1. DEVELOPMENT RIGHTS AND OBLIGATIONS

1.1 Franchisor grants Developer the exclusive right (to the extent described in Section 1.4), pursuant to the terms and conditions of this Agreement, to develop Bakeries within the territory defined in Exhibit B to this Agreement (the "Development Area"). The Bakeries shall be located only at the specific locations approved in writing by Franchisor pursuant to Section 4.1 below.

1.2 Developer shall exercise its development rights hereunder solely by executing a separate Bruegger's Fresh Bagel Bakery Affiliate Franchise Agreement ("Franchise Agreement") for each Bakery already developed or to be developed hereunder or by causing an affiliate of the Developer reasonably acceptable to Franchisor to execute such separate Bruegger's Fresh Bagel Bakery Affiliate Franchise Agreement. The Franchise Agreement for all Bakeries to be developed during the term of this Agreement shall be in the form of Exhibit C to this Agreement. The Franchise Agreement for each additional Bakery developed during the period of any renewal of this Agreement, if any, shall be in the form being offered by Franchisor to new franchisees at the time the first Bakery is developed during such renewal period, the terms of which may differ from the terms of Exhibit C. The Franchise Agreement for each Bakery shall be executed by Developer upon Franchisor's approval of the site for the Bakery pursuant to Section 4.1 below. Notwithstanding the foregoing, through any renewal term of this Agreement, the transfer provisions set forth in Section 14 of the Franchise Agreement attached as Exhibit C shall be included in and supersede such similar provisions in the then current Franchise Agreement for Bakeries developed after the initial term.

1.3 During the initial term of this Agreement, Developer shall have no obligation to develop Bakeries in the Development Area, but shall be free to develop as many as it chooses, consistent with the terms of this Agreement.

1.4 During the term of this Agreement or any renewals hereof, Franc hi so rand its affiliates shall not, anywhere within the Development Area, (1) establish or operate (directly or through an affiliate) a Bakery, franchise others to establish or operate a Bakery, (2) sell or distribute under the "BRUEGGER'S" name any of the items designated as "Core Products" from time to time in Franchisor's confidential operations manuals, or (3) sell or distribute or license others to sell or distribute under any name or mark other than the Proprietary Marks any items described as "Core Products" from time to time in Franchisor's confidential operations manuals at any location inside the Development Area, except that Franklin County Cheese Corporation, its affiliates, successors and assigns may sell Direct Set Cream Cheese and other bagel spreads anywhere inside or outside the Development Area under any name or mark other than the Proprietary Marks. Franchisor and its affiliates retain the rights, among others: (a) to establish, and franchise others to establish, Bruegger's Fresh Bagel Bakeries in any location outside the Development Area; and (b) to sell and distribute, and license others to sell and distribute, food products including, but not limited to, cream cheese products and other bagel spreads under the "BRUEGGER'S" name (or under any other name), directly or indirectly, through supermarkets, delicatessens, specialty food stores, convenience stores, and other wholesale and retail food stores, at any location outside the Development Area.

1.5 This Agreement does not grant Developer any right to use the Proprietary Marks or the System. All rights to use the Proprietary Marks and the System are granted solely under the terms of the Franchise Agreement. Developer acknowledges that it will have no right under this Agreement or under any Franchise Agreement to sub franchise any other person or legal entity to use the Proprietary Marks or the System.

2. TERM

2.1 Unless sooner terminated as provided herein, the term of this Agreement shall expire March 29, 2024.

3. DEVELOPMENT FEE

3.1 In consideration of the development rights granted herein, Developer shall pay Franchisor a Development Fee of One Dollar ($1.00), receipt of which is hereby acknowledged.

4. SITE SELECTION

4.1 Developer, at its sole expense, shall identify and obtain a site for each Bakery to be developed hereunder and, if applicable, for each bagel dough manufacturing site. Before acquiring a site by lease or purchase, Developer shall submit to Franchisor such information and materials as Franchisor may reasonably request to evaluate the site. After receipt of such information and materials, Franchisor, in its reasonable discretion, shall approve or refuse to approve the proposed site. Franchisor shall either approve or reject a proposed site not later than fifteen (15) Business Days after receipt of all information and materials reasonably requested pursuant to this Section 4.1. In evaluating a proposed site, the Franchisor shall consider site standards established by then existing Bakeries that, during the immediately preceding twelve month period, have experienced sales volumes above the median for the System. A site shall be deemed to have received Franchisor's approval unless it has been rejected in writing by Franchisor within such fifteen (15) Business Day period. The site approved (or deemed approved) by Franchisor shall be the "Approved Location" referred to in the Franchise Agreement. Notwithstanding the foregoing, any Bakeries operated in the Development Area by Developer as of the date this Agreement is executed shall be deemed Approved Locations. For purposes of this Agreement, "Business Days" shall be any days except Saturday, Sunday or the following national holidays: New Year's Day, Washington's Birthday, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans Day, Thanksgiving and Christmas.

