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Sample Business Contracts

Asset Purchase Agreement - Butterwings Entertainment Group Inc. and TeNaKi Corp.

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                            ASSET PURCHASE AGREEMENT
                            ------------------------

                                                                          DRAFT

         THIS  ASSET   PURCHASE   AGREEMENT   (the   "Agreement")   is  made  as
  of_____________1997,  by and between Butterwings Entertainment Group, Inc., an
  Illinois corporation (the "Seller"), and TeNaKi Corp., a Minnesota corporation
  (the "Buyer").

                                    Recitals
                                    --------

         Buyer  wishes to  purchase  from  Seller and  Seller  wishes to sell to
  Buyer,  certain of the  assets,  property,  rights and  business of the Seller
  relating to its Mrs. Fields cookie franchise  operation  located at 3001 White
  Bear  Ave.,  Maplewood,  Minnesota,  upon the  terms  and  conditions  of this
  Agreement.

                                    Agreement
                                    ---------

        In consideration of the premises and the mutual covenants and agreements
  hereinafter set forth, the parties hereto agree as follows:

                                    ARTICLE 1
                                   DEFINITIONS
                                   -----------

        For  purposes  of this  Agreement,  the  following  terms shall have the
following meanings.

        "Assumed Liabilities" shall mean the duties, liabilities, or obligations
of Seller identified on Schedule 1A.

        "Business"  shall mean  Seller's  business of  producing,  marketing and
selling Mrs.  Fields Cookie goods and products,  from its Maplewood  Mall,  3001
White Bear Ave., Maplewood, Minnesota location.

        "Business  Assets"  shall  mean the  assets  used in  Seller's  Business
including but not limited m all equipment,  fixtures, leasehold improvements and
inventory,  which items are  identified on Schedule 1B, located at its Maplewood
Mall, 3001 White Bear Ave., Maplewood, Minnesota location.

        "Closing"  shall  mean  the   consummation  of  the  purchase  and  sale
transaction described herein.

        "Closing  Date"  shall  mean the date on which the  Closing  occurs,  as
specified in Article 2.

        "Confidential  Information" shall mean any information or compilation of
information  which is  proprietary  to the  parties  and which  relates to their
existing or  reasonably  foreseeable  business,  including,  but not limited to,
trade  secrets and  information  contained  in or  relating to product  designs,
manufacturing  methods,  processes,   techniques,   tooling,  sales  techniques,
marketing plans or proposals  existing or potential customer lists and all other
customer  information.  Confidential  Information shall not include  information
which (i) is or becomes publicly  available other than as a result of any breach
of a confidentiality  obligation, (ii) is rightfully received from a third party
and not derived  directly  or  indirectly  from any breach of a  confidentiality
obligation,  or (iii) is  independently  developed  by the  parties  without any
reference to any such in All information which either party hereto identifies as
being  "confidential"  or a "trade secret" shall be presumed to be  Confidential
Information.

        "Customer  List" shall mean the list of the names and  addresses  of the
customers  serviced  by Seller  and third  parties  who refer  customers  to the
Business.

        "Governmental  Entity"  shall  mean any  court,  administrative  agency,
commission,   state,   municipality   or   other   governmental   authority   or
instrumentality, domestic or foreign

        "Liens"  shall  mean,  with  respect  to  the  Purchased   Assets,   all
liabilities,  claims, liens, charges, pledges, security interests,  restrictions
and or other encumbrances of any kind.

        "Material  Adverse  Effect" shall mean a material  adverse effect on the
business,  results  of  operations,  financial  condition  or  prospects  of the
Business.

       "Non-Compete" shall mean the covenants of Seller pursuant to Section 4.7.

        "Purchase  Price" shall mean the aggregate amount to be paid by Buyer to
Seller for the Purchased Assets and the Non-Compete.

        "Purchased Assets" shall mean all of the assets to be purchased and sold
hereunder on the Closing Date,  consisting of the Business Assets Customer List,
and Records and those items  described on Schedule 1B and excluding those assets
described on the "Excluded Assets" portion of Section 1B.

        "Records"  shall  mean all  books of  account,  general,  financial  and
accounting records,  files, invoices,  payment  authorizations,  certificates of
need, correspondence to and from customers, suppliers and payors, and other data
owned by Seller on the Closing  Date,  which relate to the  Business,  Purchased
Assets or Assumed Liabilities.

                                    ARTICLE 2
                             SALE OF ASSETS: CLOSING
                             -----------------------

        Section 2.1. Sale of Assets. At the Closing,  Seller shall sell, assign,
transfer,  convey and  deliver to Buyer free and clear of all Liens,  all of the
Purchased Assets.

        Section 2.2.  Purchase Price and Consulting Agreement Payments.

        (a) Buyer shall pay to Seller the Asset Purchase  Price,  which shall be
thirty-six thousand and 00/100 Dollars  ($36,000-00),  which shall be payable in
cash or certified  funds on Closing Date. Said purchase price includes the value
of the  inventory on hand on the Date of Closing and a Five  thousand and 00/100
Dollars ($5,000.00)  transfer fee to be paid by Seller to the Mrs. Fields Cookie
Franchisor.

        (b) Buyer's shall pay to Seller on the Closing,  One Thousand and 00/100
Dollars  ($1,000.00) as consideration for the  non-competition and agreements by
the Seller.

        Section 2.3. Buyers Assumptions of Liabilities. On the terms and subject
to the conditions set forth in this Agreement,  and in further  consideration of
the transfer of the Purchased  Assets,  at the Closing,  Buyer shall assume only
those  duties,  liabilities  or  obligations  of Seller  included in the Assumed
Liabilities.

        Section  2.4.  Closing.  The Closing  shall take place at the offices of
Renae Lillegard Fry, 2345 Rice Street, Suite 145, Roseville,  Minnesota, on June
1, 1997, or at such other time and location as the parties hereto shall agree in
writing.

