Date, and Buyer agrees
to purchase and take assignment and delivery from the Sellers as of the Closing
Date, all of such Seller’s right, title and interest in and to the Purchased
Assets, free and clear of all Encumbrances other than the Permitted
Encumbrances.

2.2   Excluded Assets.  Pursuant to this Agreement, Buyer is not
acquiring, and the Sellers shall retain, the following assets, rights and
properties (collectively, the “Excluded Assets”) and, as such, they are
not included in the Purchased Assets:

(a)   All cash and cash equivalents of the Sellers
on hand in the Sellers’ accounts immediately prior to Closing, other than
security deposits related to the Assumed Contracts, and Deferred Revenue Cash.

(b)   All Seller Accounts Receivable.

(c)   All Contracts that have terminated or
expired prior to the Closing Date in the ordinary course of business consistent
with the past practices of the Sellers , except any Franchise Agreements for active
franchised locations that are operating under formal or informal, written or
verbal, short term extensions pending completion of the renewal process and
execution of renewal Franchise Agreements.

(d)   All books and records as pertain to the
organization, existence or capitalization of the Sellers and any other records
or materials relating to the Sellers generally and not involving or relating to
the Purchased Assets, other than Books and Records.

(e)   All assets and rights
associated with any Employee Benefit Plan, collective bargaining agreements or
arrangements or any employment, severance change of control or other similar
agreements or arrangements, if any, maintained, contributed to or with respect
to which the Sellers or any ERISA Affiliate of either Seller has any actual or
potential liability.

(f)   All rights of the Sellers under this
Agreement, any agreement, certificate, instrument or other document executed
and delivered by either Seller or Buyer in connection with the transactions
contemplated hereby, or any side agreement between either Seller and Buyer
entered into on or after the date of this Agreement.

2.3   Assumed
Liabilities.  On the terms and
subject to the conditions set forth in this Agreement, at the Closing, Buyer
shall assume and agree to pay, discharge and perform when due, the Sellers’
liabilities and obligations (a) arising under the Assumed Contracts, including
the Franchise Agreements, to the extent such liabilities or obligations are
incurred on or after the Closing Date (but specifically excluding any liability
or obligation relating to or arising out of such Assumed Contract that exists
as a result of (i) any breach of such Assumed Contract occurring on or prior to
the Closing Date, (ii) any obligation of the Sellers or MFFB to pay any Taxes
allocated to the Sellers or MFFB pursuant to Section 7.2(b), (iii) any
violation of law, breach of warranty, tort or infringement occurring on or
prior to the Closing Date or (iv) any 

 11
 

charge, complaint,
action, suit, proceeding, hearing, investigation, claim or demand arising on or
prior to the Closing Date), (b) arising out of the operation of the Businesses
to the extent that such liabilities or obligations accrue on and after the
Closing Date based on the operation of the Businesses by Buyer following the
Closing, (c) with respect to any Contingent Initial Franchise Fee Refunds that
become due and payable after the Closing Date, (d) arising from the Deferred
Revenue Liability, (e) the Marketing Fees Balance (if a deficient amount) and
(f) other liabilities of a type and amount expressly identified on Schedule
2.3  (collectively, the “Assumed
Liabilities”).

2.4   Excluded Liabilities.  Except as and to the extent expressly
provided in Section 2.3, Buyer is not agreeing to, and shall not, assume
any other liability, obligation, undertaking, expense or agreement of either
Seller of any kind, character or description, whether absolute, contingent,
known, unknown, accrued, liquidated, unliquidated, contingent, executory or
otherwise, and whether arising prior to or following the Closing, and the
execution and performance of this Agreement shall not render Buyer liable for
any such liability, obligation, undertaking, expense or agreement (all of such
liabilities and obligations shall be referred to herein as the “Excluded
Liabilities”).  Without limiting the
generality of the foregoing, the Excluded Liabilities shall include, and Buyer
will not assume or be liable for:

(a)   Any liability or obligation with respect to
any Excluded Asset, whether arising prior to or after the Closing.

(b)   Except as expressly assumed pursuant to Section
2.3(c), any liability, claim or obligation, contingent or otherwise,
arising out of the operation of the Businesses or any Purchased Asset prior to
the Closing Date, including, without limitation, any Contingent Initial
Franchise Fee Refunds that became due and payable on or before the Closing
Date.

(c)   Any liability or obligation arising out of
or related to any Contract that is not an Assumed Contract, including the
Developing Agent Agreements.

(d)   Except as provided in Section 7.13,
any liability or obligation arising out of, or related to, any Lease Location,
whether arising prior to or after the Closing.

(e)   Except as provided in Section 7.2(a),
any liabilities or obligations of the Sellers for expenses, fees or Taxes
incident to or arising out of the negotiation, preparation, approval or
authorization of this Agreement or the consummation (or preparation for the
consummation) of the transactions contemplated hereby (including all attorneys’
and accountants’ fees, brokerage fees and transfer Taxes).

(f)   Any liability or obligation for any Taxes
that arise on or prior to the Closing Date.

(g)   Any liability or obligation to any employee
or former employee of either Seller, or any Affiliate of the Sellers who
provides services to either Seller (other than any liability or obligation
arising on or after the Closing to any such employee hired by Buyer and related
to Buyer’s employment of such employee).

 12
 

(h)   Any duty, obligation or liability arising at
any time under or relating to any Employee Benefit Plan or any employee benefit
plan, program or arrangement at any time maintained, sponsored or contributed
or required to be contributed to by either Seller or any ERISA Affiliate of
either Seller or with respect to which either Seller or any of their ERISA
Affiliates has any liability or potential liability.

(i)   Any liability or obligation arising out of
any violation by either Seller of any Legal Requirement applicable to the offer
and sale of the Franchises.

(j)   Any liability or obligation arising out of
any violation by either Seller of any Legal Requirement applicable to the
relationship between Seller and the Franchisees under the Franchise Agreements.

(k)   Any liability or obligation arising out of
any violation by either Seller or its affiliates of any Legal Requirement
applicable to the relationship between Seller and any vendors who provide goods
or services to the Franchisees.

(l)   Any liability or obligation arising out of
any infringement or other unlawful use by either Seller or any Person acting
under a Seller’s direction or control of any Intellectual Property Rights owned
or held by any Person.

(m) Any
liability or obligation of either Seller arising out of any litigation,
proceeding, or claim by any Person relating to the Businesses as conducted
prior to the Closing Date, whether or not such litigation, proceeding, or claim
is pending, threatened, or asserted before, on, or after the Closing Date or
has been disclosed by either seller to the Buyer.

ARTICLE
III

Purchase Price; Payment;
Assumption of Obligations

3.1   The
Closing.  The closing of the
transactions contemplated hereby (the “Closing”) will take place at a
location, date and time mutually agreed upon by the parties.  The effective time of the Closing shall be
deemed to be 12:01AM on the Closing Date.

3.2   Purchase Price.

(a)   Annex A sets forth a statement (the “Estimate
Statement”) containing the estimated amount due under the Purchase Price
Formula, calculated as of the Closing Date (the “Initial Purchase Price”).  The Estimate Statement has been prepared in
good faith by Sellers; provided, however,
that Buyer’s belief that the Estimate Statement is reasonable when given (and
Buyer’s payment of the Initial Purchase Price) shall not foreclose, prevent,
limit or preclude any rights or remedy of Buyer set forth herein.

(b)   On or before sixty (60) days following the
Closing Date, Sellers shall prepare and deliver to Buyer a statement (the “Closing
Statement”) setting forth the actual amount due under the Purchase Price
Formula, calculated as of the actual Closing Date and based upon the Businesses’
audited revenue statements for such period (the “Final Purchase Price”),
together with a letter from the chief financial officer of MFFB certifying that
the amounts set forth in the Closing Statement are accurate.  The
Final Purchase Price, as calculated by the Sellers, shall be

 13
 

final and binding on the
parties hereto unless Buyer delivers to Sellers a reasonably detailed statement
describing its objections to the calculation of the Final Purchase Price (a “Statement
of Objection”) within thirty (30) days of its receipt of the Closing
Statement.

(c)   If the Buyer delivers to Sellers a timely
Statement of Objection, Buyer and the Sellers and their respective independent
accountants shall negotiate in good faith and use reasonable best efforts to
resolve any dispute.  If a final
resolution is not reached within thirty (30) days after the Buyer has submitted
a timely Statement of Objection, any remaining disputes shall be resolved by an
independent accounting firm selected jointly by the parties (the “Reviewing
Accountant”).  The Reviewing
Accountant shall be instructed to limit its review to matters specifically set
forth in the Statement of Objections and to resolve any matters in dispute as
promptly as practicable, but in no event more than thirty (30) days after such
matters have been submitted to them, and to set forth their resolution in a
statement (the “Accountant Statement”) setting forth the Final Purchase
Price. With respect to any disputed matter, the Reviewing Accountant may select
Buyer’s figure, the Sellers’ figure or any figure between the two.  The Reviewing Accountant shall act as an
arbitrator to determine only those issues in dispute, based solely on the terms
of this Agreement and the presentations by the parties and not by independent
review of legal, accounting or factual matters. 
The Reviewing Accountant shall only consider issues, amounts or matters
disputed in a Statement of Objection delivered within the applicable thirty
(30) day period.  The determination of
the Reviewing Accountant shall be final and binding on the parties hereto.

(d)   The fees and expenses of the Reviewing
Accountant shall be borne by Buyer and the Sellers in inverse proportion as
they may prevail on matters resolved by the Reviewing Accountant, and such
proportionate allocation shall also be determined by the Reviewing Accountant
when their determination is rendered on the merits of the matter
submitted.  For illustration purposes
only: (i) if the total amount of disputed items by the Sellers is $100,000 and
the Reviewing Accountant award the Sellers $50,000, then the Sellers and Buyer
shall bear the Reviewing Accountant’s fees and expenses equally; or (ii) if the
total amount of the Sellers’ disputed items is $100,000 and the Reviewing
Accountant award the Sellers $75,000, then the Sellers shall bear 25% and Buyer
shall bear 75% of the Reviewing Accountant’s fees and expenses.

(e)   The Sellers and Buyer shall cooperate with
each other and the Reviewing Accountant in connection with the matters
contemplated by this Section 3.2, including Sellers’ preparation of and
the Buyer’s review of the Closing Statement, in each case including by furnishing
such information and access to books, records (including accountants’ work
papers), personnel and properties as may be reasonably requested.

(f)   Within three (3) days after the final
determination of the Final Purchase Price in accordance with this Section
3.2, (A) if the Final Purchase Price is less than the Initial Purchase
Price (the “Purchase Price Deficit”), Sellers shall (1) pay to Buyer, by
wire transfer in immediately available funds to an account designated in
writing by Buyer, an amount in cash equal to seventy-five percent (75%) of the
Purchase Price Deficit and (2) return to the Buyer or Parent, or otherwise
permit the Buyer or Parent to release from the Escrow Amount, a number of
Parent Shares equal to the quotient determined by dividing (x) twenty-five
percent (25%) of the Purchase Price Deficit by (y) the Closing Date Reference
Price, or (B) if the Final Purchase Price

 14
 

is greater than the Initial Purchase Price
(the “Purchase Price Increase”), the Buyer shall (1) pay to Sellers, by
wire transfer in immediately available funds to an account designated in
writing by Sellers, an amount in cash equal to seventy-five percent (75%) of
the Purchase Price Increase and (2) issue to the Sellers a number of Parent
Shares equal to the quotient determined by dividing (x) twenty-five percent
(25%) of the dollar amount of the Purchase Price Increase by (y) the Closing
Date Reference Price.  The parties agree
that, notwithstanding the foregoing, Buyer or Sellers may, as appropriate, make
any adjustments in the form of payment due under this Section 3.2 in
order to ensure that the amount of the Final Purchase Price paid to the
Sellers, collectively, is comprised of exactly seventy-five percent (75%) cash
and twenty-five percent (25%) Parent Shares.

3.3   Payment.  At Closing:

(a)   The Buyer shall (i) pay to each Seller the
amount in cash set forth opposite such Seller’s name in Column I on Annex B,
by wire transfer of immediately available funds, (ii) issue to each Seller the
number of Parent Shares set forth opposite such Seller’s name in Column II on Annex
B, and (iii) deliver to the Escrow Agent the number of Parent Shares equal
to the Escrow Amount, pursuant to the Escrow Agreement.

(b)   Each Seller shall deliver to Buyer a
Marketing Fees Reconciliation calculated as of the Closing Date and Buyer shall
pay to Seller or Seller shall pay to Buyer, as the case may be, the amount of
the Marketing Fees Cash shown in such Marketing Fees Reconciliation.

3.4   Allocation.   The Sellers and Buyer agree to allocate the
Final Purchase Price among the Purchased Assets in accordance with the pro
forma allocation schedule attached hereto as Schedule 3.4 and the
principles of Code Section 1060 and the regulations thereunder which final
allocation schedule will be determined after the date hereof, but by a date no
later than fifteen (15) days after the Closing Date (the “Allocation
Schedule”).  If the parties are
unable to agree on the final Allocation Schedule within fifteen (15) days after
the Closing Date, a third-party appraiser selected by Buyer, and reasonably
acceptable to the Sellers, the fees of which shall be borne equally by Buyer
and the Sellers, shall resolve the allocation of the consideration to any items
with respect to which there is a dispute between the parties.  In the absence of manifest error, the
determination of the Allocation Schedule by the third-party appraiser shall be
final and binding on all parties and shall not be subject to contest.  Each of the parties hereto agree that: (i)
none of the parties shall take a position on any Tax Return (including IRS Form
8594) that is in any way inconsistent with the Allocation Schedule without the
written consent of the other parties or unless specifically required by an
applicable Government Authority; and (ii) they shall promptly advise each other
regarding the existence of any Tax audit, controversy or litigation related to
the Allocation Schedule.  Notwithstanding
the foregoing, nothing contained herein shall prevent Buyer or the Sellers from
settling any proposed deficiency or adjustment assessed against it by any
Government Authority based upon or arising out of the Allocation Schedule, and
neither Buyer nor the Sellers shall be required to litigate before any court
any such proposed deficiency or adjustment by any Government Authority
challenging the Allocation Schedule.

3.5   Nonassignable
Contracts.  Notwithstanding anything
to the contrary herein, to the extent that the assignment hereunder by either
Seller to Buyer of any Assumed Contract is

 15
 

not permitted or is not
permitted without the consent of any other party to such Assumed Contract, this
Agreement shall not be deemed to constitute an assignment of any such Assumed
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
Assumed Contract, and Buyer shall assume no obligations or liabilities under
any such Assumed Contract.  The Sellers
shall advise Buyer in writing on the date hereof with respect to any Assumed
Contract which either Seller knows or has substantial reason to believe will or
may not be subject to assignment to Buyer hereunder at the Closing. Without in
any way limiting the Sellers’ obligation to obtain all consents and waivers
necessary for the sale, transfer, assignment and delivery of the Assumed
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
if the Closing shall occur, the Sellers 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 Assumed
Contract, including enforcement for the benefit of Buyer (at Buyer’s cost) of
any and all rights of the Sellers against any other party arising out of any
breach or cancellation of any such Assumed 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.

