Exhibit 10.12**SHAREHOLDERS' AGREEMENT

THIS SHAREHOLDERS' AGREEMENT, is made and enteredinto as of the 6th day of March, 2003, by and among LA Food Show,Inc., a California corporation (the "**Company**"), RichardRosenfield, an individual, Larry S. Flax, or his successors in trust, as Trusteeof the Larry S. Flax Revocable Trust dated June 18, 2002, as may be amended fromtime to time, and California Pizza Kitchen, Inc., a California corporation("**CPK**"), with reference to the following facts:
**A.  Flax (defined below) and Rosenfield (definedbelow) collectively own all of the shares of the Company's issued andoutstanding common stock ("**Common Stock**"), which is comprisedsolely of 2,000,000 shares of Common Stock.
**B.  Pursuant to that certain Subscription Agreementdated as of even date hereof, Flax, Rosenfield and CPK acquired 100% of theissued and outstanding shares of the Company's preferred stock("**Preferred Stock**"), which is comprised solely of 2,000,000shares of the Company's Series A 8% Convertible Preferred Stock (the"**Series A Preferred Stock**").
**C.  The parties have determined that it is in theirrespective best interests to (a) impose certain restrictions on the dispositionof shares of capital stock of the Company, (b) maintain and preserve therelationship among the parties to this Agreement, and (c) address various otherissues in connection with the relationship among the parties.
**D.  CPK, Flax and Rosenfield constitute the currentowners of one hundred percent (100%) of the issued and outstanding shares ofcapital stock of the Company.

NOW, THEREFORE, in consideration of the foregoing recitalsand the agreements and covenants contained herein and other valuableconsideration, the parties hereto agree as follows:
**DEFINITIONS**Act.**"Act" means the Securities Act of 1933, as amended.

**Accepting RemainingShareholder.**  "Accepting Remaining Shareholder" has themeaning ascribed to it in Section 3.2(b).

**Agreement.**"Agreement" means this Shareholders' Agreement, as the same mayhereinafter be amended.

**Allocated Portion.**"Allocated Portion" has the meaning ascribed to it in Section3.2(b).

**Board of Directors.**"Board of Directors" means the Company's board ofdirectors.

**Cash Equivalent.**"Cash Equivalent" means, with respect to any consideration describedin this Agreement, the sum of (i) all cash amounts comprising suchconsideration, plus (ii) the Publicly Traded Value of each share ofFreely Tradable Stock comprising such consideration, plus (iii) theDiscounted Stock Value of each share of Eligible Unregistered Stock comprisingsuch consideration, plus (iv) the cash equivalent of all other non-cashconsideration, including, without limitation, property, equipment and securitiesother than Freely Tradable Stock (the "**Other Non-CashConsideration**"), as determined in accordance with thisAgreement.

**Certificate.**"Certificate" means the Company's Certificate of Designation, dated asof February 28, 2003, as filed with the Secretary of State of the State ofCalifornia.

**Code.**"Code" shall mean the California Corporations Code, as such code maybe amended from time to time hereafter.

**Company.**"Company" has the meaning ascribed to it in the preamble.

**Company ProposedValuation.**  "Company Proposed Valuation" has the meaningascribed to it in Section 2.2.

**Company Right of FirstRefusal Period.**  "Company Right of First Refusal Period" hasthe meaning ascribed to it in Section 3.1.

**Common Stock.**"Common Stock" has the meaning ascribed to it in therecitals.

**CPK.**"CPK" has the meaning ascribed to it in the preamble.

**CPK Cash Equivalent.**"CPK Cash Equivalent" has the meaning ascribed to it in Section1.17.

**CPK IPO Response.**"CPK IPO Response" means a notice delivered pursuant to Section 2.2that indicates CPK's interest in acquiring the Company, and sets forth adescription of the consideration that CPK will pay to the Company or itsshareholders as consideration for the acquisition of the Company that includes(a) the form of such consideration, which shall be in the form of either cash orFreely Tradable Stock, or both (b) the Cash Equivalent of such consideration asof the day of the CPK IPO Response and (c) all other material terms of CPK'soffer to acquire the Company.

**CPK Parties.**"CPK Parties" means and includes CPK, and all Transferees of theShares originally held by CPK other than the Company, Flax orRosenfield.

**CPK Written Offer.**"CPK Written Offer" means a written offer by CPK to enter into aSale Transaction with the Company, which contains a description of theconsideration that CPK will pay to the Company or its shareholders including (a)the form of such consideration, which shall be in the form of either cash,Freely Tradable Stock or Eligible Unregistered Stock, or any of them, (b) theCash Equivalent of such consideration as of the day of the CPK Written Offer(the "**CPK Cash Equivalent**"), and (c) all other materialterms.

**Discounted StockValue.**  "Discounted Stock Value" means, for each share ofEligible Unregistered Stock which the holder thereof has the right to demandregistration thereof by the Eligible Registrant with the Securities and ExchangeCommission using Form S-3, Form S-4, or Form S-1 under the Act, ninety percent(90%) of the average closing price of securities of the same class as theEligible Unregistered Stock, as reported in Wall Street Journal for the 20consecutive trading days immediately preceding the date as of which the CashEquivalent of such share is being measured.

**Eligible Registrant."Eligible Registrant" shall mean a registrant that has a class ofsecurities registered pursuant to Section 12(b) or Section 12(g) of the ExchangeAct or which is required to file reports pursuant to Section 15(d) of theExchange Act.
**Eligible UnregisteredStock.  "Eligible Unregistered Stock" means securities of anEligible Registrant, which are of the same class as securities of the EligibleRegistrant that are listed on a national securities exchange or quoted on theNasdaq National Market.
**Exchange Act."Exchange Act" shall mean the Securities Exchange Act of 1934, asamended.
**Flax.**"Flax" means Larry S. Flax, or his successors in trust, as Trustee ofthe Larry S. Flax Revocable Trust dated June 18, 2002, as may be amended fromtime to time, and each of its Permitted Transferees.

**Freely TradableStock.**  "Freely Tradable Stock" means securities of anEligible Registrant that are, or will be upon the consummation of a proposedTransfer described in this Agreement, (i) registered for resale pursuant to aneffective registration statement under the Act as to which there is no stoporder in effect and which the Eligible Registrant has agreed to keep effectiveuntil each of Flax and Rosenfield are eligible to sell all such securitiespursuant to Rule 144 promulgated under the Act within a three month period, (ii)listed on a national securities exchange or quoted on the Nasdaq NationalMarket, and (iii) not subject to the volume limitations set forth in Rule 144(e)promulgated under the Act; regardless of whether any other limitations may beimposed on sales of such securities by applicable securities laws or generallyapplicable insider trading policies of the Eligible Registrant.

**Initial IPO SaleValue.**  "Initial IPO Sale Value" has the meaning ascribed toit in Section 2.2(b).

**Initial RemainingShareholder Value.**  "Initial Remaining Shareholder Value" hasthe meaning ascribed to it in Section 3.4(c)

**Initial Sale Value.**"Initial Sale Value" has the meaning ascribed to it in Section2.1(d).

**LiquidationPreference.**  "Liquidation Preference" has the meaning ascribedto it in the Certificate.

**MandatoryTransaction.**  "Mandatory Transaction" has the meaning ascribedto it in Section 5.

**New Securities.**"New Securities" means any capital stock of the Company, whether nowauthorized or not, and rights, options or warrants to purchase capital stock andsecurities of any type whatsoever that are, or may become, convertible intocapital stock, issued after the date hereof, other than (i) securities issued orissuable by the Company upon the exercise of any rights, options or warrants orthe conversion of any convertible securities; (ii) securities issued in a SaleTransaction that occurs in compliance with Section 2.1, (iii) securities offeredto the public pursuant to a registration statement filed pursuant to the Act;(iv) capital stock or warrants or options to purchase capital stock issued inconnection with bona fide acquisitions, reorganization or similar transactionsthat are approved by the Board of Directors and, if issued in connection with anacquisition, are issued in compliance with Section 7.2(d), (v) securities issuedupon any split or subdivision of the outstanding shares of capital stock of theCompany or any dividend or other distribution payable in capital stock of theCompany, or (vi) options, capital stock or rights granted to employees,directors or consultants of the Company or any affiliate of the Company pursuantto any Stock Option Plan or agreement of the Company that are approved by theBoard of Directors and are granted in compliance with Section 7.2(b), or anyCommon Stock issued pursuant thereto or derived therefrom.

**Offer.**"Offer" shall mean the written notice of intent to Transfer Shares,containing the information described in Section 3.1.

**Offered Shares.**"Offered Shares" means the Shares of any Selling Shareholder that arethe subject of an Offer to Transfer under Section 3.

**Other Non-CashConsideration.**  "Other Non-Cash Consideration" has the meaningascribed to it in Section 1.6.

**PermittedTransferee.**  "Permitted Transferee" means and includes (i) thespouse or lineal descendants of a Shareholder, or (ii) any family limitedpartnership, family limited liability company, or revocable or irrevocable trustsolely for the benefit of a Shareholder, or of a Shareholder and suchShareholder's estate, spouse or lineal descendants, provided,however, that in each case, such Permitted Transferee executes anddelivers to the Company a counterpart of this Agreement, in a form substantiallysimilar to **Exhibit A, and becomes a party to this Agreement andthereby agrees to be bound by and to observe all of the terms and conditionscontained herein.
**Person.**"Person" shall include any individual or natural person, corporation,trust, estate, partnership, limited partnership, joint venture, limitedliability company, limited liability partnership or other entity.