        Section 2.5. Deliveries at Closing. At the Closing, Seller shall convey,
transfer,  assign and  deliver to Buyer all of the  Assets,  including  good and
merchantable  title to all  personal  property  included  therein.  Seller shall
deliver to Buyer:

        (a) A Bill of Sale in the form of  Exhibit A, and such  assignments  and
other  instruments  of transfer  as may be  reasonably  satisfactory  to Buyer's
counsel,  and with such  consents to the  conveyance,  transfer  and  assignment
thereof as may be necessary to effect the conveyance,  transfer,  assignment and
delivery of the  Purchased  Assets and to vest in Buyer the title  specified  in
this Section and to assure Buyer the full benefit of the Purchased Assets; and

        (b) A Consent to Assignment for those Material Contracts and real estate
leases  for which a consent  to  assignment  is  required,  together  with those
Material Contracts  specifically listed on Schedule 1A.  Simultaneously with the
delivery  referred m in this on, Seller shall take or cause to be taken all such
actions as may  reasonably  be  required to put Buyer in actual  possession  and
operating control of the Purchased Assets.

                                    ARTICLE 3
                          REPRESENTATION AND WARRANTIES
                          -----------------------------

        A.  Seller hereby represents and warrants to Buyer as follows:

        Section 3.1.  Organization and Power of Seller.  Seller is a corporation
duly  organized,  validly  existing and in good  standing  under the laws of the
State of Illinois,  and Seller is authorized  to transact  business in Minnesota
and holds a Certificate  of Authority  issued by the State of Minnesota.  Seller
has full power and  authority  to own its  properties  and conduct the  business
presently being  conducted by it, to execute this  Agreement,  and to consummate
the transactions contemplated by this Agreement.

        Section 3.2. Authorization.  The execution,  delivery and performance of
this Agreement by Seller have been duly authorized and approved by all requisite
action on the part of Seller this  Agreement  constitutes  the valid and binding
obligation of Seller and is enforceable  against  Seller in accordance  with its
terms, except as such  enforceability may be limited by bankruptcy,  insolvency,
reorganization,  moratorium,  and other  similar  laws  relating  to or limiting
creditors' rights generally and by equitable principles.

        Section 3.3. No Conflict.  The execution and delivery of this  Agreement
do  not,  and  the  consummation  of the  actions  contemplated  hereby  and the
compliance with the terms hereof will not (a) violate any law, judgment,  order,
decree,  statute,  ordinance,  rule or  regulation  applicable  to  Seller.  (b)
conflict with any provision of Seller's governing  documents,  (c) result in any
violation of, and will not conflict with, or result in a breach of any terms of,
or constitute a default under any mortgage, instrument or agreement to which the
Seller is a party or by which Seller or any of the Purchased Assets is bound, or
create any lien or encumbrance upon any of the Purchased  Assets, or (d) require
any  consent,   approval,  order  or  authorization  of,  or  the  registration,
declaration or filing with, any Governmental Entity or Other third party.

        Section 3.4. Title to Purchased  Assets.  Seller has, or will have as of
Closing,  good, valid and marketable title to all of the Purchased Assets,  free
and clear of all Liens. No other party has any rights or claims to possession of
any of the Purchased  Assets.  None of the  Purchased  Assets are subject to any
option,  contract,  arrangement or  understanding  that would restrict  Seller's
ability to transfer the Purchased Assets to Buyer as contemplated herein.

        Section 3.5.  Condition of Purchased Assets. All of the Purchased Assets
are in good operating condition and repair, ordinary wear and tear excepted, and
in the state of  maintenance  repair and  operating  condition  required for the
proper operation and use thereof in the ordinary and usual course of business by
Seller.

      Section 3.6.  Litigation.  There is not suit, action or proceeding pending
against or affecting Seller relating to the Purchased Assets or the transactions
contemplated hereby, nor is there, to the best of Seller's knowledge,  any suit,
action or proceeding threatened against Seller relating to Purchased Assets.

        Section 3.7.  Insurance.  The Business  Assets included in the Purchased
Assets is insured for the  Seller's  benefit and will  continue to be so insured
through  the  Closing,  in  amounts  and  against  risks  that are  commercially
reasonable.

        Section 3.8.  Brokers.  There are no claims for  brokerage  commissions,
finder's  fees or similar  compensation  arising out of or due to any act of the
Seller in connection with the transactions contemplated by this Agreement.

        Section 3.9.  Compliance: Business Practices.

        (a)  Compliance  with Laws and  Regulations.  Seller has  conducted  the
Business in accordance  with applicable laws and regulations and the Mrs. Fields
Franchise Agreement, the violation of which might have a material adverse effect
upon the Business as now conducted or any of the Purchased Assets or the Assumed
Liabilities.

        (b)  Business  Forms,   Procedures,   and  Practices.   Seller's  forms,
procedures and practices are in compliance with all laws and regulations and the
Mrs. Fields Franchise  Agreements,  to the extent  applicable,  the violation of
which might have a adverse effect on the Business as now conducted or any of the
Purchased Assets, or the Assumed Liabilities.

        Section 3.10.  Condition of Business.  Since October 1, 1996,  until the
date of this Agreement:

        (a) Material Change. There has been no material change in the accounting
practices of Seller, the maintenance of Records by Seller or the relationship of
the Business with customers, suppliers or others;

        (b) Ordinary Course.  Seller has carried on the Business in the ordinary
course in substantially the same manner as conducted as of October 1, 1996; and

        (c) No Dispositions.  Seller has not sold, leased or otherwise  disposed
of, or agreed to sell, lease or otherwise dispose of, any material assets of the
Business  except as  provided in this  Agreement  or in the  ordinary  course of
business consistent with prior practice.

        Section 3. 11. Bulk Sale Law. The transfer of Purchased Assets by Seller
under this  Agreement is not subject to any  statutory  bulk sale or  fraudulent
conveyance law adopted by the State of Minnesota.