3.6   Escrow.

(a)   Indemnity Escrow Amount.  The Indemnity Escrow Amount shall be used to
satisfy Damages, if any, for which Buyer Indemnified Parties are entitled to
indemnification or reimbursement in accordance with Article XI
hereof.  For purposes of satisfying any
claim under this Agreement, the value of each Parent Share included in the
Indemnity Escrow Amount shall be equal to the Closing Date Reference Price.  Subject to the following sentence, the Escrow
Agent shall release the balance of the Indemnity Escrow Amount to the Sellers,
as applicable, on the first Business Day which is nine (9) months after the
Closing Date (the “Indemnity Escrow Release Date”), provided that if on the Indemnity Escrow
Release Date any claim by a Buyer Indemnified Party has been made that could
result in Damages and Buyer has notified the Escrow Agent and the Sellers of
such in writing, then either (i) there shall be withheld from the distribution
to the Sellers such portion of the Indemnity Escrow Amount as is necessary to
cover all Damages potentially resulting from all such pending claims in
accordance with the terms of the Escrow Agreement (and the escrow account shall
continue with respect to such withheld amount) and such withheld amount (or the
applicable portion thereof) shall either be (A) paid to Buyer or
(B) paid to the Sellers, as determined upon final resolution of each such
claim in accordance with the terms of the Escrow Agreement and Article XI
hereof or (ii) the Sellers shall post a bond in an amount reasonably acceptable
to Buyer for such amount necessary to cover all Damages potentially resulting
from all such pending claims in accordance with the terms of the Escrow
Agreement, and upon posting of such bond all of the remaining balance of the
Indemnity Escrow Amount shall be released to the Sellers in accordance with the
terms of the Escrow Agreement and Article XI hereof.

(b)   Developing Agents Escrow Amount.  The Developing Agents Escrow Amount shall be
used for any claim by a Buyer Indemnified
Person that would result in any amount being due to any Buyer
Indemnified Party under Article VI or Section 11.2(f), (a “Seller
Developing Agent Liability”).  For
purposes of satisfying any claim of a Seller Developing Agent Liability under
this Agreement, the value of each Parent Share included in the Developing

 16
 

Agents Escrow Amount shall be
equal to the Closing Date Reference Price. 
Subject to the following sentence, the Escrow Agent shall release the
balance of the Developing Agents Escrow Amount to the Sellers, as applicable,
on the first Business Day following the Developing Agents Escrow Release Date, provided that if on the Developing Agents
Escrow Release Date any claim by a Buyer Indemnified Party has been made that
could result in a Seller Developing Agent Liability and Buyer has notified the
Escrow Agent and the Sellers of such in writing, then either (i) there shall be
withheld from the distribution to the Sellers such portion of the Developing
Agents Escrow Amount as is necessary to cover all Seller Developing Agents
Liabilities potentially resulting from all such pending claims in accordance
with the terms of the Escrow Agreement (and the escrow account shall continue
with respect to such withheld amount) and such withheld amount (or the
applicable portion thereof) shall either be (A) paid to Buyer or
(B) paid to the Sellers, as determined upon final resolution of each such
claim in accordance with the terms of the Escrow Agreement, Article VI
and Section 11.2(f) hereof or (ii) the Sellers shall post a bond in an
amount reasonably acceptable to Buyer for such amount necessary to cover all
Seller Developing Agent Liabilities potentially resulting from all such pending
claims in accordance with the terms of the Escrow Agreement, and upon posting
of such bond all of the remaining balance of the Developing Agents Escrow
Amount shall be released to the Sellers in accordance with the terms of the
Escrow Agreement, Article VI and Section 11.2(f) hereof.

(c)    Conversion of Parent Shares Held In
Escrow.  If the Parent Shares held as
any part of the Escrow Amount are converted by the Parent through a stock split
or a reverse stock split, then the Closing Date Reference Price shall be
adjusted in direct but inverse relation to the stock split (the “Adjusted
Closing Date Reference Price”).  For
example, for illustration purposes only: (A) 
if the Parent Shares are split 2 to 1, then the Adjusted Closing Date
Reference Price shall be the Closing Date Reference Price divided by 2; or (B)
if the Parent Shares undergo a reverse split of 1 to 2, then the Adjusted
Closing Date Reference Price shall be the Closing Date Reference Price
multiplied by 2.

3.7.   Accounts Receivable.

(a)   Seller shall promptly forward to Buyer any
and all proceeds from Accounts Receivable relating to the Businesses that are
received by either Seller following the Closing Date to the extent such
proceeds relate in whole or in part to a period ending after the Closing Date (“Buyer
Accounts Receivable”).   The Parties
agree under the terms provided in the Transition Services Agreement that until
Buyer has made arrangements for the collection of the Buyer Accounts Receivable
generated by the Businesses and directed the Franchisees to make payment as
directed by the Buyer, that each Seller, as applicable, will continue to
collect the Buyer Accounts Receivable from the Franchisees through the
applicable Seller’s current EFT system and forward such amounts to the Buyer.

(b)    Buyer
acknowledges that all Accounts Receivable in respects of amounts due from
Franchisees or any Persons prior to the Closing Date and set forth on Schedule
3.7 shall remain the property of Sellers (the “Seller Accounts Receivable”) and that Buyer shall not
acquire any beneficial right or interest therein.  The Seller Accounts Receivable as of June 30,
2007, are set forth on Schedule 3.7, which shall be finalized and
updated as part of the post-Closing audit described in Section 7.5.

 17

(c)   Notwithstanding anything to the contrary set forth in Section  3.7(a), Sellers shall be entitled to
retain from the amounts collected pursuant to Section 3.7(a) any Seller
Accounts Receivable actually received by Sellers from a Franchisee.

(d)   Within 10 days following the end of each calendar month following
the Closing Date, Buyer shall forward to the Seller (to the extent applicable)
any amounts actually received by Buyer following the Closing Date that are
designated by a Franchisee as Seller Accounts Receivable.  For purposes of determining the amount of
Seller Accounts Receivable payable to the Seller for purposes of this Section
3.7, (x) in the case of Seller Accounts Receivable received in respect of a
period (such as a fiscal quarter or other similar period for which such amounts
are paid) that was completed prior to the Closing Date, the entire amount of
such Seller Accounts Receivable shall be paid to Sellers and (y) in the case of
any Seller Accounts Receivable that are paid on a periodic basis and are
payable for a period (such as a fiscal quarter) that includes, but does not end
prior to, the Closing Date, Sellers shall be paid a portion of such Seller
Accounts Receivable equal to the Seller Accounts Receivable for the entire
applicable period multiplied by a fraction the numerator of which is the number
of days in such period ending on the Closing Date and the denominator of which
is the number of days in the entire period for which such Seller Accounts
Receivable are paid.

(e)   Notwithstanding anything to the contrary in this Section 3.7,
neither Seller nor any of their Affiliates shall be entitled to contact any
Franchisee regarding any past due Seller Accounts Receivable without the Buyer’s
prior approval, which approval shall not be unreasonably withheld.

(f)    Buyer and Sellers shall provide to each other access to files,
records and books of account for the purpose of verifying any funds that have
been remitted to each to verify collection of the accounts receivable.

ARTICLE
IV

Representations and Warranties of the Sellers and MFFB

Each
Seller, and MFFB, as applicable, hereby represents and warrants to the Buyer
with respect to itself that the statements contained in this Article IV
are correct and complete as of the date of this Agreement and will be correct
and complete as of the Closing Date (as though made then and as though the
Closing Date were substituted for the date of this Agreement throughout this Article
IV except to the extent any representation or warranty expressly speaks
only as of a different date), except as set forth in the disclosure schedule
attached hereto (the “Disclosure Schedule”), which Disclosure Schedule
sets forth each Seller’s, or MFFB’s if applicable, disclosures identified by
Sellers or MFFB, as applicable.

4.1   Organization
and Good Standing.  Each Seller is a
single member limited liability company and is duly formed, validly existing
and in good standing under the laws of the State of Delaware.  Each Seller has all requisite power and
authority to own, lease and operate its assets and properties and to carry on
the Businesses as currently conducted. 
Each Seller is duly qualified or licensed to conduct its portion of the
Businesses as currently conducted and, to the extent applicable, is in good
standing, in each jurisdiction in which the character or location of 

 18
 

the property
owned, leased or operated by such Seller or the nature of its portion of the
Businesses conducted by such Seller makes such qualification necessary and has
obtained all Government Authorizations necessary to the ownership or operation
of its properties or the conduct of its portion of the Businesses, except where
the failure to be so qualified or licensed would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.  The Sellers do not have any
Subsidiaries.  Neither Seller owns or
holds the right to acquire any shares of stock or any other security or
interest in any other Person or has any obligation to make any investment in
any Person.

4.2   Enforceability;
Authority.  Each Seller has all
requisite limited liability company power and authority to execute and deliver
this Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby.  The
execution, delivery and performance of this Agreement, and the consummation by
it of the transactions contemplated hereby, have been duly authorized and
approved by each Seller’s sole member, and no other action on behalf of such
Seller is necessary to authorize the execution, delivery and performance of
this Agreement or the consummation of the transactions contemplated by this
Agreement.  This Agreement has been duly
executed and delivered by each Seller and, assuming the due execution of this
Agreement by Parent and Buyer, constitutes a valid and binding obligation of
each Seller enforceable against it in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium, receivership and
similar laws affecting the enforcement of creditors’ rights generally, and
general equitable principles.

4.3   Consents;
Approvals.  Except as set forth in Schedule
4.3, the execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby do not and will not:

(a)   violate or conflict with the provisions of the Organizational
Documents of either Seller;

(b)   violate any Legal Requirement or Order to
which either Seller is subject or by which any of its material properties or
assets are bound;

(c)   require any permit, consent or approval of,
or the giving of any notice to, or filing with any Government Authority; or

(d)   result in a violation or breach of, conflict with, constitute
(with or without due notice or lapse of time or both) a default (or give rise
to any right of termination, cancellation, payment or acceleration) under, or
result in the creation of any Encumbrance (other than a Permitted Encumbrance)
upon any of the properties or assets of either Seller under any of the terms,
conditions or provisions of any Contract or any other instrument or obligation
to which either Seller is a party, or by which it or any of their respective
properties or assets may be bound; excluding from the foregoing clauses (b),
(c) and (d) permits, consents, approvals, notices and filings the absence of
which, and violations, breaches, defaults and Encumbrances the existence of
which, have not had, and would not reasonably be expected, individually or in
the aggregate, to have a Material Adverse Effect.

 19
 

4.4   Financial
Statements.

(a)   The Sellers have delivered to the Buyer (i)
an audited consolidated balance sheet of MFFB as of December 31, 2005 and 2006,
and the related consolidated statements of operations, members’ equity and cash
flows for the fiscal years then ended, together with the report thereon of KPMG
LLP, MFFB’s independent certified public accountants (including the notes
thereto, “Financial Statements”), and (ii) an unaudited consolidated
balance sheet of MFFB as of April 30, 2007 (the “Balance Sheet”) and the
related unaudited consolidated statements of operations, members’ equity and
cash flows (together with the Balance Sheet, the “Interim Reports”) as
at and for the four (4)-month period ended April 30, 2007.

(b) Except as disclosed on Schedule 4.4(b),
neither Seller has any material  liabilities
or obligations (whether absolute, accrued, contingent or otherwise and whether
due or to become due), except for (i) those liabilities and obligations accrued
or disclosed on the Balance Sheet and (ii) liabilities and obligations incurred
since the date of the Balance Sheet in the ordinary course of business
consistent with past practice (none of which arise out of a breach of any
contract, tort, infringement, claim, lawsuit or breach of warranty).

4.5   Real
Property.  The Sellers do not own or
lease any real property which is used or intended to be used, or otherwise
related to, the Businesses and are not a party to, or bound by, any Real
Property Leases.

4.6   Title to
Assets.  Except for Excluded Assets
and properties and assets reflected on the Balance Sheet that have been sold or
otherwise disposed of by the Sellers in the ordinary course of business,  each Seller has good and marketable title to,
or a valid leasehold interest in, all properties and assets used by such
Seller, including, without limitation, all the properties and assets reflected
on the Balance Sheet as being owned by such Seller, free and clear of all
Encumbrances other than Permitted Encumbrances. 
All of the Personal Property is in good operating condition and repair
(with the exception of normal wear and tear), and is free from defects other
than minor defects that do not interfere with the present use thereof in the
conduct of normal operations.

4.7   Sufficiency
of Assets.  Except as set forth on Schedule
4.7, the Purchased Assets include all of the assets, properties and rights
of every type and description, real, personal, mixed, tangible and intangible
that are used in the conduct of the Businesses in substantially the same manner
as currently conducted by each Seller as of the Closing Date, subject only to
the exclusion of the Excluded Assets.

4.8   Accounts
Receivable.  Except as set forth on Schedule
4.8, all Accounts Receivable reflected on the Balance Sheet (net of
allowances for doubtful accounts as reflected thereon and as determined in
accordance with GAAP consistently applied) are or shall be valid receivables
arising in the ordinary course of business and, to each Seller’s Knowledge, are
or shall be current and collectible at the aggregate recorded amount therefore
as shown on the Balance Sheet (net of allowances for doubtful accounts as
reflected thereon and as determined in accordance with GAAP consistently
applied).  Except as set forth on Schedule
4.8, no Person has any Encumbrances on such receivables or any part thereof,
and no agreement for deduction, free goods, discount or other deferred price or
quantity adjustment has been made with respect to any

 20
 

such
receivables.  Schedule 3.7 sets
forth a complete and accurate statement of the Sellers Accounts Receivable due
and owing the Sellers as of June 30, 2007.

4.9   Insolvency
Proceedings.  No insolvency
proceedings of any kind, including, without limitation, bankruptcy,
receivership, reorganization, composition or arrangement with creditors,
voluntary or involuntary, affecting either Seller or the Purchased Assets are
pending or, to the Sellers’ Knowledge, threatened.  Neither Seller has made an assignment for the
benefit of creditors or taken any action with a view to, or that would
constitute a valid basis for, the institution of any such insolvency
proceedings.

4. 10        Taxes.

(a)   All Tax Returns required to be filed by or on behalf of either of
the Sellers have been timely filed and all such Tax Returns are correct and
complete in all material respects. All material Taxes owed by or on behalf of
either Seller (whether or not shown on any Tax Return) have been timely
paid.  Neither Seller is the beneficiary
of any extension of time within which to file any Income Tax Return.  Each Seller has withheld and paid all Taxes
required to have been withheld and paid in connection with amounts paid or
owing to any employee, independent contractor, creditor, stockholder, or other
third party, and all Forms W-2 and 1099 required with respect thereto have been
properly completed and timely filed. There are no Encumbrances (other than
Permitted Encumbrances) on any of the assets of either Seller that arose in
connection with the failure (or alleged failure) to pay any Tax.

(b)   There is no material dispute or claim concerning any Tax liability
of either Seller either (A) claimed or raised by any authority in writing or
(B) as to which any of the officers or managers of such Seller has knowledge
based upon personal contact with any agent of such authority.

(c)   Schedule 4.10 lists all federal, state, local, and foreign
Tax Returns filed by or on behalf of each Seller for taxable periods ended on
or after December 31, 2003, indicates those Tax Returns that have been audited,
and indicates those Tax Returns that currently are the subject of audit.
Neither Seller has waived any statute of limitations in respect of Taxes or
agreed to any extension of time with respect to a Tax assessment or deficiency.

(d)   The Assumed Liabilities do not include any obligations that will
not be deductible under Code §280G. Neither Seller  has any liability for the Taxes of any other
Person as a transferee or successor, by contract, or otherwise.