4.2 With respect to both Bakeries and bagel dough manufacturing sites, Franchisor shall furnish to Developer the following:

4.2.1 Site selection guidelines and criteria, and such sites election counseling and assistance as Franchisor may deem advisable;

4.2.2 Such on-site evaluations, if any, as Franchisor may deem advisable in response to Developer's request for Franchisor's approval of apropos ed site; and

4.2.3 Franchisor's representative plans and specifications for construction of a Bakery and, if applicable, a bagel dough manufacturing site, including exterior and interior design and layout plans.

4.3 If Developer will occupy the premises of a Bakery and/or a bagel dough manufacturing site (if separate from the Bakery) under a lease, Developer shall, prior to the execution of the lease, submit the lease to Franchisor for its written approval which shall not be unreasonably withheld. Developer shall use commercially reasonable efforts to negotiate a lease for the premises of each Bakery that includes all of the following terms and conditions:

4.3.1 That the lessor consents to Developer's use of such Proprietary Marks and signage as Franchisor may prescribe for the Bakery or the bagel dough manufacturing site, as the case may be;

4.3.2 That the use of the premises be restricted solely to the operation of the Bakery (or bagel dough manufacturing site, as the case may be) and any ancillary uses connected to the operation of the Bakery (or dough manufacturing site, as the case may be) during the term of the Franchise Agreement, as it may be extended in accordance with its terms;

4.3.3 That Developer be prohibited from subleasing or assigning all or any part of its occupancy rights or from extending the term of or renewing the lease without Franchisor's prior written consent which shall not be unreasonably withheld; provided, however, such consent shall not be necessary to extend the term or renew the lease so that it continues for a term not longer than the then existing term of the Franchise Agreement for such location;

4.3.4 That the lessor provide to Franchisor copies of all notices of default given to Franchisee under the lease;

4.3.5 That Franchisor have the right to enter the premises to make modifications necessary to protect the Proprietary Marks or the System or to cure any default under the applicable Franchise Agreement or under the lease;

4.3.6 That Franchisor (or Franchisor's designee) have the option, upon default, expiration, or termination of the applicable Franchise Agreement, and upon notice to the lessor, to assume all of Developer's rights and obligations under the lease, including any right to assign or sublease; provided, however, that Franchisor shall not exercise any renewal options under the lease unless it obtains a release from the lessor of any personal guarantees given by Nordahl L. Brue or Michael J. Dressell and of other guaranties given by entities owned or controlled by Nordahl L. Brue or Michael J. Dressell, for any renewal period; and

4.3.7 That the tenant under the lease have the right to remodel the premises without the prior approval of the lessor.

4.4 Developer shall furnish Franchisor with a copy of each executed lease within ten (10) days after its execution.

4.5 Notwithstanding the terms of any Franchise Agreement executed pursuant to this Agreement, Developer shall not be required to pay an initial franchisee fee or a transfer fee to Franchisor based upon an approved request by Developer for consent to change the location of an existing Bakery to a new location within the Development Area. In all other respects, such a request shall be treated as a request for a new site pursuant to this Section 4.

5. TRAINING OF DEVELOPER EMPLOYEES

After the first Bakery developed hereunder opens for business, Developer shall have the right to fulfill Franchisor's responsibility under each Franchise Agreement to conduct training for each manager, assistant manager, and baker of a Bakery, provided that the content and administration of Developer's training program are at least equal to those of Franchisor's training program and are approved in advance by Franchisor. Franchisor shall have the right to review Developer's training program periodically to ensure its quality and to verify that managers, assistant managers, and bakers are being trained in a timely and satisfactory manner. Franchisor shall notify Developer of any deficiencies in the training program. If Developer fails to cure such deficiencies within a reasonable time, Franchisor may revoke its approval of the training program and require all Bakery managers, assistant managers, and bakers to attend training conducted by Franchisor, until such time as the deficiencies in Developer's program have been corrected to Franchisor's satisfaction.

6. OPERATIONS MANUALS

Franchisor shall provide to Developer, on loan, for each Bakery and bagel dough manufacturing site developed hereunder, one set of Franchisor's confidential Operations Manuals, as they exist from time to time (the "Manuals"). The Manuals shall remain the sole property of Franchisor and shall be kept in a secure place at all times. Developer shall not photocopy, duplicate, record, or otherwise reproduce the Manuals or any of their contents without the prior written consent of Franchisor.

7. CONFIDENTIAL INFORMATION

Except as hereinafter provided, Developer shall not, during the term of this Agreement or at any time thereafter, communicate, divulge, or use for the benefit of any other person or entity any confidential information, knowledge, trade secrets, or know-how which may be communicated to Developer or of which Developer may be apprised by virtue of Developer's activities under this Agreement. Developer may divulge such confidential information only: (i) to such of its employees and outside advisors as deemed necessary by Developer; and (ii) to Developer's contractors and prospective landlords with the prior written approval of Franchisor. All information, knowledge, trade secrets, know-how, techniques, and other data of Franchisor or its affiliates which Franchisor designates in writing as confidential shall be deemed confidential for purposes of this Agreement, except information......

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