**Preferred Stock.**"Preferred Stock" has the meaning ascribed to it in the recitals.

**Publicly TradedValue.**  "Publicly Traded Value" means, for each share ofFreely Tradable Stock, the average closing price for such share of FreelyTradable Stock, as reported in the Wall Street Journal for the 20 consecutivetrading days immediately preceding the date as of which the Cash Equivalent ofsuch share is being measured.

**Remaining OfferedShares.**  "Remaining Offered Shares" has the meaning ascribedto it in Section 3.2(a).

**Remaining ShareholderOffer.**  "Remaining Shareholder Offer" has the meaning ascribedto it in Section 3.2(a).

**Remaining Shareholder Rightof First Refusal Period.**  "Remaining Shareholder Right of FirstRefusal Period" has the meaning ascribed to it in Section3.2(a).

**Remaining ShareholderNotice.**  "Remaining Shareholder Notice" has the meaningascribed to it in Section 3.2(a).

**RemainingShareholders.**  "Remaining Shareholders" means Flax, Rosenfieldand CPK.

**Rosenfield.**"Rosenfield" means Richard Rosenfield, an individual, and each of hisPermitted Transferees.  

**Sale Transaction.**"Sale Transaction" means the (a) merger or consolidation of theCompany with or into any other Person, or (b) sale or conveyance of all orsubstantially all the assets of the Company to any Person.

**Second CPK WrittenOffer.**  "Second CPK Written Offer" has the meaning ascribed toit in Section 2.1(b).

**Selling Shareholder.**"Selling Shareholder" has the meaning ascribed to it in Section3.1.

**Series A PreferredStock.**  "Series A Preferred Stock" has the meaning ascribed toit in the recitals.

**Shares.**"Shares" means (a) the shares of Common Stock presently owned orhereafter acquired by the parties to this Agreement, and (b) the shares ofSeries A Preferred Stock presently owned or hereafter acquired by the parties tothis Agreement, (c) any securities of the Company which are convertible intoshares of Common Stock or Series A Preferred Stock, and (d) any options,warrants or other rights to acquire any shares of Common Stock or Series APreferred Stock, or securities convertible into such shares of Common Stock orSeries A Preferred Stock.

**Shareholders.**"Shareholders" or "Shareholder" means, respectively, themembers of or a member of the class consisting of CPK, Flax and Rosenfield, whoare currently all of the shareholders of the Company, and (i) each Transferee orsubsequent Transferee of Shares and (ii) any Person or entity who hereafteracquires Shares of the Company, who executes and delivers to the Company acounterpart signature page to this Agreement, in a form substantially similar to**Exhibit A, and becomes a party to this Agreement and therebyagrees to be bound by and to observe all of the terms and conditions containedherein.
**Stock Option Plans.**"Stock Option Plans" means any employment, bonus or consultingagreements, pension, profit sharing, deferred compensation, stock bonus,retirement, stock option, stock purchase, phantom stock, restricted stock, stockappreciation or similar plans or agreements.

**Then OutstandingShares.**  "Then Outstanding Shares" means the number of sharesof the Company's capital stock outstanding on the date in question, on an asconverted-to-common basis without giving effect to any accumulated dividends onthe then outstanding shares of Series A Preferred Stock.

**Third Party DemandShareholder.**  "Third Party Demand Shareholder" means anyPerson having the right to require that the Company effect a registration underthe Securities Act of shares of Common Stock owned by such Person.

**Third Party Written Notice.**"Third Party Written Notice" has the meaning ascribed to it in Section2.1(b).

**Transfer.**"Transfer" means to give, sell, assign, transfer, convey, exchange,mortgage, grant a security interest in, encumber, pledge, hypothecate orotherwise dispose of.

**Transferee.**"Transferee" means any Person who is the recipient of Shares pursuantto a Transfer in accordance with the terms of this Agreement.

**Unallocated RemainingOffered Shares.**  "Unallocated Remaining Offered Shares" hasthe meaning ascribed to it in Section 3.2.

**Unpurchased New Securities.**  "Unpurchased New Securities" has the meaning ascribed to itin Section 6.2.

**RIGHT OF FIRST NEGOTIATION.Determination by the Company toEnter into a Sale Transaction.

In the event that the Company determines that itdesires to enter into any Sale Transaction (either in the Company's soledetermination or as a result of the Company being approached by any Person thatdesires to enter into a Sale Transaction with the Company which the Companywishes to entertain), the Company shall, prior to entering into any substantivenegotiations with respect to any Sale Transaction with any Person, give CPKwritten notice of its desire to enter into a Sale Transaction and, if withinfifteen (15) days after receipt of such notice, CPK states in writing that CPKis interested therein, the Company shall attempt in good faith to negotiate theterms of such Sale Transaction with CPK on mutually satisfactory terms.  If theCompany determines, in its reasonable discretion, that it will not be able toreach or is unlikely to be able to reach a satisfactory agreement with CPK withrespect to the terms of such Sale Transaction, the Company shall so notify CPKin writing, and the Company shall then be free to locate, negotiate with, andreach agreement with any other Person with respect to such SaleTransaction.

Notwithstanding the foregoing Section 2.1(a), if duringthe course of its negotiations with CPK, CPK delivers a CPK Written Offer to theCompany, the Company may only enter into a Sale Transaction with any otherPerson if (i) the Cash Equivalent (as determined in the manner described inSection 2.1(e)) of the consideration that the Company would receive from suchother Person as consideration for the closing of such Sale Transaction as of thedate of the CPK Written Offer exceeds 110% of the CPK Cash Equivalent, or (ii)the Company complies with the procedures set forth in Section 2.1(c).

After the delivery of a CPK Written Offer to the Company,the Company may only enter into a Sale Transaction with a Person other than CPKin which the Cash Equivalent (as determined in the manner described in Section2.1(e)) of the consideration that the Company would receive from such Person asconsideration for the closing of such Sale Transaction does not exceed 110% ofthe CPK Cash Equivalent if (i) the Company delivers to CPK a written noticestating that the Company has received an offer from another Person to enter intoa Sale Transaction (the "
Third Party Written Notice
"), whichThird Party Written Notice sets forth (A) the form and amount of considerationto be paid as consideration for the closing of such Sale Transaction, and (B)the Cash Equivalent (as determined in the manner described in Section 2.1(e)) asof the date of such Third Party Written Notice, and (ii) CPK does not, withinfifteen (15) days after such Third Party Written Notice is deemed delivered toCPK by the Company, deliver a written notice (the "
Second CPK WrittenOffer
") to the Company stating that CPK wishes to enter into a SaleTransaction with the Company in which the consideration received by the Companyas consideration for the closing of such Sale Transaction (Y) is in the form ofcash, Freely Tradable Stock or Eligible Unregistered Stock, or any of them(unless the consideration offered by such other Person is solely in the form ofcash, in which case such consideration must be in the form of cash or FreelyTradable Stock, or both), and (Z) has a Cash Equivalent as of the date of suchThird Party Written Notice that equals or exceeds the Cash Equivalent of theconsideration set forth in such Third Party Written Notice.  If CPK timelydelivers such Second CPK Written Offer to the Company, the Company and CPK shallenter into good faith negotiations to close such Sale Transaction.  In the eventthat the consideration that the Company would receive from such other Person asconsideration for the closing of such Sale Transaction is or includes Other Non-Cash Consideration, the Third Party Written Notice shall not be deemed to havebeen delivered until the Cash Equivalent value of such Other Non-CashConsideration has been determined as provided in Section 2.1(e).

If, as of the day immediately preceding the closing dateof a Sale Transaction between CPK and the Company pursuant to a CPK WrittenOffer or a Second CPK Written Offer, the value of the Cash Equivalent of theconsideration offered by CPK in the CPK Written Offer or Second CPK WrittenOffer (as applicable) is greater than 110% of the Cash Equivalent of suchconsideration as of the date of the CPK Written Offer or Second CPK WrittenOffer (as applicable) (the "
Initial Sale Value
"), CPK, in itssole discretion, shall have the right to terminate the Sale Transaction unlessthe Company agrees to accept consideration of the same type offered by CPK inthe CPK Written Offer or Second CPK Written Offer (as applicable) which, on theclosing date of the Sale Transaction, has a Cash Equivalent equal to 110% of theInitial Sale Value.  If, as of the day immediately preceding the closing date ofa Sale Transaction between CPK and the Company pursuant to a CPK Written Offeror a Second CPK Written Offer, the value of the Cash Equivalent of theconsideration offered by CPK in the CPK Written Offer or Second CPK WrittenOffer (as applicable) is less than 90% of the Initial Sale Value, the Company,in its sole discretion, shall have the right to terminate the Sale Transactionunless CPK agrees to pay consideration of the same type offered by CPK in theCPK Written Offer or Second CPK Written Offer (as applicable) which, on theclosing date of the Sale Transaction, has a Cash Equivalent equal to 90% of theInitial Sale Value.  Following any termination pursuant to this Section 2.1(d),the Company shall have the right to consummate a Sale Transaction with any otherPerson so long as the consideration received by the Company in such transactionhas a Cash Equivalent which is equal to or greater than the Initial SaleValue.

