Document:

Unassociated Document

    

    
      

      

    

    

    

    Exhibit
      10.1

     

    PROMISSORY
      NOTE

     

    $200,000.00 

    Denver,
      Colorado

     November
      29, 2007

     

    FOR
      VALUE
      RECEIVED, and at the times hereinafter specified, the undersigned (“Maker”)
      hereby promises to pay to the order of A-Squared Holdings, Inc. (hereinafter
      referred to, together with each subsequent holder hereof, as “Holder”), at such
      address as may be designated from time to time hereafter by any Holder, the
      principal sum of TWO HUNDRED THOUSAND AND NO/100THS DOLLARS ($200,000.00),
      or so
      much thereof as shall have been advanced to or for the benefit of Maker,
      together with interest on the principal balance outstanding from time to time,
      as hereinafter provided, in lawful money of the United States of
      America.

     

    The
      term
      of this note shall commence as of the date hereof and, if not sooner paid,
      the
      entire unpaid principal indebtedness, all accrued and unpaid interest, and
      all
      other sums payable in connection with this note shall be due and payable on
      November 29, 2008 (the “Maturity Date”).  Notwithstanding the
      foregoing sentence, the maturity date of this note may be extended at the option
      of Maker for a period of one year following the Maturity Date provided Holder
      receives a renewal fee equal to 1.5% of the then outstanding principal balance
      due.  In no event shall the maturity date of this note be later than
      November 29, 2009.

     

    During
      the period commencing on the date hereof and continuing until this note is
      paid
      in full, (a) interest on the principal balance of this note shall accrue at
      the
      rate of 15% per annum and (b) interest payments shall be made every 90 days,
      beginning 90 days for the date hereof.  Interest shall be computed on
      the basis of a 360-day year, calculated for the actual number of days
      elapsed.

     

    Whenever
      any payment to be made hereunder is due on a day other than a Business Day,
      such
      payment may be made on the next succeeding Business Day, and such extension
      of
      time shall in such case be included in the computation of payment of
      interest.  “Business Day” shall mean a day on which Holder’s offices
      are open for business in Denver, Colorado.

     

    Maker
      may
      prepay this note in whole or in part.

     

    All
      payments hereunder shall, at Holder’s option, be applied first to the payment of
      accrued interest at the rate specified below, if any, second, to accrued
      interest first specified above, and the balance applied in reduction of the
      principal amount.  If any payment is not paid when due hereunder, then
      the entire outstanding balance hereunder, including the interest component
      of
      the delinquent payment, shall bear interest from the date such payment was
      due
      until such payment is paid at a rate equal to 24.00% per annum (the “Default
      Rate”).  In addition, upon the maturity date hereof, by acceleration
      or otherwise, the entire balance of principal, interest, and other sums due
      shall bear interest from such maturity date until paid at the Default
      Rate.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Any
      default in payment of any sum required hereunder or performance of any other
      covenant or agreement herein contained shall constitute an “Event of Default”
hereunder and under each document securing this note, and any Event of Default
      under any of such documents securing this Note shall constitute an Event of
      Default hereunder.  Any default in payment or other terms of any other
      indebtedness owed by Maker to Holder shall constitute an Event of Default
      hereunder, and any default hereunder shall constitute a default under any other
      such indebtedness.  Upon the occurrence of any Event of Default, the
      entire balance of principal, accrued interest, and other sums owing hereunder
      shall, at the option of Holder, become at once due and payable without notice
      or
      demand.

     

    Maker
      and
      all parties now or hereafter liable for the payment hereof, primarily or
      secondarily, directly or indirectly, and whether as endorser, guarantor, surety,
      or otherwise, hereby severally (a) waive presentment, demand, protest, notice
      of
      protest and/or dishonor, and all other demands or notices of any sort whatever
      with respect to this note, (b) waive any defenses that might be available to
      a
      surety or accommodation maker, (c) consent to impairment or release of
      collateral, extensions of time for payment, and acceptance of partial payments
      before, at, or after maturity, (d) waive any right to require Holder to proceed
      against any security for this note before proceeding hereunder, (e) consent
      to
      the release of any other party liable hereunder, without diminishing or in
      any
      way affecting their liability hereunder, and (f) agree to pay all costs and
      expenses, including attorneys’ fees and expenses, which may be incurred in the
      collection of this note or any part thereof or in preserving, securing
      possession of, and realizing upon any security for this note.

     

    The
      provisions of this note and of all agreements between Maker and Holder are
      hereby expressly limited so that in no contingency or event whatever shall
      the
      amount paid, or agreed to be paid, to Holder for the use, forbearance, or
      detention of the money to be loaned hereunder exceed the maximum amount
      permissible under applicable law.  If from any circumstance whatever,
      the performance or fulfillment of any provision hereof or of any other agreement
      between Maker and Holder shall, at the time performance or fulfillment of such
      provision is due, involve or purport to require any payment in excess of the
      limits prescribed by law, then the obligation to be performed or fulfilled
      is
      hereby reduced to the limit of such validity, and if from any circumstance
      whatever Holder should ever receive as interest an amount which would exceed
      the
      highest lawful rate, the amount which would be excessive interest shall be
      applied to the reduction of the principal balance owing hereunder (or, at
      Holder’s option, be paid over to Maker) and shall not be counted as
      interest.

     

    If
      any
      provision hereof or of any other document securing or related to the
      indebtedness evidenced hereby is, for any reason and to any extent, invalid
      or
      unenforceable, then neither the remainder of the document in which such
      provision is contained, nor the application of the provision to other persons,
      entities, or circumstances, nor any other document referred to herein, shall
      be
      affected thereby, but instead shall be enforceable to the maximum extent
      permitted by law.

     

    Each
      provision of this note shall be and remain in full force and effect
      notwithstanding any negotiation or transfer hereof to any other Holder or
      participant.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    MAKER
      HEREBY WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY DISPUTE ARISING IN CONNECTION
      WITH THIS NOTE, OR IN ANY WAY RELATED TO THE NEGOTIATION, ADMINISTRATION,
      MODIFICATION, EXTENSION OR COLLECTION OF THE INDEBTEDNESS EVIDENCED
      HEREBY.  MAKER STATES THAT IT HAS CONFERRED SPECIFICALLY WITH HOLDER
      WITH RESPECT TO THIS WAIVER, AND MAKER HAS AGREED TO THIS WAIVER AFTER
      CONSULTATION WITH ITS COUNSEL AND WITH FULL UNDERSTANDING OF THE IMPLICATIONS
      HEREOF.

     

    Regardless
      of the place of its execution, this note shall be construed and enforced in
      accordance with the laws of the State of Colorado.

     

    

     

    FOREVER
      VALUABLE COLLECTIBLES,
      INC.

     

    

     

    By: 
      /s/        ______________________

     

    Its:_____President  ________________Exhibit 10.1

 

Execution
copy

 

ASSET
PURCHASE AGREEMENT

 

BY AND
AMONG

 

NEXCEN
ASSET ACQUISITION, LLC,

 

GREAT
AMERICAN COOKIE COMPANY FRANCHISING, LLC,

 

GREAT
AMERICAN MANUFACTURING, LLC,

 

NEXCEN
BRANDS, INC.

 

AND

 

MRS.
FIELDS FAMOUS BRANDS, LLC

 

 

DATED AS
OF JANUARY 29, 2008

 

 

TABLE OF
CONTENTS

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE I Definitions and Usage

  	
   

  	
  2

  
	
  1.1

  	
  Definitions

  	
   

  	
  2

  
	
  1.2

  	
  Usage

  	
   

  	
  28

  
	
  ARTICLE II Purchase and Sale of Businesses
  and Assets

  	
   

  	
  30

  
	
  2.1

  	
  Purchase and Sale of Assets

  	
   

  	
  30

  
	
  2.2

  	
  Excluded Assets

  	
   

  	
  30

  
	
  2.3

  	
  Assumed Liabilities

  	
   

  	
  32

  
	
  2.4

  	
  Excluded Liabilities

  	
   

  	
  33

  
	
  ARTICLE III Purchase Price; Payment;
  Assumption of Obligations

  	
   

  	
  36

  
	
  3.1

  	
  The Closing

  	
   

  	
  36

  
	
  3.2

  	
  Purchase Price

  	
   

  	
  37

  
	
  3.3

  	
  Payment

  	
   

  	
  40

  
	
  3.4

  	
  Allocation

  	
   

  	
  41

  
	
  3.5

  	
  Nonassignable Contracts

  	
   

  	
  42

  
	
  3.6

  	
  Escrow

  	
   

  	
  43

  
	
  3.7

  	
  Accounts Receivable

  	
   

  	
  45

  
	
  ARTICLE IV Representations and Warranties
  of the Sellers and MFFB

  	
   

  	
  47

  
	
  4.1

  	
  Organization and Good Standing

  	
   

  	
  48

  
	
  4.2

  	
  Enforceability; Authority

  	
   

  	
  49

  
	
  4.3

  	
  Consents; Approvals

  	
   

  	
  50

  
	
  4.4

  	
  Financial Statements

  	
   

  	
  51

  
	
  4.5

  	
  Real Property

  	
   

  	
  52

  
	
  4.6

  	
  Title to Assets

  	
   

  	
  59

  
	
  4.7

  	
  Sufficiency of Assets

  	
   

  	
  59

  
	
  4.8

  	
  Accounts Receivable

  	
   

  	
  59

  
	
  4.9

  	
  Insolvency Proceedings

  	
   

  	
  60

  
	
  4.10

  	
  Taxes

  	
   

  	
  60

  
	
  4.11

  	
  Labor Relations; Compliance

  	
   

  	
  62

  
	
  4.12

  	
  Employee Benefits

  	
   

  	
  63

  
	
  4.13

  	
  Litigation; Orders

  	
   

  	
  67

  
	
  4.14

  	
  Compliance With Laws; Permits

  	
   

  	
  68

  
	
  4.15

  	
  Operations of the Sellers

  	
   

  	
  69

  
	
  4.16

  	
  Material Contracts

  	
   

  	
  71

  
	
  4.17

  	
  Insurance

  	
   

  	
  74

  
	
  4.18

  	
  Environmental and Safety Matters

  	
   

  	
  74

  
	
  4.19

  	
  Intellectual Property

  	
   

  	
  76

  
	
  4.20

  	
  Affiliate Transactions

  	
   

  	
  82

  
	
  4.21

  	
  Brokers’ or Finders’ Fees

  	
   

  	
  82

  
	
  4.22

  	
  Suppliers

  	
   

  	
  82

  
	
  4.23

  	
  Franchise Matters

  	
   

  	
  83

  
	
  4.24

  	
  Powers of Attorney

  	
   

  	
  96

  
	
  4.25

  	
  Investment

  	
   

  	
  96

  
	
  4.26

  	
  Deferred Revenue Liability

  	
   

  	
  96

  
	
  4.27

  	
  Indenture Payment

  	
   

  	
  96

  
	
  4.28

  	
  Settlement Agreement

  	
   

  	
  97

  
	
  4.29

  	
  Other Contracts

  	
   

  	
  97

  
	
  ARTICLE V Representations and Warranties of
  Buyer and Parent

  	
   

  	
  97

  

 

 

	
  5.1

  	
  Existence and Good Standing;
  Authorization

  	
   

  	
  98

  
	
  5.2

  	
  Consents and Approvals; No
  Violations

  	
   

  	
  99

  
	
  5.3

  	
  SEC Documents and Other Reports

  	
   

  	
  100

  
	
  5.4

  	
  Litigation

  	
   

  	
  101

  
	
  5.5

  	
  Brokers’ or Finders’ Fees

  	
   

  	
  101

  
	
  5.6

  	
  Parent Shares

  	
   

  	
  101

  
	
  ARTICLE VI Pre-Closing Covenants

  	
   

  	
  102

  
	
  6.1

  	
  Efforts to Closing

  	
   

  	
  102

  
	
  6.2

  	
  Conduct of the Businesses

  	
   

  	
  103

  
	
  6.3

  	
  Access and Investigation

  	
   

  	
  105

  
	
  6.4

  	
  Business Plan

  	
   

  	
  105

  
	
  6.5

  	
  Exclusivity

  	
   

  	
  106

  
	
  6.6

  	
  Change of Name

  	
   

  	
  107

  
	
  6.7

  	
  Notice of Developments

  	
   

  	
  107

  
	
  6.8

  	
  Continuation of Businesses

  	
   

  	
  108

  
	
  6.9

  	
  Regulatory Filings

  	
   

  	
  109

  
	
  6.10

  	
  Maintenance of Real Property

  	
   

  	
  110

  
	
  6.11

  	
  Leases

  	
   

  	
  110

  
	
  6.12

  	
  Title Insurance

  	
   

  	
  111

  
	
  6.13

  	
  Financing

  	
   

  	
  111

  
	
  6.14

  	
  Employees

  	
   

  	
  111

  
	
  ARTICLE VII Post-Closing Covenants

  	
   

  	
  112

  
	
  7.1

  	
  Employees

  	
   

  	
  112

  
	
  7.2

  	
  Taxes Related to Purchase of Assets;
  Tax Cooperation

  	
   

  	
  113

  
	
  7.3

  	
  Nonsolicitation

  	
   

  	
  116

  
	
  7.4

  	
  Further Assurances

  	
   

  	
  118

  
	
  7.5

  	
  Audit

  	
   