(e)   The aggregate unpaid Taxes of the Sellers (i) did not, as of
December 31, 2006, exceed the reserve for Tax liability (rather than any
reserve for deferred Taxes established to reflect timing differences between
book and Tax income) set forth on the face of the Balance Sheet (rather than in
any notes thereto) and (ii) will not exceed that reserve as adjusted for
operations and transactions through the Closing Date in accordance with the
past custom and practice of each Seller in filing its Tax Returns.

 21
 

4.11         Labor Relations; Compliance.

(a)   Except as set forth on Schedule 4.11, there are no
Proceedings pending or, to each Seller’s Knowledge, threatened against either
Seller with respect to or by any employee or former employee of the Businesses
and, to each Seller’s Knowledge, there are no Proceedings pending or threatened
against any employees or former employee of the Businesses.  Neither Seller has experienced any strikes,
grievances, claims of unfair labor practices or other collective bargaining
disputes.  Neither Seller has engaged in
any unfair labor practices.  Neither
Seller is a party to any collective bargaining agreement or relationship with
any labor organization, and, to each Seller’s Knowledge, there are no
organizational efforts presently made or threatened by or on behalf of any
labor union with respect to the employees of the Businesses.

(b) Neither Seller has
implemented any plant closing or layoff of employees that could implicate the
WARN Act, and no such action will be implemented without advance notification
to Buyer.

4.12         Employee
Benefits.   Neither Seller maintains
or contributed to any employee benefit plans (as defined in Section 3(3) of
ERISA) or any other employee benefit plan, program or arrangement, whether or
not subject to ERISA, including, without limitation, employment, severance,
incentive, retention, consulting, change-in-control, fringe benefit, collective
bargaining, deferred compensation, or other compensatory plan, policy,
agreement or arrangement which is made or maintained with or for the benefit of
any current or former employee, director or other personnel of any of either
Seller or contributed to by either Seller or under which either Seller has or
may have a direct or indirect liability.

4.13         Litigation; Orders.

(a)   Except as set forth on Schedule 4.13(a), there is no
material Proceeding at law or in equity by any Person or any Proceeding by or
before any Government Authority (collectively, “Proceedings”) pending
or, to each Seller’s Knowledge, threatened, against either of the Sellers or
relating to any of the Purchased Assets.

(b)   Except as set forth on Schedule 4.13(b),
(i) there is no Order to which either of the Sellers or any of the
Purchased Assets is subject, and (ii) each Seller is in compliance with
each Order to which it or its properties or assets are subject.

4.14         Compliance With Laws; Permits.

(a)   Except as set forth on Schedule 4.14, each Seller is in
full compliance with each Legal Requirement that is applicable to it or to the
conduct or operation of the Businesses or the ownership of the Purchased
Assets, except for such non-compliance, individually or in the aggregate, as
would not reasonably be expected to have a Material Adverse Effect.  Neither Seller has received any written
notice or other communication (whether oral or written) from any Government
Authority or any other Person regarding any actual, alleged, possible or
potential violation of, or failure to comply with, any material Legal
Requirement applicable to the Businesses.

 22
 

(b)   Each Seller possesses all Government Authorizations necessary for
the ownership of its properties and the conduct of the Businesses as currently
conducted, except for such exceptions as, individually or in the aggregate,
have not had and would not reasonably be expected to have a Material Adverse
Effect.  Further, (i) to each Seller’s
Knowledge, all such Government Authorizations are in full force and effect and
(ii) neither Seller has received any written notice of any event, inquiry,
investigation or proceeding threatening the validity of such Government
Authorizations.

4.15         Operations of the Sellers.  Except as set forth on Schedule 4.15,
since June 30, 2006, through the date of this Agreement, there has not been any
change, event or condition of any character that has had or would reasonably be
expected to have a Material Adverse Effect. 
Without limiting the generality of the foregoing, except as set forth on
Schedule 4.15, since June 30, 2006, each Seller has operated its portion
of the Businesses in the ordinary course of business consistent with past
practice, and during such time period, neither Seller has:

(a)   sold, leased, transferred, or assigned any of its material assets,
other than for a fair consideration in the ordinary course of business;

(b)   entered into any Material Contract outside the ordinary course of
business;

(c)   accelerated, terminated, made material modifications to, or
cancelled any Material Contract in any material respect;

(d)   transferred, assigned, or granted any license or sublicense of any
rights under or with respect to any Intellectual Property Right, other than to
a Franchisee pursuant to a Franchise Agreement entered into in the ordinary
course of business;

(e)   made any capital expenditure (or series of related capital
expenditures) either involving more than $5,000, individually, or $15,000, in
the aggregate, or outside the ordinary course of business;

(f)    engaged in any sales or promotional discount or other similar
activities with customers (including, without limitation, materially altering
credit terms) other than any such activities undertaken in accordance with the
terms of its current Franchise Agreements;

(g)   delayed or postponed the payment of any accounts payable, other
payables, expenses or other liabilities (including marketing or promotional
expenses), or accelerated the collection of or discount any Accounts Receivable
or otherwise accelerated cash collections of any type other than in the
ordinary course of business and in an amount not greater than $5,000 in the
aggregate;

(h)   incurred any Indebtedness or incurred or become subject to any
material liability, except current liabilities incurred in the ordinary course
of business and liabilities under Contracts (other than liabilities for breach)
entered into in the ordinary course of business;

(i)    suffered any extraordinary losses or waived any rights of
material value, whether or not in the ordinary course of business;

 23
 

(j)    experienced any material damage, destruction, or loss (whether or
not covered by insurance) to its property;

(k)   become liable for any Damages in connection with, or become
obligated to rescind or otherwise materially modify, any Franchise Agreement;
or

(l)    committed to do any of the foregoing actions.

4.16         Material Contracts.

(a)   Schedule 4.16 contains a complete and correct list
identified by Seller, as of the date of this Agreement, of the following
Contracts to which either Seller is a party or by which either Seller is bound
(collectively, the “Material Contracts”):

(i)            any agreement (or group of related agreements) for the
lease of personal property to or from a Person providing for lease payment in
excess of $5,000 per annum;

(ii)           any agreement (or group of related agreements) for the
purchase or sale of raw materials, commodities, supplies, products, or other
personal property, or for the furnishing or receipt of services, the
performance of which will extend over a period of more than one year, or
involve consideration in excess of $5,000;

(iii)          each Franchise Agreement submitted to a Person for
execution but not yet executed and delivered to either Seller by such Person;

(iv)          any agreements relating to Intellectual Property Rights
except as set forth in Schedule 4.19(b);

(v)           any agreement imposing continuing confidentiality
obligations on the Sellers;

(vi)          all executory contracts for capital
expenditures with remaining obligations in excess of $5,000 each;

(vii)         all contracts containing covenants that in any way purport
to limit the freedom to engage in any line of business or to compete with any
Person or in any geographical area;

(viii)        all severance, change of control or similar agreements or
contracts with any employees; and

(ix)           any other agreement the performance of which involves
consideration in excess of $5,000.

(b)   All Material Contracts are in full force and effect and in written
form and true, correct and complete copies of all Material Contracts, including
any amendments, waivers, supplements or other modifications thereto, have been
made available to Buyer.  Except as 

 24
 

disclosed in Schedule 4.16,
neither Seller is in violation or breach of or in default under any Material
Contract the effect of which, individually or in the aggregate, does have or
would reasonably be expected to have a Material Adverse Effect.  No Proceeding or event or condition has
occurred or exists or is alleged by any party to have occurred or exist which,
with notice or lapse of time or both, would constitute a default by any of the
parties thereto of their respective obligations under a Material Contract (or
would give rise to any right of termination or cancellation), except as does
not have and would not reasonably be expected to have a Material Adverse
Effect.  Neither Seller has, nor to each
Seller’s Knowledge, has any other party to any Material Contract, breached or
provided any written notice of an intent to breach, any provision thereof,
except such a breach as does not have and would not reasonably be expected to
have a Material Adverse Effect.

(c)   Schedule 4.16(c) contains a complete
and correct list of all written agreements, contracts or instruments to which
an Affiliate of either Seller is a party and pursuant to which either Seller is
a beneficiary of any goods, services or other benefits related to the Purchased
Assets.

4.17         Insurance.  Schedule 4.17 sets forth an
accurate and complete summary of (a) each insurance policy providing for
liability exposure (including policies providing property, casualty, liability
and workers’ compensation coverage and bond and surety arrangements) to which
either Seller is currently a party, a named insured or otherwise the
beneficiary of coverage (“Insurance Policies”) and (b) all insurance loss runs
or workers’ compensation claims received for the past three (3) policy
years.  All such Insurance Policies are
in full force and effect.  Since January
1, 2004, each Seller has paid all premiums due thereunder and, except as set
forth in Schedule 4.17, no notice (whether oral or written) of
cancellation of any such coverage or increase in premiums thereof has been
received by either Seller.

4.18         Environmental Matters.  In the conduct of the Businesses and the
ownership and operation of the Purchased Assets, each Seller has complied and
is in compliance in all material respects with all Environmental and Safety
Requirements.  Neither Seller has
received any written notice, report or other information regarding any
violation of, or liability under Environmental and Safety Requirements.  Neither Seller, nor any of its predecessors
or Affiliates with respect to the Businesses, has treated, stored, disposed of,
arranged for or permitted the disposal of, transported, handled, released, or
exposed any Person to, any substance, or owned or operated the Businesses or
any property or facility relating to the Businesses (and no such property or
facility is contaminated by any such substance) in a manner that has given or
would give rise to any liabilities or investigative, corrective or remedial
obligations pursuant to CERCLA or any other Environmental and Safety
Requirements.  All environmental audits,
reports and other material environmental documents relating to the past or
current operations or facilities of each Seller and its predecessors and
Affiliates with respect to the Businesses have been provided to the Buyer.

4.19         Intellectual Property.

(a)   Schedule 4.19(a) attached hereto
sets forth a complete and correct list of: (i) all registered trademarks or
service marks owned by either Seller; (ii) all pending applications for
registration of any trademarks or service marks owned by either Seller;
(iii) all trade names,

 25
 

common law
trademarks and unregistered marks owned and used by either Seller that relate
solely to the Businesses; (iv) all recipes and proprietary food processes and
product formulations; and (v) all internet domain names and URLs registered or
applied for by either Seller.

(b)   Schedule 4.19(b) attached hereto sets forth a complete and
correct list of:  (i) all computer
software licenses or similar agreements or arrangements relating to information
technology used exclusively in the operation of the Businesses (“IT Software”);
(ii) all other licenses or similar agreements or arrangements, in effect as of
the date hereof, in which either Seller or its Affiliates are a licensee of
Intellectual Property Rights that are related to or used in connection with the
Businesses; (iii) all licenses or similar agreements or arrangements in which
either Seller or its Affiliates are a licensor of Intellectual Property Rights
that are related to or used in connection with the Businesses, including
Franchise Agreements; and (iv) all other agreements or similar arrangements, in
effect as of the date hereof, relating to the use of Intellectual Property
Rights by either Seller, including settlement agreements, consent-to-use or
standstill agreements and standalone indemnification agreements.

(c)   Except as set forth on Schedule 4.19(c), (i) each
Seller owns and possesses all right, title and interest in and to, or has the
enforceable right to use, the Intellectual Property Rights, identified with
such Seller and set forth in Schedule 4.19(a), has a valid and
enforceable right to use pursuant to the agreements set forth in Schedule
4.19(b), and otherwise own and possess all right, title and interest in and
to all other Intellectual Property Rights necessary for the operation of the
Businesses as currently conducted, free and clear of all Encumbrances, other
than Permitted Encumbrances (collectively, the “Sellers’ Intellectual
Property Rights”), and (ii) neither Seller has licensed any of the Sellers’
Intellectual Property Rights to any third party on an exclusive basis.

(d)   Except as set forth on Schedule 4.19(d), (i) neither Seller
has infringed, diluted, misappropriated or otherwise conflicted with, and the
operation of the Businesses as currently conducted does not infringe,
misappropriate or otherwise conflict with, any Intellectual Property Rights of
any Person; (ii) neither Seller is aware of any facts which indicate a
likelihood of any of the foregoing; (iii) neither Seller has received any
notices regarding any of the foregoing (including any demands that either
Seller is required to license any Intellectual Property Rights from any Person
or any requests for indemnification from customers) and (iv) neither Seller has
requested nor received any written opinions of counsel related to the
foregoing.

(e)   Except as set forth on Schedule 4.19(e), (i) no loss or
expiration of any of the Sellers’ Intellectual Property Rights is threatened,
pending or reasonably foreseeable, except for trademarks or service marks
expiring at the end of their current registration terms without renewal by the
applicable Seller (and not as a result of any act or omission by either Seller,
including a failure by such Seller to pay any required maintenance fees); (ii)
all of the Sellers’ Intellectual Property Rights are valid and enforceable and
none of the Sellers’ Intellectual Property Rights has been misused; (iii) no
claim by any third party contesting the validity, enforceability, use or
ownership of any of the Sellers’ Intellectual Property Rights has been made, is
currently outstanding or is threatened, and there are no grounds for the same;
(iv) each Seller has taken all necessary and desirable action to maintain and
protect all of the Sellers’ Intellectual Property Rights and will continue to
maintain and protect all of the Sellers’

 26
 

Intellectual Property Rights prior to the
Closing so as not to adversely affect the validity or enforceability thereof;
and (v) neither Seller has disclosed or allowed to be disclosed any of its
trade secrets or confidential information to any third party other than
pursuant to a written confidentiality agreement and each Seller has entered
into written confidentiality agreements with all of its employees and
independent contractors acknowledging the confidentiality of the Sellers’
Intellectual Property Rights.

(f)    Except as set forth on Schedule 4.19(f), to each Seller’s
Knowledge, no Person has infringed, diluted, misappropriated or otherwise
conflicted with any of the Sellers’ Intellectual Property Rights and neither
Seller is aware of any facts that indicate a likelihood of any of the same.

(g)   Except as set forth on Schedule 4.19(g), all Intellectual
Property Rights owned by each Seller was: (i) developed by employees of such
Seller working within the scope of their employment; (ii) developed by
officers, directors, agents, consultants, contractors, subcontractors or others
who have executed appropriate instruments of assignment in favor of such Seller
as assignee that have conveyed to such Seller ownership of all of such Person’s
rights in the Intellectual Property Rights relating to such developments; or
(iii) acquired in connection with acquisitions in which such Seller obtained
appropriate representations, warranties and indemnities from the transferring
party relating to the title to such Intellectual Property Rights.  

(h)   Except as set forth in Schedule 4.19(h), none of the
Sellers’ Intellectual Property Rights is subject to any proceeding or
outstanding decree, order, judgment, agreement or stipulation restricting in
any manner the use, transfer or licensing thereof by either Seller, or which
may affect the validity, use or enforceability of the Sellers’ Intellectual
Property Rights.

(i)    Each Seller has collected, used, imported, exported and protected
all personally identifiable information, and other information relating to
individuals protected by law, in accordance with the privacy policies of each
Seller and in accordance with applicable law, including by entering into
agreements, where applicable, governing the flow of such information across
national borders.