        Section  3.12.  Financial  Statements.  Seller  has  delivered  to Buyer
financial information respecting the Seller, (the "Financial Statements"), which
consist of unaudited financial  statements for the Seller's Maplewood Mall, 3001
White Bear  Ave.,  Maplewood,  Minnesota  location,  as of October 6, 1996.  The
Financial  Statements  fairly  present  the  financial  position  and results of
operations  of the  Seller  as for the  periods  then  ended  and the  financial
position  of the  Seller at the  dates  thereof  in  accordance  with  generally
accepted accounting  principles.  The Seller has maintained its books of account
in  accordance  with  generally  accepted  accounting  principles   consistently
applied,  and such books of account  are and,  during the period  covered by the
Financial Statements were, correct and complete in all material respects, fairly
and accurately reflect or reflected the income, expenses, assets and liabilities
of the Seller,  including the nature  thereof and the  transactions  giving rise
thereto,  and provide or provided a fair and accurate basis for the  preparation
of the  Financial  Statements.  Seller's  revenue  accounts  support the revenue
recognition  shown on the Financial  Statements for the period indicated and are
complete and accurate in all material respects.  Seller's revenues, as reflected
in Seller's  Financial  Statements,  are recorded at levels which are realizable
and collectable.  All quantities and costing used by Seller to record the values
of the Purchased Assets are complete and accurate in all material respects.

        Section 3.13. Real Estate Lease.  The lease for the premises  located at
the Maplewood Mall, 3001 White Bear Ave., Maplewood,  Minnesota (the "Lease") is
valid and binding and enforceable in accordance with its terms,  and to the best
of Seller's  knowledge,  neither  Seller nor the other party to the Lease are in
material default of any of the provisions thereof.

        Section 3.14.  Inventories.  Merchandise  inventories  are  consistently
represented in the Financial  Statements at their proper cost. Seller represents
that the inventory, within normal tolerance for minor clerical errors, exists as
and is verifiable by physical count.

        Section 3.15. Pre-Bill.  Seller has not prebilled or received prepayment
for  products  to be sold,  services  to be  rendered or expenses to be incurred
subsequent to the Closing Date.

        Section 3.16. Patents,  Trademarks,  Trade Secrets,  etc. Seller owns no
patents, patent applications, trademarks, trademark registrations,  applications
for  trademark   registration,   service  marks,   service  mark  registrations,
applications for service mark registration,  trade names,  registered copyrights
and any other  intellectual  property  rights or licenses  needed to operate the
Business or holds the franchise rights for the use of such marks.

        Section  3.17.  Material  Contracts.  Schedule  3.17  lists  all  of the
contacts leases  (including,  but not limited to, the Lease),  arrangements  and
understandings including,  without limitation, sales orders, purchase orders and
distribution  agreements  which are material to and relate to the Business as it
is conducted by Seller,  each of which was entered into, arrived at or conducted
on behalf of Seller with  appropriate  authority  in  accordance  with  Seller's
customary  practices.  No sales order  contains or entitled  the customer to any
discount,  credit,  rebate  or  allowance  of any kind or nature  that  reflects
prepayment made by a customer. To Seller's and Owners' knowledge, neither Seller
nor the other parties to such contracts,  arrangements and understandings are in
material default thereof.

        Section 3.18. Labor. Seller is not, and, as of the Closing Date will not
be, a party to any  employment  or  consulting  agreement  or to any  collective
bargaining  agreement,  nor are its employees members of a collective bargaining
unit or union, nor has there been any recent unionization  activity.  Seller has
substantially  complied  with all laws  relating  to the  employment  of  labor,
including provisions relating to wages, hours,  collective  bargaining,  and the
payment of  unemployment  compensation  and  workers'  compensation  amounts and
social  security,  withholding  and  similar  taxes,  and is not  liable for any
arrears of wages,  compensation fund contributions or any taxes or Penalties for
failure to comply with such laws.  To the best  knowledge  of Seller and Owners,
none of  employees  of  Seller  has  given any  notice  or made any  threat,  or
otherwise  revealed an intent to cancel or otherwise  terminate his relationship
with Seller,  or given notice or expressed an interest not to accept  employment
with Buyer as of the Closing, or to thereafter cancel or otherwise terminate his
employment  with Buyer. At the Closing Date, all employees of Seller which Buyer
has notified will be hired by Buyer as of the Closing will be free  effective as
of Closing, of all employment  obligations to Seller and. will be free to become
employees of Buyer.

        Section  3.19.  Taxes.  Seller  has failed or will  timely  file all tax
returns and reports  required  by federal,  state or local law and has paid,  or
made  adequate  provision  for the payment of, all taxes,  interest,  penalties,
assessments  or  deficiencies  due  in  connection  therewith.  No  Lien  on the
Purchased  Assets will result from, nor will any transferee  liability attach to
the Purchased Assets by virtue of, any failure to file any return required to be
filed or payment  required to be paid with respect to the Seller for any and all
taxes,  levies,  imports,  duties,  franchise,  license and  registration  fees,
charges or withholdings of any nature.

         Section  3.20.  Statements  Not  Misleading.  Seller  and  Owners  have
  disclosed  all  facts,  events  or  transactions  which  are  material  to the
  Purchased Assets and the Business.  No representation or warranty of Seller or
  of Owners,  or document  furnished by Seller and Owners  hereunder is false or
  inaccurate  in any  material  respect or contains  or will  contain any untrue
  statement of a material fact or omits or will omit to state any fact necessary
  to the herein or in not misleading.

        B.     Buyer hereby represents and warrants to Seller as follows:

        Section 3.21.  Organization  and Power of Buyer.  Buyer is a corporation
duly  organized,  validly  existing and in good  standing  under the laws of the
State of Minnesota,  and Buyer is authorized to transact  business in Minnesota.
Buyer  has full  power and  authority  to own its  properties  and  conduct  the
business  presently  being  conducted  by it,  to  consummate  the  transactions
contemplated by this Agreement.