  	
  118

  
	
  7.6

  	
  Confidentiality

  	
   

  	
  119

  
	
  7.7

  	
  Solvency

  	
   

  	
  120

  
	
  7.8

  	
  Restrictions on Sale of Parent
  Shares

  	
   

  	
  120

  
	
  7.9

  	
  Registration

  	
   

  	
  122

  
	
  7.10

  	
  Agreement to Vote

  	
   

  	
  122

  
	
  7.11

  	
  Access to Records

  	
   

  	
  123

  
	
  7.12

  	
  Product Formulation Royalties

  	
   

  	
  123

  
	
  7.13

  	
  Lease Obligations

  	
   

  	
  124

  
	
  7.14

  	
  Intellectual Property

  	
   

  	
  127

  
	
  7.15

  	
  Franchise Business

  	
   

  	
  128

  
	
  7.16

  	
  New Settlement Agreement

  	
   

  	
  128

  
	
  7.17

  	
  Waste Water Filter

  	
   

  	
  128

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

  	
   

  	
  129

  
	
  8.1

  	
  Truth of Representations and
  Warranties

  	
   

  	
  130

  
	
  8.2

  	
  Performance of Agreements

  	
   

  	
  130

  
	
  8.3

  	
  Certificate

  	
   

  	
  130

  
	
  8.4

  	
  No Injunction

  	
   

  	
  130

  
	
  8.5

  	
  Governmental and Other Approvals

  	
   

  	
  131

  
	
  8.6

  	
  Indenture Lien Release

  	
   

  	
  131

  
	
  8.7

  	
  Transition Services

  	
   

  	
  131

  
	
  8.8

  	
  Escrow Agreement

  	
   

  	
  131

  
	
  8.9

  	
  Registration Rights Agreement

  	
   

  	
  131

  
	
  8.10

  	
  Voting Agreement

  	
   

  	
  132

  

 

ii

 

	
  8.11

  	
  Deed

  	
   

  	
  132

  
	
  8.12

  	
  No Material Adverse Effect

  	
   

  	
  132

  
	
  8.13

  	
  Financing

  	
   

  	
  132

  
	
  8.14

  	
  Real Property

  	
   

  	
  132

  
	
  8.15

  	
  Title Insurance

  	
   

  	
  132

  
	
  8.16

  	
  Closing Deliverables

  	
   

  	
  133

  
	
  ARTICLE IX Conditions Precedent to the
  Sellers’ Obligation to Close

  	
   

  	
  134

  
	
  9.1

  	
  Truth of Representations and
  Warranties

  	
   

  	
  134

  
	
  9.2

  	
  Performance of Agreements

  	
   

  	
  135

  
	
  9.3

  	
  Certificate

  	
   

  	
  135

  
	
  9.4

  	
  No Injunction

  	
   

  	
  135

  
	
  9.5

  	
  Governmental and Other Approvals

  	
   

  	
  135

  
	
  9.6

  	
  Escrow Agreement

  	
   

  	
  136

  
	
  9.7

  	
  Registration Rights Agreement

  	
   

  	
  136

  
	
  9.8

  	
  Closing Deliverables

  	
   

  	
  136

  
	
  ARTICLE X Termination

  	
   

  	
  137

  
	
  10.1

  	
  Right to Terminate

  	
   

  	
  137

  
	
  10.2

  	
  Effect of Termination

  	
   

  	
  138

  
	
  ARTICLE XI Indemnification; Remedies

  	
   

  	
  139

  
	
  11.1

  	
  Survival

  	
   

  	
  139

  
	
  11.2

  	
  Indemnification by the Sellers and
  MFFB

  	
   

  	
  140

  
	
  11.3

  	
  Indemnification by Buyer

  	
   

  	
  141

  
	
  11.4

  	
  Limitation on Liability

  	
   

  	
  142

  
	
  11.5

  	
  Other Indemnification Provisions

  	
   

  	
  143

  
	
  11.6

  	
  Procedure for Indemnification

  	
   

  	
  144

  
	
  11.7

  	
  Non-Third Party Claims

  	
   

  	
  147

  
	
  11.8

  	
  Indemnification Payments

  	
   

  	
  147

  
	
  ARTICLE XII Miscellaneous

  	
   

  	
  148

  
	
  12.1

  	
  Public Disclosure or Communications

  	
   

  	
  148

  
	
  12.2

  	
  Notices

  	
   

  	
  149

  
	
  12.3

  	
  Entire Agreement; Nonassignability;
  Parties in Interest

  	
   

  	
  150

  
	
  12.4

  	
  Bulk Sales Law

  	
   

  	
  151

  
	
  12.5

  	
  Expenses

  	
   

  	
  151

  
	
  12.6

  	
  Waiver and Amendment

  	
   

  	
  152

  
	
  12.7

  	
  Severability

  	
   

  	
  152

  
	
  12.8

  	
  Remedies Cumulative

  	
   

  	
  152

  
	
  12.9

  	
  Counterparts

  	
   

  	
  153

  
	
  12.10

  	
  Governing Law; Jurisdiction

  	
   

  	
  153

  
	
  12.11

  	
  Specific Performance

  	
   

  	
  154

  

 

iii

 

Annexes, Exhibits and Schedules

 

	
  Annexes

  	
   

  
	
   

  	
  Financial Results of GAC Related Businesses as of
  November 24, 2007

  	
  Annex A

  
	
   

  	
  Purchase Price
  Allocation

  	
   

  	
  Annex B

  
	
  Exhibits

  	
   

  	
   

  
	
   

  	
  GACCF and GAM Logos

  	
   

  	
  Exhibit A

  
	
   

  	
  Form of Transition
  Services Agreement

  	
   

  	
  Exhibit B

  
	
   

  	
  Form of Escrow
  Agreement

  	
   

  	
  Exhibit C

  
	
   

  	
  Form of
  Registration Rights Agreement

  	
   

  	
  Exhibit D

  
	
   

  	
  Form of Voting
  Agreement

  	
   

  	
  Exhibit E

  
	
   

  	
  Form of Deed

  	
   

  	
  Exhibit F

  
	
  Schedules

  	
   

  
	
   

  	
  Assumed Contracts

  	
   

  	
  1.1A

  
	
   

  	
  Deferred Revenue
  Liability

  	
   

  	
  1.1B

  
	
   

  	
  Vendor Agreements

  	
   

  	
  1.1D

  
	
   

  	
  Excluded Contracts

  	
   

  	
  2.2(g)

  
	
   

  	
  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)

  
	
   

  	
  Owned Real Property

  	
   

  	
  4.5(a)

  
	
   

  	
  Leased Real Property

  	
   

  	
  4.5(b)

  
	
   

  	
  Real Property Permits

  	
   

  	
  4.5(g)(1)

  
	
   

  	
  Consents and Real
  Property Permits

  	
   

  	
  4.5(g)(2)

  
	
   

  	
  Sufficiency of Assets

  	
   

  	
  4.7

  
	
   

  	
  Accounts Receivable and
  Encumbrances

  	
   

  	
  4.8

  
	
   

  	
  Sellers’ Tax Returns
  Subject to Audit

  	
   

  	
  4.10

  
	
   

  	
  Labor Relations;
  Compliance

  	
   

  	
  4.11

  
	
   

  	
  Employee Benefit Plans

  	
   

  	
  4.12

  
	
   

  	
  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(a)

  
	
   

  	
  Breach or Default of
  Material Contracts

  	
   

  	
  4.16(b)

  
	
   

  	
  Affiliated Contracts

  	
   

  	
  4.16(c)

  
	
   

  	
  Insurance

  	
   

  	
  4.17

  
	
   

  	
  Environmental and
  Safety Matters

  	
   

  	
  4.18

  
	
   

  	
  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)

  
					

 

iv

 

	
   

  	
  Powers of Attorney

  	
  4.24

  
	
   

  	
  Settlement
  Franchisees

  	
  4.28

  
	
   

  	
  Transferred Employees

  	
  6.14

  
	
   

  	
  Vendor Allocation Schedule

  	
  7.12

  
	
   

  	
  Lease Locations

  	
  7.13(a)

  
	
   

  	
  Foreign Trademarks

  	
  7.14

  
	
   

  	
  Governmental and Other Approvals

  	
  8.5

  

 

v

 

ASSET PURCHASE AGREEMENT

 

This Asset Purchase Agreement (“Agreement”)
is entered into as of January 29, 2008, by and among NexCen Asset
Acquisition, LLC, a Delaware limited liability company (“Buyer”), NexCen
Brands, Inc., a Delaware corporation (“Parent”), Great American
Cookie Company Franchising, LLC, a Delaware limited liability company (“GACCF”),
Great American Manufacturing, LLC, a Delaware limited liability company (“GAM,”
and with GACCF, 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:

 

“Accountant Statement”
is defined in Section 3.2(c).

 

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

 

“Actual Financials” is
defined in Section 3.2(b).

 

“Acquisition Proposal”
is defined in Section 6.5.

 

“Acquired Franchise Assets”
means those Purchased Assets owned or used by MFFB or GACCF in the operation of
the GAC Franchise Business.

 

“Acquired Manufacturing
Assets” means those Purchased Assets owned or used by MFFB or GAM in the
operation of the GAC Manufacturing Business.

 

“Adjusted Closing Date
Reference Price” is defined in Section 3.6(b).

 

“Adjustment” is defined in
Section 7.8.

 

 

“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; provided, that, for purposes of Section 7.3(a) only,
Affiliates shall be deemed to include only Persons controlled by MFC and not
Persons controlling MFC.  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.

 

“Allocation Schedule” is
defined in Section 3.4.

 

“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.

 

“Assumed Liabilities” is
defined in Section 2.3.

 

“Balance Sheet” is
defined in Section 4.4(a).

 

“Books and Records”
means all books and records of the Sellers or their Affiliates 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, and personnel files and records for
the Transferred Employees; provided, that “Books
and Records” will not include any corporate records of the Sellers or their
Affiliates.

 

“Brands” means the “Great
American Cookies” and “Great American Chocolate Chip Cookie Company,” and all
other brands owned or in use by GACCF, 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.

 

“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.

 

“Businesses” means the
businesses that relate to the operation of the GAC Franchise Business and the
GAC Manufacturing Business, including the use of any of the Purchased Assets in
connection with the operation thereof.

 

“Business Plan” is
defined in Section 6.4.

 

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

 

“Buyer’s Closing Documents”
is defined in Section 9.8.

 

2

 

“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.).

 

“Claim Notice” is
defined in Section 11.7.

 

“Closing” is defined in Section 3.1.

 

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

 

“Closing Date Reference
Price” means $4.23.

 

“Closing Statement” is
defined in Section 3.2(b).

 

“COBRA” means Part 6
of Subtitle B of Title I of ERISA, Section 4980B of the Code, and any
similar applicable Legal Requirement.

 

“Code” means the
Internal Revenue Code of 1986.

 

“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 GACCF 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).

 

“Core Representations”
is defined in Section 11.1.

 

“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.

 

“Deed” means the Limited
Warranty Deed transferring fee title to the Owned Real Property to GAC Manufacturing, LLC, to be dated as
of the Closing Date and substantially in the form attached hereto as Exhibit F.

 

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

 

3

 

“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.

 

“Disclosure Schedule” is defined in
the first paragraph of Article IV.

 

“Domestic UFOC” means the Uniform
Franchise Offering Circular of GACCF, 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 compensation or benefit plan, program, agreement or arrangement
of any kind (whether written or oral) including any employment, severance,
change of control or other similar agreement or arrangement.

 

“Encumbrance Documents”
is defined in Section 4.5(i).

 

“Encumbrances” means any
liens, 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, whenever in effect, all federal, state, local and
foreign statutes, regulations, ordinances, codes and other provisions having
the force or 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, or pollution or protection
of the environment, including, without limitation, 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 Substances.

 

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

 

“ERISA Affiliate” means,
with respect to any Person, any other Person that at any relevant time is or
was treated as a single employer with such Person under Sections 414(b), (c), (m) or
(o) of the Code.

 

“Escrow Agent” means
Wilmington Trust Company, in its capacity as the escrow agent under the Escrow
Agreement.

 

“Escrow Agreement” means
the Escrow Agreement, to be dated as of the Closing Date and substantially in
the form attached hereto as Exhibit C.

 

“Executive 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 and Michael Ward.

 

4

 

“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.

 

“Filter Contract” means
the contract to be entered into by GAM to replace the waste water filter at its
manufacturing facility.

 

“Final Purchase Price”
means the Initial Purchase Price minus the Purchase Price Deficit Amount, if
any.

 

“Financial Statements”
is defined in Section 4.4(a).

 

“Franchise Agreements”
means any Contract (and any written or oral amendment or modification thereto)
between GACCF or any of its 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 GACCF or any of its predecessors.

 

“Franchise”  means the grant by GACCF to a Franchisee of the rights to
establish and operate a location using the Brands 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.

 

“Franchise Purchase Price”
means $45,000,000, which is the initial purchase price for the Acquired
Franchise Assets.

 

“Franchise Revenue
Difference” means the difference between the total revenues in the Actual
Financials minus the “Total Revenues” as set forth under the column entitled “GAC
Franchise Business” on Annex A, each calculated in accordance with GAAP.

 

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

 

“GAC” means Great
American Cookie.