For purposes of this Section 2.1, if a Person other thanCPK offers to enter into a Sale Transaction with the Company and any portion ofthe consideration that the Company would receive from such other Person asconsideration for the closing of such Sale Transaction is in the form of OtherNon-Cash Consideration, the Cash Equivalent of such Other Non-Cash Considerationshall be determined by the appraisal mechanism set forth in the second paragraphof Section 3.4(d) as if CPK was the Selling Shareholder).  

Notwithstanding anything to the contrary, the provisionsof this Section 2.1 shall no longer be applicable, and CPK shall have no rightspursuant to this Section 2.1, beginning on the first date that CPK does not holdat least fifteen percent (15%) of the Then Outstanding Shares.

**Determination by the Companyto Consummate an Initial Public Offering .  In the event that the Company determines, for anyreason, that it desires to offer any of its securities in an initial publicoffering under the Act, the Company shall, prior to initiating such initialpublic offering, give CPK written notice of its desire to offer its securitiesin such initial public offering and of its good faith estimate of the Company'svaluation (the "
Company Proposed Valuation
").  The CompanyProposed Valuation shall be based upon presentations made to the Company bypotential underwriters for such initial public offering.  The Company shall makeall written materials it receives in connection with all such presentationsavailable to CPK.  If CPK is interested in acquiring the Company, and CPKprovides the Company with a CPK IPO Response within fifteen (15) days afterreceipt of the Company Proposed Valuation, then the Company shall attempt ingood faith to negotiate the terms of such an acquisition by CPK on mutuallysatisfactory terms.  If the Company determines, in its reasonable discretion,that it will not be able to reach or is unlikely to be able to reach asatisfactory agreement with CPK with respect to the terms of such an acquisition(including, without limitation, as a result of the Company's determination thatthe consideration being offered by CPK is unsatisfactory), the Company shall sonotify CPK in writing, and the Company shall have a period of one year duringwhich it may offer its securities in the same initial public offering under theAct previously contemplated by the Company, so long as such shares are sold at aprice which reflects a valuation of the Company that is equal to or greater thanthe lesser of (i) the Company Proposed Valuation and (ii) a valuation of theCompany based upon the Cash Equivalent of the consideration offered by CPK inthe CPK IPO Response to acquire the Company as of the date of the CPK IPOResponse.

If, as of the day immediately preceding the closing dateof an acquisition of the Company by CPK pursuant to a CPK IPO Response, thevalue of the Cash Equivalent of the consideration offered by CPK in such CPK IPOResponse is greater than 110% of the Cash Equivalent of such consideration as ofthe date of the CPK IPO Response (the "
Initial IPO SaleValue
"), CPK, in its sole discretion, shall have the right to terminatesuch acquisition of the Company unless the Company agrees to acceptconsideration of the same type offered by CPK in the CPK IPO Response which, onthe closing date of the acquisition, has a Cash Equivalent equal to 110% of theInitial IPO Sale Value.  If, as of the day immediately preceding the closingdate of an acquisition of the Company by CPK pursuant to a CPK IPO Response, thevalue of the Cash Equivalent of the consideration offered by CPK in the CPK IPOResponse is less than 90% of the Initial IPO Sale Value, the Company, in itssole discretion, shall have the right to terminate such acquisition of theCompany by CPK unless CPK agrees to pay consideration of the same type offeredby CPK in the CPK IPO Response which, on the closing date of the acquisition,has a Cash Equivalent equal to 90% of the Initial IPO Sale Value.  Following anytermination pursuant to this Section 2.2(b), the Company shall have a period ofone year during which it may offer its securities in the same initial publicoffering under the Act previously contemplated by the Company, so long as suchshares are sold at a price which reflects a valuation of the Company that isequal to or greater than the lesser of (i) the Company Proposed Valuation, and(ii) the Initial IPO Sale Value.

Notwithstanding anything to the contrary, the provisionsof this Section 2.2 shall no longer be applicable, and CPK shall have no rightspursuant to this Section 2.2, beginning on the first date that CPK does not holdat least fifteen percent (15%) of the Then Outstanding Shares.

**RIGHT OF FIRSTREFUSAL.Company's Right of First Refusal.  In the eventthat any Shareholder desires to Transfer all or part of its Shares to any partyother than a Permitted Transferee, and receives a *bona fide* offer fromany Person to purchase all or part of its Shares, such Shareholder (the"**Selling Shareholder**") shall deliver an Offer to the Company,which shall set forth all relevant information regarding such proposed Transfer,including but not limited to, (a) the identity and address of the proposedTransferee, (b) the number of Offered Shares, (c) the form and amount ofconsideration to be paid for such Offered Shares, (d) all other terms andconditions of such proposed Transfer, including representations and warrantiesto be given to the proposed Transferee and similar provisions, and (e) if suchan agreement has been prepared, the form of agreement pursuant to which suchTransfer is to be made, together with all ancillary documents referred to insuch agreement.  The Company shall have fifteen (15) days after such Offer isdeemed delivered (the "**Company Right of First Refusal Period**")to accept Transfer of all or any portion of the Offered Shares at the purchaseprice or for the consideration (subject to Section 3.4), and upon all of theterms and conditions, set forth in the Offer by giving written notice ofacceptance to the Selling Shareholder within such Company Right of First RefusalPeriod.  In the event the proposed consideration is or includes Other Non-CashConsideration, such acceptance by the Company shall be subject to Section 3.4,and the Company Right of First Refusal Period shall not be deemed to havecommenced until the Cash Equivalent value of such Other Non-Cash Considerationhas been determined as provided in Section 3.4.  Failure of the Company to givewritten notice of acceptance to the Selling Shareholder within the Company Rightof First Refusal Period shall be deemed a rejection of the Offer.  In the eventthe Company elects to accept Transfer of all of the Offered Shares, the Companyshall pay the Selling Shareholder the purchase price or the Cash Equivalentthereof within ninety (90) days after the effective date of the acceptancenotice unless otherwise agreed to by the Selling Shareholder and the Company.The Company's right to purchase Shares is subject to the restrictions governingthe right of a corporation to purchase its own shares set forth inSections 500 etseq. of the Code, and such other pertinentgovernmental or legal restrictions as are now or may hereafter becomeeffective.

**Remaining Shareholders' Right of FirstRefusal.**In the event the Company rejects the Offer to acceptTransfer of the Offered Shares or does not accept Transfer of all of the OfferedShares, such Selling Shareholder shall deliver to the Remaining Shareholderscopies of the Offer previously transmitted to the Company, and a statement ofthe number of Offered Shares the Transfer of which were not accepted by theCompany pursuant to Section 3.1 above (collectively, the "
RemainingShareholder Offer
").  The Remaining Shareholders shall have fifteen(15) days after such Remaining Shareholder Offer is deemed delivered (the"
Remaining Shareholder Right of First Refusal Period
") to electto accept Transfer of such then remaining Offered Shares (the "
RemainingOffered Shares
") at the price and upon the terms and conditions setforth in the Remaining Shareholder Offer by giving written notice (a"
Remaining Shareholder Notice
") of acceptance to such SellingShareholder within Remaining Shareholder Right of First Refusal Period.Notwithstanding anything to the contrary, for purposes of this Section 3.2, CPKshall no longer be deemed to be a Remaining Shareholder beginning on the firstdate that CPK does not hold at least fifteen percent (15%) of the ThenOutstanding Shares.

In the event more than one of the Remaining Shareholderselect to accept Transfer of the Remaining Offered Shares and the total aggregatenumber of Shares with respect to which such Remaining Shareholders desire toaccept Transfer of exceeds the Remaining Offered Shares, then each RemainingShareholder electing to accept Transfer (an "
Accepting RemainingShareholder
") shall be entitled to accept Transfer of that number ofRemaining Offered Shares (not to exceed that number of Remaining Offered Sharessuch Remaining Shareholder indicated a desire to accept Transfer of in itsRemaining Shareholder Notice) equal to the product of (i) the total number ofRemaining Offered Shares, 
multiplied by
 (ii) the quotient of (A) thenumber of Shares owned by such Accepting Remaining Shareholder as of the datethe Remaining Shareholder Offer is deemed delivered, 
divided by
 (B) theaggregate number of Shares owned by all Accepting Remaining Shareholders as ofthe date that the Remaining Shareholder Offer is deemed delivered (such product,the "
Allocated Portion
").  If as a result of the application ofsuch product, the Accepting Remaining Shareholders are not entitled to acceptTransfer of all of the Remaining Offered Shares, such portion of the RemainingOffered Shares that no Accepting Remaining Shareholder is then entitled toreceive Transfer of (the "
Unallocated Remaining OfferedShares
") shall automatically be Transferred to those AcceptingRemaining Shareholders who indicated in their Remaining Shareholder Notices adesire to accept Transfer of Remaining Offered Shares in excess of theirAllocated Portions; 
provided
, 
however
, that if more than oneAccepting Remaining Shareholder indicated in its Remaining Shareholder Noticeits desire to accept Transfer of Remaining Offered Shares in excess of itsAllocated Portion, such Unallocated Remaining Offered Shares shall be allocatedto all such Accepting Remaining Shareholders such that each such AcceptingRemaining Shareholder will be entitled to accept Transfer of that number ofUnallocated Remaining Offered Shares equal to the product of (i) the totalnumber of Unallocated Remaining Offered Shares, 
multiplied by
 (ii) thequotient of (A) the number of Shares owned by such Accepting RemainingShareholder as of the date the Remaining Shareholder Offer is deemed delivered,
divided by
, (B) the aggregate number of Shares owned by all suchAccepting Remaining Shareholders as of the date that the Remaining ShareholderOffer is deemed delivered.  If, as a result of such allocation, any UnallocatedRemaining Offered Shares have been allocated to an Accepting RemainingShareholder that did not indicate a desire to accept Transfer thereof in itsRemaining Shareholder Notice, such Unallocated Remaining Offered Shares shall bereallocated among such Accepting Remaining Shareholders in the manner describedin the preceding sentence until all such Unallocated Remaining Offered Shareshave been allocated to Accepting Remaining Shareholders who indicated a desireto accept Transfer thereof in their Remaining Shareholder Notices.