        Section 3.22. Authorization.  The execution, delivery and performance of
this Agreement by Buyer have been duly  authorized and approved by all requisite
action on the part of Buyer,  this Agreement  constitutes  the valid and binding
obligation of Buyer and is  enforceable  against  Buyer in  accordance  with its
terms, except as such  enforceability may be limited by bankruptcy,  insolvency,
reorganization,  moratorium,  and other  similar  laws  relating  to or limiting
creditors' rights generally and by equitable principles.

        Section 3.23. No Conflict.  The execution and delivery of this Agreement
do not, and the  consummation of the  transactions  contemplated  hereby and the
compliance with the terms hereof will not (a) violate any law, judgment,  order,
decree,  statute,  ordinance,  rule or regulation  applicable to Buyer or either
Owner,  (b) conflict  with any  provision of Buyer's  governing  documents,  (c)
result in any violation of, and will not conflict with, or result in a breach of
any  terms of,  or  constitute  a default  under  any  mortgage,  instrument  or
agreement  to  which  the  Buyer  is a party  or by  which  Buyer  or any of the
Purchased  Assets is bound,  or create any lien or  encumbrance  upon any of the
Purchased Assets, or (d) require any consent,  approval,  order or authorization
of, or the registration,  declaration or filing with, any Governmental Entity or
other third party.

        Section 3.24.  Litigation.  There is suit action or  proceeding  pending
against or affecting Buyer relating to the Purchased  Assets or the transactions
contemplated  hereby, nor is there, to the best of Buyer's knowledge,  any suit,
action or proceeding threatened against Buyer relating to the Purchased Assets.

        Section 3.25.  Brokers.  There are no claims for brokerage  commissions,
finder's  fees or similar  compensation  arising out of or due to any act of the
Buyer in connection with transactions contemplated by this Agreement.


                                    ARTICLE 4
                                    COVENANTS
                                    ---------


        Section  4.l.  Conduct of  Business.  During the period from the date of
this  Agreement  and  continuing  until the Closing.  Seller  agrees  (except as
expressly  provided in this  Agreement or the Schedules  hereto or to the extent
that Buyer shall otherwise consent in writing) that:

        (a) Ordinary Course.  Seller shall carry on the Business in the ordinary
course in  substantially  the same manner as presently  conducted,  maintain the
Records  in  substantially  the  same  manner  as  presently  and  preserve  the
relationships of the Business with customers, suppliers and others.

        (b) No Dispositions.  Seller shall not sell, lease or otherwise  dispose
of,  or agree to sell,  lease or  otherwise  dispose  of,  any of the  Purchased
Assets,  except  in the  ordinary  course  of  business  consistent  with  prior
practice.

        (c) Other  Actions.  Seller  shall  take no action  that  would or might
result in any of its  representations  and warranties so forth in this Agreement
becoming  untrue  (including  the  accuracy  of  the  Schedules),  in any of the
conditions to Closing set forth in Article 6 not being  satisfied,  or in any of
the Purchased Assets becoming materially less valuable.

        (d) Compliance with Laws.  Seller shall comply with all laws,  rules and
regulations of any Governmental Entity applicable to the Purchased Assets or the
conduct of the Business.

        (e) Advice of Changes.  Seller shall promptly advise Buyer in writing of
the  occurrence  of any matter or event that is  material to the  Business,  the
Purchased  Assets,  or to the  closing  conditions  or the  representations  and
warranties in this Agreement.

        Section  4.2.  Access  to  Information.  From and after the date of this
Agreement  until the Closing  Date,  Seller shall afford to Buyer and to Buyer's
counsel,  accountants and other authorized  representatives,  full access to the
facilities,  properties,  contracts, books, records, key personal, customers and
suppliers of the  Business and shall allow them to examine and obtain  copies of
any and all documents pertaining or relating to the Purchased Assets and Assumed
Liabilities  in  order  that  Buyer  and  its  authorized  representatives,   in
conducting  the Due Diligence  Review,  may have full  opportunity  to make such
reasonable investigations as they shall desire to make of the affairs of Seller.
All access will be scheduled by mutual agreement,  not unreasonably refused, and
shall be scheduled so as not to  unreasonably  interfere  with the  operation of
Seller's business.

        Section  4.3.  Further  Assurances.  Seller will execute and deliver all
such other and additional instruments, notices, releases, undertakings, consents
and other documents, and do all such other acts and things, as may be reasonably
requested by Buyer as necessary to assure to Buyer all the rights and  interests
granted or intended to be granted  under this  Agreement.  Seller  shall take or
shall cause to be taken such other reasonable  actions as Buyer may require more
effectively to transfer, convey and assign to, and vest in, Buyer, and put Buyer
in possession of, the Purchased Assets as contemplated by this Agreement. In the
event that any Purchased  Assets cannot be fully and effectively  transferred to
Buyer  without the  consent of a third  party or parties,  and if at the Closing
Buyer shall have waived its right to receive at the Closing such consent, Seller
shall  thereafter  be  obligated  to use its best  efforts  to assure  Buyer the
benefits of such contract,  commitment,  other  arrangement  or other  Purchased
Asset.

        Section 4.4. Passage of Title and Risk of Loss.  Legal title,  equitable
title,  and  risk  of  loss  with  respect  to the  property  and  rights  to be
transferred  hereunder  shall not pass to Buyer  until the  property or right is
transferred at the Closing and possession thereof is delivered to Buyer.

        Section 4.5.  Allocation of Purchase  Price.  Within one hundred  twenty
(120) days after the Closing (unless  required sooner to meet the reasonable IRS
filing  requirements  of one of the  parties)  the  parties  agree  to  complete
duplicate IRS Form 8594 ("Asset  Acquisition  Statement") as required by Section
1060 of the Internal  Revenue Code. The parties  further agree to make no change
or  alteration of the Form 8594 and to file no  Supplement  Statement  Form 8594
without at least  fifteen (15) days prior  written  notice to the other party of
the nature and extent of the changes,  which notice shall include the revised or
Supplemental Statement Form 8594.