(j)    Each item of the Sellers’ Intellectual Property Rights is valid,
enforceable and subsisting. All necessary registration, maintenance and renewal
fees currently due in connection with the Sellers’ Intellectual Property Rights
have been made and all necessary documents, recordations and certifications in
connection with the Sellers’ Intellectual Property have been filed with the
relevant patent, copyright, trademark or other authorities in the United States
or foreign jurisdictions, as the case may be, for the purpose of maintaining
the Sellers’ Intellectual Property Rights. 
Prior to the Closing, each Seller will deliver to Buyer all files,
documents, or instruments necessary to the preservation and maintenance of the
Sellers’ Intellectual Property Rights.

(k)   Neither Seller owns, nor has pending, any patent applications or
patents.

 27
 

4.20         Affiliate Transactions.  Except as set forth on Schedule 4.20,
(a) there are no Assumed Contracts between either Seller, on the one hand, and
any member, interest or right holder or any family member or affiliate of any
such member, interest or right holder, on the other hand; (b) there are no
Assumed Contracts between either Seller, on the one hand, and any employee or
director or any family member or affiliate of any such person, on the other
hand, other than employment agreements entered into in the ordinary course of
business consistent with past practice; and (c) there are no loans or other
indebtedness owing by any employee of either Seller or any family member or
affiliate of any such person to the Sellers.

4.21         Brokers or Finders.  No agent, broker, firm or other Person acting
on behalf of either Seller or, to Seller’s Knowledge, any of their Affiliates
is, or will be, entitled to any investment banking, commission, broker’s or
finder’s fees from any of the parties hereto, or from any Affiliate of any of
the parties hereto, in connection with any of the transactions contemplated by
this Agreement.

4.22         Suppliers.  Except for the suppliers named in Schedule
4.22, neither Seller has purchased, from any single supplier, goods or
services for which the aggregate purchase price exceeds 5% of the total amount
of goods and services purchased by such Seller during the fiscal year ended
December 31, 2006.  Since December 31,
2006, there has not been any termination, cancellation or material curtailment
of the Businesses relationship of either Seller with any supplier named in Schedule
4.22 or any material and adverse (to either of the Sellers) change in any
material term (including credit terms) of the supply agreements or related
arrangements with any such supplier.  No
supplier named in Schedule 4.22 has advised either Seller that it
intends, or has threatened, to cancel or otherwise terminate the business
relationship of such supplier with either Seller or any Franchisee or that it
intends to modify materially and adversely (to such Seller) its business
relationship with such Seller or any Franchisee or to decrease materially or
limit materially its supply to such Seller or any Franchisee.

4.23         Franchise Matters.

(a)   Except as set forth on Schedule 4.23(a), since January 1,
2004, neither Seller has or had any Subsidiary or Affiliate offering or selling
Franchises domestically or internationally. 
The Sellers and their Affiliates are the only persons or entities that
have offered or sold Franchises for their respective Brands since January 1,
2000.

(b)   Schedule 4.23(b) sets forth a listing of, and each Seller
has provided Buyer with a true and complete copy of, each Seller’s currently
effective Seller UFOC(s), together with true and complete copies of all Seller
UFOCs used by such Seller since January 1, 2004 in connection with the offer
and sale of Franchises.

(c)   Schedule 4.23(c) sets forth a true and complete list of all
Franchise Agreements to which each Seller is a party, including for each
Franchise Agreement (i) the name, address and telephone number of each and
every Franchisee; (ii) the effective dates and expiration dates; and (iii) a
description of any protected or exclusive territory.  There are no other currently effective
Franchise Agreements relating to the Brands. 
Except as noted in Schedule 4.23(c), each Franchise Agreement
entered is substantially similar to the form of Franchise Agreement
incorporated into the Seller UFOC that was issued to the Franchisee 

 28
 

contemporaneously with the sale of such
Franchise by each Seller to the Franchisee. 
Each Seller has and has had made available to Buyer true, complete and
correct copies of all Franchise Agreements listed or required to be listed on Schedule
4.23(c), including all amendments and addenda thereto, except those in
respect of which Sellers have indicated on Schedule 4.23(c) that the
Franchise Agreement on file is missing.

(d)   From and after the date of its formation, each Seller has and has
had at all relevant times, the limited liability company power and authority
and legal right to enter into and carry out the terms of each Franchise
Agreement.  All of the Franchise
Agreements are valid, binding and enforceable against the Franchisee thereunder
in accordance with its terms, subject to any such Franchisee’s bankruptcy,
insolvency, receivership or similar proceeding under state or federal law and
subject to any equitable doctrines and Legal Requirements which may affect the
enforceability of the Franchise Agreements against Franchisees.  Each Seller has maintained a standard
practive of refraining from the negotiation of the Franchise Agreements on a
Franchisee by Franchisee basis.

(e)   Schedule 4.23(e) identifies each existing Franchisee that
(i) is, to each Seller’s Knowledge, currently in material default under any
Franchise Agreement, whether or not such Seller has notified the Franchisee
about the default; (ii) has received within the twelve (12) month period prior
to the date of this Agreement a Notice of Default from either Seller that such
Franchisee has incurred a default under such Franchise Agreement; (iii) has on
three or more occasions within any twelve (12) month period received Notices of
Default under a Franchise Agreement; or (iv) is a party to a Franchise
Agreement under which the franchise unit is not yet open and operating.

(f)    Schedule 4.23(f) sets forth a true and complete list of
all written or oral agreements or arrangements (and with respect to oral
agreements a description thereof) with independent sales representatives,
contractors, brokers or consultants under which either Seller has authorized
any person to sell or promote Franchises on behalf of such Seller or has agreed
to rebate or share amounts receivable under any Franchise Agreement in
connection with the offer and sale of any such Franchise Agreement and
indicating which of such agreements are in default and may be terminated by
such Seller by notice to the other party. 
Each Seller has delivered to Buyer true, correct and complete copies of
all written agreements described in Schedule 4.23(f).  Each Seller has delivered to Buyer true,
correct and complete copies of all written correspondence and memoranda
evidencing such oral agreements described in Schedule 4.23(f).

(g)   To the Sellers’ Knowledge, except as set forth on Schedule
4.23(g), neither Seller has (i) offered nor sold, nor otherwise granted
rights, to any Party conferring upon that Party area development, area
representative, master franchise, sub-franchise, or other multi-unit or
multi-level rights with respect to the Brands within the United States or (ii)
used or uses independent sales representatives, area directors, contractors,
sales and service providers or brokers to sell or promote the sale of its
Franchises.

(h)   To the Sellers’ Knowledge, except as set forth on Schedule
4.23(h), and except as may be granted by operation of law, (i) no
Franchisee has been granted any Territorial Rights by either Seller pursuant to
which (A) such Seller is restricted in any way in their right to 

 29
 

own or operate, or license others to own or
operate, any business or line of business or (B) the Franchisee is granted
rights for the acquisition of additional franchises or expansion of the
Franchisee’s territory, (ii) no Franchisee’s Territorial Rights conflict with
the Territorial Rights of any other Franchisee, and (iii) to the extent either
Seller has  granted any such Territorial
Rights (whether or not disclosed or required to be disclosed herein), such
Seller has complied with such Territorial Rights and in the course of offering
or selling franchises has not violated the Territorial Rights of any
Franchisee.

(i)    Since January 1, 2004, and except as set forth on Schedule
4.23(i), each Seller  has:  (i) prepared and maintained each Seller UFOCs
in accordance with applicable law; (ii) filed and obtained registration of the
offer and sale of the Franchises in all jurisdictions requiring such
registration prior to any offers or sales of Franchises in such jurisdictions
(the “Registration Laws”) and has filed all material changes, amendments
and renewals thereto on a timely basis as required by Legal Requirements in
such jurisdictions; (iii) filed all notice filings (including the filing of
Seller UFOC, as applicable) in all jurisdictions in which a notice filing is
required to be filed prior to the offer and sale of franchises in such
jurisdictions; (iv) filed all notices of exemption in all jurisdictions in
which a notice filing is required in order to obtain an exemption from regulation
as a “business opportunity” or to otherwise be subject to regulation under
Legal Requirements in such jurisdictions absent such notice filing; and (v)
sold no franchises during periods after the need for amendment arose and before
the prospective Franchisee had been in receipt of an amended Seller UFOC for
the required period for redisclosure in the jurisdiction.  Seller UFOCs were prepared in all material
respects in compliance with the UFOC Guidelines and/or other Legal Requirements
and there were no material misrepresentations or misstatements of fact or
omissions to state material information in any Seller UFOC necessary to make
the statements made therein not misleading under the circumstances at the time
such Seller was using such Seller UFOC. 
Since January 1, 2004, neither Seller has ever withdrawn any of their
applications or registrations to offer and sell franchises from any
jurisdiction except as set forth on Schedule 4.23(i).

(j)    To the Sellers’ Knowledge, except as set forth on Schedule
4.23(j), neither Seller has (i) offered or sold franchises or any form of
agreement for operations under the Brands outside of the United States or (ii)
filed any application seeking registration, exemption, and/or approval to do
so.

(k)   The Sellers have heretofore made available to Buyer correct and
complete copies of all correspondence with Government Authorities concerning
compliance with Registration Laws (including franchise registration orders),
franchise advertising or promotional materials, UFOCs, and Franchise Agreements
with current and past Franchisees.  The
Sellers have made available or delivered to Buyer true and complete copies of
the Franchisee files and other materials associated with each and every
Franchisee.  Since January 1, 2005,
Sellers have not, in any of the aforementioned documents or filings under any
Registration Laws, made any untrue statement of a material fact, or omitted to
state any fact necessary to make the statements made by Sellers, taken as a
whole, not misleading, in connection with the offer or sale of any franchise or
business opportunity.

(l)    Except as disclosed in Schedule 4.23(l), each Franchise
Agreement complies, and the offer, sale, administration and relationship of
such Franchise complied at the time such 

 30
 

offer and sale was made and at all times
since such Franchise Agreement became effective, with all Legal Requirements.

(m)  Except as listed or described in Schedule 4.23(m), no
Franchise Agreement has been subordinated and no provision regarding the
calculation and payment of royalty fees in any Franchise Agreement has been
waived, altered or modified in any material respect adverse to either Seller.

(n)   Set forth in Schedule 4.23(n) is a description of any
franchisee organization which holds itself out as a representative of any group
of two or more Franchisees.  There are no
agreements of any kind in effect between any such franchisee organization and
either Seller.

(o)   Except as set forth on Schedule 4.23(o), no orders,
consents or decrees (other than routine comment letters from regulators, orders
approving registrations, renewals of registrations or registration exemptions)
have been issued by any foreign or domestic (federal or state) administrative
or regulatory agency to either Seller nor have letters of inquiry,
investigation or the like been issued to either Seller by such foreign or
domestic administrative or regulatory agencies relating, directly or
indirectly, to either Sellers’ offer and sale of Franchises.

(p)   Neither Seller has offered or sold Franchises in any jurisdiction
where the sale of any such Franchise violated any Legal Requirements of such
jurisdiction.  Neither Seller has offered
rescission as would be required under any Legal Requirements arising from a possible
violation of any Legal Requirements.  No
Franchisee: (i) paid any consideration or signed any Franchise Agreement before
the expiration of all applicable waiting periods; (ii) has asserted or
exercised any statutory right of rescission arising from a violation of the
Legal Requirements; (iii) has an immediate or inchoate right to exercise any
statutory right of rescission arising from the violation of any Legal
Requirements relating to the offer and sale of Franchises.  With the exception of routine comment letters
from regulators, neither Seller has ever received: (A) a stop order, revocation
or withdrawal of approval or a license or exemption to offer and sell
Franchises in any jurisdiction; or (B) an official notice, complaint, subpoena,
request for information, or any form of formal or informal inquiry from any
Government Authority regarding the offer or sale of Franchises.  Neither Seller has participated in any
remedial program directed towards its franchise selling practices administered
by the National Franchise Council, the International Franchise Association, the
Federal Trade Commission, any state or provincial authority, or any other
public or private organization.

(q)   The Books and Records of each Seller  and the files of its franchise counsel
include all written communications and written memorialization of all material
oral communications with franchise regulatory authorities regarding the
franchises, including without limitation all applications for initial
registration, renewal applications, amendments, comment letters, approvals,
licenses, consents, exemption filings, withdrawals, and undertakings regarding
future changes in such Seller’s offering materials.

(r)    Except as set forth in Schedule 4.23(r), each Seller has
complied with all Legal Requirements applicable to the administration of the
relationships with the Franchisees under the Franchise Agreements.

 31

(s)  Each Seller has delivered or made available
to Buyer correct and complete copies of all registrations, material advertising
or promotional materials (used by such Seller subsequent to January 1, 2005),
Seller UFOCs or agreements used by such Seller or filed with any foreign or
domestic administrative or regulatory agency or otherwise used by such Seller
in connection with the offer, sale and operation of Franchises in any
jurisdiction (domestic or international) since January 1, 2005.  Neither Seller has published any franchise
recruitment advertising in violation of the Legal Requirements of any
jurisdiction.  Each Seller has effected
timely filing of franchise recruitment advertising with the applicable Government
Authority before publication and obtained any approvals or clearances, or
received no comments requiring changes to the advertising materials that were
not incorporated in the final copy.

(t)  Schedule 4.23(t) includes a true and
complete list of all written or oral agreements or arrangements (and with
respect to oral agreements or arrangements, a description thereof) with third
party vendors or suppliers who currently approved by either Seller to act as
providers of goods or services to the Franchisees.  Except as set forth in Schedule 4.23(t),
and excluding entertainment by vendors/suppliers or reimbursement for
franchisee conventions or meetings in the ordinary course of business, neither
Seller receives rebates, commissions, discounts or other payments or
remuneration of any kind from such vendors or suppliers of such goods or
services.

(u)  To each Seller’s Knowledge, neither Seller is
in violation or default of any Franchise Agreement, nor has there occurred any
event or condition which with the passage of time or giving of notice (or both)
would constitute a material default by such Seller of any Franchise Agreement
under, or permit termination or rescission of, any such Franchise
Agreement.  Neither the execution of this
Agreement nor the consummation of the transactions contemplated herein would
result in a violation of or a default under, or give rise to a right of
termination, modification, cancellation, rescission or acceleration of any
obligation or loss of material benefits under, any Franchise Agreement.  No consent or approval of any Franchisee is
required in connection with the consummation of the transactions contemplated
by the Agreement.

(v)  All Franchise Agreements and related
documents provided to the Buyer are true, correct and complete and they
constitute all of the agreements between either Seller and its Franchisees and
there exists no other agreements, oral or written, between such Seller and any
Franchisee. There are no material agreements or special arrangements with any
Franchisee other than as set forth in the Seller UFOCs and Franchise
Agreements.

(w)  Each Seller’s use and administration of
advertising contributions and fees made under the Franchise Agreements has at
all times complied with the provisions of all Franchise Agreements or other
agreements made by such Seller with respect to their use of the advertising
contributions and fees, conforms with any descriptions of such activities
contained in applicable Seller UFOCs and does not violate any Legal
Requirements.

(i)        Schedule 4.23(w) sets forth, as
to each Seller individually:  (A) a
statement of the amount of Marketing Fees in respect of the TTM Period; (B) the
amount of Marketing Fees actually spent by each Seller during the TTM Period;
and (C) the amount of any residual Marketing Fees being held by either Seller
or the deficit in Marketing Fees for which

 32
 

either Seller is to be
reimbursed from future Marketing Fees as of the end of the TTM Period, as the
case may be (the “Marketing Fees Balance”). The foregoing reconciliation
of Marketing Fees is referred to herein as the “Marketing Fees Reconciliation.”

