June20,2013

KateAnderson
KatesCupcakes,Inc.

DearMs.Anderson,

WewelcometheopportunitytosubmitaproposaltoacquirethebusinessofKates
Cupcakes,Inc.andrelatedcompanies(collectivelytheCompanyorSeller)operating
approximately15retailstoresinCaliforniasellingbakedgoods(theBusiness).Weunderstand
thedesiretoproceedexpeditiouslywithasaleoftheBusiness.Wearepreparedtomovequickly
onthetransactionandbelievewearewellsuitedtodoso.Thislettersummarizesourproposal.

1. PurchasePrice

AnentitynewlyformedbyPearson,LLC(Buyer)wouldpurchasesubstantiallyallofthe
operatingassets,includingalltangibleandintangibleassets,equipment,leases,contractrights,
andintellectualpropertyusedintheBusinessforapurchasepriceofonemilliononehundred
thousanddollars($1,100,000).BuyerwillnotassumeanyliabilitiesoftheBusinessofthe
Companyotherthanliabilitiesaccruingaftertheclosingundercontractsorleasesassumedby
Buyer.

2. DefinitiveAgreement

Theclosingwillbesubjecttothenegotiationandexecutionofdefinitivetransaction
documentsthatwillinclude,amongotherthings,customaryrepresentations,warranties,
covenants,andindemnitiesbytheSellerandtheirprincipalsregardingthebusiness,operations,
andfinancialconditionoftheBusiness.

3. ClosingDate

Thepartiesacknowledgethattimeisofimportanceandthattheywillworktowards
closingthetransactionasquicklyaspossible.

4. ConditionstoClosing

TheconsummationoftheTransactionwillbesubjecttothesatisfactionofcustomary
conditions,including,withoutlimitation,thefollowing:

a. Thenegotiation,execution,anddeliveryofdefinitiveagreementssatisfactoryto
eachoftheparties,includingretailleases,andsecuringofanyrequired
governmentalorthirdpartyapprovals,waivers,orconsents.
 b. MaintenanceoftheCompanysbusinessintheordinarycourse,andtheabsence
ofanymaterialadversechangeintheCompanysbusinessoffinancialcondition
ormaterialchangedintheconductofitsbusinessasofthedateofthisLetterof
Intent.

c. TheCompanynotseekingorrequestinganytypeofbankruptcyprotectionor
bankruptcyprocedure.

5. BindingAgreement

Otherthanthisparagraph5,whichisintendedtobeandislegallybinding,thisletteris
nonbindingandconstitutesanindicationofintentonlyandcreatesnoliabilityorobligationofany
naturewhatsoeveramongthepartiesheretowithrespecttoanycontemplatedtransactionorany
othermatteroractiondescribedorreferredtoherein.Legallybindingobligationswithrespectto
thecontemplatedtransactionwillonlyariseuponexecutionofadefinitiveagreementandrelated
agreementswithrespecttothetransaction.

Iftheforegoingissatisfactory,pleaseindicateyouragreementwiththeforegoingby
countersigningacopyofthisletterandreturningittoourattention.Welookforwardto
proceedingtogetheronthistransaction.

_________________________________

MichaelD.Kampfer
ManagingDirector
mkampfer@pearsonllc.com
662.555.0198

By:______________________________

Its:______________________________