Prominent NY Based Internet Incubator Proceeding Towards Merger with BAB Holdings.

Business Editors

CHICAGO--(BUSINESS WIRE)--April 17, 2000

BAB Holdings, Inc. (Nasdaq: BAGL - news) today announced continued progress towards execution of a definitive Merger Agreement with a New York based Internet Incubator. It is expected that the merger agreement will be executed within the next 10 days, at which time further details concerning the Merger Agreement and the Internet Incubator will be released.

As previously announced, upon completion of the merger, BAB's current business would be assigned to a subsidiary (the "Bagel Subsidiary"). Going forward, the sole responsibility of current BAB management would be to operate and to provide leadership to the Bagel Subsidiary. It is anticipated that the Bagel Subsidiary would then be spun off at a future date to existing BAB shareholders, giving existing BAB shareholders 100% of their present economic value in BAB. In addition to keeping 100% of what they currently have, the existing shareholders would own 10% of the equity of the Internet Incubator upon the merger.

Following the merger, the parent company, BAB Holdings, would change its name and NASDAQ ticker symbol to a name and ticker symbol designated by the Internet Incubator, and thus would become a pure play in the development of Internet Infrastructure, Internet Businesses, and of the migration of Bricks and Mortar businesses onto the Internet.

Subject to shareholders' approval, the Management of the Internet Incubator and their Board of Directors would assume control of, and provide leadership to the Merged Company.

Furthermore, in a related agreement, an affiliate of the New York Internet Incubator would provide substitute long term financing for the current bank debt obligation of the Company.

The merger is subject to completion and execution of the final merger documents and shareholder approval.

Certain statements contained in this press release, including statements regarding the development of the company's business, the markets for the company's products, anticipated capital expenditures, and the effects of completed and proposed acquisitions, and other statements contained herein regarding matters that are not historical facts, are forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995). Because such statements include risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. Certain risks and uncertainties are outside the control of the company and its management, including its ability to attract new franchisees; the continued success of current franchisees; the effects of competition on franchisee and company-owned store results; consumer acceptance of the company's products in new and existing markets; fluctuation in development and operating costs; brand awareness; availability and terms of capital; adverse publicity; acceptance of new product offerings; availability of locations and terms of sites for store development; food, labor and employee benefit costs; changes in government regulation (including increases in the minimum wage law); regional economic and weather conditions; the hiring, training, and retention of skilled corporate and restaurant management; and the integration and assimilation of acquired concepts. Some of these risks and uncertainties are wholly outside of the control of the company. Accordingly, readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's analysis only as of the date hereof. The company undertakes no obligation to publicly release the results of any revision to these forward-looking statements which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.