 

“GAC Franchise Business”
means the licensing of the right to conduct the business of a retail snack,
dessert and beverage outlet selling any GACCF Products and other products for
off-premises consumption and services specified by GACCF at or from the
premises of such outlet (including carts and kiosks).

 

“GAC Manufacturing Business”
means the GAC dough manufacturing and supply businesses, and any ancillary
product supply business.

 

5

 

“GACCF Accounts Receivable”
means (a) all trade accounts receivable, franchise royalty accounts
receivable and other rights to payment from franchisees and customers of GACCF,
(b) all advertising accounts receivable of GACCF related to advertising or
marketing funds, (c) all other accounts or notes receivable of GACCF 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.

 

“GACCF Products” means
products approved or required by GACCF from time to time for sale in the GAC
Franchise Business, including, without limitation, specialty snacks and other
bakery items, desserts and beverages (such as cookies, brownies, coffee cakes
and coffee) and other products approved by GACCF from time to time.

 

“GACCI” means Great
American Cookie Company, Inc., a Delaware Corporation.

 

“GAM Accounts Receivable”
means (a) all trade accounts receivable, franchise royalty accounts
receivable and other rights to payment from franchisees and customers of GAM, (b) all
advertising accounts receivable of GAM related to advertising or marketing
funds, (c) all other accounts or notes receivable of GAM 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.

 

“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.

 

“Hazardous Substance” means any
hazardous materials, substances or wastes, chemical substances or mixtures,
pesticides, pollutants, contaminants, toxic chemicals, petroleum products or
byproducts, asbestos, polychlorinated biphenyls, noise, odor or radiation, or
any other material, substance or waste as to which liability or standards of
conduct may be imposed pursuant to Environmental and Safety Requirements.

 

“HSR Act” means the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

 

“Improvements” is
defined in Section 4.5(d).

 

“Indemnification Objection”
is defined in Section 11.7.

 

“Indemnified Party” is
defined in Section 11.3.

 

“Indemnifying Party” is
defined in Section 11.6(a).

 

“Indemnity Escrow Amount”
means, for each Seller, the number of Parent Shares set forth next to each
Seller’s name in Column II of Annex B.

 

6

 

“Indemnity Escrow Release
Date” is defined in Section 3.6(a).

 

“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.

 

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

 

“Initial Period” is
defined in Section 7.8.

 

“Initial Purchase Price”
means the sum of (i) the Franchise Purchase Price plus (ii) the Manufacturing Purchase
Price.

 

“Insurance Policies” is
defined in Section 4.17.

 

“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 (including, without
limitation, the Seller Recipes and 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.

 

“Interim Reports” is
defined in Section 4.4(a).

 

7

 

“Inventory” means the
inventory of GAM, 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 GAC Manufacturing Business.

 

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

 

“IT Software” is defined
in Section 4.19(b).

 

“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,
Michael Ward, Dale Thompson, Michael Curtis, Steve Passey and Justin Nalder.  The terms “know” and
“knows” and like terms will have correlative meanings.

 

“Leases” is defined in Section 4.5(b).

 

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

 

“Lease Obligation Date”
is defined in Section 7.13(d).

 

“Leased Real Property”
is defined in Section 4.5(b).

 

“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.

 

“Manufacturing Contribution”
means manufacturing revenues less direct manufacturing expenses, each as
calculated in accordance with GAAP.

 

“Manufacturing Contribution
Difference” means the Manufacturing Contribution in the Actual Financials
minus the “Manufacturing Contribution” as set forth under the column entitled “GAC
Manufacturing Business” on Annex A, each as calculated in accordance
with GAAP.

 

“Manufacturing Purchase
Price” means $48,650,000, which is the initial purchase price for the
Acquired Manufacturing Assets.

 

“Marketing Fees” means,
in the aggregate, the amount of marketing fees collected by GACCF 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 

 

8

 

assets,
business, liabilities, prospects, results of operations or condition (financial
or otherwise) 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 the Sellers of the transactions contemplated by this Agreement.

 

“Material Contracts” is
defined in Section 4.16(a).

 

“MFC” means Mrs. Fields’
Companies, Inc.

 

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

 

“Minimum Loss” is
defined in Section 11.4(a).

 

“Multiemployer Plan” has
the meaning set forth in Section 3(37) of ERISA.

 

“NASAA” means the North
American Securities Administrators Association.

 

“New Settlement Agreement”
means that certain Settlement and Release Agreement dated as of January 29,
2008, by and among Parent, GACCF, MFFB, Mrs. Fields’ Original Cookies, Inc.
and certain franchisees of GACCI that are signatories thereto.

 

“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.

 

“Original Settlement
Agreement” means collectively those certain Settlement Agreement and
Releases dated June 1998, by and among Mrs. Fields’ Original Cookies, Inc.,
Capricorn Investors II, L.P., GACCI, Cookies USA, Inc., The Jordan Company
and certain franchisees of GACCI.

 

“Other Interim Report”
is defined in Section 6.3.

 

“Owned Real Property” is
defined in Section 4.5(a).

 

“Parent SEC Documents”
is defined in Section 5.3.

 

9

 

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

 

“Permitted Encumbrances”
means (i) any liens for current Taxes, assessments or governmental charges
which are not yet due and payable or (ii) with respect to each Owned Real
Property and Improvements on the Leased Real Property (as the case may be): (a) real
estate taxes, assessments and other governmental levies, fees or charges
imposed with respect to such Real Property which are not due and payable as of
Closing, (b) mechanics liens and similar liens for labor, materials or
supplies provided with respect to such Real Property incurred in the ordinary
course of business for amounts which are not due and payable and which shall be
paid in full and released at Closing, (c) zoning, building codes and other
land use laws regulating the use or occupancy of such Real Property or the
activities conducted thereon which are imposed by any Governmental Authority
having jurisdiction over such Real Property which are not violated by the
current use or occupancy of such Real Property or the operation of the
Businesses thereon, and (d) easements, covenants, conditions, restrictions
and other similar matters of record affecting title to such Real Property which
do not or would not materially impair the use or occupancy of such Real
Property in the operation of the Businesses conducted thereon.

 

“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, charge, complaint, material grievance, 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 that could
come before), or otherwise involving, any Government Authority or arbitrator.

 

“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 Deficit
Amount” is defined in Section 3.2(f).

 

“Purchase Price Deficit
Statement” is defined in Section 3.2(f).

 

“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), 

 

10

 

including,
without limitation, (i) Personal Property, (ii) Real Property, (iii) Assumed
Contracts, (iv) the Marketing Fees Balance (if a positive amount), (v) Government
Authorizations, (vi) Intellectual Property Rights, (vii) Inventory,
maintenance and operating supplies, (viii) Prepaid Expenses, (ix) Books
and Records, (x) the assets of any advertising fund, gift card program,
and any brand building fund associated with the Businesses, (xi) all claims,
causes of action, choses in action, rights of recovery and rights of set-off of
any kind against the Franchisees, (xii) all proceeds actually recovered under
insurance policies and, to the extent transferable, all rights of recovery
under such insurance policies, (xiii) the Deferred Revenue Cash, (xiv) 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, (xv) 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, (xvi) 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, (xvii) the rights to obtain and have
installed the waste water filter under the Filter Contract, but not the payment
obligations thereunder, and (xviii) the Seller Recipes and Processes.

 

“Qualified Plan” is defined in Section 4.12(b).

 

“Real Estate Impositions”
is defined in Section 4.5(k).

 

“Real Property” is
defined in Section 4.5(c).

 

“Real Property Laws” is
defined in Section 4.5(f).

 

“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.

 

“Real Property Permits”
is defined in Section 4.5(g).

 

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

 

“Registration Rights
Agreement” is defined in Section 7.9.

 

“Registration Statement”
is defined in Section 7.9.

 

“Release Consideration”
has the meaning set forth in the New Settlement Agreement.

 

“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.

 

“Reviewing Accountant”
is defined in Section 3.2(c).

 

“SEC Financial Statements”
is defined in Section 7.5.

 

11

 

“Securities” is defined
in Section 7.8.

 

“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(c).

 

“Seller Benefit Plan” is defined in Section 4.12(a).

 

“Seller Indemnified Parties”
is defined in Section 11.3.

 

“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.

 

“Seller Recipes and
Processes” is defined in Section 4.19(l).

 

“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 GACCF
to offer and sell Franchises in the United States and throughout the world.

 

“Settlement Franchisees”
means those persons or entities who are franchisee parties to the Original
Settlement Agreement.

 

“Statement of Objection”
is defined in Section 3.2(b).

 

“Straddle Period” is
defined in Section 7.2(b).

 

“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.

 

“Survey” means that certain
ALTA/ACSM Land Title Survey for the Owned Real Property, Job No. 20070272-001,
prepared by Abb W. Preston of Preston Land Surveyors dated as of November 9,
2007.

 

“Survival Date” is
defined in Section 11.1.

 

“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 

 

12

 

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.

 

“Termination Date” is
defined in Section 10.1(b).

 

“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.

 

“Third Party Claim” is
defined in Section 11.6(b).

 

“Title Commitment” means
that certain ALTA Commitment, File No. 10012007, for the
Owned Real Property issued by the Title Company dated as of October 23, 2007 or such later date as
in effect from time to time.

 

“Title Company” means Stewart
Title Guaranty Company.

 

“Title Policy” is
defined in Section 8.15.

 

“Transfer” is defined in
Section 7.8.

 

“Transfer Taxes” is
defined in Section 7.2(a).

 

“Transferred Employees”
is defined in Section 6.14.

 

“Transition Services
Agreement” means the Transition Services Agreement, to be dated as of the
Closing Date and substantially in the form attached hereto as Exhibit B.

 

“TTM Period” means the
period consisting of the trailing twelve (12) months ended November 24,
2007.

 

“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 GACCF since March 16, 2004,
in its efforts to comply with the laws pertaining to the offer and sale of the
Franchises.

 

“Undertakings” has the
meaning set forth in the New Settlement Agreement.

 

13

 

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

 

“Vendor Allocation Schedule”
is defined in Section 7.12.

 

“Voting Agreement” is
defined in Section 7.10.

 

“WARN Act” means the
Worker Adjustment and Retraining Notification Act, and any similar foreign,
state or local law, regulation or ordinance.

 

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.

 

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 directed by Buyer) as of the Closing Date, and Buyer agrees to
purchase and to take (or to cause its designated Affiliate to 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 (other than the
Marketing 

 

14

 

Fees Balance,
which shall be delivered by the Sellers to the Buyer within five (5) Business
Days after the Closing Date), 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 the Books and
Records.

 

(e)   All assets
and rights associated with any Seller Benefit Plan, collective bargaining
agreements or arrangements, or any Employee Benefit Plan maintained, sponsored,
contributed to or required to be contributed to by any Seller or any ERISA
Affiliate of any Seller or with respect to which any Seller or any ERISA
Affiliate of any 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.

 

(g)   Those
Contracts set forth on Schedule 2.2(g).

 

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 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 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

 

15

 

such liabilities or
obligations accrue on or after the Closing Date and are based on conditions
resulting from 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, and (e) 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
(or relating to either Seller, either Business or any of the Purchased Assets)
of any kind, character or description, whether absolute, 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 and the Marketing Fee
Balance (if a negative amount).

 

(c)   Any liability or obligation arising out of or
related to any Contract that is not an Assumed Contract.

 

(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)   Any liabilities or obligations of the Sellers
for expenses or fees 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, and brokerage fees).

 

(f)    Any liability or obligation for any Taxes
other than (i) Taxes on the Purchased Assets payable with respect to
taxable periods beginning on or after the Closing Date, (ii) Transfer
Taxes for which Buyer is liable pursuant to Section 7.2(a) of
this Agreement, and (iii) the portion of the Taxes on the Purchased Assets
payable for a Straddle Period for which Buyer is liable pursuant to Sections
7.2(b) and (c) of this Agreement.

 

(g)   Any liability or obligation to any current or
former employee, officer, director or contractor of either Seller, or any
Affiliate of any Seller who provides or provided services to either Seller or
any Affiliate thereof (other than any liability or obligation arising after the
Closing to any employee hired by Buyer and related solely to the Buyer’s
employment of such employee), including any liability or obligation arising out
of, relating to or incurred in

 

16

 

connection with the employment or service by, or
termination from employment or service with, either Seller or any Affiliate of
any Seller, including any liabilities or obligations pertaining to any salary
or wages, vacation pay, bonuses or any other type of compensation or benefits.

 

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

 

(i)    Any liability or obligation (contingent or
otherwise) arising out of or relating to any Environmental and Safety
Requirements, except to the extent based on conditions resulting from Buyer’s
operation of the Businesses following the Closing.

 

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

 

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

 

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

 

(m)  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.

 

(n)   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 Buyer.

 

(o)   All obligations to make payments to the
vendor under the Filter Contract.

