June 20, 2013
Kate’s Cupcakes, Inc.
Dear Ms. Anderson,
We welcome the opportunity to submit a proposal to acquire the business of Kate’s
Cupcakes, Inc. and related companies (collectively the “Company” or “Seller”) operating
approximately 15 retail stores in California selling baked goods (the “Business”). We understand
the desire to proceed expeditiously with a sale of the Business. We are prepared to move quickly
on the transaction and believe we are well suited to do so. This letter summarizes our proposal.
An entity newly formed by Pearson, LLC (“Buyer”) would purchase substantially all of the
operating assets, including all tangible and intangible assets, equipment, leases, contract rights,
and intellectual property used in the Business for a purchase price of one million one hundred
thousand dollars ($1,100,000). Buyer will not assume any liabilities of the Business of the
Company other than liabilities accruing after the closing under contracts