(ii)       Schedule 4.23(w) sets forth, as to
each Seller individually, a listing of each Contract entered into by such
Seller that is not fully performed by both parties as of the date of this
Agreement pursuant to which such Seller has obligated itself to the expenditure
of Marketing Fees, along with a statement of any payments made, and remaining
to be made, by such Seller in order to complete its performance under each such
Contract.

(x)  Except as specified on Schedule 4.23(x),
there is no action, proceeding, or investigation pending or, to each Seller’s
Knowledge, threatened against or involving either Seller with respect to any of
its domestic or international Franchises, and to each Seller’s Knowledge, there
is no basis for any such action, proceeding or investigation except for
actions, proceedings or investigations that could not, in any individual case
or in the aggregate, reasonably be expected to have a material adverse effect
on either Seller.  Neither Seller is
subject to any judgment, order or decree entered in any lawsuit or proceeding
which has or may have a material adverse effect on its rights and interests in
any Franchise Agreement.  To the each
Seller’s Knowledge, there are not currently, nor have there ever been any
administrative actions, cease and desist orders or other administrative actions
by any federal or state agency which regulates Franchises.

(y)  Since January 1, 2004, except as specified on
Schedule 4.23(y), neither Seller has waived enforcement of, or failed to
enforce, any noncompete or similar restriction under a Franchise Agreement, and
to each Seller’s Knowledge, no current or former Franchisee is currently in
violation of any applicable noncompete covenant.

(z)  Except as set forth on Schedule 4.23(z),
neither Seller nor any of their Affiliates have entered into any guarantees in
respect of leases held by Franchisees of the Businesses.

(aa)        All persons acting as franchise
salespersons and franchise sales brokers authorized to act on behalf of each
Seller has been duly and timely registered and qualified in all jurisdictions
where such registration or qualification is necessary.  All information filed by either Seller with
such registrations about all such persons is accurate, true and complete in all
respects.  All of the Domestic UFOCs
accurately disclose any relevant information about franchise brokers required
in Items, 2, 3 and 4.

(bb)       Since January 1, 2004, each Seller has
conducted reasonable training programs for all officers, agents, employees,
brokers, salespersons, contractors and other representatives engaged in the
offer and sale of Franchises on behalf of such Seller in the requirements of
applicable law before permitting such persons to engage with prospective
Franchisees and has a standard practice of retraining such persons at least
annually regarding the requirements of applicable law.

(cc)        Neither Seller has any published
policies governing their franchise sales efforts and personnel that mandate
conformance with applicable law and that notify sales

 33
 

personnel that
violation of any Legal Requirements will result in disciplinary action or
termination.  Each Seller has instituted
and maintained internal controls adequate to assure that material violations of
legal requirements governing franchise sales are discovered and remedied and
that their records demonstrate compliance with Legal Requirements or that
appropriate steps are taken to remedy non-compliance when discovered.

(dd)        Each
Seller has obtained, has filed with the applicable jurisdictions and has
retained in its records the consent of their accountants to publication of the
financial statements set forth in the Seller UFOCs, and modified Seller UFOCs
to conform to any comments offered by the accountants prior to distribution to
prospective Franchisees.

4.24         Powers
of Attorney.  Except as set forth on Schedule
4.24, there are no outstanding powers of attorney executed by or on behalf
of either Seller.

4.25         Investment.  Each Seller (a) understands that the Parent
Shares have not been, and will not be, registered under the Securities Act, or
under any state securities laws, and are being offered and sold in reliance
upon federal and state exemptions for transactions not involving any public
offering, (b) is acquiring the Parent Shares solely for its own account for
investment purposes, and not with a view to the distribution thereof, (c) is a
sophisticated investor with knowledge and experience in business and financial
matters, (d) has received certain information concerning Parent and has had the
opportunity to obtain additional information as desired in order to evaluate
the merits and the risks inherent in holding the Parent Shares, (e) is able to
bear the economic risk and lack of liquidity inherent in holding the Parent
Shares, and (f) is an Accredited Investor.

4.26         Deferred Revenue Liability.  As of the date of this Agreement and the
Closing Date, the Deferred Revenue Liability amount reflects the full amount of
all deferred revenues allocated to each Seller’s Franchise Agreements.

4.27         Indenture Payment.  To MFFB’s Knowledge, without giving effect to
the transactions contemplated hereunder, MFFB will have adequate cash and cash
equivalents on hand to make its payments due on September 15, 2007, and March
15, 2008, under and in accordance with the Indenture.

4.28         Right of First Refusal.  The Right of First Refusal, Mutual
Termination and Release (“ROFR Agreement”), dated as of October 2004, by
and between Pretzel Time and one of its master franchisors is only applicable
to the Master Franchise Agreement, between Pretzel Time and such master
franchisor and does not in any way limit either Seller’s ability to consummate
the transactions contemplated by this Agreement, including the transfer of the
rights to franchise Pretzel Time in Canada. 
Nothing in this Agreement triggers the rights of the master franchisor
under Section 1.A of the ROFR Agreement.

4.29         Other Contracts.  Neither MFFB nor either of the Sellers has
entered into any Contract with any of the parties identified in the third
disclosure on Schedule 4.13 that is not otherwise required to be set
forth on the Disclosure Schedules.

 34
 

ARTICLE V

Representations and
Warranties of Buyer and Parent

Parent and Buyer,
jointly and severally, hereby represent and warrant to the Sellers, subject to
the limitations set forth in Article XI of this Agreement, that the
statements contained in this Article V are correct and complete as of
the date of this Agreement and will be correct and complete as of the Closing
Date (as though made then and as though the Closing Date were substituted for
the date of this Agreement throughout this Article V except to the
extent any representation or warranty expressly speaks only as of a different
date), except as set forth in the Disclosure Schedules attached hereto.

5.1  Existence and Good Standing;
Authorization.

(a)  Each of Parent and Buyer is
organized, validly existing and in good standing under the laws of its
incorporation, organization or formation.

(b)  Each of Parent and Buyer has
all requisite corporate or organizational power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and to consummate
the sale and the other transactions contemplated hereby.  The execution, delivery and performance of this
Agreement by each of Parent and Buyer, and the consummation by it of the
transactions contemplated hereby, have been duly authorized and approved by its
respective board of directors or members, and no other corporate, stockholder,
organizational, member or manager action on the part of Parent or Buyer is
necessary to authorize the execution, delivery and performance of this
Agreement by Parent or Buyer and the consummation thereby of the transactions
contemplated by this Agreement.  This
Agreement has been duly executed and delivered by Parent and Buyer and,
assuming the due execution of this Agreement by the Sellers, this Agreement
constitutes a valid and binding obligation of each of Parent and Buyer
enforceable against Parent and Buyer in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium, receivership and
similar laws affecting the enforcement of creditors’ rights generally, and
general equitable principles.

5.2  Consents and Approvals; No Violations.  The execution and delivery of this
Agreement by Parent and Buyer and the consummation of the transactions
contemplated hereby do not and will not:

(a)  violate or conflict with any provisions of
the Organizational Documents of Parent or Buyer;

(b)  violate any Legal Requirement or Order to
which Parent or Buyer is subject or by which any of their respective material
properties or assets are bound;

(c)  require any permit, consent or approval of,
or the giving of any notice to, or filing with any Government Authority on or
prior to the Closing Date; and

(d)  result in a material violation or breach of,
conflict with, constitute (with or without due notice or lapse of time or both)
a default (or give rise to any right of termination, cancellation, payment or acceleration)
under, or result in the creation of any Encumbrance upon any of the material
properties or assets of Parent or Buyer under any of the material terms,

 35
 

conditions or provisions of any
material Contract or any other instrument or obligation to which Parent or
Buyer is a party, or by which it or any of their respective material properties
or assets may be bound; excluding from the foregoing clauses (b), (c) and (d)
permits, consents, approvals, notices and filings the absence of which, and
violations, breaches, defaults and Encumbrances the existence of which, would
not, individually or in the aggregate, reasonably be expected to prevent Parent
or Buyer from performing its obligations under this Agreement.

5.3  SEC Documents and Other Reports.  Parent has timely filed with the SEC all
documents required to be filed by it since December 31, 2006 under the
Securities Act or the Exchange Act (the “Parent SEC Documents”).  As of their respective filing dates, the
Parent SEC Documents complied in all material respects with the requirements of
the Securities Act or the Exchange Act, as the case may be, each as in effect
on the date so filed, and at the time filed with the SEC none of the Parent SEC
Documents contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.  The financial statements
of Parent included in the Parent SEC Documents complied as of their respective
dates in all material respects with the then applicable accounting requirements
and the published rules and regulations of the SEC with respect thereto, were
prepared in accordance with GAAP (except in the case of the unaudited
statements, as permitted by Form 10-Q under the Exchange Act) applied on a
consistent basis during the periods involved (except as may be indicated
therein or in the notes thereto) and fairly present in all material respects
the condensed consolidated financial position of Parent and its subsidiaries as
at the dates thereof and the condensed consolidated results of their operations
and their condensed consolidated cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments and to any other adjustments described therein).

5.4  Litigation.  There are no Proceedings pending, or, to the
knowledge of Parent or Buyer, threatened which would prevent, enjoin, alter or
materially delay any of the transactions contemplated by this Agreement.

5.5  Brokers’ or Finders’ Fees.  No agent, broker, firm or other Person acting
on behalf of Parent or Buyer is, or will be, entitled to any investment
banking, commission, broker’s or finder’s fees from any of the parties hereto,
or from any Person controlling, controlled by or under common control with any
of the parties hereto, in connection with any of the transactions contemplated
by this Agreement.

5.6  Parent Shares.  All of the Parent Shares issuable in accordance
with this Agreement will be, when so issued, duly authorized, validly issued,
fully paid and non-assessable and free and clear of any liens (other than those
created under federal and state securities laws or the Voting Agreement) and
not subject to preemptive or other similar rights of the stockholders of
Parent.

ARTICLE VI

Developing Agent
Liabilities

Notwithstanding anything
to the contrary set forth herein and without prejudice to any Buyer Indemnified
Party’s rights under Section 11.2(f), each of MFFB and Sellers agree
that

 36
 

if any Developing Agent
Franchise Agreement is terminated by a Developing Agent not in the ordinary
course of business (i.e., lease
termination, poor store performance, etc.) on or prior to the Developing Agents
Escrow Release Date (and such Franchise location is not otherwise transferred
to or replaced by another Franchisee acceptable to Buyer within thirty (30)
days of such termination), Buyer may deduct from the Developing Agents Escrow
Amount the number of Parent Shares equal to the sum of (i) 4.5 times the TTM
Period Continuing Royalties attributable to such Developing Agent under the
terminated Developing Agent Franchise Agreement, plus (ii) 4.5 times the TTM Period Product Formulation
Royalties attributable to such Developing Agent under the terminated Developing
Agent Franchise Agreement, plus
(iii) 2.0 times the TTM Period Initial Franchise Fees attributable to such
Developing Agent under the terminated Developing Agent Franchise Agreement
(collectively, the “Sellers’ Developing Agent Liabilities Formula”) divided by (iv) the Adjusted Closing Date
Reference Price.  Notwithstanding the
foregoing, if, after the Developing Agents Escrow Release Date but prior to the
fifteen (15) month anniversary of the Closing Date, any Developing Agent
terminates a Developing Agent Franchise Agreement (and such Franchise location
is not otherwise transferred to or replaced by another Franchisee acceptable to
Buyer within thirty (30) days of such termination) in connection with, or as a
result of, the Developing Agent Lawsuits or any settlement thereof, each of
MFFB and Sellers agree, jointly and severally, to pay to the Buyer an amount in
cash calculated in accordance with the Sellers Developing Agent Liabilities
Formula within thirty (30) days of the Buyer providing MFFB and Sellers written
notice of such termination.

ARTICLE VII

Post-Closing Covenants

7.1  Intentionally Omitted.

7.2  Taxes Related to Purchase of Assets; Tax
Cooperation.

(a)  All stamp, transfer, documentary, sales and
use, registration and other similar taxes and fees (including any penalties and
interest) incurred in connection with this Agreement and the transactions
contemplated hereby (collectively, the “Transfer Taxes”) shall be paid
one-half by Buyer and one-half by the Sellers (such obligation to be joint and
several as between the Sellers), and except to the extent required to be filed
by the Sellers, Buyer shall properly file on a timely basis all necessary Tax
Returns and other documentation with respect to all Transfer Taxes.  The provisions of this Section 7.2 and
no other provision, shall govern the economic burden of Transfer Taxes.

(b)  All personal property taxes and assessments
on the Purchased Assets for any taxable period commencing on or prior to the
Closing Date and ending after the Closing Date (a “Straddle Period”)
shall be prorated between Buyer and the Sellers as of the close of business on
the Closing Date based on the best information then available, with (a) the
Sellers liable for such Taxes attributable to any portion of a Straddle Period
ending on or prior to the Closing Date and (b) Buyer being liable for such
Taxes attributable to any portion of a Straddle Period beginning after the
Closing Date.  Information available
after the Closing Date that alters the amount of Taxes due with respect to the
Straddle Period will be taken into account and any change in the amount of such
Taxes shall be prorated between Buyer and Sellers as set forth in the next

 37
 

sentence.  All such prorations shall be allocated so
that items relating to the portion of a Straddle Period ending on or prior to
the Closing Date shall be allocated to the Sellers based upon the number of
days in the Straddle Period on or prior to the Closing Date and items related
to the portion of a Straddle Period beginning on or after the Closing Date
shall be allocated to Buyer based upon the number of days in the Straddle
Period from and after the Closing Date. 
The amount of all such prorations that must be paid in order to convey
the Purchased Assets to Buyer free and clear of all Encumbrances other than
Permitted Encumbrances have been calculated and shall be paid on the Closing
Date; all other prorations shall be calculated and paid as soon as practicable
thereafter.

(c)  The Sellers and Buyer shall (and shall cause
their respective Affiliates to) cooperate fully with each other and make
available or cause to be made available to each other for consultation,
inspection and copying (at such other party’s expense) in a timely fashion such
personnel, Tax data, relevant Tax Returns or portions thereof and filings,
files, books, records, documents, financial, technical and operating data,
computer records and other information as may be reasonably requested,
including, without limitation, (a) for the preparation by such other party of
any Tax Returns or (b) in connection with any Tax audit or proceeding including
one party (or an Affiliate thereof) to the extent such Tax audit or proceeding
relates to or arises from the transactions contemplated by this Agreement.

7.3  Noncompetition
and Nonsolicitation.

(a)  For a period of five  (5)  years
from the date of this Agreement, neither Seller nor MFFB shall, and MFFB shall
cause each of its Affiliates not to, directly or indirectly, on its own behalf,
as an agent of, on behalf of or in conjunction with, or as a member, partner or
shareholder of, any other firm, corporation or other entity or Person:

(i)            own, operate or control, or
participate in the ownership, operation or control of, or have any financial interest
in, any pretzel-related franchise business that is substantially similar to the
pretzel franchise segment of the Businesses and which targets a substantially
similar demographic customer base, if any or all such activities comprise five
percent (5%) or more of the business’ gross sales, provided,
however, that the foregoing shall not restrict MFFB or either Seller
or any of their Affiliates from owning up to five (5%) percent of the
outstanding voting securities of any company which is listed on any recognized
public stock exchange, traded on Nasdaq or over-the-counter; or

(ii)           induce any former employee, licensee,
independent contractor, manufacturer, supplier or Franchisee of either Seller
with respect to the Businesses, to terminate his or her employment or
relationship, as applicable, with Buyer or its Affiliates.