 

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)   Subject to the terms and conditions of this
Agreement, in reliance on the representations, warranties, covenants and
agreements of the Sellers contained herein, and in

 

17

 

payment and consideration for the sale, conveyance,
assignment, transfer and delivery of the Purchased Assets by the Sellers to
Buyer, Buyer or Parent shall pay the Initial Purchase Price as hereinafter
provided.  Annex A has been
prepared in good faith by MFFB management; provided, however,
that Buyer’s belief that Annex A 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, the Sellers shall prepare and deliver to Buyer a statement (the “Closing
Statement”) setting forth the audited revenues and expenses related to the
GAC Franchise Business and audited revenues and expenses related to the GAC
Manufacturing Business for the TTM Period, in each case reflected in the
Sellers’ audited financial statements (the “Actual Financials”), together
with a letter from the chief accounting officer of MFFB certifying that the
amounts set forth in the Closing Statement are accurate.  The Actual Financials, as
calculated by the Sellers, shall be final and binding on the parties hereto
unless Buyer delivers to the Sellers a reasonably detailed statement describing
its objections to the calculation of the Actual Financials (a “Statement of
Objection”) within thirty (30) days of its receipt of the Closing
Statement.

 

(c)   If Buyer delivers to the 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 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 Objection 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 Actual Financials. 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 awards 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 awards the Sellers $75,000, then the Sellers shall bear 25% and
Buyer shall bear 75% of the Reviewing Accountant’s fees and expenses.

 

18

 

(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 the Sellers’ preparation
of and 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) Business Days after
the final determination of the Actual Financials in accordance with this Section 3.2,
if the Actual Financials differ from the financials on Annex A, then
Buyer shall calculate (i) the Franchise Revenue Difference and (ii) the
Manufacturing Contribution Difference. 
If the sum of the Franchise Revenue Difference and the Manufacturing
Contribution Difference (the “Cumulative Difference”) is a negative
amount of $100,000 or greater, then Buyer shall deliver a statement to the
Sellers (the “Purchase Price Deficit Statement”) setting forth the
Cumulative Difference.  If the Cumulative
Difference is a negative amount of $100,000 or greater, then upon receipt of
the Purchase Price Deficit Statement, the Sellers shall owe to Buyer an amount
equal to the Cumulative Difference, multiplied by 8.4 (the “Purchase Price
Deficit Amount”).  Notwithstanding
the forgoing, if the Cumulative Difference is a positive amount (e.g. the
Actual Financials are cumulatively greater than the financials on Annex A),
then Buyer shall not owe any additional amounts to the Sellers under this
Agreement.

 

(g)   Any Purchase Price Deficit Amount owed by the
Sellers to Buyer, shall be paid, within three (3) Business Days after the
Sellers’ receipt of the Purchase Price Deficit Statement, by wire transfer of
immediately available funds by the Sellers to an account designated in writing
by Buyer; provided, that, if the
Sellers do not make such payment to Buyer within three (3) Business Days
after the Sellers’ receipt of the Purchase Price Deficit Statement, Buyer may
draw from the Indemnity Escrow Amount the number of Parent Shares equal to (x) the
Purchase Price Deficit Amount divided
by (y) the Closing Date Reference Price to satisfy the Sellers’ payment
obligations under this Section 3.2(g).

 

3.3   Payment.  At Closing:

 

(a)   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 and (ii) cause to be
delivered to the Escrow Agent the number of Parent Shares equal to the
Indemnity Escrow Amount, pursuant to the Escrow Agreement.

 

(b)   GACCF shall deliver to Buyer a Marketing Fees
Reconciliation calculated as of the Closing Date and GACCF shall pay to Buyer
the amount of the Marketing Fees Cash (if a positive amount) 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 ninety (90) days after the Closing Date (the “Allocation Schedule”).  The Sellers and Buyer agree that the Sellers’
amount realized for income tax purposes shall not include any Royalty Advances
as defined in and paid under the New Settlement Agreement.  If the parties are unable

 

19

 

to agree on the final
Allocation Schedule within ninety (90) 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 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 the 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.  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

 

20

 

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. 
Notwithstanding the forgoing, the Indemnity Escrow Amount shall be
available to satisfy any claims made by Buyer pursuant to Section 3.2(g).

 

(b)   Conversion of Parent Shares Held In Escrow.  If the Parent Shares held as any part of the
Indemnity 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)   Each Seller shall hold in trust for, and,
within five (5) Business Days of such Seller’s receipt, pay to, Buyer any
and all proceeds from:

 

(i)            GACCF Accounts Receivable relating
to the GAC Franchise Business that are received by GACCF following the Closing
Date to the extent such proceeds relate to a period ending on or after the
Closing Date;

 

(ii)           GAM Accounts Receivable relating to
the GAC Manufacturing Business that are received by GAM following the Closing
Date to the extent such proceeds relate to a period ending on or after the
Closing Date (Sections 3.7(a)(i) and (ii) collectively, the “Buyer
Accounts Receivable”);

 

(b)   The parties agree that each Seller, as
applicable, will continue to collect the Buyer Accounts Receivable through the
applicable Seller’s current EFT system pursuant to and until such time as
stipulated in the Transition Services Agreement and forward such amounts to
Buyer.

 

(c)   Buyer acknowledges that all GACCF Accounts
Receivable and GAM Accounts Receivable in respect of amounts due from
Franchisees or any Persons prior to the Closing Date shall remain the property
of each Seller, as applicable, (the “Seller
Accounts Receivable”) and that Buyer shall not acquire any
beneficial right or interest therein.  An

 

21

 

estimate of the Seller Accounts Receivable calculated
as of September 29, 2007 is set forth on Schedule 3.7.  A revised estimate of the Seller Accounts
Receivable as of the Closing Date shall be calculated within ten (10) days
of the Closing Date, with the Seller Accounts Receivable to be finalized and
updated in connection with the preparation of the Closing Statement.

 

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

 

(e)   Within 10 days following the end of each
calendar month following the Closing Date, Buyer shall forward to the Sellers
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 Sellers 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 the 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, the 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.

 

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

 

(g)   Buyer and the Sellers shall provide to each
other reasonable 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
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 schedules attached
hereto (the “Disclosure Schedules”), which Disclosure Schedules set
forth individually each Seller’s, or MFFB’s if applicable, disclosures
identified by each Seller or MFFB, as applicable.

 

22

 

4.1   Organization and Good
Standing.

 

(a)   MFFB 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.

 

(b)   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 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.

 

(a)   MFFB 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 its sole member,
and no other action on the part of MFFB 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 MFFB and,
assuming the due execution of this Agreement by the Sellers, Buyer and Parent,
constitutes a valid and binding obligation of MFFB 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.

 

(b)   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
MFFB, Buyer and Parent, 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.

 

23

 

4.3   Consents; Approvals.  Except as set forth in Schedule 4.3 and
except for the applicable requirements of the HSR Act, the execution and
delivery of this Agreement by each Seller and MFFB 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 or MFFB;

 

(b)   violate any Legal Requirement or Order to
which either Seller or MFFB 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 or
MFFB under any of the terms, conditions or provisions of any Contract or any
other instrument or obligation to which either Seller or MFFB 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.

 

4.4   Financial Statements.

 

(a)   MFFB has delivered to 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, its independent certified public accountants (including
the notes thereto, “Financial Statements”), and (ii) an unaudited
consolidated balance sheet of MFFB as of September 29, 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 trailing thirty-nine (39) week period ended September 29,
2007.

 

(b)   Except as disclosed on Schedule 4.4(b),
there are no material  liabilities or
obligations of either Seller (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.

 

(a)   Owned Real Property.  Schedule 4.5(a) sets forth a true
and correct list of each parcel of real property owned by either Seller and
identified by owner (the “Owned Real Property”), including the address
and a description of each such parcel. 
Except as set forth on

 

24

 

Schedule 4.5(a):
(i) the applicable Seller has good, valid and marketable fee simple title
to such Owned Real Property, free and clear of all liens and Encumbrances as of
the date hereof and as of the Closing Date, except for Permitted Encumbrances; (ii) such
Seller is in actual possession of each such parcel; (iii) neither Sellers
nor MFFB have leased or otherwise granted to any Person the right to use or
occupy such Owned Real Property or any portion thereof; and (iv) there are
no outstanding options, rights of first offer or rights of first refusal
granted by the Sellers, or, to the Sellers’ Knowledge, by any other party, to
purchase such Owned Real Property or any portion thereof or interest
therein.  Neither Seller is a party to
any agreement or option to purchase any real property or interest therein
relating to, or intended to be used in the operation of the Businesses.

 

(b)   Leased Real Property.  Schedule 4.5(b) sets forth a true
and correct list of each parcel of real property in which each Seller holds a
leasehold estate and identified by such Seller (the “Leased Real Property”),
including the address of each such leased property.  Accurate and current copies of all real
property leases, subleases, licenses or other occupancy agreements (and all
amendments thereto) set forth on Schedule 4.5(b) (the “Leases”)
have been delivered to Parent and Buyer. 
Except as set forth on Schedule 4.5(b), with respect to each of
the Leases: (i) such lease is valid, binding, enforceable and in full
force and effect against Seller; (ii) the transactions contemplated by
this Agreement do not require the consent of any other party to such lease
(except for those Leases for which lease consents are obtained), will not
result in a breach of or default under such Lease, and will not otherwise cause
such Lease to cease to be valid, binding, enforceable and in full force and
effect on materially identical terms following the Closing; (iii) neither
Sellers’ possession or quiet enjoyment of the Leased Real Property under such
Lease has been disturbed and there are no disputes with respect to such Lease; (iv) neither
Seller nor, to the Sellers’ Knowledge, any other party to the Lease is in
breach of or default under such Lease, and no event has occurred or circumstance
exists that, with the delivery of notice, the passage of time or both, would
constitute such a breach or default, or permit the termination, modification or
acceleration of rent under such lease; (v) to the Sellers’ Knowledge, no
security deposit or portion thereof deposited with respect to such Lease has
been applied in respect of a breach of or default under such Lease that has not
been redeposited in full; (vi) neither Seller nor MFFB owes, or will owe
in the future, any brokerage commissions or finder’s fees with respect to such
Lease; (vii) the other party to such Lease is not an Affiliate of, and
otherwise does not have any economic interest in the Sellers or MFFB; (viii) neither
Seller has subleased, licensed or otherwise granted any Person the right to use
or occupy the Leased Real Property or any portion thereof; (ix) neither
Seller has collaterally assigned or granted any other lien or Encumbrance with
regard to such Lease or any interest therein that would have a material adverse
effect on the use of the Leased Real Property; and (x) there are no liens
or Encumbrances on the estate or interest created by such Lease except as would
be disclosed on a title report or commitment.

 

(c)   The Owned Real Property identified in Schedule
4.5(a) and the Leased Real Property identified on Schedule 4.5(b) (collectively,
the “Real Property”) comprises all of the real property used exclusively
or primarily in the Sellers’ Businesses; and neither Seller is a party to any
agreement or option to purchase any real property or interest therein.

 

(d)   To the Sellers’ Knowledge, all buildings,
structures, fixtures, building systems and equipment, and all components
thereof, including the roof, foundation, load-bearing walls,

 

25

 

and other structural elements thereof, heating,
ventilation, air conditioning, mechanical, electrical, plumbing and other
building systems, environmental control, remediation and abatement systems,
sewer, storm, and waste water systems, irrigation and other water distribution
systems, parking facilities, fire protection, security and surveillance
systems, and telecommunications, computer, wiring, and cable installations,
included in the Real Property (the “Improvements”) are in good condition
and repair and sufficient for the operation of the Sellers’ Businesses.  To the Sellers’ Knowledge, there are no
structural deficiencies of latent defects affecting any of the Improvements and
there are no facts or conditions affecting any of the Improvements which would,
individually or in the aggregate, interfere in any respect with the use or
occupancy of the Improvements or any portion thereof in the operation of the
Sellers’ Businesses as currently conducted thereon.  The Sellers have good and marketable title to
the Improvements on the Leased Real Property, free and clear of all liens and
Encumbrances, except Permitted Encumbrances, and other than the right of Buyer
pursuant to this Agreement, there are no outstanding options, rights of first
offer or rights of first refusal to purchase any such Improvements or any
portion thereof or interest therein.

 

(e)   To the Sellers’ Knowledge, there is no
condemnation, expropriation or other proceeding in eminent domain, pending or
threatened, affecting any parcel of Real Property or any portion thereof or
interest therein.  There is no
injunction, decree order, writ or judgment outstanding, or any claim,
litigation, administrative action or similar proceeding, pending or threatened,
relating to the ownership, lease, use or occupancy of the Real Property or any
portion thereof, or the operation of the Sellers’ Businesses as currently
conducted thereon.

 

(f)    The Real Property is in compliance in
all material respects with all applicable building, zoning, subdivision, health
and safety and other land use laws, including the Americans with Disabilities
Act of 1990, as amended, and all insurance requirements affecting the Real
Property (collectively, the “Real
Property Laws”), and the
current use and occupancy of the Real Property and operation of the Sellers’
Businesses thereon do not violate any Real Property Laws in any material
respects.  Neither Seller has received
any notice of violation of any Real Property Law and, to the Sellers’
Knowledge, there is no basis for the issuance of any such notice or the taking
of any action for such violation.  To the
Sellers’ Knowledge, there is no pending or anticipated change in any Real
Property Law that will materially impair the ownership, lease, use or occupancy
of any Real Property or any portion thereof in the continued operation of the
Sellers’ Businesses as currently conducted thereon.