        Section 4.6. Expenses. Whether or not the Closing takes place, all costs
and expenses  incurred in connection  with this  Agreement and the  transactions
contemplated  hereby  shall be paid by the party  incurring  such  expense.  Any
sales,  use or other  transfer  taxes  applicable to the conveyance and transfer
from  Seller  to  Buyer  of the  Purchased  Assets  and any  other  transfer  or
documentary  taxes or any filing or recording fees applicable to such conveyance
and transfer shall be paid by Seller.

        4.7.   Seller's Non-Compete.

        (a)  Non-Competition.  For a period of three (3) years from the  Closing
Date,  except as Buyer may  otherwise  consent  in  writing,  Seller  shall not,
directly or indirectly,  as a principal,  agent, partner,  member,  shareholder,
trustee,  consultant,  independent  contractor,  or otherwise:  (i) own, manage,
operate,  control or otherwise be in any manner affiliated or connected with, or
engage or participate in the ownership,  management, operation or control of (as
independent  contractor,  or otherwise),  any business or entity which as one of
its business  activities  competes,  directly or  indirectly,  with Buyer in the
Business  within  Fifteen (15) miles of any location from which Seller  operated
the  Business on the  Closing  Date;  (ii)  attempt to sell,  offer,  or provide
products or services  which are or are related to floral  products to any person
or entity listed on the Customer List; or (iii) lend money, loans, make gifts of
money or other property,  or otherwise lend financial or other assistance in any
form to any person,  firm,  association,  partnership,  venture,  corporation or
other business entity who is engaged or will within the period  prescribed above
engage in any of the activities prohibited by clause (i) or (ii).

        (b)  Confidentiality.  All data and information that Seller has obtained
regarding the Business, including the Customer List, information relating to the
requirements  of  customers  on the  Customer  List  and all  other  information
regarding  the affairs of the  Business,  shall be held in confidence by Seller,
and Seller shall not divulge any of such  information  to anyone except Buyer or
its representatives.

        (c) Injunctive  Relief.  Seller  acknowledges  that any violation of any
provision of this Section 4.7 will cause irreparable harm to Buyer, that damages
for such harm will be incapable of precise  measurement  and that,  as a result,
Seller  will not have an  adequate  remedy at law to redress  the harm caused by
such violations.  Therefore,  in the event of Seller's violation of Section 4.7,
Seller agrees that, in addition to its other  remedies,  Buyer shall be entitled
to injunctive relief,  including but not limited to temporary restraining orders
and/or  preliminary  or  permanent  injunctions  to  restrain or enjoin any such
violation.  Seller agrees to and hereby does submit to  jurisdiction  before any
state or  federal  court of record in  Hennepin  County,  Minnesota,  and Seller
hereby waives any right to raise the question of  jurisdiction  and venue in any
action that Buyer may bring in such court against Seller.

        In addition to other relief to which it shall be  entitled,  Buyer shall
be entitled  to recover  from Seller the costs and  reasonable  attorney's  fees
incurred by Buyer in seeking (i) enforcement of this Section 4.7 and (ii) relief
from Seller's violation of any restriction contained in this Section 4.7.

        (d)  Severability.  Should  any  clause,  portion or  paragraph  of this
Section 4.7 be unenforceable or invalid for any reason, such unenforceability or
invalidity shall not affect the  enforceability  or validity of the remainder of
this Section 4.7. Should any particular  covenant or restriction,  including but
not limited to the covenants and  restrictions of Section 4.7(a) and 4.7(b),  be
held to be  unreasonable  or  unenforceable  for any reason,  including  without
limitation the time period,  geographical  area and scope of activity covered by
such  covenant,  then such  covenant or  restriction  shall be given  effect and
enforced to the greatest extent that would be reasonable and enforceable.

        Section 4.8.  Post-Closing Access to Records. From and after the Closing
Date,  Buyer shall  afford  Seller and Owners  reasonable  access to the Records
conveyed as part of the Purchased Assets for purposes of tax audit, governmental
investigation,  litigation not involving  (directly or  indirectly)  Buyer as an
adverse or conflicting  party, or for any other reasonable  business purpose not
involving  an interest  which is adverse or  conflicting  with the  interests of
Buyer,  in the discretion of Buyer.  Unless  otherwise  consented to by Buyer in
writing,  Seller shall hold in strict confidence all non-public  information and
documents  contained  in such  Records,  and shall not  disclose the same to any
third party except to  governmental  officials as may be legally  required.  All
access will be  scheduled  by mutual  agreement,  not to  unreasonably  with the
operation of Seller's  business.  Buyer shall maintain the Records in accordance
with its standard record  retention  policies,  but will retain specific Records
for a longer period if reasonably  required and  identified by Seller in writing
(provided  Buyer reserves the right to require Seller to pay the storage expense
for such longer period)

        Section 4.9. Audit of Financial Statements.  Buyer shall have the right,
at its expense and by an accounting firm of its election,  to have an audit done
of Seller's Financial  Statements,  including the financial statements of Seller
ending  with the  Closing  Date.  Seller  shall  afford to Buyer and to  Buyer's
accountants and other authorized representatives, full access to Seller's books,
records,  and key  personnel  and shall  allow and obtain  copies of any and all
necessary  documents in order that Buyer and its representatives can conduct the
required audit.

                                    ARTICLE 5
                   CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS
                   -------------------------------------------

        All  obligations  of Buyer  under  this  Agreement  are  subject  to the
fulfillment,  prior  to or at  the  Closing  Date,  of  each  of  the  following
conditions:

        Section 5.1.  Representations  and Warranties.  All  representations and
warranties of Seller  contained in this Agreement shall have been true and shall
be true in all  material  respects  at and as of the  Closing  Date,  except  as
otherwise  specifically  contemplated  by  this  Agreement.  Seller  shall  have
compiled in all material respects with all covenants and conditions  required to
be  performed  or complied  with by it prior to or at the Closing  Date.  Seller
shall furnish Buyer with an appropriate  certificate to the foregoing  effect a3
of the Closing Date.