(b)  Buyer and Parent are entitled (without
limitation of any other remedy) to specific performance and/or injunctive
relief with respect to any breach or threatened breach of the covenants in this
Section 7.3, without the need to post any bond.  If any court of competent jurisdiction at any
time deems the time periods for the foregoing covenants too lengthy or the
scope of the covenants too broad, the restrictive time periods will be deemed
to be the longest period permissible by law, and the scope will be deemed to
comprise the broadest scope permissible by law under the circumstances.  It is the intent of the parties to protect
and preserve

 38
 

the Businesses and the
Purchased Assets and therefore the parties agree and direct that the time
period and scope of the foregoing covenants will be the maximum permissible
duration (not to exceed five years) and size.

7.4  Further Assurances.  From time to time following the Closing, each
party shall execute and deliver, or cause to be executed and delivered, such
instruments and documents as a party may reasonably request or as may be
otherwise necessary to more effectively consummate the transactions
contemplated hereby.  Following the
Closing, the Sellers agree to forward to Buyer any correspondence or other
communications addressed to the Sellers received by them that relates to the
Purchased Assets or Assumed Liabilities.

7.5  Audit. 
Sellers shall use commercially reasonable efforts to cause KPMG LLP,
within seventy (70) days of the Closing Date, to (x) audit the financial
statements of each Seller for 2004, 2005 and 2006 in a manner meeting the
requirements of Regulation S-X under the Securities Act of 1933, as amended
(the “SEC Financial Statements”); (y) review pro forma financial
statements that Parent intends to file in reports filed pursuant to the
Exchange Act; and (z) take such other similar actions reasonably requested by
the Buyer, including (i)  consenting to the proper use of its report(s) on
the audited financial statements included in the SEC Financial Statements; and
(ii) performing a SAS 100 review of any unaudited financial statements included
in the SEC Financial Statements.  In
connection with the foregoing, the Sellers shall use their reasonable efforts
to assist the Buyer in the preparation of such SEC Financial Statements, at
Buyer’s expense, including without limitation providing the Buyer’s
Representatives with full access during normal business hours, and in a manner
so as not to interfere with the normal business operations of the Sellers, to
all relevant books, records, work papers, information and employees and
auditors of such Persons, to the extent necessary in connection with the
preparation of any such SEC Financial Statements.  Buyer shall reimburse Sellers for costs
incurred by Sellers in connection with the preparation of the SEC Financial
Statements and its compliance with Sellers’ obligations under this Section
7.5, including expenses incurred with Sellers’ engagement of KPMG LLP; provided, however, that Sellers obtain
Buyer’s written consent before incurring any charges over $25,000 in respect of
Sellers’ obligations under this Section 7.5.

7.6  Confidentiality.  From and after the date hereof, for a period
of three (3) years, the Sellers shall, and shall cause each of its Affiliates
to, treat as confidential and use commercially reasonable efforts to safeguard
and not to use, except as expressly agreed in writing by Buyer, any and all the
Seller Information included within the Purchased Assets, including the
Intellectual Property, in each case using the standard of care necessary to
prevent the unauthorized use, dissemination or disclosure of such the Seller
Information.  For purposes of this Section
7.6, from and after the date hereof, confidential information included
within the Purchased Assets shall be deemed to be “Seller Information”
notwithstanding the fact that such information was available to or in the
possession of the Sellers or any of their Affiliates prior to the Closing.  Notwithstanding the generality of the
foregoing, nothing in this Section 7.6 shall prohibit either Seller or
its Affiliates from making public disclosures required by applicable Legal
Requirements, according to Section 12.1.

 39
 

7.7  Solvency.  From the time of execution of this Agreement
through March 15, 2008, each of the Sellers and MFFB shall continue to pay
their debts as they mature or become due, including the September 15, 2007, and
March 15, 2008, payments due under the Indenture.

7.8  Restrictions on Sale of Parent Shares.  During the twelve (12) month period following
the Closing Date (such period herein referred to as the “Initial Period”),
neither Seller shall, directly or indirectly, through an “affiliate” or “associate”
(as such terms are defined in the General Rules and Regulations under the
Securities Act of 1933, as amended), or otherwise, offer, sell, pledge,
hypothecate, grant an option for sale, or otherwise dispose of, or transfer or
grant any rights with respect thereto in any manner either privately or
publicly (each, a “Transfer”) any of the Parent Shares or Shares of the
Parent acquired by the Sellers pursuant to a stock split, stock dividend,
reverse stock split, subdivision, combination, reclassification or similar
change in the capital structure of Parent (each an “Adjustment”)
affecting Parent Shares (together with the Parent Shares, “Securities”),
or enter into any agreement or any transaction that has the effect of
transferring, in whole or in part, directly or indirectly, the economic
consequence of ownership of the Securities, whether any such agreement or
transaction is to be settled by delivery of the Securities; provided, however,
that Sellers may pledge their rights in the Parent Shares in accordance with the
Indenture.  Following the Initial Period,
the restrictions on Transfer provided for in this Section 7.8 shall
lapse with respect to 25% of the number of Parent Shares owned by the Sellers
in the aggregate (taking into account and proportionally adjusting for any
Adjustments occurring during such period) and the Sellers may Transfer such
Parent Shares, in open market transactions without restriction.  On the first day of each of the first three
consecutive three month periods following the first anniversary of the Closing
Date, the restrictions on Transfer provided for in this Section 7.8
shall lapse with respect to 25% of the aggregate number of Parent Shares paid
to the Sellers at Closing, (taking into account and proportionally adjusting
for any Adjustments occurring during such period) and the Sellers may Transfer
such Parent Shares, in open market transactions without restriction.

7.9  Registration.  The Parent Shares shall have registration
rights in accordance with the terms of that certain Registration Rights
Agreement, dated as of the Closing, in form and substance to be mutually agreed
by the parties thereto (the “Registration Rights Agreement”), pursuant
to which, among other things, Parent shall agree to use its commercially
reasonable efforts to (a) file a registration statement on Form S-3, if
eligible, or other appropriate form (the “Registration Statement”)
covering the Parent Shares issued pursuant to this Agreement, with the SEC and
(b) cause such Registration Statement to become effective each within 180 days
following the Closing Date.

7.10     Agreement
to Vote.  At all times prior to a
Transfer (as defined above) of Parent Shares, at every meeting of the
stockholders of the Company called with respect to any of the following, and at
every adjournment thereof, and on every action or approval by written consent
of the stockholders of Parent, the Sellers shall appear at such meeting (in
person or by proxy) and shall vote or consent the Parent Shares (i) in favor of
adoption of each proposal recommended by the Board of Directors of Parent for
adoption by the stockholders and (ii) against any proposal for which the
Board of Directors of Parent does not support. 
Prior to the termination of this Agreement, each Seller covenants and
agrees not to enter into any agreement or understanding with any person to vote
or give instructions in any manner inconsistent with the terms of this
Agreement.  Each Seller agrees to enter
into a voting

 40
 

agreement at the
Closing on terms reasonably acceptable to Buyer (the “Voting Agreement”)
that appoints a designee of Buyer its proxies and attorneys-in-fact, with full
power of substitution and resubstitution, to vote or act by written consent
with respect to the Parent Shares held by the Seller.

7.11         Access
to Records.  For two (2) years after
the Closing, each party will permit the other parties and their Affiliates
reasonable access on not less than five (5) business days prior written notice,
during normal business hours, at the sole cost and expense of the requesting
party and in a manner that will not unreasonably interfere with the normal
operations of the providing party, to and the right to make copies of the books
and records of such party relating to either Seller and/or the Purchased Assets
existing prior to Closing and in such providing party’s possession or control; provided, however, that the requesting
party shall only use such information (a) to protect or enforce its rights or
perform its obligations under this Agreement and any agreements entered into
among the parties in connection herewith or (b) in connection with tax or other
regulatory filings, litigation or financial reporting.  In addition, the providing party will make
available to the requesting party or its Affiliate, upon reasonable request and
to the extent still employed by the providing party, personnel who are familiar
with any such matter requested.

7.12         Product
Formulation Royalties.  From and
after the Closing Date, MFFB or its Affiliates, as applicable, shall notify
Buyer within five (5) days of its receipt of any Product Formulation Royalties
that are to be paid to the Buyer hereunder, which notice shall include
sufficient detail setting forth the calculation of such amounts.  Within fifteen (15) days of the collection or
receipt by MFFB or its Affiliates, as applicable, of any Product Formulation
Royalties, MFFB or its Affiliates shall pay to, or as directed by, Buyer such
amounts owing Buyer in immediately available funds by wire transfer.  All payments pursuant to this Section 7.12
shall be made in accordance with the allocation schedule for the applicable
Vendor Agreements attached hereto as Schedule 7.12 (the “Vendor
Allocation Schedule”). 
Notwithstanding the foregoing, MFFB shall use, and shall cause its
Affiliates to use, good faith efforts to have the counterparty to each Vendor
Agreement pay Buyer the Product Formulation Royalties directly, based upon the
Vendor Allocation Schedule.  In addition,
MFFB shall use its good faith efforts, or cause its Affiliates to use good
faith efforts, to assist Buyer transitioning any services received pursuant to
a Vendor Agreement to Buyer as Buyer may request.

7.13         Lease
Obligations.

(a)  General.  Except as expressly set forth in this Section
7.13, MFFB and its Affiliates shall retain all liability for those Pretzel
Time and Pretzelmaker locations set forth on Schedule 7.13(a) for which
MFFB or one of its Affiliates is either the tenant under the lease or
guarantees the obligations under the lease (collectively, “Lease Locations”).  If Buyer terminates the Franchise Agreement
for any Franchisee in a Lease Location, Buyer shall use its good faith efforts
to provide MFFB at least thirty (30) days prior written notice of such
termination.   If MFFB, or any of its
successors and assigns of any MFFB Other Franchise Brand, terminates any MFFB
Other Franchise Brand at a Lease Location, MFFB shall use its good faith
efforts to provide Buyer at least thirty (30) days prior written notice of such
termination.

 41
 

(b)  Notwithstanding anything set forth herein to
the contrary, if any Franchise Agreement in respect of any Lease Location is
terminated by Buyer, with or without Cause, or is terminated by the Franchisee
of such Lease Location, Buyer and MFFB shall each use their reasonable best
efforts to (i) within the first ninety (90) days following the effective date
of such termination, locate another Person to operate the Franchise at such
Lease Location, (ii) between ninety-one (91) and one hundred eighty (180) days
following the effective date of such termination, find a suitable franchisee
from any brand under which either Buyer or MFFB, or either of their Affiliates,
conducts a franchise business, to operate a franchise at such Lease Location,
and (iii) from one hundred eighty-one (181) days following the effective date
of such termination, either find any Person to operate any business at such
Lease Location or negotiate a settlement, reasonably acceptable to each Party,
with the landlord terminating the lease for such Lease Location.

(c)  For purposes of this Section 7.13, “Cause”
shall mean a termination of a Franchise Agreement by Buyer due to a breach of
the Franchise Agreement by the Franchisee, which breach is not cured, or
capable of being cured, in the time permitted under the applicable Franchise Agreement
or a termination of the Franchise Agreement due to negligence by the
Franchisee.

(d)  Buyer Terminations.  From the Closing Date until, and including,
August 7, 2008, if Buyer terminates a Franchise Agreement in respect of a Lease
Location (i) without Cause, Buyer will be responsible for one hundred percent
(100%) of the liability associated with such Lease Location following such
termination, (ii) with Cause, MFFB shall be responsible for one hundred percent
(100%) of the liability associated with such Lease Location.  From and after August 8, 2008, if Buyer
terminates a Franchise Agreement in respect of a Lease Location (i) without
Cause, Buyer will be responsible for one hundred percent (100%) of the liability
associated with such Lease Location following such termination, (ii) with
Cause, Buyer and MFFB shall each be responsible for fifty percent (50%) of the
liabilities associated with such Lease Location.

(e)  Franchisee Terminations.  From the Closing Date until, and including,
August 7, 2008, if a Franchisee terminates its Franchise Agreement in respect
of a Lease Location, MFFB shall be responsible for one hundred percent (100%)
of the liability associated with such Lease Location.  From and after August 8, 2008, if a
Franchisee terminates its Franchise Agreement in respect of a Lease Location
(other than as a result of MFFB terminating such Franchisee’s right to operate
a MFFB Other Franchise Brand at such Lease Location), each of Buyer and MFFB
shall each be responsible for fifty percent (50%) of the liabilities associated
with such Lease Location.

(f)  MFFB Terminations.  From the Closing Date until, and including,
August 7, 2008, if MFFB terminates a lease or sub-lease in respect of a Lease
Location for any reason, MFFB shall be responsible for one hundred percent
(100%) of the liability associated with such Lease Location.  From and after August 8, 2008, if MFFB
terminates a lease or sub-lease in respect of a Lease Location (other than as a
result of MFFB terminating such Franchisee’s right to operate a MFFB Other
Franchise Brand at such Lease Location) for a Lease Breach, each of Buyer and
MFFB shall each be responsible for fifty percent (50%) of the liabilities
associated with such Lease Location; provided, however, that MFFB
provides Buyer at least thirty (30)

 42
 

days prior written notice of
its intent to terminate such lease or sub-lease.  For purposes of this Section 7.13(f), “Lease
Breach” shall mean a breach by a Franchisee of  a lease or sub-lease in respect of a Lease
Location, which breach is not cured, or capable of being cured, in the time
permitted under the applicable lease or sub-lease.

7.14         Business
Plan.  Buyer and the Sellers will
cooperate in good faith to develop a plan to address co-branding of the Pretzel
Time and Pretzelmaker franchise systems (the “Business Plan”) within
five (5) Business Days of the Closing. 
The Buyer and Sellers will cooperate in good to fully implement the
Business Plan, including executing additional documents or taking any other
actions contemplated by, or reasonably necessary to implement, the Business
Plan.  Each Seller shall provide Buyer
with all records and information reasonably necessary and appropriate to carry
out this Section 7.14.

7.15         Change
of Name.  Within ten (10) days of the
Closing Date, (a) Pretzel Time shall amend its Organizational Documents and
take all other actions necessary to change its name to a name that does not
include the words “Pretzel Time” or anything similar to “Pretzel Time,” (b)
Pretzelmaker shall amend its Organizational Documents and take all other
actions necessary to change its name to a name that does not include the words “Pretzelmaker”
or anything similar to “Pretzelmaker,” (c) each Seller shall take all actions
requested by Buyer to allow Buyer to change or incorporate “Pretzel Time” or “Pretzelmaker”
into Buyer’s name (or the names of any of its Affiliates), and (d) MFFB shall
cause each of its Affiliates to amend their Organizational Documents, if
necessary, and take all other actions necessary to change their names, if
applicable, to names that do not include the words “Pretzel Time,” “Pretzelmaker,”
or anything similar to “Pretzel Time” or “Pretzelmaker.”

7.16         Intellectual
Property.  The Sellers agrees to use
commercially reasonably efforts to take, or cause to be taken all actions as
Buyer may reasonably request or as may be otherwise necessary to assist with
the registration and transfer of all foreign trademarks set forth on Schedule
7.16.