 

(g)   All certificates of occupancy,
permits, licenses, franchises, approvals and authorizations (collectively, the “Real Property Permits”) of all Governmental Authorities, board
of fire underwriters, association or any other entity having jurisdiction over
the Real Property that are required or appropriate to use or occupy the Real
Property or operate the Sellers’ Businesses as currently conducted thereon have
been issued and are in full force and effect. 
Schedule 4.5(g)(1) lists all material Real Property Permits
held by the Sellers with respect to each parcel of Real Property.  Neither Seller has received any notice from
any Governmental Authority or other entity having jurisdiction over the Real
Property threatening a suspension, revocation, modification or cancellation of
any Real Property Permit and there is no basis for the issuance of any such
notice or the taking of any such action. 
Except as set forth on Schedule 4.5(g)(2), the Real Property Permits are transferable to
Buyer without the consent or approval of the issuing Governmental Authority or
entity; no disclosure, filing or other action by 

 

26

 

the Sellers is required in connection with such
transfer; and Buyer shall not be required to assume any additional liabilities
or obligations under the Real Property Permits as a result of such transfer.

 

(h)   The classification of each parcel of
Real Property under applicable zoning laws, ordinances and regulations permits
the use and occupancy of such parcel and the operation of the Sellers’
Businesses as currently conducted thereon, and permits the Improvements located
thereon as currently constructed, used and occupied.  There are sufficient parking spaces, loading
docks and other facilities at such parcel to comply with such zoning laws,
ordinances and regulations.  The Sellers’
use or occupancy of the Real Property or any portion thereof or the operation
of the Sellers’ Businesses as currently conducted thereon is not dependent on a
“permitted non-conforming use” or “permitted non-conforming structure” or
similar variance, exemption or approval from any Governmental Authority.

 

(i)    The current use and occupancy of the
Real Property and the operation of the Sellers’ Businesses as currently
conducted thereon do not violate any easement, covenant, condition, restriction
or similar provision in any instrument of record or, to the Sellers’ Knowledge,
other unrecorded agreement affecting such Real Property (the “Encumbrance
Documents”).  Neither Seller has
received any notice of violation of any Encumbrance Documents, and there is no
basis for the issuance of any such notice or the taking of any action for such
violation.

 

(j)    None of the Improvements encroaches
on any land that is not included in the Real Property or on any easement
affecting such Real Property, or violates any building lines or set-back lines,
and there are no encroachments onto the Real Property, or any portion or the
continued operation of the Sellers’ Businesses as currently conducted thereon.

 

(k)   Each parcel of Real Property is a
separate lot for real estate tax and assessment purposes, and no other real
property is included in such tax parcel. 
There are no Taxes, assessments, fees, charges or similar costs or
expenses imposed by any Governmental Authority, association or other entity
having jurisdiction over the Real Property (collectively, the “Real Estate Impositions”) with respect to any Real Property or
portion thereof that have become past due. 
To the Sellers’ Knowledge, there is no pending or threatened increase or
special assessment or reassessment of any Real Estate Impositions for such
parcel.

 

(l)    Each parcel of Real Property has
direct access to a public street adjoining the Real Property, and such access
is not dependent on any land or other real property interest which is not
included in the Real Property.  None of
the Improvements or any portion thereof is dependent for its access, use or
operation on any land, building, improvement or other real property interest
which is not included in the Real Property.

 

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

27

 

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
GACCF Accounts Receivable and GAM 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 such
receivables.  Schedule 3.7 sets forth a
complete and accurate statement of Seller Accounts Receivable due and owing to
the Sellers, as applicable, as of September 29, 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, MFFB or the Purchased Assets are pending or, to each Seller’s
Knowledge or MFFB’s Knowledge, threatened. 
Neither Seller nor MFFB 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 (i) claimed or raised
by any authority in writing or (ii) as to which any of the officers or
managers of such Seller has knowledge based upon personal contact with any
agent of such authority.

 

28

 

(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.

 

4.11         Labor
Relations; Compliance.

 

(a)   The Sellers have complied and are in
compliance in all material respects with all applicable laws relating to the
employment of labor.  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 (or representatives thereof) 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 engaged in any unfair labor practices.

 

(b)   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.  Within the last three (3) years,
neither Seller has experienced any union organization attempts, strikes, work
stoppages, slowdowns, grievances, claims of unfair labor practices or other
collective bargaining disputes, and none are underway or, to each Seller’s
Knowledge, threatened.

 

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

 

(d)   To each Seller’s Knowledge no executive or
manager of such Seller (i) has any present intention to terminate his or
her employment, or (ii) is a party to any confidentiality,
non-competition, proprietary rights or other such agreement between such
employee and any Person besides the Sellers that would be material to the
performance of such employee’s employment duties, or the ability of Buyer to
conduct the Businesses.

 

4.12         Employee
Benefits.

 

(a)   Schedule 4.12 lists each Employee
Benefit Plan maintained, sponsored, or contributed to or required to be
contributed to by either Seller or by MFFB on
behalf of any employee of the Businesses or under which either Seller has or
may have a direct or indirect liability or obligation (each a “Seller Benefit Plan”).

 

29

 

 

(b)   Each Seller has delivered to Buyer true and
complete copies of each Seller Benefit Plan document, and, as applicable, with
respect to each Seller Benefit Plan, true and complete copies of (1) any
related trust agreements, insurance contracts or other funding agreements or
arrangements, (2) the most recent summary plan description and any summary
of material modifications, if the Seller Benefit Plan is subject to ERISA, (3) the
most recent determination letter or opinion letter issued by the IRS and any
pending application for a determination letter or opinion letter with respect
to any Seller Benefit Plan intended to qualify under Section 401(a) of
the Code (“Qualified Plan”),
and (4) the last two Form 5500 filings if such filings are required
by ERISA or the Code.

 

(c)   Each Seller Benefit Plan has been maintained,
funded and administered in all material respects in accordance with its terms
and the provisions of applicable Legal Requirements, including ERISA and the
Code.  No compensation paid or required
to be paid under any Seller Benefit Plan is or will be subject to additional
tax under Section 409A(a)(1)(B) of the Code.

 

(d)   All contributions, premium and benefit
payments required to be made under or in connection with each Seller Benefit
Plan through the Closing Date have been made or properly accrued, and all
contributions, premium and benefit payments not yet required to be made under
or in connection with each Seller Benefit Plan through the Closing Date will
have been made or properly accrued.

 

(e)   Each Seller Benefit Plan which is a Qualified
Plan is a prototype or volume submitter plan with respect to which the sponsor
has received a favorable determination as to its qualification under the Code
that has not been subsequently amended or modified or is an individually
designed plan that, together with the trust (if any) forming a part thereof,
has received from the IRS a
favorable determination letter as to its qualification under the Code and, and
in either case, no event has occurred that will or would reasonably be expected
to give rise to disqualification or loss of tax-exempt status of any Seller
Benefit Plan or its related trust.

 

(f)    With respect to each Seller Benefit Plan, no
Proceeding or other action, suit, audit, claim or investigation (other than
routine claims for benefits) is pending or, to the Sellers’ Knowledge,
threatened, and there is no basis for any such Proceeding or other action,
suit, audit, claim or investigation.

 

(g)   Except as set forth in Schedule 4.12:

 

(i)            Neither any Seller nor any ERISA
Affiliate thereof contributes to, ever has contributed to, or ever has been
required to contribute to any Multiemployer Plan or employee pension plan
subject to Title IV of ERISA or Code Section 412 or has any liability, or
indirect liability, including any liability on account of a “partial withdrawal”
or complete withdrawal (as defined in ERISA Sections 4203 and 4201
respectively), under any Multiemployer Plan or under Title IV of ERISA or Section 412
of the Code.  Neither any Seller nor any ERISA
Affiliate thereof is bound by any Contract that would result in any direct or
indirect liability described in ERISA Section 4204.  No Seller Benefit Plan is a multiple employer
plan for purposes of Sections 4063 or 4064 of ERISA or subject to Section 413(c) of
the Code or a multiple employer welfare arrangement as defined in Section 3(40)
of ERISA.

 

30

 

(ii)           Neither any Seller nor any Seller
Benefit Plan has any obligation to provide post-employment medical, health or
life insurance or other welfare-type benefits for current or future retired or
terminated employees, directors, officers, or independent contractors or such
persons’ spouses, dependents or other beneficiaries (other than in accordance
with COBRA); each Seller Benefit Plan which is a group health plan has at all
times been maintained in material compliance with COBRA, and each group health
plan maintained by any ERISA Affiliate of either Seller has been maintained in
material compliance with COBRA.

 

(iii)          Neither any Seller nor their
respective employees, or any other Person has engaged in a non-exempt
prohibited transaction (as defined in Section 406 of ERISA or Section 4975
of the Code) with respect to any Seller Benefit Plan that has resulted or may
result in any material liability to the Sellers; neither Seller has incurred
any material liability for any penalty or tax, nor does any fact exist which
would subject the Sellers to any material penalty or tax, under Chapter 43 of
Subtitle D of the Code or Section 502 of ERISA; and no fiduciary of any
Seller Benefit Plan (as defined in Section 3(21) of ERISA) (where such
fiduciary is an employee of the Sellers, or any other Person who is a
fiduciary) has engaged in any material breach of fiduciary duty (as determined
under ERISA) with respect to any Seller Benefit Plan.

 

(h)   No event has occurred or circumstance exists
with respect to the Sellers, or the participants and beneficiaries of any
Seller Benefit Plan, that would reasonably be expected to result in a material
increase in expenses (including premiums, notwithstanding ordinary course
premium increases, contributions and/or benefit payments) to the Businesses.

 

(i)    The consummation of the transactions
contemplated by this Agreement will not, either alone or in combination with
any other event, result in (1) the payment to any Person of money or other
property (including severance payments, bonus or other compensation), (2) accelerate
the time of payment or vesting, or increase the amount of compensation due any
Person, or (3) require either Seller to place in trust or otherwise set
aside any amounts in respect of severance pay or any other payment or
benefit.  There are no agreements or
arrangements pursuant to which the Sellers or Buyer would be required to make a
“parachute payment” (within the meaning of Section 280G(b)(2) of the
Code) as a result of the consummation of the transactions contemplated by this
Agreement (whether alone or in combination with a termination of employment or
other event).

 

4.13         Litigation;
Orders.

 

(a)   Except as set forth on Schedule 4.13(a),
there is no material Proceeding 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.

 

31

 

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.  Without limiting the generality of the foregoing
or any other representation and warranty set forth in this Agreement, GAM has
produced and distributed during the last three (3) years and is producing
and distributing food products that are in compliance with the federal Food,
Drug and Cosmetic Act, and all other applicable laws governing the production
of food.

 

(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 December 31, 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 December 31,
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;

 

32

 

(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 GACCF Accounts Receivable or GAM 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;

 

(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(a) contains a
complete and correct list identified by the Sellers, 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;

 

33

 

(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 collective bargaining agreements;

 

(ix)           all severance, change of control or
similar agreements or contracts with any employees, and any employment
agreements requiring payment of annual compensation in excess of $100,000;

 

(x)            all settlement, conciliation or
similar agreements with any Government Authority or pursuant to which any
Seller is required after the execution date of this Agreement to pay
consideration in excess of $25,000; and

 

(xi)           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 disclosed in Schedule 4.16(b),
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.

 

34

 

4.18         Environmental
and Safety Matters.  Except as set
forth on Schedule 4.18, with respect to the Businesses
(including, without limitation, the ownership and operation of the Purchased
Assets): (i) each Seller has at all times complied and is in compliance in
all material respects with all Environmental and Safety Requirements; (ii) without
limiting the foregoing, all Government Authorizations required under
Environmental and Safety Requirements to be obtained by the Sellers are valid
and in full force and effect, each Seller has at all times complied and is in
compliance in all material respects with the terms and conditions of such
Government Authorizations; (iii) neither Seller is subject to any suit,
investigation, inquiry or Proceeding by or before any court or Government
Authority relating to Environmental and Safety Requirements, including, without
limitation, with respect to any of its current or former operations, properties
or facilities; (iv) neither Seller, nor any of its predecessors or
Affiliates, has caused a release of Hazardous Substances, and no condition of
contamination by Hazardous Substances is present, at any of the Sellers’ Owned
Real Properties, and, to the Sellers’ Knowledge, there are no facts, events,
circumstances or conditions relating to any current or former facilities,
properties or operations of the Sellers or of their predecessors or Affiliates
that have given or would give rise to any current or future investigatory,
remedial, or corrective obligations or other liabilities (contingent or
otherwise) under CERCLA or any other Environmental and Safety Requirements; (v) neither
this Agreement nor the consummation of the transactions contemplated hereby
will result in any obligations for site investigation or cleanup, or
notification to or consent of any Government Authority or other Person pursuant
to any of the so-called “transaction-triggered” or “responsible property
transfer” Environmental and Safety Requirements; (vi) each Seller has
furnished to Buyer copies of all audits, assessments, reports and other
documents within its possession or under its reasonable control (including all
Phase I and Phase II reports) bearing on environmental, health or safety
liabilities or concerning compliance with Environmental and Safety Requirements
with respect to any current or former operations, properties or facilities of either
Seller or its predecessors or Affiliates; (vii) neither Seller has
received any written or oral notice, report or other information regarding any
actual or alleged violation of, or actual or potential liability or obligation
(contingent or otherwise) under, any Environmental and Safety Requirement or
that any existing Government Authorization that was obtained pursuant to any
Environmental and Safety Requirement is to be revoked or suspended by any
Government Authority or that any Seller is not currently operating or required
to be operating under, or subject to any outstanding compliance order, decree
or agreement, any consent decree, order or agreement, or any corrective action
decree, order or agreement issued or entered into under, or pertaining to
matters regulated by, any Environmental and Safety Requirement; (viii) neither
Seller owns or operates any underground storage tanks, and no such underground
storage tanks are in violation of any Environmental and Safety Requirement; and
(ix) neither Seller, nor any of its predecessors or Affiliates, has
treated, stored, disposed of, arranged for or permitted the disposal of,
transported, handled, released, or exposed any Person to, any Hazardous
Substances, or owned or operated either Business or any property or facility
relating to the Businesses (and no such property or facility is or was
contaminated by any such Hazardous Substances) in a manner that has given or
would give rise to any current or future liabilities or investigative,
corrective or remedial obligations (contingent or otherwise) pursuant to CERCLA
or any other Environmental and Safety Requirement.