        Section 5.2. Litigation Affecting Closing. No action, suit or proceeding
shall be pending or, to the best of Seller's knowledge,  threatened by or before
any court or  Governmental  Entity in which it is sought to restrain or prohibit
or to obtain  damages or other relief in connection  with this  Agreement or the
consummation of the transactions contemplated hereby.

        Section 5.3.  Instruments  of Sale,  Etc. Buyer shall have received such
instruments of sale, conveyance, transfer and assignment satisfactory to counsel
for Buyer as are  necessary  or  desirable  to vest in Buyer title to all of the
Purchased Assets or to confirm the status of title to the Purchased Assets.

        Section 5.4.  Consents.  Buyer shall have received all consents required
by this Agreement for the transfer or assignment of all of the Purchased  Assets
or the  transactions  contemplated  hereby,  including  but not  limited to, the
consent of the Mrs.  Fields  Cookies  franchisor  to become a franchisee  and to
approve the sale contemplated hereby.

        Section  5.5.  No  Material  Adverse  Change.  Since  the  date  of this
Agreement, there shall not have occurred any Material Adverse Change.

        Section 5.6.  Employees.  Seller shall have  terminated,  effective upon
Closing,  the  employment  of  all  employees  of  the  Business  and  paid  all
compensation  or  other  money  due to such  employees  with  respect  to  their
employment and  termination by Seller,  and shall have  cooperated with Buyer in
Buyer's  efforts  to hire  such  employees  as  Buyer  deems  desirable  for the
continuation of the Business.

        Section 5.7. Satisfactory Pre-Closing Due Diligence. Buyer has concluded
its preclosing  due diligence with regard to Seller and its Business,  and Buyer
and Buyer's  counsel  have been  satisfied  that the same has not  revealed  any
problems,  liabilities  or  obligations  of Seller  that  would  have a material
adverse impact on the financial  condition,  operations or property of Seller or
its  Business,  such due diligence and  conclusion,  however,  shall not relieve
Seller or  Owners  from  liability  for  breach  of any of the  representations,
covenants or warranties hereof.

        Section 5.8. Satisfactory  Approval of Re: Mrs. Fields Franchise.  Buyer
has concluded its review of the Mrs. Fields Franchise Agreement and is satisfied
that the terms of which meet with  Buyer's  approval,  obtaining  the  necessary
approvals  from the Mrs.  Fields  Franchisor  for the  transaction  contemplated
hereby,  obtaining the necessary grant of franchise  rights for Buyer to operate
the Mrs. Fields franchise,  and completing the necessary training with regard to
the operation of the Mrs. Fields franchise.

                                    ARTICLE 6
                  CONDITIONS PRECEDENT TO SELLER'S OBILGATIONS
                  --------------------------------------------

        All  obligations  of the Seller under this  Agreement are subject to the
fulfillment, prior to or at the Closing, of each of the following conditions:

        Section  6.  1.  Litigation   Affecting  Closing.  No  action,  suit  or
proceeding shall be pending or threatened by or before any court or Governmental
Entity in which it is sought to restrain  or  prohibit  or to obtain  damages or
other  relief in  connection  with this  Agreement  or the  consummation  of the
transactions contemplated hereby.

        Section  6.2.  Released  From  Assumed  Liabilities.  Seller  shall have
obtained  a  release  from  the  liabilities  and  obligations  of  the  Assumed
Liabilities,  effective upon Buyer's  assumption  thereof from each of the other
parties to the Assumed Liabilities.

                                    ARTICLE 7
                        TERMINATION, AMENDMENT AND WAIVER
                        ---------------------------------

        Section 7.1.  Termination  Events.  This  Agreement may be terminated on
written notice by Buyer or Seller,  if the Closing shall not have occurred on or
before May 1, 1997 (the  "Termination  Date"),  or such other date to which this
Agreement  has been  extended by  agreement of the  parties.  In addition,  this
Agreement may be terminated on written notice, on or before the Closing Date:

        (a)    By the mutual consent of the parties hereto; or

        (b) By Buyer, if the conditions set forth in Article 5 are not satisfied
(or are incapable of being satisfied) on or before the Termination Date, without
fault of Buyer; or

        (c) By  Seller,  if the  conditions  set  forth  in  Article  6 are  not
satisfied  (or are incapable of being  satisfied)  on or before the  Termination
Date, without fault of Seller.

        Section 7.2. Effect of Termination.  In the event of termination of this
Agreement  as provided in Section 7.1 hereof,  this  Agreement  shall  forthwith
become  void and them  shall be no  liability  on the part of Buyer or Seller or
their respective officers or directors,  except that the agreements contained in
Section 7.6 hereof shall survive the termination hereof.

        Section  7.3.  Amendment.  This  Agreement  may be  amended  only by the
parties hereto by an instrument in writing signed by or on behalf of each of the
parties hereto.

        Section 7.4. Waiver.  Any term or provision of this Agreement may at any
time be waived  in  writing  by the party or  parties  who are  entitled  to the
benefits being waived.

        Section  7.5.  Return of  Documents.  In the event  that the sale of the
Purchased  Assets  is not  consummated  for any  reason  whatsoever,  or if this
Agreement is terminated for any reason whatsoever, each party will return to the
other party on a timely basis all  documents,  agreements,  instruments or other
written information concerning the other party that was obtained from such other
party.

        Section  7.6.  Nondisclosure.  In  the  event  that  this  Agreement  is
terminated or the sale of the Purchased Assets is not consummated for any reason
whatsoever,  Buyer and  Seller,  and their  respective  employees,  agents,  and
assigns,  agree to hold in confidence and not to disclose,  furnish communicate,
make  accessible  to any  person  or use in any way for  either  party's  own or
another's benefit any Confidential  Information of the other party or permit the
same to be used in  competition  with the party  which  owns  such  Confidential
Information.

