ASSET PURCHASE AGREEMENT

THIS ASSET PURCHASE AGREEMENT (the "Agreement") is entered into on this 25^th day of November, 2002, by and between Moto Photo, Inc., a Delaware corporation with an address at 4444 Lake Center Drive, Dayton, OH ("Seller") and MOTO Franchise Corp., an Ohio corporation, c/o LG Management Corp., with an address at 210 New Road, Linwood, NJ ("Buyer").

A. Seller is a franchisor of businesses offering on site photographic film and digital processing, portrait studios and merchandise sales under the mark "MotoPhoto" and a supplier of paper, chemistry and related products to franchisees (the "Business").

B. Seller desires to sell and Buyer desires to purchase certain assets used by Seller in connection with the Business in accordance with the terms and conditions of this Agreement.

In consideration of the mutual promises and covenants contained in this Agreement, and for other consideration, the receipt and sufficiency of which is acknowledged, and intending to be legally bound, the parties agree as follows:

1. SALE AND PURCHASE OF ASSETS. Upon the terms and subject to the conditions of this Agreement, at Closing, Seller shall sell, transfer, and assign to Buyer, and Buyer shall purchase from Seller, free and clear of all claims, liabilities, encumbrances, liens and security interests of any kind whatsoever, the Business as a going concern, and all of Seller's rights, title, and interest in and to the following assets (the "Assets"):

1.1 All franchise agreements and license agreements for open units, along with any sublease, collateral assignment of lease, security interest or personal guaranty granted in connection with the foregoing (the "Franchise Agreements") and selected Area Developer Agreements along with any personal guaranty granted in connection with the foregoing (the "Developer Agreements"), including but not limited to those set forth on Schedule 1.1;

1.2 All non-compete agreements entered into between Seller, and including without limitation, any franchisee, licensee, area developer, and certain management employees or otherwise for the benefit of Seller, including those set forth on Schedule 1.2;

1.3 All management agreements, or other contracts pursuant to which Seller manages the business of any franchisee, licensee or area developer (the "Management Agreements"), including those set forth on Schedule 1.3;

1.4 All accounts receivable, notes receivable, and any other amounts due to Seller at Closing and amounts earned but not yet billed for goods sold and delivered before Closing along with any security interest or personal guaranty granted in connection with the foregoing;

1.5 All inventory wherever located, including but not limited to inventory located in Seller's distribution warehouse and in company-owned stores;

1.6 All equipment, machinery, furniture, fixtures, leasehold improvements and any other fixed assets including, but not limited to, all such assets owned or used by Seller in the Business and identified on Schedule 1.6 and reflected on Seller's Balance Sheet dated June 30, 2002, or which hereafter have been acquired prior to Closing, including any such assets used in connection with Seller's operation of the Dayton Mall store location, except the real estate lease;

1.7 All intellectual property owned, licensed or used by Seller including, but not limited to, all patents, patent applications, inventions, trade names, trademarks, service marks, copyrights, logos, trade secrets (including all print and electronic copies of training and operations manuals, system or franchise recruitment advertising and similar items), marketing plans and any other intangible or intellectual property related to or used in the Business, including those items set forth on Schedule 1.7 (the "Intellectual Property");

1.8 Seller's web site and internet domain, name extranet, or intranet system and current hosting agreements and/or maintenance agreements, including but not limited to those set forth on Schedule 1.8;

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