 

35

 

4.19                           Intellectual
Property.

 

(a)          Schedule 4.19(a)  attached hereto sets forth a complete and
correct list of the following items that are owned by either Seller or any of
their Affiliates and used in the Businesses: 
(i) all patented or registered Intellectual Property Rights; (ii) all
pending patent applications or other applications for registration of
Intellectual Property Rights; (iii) all trade names, trademarks and
unregistered marks; (iv) all material unregistered copyrights, mask works
and computer software (e.g., internally developed back office software, etc.);
and (v) all internet domain names and URLs registered or for which an
application has been filed.  Neither
Seller nor any of their Affiliates own any unregistered common law or
unregistered Intellectual Property Rights that are used in and are material to
the Businesses.

 

(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”)
for which either Seller or its Affiliates paid more than $10,000 in the
aggregate in license fees or pays more than $5,000 in annual support fees; (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 an
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 or offers 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 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

 

36

 

patents expiring at the end of their maximum statutory
terms (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’ 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)             The computer software, computer firmware, computer
hardware (whether general purpose or special purpose), and other similar or
related items of automated, computerized and/or software system(s) that
are used or relied on by either Seller in the conduct of the Businesses is, in
the opinion of the Sellers, sufficient in all material respects for the current
needs of such Businesses and does not infringe, misappropriate or otherwise
conflict with any Intellectual Property Rights of any Person.

 

(j)             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.

 

37

 

(k)          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.

 

(l)             Each material recipe and proprietary food process used
in the Businesses during the last five (5) years are and were owned by the
Sellers and are not subject to any license or similar use agreement with any
third party (including MFFB) and have not been sold or otherwise transferred to
any third party (including MFFB).  All
material recipes and proprietary food processes used in the Businesses as of
the date of this Agreement (the “Seller Recipes and Processes”) are
either located at the GAM manufacturing facility or will be delivered to Buyer
at Closing.

 

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’ Fees.  No agent,
broker, firm or other Person acting on behalf of either Seller or, to such
Sellers’ 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
Business 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.

 

38

 

4.23                           Franchise
Matters.

 

(a)          GAM has never offered or sold Franchises.  Except as set forth on Schedule 4.23(a),
since  January 1, 2004, GACCF
has been the only Person offering and selling Franchises and no Subsidiary or
Affiliate has ever offered or sold Franchises domestically or
internationally.  GACCF and its
Affiliates are the only Persons 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 GACCF has
provided Buyer with a true and complete copy of, its’ 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 GACCF 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
contemporaneously with the sale of such Franchise by GACCF to the Franchisee.  GACCF 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, GACCF 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.  GACCF has maintained a standard practice 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 the Seller’s Knowledge, currently in material default under any Franchise
Agreement, whether or not GACCF 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 GACCF 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

 

39

 

independent sales representatives, contractors,
brokers or consultants under which GACCF has authorized any person to sell or
promote Franchises on behalf of GACCF 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 GACCF by notice to the other party.  GACCF has delivered to Buyer true, correct
and complete copies of all written agreements described in Schedule 4.23(f).  GACCF 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 Seller’s Knowledge, except as set forth on Schedule
4.23(g), GACCF has not (i) offered nor sold, nor otherwise granted
rights, to any Person conferring upon that Person 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 Seller’s 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 GACCF pursuant to which (A) GACCF
is restricted in any way in their right to 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 GACCF has  granted any such
Territorial Rights (whether or not disclosed or required to be disclosed
herein), GACCF 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 UFOC 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,
GACCF has never withdrawn any of its applications or registrations to offer and
sell franchises from any jurisdiction except as set forth on Schedule
4.23(i).

 

40

 

(j)             To the Seller’s Knowledge, except as set forth on Schedule
4.23(j), GACCF has not (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)          GACCF has 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. 
GACCF has 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,
GACCF has 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 GACCF, 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 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),
the rights of GACCF under any and all of the Franchise Agreements have not been
subordinated to the rights of any other Person 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 GACCF.

 

(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, indicating thereon
whether such franchisee organization is sponsored by GACCF or is independently
maintained.  There are no agreements of
any kind in effect between any such franchisee organization and GACCF.

 

(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 GACCF nor have letters of
inquiry, investigation or the like been issued to GACCF by such foreign or
domestic administrative or regulatory agencies relating, directly or
indirectly, to GACCF’s offer and sale of Franchises.

 

(p)         GACCF has not offered or sold Franchises in any jurisdiction
where the sale of any such Franchise violated any Legal Requirements of such
jurisdiction.  GACCF has not 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

 

41

 

exception of routine comment letters from regulators,
GACCF has never 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.  GACCF has not 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 GACCF 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), GACCF
has complied with all Legal Requirements applicable to the administration of
the relationships with the Franchisees under the Franchise Agreements.

 

(s)          GACCF has delivered or made available to Buyer correct
and complete copies of all registrations, material advertising or promotional
materials (used by GACCF subsequent to January 1, 2005), Seller UFOCs or
agreements used by GACCF or filed with any foreign or domestic administrative
or regulatory agency or otherwise used by GACCF in connection with the offer,
sale and operation of Franchises in any jurisdiction (domestic or
international) since January 1, 2005. 
GACCF has not published any franchise recruitment advertising in
violation of the Legal Requirements of any jurisdiction.  GACCF 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 GACCF 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,
GACCF does not receive rebates, commissions, discounts or other payments or
remuneration of any kind from such vendors or suppliers of such goods or
services.

 

(u)         To the Seller’s Knowledge, GACCF is not 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 GACCF 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 

 

42

 

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 Buyer are true, correct and complete and they constitute all of the
agreements between GACCF and its Franchisees and there exists no other
agreements, oral or written, between GACCF 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)       GACCF’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 GACCF 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 GACCF:  (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 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 a listing of each
Contract entered into by GACCF that is not fully performed by both parties as
of the date of this Agreement pursuant to which GACCF has obligated itself to
the expenditure of Marketing Fees, along with a statement of any payments made,
and remaining to be made, by GACCF 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 the Knowledge of
GACCF, threatened against or involving GACCF with respect to any of its
domestic or international Franchises, and to the Knowledge of GACCF, 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 GACCF.  GACCF is not 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 Knowledge of GACCF, 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), GACCF has not waived enforcement of, or failed to enforce, any
noncompete or similar restriction under a Franchise Agreement, and to the
Knowledge of GACCF, no current or former Franchisee is currently in violation
of any applicable noncompete covenant.

 

43

 

(z)           Except as set forth on Schedule 4.23(z),
neither GACCF nor any of its 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 GACCF
has been duly and timely registered and qualified in all jurisdictions where
such registration or qualification is necessary.  All information filed by GACCF 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, GACCF 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 GACCF 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)                            GACCF has no published policies governing
its franchise sales efforts and personnel that mandate conformance with
applicable law and that notify sales personnel that violation of any Legal
Requirements will result in disciplinary action or termination.  GACCF 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)                          GACCF 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.

 

44

 

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 Executive Knowledge,
without giving effect to the transactions contemplated hereunder, MFFB will
have adequate cash and cash equivalents on hand to make its payment due on March 15,
2008, under and in accordance with the Indenture.

 

4.28                           Settlement
Agreement.  GACCF is
the successor-in-interest to GACCI and is bound by all of the obligations of
GACCI under the Original Settlement Agreement. 
All of the Settlement Franchisees are listed on Schedule 4.28,
along with the identification of the franchised stores (by brand name and
location) owned by the Settlement Franchisees that are eligible for payment
rights under Section 2(b) or the settlement tag-along rights under Section 2(c) of
the Original Settlement Agreement as of November 1, 2007.  The notice to the Settlement Franchisees
provided for in Section 2 of the Original Settlement Agreement was duly
given by MFFB on September 21, 2007, and the thirty-day and sixty-day
notice periods provided for in such Section 2 expired on October 20,
2007, and November 19, 2007, respectively. 
As of the date of this Agreement, MFFB has received from the Settlement
Franchisees notices of the exercise of tag-along rights as listed on Schedule
4.28.

 

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.

 

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

 

(b)         Each of Buyer and Parent 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 Buyer and
Parent, 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 Buyer or Parent is necessary to authorize the execution,
delivery 

 

45

 

and performance of this
Agreement by Buyer or Parent and the consummation thereby of the transactions
contemplated by this Agreement.  This
Agreement has been duly executed and delivered by Buyer and Parent and, assuming
the due execution of this Agreement by MFFB and the Sellers, this Agreement
constitutes a valid and binding obligation of each of Buyer and Parent
enforceable against Buyer and Parent 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.  Except for
the applicable requirements of the HSR Act, the execution and delivery of this
Agreement by Buyer and Parent 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 Buyer or Parent;

 

(b)         violate any Legal Requirement or Order to which Buyer
or Parent 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 Buyer or Parent under any of the material
terms, conditions or provisions of any Material Contract or any other
instrument or obligation to which Buyer or Parent 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 Buyer or Parent 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 

 

46

 

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 Buyer or Parent, 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 Buyer or
Parent 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

Pre-Closing Covenants

 

6.1   Efforts to Closing. 
On the terms and subject to the conditions in this Agreement, the
Sellers agree to use their reasonable best efforts to take, or cause to be
taken, all actions as may reasonably be necessary to consummate the
transactions contemplated hereby and to cause the conditions set forth in Article VIII
to be satisfied, and Buyer agrees to use its reasonable best efforts to take,
or cause to be taken, all actions as may reasonably be necessary to consummate
the transactions contemplated hereby and to cause the conditions set forth in Article IX
to be satisfied as soon as practicable after the date hereof but not later than
the Termination Date.  Without limiting
the generality of the foregoing, the Sellers shall give or cause to be given
any notices to third parties required to be given pursuant to any Assumed Contract
to which they are a party as a result of this Agreement or any of the
transactions contemplated hereby.  The
Sellers shall use their commercially reasonable efforts to obtain prior to the
Closing, and deliver to Buyer at or prior to the Closing, all consents, waivers
and approvals required to be obtained under each Assumed Contract to which they
are a party or by which they are bound, in form and substance reasonably
acceptable to Buyer.  Buyer shall use
commercially reasonable efforts to cooperate with the Sellers in the Sellers’
efforts to obtain the aforementioned consents, including by providing such
information as the other contracting parties may reasonably request.

 

6.2   Conduct of the Businesses. 
From the date of this Agreement until the Closing Date, the Sellers
shall conduct the Businesses in the ordinary and normal course of business,
consistent with past practice; make ordinary marketing, advertising,
promotional and other budgeted expenditures and implement ordinary pricing and
promotional strategies in amounts generally comparable with the level of such
strategies for the 12-month period ended December 31, 2006; and use
commercially reasonable efforts to preserve and maintain the ongoing
operations, organization and assets of the Business and maintain the goodwill
of the Businesses’

 

47

 

franchisees, customers and
others having business relations with the Sellers.  Further, and without limiting the generality
of the foregoing, during the period from the date hereof to the Closing Date,
except as may be first approved by Buyer in writing, or as is otherwise
expressly permitted or required by this Agreement, neither Seller shall:

 

(a)          Cancel, encumber, or in any way discharge, terminate,
adversely modify or amend or impair any Assumed Contract or enter into, modify,
amend or terminate any Material Contract, other than in the ordinary course of
business consistent with past practice, or commit any act or fail to take any
action that would cause a material breach of any such Assumed Contract.

 

(b)         Waive, modify, alter, reduce or compromise any amounts
payable by any Franchisee, except for amounts due and owing to either Seller
prior to the Closing; provided,
that such action will not waive, modify, alter, reduce or compromise any amount
payable by the Franchisee to Buyer on or after the Closing Date.

 

(c)          Sell or dispose of any of the Purchased Assets, except
for sales of inventory, immaterial sales or other dispositions, each in the
ordinary course of business consistent with past practice.

 

(d)         Create or suffer or permit the creation of any
Encumbrance (other than Permitted Encumbrances) on any of the Purchased Assets
or with respect thereto, unless such Encumbrance will be discharged prior to
the Closing.

 

(e)          Implement any layoffs that could implicate the WARN
Act.

 

(f)            Take any action that would prevent either Seller from
consummating the transactions contemplated in this Agreement.

 

(g)         Knowingly violate any applicable Legal Requirement.

 

(h)         Make any capital commitment, individually or in the
aggregate, in excess of $25,000, other than those to be paid for in full prior
to the Closing and entering into and making payments under the Filter Contract.

 

(i)             Take, or fail to take, any other action which would
reasonably be expected to result in a material breach or inaccuracy in any of
the representations or warranties of the Sellers contained in this Agreement.