                                    ARTICLE 8
                                  MISCELLANEOUS
                                  -------------

        Section  8.1.  Notices.  All  notices,   requests,   demands  and  other
communications hereunder shall be in writing and delivered personally or sent by
certified mail, postage prepaid to the addresses set forth below:

        To Buyer:           TeNaKi Corp.
                            2396 East Skillman Avenue
                            North St. Paul, MN 55109

        with copy to:       Raw Lillegard Fry
                            2345 Rice Street, Suite 145
                            Roseville, MN 55113

        To Seller:          Butterwings Entertainment Group, Inc.
                            2345 Pembroke Avenue, Suite B
                            Hoffman Estates, Illinois 60195

                            Attn:  Kenneth B. Drost

        Section 8.2. Entire Agreement.  This Agreement  (including the Schedules
and Exhibits  hereto)  constitutes  the sole  understanding  of the parties with
respect to the subject matter hereof.

        Section 8.3. Counterparts:  Expenses.  This Agreement may be executed in
two or more counterparts,  each of which shall be deemed an original, but all of
which together shall  constitute one and the same  instrument.  Each party shall
pay all its own fees and bear all its own expenses  incurred in connection  with
this Agreement and the transactions contemplated hereby.

        Section 8.4. Parties in Interest: Assignment. This Agreement shall inure
to the benefit of, and be binding upon, the parties hereto and their  respective
successors  and assigns,  provided that any  assignment of this Agreement of the
rights-hereunder  by any party hereto  without the written  consent of the other
parties shall be void.

        Section 8.5.  Governing  Law.  This  Agreement  shall be governed by and
construed in accordance with the laws of the State of Minnesota.

        Section 8.6.  Schedules  and  Headings.  All of  Schedules  and Exhibits
attached  hereto are a part of this  Agreement and all of the matters  contained
therein are incorporated  herein by reference.  The descriptive  headings of the
several  Articles and Sections of this  Agreement  are inserted for  convenience
only and do not constitute part of this Agreement.

        Section 8.7.  Indemnification by Seller.  Seller agrees to indemnify and
hold Buyer harmless from and against any order,  action,  cost,  claim,  damage,
disbursement,  expense, liability, loss, deficiency,  obligation, penalty, fine,
assessment  or  settlement  of  any  kind  or  nature,  whether  foreseeable  or
unforeseeable,  including, but not limited to, any and all attorney fees, costs,
and other,  expenses directly or indirectly,  as a result of, or upon or arising
from  (i)  any   inaccuracy  or  breach  or   non-performance   of  any  of  the
representations,  warranties,  covenants  or  agreements  made by  Seller  in or
pursuant  to this  Agreement,  (ii) any  order,  action,  cost,  claim,  damage,
liability or Lien arising prior to the Closing whether asserted prior to, on, or
after the  Closing,  (iii) any third party  claims in respect to the Business or
Purchased Assets, or regarding the conduct of the Business, prior to the Closing
that are  asserted  prior  to,  on or  after  the  Closing,  or (iv) any loss or
liability by Seller's negligence or failure to comply with its obligations under
this Agreement prior to, the Closing that are asserted prior to, on or after the
Closing.

        Section 8.8.  Indemnification  by Buyer.  Buyer agrees to indemnify  and
hold Seller harmless from and against any order,  action,  cost, claim,  damage,
disbursement,  expense, liability, loss, deficiency,  obligation, penalty, fine,
assessment  or  settlement  of  any  kind  or  nature  whether   foreseeable  or
unforeseeable,  including, but not limited to, any and all attorney fees, costs,
and other  expenses,  directly or  indirectly,  as a result of, or based upon or
arising from (i) and  inaccuracy in or breach or  non-performance  of any of the
representations,  warranties,  covenants  or  agreements  made with  Buyer in or
pursuant to this Agreement,(ii) any order, action, cost, claim, damage liability
or Lien arising  after the  Closing,  (iii) any third party claims in respect to
the Business or Purchased Assets, regarding the conduct of the Business, arising
after the Closing, or (iv) any loss or liability caused by Buyer's negligence or
failure to comply with its obligations  under this Agreement,  which arise after
the Closing.

        Section 8.9. Survival.  The  representation and warranties  contained in
Article 3, the  covenants  contained in Article 4 (with the exception of Section
4.7),  and  indemnification  provisions  contained  in Section 8.7 and 8.8 shall
survive the Closing for a period of one (1) year following the Closing Date. The
covenants  in Section 4.7 shall  survive  the  Closing  for the  periods  stated
therein.

        Section  8.10.  Public  Announcement.  No public  announcement  or other
public  disclosure shall be made,  prior to the Closing,  of this transaction or
the terms and conditions thereof, except as mutually agreed by the parties or as
may be required by applicable law.

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



BUTTERWINGS ENTERTAINMENT GROUP, INC.                     TENAKI CORP.

By: /s/ Steve Buckley                              By:_________________________
---------------------                              
        Its President                                          Its
        -------------                                          ----------------




CONSENTED TO:

MRS. FIELDS DEVELOPMENT CORPORATION
By: __________________________
        Its ____________________



<PAGE>


                                   SCHEDULE 1A

                               ASSUMED LIABILITIES

Lease for premises located at 3001 White Bear Ave., Maplewood,  Minnesota, dated
April 5, 1991.