In the event the proposed consideration set forth in theOffer is other than cash, such acceptance by the Remaining Shareholders shall besubject to Section 3.4 below.  Failure of a Remaining Shareholder to give theSelling Shareholder written notice of acceptance within the RemainingShareholder Right of First Refusal Period shall be deemed a rejection of theOffer.  In the event that the Remaining Shareholders or the Company and theRemaining Shareholders elect to accept Transfer of all of the Offered Shares,they shall pay the Selling Shareholder their respective portions of the purchaseprice or the Cash Equivalent thereof within ninety (90) days after theexpiration of the Remaining Shareholder Right of First Refusal Period unlessotherwise agreed to by the Selling Shareholder and those of the Company and theRemaining Shareholders electing to accept Transfer of all of the OfferedShares.

**Limitation on Rights toTransfer.**  In the event that the Company and the Remaining Shareholdersdo not, in the aggregate, elect to accept Transfer of all of the Offered Sharespursuant to Sections 3.1 and 3.2 above respectively, the Selling Shareholder mayTransfer all of the Offered Shares for a period of one hundred eighty (180) daysimmediately following the expiration of the Remaining Shareholder Right of FirstRefusal Period (unless a longer period for closing is specified in the Offer),only to the proposed Transferee set forth in the Offer and only for theconsideration and upon the terms and conditions set forth in the Offer;provided, however, that the Transfer may only be effectuated ifthe Company determines that such Transfer complies with state and federalsecurities laws.  If the Transfer is not consummated within such one hundredeighty (180) day period in the manner described above, then the SellingShareholder shall continue to hold the Offered Shares subject to the provisionsof this Agreement and the provisions of this Agreement must be satisfieddenovo before the Selling Shareholder may Transfer the OfferedShares.

**CashEquivalent of Purchase Price.  In the event that the consideration offered by theproposed Transferee consists, in whole or in part, of Freely Tradable Stock, tothe extent that such offered consideration consists of Freely Tradable Stock,the Company or the Remaining Shareholders, or both, shall be entitled, but notobligated, to substitute the Cash Equivalent of such consideration as of thedate of the Offer in the form of in cash or Freely Tradable Stock, or both,subject to Section 3.4(d).

In the event that the consideration offered by theproposed Transferee consists, in whole or in part, of Eligible UnregisteredStock or Other Non-Cash Consideration, or any of them, to the extent that suchoffered consideration is in the form of Eligible Unregistered Stock or OtherNon-Cash Consideration, the Company or the Remaining Shareholders, or both,shall be entitled, but not obligated, to substitute the Cash Equivalent of suchconsideration as of the date of the Offer in the form of in cash, EligibleUnregistered Stock, or Freely Tradable Stock, or any of them, subject to Section3.4(d).

In the event that any Remaining Shareholder states in itsRemaining Shareholder Notice that, pursuant to either Section 3.4(a) or 3.4(b),any part of the consideration it will pay the Selling Shareholder will be in theform of either Freely Tradable Stock or Eligible Unregistered Stock, or both,and as of the day immediately preceding the closing date of the Transfer of anyor all of the Offered Shares to such Remaining Shareholder, the value of theCash Equivalent of that portion of the consideration offered by such RemainingShareholder in Freely Tradable Stock or Eligible Unregistered Stock, or both, isgreater than 110% of the Cash Equivalent of such portion of the consideration asof the date of the Remaining Shareholder Notice (the "
Initial RemainingShareholder Value
"), such Remaining Shareholder, in its solediscretion, shall have the right to terminate the Transfer unless the SellingShareholder agrees to accept consideration of the same type offered by suchRemaining Shareholder in the Remaining Shareholder Notice which, on the closingdate of the Transfer, has a Cash Equivalent equal to 110% of the InitialRemaining Shareholder Value.  In the event that any Remaining Shareholder statesin its Remaining Shareholder Notice that, pursuant to either Section 3.4(a) or3.4(b), any part of the consideration it will pay the Selling Shareholder willbe in the form of either Freely Tradable Stock or Eligible Unregistered Stock,or both, and as of the day immediately preceding the closing date of theTransfer of any or all of the Offered Shares to such Remaining Shareholder, thevalue of the Cash Equivalent of that portion of the consideration offered bysuch Remaining Shareholder in Freely Tradable Stock or Eligible UnregisteredStock, or both, is less than 90% of the Initial Sale Value, the SellingShareholder, in its sole discretion, shall have the right to terminate theTransfer unless the Remaining Shareholder agrees to pay consideration of thesame type offered by the Remaining Shareholder in the Remaining ShareholderNotice which, on the closing date of the Transfer, has a Cash Equivalent equalto 90% of the Initial Remaining Shareholder Value.  Following any terminationpursuant to this Section 3.4(c), the Selling Shareholder may Transfer all of theOffered Shares for a period of one hundred eighty (180) days immediatelyfollowing the such termination, only to the proposed Transferee set forth in theOffer and only for the consideration and upon the terms and conditions set forthin the Offer.

The Cash Equivalent of the Other Non-Cash Considerationoffered by the proposed Transferee shall be determined as follows, and the Offershall not be deemed to have been received for purposes of the starting of theCompany Right of First Refusal Period or the Remaining Shareholder Right ofFirst Refusal Period until such Cash Equivalent has beendetermined:

Within fifteen (15) days following the date the Offer isdeemed given, the Selling Shareholder and the Company shall attempt in goodfaith to agree upon the cash equivalent fair market value of the Other Non-CashConsideration offered.  In the event they are unable to agree upon such cashequivalent fair market value within such fifteen (15) day period, they shallmutually select an independent appraiser to determine the cash equivalent fairmarket value of the Other Non-Cash Consideration within fifteen (15) days afterthe expiration of such fifteen (15) day period.  Any independent appraiserselected pursuant to this Section 3.4, by any party hereto shall havesubstantial experience in the valuation of the type of Other Non-CashConsideration being valued.  In the event that such Selling Shareholder and theCompany are unable to agree upon an independent appraiser within such fifteen(15) day period, they shall each choose an independent appraiser to determinethe cash equivalent fair market value and shall notify the other party, inwriting, of such choice.  Each appraiser shall submit its appraisal, includingthe premises upon which it was based, to the Selling Shareholder and to theCompany within a reasonable time period after appointment, it being acknowledgedthat each such appraiser shall use its best efforts to submit such appraisalwithin fifteen (15) day after appointment.  If the two appraisals are insubstantial agreement, the appraised cash equivalent fair market value of theOther Non-Cash Consideration offered shall be determined by taking the averageof the two appraisals.  For purposes hereof, "substantial agreement"shall mean that the difference between the appraisals is equal to or less thanfifteen percent (15%) of the higher appraisal.  If the two appraisals are not insubstantial agreement, the two appraisers shall appoint a third appraiser withina reasonable time period after the date of the later of their submittedappraisal, it being acknowledged that each such appraiser shall use its bestefforts to cause such appointment to occur within fifteen (15) days of suchlater submitted appraisal.  Such third appraiser shall determine the cashequivalent fair market value of the Other Non-Cash Consideration offered andsubmit a written appraisal including the premises upon which it was based withina reasonable time period, and in any event shall use its best efforts to submitsuch appraisal within fifteen (15) days following his appointment.  The cashequivalent shall then be determined by averaging the two of three appraisalsthat are closest in amount.  The appraisal fee(s) shall be borne equally by theSelling Shareholder and the Company.