 

(j)             Enter into any transaction whereby either Seller
receives an advance or lump sum payment that provides value or a discount to
future value for a period in excess of six (6) months.

 

(k)          Enter into any Real Property Lease.

 

(l)             Agree or commit, whether in writing or otherwise, to
take any of the actions specified in the foregoing clauses.

 

48

 

6.3   Access and Investigation. 
The Sellers will permit Parent, Buyer and their respective
Representatives to have reasonable access, prior to the Closing Date, to the
properties and to the books and records of the Sellers during normal working hours
and upon reasonable advance notice, to familiarize itself with, access and
investigate the Sellers’ properties, Businesses and operating and financial
conditions.  As promptly as practicable
after the end of each month ended after the date of this Agreement and prior to
the Closing Date, the Sellers shall deliver to Parent unaudited consolidated
financial statements of MFFB as at and for the year through the end of the most
recently completed fiscal month (each such report, an “Other Interim Report”).

 

6.4   Business Plan.  Prior
to the Closing Date, Buyer and the Sellers will cooperate in good faith to
develop a plan to address co-branding of the GAC and Parent’s Affiliates’
existing franchise systems (the “Business Plan”).  Buyer and the Sellers will cooperate in good
faith 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 6.4.

 

6.5   Exclusivity.  The
Sellers agree that neither of them nor any of their members or officers shall,
and that they shall each use their respective reasonable best efforts to cause
their Affiliates, employees, agents and representatives (including any
investment banker, attorney or accountant retained by them) not to (and shall
not authorize any of them to) directly or indirectly: (i) solicit,
initiate, knowingly encourage or knowingly facilitate any inquiries with
respect to, or the making, submission or announcement of, any offer or proposal
from any Person (other than Buyer or Parent) concerning any proposal for a
merger, sale of substantial assets (including the license of any assets), sale
of shares of stock or securities of either Seller, business combination
involving either of the Sellers, or other takeover or business combination
transaction involving either of the Sellers (an “Acquisition Proposal”);
(ii) participate in any discussions or negotiations regarding, or furnish
to any Person any nonpublic information with respect to, or otherwise cooperate
in any respect with, any Acquisition Proposal; (iii) engage in discussions
with any Person with respect to any Acquisition Proposal (except to inform such
Person that these restrictions exist); (iv) approve, endorse or recommend
any Acquisition Proposal; or (v) enter into any letter of intent or
similar document or any contract, agreement, arrangement, understanding or
commitment contemplating any Acquisition Proposal or transaction contemplated
thereby or requiring opposition to or seeking to prevent or undermine the
transactions contemplated by this Agreement. 
The Sellers will immediately cease any and all existing activities,
discussions or negotiations with any Third Parties conducted heretofore with
respect to any Acquisition Proposal.

 

6.6   Change of Name. 
Within ten (10) Business Days after the Closing Date, (a) GACCF
shall amend its Organizational Documents and take all other actions necessary
to change its name to a name that does not include “GACCF,” “Great American
Cookies” or anything similar to “GACCF” or “Great American Cookies” (b) GAM
shall amend its Organizational Documents and take all other actions necessary
to change its name to a name that does not include “GAM” or anything similar to
“GAM,” (c) each Seller shall take all actions requested by Buyer to allow
Buyer to change or incorporate “GACCF,” “GAM” or “Great American Cookies” into
Buyer’s name (or the names of any of its Affiliates), and (d) MFFB 

 

49

 

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 “GACCF,” “GAM,” “Great
American Cookies,” or anything similar to “GACCF,” “GAM” or “Great American
Cookies.”

 

6.7   Notice of Developments. 
The Sellers shall promptly advise Buyer, and Buyer or Parent, as the
case may be, shall promptly advise the Sellers, in writing of any (a) event,
circumstance or development that results (or would reasonably be expected to
result on the Closing Date) in a breach of any representation or warranty made
by it in this Agreement and (b) any material failure of the Sellers,
Parent or Buyer, as the case may be, to comply with or satisfy any condition or
agreement to be complied with or satisfied by it hereunder; provided that no disclosure pursuant to
this Section 6.7 shall be deemed to amend or supplement any
provision of this Agreement or any disclosure schedule hereto, or to prevent or
cure any misrepresentation, breach of warranty or breach of covenant.

 

6.8   Continuation of Businesses.

 

(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, (ii) request informal advisory opinions from state
franchise administrators in order to determine which states, if any, will
permit Buyer to “tack” the registration of its franchise program onto the
existing registrations of GACCF, and (iii) prepare and file the initial
registration of Buyer’s Uniform Franchise Offering Circular with appropriate
state franchise administrators.

 

(b)                                 Buyer shall, with Sellers’ cooperation,
amend any disclosure document relating to any pending international franchise
transaction that does not close prior to the Closing Date to include required
information about Buyer, Parent and any changes Buyer intends to make in the
documentation for international franchises.

 

(c)                                  The Sellers 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
Sellers’ sale or Buyer’s acquisition of the “Great American Cookies” franchise
system.

 

6.9   Regulatory Filings. 
Each of Parent and MFFB shall supply
as promptly as practicable any additional information and documentary material
that may be requested pursuant to the HSR Act in respect of the transactions
contemplated by this Agreement, and shall use their respective commercially
reasonable efforts to cause the expiration or termination of the applicable
waiting periods under the HSR Act as soon as practicable.  Each of Parent and MFFB, acting solely
through counsel, will (i) promptly notify the other of any written
communication to that party from any Governmental Authority and, subject to the
HSR Act, if practicable, permit the other party to review in advance any
proposed written communication to any such Governmental Authority and
incorporate such other party’s reasonable comments thereto, (ii) not agree
to participate in any substantive meeting or discussion with any such
Governmental Authority in respect of any filing, investigation or inquiry
concerning this Agreement or the transactions contemplated hereby unless it
consults with the other party in advance and, to the extent permitted by such
Governmental

 

50

 

Authority, gives the other party the opportunity
to attend and (iii) furnish the other party with copies of all
correspondence, filings and written communications between it and its
Affiliates and their respective representatives on one hand, and any such
Governmental Authority and its respective staff on the other hand, with respect
to this Agreement and the transactions contemplated hereby.  If any
administrative or judicial action or proceeding is instituted (or threatened to
be instituted) challenging any transaction contemplated by this Agreement as
violative of the HSR Act or any other law, or if any statute, rule, regulation,
executive order, decree, injunction or administrative order is enacted, entered,
promulgated or enforced by a Governmental Authority that would make the
transactions contemplated by this Agreement illegal or would otherwise prohibit
or materially impair or delay the consummation thereof, each of Parent and MFFB
shall cooperate in all respects with the other and use its commercially
reasonable efforts to resolve any and all objections as may be asserted with
respect to this Agreement under the HSR Act. 
Notwithstanding the foregoing, Parent and MFFB shall not be required to
take any commercially unreasonable action that substantially impairs the
overall benefits expected to be realized from the consummation of the
transactions set forth herein.

 

6.10                           Maintenance of
Real Property.  The Sellers
shall maintain the Real Property, including all of the Improvements, in
substantially the same condition as existed on the date of this Agreement,
ordinary wear and tear excepted, and shall not demolish or remove any of the
existing Improvements, or erect new improvements on the Real Property or any
portion thereof, without the prior written consent of Buyer.

 

6.11                           Leases.  Neither Seller shall amend, modify, extend,
renew or terminate any Lease, nor shall Sellers enter into any new lease
sublease, license or other agreement for the use or occupancy of any Real
Property, without the prior written consent of Buyer or Parent.

 

6.12                           Title Insurance.  The Sellers shall use commercially reasonable
efforts to assist Buyer in obtaining the Title Policy in form and substance as
set forth in Article VIII, within the time periods set forth
therein, including removing from title any liens that are not Permitted
Encumbrances.  The Sellers shall provide
the Title Company with any affidavits, releases, indemnities, memoranda or
other assurances reasonably requested by the Title Company to issue the Title
Policy.  All fees, costs and expenses
with respect to the Title Commitment, the Title Policy and the Survey shall be
paid one-half by Buyer and one-half by the Sellers.

 

6.13                           Financing.  The Sellers shall cooperate and take all
actions reasonably requested by Parent in connection with Parent obtaining the
financing it needs in order to consummate the transactions contemplated hereby,
provided that the foregoing does
not require the Sellers to execute any agreements, certificates or other
documents not expressly provided for in this Agreement.

 

6.14                           Employees.  Prior to the Closing Date, Buyer shall cause
Parent to offer jobs to the employees of the Sellers set forth on the attached Schedule
6.14.  These job offers (a) shall
become effective only upon the occurrence of the Closing, (b) shall
reflect terms and conditions of employment that are substantially similar in
the aggregate to those terms and conditions under which such employees are
employed by the Sellers as of the Closing Date, and (c) shall further be
conditioned upon such employees being available to begin work for Buyer as

 

51

 

of the Closing Date, subject to any reinstatement or leave rights they
may have under the applicable leave policies of the Sellers or applicable
law.  Employees of the Sellers who accept
such offers of employment shall be referred to herein as “Transferred
Employees.”

 

ARTICLE VII

Post-Closing Covenants

 

7.1   Employees.

 

(a)                                  Following the Closing Date, if requested
by Buyer and permitted under Parent’s 401(k) plan, the Sellers shall take
all actions necessary to permit the rollover in cash (but not outstanding loan
promissory notes for participant loans) of account balances (but not outstanding
loans) of all Transferred Employees from the Seller 401(k) plan in which
such employees participated as of the Closing Date to a 401(k) plan
maintained by Buyer or an Affiliate of Buyer.

 

(b)                                 The Sellers hereby agree that any current
or former employee of the Businesses who (i) as of the Closing Date is
short-term disabled or receiving or entitled to receive short-term disability
benefits and who subsequently becomes eligible to receive long-term disability
benefits, or (ii) as of the Closing Date is receiving or entitled to
receive long-term disability benefits, shall become eligible or continue to be
eligible, as applicable, to receive long-term disability benefits under a
Seller’s or its Affiliate’s long-term disability plan unless and until such individual
is no longer disabled.

 

(c)                                  No provision of this Agreement, express
or implied: (i) shall be construed to establish, amend, or modify any
benefit plan, program, agreement, or arrangement; (ii) shall limit the
ability of Buyer or any of its Affiliates to amend, modify or terminate any
benefit plan, program, agreement or arrangement at any time assumed,
established, sponsored or maintained by any of them; (iii) is intended to
confer upon any current or former employee (including any Transferred Employee)
or any other Person any right to employment or continued employment for any
period of time by reason of this Agreement, or any right to a particular term
or condition of employment; or (iv) is intended to confer upon any Person
(including any Transferred Employee) any rights as a third party beneficiary.

 

7.2   Taxes Related to Purchase of Assets; Tax Cooperation.

 

(a)          Transfer Taxes.

 

(i)                                     All deed, stamp, transfer, documentary,
sales and use, and registration taxes, and conveyance fees, recording charges
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 Buyer, on the one hand, and the Sellers, on the other hand).  The provisions of this Section 7.2
and no other provision, shall govern the economic burden of Transfer Taxes.

 

(ii)                                  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

 

52

 

all Transfer Taxes and Buyer and the Sellers shall
cooperate in good faith to minimize, to the fullest extent possible under
applicable laws, the amount of any such Transfer Taxes payable in connection
therewith.  For Tax Returns required to
be prepared by Buyer pursuant to this Section 7.2(a)(ii), Buyer
shall collect the proper amount from the Sellers and pay the Transfer Taxes
shown on such Tax Return.  Buyer shall
use reasonable best efforts to provide to the Sellers any Tax Returns which
Buyer is required to prepare and file at least ten (10) days before such Tax
Returns are due to be filed.  For Tax
Returns required to be prepared by the Sellers pursuant to this Section 7.2(a)(ii),
the Sellers shall collect the proper amount from Buyer and pay the Transfer
Taxes shown on such Tax Return.  The
Sellers shall use reasonable best efforts to provide Buyer any Tax Returns
which they are required to prepare and file at least ten (10) days before
such Tax Returns are due to be filed.

 

(b)   Straddle Period Taxes.  Buyer shall prepare or cause to be prepared
and file or cause to be filed any Tax Returns other than any Tax Return based
upon or related to income or receipts with respect to the Purchased Assets for
taxable periods which begin before the Closing Date and end after the Closing
Date (a “Straddle Period”).  Such
Tax Returns shall be prepared or caused to be prepared by Buyer.  Buyer shall submit drafts of such Tax Returns
to the Sellers for approval by the Sellers (which approval shall not be
unreasonably withheld or delayed) no later than twenty (20) days prior to the
date that such Tax Returns are required to be filed with the appropriate
Governmental Authority, including extensions. 
In the event that the Sellers and Buyer cannot reach agreement with
respect to any items shown on such Tax Returns, a nationally recognized
accounting firm mutually acceptable to the Sellers and Buyer shall prepare the
Tax Returns.  The costs related to having
the accounting firm prepare the Tax Returns shall be borne equally by the
Sellers and Buyer.  The Sellers shall pay
to Buyer an amount equal to the portion of the Taxes shown on a Tax Return
approved by the Sellers which relates to the portion of such Straddle Period
ending on the Closing Date promptly upon receiving notice from Buyer that the
Sellers are liable under this Section 7.2(b) for such Taxes
but in no event later than five (5) Business Days before the Tax Return
reflecting such liability is required to be filed.  For purposes of this Section 7.2(b),
in the case of sales, use and other similar Taxes that are payable for a
Straddle Period, the portion of such Tax that relates to the portion of such
taxable period ending on the Closing Date shall be deemed equal to the amount
that would be payable if the relevant taxable period ended on and included the
Closing Date.