                                   SCHEDULE 1B

                                PURCHASED ASSETS

I.      Purchased Assets

        The Purchased  Assets include all of assets of any kind or nature,  used
or useful in the Business,  including, without limitation, the following assets,
but excluding the assets described below as "Excluded":

        a.     Tangible Property/Equipment

        All tangible  personal  property and fixtures of every kind,  nature and
description,  including without limitation, all machinery, equipment, computers,
parts,  furniture,  trade fixtures and general  supplies,  located at 3001 White
Bear Ave., Maplewood, Minnesota;

        b.     Inventory

        All inventory,  including prepaid and in-transit items, of materials and
supplies,  spare  parts,  shipping  containers  and  materials,  packaging,  and
finished products relating to the Seller's Business,  located at 3001 White Bear
Ave., Maplewood, Minnesota;

        c.     Contracts

        All customer contracts,  agreements, and engagements,  the lease for the
premises at 3001 White Bear Ave., Maplewood,  Minnesota and all other contracts,
agreements,   leases  and  licenses  relating  to  the  Business  ("Contracts"),
including,  without  limitation,  all of the contracts,  etc. listed on Schedule
3.17 of the Asset  Purchase  Agreement,  together  with all  claims or rights of
action now existing or  hereinafter  arising out of such contracts or agreements
or the performance  thereof,  the benefit of all open orders placed with Seller,
the benefit of all  purchase  orders  placed by Seller for  products of the type
included in the inventory being acquired hereunder,  all warranties extended and
representations  made to Seller by third parties to the extent  assignable,  and
all rights, remedies, setoffs, allowances, reworkings, discount;

        d.     General Intangibles

        All claims and rights against third parties  relating to, or arising out
of the  Business,  together  with  any  and all  security  interests,  liens  of
mortgages  granted  or  otherwise  available  to  Seller  as  security  for  the
collection  of  any of  the  Purchased  Assets;  security  deposits,  investment
securities;  permits;  approvals;  variances provider numbers; Seller's existing
telephone  numbers;  trademarks,  service marks, and all  substantially  similar
names  and  marks;  and all  copyrights,  patents,  trade  secrets,  inventions,
discoveries,  know-how and other  Intellectual  Property  rights relating to the
Business;

        e.     Records

        All logs, books, records, files, customer lists, and histories, supplier
lists, and files,  engineering and design drawings, and all sales literature and
sales aids,  product sheets and  documentation,  product  displays,  advertising
materials,  manuals,  computer and  electronic  data  processing  materials  and
programs,  correspondence,  and all other  Records as defined in Asset  Purchase
Agreement;


        f.     Goodwill

        All of the  know-how and goodwill of the  Business,  including,  without
limitation, the exclusive right for Buyer to hold itself out as the successor to
the Business of Seller.

II.     Excluded Assets

        a.     Accounts Receivable.

        b.     Cash on hand and in bank accounts.

        c.     Corporate records of Seller.



<PAGE>



                                  SCHEDULE 3.17

                               MATERIAL CONTRACTS

Party                 Date                  Agreement Type




                                            REAL ESTATE LEASES



Date           Premises Description

4/5/91         3001 White Bear Ave., Maplewood, Minnesota, legally described as:


<PAGE>



                                    EXHIBIT A

                     BILL OF SALE, ASSIGNMENT AND CONVEYANCE
                          Effective as of _____________


        WHEREAS, TeNaKi Corp. ("Buyer") and Butterwings Group, Inc., an Illinois
corporation  ("Seller"),  have entered into an Asset Purchase Agreement dated as
of __________(which, together with the Exhibits thereto. is hereinafter referred
to as the "Asset Purchase Agreement"); and

        WHEREAS, the Asset Purchase Agreement  contemplates and provides for the
assignment,  transfer  and  conveyance  to Buyer of the assets of Seller used or
useful in the business of the Seller (the "Business);

        NOW, THEREFORE,  in consideration of the premises and for other good and
valuable  consideration,  the  receipt  and  sufficiency  of  which  are  hereby
acknowledged,  Seller does hereby grant, bargain, sell, transfer, convey, assign
and deliver to Buyer,  as of the date,  first above  appearing,  all of Seller's
right,  title and interest  whatever  kind and  character,  in and to the assets
described on Schedule 1B hereto (the "Purchased Assets"):

        TO HAVE AND TO HOLD unto Buyer.  its successors and assigns  forever all
of the Purchased Assets hereby granted, bargained, sold, transferred,  conveyed,
assigned and delivered.

        Seller hereby irrevocably makes, constitutes and appoints Buyer the true
and lawful Attorney of Seller,  with full Power of substitution,  for and in the
name and stead of Seller but on behalf and for the  benefit of Buyer,  to demand
and receive from time to time any and all  property,  tangible  and  intangible,
constituting  any of the Purchased  Assets and to give receipts and releases for
and in  respect  of the same and any part  thereof  and,  from time to time,  to
institute  and  prosecute in the name of Seller,  but at the expense and for the
benefit of Buyer,  any and all  proceedings at law, in equity or otherwise which
Buyer may deem proper to collect, assert or enforce any claim, right or title of
any kind in of any of the Purchased  Assets and to defend and compromise any and
all actions,  suits or proceedings hereafter instituted in respect of any of the
Purchased Assets and to do all such acts and things in relation to the Purchased
Assets  as  Buyer  shall  deem  desirable,  except  in all  cases  as  otherwise
contemplated by the Asset Purchase Agreement.

        Seller hereby  covenants and agrees to execute and deliver to Buyer such
other instruments of conveyance, assignment and transfer as Buyer may reasonably
request  in order to more fully  vest in Buyer all and  singular  the rights and
properties hereby granted, bargained, sold, transferred , conveyed, assigned and
delivered.

        This Bill of Sale,  Assignment  and  Conveyance  shall be deemed to have
been  executed and  delivered in the State of Minnesota and shall be governed by
and  construed in  accordance  with the internal  laws,  as opposed to the rules
governing conflicts of laws, of the State of Minnesota.

        The Bill of Sale, Assignment and Conveyance shall be binding upon Seller
and its successors and assigns.

        IN WITNESS  WHEREOF,  Seller has caused this  instrument to be signed in
its name by its proper and duly authorized corporate officer as of the _________
day of ____________, 19__.

                                                BUTTERWINGS ENTERTAINMENT GROUP

                                                          By: /s/ Steve Buckley
                                                          ---------------------
                                                                 Its President
                                                                 -------------