**Drag Along and Co-SaleRights.**Drag Along Rights.In the event that Flax and Rosenfield desire to Transfer collectively all oftheir Shares to a single Transferee (other than a Permitted Transferee) or in asingle transaction, and the Company and the Remaining Shareholders do notexercise their rights of first refusal set forth in Section 3 and purchase allof the Offered Shares, then Flax and Rosenfield shall have the right to requireall of the CPK Parties to Transfer all of their Shares, upon the same terms andconditions and for the same purchase price as Flax and Rosenfield intend to sellall of their Shares of the Company, if requested by Flax and Rosenfield, byproviding written notice of the proposed Transfer to all of the CPK Partiessetting forth in reasonable detail the terms of the proposed Transfer;provided, however, that no CPK Party shall be required to Transferany of its Shares to such single Transferee unless the aggregate considerationreceived in exchange for all Shares so Transferred (a) is in the form of cash orFreely Tradable Stock, or both, (b) is first allocated such that each share ofSeries A Preferred Stock so Transferred receives no less than its fullLiquidation Preference then in effect, and (c) after the allocation of a portionof such consideration in satisfaction of all such Liquidation Preferences of thethen outstanding shares of Series A Preferred Stock, and all liquidationpreferences of any other shares of Preferred Stock then outstanding, theremaining aggregate consideration received in exchange for all Shares soTransferred is allocated, on an as converted-to-common basis, to (i) the holdersof shares of Series A Preferred Stock so Transferred, (ii) the holders of sharesof Common Stock so Transferred, and (iii) the holders of all other shares ofPreferred Stock so Transferred having a right to a portion of suchconsideration.  The CPK Parties shall deliver at such closing documentstransferring all of the Shares held by the CPK Parties, duly executed fortransfer, and shall be entitled to receive the proceeds (after deduction oftransfer taxes and fees not paid by purchaser and other expenses directlyattributable to the transfer of such Shares) allocable to the Transfer thereof.The CPK Parties further agree to timely take all such other actions as Flax andRosenfield reasonably request in connection with such proposed Transfer;provided, however, that when taking such other actions, such CPKParties shall only be required to make representations and warranties and agreeto covenants and indemnities that are substantially similar to those made byFlax and Rosenfield with respect to such CPK Parties' ownership of such Sharesand those matters necessary for such CPK Parties' to be able to effectuate theTransfer of such Shares to such proposed Transferee, including, withoutlimitation, representations and warranties relating to such CPK Parties'authorization to transfer such Shares, and that the Transfer of such Shares bysuch CPK Parties will not (y) require any third party consent or (z) conflictwith or result in a violation or breach or default of any contract to which suchCPK Parties are a party or any governmental law, rule, ordinance orregulation.
**Co-SaleRights.In the event that either Flax or Rosenfield desire toTransfer individually at least ten percent (10%)  (on an as converted-to commonbasis and without giving effect to any accumulated dividends on the thenoutstanding shares of Series A Preferred Stock) of his Shares to a singleTransferee (other than to any Permitted Transferee), in a single transaction, orin one or more transactions to multiple Transferees that are related parties,then Flax or Rosenfield (as applicable) shall give written notice to the CPKParties indicating (i) the identity and address of the proposed Transferee, (ii)the form and amount of consideration to be paid for such Shares, (iii) theanticipated closing date of such Transfer, (iv) all other terms and conditionsof such proposed Transfer, including representations and warranties to be givento the proposed Transferee and similar provisions, and (v) if such an agreementhas been prepared, the form of agreement pursuant to which such Transfer is tobe made, together with all ancillary documents referred to in such agreement.The CPK Parties shall have fifteen (15) days after such notice is deemeddelivered to elect to participate in the proposed Transfer by giving writtennotice to Flax or Rosenfield (as applicable) within such fifteen (15) dayperiod.  Each CPK Party electing to participate in the Transfer shall beentitled to sell to the prospective Transferee a number of Shares equal to thetotal number of Shares which Flax or Rosenfield (as applicable) proposed toTransfer multiplied by the quotient of (a) the number of Shares owned by suchCPK Party as of the date notice is given as provided in the first sentence ofthis Section 4.2(a), 
divided by
 (b) the aggregate number of Shares ownedby Flax or Rosenfield (as applicable) and all of the CPK Parties electing toparticipate in the Transfer.  Such Transfer by a CPK Party shall be onsubstantially the same terms and conditions as the Transfer by Flax orRosenfield (as applicable), and such CPK Party shall only be required to makerepresentations and warranties and agree to covenants and indemnities that aresubstantially similar to those made by Flax or Rosenfield (as applicable) withrespect to such CPK Parties' ownership of such Shares and those mattersnecessary for such CPK Parties' to be able to effectuate the Transfer of suchShares to such proposed Transferee, including, without limitation,representations and warranties relating to such CPK Parties' authorization totransfer such Shares, and that the Transfer of such Shares by such CPK Partieswill not (y) require any third party consent or (z) conflict with or result in aviolation or breach or default of any contract to which such CPK Parties are aparty or any governmental law, rule, ordinance or regulation.  The failure ofany CPK Party to give written notice of election to participate within thefifteen (15) day period described above in this Section 4.2(a) shall be deemedan election not to participate.

In the event that one or more CPK Party elects toparticipate in the Transfer, as provided in Section 4.2(a) above, the Transfershall be completed, in accordance with the terms set forth in the notice givenas provided in the first sentence of Section 4.2(a), 
provided
,
however
, that each electing CPK Party shall have the right to include insuch Transfer a number of Shares determined as provided in Section 4.2(a).  Inthe event that no Remaining Shareholders elect to participate in the Transfer,Flax or Rosenfield (as applicable) may complete the Transfer in accordance withthe terms set forth in the notice given as provided in the first sentence ofSection 4.2(a).

**REQUIRED PARTICIPATION INCERTAIN TRANSACTIONS.  By its execution of thisAgreement, each CPK Party hereby expressly agrees, for so long as the CPKParties collectively hold at least fifty percent (50%) of the then outstandingshares of the Company's Series A Preferred Stock, to vote in favor of, executeany shareholder consents necessary to approve of, accept, enter into, be boundby, cooperate in completing, and comply with all of the terms and conditions of,any of the following transactions (each, a "**MandatoryTransaction**"):**Sale Transactions.Any Sale Transaction, provided that (i) the Company has complied with Section 2,(ii) such Sale Transaction has been approved of, and recommended to theShareholders for their approval thereof, by the Board of Directors, and (iii)the Cash Equivalent as of the date of the closing of the Sale Transaction of theproceeds received by the Company as a result of such Sale Transaction will bedistributed in a manner such that (A) the holders of shares of Series APreferred Stock receive distributions in satisfaction of the entire LiquidationPreference then in effect for their shares of Series A Preferred Stock, (B) suchdistributions occur prior to the distribution of any portion of such proceeds tothe holders of Common Stock, and (C) upon satisfaction of all such LiquidationPreferences of the then outstanding shares of Series A Preferred Stock, and allliquidation preferences of any other shares of Preferred Stock then outstanding,the remaining proceeds received by the Company as a result of such SaleTransaction will be distributed, on an as converted-to-common basis, to (1) theholders of shares of Series A Preferred Stock, (2) the holders of shares ofCommon Stock, and (3) the holders of all other shares of Preferred Stock havinga right to so participate in such a distribution; and 
**Equity Financings.Any issuance of shares of capital stock by the Company that CPK would have aright to subscribe for or purchase a portion thereof pursuant to Section 6below.
**ADDITIONAL ISSUANCE OFSHARES.  **General.  In theevent that the Company determines that it is in its best interests to raiseadditional capital through an equity financing in which the Company issues NewSecurities, the Company shall provide CPK with the right to purchase that numberof New Securities equal to CPK's *pro rata*share of such New Securities.For purposes of this Section 6, CPK's "***pro rata*share**"shall be equal to the ratio of (a) the sum of (i) the number of shares of CommonStock into which the shares of Series A Preferred Stock then held by CPK arethen convertible (without giving effect to any accumulated dividends on the thenoutstanding shares of Series A Preferred Stock) plus (ii) the number ofshares of Common Stock then held by CPK, to (b) the total number of ThenOutstanding Shares; provided, however, that if Flax andRosenfield, or either of them, do not purchase all of the other New Securitiesissued in such equity financing, the Company shall provide CPK with theopportunity to purchase such other New Securities prior to offering such NewSecurities on the same terms to any other Person, all in accordance with thisSection 6.  Notwithstanding anything to the contrary, the provisions of thisSection 6 shall no longer be applicable, and CPK shall have no rights pursuantto this Section 6, beginning on the first date that CPK does not hold at leastfifteen percent (15%) of the Then Outstanding Shares.
**Notice Procedures.In the event the Company proposes to undertake anissuance of New Securities as described in this Section 6, it shall give CPKwritten notice of its intention thereof, describing the type of capital stock,the price and the general terms upon which the Company proposes to issue thesame.  CPK shall have fifteen (15) days after receipt of any such notice toagree to purchase its 
pro rata 
share of such New Securities for the priceand upon the general terms specified in the notice, by giving written notice tothe Company and stating therein the quantity of New Securities to bepurchased.

In the event that CPK exercises its right to purchase its
pro rata
 portion of the New Securities described in Section 6(a) above,and Flax and Rosenfield do not purchase all of the remaining New Securitiesissued in connection therewith by the Company, the Company shall give CPKwritten notice of such determination by Flax and Rosenfield.  Such notice shallalso contain the aggregate number of New Securities that Flax and Rosenfield arepurchasing, and that number of New Securities being offered that Flax andRosenfield are not purchasing (the "
Unpurchased NewSecurities
").  CPK shall have fifteen (15) days after receipt of anysuch notice to agree to purchase the Unpurchased New Securities for the priceand upon the general terms specified in the notice provided to CPK pursuant toSection 6.2(a), by giving written notice to the Company and stating therein thequantity Unpurchased New Securities to be purchased.

