Unassociated Document


    

      REGISTRATION
        RIGHTS AGREEMENT

       

      This
        Registration Rights Agreement (this “Agreement”)
        is
        made and entered into effective as of December 18, 2007 (the “Effective
        Date”)
        between UFood Restaurant Group, Inc. (f/k/a UFood Franchise Company), a Nevada
        corporation (the “Company”),
        and
        the persons who have executed the signature page(s) hereto (each, a
“Purchaser”
and
        collectively, the “Purchasers”).

       

      RECITALS:

       

      WHEREAS,
        the Company has entered into an Agreement and Plan of Merger and Reorganization
        with KnowFat Franchise Company, Inc., a Delaware corporation (“KnowFat”),
        pursuant to which a newly organized, wholly-owned subsidiary of the Company
        has
        merged with and into KnowFat, with KnowFat remaining as the surviving entity
        and
        a wholly-owned subsidiary of the Company (the “Merger”);

       

      WHEREAS,
        prior to the Merger, the Company issued Convertible Promissory Notes (the
        “Notes
        Offering”)
        which,
        upon the closing of the Merger and the PPO (as defined below), automatically
        converted into Units (as defined below), consisting of shares (the “Bridge
        Shares”)
        of
        Common Stock (as defined herein) and common stock purchase warrants (the
        “Bridge
        Warrants”)
        to
        purchase shares of Common Stock;

       

      WHEREAS,
        simultaneously with the Merger and to provide the capital required by the
        Company for working capital and other purposes, the Company has offered in
        compliance with Rule 506 of Regulation D and/or Regulation S of the Securities
        Act (as defined herein), to investors in a private placement transaction
        (the
“PPO”),
        units
        (“Units”)
        of its
        securities, each Unit consisting of one share of Common Stock (the “Investor
        Shares”)
        and a
        common stock purchase warrant (the “Investor
        Warrants”)
        to
        purchase one-half (50%) of a share of Common Stock;

       

      WHEREAS,
        the initial closing of the PPO and the closing of the Merger have taken place
        on
        the Effective Date; and

       

      WHEREAS,
        in connection with the Merger, the Notes Offering and the PPO, the Company
        agrees to provide certain registration rights related to the Bridge Shares,
        the
        Investor Shares and the shares of Common Stock issuable upon exercise of
        the
        Bridge Warrants and the Investor Warrants, on the terms set forth
        herein;

       

      NOW,
        THEREFORE,
        in
        consideration of the mutual promises, representations, warranties, covenants,
        and conditions set forth herein, the parties mutually agree as follows:


       

      1.  Certain
        Definitions.
        As used
        in this Agreement, the following terms shall have the following respective
        meanings:

       

      “Approved
        Market”
means
        the Over-the-Counter Bulletin Board, the Nasdaq Stock Market, the New York
        Stock
        Exchange or the American Stock Exchange.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      “Blackout
        Period”
means,
        with respect to a registration, a period, in each case commencing on the
        day
        immediately after the Company notifies the Purchasers that they are required,
        because of the occurrence of an event of the kind described in Section 4(f)
        hereof, to suspend offers and sales of Registrable Securities during which
        the
        Company, in the good faith judgment of its board of directors, determines
        (because of the existence of, or in anticipation of, any acquisition, financing
        activity, or other transaction involving the Company, or the unavailability
        for
        reasons beyond the Company’s control of any required financial statements,
        disclosure of information which is in its best interest not to publicly
        disclose, or any other event or condition of similar significance to the
        Company) that the registration and distribution of the Registrable Securities
        to
        be covered by such Registration Statement, if any, would be seriously
        detrimental to the Company and its stockholders and ending on the earlier
        of (1)
        the date upon which the material non-public information commencing the Blackout
        Period is disclosed to the public or ceases to be material and (2) such time
        as
        the Company notifies the selling Holders that the Company will no longer
        delay
        such filing of the Registration Statement, recommence taking steps to make
        such
        Registration Statement effective, or allow sales pursuant to such Registration
        Statement to resume.

       

      “Bridge
        Shares”
has
        the
        meaning given it in the recitals of this Agreement.

       

      “Bridge
        Warrants”
has
        the
        meaning given it in the recitals of this Agreement.

       

      “Business
        Day”
means
        any day of the year, other than a Saturday, Sunday, or other day on which
        the
        Commission is required or authorized to close.

       

      “Commission”
means
        the U. S. Securities and Exchange Commission or any other federal agency
        at the
        time administering the Securities Act.