7.17         Franchise
Business

(a)  Buyer shall, with Sellers’ cooperation, (i)
revise the Domestic UFOC to include information required under the UFOC
Guidelines concerning Buyer, Parent and any changes in the domestic franchise
program Buyer intends to make and (ii) prepare and file the initial
registration of Buyer’s Domestic UFOC with appropriate state franchise
administrators.

(b)  Buyer shall, with Sellers’ cooperation, amend
any disclosure document relating to any international franchise transaction
pending as of the Closing Date to include required information about Buyer,
Parent and any changes Buyer intends to make in the documentation for
international franchises.

(c)  Seller shall cooperate with Buyer to minimize
the possibility that any prospective Franchisee will decide not to consummate a
pending domestic or international transaction on account of the transactions
contemplated by this Agreement.

 43
 

ARTICLE VIII

Conditions Precedent to
Parent’s and Buyer’s Obligation to Close.

Buyer’s
obligation to purchase the Assets and Parent’s and Buyer’s obligation to take
the other actions required to be taken by either Parent or Buyer at the Closing
is subject to the satisfaction, at or prior to the Closing, of each of the
following conditions (any of which may be waived by Buyer or Parent, as
appropriate, in whole or in part):

8.1           Truth of Representations and
Warranties.  The representations and
warranties of the Sellers contained in this Agreement that are qualified as to
materiality shall be true and correct, and those not so qualified shall be true
and correct in all material respects, as of the date of this Agreement and on
and as of the Closing Date, except to the extent that any such representation
or warranty expressly relates to an earlier date, in which case such
representation and warranty qualified as to materiality shall be true and
correct, and such representation and warranty not so qualified shall be true
and correct in all material respects, as of such earlier date.

8.2           Performance of Agreements.  Each of the covenants and agreements of the
Sellers to be performed or complied with by them at or prior to the Closing
Date pursuant to the terms hereof, shall have been performed or complied with
in all material respects.

8.3           Certificate.  Each Seller shall have delivered (and caused
to be delivered) to the Buyer a certificate, dated the Closing Date and
executed by or on behalf of such Seller, certifying as to the satisfaction of
the conditions set forth in Sections 8.1 and 8.2 of this
Agreement.

8.4           No Injunction.  No court or other Government Authority shall
have issued an Order, which shall then be in effect, restraining or prohibiting
the completion of the transactions contemplated hereby.

8.5           Governmental and Other Approvals.  All of the Government Authorizations and
third-party consents and approvals set forth on Schedule 8.5 shall have
been received and shall be in full force and effect.  The Buyer shall have received copies of
releases of all Encumbrances (other than Permitted Encumbrances) against any
asset, property or right of the Purchased Assets.

8.6   Indenture
Lien Release.  The Sellers shall have
delivered to the Buyer evidence satisfactory to the Buyer in its sole
discretion that the Trustee (as defined in the Indenture) has taken all action
and delivered all documents necessary to obtain a full and unconditional
release of the Purchased Assets from the security interests created by the
Indenture, Notes and Collateral Agreements (as such terms are defined in the
Indenture).

8.7           Transition Services.  The Sellers shall have entered into a
transition services agreement, substantially in the form of Exhibit B.

8.8           Escrow
Agreement.  The Sellers and the
Escrow Agent shall have entered into the Escrow Agreement, and such agreement
shall be in full force and effect.

 44
 

8.9           Registration
Rights Agreement.  Each Seller shall
have entered into the Registration Rights Agreement, and such agreement shall
be in full force and effect.

8.10         Voting
Agreement.  Each Seller shall have
entered into the Voting Agreement, and such agreement shall be in full force
and effect.

8.11         Closing Deliverables.  In addition to any other documents to be
delivered or actions to be taken under other provisions of this Agreement, at
the Closing, the Sellers shall deliver to Buyer:

(i)            One or more executed bills of sale
in form and substance reasonably satisfactory to Buyer transferring to Buyer
all Tangible Personal Property.

(ii)           One or more executed assignment and
assumption agreement(s) in form and substance reasonably satisfactory to Buyer
assigning to Buyer the Assumed Contracts to be assigned hereunder.

(iii)          Certified copies of the resolutions of
the Sellers authorizing the execution, delivery, and performance of this
Agreement by the Sellers and the consummation of the transactions provided for
herein.

(iv)          An executed assignment and assumption
of the Intellectual Property, in form and substance reasonably acceptable to
Buyer.

(v)           A non-foreign affidavit dated as of
the Closing Date, sworn under penalty of perjury and in the form required under
treasury regulations issued pursuant to Code §1445 stating that the Sellers is
not a foreign person as defined in Code §1445.

ARTICLE IX

Conditions Precedent to
the Sellers’ Obligation to Close

All
obligations of the Sellers under this Agreement are subject to the fulfillment
of each of the following conditions, any or all of which may be waived in whole
or in part by the Sellers, in their sole discretion:

9.1           Truth of Representations and
Warranties.  The representations and
warranties of Parent and Buyer contained in this Agreement that are qualified
as to materiality shall be true and correct, and those not so qualified shall
be true and correct in all material respects, as of the date of this Agreement
and on and as of the Closing Date, except to the extent that any such
representation or warranty expressly relates to an earlier date, in which case
such representation or warranty that is qualified as to materiality shall be
true and correct, and such representation and warranty not so qualified shall
be true and correct in all material respects, as of such earlier date.

9.2           Performance of Agreements.  Each of the covenants and agreements of
Parent and Buyer to be performed or complied with by Parent or Buyer at or
prior to the Closing Date pursuant to the terms hereof, shall have been duly
performed or complied with by each of Parent and Buyer in all material
respects.

 45
 

9.3           Certificate.  Parent and Buyer have delivered to the
Sellers a certificate, dated the Closing Date and executed by a duly authorized
officer on behalf of Parent and Buyer, certifying as to the satisfaction of the
conditions set forth in Sections 9.1 and 9.2 of this
Agreement.

9.4           No Injunction.  No court or other Government Authority shall
have issued an Order, which shall then be in effect, restraining or prohibiting
the completion of the transactions contemplated hereby.

9.5           Governmental
and Other Approvals.  All Government
Authorizations and third-party consents and approvals set forth on Schedule
8.5 shall have been received and shall be in full force and effect.

9.6           Escrow
Agreement.  Buyer, Parent and the
Escrow Agent shall have entered into the Escrow Agreement, and such agreement
shall be in full force and effect.

9.7           Registration Rights Agreement.  Parent shall have entered into the
Registration Rights Agreement, and such agreement shall be in full force and
effect.

9.8           Closing
Deliverables.  In addition to any
other documents to be delivered or actions to be taken under other provisions
of this Agreement, at Closing, Parent or Buyer, as applicable, shall deliver to
the Sellers the following (“Buyer’s Closing Documents”):

(a)  The Initial Purchase Price
as provided in Sections 3.2 and 3.3.

(b)  One or more assignment and
assumption agreement(s) assuming the Assumed Liabilities executed by Buyer, in
form and substance reasonably satisfactory to the Sellers.

(c)  A certified copy of the
resolutions of Parent and Buyer authorizing the execution, delivery and
performance of this Agreement and the consummation of the transactions provided
for herein.

ARTICLE X

Termination

10.1         Right to Terminate.  This Agreement and the transactions
contemplated hereby may be terminated at any time prior to the Closing:

(a)  by the mutual written
consent of Buyer and the Sellers;

(b)  by either Buyer or the
Sellers if the Closing shall not have occurred by August 31, 2007 (the “Termination
Date”);

(c)  by either Parent or the
Sellers if a court of competent jurisdiction or other Government Authority
shall have issued a nonappealable final order, decree or ruling or taken any
other action, in each case having the effect of permanently restraining,
enjoining or otherwise prohibiting the transactions contemplated hereby, except
if the party relying on such

 46
 

order, decree
or ruling or other action has not complied with its obligations under this
Agreement;

(d)  by the Sellers, if there has
been a breach of any representation, warranty, covenant or agreement on the
part of Parent or Buyer set forth in this Agreement that causes the conditions
set forth in Article IX to become incapable of fulfillment by the
Termination Date, unless waived by the Sellers;

(e)  by Parent or Buyer, if there
has been a breach of any representation, warranty, covenant or agreement on the
part of the Sellers set forth in this Agreement that causes the conditions set
forth in Article VIII to become incapable of fulfillment by the
Termination Date, unless waived by Buyer or Parent; provided,
however, that the party exercising its
right to so terminate this Agreement pursuant to Section 10.1(b), 10.1(d)
or 10.1(e) shall not have a right to terminate if, at the time of such
termination, there exists a breach of any of its representations, warranties,
covenants or agreements contained in this Agreement that results in the closing
conditions set forth in Article VIII or IX, as applicable, not
being satisfied.

10.2         Effect
of Termination.  In the event of the
termination of this Agreement as provided in this Article X, this
Agreement shall become null and void and of no further force or effect, and
there shall be no liability or obligation hereunder on the part of the Sellers,
the Parent or Buyer, or any of their respective directors, officers, employees,
members, partners, Affiliates, agents, representatives, heirs, administrators,
executors, successors or assigns, except (i) the provisions of this Agreement
relating to the Confidentiality Agreement and (ii) the obligations of the
parties to this Agreement under Article XI hereof and this Section
10.2 shall survive any such termination. 
Notwithstanding the foregoing, nothing herein shall relieve any party
from liability for any breach of any of its covenants or agreements or breach
of its representations or warranties contained in this Agreement prior to
termination of this Agreement.

ARTICLE XI

Indemnification; Remedies

11.1         Survival.  All representations and warranties made by
the Sellers, MFFB, Parent or Buyer, herein, or in any certificate, schedule or
exhibit delivered pursuant hereto, shall survive the Closing and continue in
full force and effect until the 9-month anniversary  of
the Closing Date (the “Survival Date”), other than in the case of fraud
and except as to any matters with respect to which a bona fide written claim
shall have been made or action at law or in equity shall have been commenced
before such date, in which event survival shall continue (but only with respect
to, and to the extent of, such claim or action); provided,
however, that the representations and warranties (i) in Section
4.10 shall survive and remain in full force and effect until 30 days after
the expiration of the applicable statute of limitations for the assessment of
Taxes (including all periods of extension, whether automatic or permissive) and
(ii) in Sections 4.1, 4.2, 4.6, 4.7, 4.21, 5.1,
5.5 and 5.6 (the “Core Representations”) shall survive and
remain in full force and effect indefinitely. Each covenant and agreement of
the Sellers and Buyer contained in this Agreement, which by its terms is
required to be performed after the Closing Date, shall survive the Closing and
remain in full force and effect until such covenant or agreement is performed.

 47
 

11.2         Indemnification by the Sellers and
MFFB.  Subject to the limitations set
forth in this Article XI, the Sellers, severally but not jointly, and
MFFB jointly and severally with each Seller, shall indemnify, defend and hold
harmless Buyer and Parent and their managers, members, officers, directors,
agents, attorneys and employees, (hereinafter “Buyer Indemnified Parties”)
from and against any and all Damages incurred or sustained by Buyer Indemnified
Parties as a result of:

(a)  the breach of any
representation or warranty of the Sellers or MFFB, as the case may be,
contained in this Agreement or in any certificate or other instrument furnished
to Buyer or Parent by either Seller pursuant to this Agreement;

(b)  the breach of, default under
or nonfulfillment of any covenant, obligation or agreement of either Seller or
MFFB, as the case may be, under this Agreement or the agreements and
instruments contemplated herein;

(c)  the Excluded Assets;

(d)  any liability that is based
upon the occurrence of events, or actions taken by either Seller, prior to the
Closing Date and is not an Assumed Liability, including the Excluded
Liabilities; or

(e)  any litigation, proceeding
or claim by any Person relating to the Businesses as conducted prior to Closing
whether or not such litigation, proceeding or claim is set forth on Schedule
4.13(a) or Schedule 4.13(b);

(f)  any liabilities or
obligations that arise within fifteen (15) months of the Closing Date with
respect to the Developing Agent Agreements to the extent such liability or
obligation is not otherwise reimbursed in accordance with Article VI; or

(g)  any and all actions, suits,
or proceedings, incident to any of the foregoing.

11.3         Indemnification by Buyer.  Subject to the limitations set forth in this Article
XI, Buyer and Parent will each indemnify, defend and hold harmless the
Sellers and their respective stockholders, managers, officers, directors,
agents, attorneys and employees (hereinafter “Seller Indemnified Parties”
and, together with the Buyer Indemnified Parties, the “Indemnified Party”)
from and against any and all Damages incurred or sustained by the Sellers
Indemnified Parties as a result of:

(a)  the breach of any
representation or warranty of Buyer or Parent contained under this Agreement or
any certificate or other instrument furnished by Buyer or Parent to Seller
pursuant to this Agreement;

(b)  the breach of, default under
of nonfulfillment of any covenant, obligation or agreement by Buyer or Parent
under this Agreement or in the agreements and instruments contemplated herein;

(c)  the operation of the
Businesses and the ownership of the Purchased Assets by Buyer following the
Closing;

 48
 

(d)  any Assumed Liability; and

(e)  any and all actions, suits,
or proceedings incident to any of the foregoing..

11.4         Limitation
on Liability.

(a)  None of the Sellers, MFFB or
Parent nor Buyer shall have any liability for Damages under, respectively, Section 11.2
(other than Section 11.2(f)) or Section 11.3, and neither the Seller
Indemnified Parties nor the Buyer Indemnified Parties shall have the right to
seek indemnification under, respectively, Section 11.2 (other than Section
11.2(f) or Section 11.3 until the aggregate amount of the Damages
incurred by such Indemnified Party exceeds $200,000 (the “Minimum Loss”),
provided that the Minimum Loss shall not apply to any Damages (and there shall
be first-dollar liability) resulting from any breach or misrepresentation of
any Core Representations and Section 4.10.  After the Minimum Loss is exceeded, the
Indemnified Party shall be entitled to indemnification for the entire amount of
its Damages in excess of the Minimum Loss, subject to the limitations on
recovery and recourse set forth in this Article XI.

(b)  The aggregate liability of
the Sellers and MFFB on the one hand, 
and Buyer and Parent, on the other, for all Damages under Section
11.2 or Section 11.3 or payments under Article VI, as
applicable, shall not exceed the Final Purchase Price (the “Cap”).  The limitations set forth in this Section
11.4 or elsewhere in this Article XI shall not apply to any breach
of a Core Representation or in the case of fraud.

(c)  In determining the amount of Damages in
respect of a claim under this Article XI, there shall be deducted an
amount equal to the amount of any third-party insurance proceeds actually
received by the Indemnified Party making such claim with respect to such
Damages, less the cost of any increase in insurance premiums over the projected
period of such increase as a result of making a claim for such Damages, provided that there shall be no
obligation to make a claim, and no offset against Damages shall be made if a
party reasonably believes that making a claim for such Damages is reasonably
likely to result in a non-renewal of the insurance policy.

11.5         Other
Indemnification Provisions.

(a)  To the extent that any
representations and warranties of the Sellers, Parent or Buyer, as applicable,
have been breached, thereby entitling the non-breaching party to
indemnification pursuant to Section 11.2 and Section 11.3 hereof,
it is expressly agreed and acknowledged by the parties that solely for purposes
of calculation of Damages in connection with any right to indemnification, the
representations and warranties of either or the Sellers or Parent and Buyer, as
applicable, that have been breached shall be deemed not qualified by any
references therein to materiality generally, Sellers’ Knowledge or to whether
or not any breach or inaccuracy results in a Material Adverse Effect.