**Completion ofTransaction.  In the event that CPK fails to exercise its right topurchase New Securities set forth in this Section 6 within the time periods setforth in this Section 6, the Company shall have one hundred eighty (180) daysthereafter to consummate the sale of such New Securities for which CPK did notexercise its option, at a price and upon general terms no more favorable to thepurchasers thereof than specified in the notice provided to CPK pursuant toSection 6.2(a).  In the event the Company has not sold such shares of capitalstock within said one hundred eighty (180) day period, the Company shall notthereafter issue or sell any New Securities in an equity financing without firstoffering such New Securities to CPK in the manner providedabove.
**CORPORATE  GOVERNANCE**Composition of Boardof Directors.****As provided in the Company's Bylaws, the number ofmembers of the Board of Directors shall initially be three.  Each Shareholdershall vote all of its shares, and shall take all other necessary and desirableactions within such Shareholder's control (whether in its capacity as ashareholder, director, member of a board committee or officer of the Company orotherwise), and the Company shall take all necessary and desirable actionswithin its control (including, without limitation, calling special board andshareholders' meetings) to ensure that:the number of directors constituting the Board ofDirectors remains three until the earlier to occur of (i) the first date onwhich CPK holds less than twenty-three percent (23%) of the Then OutstandingShares and (ii) that date on which CPK elects not to exercise its right of firstrefusal set forth in Section 6 to purchase its entire 
pro rata
 share ofNew Securities;

one of the members of the Board of Directors shall be anindividual designated by Flax, who shall initially be Larry Flax;

one of the members of the Board of Directors shall be anindividual designated by Rosenfield, who shall initially be RichardRosenfield;

until the first date on which CPK no longer holds atleast fifteen percent (15%) of the Then Outstanding Shares, one of the membersof the Board of Directors shall be an individual designated by CPK, who shallinitially be Fred Hipp; 

in the event that any member of the Board of Directorswho was designated by either Flax and Rosenfield ceases to serve as a directorfor any reason, that the Shareholder who designated such designee shalldesignate the successor member of the Board of Directors thereto, and that suchdesignee shall become a member of the Board of Directors;

in the event that the member of the Board of Directorswho was designated by CPK ceases to serve as a director for any reason, and suchcessation occurs prior to the first date on which CPK no longer holds at leastfifteen percent (15%) of the Then Outstanding Shares, that CPK shall designatethe successor member of the Board of Directors thereto, and that such designeeshall become a member of the Board of Directors; 

in the event that a Shareholder desires to remove fromthe Board of Directors the member designated by such Shareholder, that theShareholders and the Company shall take all necessary actions to remove suchdesignee from the Board; and

so long as CPK owns at least 15% of the Then OutstandingShares immediately prior to a Transfer of its shares, if CPK Transfers at least15% of the Then Outstanding Shares to a single transferee, that the number ofdirectors constituting the Board of Directors is increased to a sufficientnumber so that such transferee can elect one board member pursuant to thecumulative voting procedures imposed by California law.

**Required Approval of CPK forCertain Matters.  Until the first date on which CPK no longer holds atleast twenty percent (20%) of the Then Outstanding Shares, the Company shallnot, without the affirmative vote or prior written consent of CPK:Make a change to the compensation paid by the Company toeither of Larry Flax and Richard Rosenfield in their capacities as officers,employees or directors of the Company, it being acknowledged that:

as of the date of the opening of the first LA Food Showrestaurant, the Company will pay each of Larry Flax and Richard Rosenfield anannual salary of $150,000;

of such $150,000 annual salary (which will accrue), untilthe Salary Trigger Date (defined below), the Company will pay each of Larry Flaxand Richard Rosenfield $36,000 annually in accordance with the Company's paymentpolicy for its employees then in effect, and each of Larry Flax and RichardRosenfield will defer the Company's obligation to pay each of them the remainingsalary amounts then owed, 

upon the Salary Trigger Date, the Company shall pay toeach of Larry Flax and Richard Rosenfield all compensation amounts that each ofLarry Flax and Richard Rosenfield have previously deferred pursuant to Section7.2(a)(ii) above, 

beginning on the Salary Trigger Date, the Company shallcommence the payment to each of Larry Flax and Richard Rosenfield such $150,000annual salary in full in accordance with the Company's payment policy for itsemployees then in effect; and

Larry Flax and Richard Rosenfield are the soleshareholders in Flax & Rosenfield Restaurant Group, Inc.,
and assuch, each of them may, without violating any contractual, fiduciary or otherobligation to the Company, develop other restaurant concepts or providerestaurant consulting services to other restaurant businesses, or both, so longas each of Larry Flax and Richard Rosenfield devotes to the Company an amount oftime reasonably necessary to perform his duties in connectiontherewith.

For purposes of this Section 7.2(a), the "**SalaryTrigger Date**" shall mean the first to occur of (A) the first date onwhich the Company has raised an aggregate of at least $5,000,000 through theissuance of New Securities in future equity financings, or (B) the first dateupon which a balance sheet of the Company (prepared at any time in accordancewith the Company's standard policies and practices) reflects that the Company'scurrent assets are equal to or greater than the sum of (1) $250,000,plus, (2) the Company's "**current liabilities.**"  Forpurposes of this Section 7.2(a), "**current liabilities**" shallinclude all amounts of deferred compensation owed to Larry Flax and RichardRosenfield contemplated above, shall exclude all then accrued and unpaiddividends on the then outstanding shares of Series A Preferred Stock, and shallexclude any and all current liabilities relating to the expansion of theCompany's business;
Authorize, or obligate itself to authorize, the issuanceor grant of any shares of capital stock of the Company, or any options orwarrants to purchase, or rights to subscribe for, capital stock of the Company,to employees, directors or consultants of the Company pursuant to any StockOption Plan or agreement of the Company approved by the Board of Directors, thatin the aggregate would be in excess of ten percent (10%) of the Company'soutstanding shares of capital stock (as determined on an as converted-to-commonbasis and without giving effect to any accumulated dividends on the thenoutstanding shares of Series A Preferred Stock) as of the date of thisAgreement;

Enter into any agreement, arrangement or transaction withany Shareholder, or any affiliate, relative, beneficiary or employee of theforegoing; or

Make any material acquisition, which acquisition may takeplace by way of a merger, reorganization, recapitalization or similartransaction (it being understood that a Sale Transaction shall not be consideredan acquisition by the Company).

**REGISTRATION  RIGHTS.**Piggyback  Rights.Except with respect to an initial public offering of theCompany's Common Stock under the Act, subject to the provisions herein, if theCompany at any time proposes to register any of its Common Stock under the Actfor sale to the public (other than registration of shares of Common Stock onForm S-4 or Form S-8 or any successor form thereto), the Company shall givewritten notice of the proposed registration to the Shareholders at least thirty(30) days prior to the filing thereof, and each Shareholder shall have the rightto request that all or any part of its Common Stock be included in suchregistration by giving written notice to the Company within fifteen (15) daysafter the giving of notice by the Company of such proposed registration (eachShareholder giving the Company a notice requesting that Common Stock owned by itbe included in such proposed registration being hereinafter referred to in thisSection 8 as a "
Registering Holder
"); 

If the registration described in Section 8.1(a) is anunderwritten registration and the managing underwriters of such registrationdetermine that the aggregate amount of securities of the Company which theCompany, all Registering Holders and all other security holders of the Companypursuant to contractual rights to participate in such registration ("
OtherHolders
") propose to include in such registration statement, exceeds themaximum number of shares of Common Stock that may be included therein for anyreason (including, without limitation, that such number of shares of CommonStock would have an adverse effect on the price at which the shares of CommonStock proposed to be registered may be sold), the number of shares of CommonStock to be registered may be reduced or limited to the extent necessary toreduce the total number of shares of Common Stock to be included in suchregistration to the amount recommended by the managing underwriters (it beingagreed and understood that such underwriters shall have the right to eliminateentirely the participation in such registration of all Registering Holders) asfollows:

In connection with an offering initiated by the Company,such reduction shall be made:

first, from the shares of Common Stock to be registeredby Other Holders who are not entitled under any agreements between them and theCompany to participate 
pari passu 
with the Registering Holders in suchregistration;

second, from the shares of Common Stock intended to beoffered by the Registering Holders and those Other Holders who are entitledunder any agreements between them and the Company to participate 
pari passu
with the Registering Holders in such registration, on a 
pro rata
basis, based on the relative equity interests in the Company of all suchRegistering Holders and such Other Holders who have requested that shares ofCommon Stock owned by them be so included; and

last, from the shares of Common Stock to be registeredfor the account of the Company.

In connection with an offering initiated by a Third PartyDemand Shareholder, such reduction shall be made: 

first, from shares of Common Stock held by Persons(including the Company) who are not Registering Holders, the Third Party DemandShareholder or Other Holders who are entitled under any agreements between themand the Company to participate 
pari passu 
with the Registering Holders insuch registration;

second, from the shares of Common Stock to be registeredby the Registering Holders and the Other Holders who are entitled under anyagreements between them and the Company to participate 
pari passu 
withthe Registering Holders in such registration, on a 
pro rata
 basis, basedon the relative equity interests in the Company of all such Registering Holdersand such Other Holders who have requested that shares of Common Stock owned bythem be so included; and

last, from the shares of Common Stock to be registered bythe Third Party Demand Shareholder.