 

(c)   Property Taxes.  The Sellers and Buyer shall allocate payment
of property Taxes payable in connection with the Purchased Assets as of the
Closing Date.  The portion of such
property Taxes that relates to the portion of such taxable period ending on and
including the Closing Date shall be deemed to be the amount of such Taxes for
the entire taxable period multiplied by a faction the numerator of which is the
number of days in the taxable period ending on the Closing Date and the
denominator of which is the number of days in the entire taxable period.  Buyer and the Sellers shall also cooperate
with respect to the preparation and filing of any property Tax Returns (and
payment of any property Taxes) in a manner similar to the procedure for the
preparation and filing of Tax Returns (and payment of Taxes) for a Straddle
Period.

 

(d)   Cooperation.  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 

 

53

 

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   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 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 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 (5) 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.  The 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 2005, 2006 and 2007 in a manner meeting the requirements of
Regulation S-X under the Securities Act (the “SEC Financial Statements”);
(y) review the proposed pro forma adjustments specific to the Sellers’
financial information to be included in the 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 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 of the Sellers included in the SEC
Financial Statements.  In connection with
the foregoing, the Sellers shall use their reasonable efforts to assist Buyer
in the preparation of such SEC Financial Statements, at Buyer’s expense,
including without limitation providing Buyer’s Representatives

 

54

 

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 the
Sellers for costs incurred by the Sellers in connection with the preparation of
the SEC Financial Statements and their compliance with the Sellers’ obligations
under this Section 7.5, including expenses incurred with the
Sellers’ engagement of KPMG LLP.  The
Sellers shall advise Buyer should the Sellers become aware that KPMG LLP’s
charges in respect of the Sellers’ obligations under this Section 7.5
will exceed $110,000.  The Sellers shall
act in good faith and use their reasonable best efforts to ensure that the cost
of their compliance obligations under this Section 7.5 are
minimized to the extent possible.

 

7.6   Confidentiality. 
Except as otherwise stated herein, from and after the date hereof, for a
period of three (3) years, the Sellers shall, and shall cause each of
their 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
Seller Information.  Such three (3) year
limitation shall not apply to the Seller Recipes and Processes, and the Sellers
shall, and shall cause each of their respective Affiliates to, treat the Seller
Recipes and Processes as confidential and use commercially reasonable efforts
to safeguard the secrecy of, and refrain from using, any of the Seller Recipes
and Processes following the Closing Date. 
After the Closing Date, the Sellers and their respective Affiliates
shall not make any representations to the public that any recipes or processes
used by the Sellers or their respective Affiliates are identical or
substantially similar to the Seller Recipes and Processes.  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.

 

7.7   Solvency.  From the
time of execution of this Agreement through July 31, 2008, each of the
Sellers and MFFB shall continue to pay their debts as they mature or become
due, including the March 15, 2008 payment due under the Indenture.

 

7.8   Restrictions on Sale of Parent Shares.  During the six (6) 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), 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

 

55

 

of
the Securities, whether any such agreement or transaction is to be settled by
delivery of the Securities; provided,
however, that the 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 six month 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, subject to
an effective Registration Statement (as defined in Section 7.9)
covering such Parent Shares or an available exemption from registration.

 

7.9   Registration.  The Sellers shall have registration rights in
accordance with the terms of a registration rights agreement, dated as of the
Closing Date and substantially in the form attached hereto as Exhibit D
(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 within 180 days
following the Closing Date and (b) cause such Registration Statement to
become effective as soon as reasonably possible after such filing.

 

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 Parent 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 Agreement, dated as of the
Closing Date and substantially in the form attached hereto as Exhibit E
(the “Voting Agreement”), that appoints a designee of Parent 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

 

56

 

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
(i) ,within five (5) Business Days of its receipt of any Product Formulation
Royalties that are to be paid to Buyer hereunder, pay Buyer such Product
Formulation Royalties and provide Buyer with a notice detailing such amounts,
which notice shall include sufficient detail setting forth the calculation of
such amounts and (ii) until payment of such Product Formulation Royalties
to Buyer, hold such amounts in trust for Buyer. 
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 in
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 GACCF 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.

 

(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 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.

 

57

 

(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, but excluding, the first day following the one
(1) year anniversary of the Closing Date (the “Lease Obligation Date”),
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 the Lease Obligation Date, 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, but excluding, the Lease Obligation Date, 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 the Lease Obligation Date, 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), 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, but excluding, the Lease Obligation Date, if MFFB
terminates a lease or sublease 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 the Lease Obligation Date, if MFFB terminates a lease or sublease
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, 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) days prior written notice of its intent to terminate
such lease or sublease.  For purposes of
this Section 7.13(f), “Lease Breach” shall mean a breach by
a Franchisee of a lease or sublease 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 sublease.

 

7.14                           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 7.14.

 

58

 

7.15                           Franchise Business.

 

(a)          Buyer shall, with the Sellers’ cooperation,
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.

 

(b)         Buyer shall, with the 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)          The Sellers 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.

 

7.16                           New Settlement Agreement.  Each
of Parent and MFFB agree that they will make all payments of the Release
Consideration and perform all Undertakings, in each case, as contemplated by
the New Settlement Agreement and will indemnify and hold harmless Parent,
Buyer, the Sellers, MFFB and their Affiliates, as applicable, for any and all
Damages incurred by them by reason of any failure by Parent or MFFB, as
applicable, to make such payments or to so perform. 

 

7.17                           Waste Water Filter.  MFFB
agrees to replace the waste water filter at the GAM manufacturing facility as
contemplated by the Filter Contract. 
Upon completion, the waste water filter will be in good condition and
repair and sufficient for the operation of the GAC Manufacturing Business.  MFFB shall indemnify and hold harmless Parent
and Buyer for any and all costs and expenses related to the Filter Contract and
to any other expenses paid to repair and replace the waste water filter that is
to be replaced pursuant to the Filter Contract.

 

ARTICLE VIII

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

 

The
Buyer’s obligation to purchase the Assets and Parent’s and the Buyer’s
obligation to take the other actions required to be taken by Buyer or Parent 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):

 

59

 

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 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.  Buyer shall have
received copies of releases of all Encumbrances (other than Permitted
Encumbrances) against any asset, property or right of the Purchased
Assets.  The applicable waiting periods,
if any, and any extensions thereof, under the HSR Act shall have expired or
otherwise been terminated.

 

8.6                                 Indenture Lien Release.  The
Sellers shall have delivered to Buyer evidence satisfactory to 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 the Transition Services Agreement, and such
agreement shall be in full force and effect.

 

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.

 

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                           Deed.  GAM shall have executed and
delivered the Deed, and such agreement shall be in full force and effect.

 

60

 

8.12                           No Material Adverse Effect.  From
the date hereof to the Closing Date, there shall not have occurred any event,
circumstance or effect that has had or would reasonably be expected to have a
Material Adverse Effect.

 

8.13                           Financing.  The Parent shall have obtained
on terms and conditions satisfactory to it all of the financing it needs in
order to consummate the transactions contemplated hereby.

 

8.14                           Real Property.  No
damage or destruction or other change has occurred with respect to any of the
Owned Real Property or any portion thereof that, individually or in the
aggregate, would materially impair the use or occupancy of the Owned Real
Property or the operation of the Sellers’ Businesses as currently conducted thereon.

 

8.15                           Title Insurance. 
Buyer has obtained a proforma for a title insurance policy from the
Title Company in accordance with the Title Commitment, which will insure
Buyer’s fee simple title to the Owned Real Property as of the Closing Date
(including all recorded appurtenant easements, insured as separate legal
parcels), with gap coverage from the Sellers through the date of recording,
subject only to Permitted Encumbrances, in an amount equal to the fair market
value of the Owned Real Property insured thereunder and which includes all
endorsements requested by Buyer.  At
Closing, the Title Company shall be irrevocably committed to issue a title
insurance policy in substantially the same form as such proforma (the “Title
Policy”).  The Sellers shall have
provided the Title Company with all affidavits, releases, indemnities,
memoranda or other assurances requested by the Title Company to issue the Title
Policy.  All fees, costs and expenses
with respect to the Title Commitment, the Title Policy and the Survey shall be
paid one-half by Buyer and one-half by the Sellers.

 

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

 

(a)          One or more executed bills of sale in form
and substance reasonably satisfactory to Buyer transferring to Buyer or its
respective designated Affiliates all Tangible Personal Property.

 

(b)         One or more executed assignment and assumption
agreement(s) in form and substance reasonably satisfactory to Buyer
assigning to Buyer or its respective designated Affiliates the Assumed
Contracts, including the Leases, to be assigned hereunder.

 

(c)          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.

 

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

 

(e)          A non-foreign affidavit from
Mrs. Fields’ Original Cookies, Inc. dated as of the Closing Date,
sworn under penalty of perjury and in the form required under treasury 

 

61

 

regulations
issued pursuant to Code §1445 stating that Mrs. Fields’ Original
Cookies, Inc. is not a foreign person as defined in Code §1445.

 

(f)            Any Seller Recipes and Processes not located
at the GAM manufacturing facility.

 

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.

 

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.  The applicable waiting periods, if any, and
any extensions thereof, under the HSR Act shall have expired or otherwise been
terminated.

 

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.

 

62

 

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 Buyer or the Sellers if the Closing shall
not have occurred by January 31, 2008 (the “Termination Date”);

 

(c)          by Buyer 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 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, Parent

 

63

 

 

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, (ii) the obligations
of the parties to this Agreement under Article XI hereof and this Section 10.2
shall survive any such termination and (iii) that Parent shall be
obligated to pay to MFFB at the time of such termination a termination fee of
$750,000 in the event that all conditions to Closing under Article VIII
have been satisfied on or before January 31, 2008, other than the
financing condition in Section 8.13 and other than the delivery of
documents at Closing.  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 4.18 shall
survive and remain in full force and effect for a period of five (5) years
after Closing, (ii) 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 (iii) 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.

 

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;

 

64

 

(c)          the Excluded Assets;

 

(d)         any Excluded Liability, including, without
limitation, 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; 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); or

 

(f)            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 the Sellers 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, except with
respect to any Excluded Liability;

 

(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(a) or
Section 11.3(a), and neither the Seller Indemnified Parties nor the
Buyer Indemnified Parties shall have the right to seek indemnification under,
respectively, Section 11.2(a) or Section 11.3(a) 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
(i) any breach or misrepresentation of any Core Representations and Sections
4.10 and 4.18 or (ii) any payment obligation of either Seller
under Section 3.2(g).  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.

 

65

 

(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, as applicable, shall not
exceed the Final Purchase Price (the “Cap”); provided, however, that the aggregate liability of the
Sellers and MFFB for all Damages under Section 11.2(a) resulting
from a breach or misrepresentation of Section 4.18 shall not exceed
Five Million Dollars ($5,000,000).  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.

 

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.

 

66

 

(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.

 

(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,

 

67

 

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 Indemnity Escrow Amount, and then, if
the Indemnity 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, the 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
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):

 

68

 

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:

 

NexCen Brands, Inc.

1330 Avenue of the Americas

34th Floor

New York, NY  10019

Attention:  Sue Nam, General Counsel

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, including without limitation the
letter of intent dated as of December 7, 2007, (b) are not intended
to confer upon any other Person, either explicitly or 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 their 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 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 all or substantially all of the assets of Buyer; provided, however, that Buyer shall remain
obligated to perform all their obligations under this Agreement if not
performed by such Affiliates.

 

12.4                           Bulk Sales Law. 
Buyer hereby waive 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 

 

69

 

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.

 

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,

 

70

 

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 have 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]

 

71

 

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 D’Loren

  
	
   

  	
  Title:

  	
  President and Chief Executive 

  
	
   

  	
   

  	
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  NEXCEN BRANDS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Robert D’Loren

  
	
   

  	
  Title:

  	
  President
  and Chief Executive  

  
	
   

  	
   

  	
  Officer

  
				

 

Signature Page to Asset Purchase Agreement

 

 

	
   

  	
  GREAT AMERICAN COOKIE COMPANY 

  FRANCHISING, LLC

   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Michael Ward

  
	
   

  	
  Title:

  	
  Executive
  Vice President, Chief

  
	
   

  	
   

  	
  Legal
  Officer and Secretary

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  GREAT AMERICAN MANUFACTURING, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Michael Ward

  
	
   

  	
  Title:

  	
  Executive
  Vice President, Chief 

  
	
   

  	
   

  	
  Legal
  Officer and Secretary

  	
   

  

 

Signature Page to Asset Purchase Agreement

 

 

	
   

  	
  MRS. FIELDS FAMOUS BRANDS, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Michael Ward

  
	
   

  	
  Title:

  	
  Executive
  Vice President, Chief

  
	
   

  	
   

  	
  Legal
  Officer and Secretary

  	
   

  

 

Signature Page to Asset Purchase Agreement

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00135-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00135-of-00352.parquet"}]]