(b)  Following the Closing, the
parties’ rights to indemnification pursuant to this Article XI shall,
except for equitable relief and specific performance of covenants that survive
Closing and for claims under Section 12.4 of this Agreement, be the sole
and exclusive remedy available to the parties with respect to any matter
arising under or in connection with this Agreement or the transactions
contemplated hereby, other than for claims of fraud.

 49
 

11.6         Procedure
for Indemnification.  The procedure
to be followed in connection with any claim for indemnification by Buyer
Indemnified Parties under Section 11.2 or Seller Indemnified Parties
under Section 11.3 or any claims by one party against the other is set
forth below:

(a)  Notice.  Whenever any Indemnified Party shall have
received notice that a claim has been asserted or threatened against such
Indemnified Party, which, if valid, would subject the indemnifying party (the “Indemnifying
Party”) to an indemnity obligation under this Agreement, the Indemnified
Party shall promptly notify the Indemnifying Party of such claim; provided, however, that failure to so notify the
Indemnifying Party shall not relieve the Indemnifying Party of its
indemnification obligations hereunder, except to the extent the Indemnifying Party
is actually prejudiced thereby.  Any such
notice must be made to the Indemnifying Party not later than the expiration of
the applicable survival period specified in Section 11.1 above.

(b)  Defense of a Third Party Claim.  If any third party shall notify any party
with respect to any matter (a “Third Party Claim”) that may give rise to
a claim for indemnification against any other party under this Article XI,
the Indemnifying Party will have the right, but not the obligation, to assume
the defense of the Third Party Claim so long as (i) the Indemnifying Party
provides the Indemnified Party with evidence reasonably acceptable to the
Indemnified Party that the Indemnifying Party will have the financial resources
to defend against the Third Party Claim and fulfill its indemnification
obligations hereunder, (ii) uses counsel reasonably satisfactory to the
Indemnified Party, (iii) the Indemnifying Party acknowledges its obligation to
indemnify the Indemnified Party hereafter in respect of such matters and (iv)
the relief sought is monetary damages.

(c)  After notice from the Indemnifying Party to
the Indemnified Party of its election to assume the defense of the Third Party
Claim, the Indemnifying Party shall not, as long as the Indemnifying Party
diligently conducts such defense, be liable to the Indemnified Party for any
legal or other expense subsequently incurred by the indemnified party in
connection with the defense thereof, other than reasonable costs of
investigation; provided, however, that if
counsel defending such Third Party Claim shall advise the parties of a
potential conflict of interest arising from the existence of one or more legal
defenses available to the Indemnified Party which are different from or
additional to those available to the Indemnifying Party or its Affiliates, then
the Indemnified Party may retain separate counsel to defend it and in that
event the reasonable fees and expenses of such separate counsel shall be paid
by the Indemnifying Party if applicable under this Article XI.  Subject to the proviso to the foregoing
sentence, if the Indemnifying Party assumes such defense, the Indemnified Party
shall have the right to participate in the defense thereof and to employ
counsel, at its own expense, separate from the counsel employed by the
Indemnifying Party.  The Indemnifying
Parties shall be liable for the reasonable fees and expenses of counsel
employed by the Indemnified Party for any period during which the Indemnifying
Party have not assumed the defense thereof if they ultimately are found to be
liable to indemnify the Indemnified Party. 
If the Indemnifying Party choose to defend or prosecute any Third Party
Claim, all of the parties hereto shall cooperate in the defense or prosecution
thereof.

 50
 

(d)  If an Indemnifying Party assumes the defense
of an action or proceeding, then without the Indemnified Party’s written
consent, the Indemnifying Party shall not settle or compromise any Third Party
Claim or consent to the entry of any judgment which does not include as an
unconditional term thereof the delivery by the claimant or other plaintiff to
the Indemnified Party of a written release from all liability in respect of
such Third Party Claim or if such settlement shall include injunctive or other
relief that affects or relates to the right or obligations of such Indemnified
Party, other than the obligation to pay monetary damages where such damages
have been satisfied in full by the Indemnifying Party or their respective
Affiliates.

11.7         Non-Third
Party Claims.  Within thirty (30) Business
Days after a party obtains knowledge that it has sustained any Damages not
involving a Third Party Claim or action which such party reasonably believes
may give rise to a claim for indemnification from another party hereunder, such
Indemnified Party shall deliver notice of such claim to the Indemnifying Party,
together with a brief description of the facts and data which support the claim
for indemnification (a “Claim Notice”); provided, however,
that failure to so notify the Indemnifying Party shall not relieve the
Indemnifying Party of its indemnification obligations hereunder, except to the
extent that the Indemnifying Party is actually prejudiced thereby.  Any Claim Notice must be made to the
Indemnifying Party not later than the expiration of the applicable survival
period specified in Section 11.1 above. 
If the Indemnifying Party does not deliver notice to the Indemnified
Party within thirty (30) Business Days following its receipt of a Claim Notice
that the Indemnifying Party disputes its liability to the Indemnified Party
under this Article XI (an “Indemnification Objection”) the Indemnifying
Party will be deemed to have rejected such claim, in which event the other
party will be free to pursue such remedies as may be available to them.

11.8         Indemnification
Payments.  In the event any Buyer
Indemnified Party is entitled to indemnification pursuant to this Article XI
for Damages described in such Claim Notice, such Buyer Indemnified Party shall
be entitled to obtain such indemnification first out of the then remaining
balance of the Escrow Amount, and then, if the Escrow Amount is insufficient to
satisfy such indemnification claim, such Buyer Indemnified Party may seek
indemnification from the Sellers or MFFB for the unreimbursed portion of such
claim.  Notwithstanding the foregoing, in
the event any Buyer Indemnified Party is entitled to indemnification pursuant
to this Article XI for Damages described in such Claim Notice, the
Sellers and MFFB shall satisfy their obligation to indemnify for such Damages
by payment by wire transfer of immediately available funds to an account
designated in writing by such Buyer Indemnified Party.

ARTICLE XII

Miscellaneous

12.1         Public
Disclosure or Communications.  Except
to the extent required by applicable Legal Requirements (including, without
limitation, the UFOC Guidelines, securities laws applicable to MFFB, and the
rules of the Nasdaq Global Market and securities laws applicable to Parent),
none of the Parent, Buyer, MFFB, Sellers or any of their Affiliates shall issue
any press release or public announcement of any kind concerning the
transactions contemplated by this Agreement without the prior written consent
of the other parties; and, in the event that any such public announcement,
release or disclosure is required by applicable Legal

 51
 

Requirements (including,
without limitation, the rules of the Nasdaq Global Market and securities laws),
the disclosing party will provide the other parties, to the extent practicable
and permissible under the circumstances, reasonable opportunity to comment on
any such announcement, release or disclosure prior to the making thereof. Each
of the parties hereto acknowledges that each of Parent and MFFB shall be
required to file a Current Report on Form 8-K disclosing the transactions
contemplated by this Agreement and attaching as an exhibit thereto a copy of
this Agreement.

12.2         Notices.  All notices, consents, waivers, and other
communications under this Agreement must be in writing and will be deemed to
have been duly given when (a) delivered by hand (with written confirmation of
receipt), (b) sent by telecopier (with written confirmation of receipt); provided that a copy is mailed by registered mail, return
receipt requested, or (c) received by the addressee, if sent by a nationally
recognized overnight delivery service (receipt requested), in each case to the
appropriate addresses and telecopier numbers set forth below (or to such other
addresses and telecopier numbers as a party may designate by notice to the
other parties):

If to the Sellers or MFFB:

Mrs. Fields Famous Brands, LLC

2855 East Cottonwood Parkway, Suite 400

Salt Lake City, UT 84121

Attention: 
Michael Ward, EVP and General Counsel

Facsimile: 
(801) 736-5944

If to Buyer or Parent:

1330 Avenue of the
Americas

34th Floor

New York, NY  10019

Attention:  David Meister, CFO

Facsimile: (212) 277-1160

With a copy to (which shall not constitute notice):

Kirkland & Ellis LLP

655 15th Street, N.W.

Washington, DC  20005

Attention:  Mark D. Director, Esq.

Facsimile: (202) 879-5200

12.3         Entire
Agreement; Nonassignability; Parties in Interest.  This Agreement and the certificates,
exhibits, schedules, documents, instruments and other agreements specifically
referred to herein or therein or delivered pursuant hereto or thereto:  (a) constitute the entire agreement among the
parties with respect to the subject matter hereof and supersede all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof, (b) are not intended to confer upon any
other Person, either explicitly or

 52
 

implicitly, any equitable
or legal rights or remedies of any nature whatsoever hereunder, and (c) shall
not be assigned by operation of law or otherwise without the written consent of
the other party; provided, however, that Buyer
may, without the consent of the Sellers, (i) assign any or all of its rights
and interests hereunder to one or more of its Affiliates, (ii) designate one or
more of its Affiliates to perform its obligations hereunder, (iii) direct the
Sellers, at the Closing and on behalf of the Buyer, to transfer title to all or
some of the Purchased Assets directly to one of more of its Affiliates, and
(iv) assign its rights to indemnification under this Agreement upon a sale or
transfer of Buyer or all or substantially all of the assets of Buyer; provided, however, that Buyer shall remain
obligated to perform all its obligations under this Agreement if not performed
by such Affiliates.

12.4         Bulk Sales Law.  Buyer hereby waives compliance by the Sellers
with the provisions of any so-called bulk transfer laws of any jurisdiction in
connection with the sale of the Purchased Assets.  Notwithstanding any such waiver, each of the
Sellers, severally, and MFFB jointly and severally with each Seller, agrees to
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.

12.5         Expenses.  Except as otherwise specifically provided in
this Agreement, whether or not the transactions contemplated by this Agreement
are consummated, each party hereto shall bear its own costs, expenses and fees
incurred in connection with this Agreement and the other transactions
contemplated by this Agreement.

12.6         Waiver and Amendment.  Any representation, warranty, covenant, term
or condition of this Agreement which may legally be waived, may be waived, or
the time of performance thereof extended, at any time by the party hereto
entitled to the benefit thereof and any term, condition or covenant hereof may
be amended by the parties hereto at any time. Any such waiver, extension or
amendment shall be evidenced by an instrument in writing executed on behalf of
the appropriate party by a person who has been authorized by such party to execute
waivers, extensions or amendments on its behalf. No waiver by any party hereto,
whether express or implied, of its rights under any provision of this Agreement
shall constitute a waiver of such party’s rights under such provisions at any
other time or a waiver of such party’s rights under any other provision of this
Agreement. No failure by any party hereto to take any action against any breach
of this Agreement or default by another party shall constitute a waiver of the
former party’s right to enforce any provision of this Agreement or to take
action against such breach or default or any subsequent breach or default by
such other party.

12.7         Severability.  Any term or provision of this Agreement which
is invalid or unenforceable will be ineffective to the extent of such
invalidity or unenforceability without rendering invalid or unenforceable the
remaining rights of the person intended to be benefited by such provision or
any other provisions of this Agreement.

12.8         Remedies Cumulative.  Except as otherwise provided herein, any and
all remedies herein expressly conferred upon a party will be deemed cumulative
with and not exclusive of any other remedy conferred hereby, or by law or
equity upon such party, and the exercise by a party of any one remedy will not
preclude the exercise of any other remedy.

 53
 

12.9         Counterparts.  This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, and all of which
taken together shall constitute one instrument. 
Any signature page delivered by a facsimile machine, or in portable
document format (“PDF”) file format shall be binding to the same extent
as an original signature page with regard to any agreement subject to the terms
hereof or any amendment thereto.

12.10       Governing
Law; Jurisdiction.

(a)  The interpretation and construction of this
Agreement, and all matters relating hereto, shall be governed by the laws of
the State of New York, including Sections 5-1401 and 5-1402 of the New York
General Obligations Law.

(b)  Each of the parties agrees
that any legal action or proceeding with respect to this Agreement may be
brought in the courts of the State of New York or the United States District
Court for the Southern District of New York and, by execution and delivery of
this Agreement, each party hereto hereby irrevocably submits itself in respect
of its property, generally and unconditionally, to the non-exclusive
jurisdiction of the aforesaid courts in any legal action or proceeding arising
out of this Agreement.  Each of the
parties hereto hereby irrevocably waives any objection which it may now or
hereafter have to the laying of venue of any of the aforesaid actions or
proceedings arising out of or in connection with this Agreement brought in the
courts referred to in the preceding sentence. 
Each party hereto hereby consents to process being served in any such
action or proceeding by the mailing of a copy thereof to the address set forth
in Section 12.2 hereof below its name and agrees that such service
upon receipt shall constitute good and sufficient service of process or notice
thereof.  Nothing in this paragraph shall
affect or eliminate any right to serve process in any other manner permitted by
applicable Legal Requirements.

12.11       Specific
Performance.  The Sellers agree that
the Purchased Assets include unique property that cannot be readily obtained on
the open market and that Buyer will be irreparably injured if this Agreement is
not specifically enforced.  Therefore, Buyer shall have the
right specifically to enforce the Sellers’ performance under this Agreement,
and the Sellers agree to waive the defense in any such suit that Buyer has an
adequate remedy at law and to interpose no opposition, legal or otherwise, as
to the propriety of specific performance as a remedy.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE FOLLOWS]

 54

IN
WITNESS WHEREOF, the parties hereto have each executed and
delivered this Asset Purchase Agreement as of the day and year first above
written.

	
  

  	
  NEXCEN ASSET ACQUISITION, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By: NexCen Brands, Inc., its Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert W. D’Loren

  
	
   

  	
  Title:

  	
  Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
  NEXCEN BRANDS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert W. D’Loren

  
	
   

  	
  Title:

  	
  Chief Executive Officer

  
					

 

 

	
  

  	
  PRETZEL TIME FRANCHISING, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael Ward

  	
   

  
	
   

  	
  Title:

  	
  Executive VP, CLO and Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  PRETZELMAKER FRANCHISING, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael Ward

  	
   

  
	
   

  	
  Title:

  	
  Executive VP, CLO and Secretary

  

 

 

	
  

  	
   

  	
   

  
	
   

  	
  MRS. FIELDS FAMOUS BRANDS, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael Ward

  	
   

  
	
   

  	
  Title:

  	
  Executive VP, CLO and Secretary

  

 

ANNEX A

ESTIMATE STATEMENT

[Attached]

ANNEX B

PURCHASE PRICE ALLOCATION

	
  Seller

  	
   

  	
  Column I

  Cash at Closing

  	
   

  	
  Column II

  Parent Shares at Closing

  	
   

  	
  Column III

  Indemnity Escrow

  Amount

  	
   

  	
  Column IV

  Developing Agents

  Escrow Amount

  	
   

  
	
  Pretzelmaker

  	
   

  	
  $

  	
  8,143,905

  	
   

  	
  235,416 shares

  	
   

  	
  156,943 shares

  	
   

  	
  0 shares

  	
   

  
	
  Pretzel Time

  	
   

  	
  $

  	
  13,926,294

  	
   

  	
  229,080
  shares

  	
   

  	
  243,422
  shares

  	
   

  	
  136,054
  shares

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00127-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00127-of-00352.parquet"}]]