Common Stock proposed to be registered and sold for theaccount of any Registering Holder shall be sold to prospective underwritersselected or approved by the Company and on the terms and subject to theconditions of one or more underwriting agreements negotiated between the Companyand the prospective underwriters.  The Registering Holders shall be permitted towithdraw all or a part of the shares of Common Stock held by such RegisteringHolders which were to be included in such registration at any time prior to theeffective date of such registration.  The Company shall not be required tomaintain the effectiveness of the registration statement for such registrationbeyond the earlier to occur of ninety (90) days after the effective date thereofor the consummation of the distribution by the Company of the shares of CommonStock included for the account of the Company in such registration statement.The Company may withdraw any registration statement at any time before itbecomes effective, or postpone the offering of securities, without obligation orliability to any Shareholder.

The registration rights set forth in this Section 8 shallterminate and be of no further effect with respect to the Common Stock (i) atsuch time as the Company has filed, and there has become effective, threeregistration statements in which all Shareholders have been afforded theopportunity to include all shares of Common Stock held by them; or (ii) ifearlier, after a public trading market has existed for shares of Common Stock ofthe Company and the shares of Common Stock held by the Shareholders may bedistributed to the public pursuant to Rule 144(k) promulgated under the Act (orany successor rule or regulation), free of any restrictions imposed pursuant toparagraph (f) of this Section 8.

In connection with any registration of shares of CommonStock under the Act pursuant to this Agreement, the Company will furnish eachRegistering Holder whose shares of Common Stock are registered thereunder with acopy of the registration statement and all amendments thereto and will supplyeach Registering Holder with copies of any prospectus included therein(including a preliminary prospectus and all amendments and supplements thereto),in such quantities as may be reasonably necessary for the purposes of theproposed sale or distribution covered by such registration.  The Company shallnot, however, be required to supply copies of a prospectus for a period beyondninety days after the effective date of such registration statement and, at theend of such period, the Company may deregister any shares of Common Stockcovered by such registration statement and not then sold or distributed.  Inconnection with any such registration of Common Stock, the Company will, at therequest of the managing underwriter with respect thereto, use its best effortsto qualify such registered shares for sale under the securities laws of suchstates as is reasonably required to permit the distribution of such registeredshares, provided that the Company shall not be required in connection therewithor as a condition thereof to qualify as a foreign corporation or to execute ageneral consent to service of process in any jurisdiction or become subject totaxation in any jurisdiction.

Notwithstanding any other provision of this Section 8,each Shareholder agrees in connection with any registration of the Company'ssecurities under the Act, if so requested by the Company or any managingunderwriter in connection with such registration, each Shareholder shall agreein writing not to sell, assign, convey or otherwise transfer any of theCompany's securities during the periods specified by the Company's Board ofDirectors after negotiation with such managing underwriter, with such periodsnot to exceed the 10 days prior to, and the 180 days following the effectivedate of a registration statement of the Company filed under the Act inconnection with such registration; 
provided
, 
however
, that therestrictions set forth in this Section 8.1(f) shall be effective only if and tothe extent that (i) all Shareholders enter into agreements with the underwriterspursuant to this Section 8.1(f) not to sell, assign, convey or otherwisetransfer any of the Company's securities in connection with such registration,and (ii) the time periods in all such agreements during which the Shareholdersmay not sell, assign, convey or otherwise transfer any of the Company'ssecurities in connection with such registration are identical; 
provided
,
further
, that, in the case of death of a Shareholder, if consented to bythe managing underwriter, such Shareholder's estate shall be permitted to offerfor public sale prior to the expiration of such period such securities of theCompany as reasonably necessary to generate funds for the payment of estatetaxes.  The Company may impose stop-transfer instructions with respect tosecurities subject to the foregoing restrictions until the end of suchperiod.

Except as otherwise required by state securities laws orthe rules and regulations promulgated thereunder, all expenses, disbursementsand fees incurred by the Company in connection with carrying out its obligationsunder this Section 8 shall be borne by the Company; 
provided
,
however
, that each Registering Holder shall pay (i) all costs andexpenses of counsel for such Registering Holder if such counsel is not alsocounsel for the Company, (ii) all underwriting discounts, commissions andexpenses and all transfer taxes with respect to the shares sold by suchRegistering Holder, and (iii) all other expenses incurred by such RegisteringHolder and incidental to the sale and delivery of the shares to be sold by suchRegistering Holder.

It shall be a condition of each Registering Holder'srights hereunder to have shares of Common Stock owned by such Registering Holderregistered that:

such Registering Holder shall cooperate with the Companyby supplying information and executing documents relating to such RegisteringHolder or the securities of the Company owned by such Registering Holder inconnection with such registration;

such Registering Holder shall enter into anyundertakings, and take such other action relating to the conduct of the proposedoffering, which the Company or the underwriters may reasonably request as beingnecessary to insure compliance with federal and state securities laws and therules or other requirements of the National Association of Securities Dealers,Inc. or which the Company or the underwriters may reasonably request tootherwise effectuate the offering; and

such Registering Holder shall execute and deliver anagreement to indemnify and hold harmless the Company, each of its directors,each of its officers who has signed the registration statement, any underwriter(as defined in the Act), and each person, if any, who controls the Company orsuch underwriter within the meaning of the Act, against such losses, claims,damages or liabilities (including reimbursement for legal and other expenses) towhich the Company or any such director, officer, underwriter or controllingperson may become subject under the Act or otherwise, in such manner as iscustomary for registrations of the type then proposed and, in any event,equivalent in scope to indemnities given by the Company in connection with suchregistration, but only (A) with respect to written information furnished by suchRegistering Holder in his capacity as a selling shareholder in connection withsuch registration, and (B) in an amount equal to the net proceeds received bysuch Registering Holder from the sale of Common Stock pursuant to suchregistration.

In the event of any registration under the Act of anyshares of Common Stock pursuant to this Section 8, the Company hereby agrees toindemnify and hold harmless each Shareholder disposing of such shares againstsuch losses, claims, damages or liabilities (including reimbursement for legaland other expenses) to which each such Shareholder may become subject under theAct or otherwise, in such manner as is customary for registrations of the typethen proposed, but not with respect to information furnished by each of them intheir capacities as selling shareholders in connection with suchregistration.

**Additional Registration Rights.  To the extent theCompany affords Flax and Rosenfield the opportunity to include any of theirshares of Common Stock in any registration of its Common Stock under the Act(other than registration of shares of Common Stock on Form S-8 or any successorform thereto), the Company shall afford CPK the opportunity to include itsshares of Common Stock in such registration to the same extent, and on the sameterms and conditions, on a *pro*rata basis, afforded to Flax andRosenfield, based on the relative equity interests in the Company of CPK, Flaxand Rosenfield.
**USE OF CPKRESOURCES.  The Company hereby agrees to use its commercially reasonableefforts to design all of its "back office" functions (such asaccounting, computer communications and inventory control) to be compatible withthe similar back office functions of CPK's "California Pizza Kitchen"restaurant business.  At the request of the Company, CPK, at its solediscretion, may make its employees and services available to the Company for anypurpose related to the Company's business.  If CPK does so make its employeesand services available to the Company, the Company will compensate CPK for theprovision of such services based upon amounts determined by arms-lengthnegotiations between CPK and the Company and pursuant to secondmentagreements.
**PREPARATION OF FINANCIALSTATEMENTS .  **FinancialStatements.  The Company shall prepare, in its usual course of business,customary year-end and quarterly financial statements, all in accordance withGAAP consistently applied, and shall cause its year-end financial statements tobe accompanied by a report and opinion thereon by the Company's independentcertified public accountants.  The Company shall use its best efforts to causesuch independent certified public accountants to be one of the "Big 4"accounting firms.  The Company currently contemplates that the customaryfinancial statements will include, without limitation, a balance sheet of theCompany and its subsidiaries (if any) as of the end of the Company's fiscalyear, and consolidated statements of income and retained earnings andconsolidated statements of changes in cash flows of the Company and itssubsidiaries (if any) for the Company's fiscal year, setting forth in each casein comparative form the corresponding figures for the previous fiscalyear.
**Access to FinancialStatements.  The Company hereby acknowledges that each member of theBoard of Directors shall have access to all financial statements prepared by theCompany, including without limitation any quarterly or monthly financialstatements prepared by the Company, as well as the Company's books and recordsand any business plans of the Company and forecasts of the Company's projectedcosts, revenues income, and capital requirements.  The Company furtheracknowledges that for so long as CPK has a right to designate a member of theBoard of Directors pursuant to Section 7.1(d), CPK's representatives authorizedby such member shall have the same access to the Company's financial statements,business plans and forecasts of the Company's projected costs, revenues incomeand capital requirements, as such member pursuant to the first sentence of thisSection 10.2.
**TERMINATION AND AMENDMENT OFAGREEMENT; ADMISSION OF ADDITIONAL MEMBERS.**General.**  ThisAgreement shall terminate upon the first to occur of the following events:

The written agreement of all of the then-currentShareholders and the Company to terminate this Agreement;

Upon the consummation of a public offering pursuant to aneffective registration statement under the Act of shares of Common Stock that isunderwritten by a nationally recognized investment bank; 
provided
,
however
, that in such case, the terms and conditions of Section 8 shallcontinue to exist in full force and effect;

Upon the completion of any transaction, in any form, as aresult of which or following which the Shareholders who are then parties to thisAgreement represent, in the aggregate, less than fifty percent (50%) of thetotal voting power of the Company or any entity other than the Company which isthe surviving entity in such transaction 
provided
, 
however
, thatin such case, the terms and conditions of Section 8 shall continue to exist infull force and effect; or 

Upon the completion of any Sale Transaction that occursin compliance with Section 2.1.

**Amendment andModification.**  This Agreement may be amended or modified only with thewritten consent of the Company and the holders of 80% of the Then OutstandingShares held by the Shareholders, expressly setting forth the amendments ormodifications; provided, however, that no such modification oramendment will be effective without the affirmative vote or consent of CPK solong as CPK owns at least twenty percent (20%) of the Then Outstanding Shares.Following any such amendment, all references herein to this Agreement shall bedeemed to mean and include the Agreement as so amended.

**Agreement of Parties toAdmit Additional Shareholders.**  Each party to this Agreement, by itsexecution hereof, hereby agrees that, if required by the Company, it shall causeany individual or entity to whom Shares are Transferred by any Shareholder inaccordance with this Agreement to execute and deliver of a counterpart signaturepage to this Agreement in a form substantially similar to **ExhibitA, and upon such execution and delivery, such Individual or entity shallbecome a party to this Agreement and thereby agree to be bound by and to observeall of the terms and conditions contained herein.
**MISCELLANEOUS.**Entire Agreement.**This Agreement, including the exhibits hereto and the agreements expresslyreferred to herein, constitutes the entire understanding between the partiespertaining to the subject matter hereof and supersedes all prior agreements,understandings, negotiations and discussions, whether oral or written.  Thereare no warranties, representations or other agreements between the parties, inconnection with the subject matter hereof, except as specifically set forthherein.  No supplement, modification, waiver or termination of this Agreementshall be binding unless made in writing and in compliance with the provisions ofSection 12.2.

**Waivers.**  No term,condition or provision of this Agreement may be waived except by an expresswritten instrument to such effect signed by the party to whom the benefit ofsuch term, condition or provision runs.  No such waiver of any term, conditionor provision of this Agreement shall be deemed a waiver of any other term,condition or provision, irrespective of similarity, or shall constitute acontinuing waiver of the same term, condition or provision, unless otherwiseexpressly provided.  No failure or delay on the part of any party in exercisingany right, power or privilege under any term, condition or provision of thisAgreement shall operate as a waiver thereof, nor shall a single or partialexercise thereof preclude any other or further exercise of any other right,power or privilege. 

**Severability.**  Inthe event any one or more of the terms, conditions or provisions contained inthis Agreement should be found in a final award or judgment rendered by anycourt or arbitrator or panel of arbitrators of competent jurisdiction to beinvalid, illegal or unenforceable in any respect, the validity, legality andenforceability of the remaining terms, conditions and provisions containedherein shall not in any way be affected or impaired thereby, and this Agreementshall be interpreted and construed as if such term, condition or provision, tothe extent the same shall have been held invalid, illegal, or unenforceable, hadnever been contained herein, provided that such interpretation and constructionis consistent with the intent of the parties as expressed in thisAgreement.

**Headings,Definitions.**  The headings of the Sections contained in this Agreementare included herein for reference purposes only, solely for the convenience ofthe parties hereto, and shall not in any way be deemed to affect the meaning,interpretation or applicability of this Agreement or any term, condition orprovision hereof.  All references to Sections, Articles, Schedules or Exhibitscontained herein mean Sections, Articles, Schedules or Exhibits of thisAgreement unless otherwise stated**.**All capitalized terms defined hereinare equally applicable to both the singular and plural forms of suchterms.

**Applicable Law.**This Agreement shall be governed by and construed in accordance with the laws ofthe State of California, without reference to the choice of law principlesthereof.

**Attorneys' Fees.**  In the event that any partyto this Agreement shall commence any suit, action, arbitration or otherproceeding to interpret this Agreement, or determine or enforce any right orobligation created hereby, including but not limited to any action forrescission of this Agreement or for a determination that this Agreement is voidor ineffective abinitio, the prevailing party in such actionshall recover such party's costs and expenses incurred in connection therewith,including attorney's fees and costs of appeal, if any.  Any court, arbitrator orpanel of arbitrators shall, in entering any judgment or making any award in anysuch suit, action, arbitration or other proceeding, in addition to any and allother relief awarded to such prevailing party, include in such judgment or awardsuch party's costs and expenses as provided in this Section12.6.

**Execution andCounterparts.**  This Agreement may be executed in any number ofcounterparts, each of which when so executed and delivered shall be deemed anoriginal, and such counterparts together shall constitute only one instrument.Any or all of such counterparts may be executed within or outside the state ofCalifornia.  Any one of such counterparts shall be sufficient for the purpose ofproving the existence and terms of this Agreement, and no party shall berequired to produce an original or all of such counterparts in making suchproof.

**Covenant of FurtherAssurances.**  All parties to this Agreement shall, upon request, performany and all acts and execute and deliver any and all certificates, instrumentsand other documents that may be necessary or appropriate to carry out any of theterms, conditions and provisions hereof or to carry out the intent of thisAgreement. 

**Remedies Cumulative.**Each and all of the several rights and remedies provided for in this Agreementshall be construed as being cumulative and no one of them shall be deemed to beexclusive of the others or of any right or remedy allowed by law or equity, andpursuit of any one remedy shall not be deemed to be an election of such remedy,or a waiver of any other remedy.

**Binding Effect.**This Agreement shall inure to the benefit of and be binding upon all of theparties hereto and their respective executors, administrators, successors andpermitted assigns. 

**Compliance withLaws.**  Nothing contained in this Agreement shall be construed to requirethe commission of any act contrary to law, and whenever there is a conflictbetween any term, condition or provision of this Agreement and any present orfuture statute, law, ordinance or regulation contrary to which the parties haveno legal right to contract, the latter shall prevail, but in such event theterm, condition or provision of this Agreement affected shall be curtailed andlimited only to the extent necessary to bring it within the requirement of thelaw, provided that such construction is consistent with the intent of theparties as expressed in this Agreement.

**Gender.**  As used inthis Agreement, the masculine, feminine or neuter gender, and the singular orplural number, shall be deemed to include the others whenever the context soindicates.

**No Third PartyBenefit.**  Nothing contained in this Agreement shall be deemed to conferany right or benefit on any Person who is not a party to thisAgreement.

**Construction; Representationby Counsel.**  The parties hereto represent that they have beenrepresented and advised by counsel in connection with the negotiation andpreparation of this Agreement, and this Agreement shall be deemed to have beendrafted jointly by the parties, notwithstanding that one party or the other mayhave performed the actual drafting hereof.  This Agreement shall be construedand interpreted in accordance with the plain meaning of its language, and notfor or against either party, and as a whole, giving effect to all of the terms,conditions and provisions hereof.

**Injunctive Relief; SpecificPerformance.**  The parties hereby agree and acknowledge that a breach ofany material term, condition or provision of this Agreement would result insevere and irreparable injury to the other party, which injury could not beadequately compensated by an award of money damages, and the parties thereforeagree and acknowledge that they shall be entitled to injunctive relief in anycourt of competent jurisdiction in the event of any breach of any material term,condition or provision of this Agreement, or to enjoin or prevent such a breach,including without limitation an action for specific performance hereof, and theparties hereby irrevocably consent to the issuance of any such injunction.  Theparties further agree that no bond or surety shall be required in connectiontherewith.

**Jurisdiction and Venue.  The federal and statecourts located within the County of Los Angeles, in the State of California,shall have exclusive jurisdiction and venue with respect to all actions, claimsand proceedings arising out of or relating to this Agreement, or itsenforcement.  The parties to this Agreement hereby waive any right to commenceany claim, action or proceeding in any other venue or jurisdiction, except asset forth in this paragraph, or to seek dismissal of any action, claim orproceeding in the County of Los Angeles, in the State of California, on thebasis of improper venue or forum non conveniens.  Moreover, the parties herebyconsent to the personal jurisdiction of the courts of the County of Los Angeles,in the State of California.
**Legend.**  Each stockcertificate representing Shares when issued shall have conspicuously thereon thefollowing legend:

"THE SALE, ASSIGNMENT, TRANSFER, CONVEYANCE, EXCHANGE,MORTGAGE, GRANT OF A SECURITY INTEREST IN, GIFT, ENCUMBRANCE, PLEDGE,HYPOTHECATION OR OTHER DISPOSITION OF THE SHARES REPRESENTED BY THIS CERTIFICATEOR ANY INTEREST THEREIN IS RESTRICTED BY AND SUBJECT TO A SHAREHOLDERS'AGREEMENT DATED MARCH 6, 2003.  A COPY OF SAID AGREEMENT MAY BE INSPECTED AT THEPRINCIPAL OFFICE OF THE CORPORATION."

A copy of this Agreement shall be delivered to the Secretaryof the Company and shall be shown to any Person making any inquiry with respectthereto.  

**Notices.**  Allnotices and communications to be given or otherwise made to either the Companyor Subscriber shall be deemed to be sufficient if contained in a writteninstrument delivered in person or by facsimile or duly sent by first classregistered or certified mail, return receipt requested, postage prepaid, or byovernight courier, or addressed to such party at the followingaddress:

If to CPK:

California Pizza Kitchen, Inc.******************************************************************************