       

      “Common
        Stock”
means
        the common stock, par value $0.001 per share, of the Company and any and
        all
        shares of capital stock or other equity securities of: (i) the Company which
        are
        added to or exchanged or substituted for the Common Stock by reason of the
        declaration of any stock dividend or stock split, the issuance of any
        distribution or the reclassification, readjustment, recapitalization or other
        such modification of the capital structure of the Company; and (ii) any other
        corporation, now or hereafter organized under the laws of any state or other
        governmental authority, with which the Company is merged, which results from
        any
        consolidation or reorganization to which the Company is a party, or to which
        is
        sold all or substantially all of the shares or assets of the Company, if
        immediately after such merger, consolidation, reorganization or sale, the
        Company or the stockholders of the Company own equity securities having in
        the
        aggregate more than 50% of the total voting power of such other
        corporation.

       

      “Effective
        Date”
means
        the later of (i) the date set forth in the preamble to this Agreement and
        (ii)
        the date of the final closing of the PPO.

       

      “Exchange
        Act”
means
        the Securities Exchange Act of 1934, as amended, and the rules and regulations
        of the Commission promulgated thereunder.

       

      “Family
        Member”
means
        (a) with respect to any individual, such individual’s spouse, any descendants
        (whether natural or adopted), any trust all of the beneficial interests of
        which
        are owned by any of such individuals or by any of such individuals together
        with
        any organization described in Section 501(c)(3) of the Internal Revenue Code
        of
        1986, as amended, the estate of any such individual, and any corporation,
        association, partnership or limited liability company all of the equity
        interests of which are owned by those above described individuals, trusts
        or
        organizations and (b) with respect to any trust, the owners of the beneficial
        interests of such trust.

       

      
        
          
          

        

        
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      “Holder”
means
        each Purchaser or any of such Purchaser’s respective successors and Permitted
        Assignees who acquire rights in accordance with this Agreement with respect
        to
        any Registrable Securities directly or indirectly from a Purchaser or from
        any
        Permitted Assignee.

       

      “Investor
        Shares”
has
        the
        meaning given it in the recitals of this Agreement.

       

      “Investor
        Warrants”
has
        the
        meaning given it in the recitals of this Agreement.

       

      “Majority
        Holders”
means
        at any time Holders representing a majority of the Registrable
        Securities.

       

      “Permitted
        Assignee”
means
        (a) with respect to a partnership, its partners or former partners in accordance
        with their partnership interests, (b) with respect to a corporation, its
        stockholders in accordance with their interest in the corporation, (c) with
        respect to a limited liability company, its members or former members in
        accordance with their interest in the limited liability company, (d) with
        respect to an individual party, any Family Member of such party, (e) an entity
        that is controlled by, controls, or is under common control with a transferor,
        or (f) a party to this Agreement.

       

      “Piggyback
        Registration”
means,
        in any registration of Common Stock as set forth in Section 3(b), the ability
        of
        holders of Registrable Securities to include Registrable Securities in such
        registration.

       

      “Piggyback
        Registration”
means,
        in any registration of Common Stock referenced in Section 3(b), the right
        of
        each Holder to include the Registrable Securities of such Holder in such
        registration.

       

      The
        terms
“register,”
        “registered,”
and
        “registration”
refer
        to a registration effected by preparing and filing a registration statement
        in
        compliance with the Securities Act, and the declaration or ordering of the
        effectiveness of such registration statement.

       

      “Registrable
        Securities”
means
        the Bridge Shares, the Investor Shares and the Registrable Warrant Shares
        but
        excluding (i) any Registrable Securities that have been publicly sold or
        may be
        sold immediately without registration under the Securities Act either pursuant
        to Rule 144(k) of the Securities Act or otherwise; (ii) any Registrable
        Securities sold by a person in a transaction pursuant to a registration
        statement filed under the Securities Act, or (iii) any Registrable Securities
        that are at the time subject to an effective registration statement under
        the
        Securities Act.

       

      “Registrable
        Warrant Shares”
means
        the shares of Common Stock issued or issuable to each Purchaser upon exercise
        of
        the Bridge Warrants and the Investor Warrants. 

       

      
        
          
          

        

        
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      “Registration
        Default Date”
means
        the date that is 90 days after the Registration Filing Date.

       

      “Registration
        Default Period”
means
        the period following the Registration Default Date during which any Registration
        Event occurs and is continuing.

       

      “Registration
        Event”
means
        the occurrence of any of the following events:

       

      (a)  the
        Company fails to file with the Commission the Registration Statement on or
        before the Registration Filing Date;

       

      (b)  the
        Registration Statement is not declared effective by the Commission on or
        before
        the Registration Default Date;

       

      (c)  after
        the
        SEC Effective Date, sales cannot be made pursuant to the Registration Statement
        for any reason (including without limitation by reason of a stop order, or
        the
        Company’s failure to update the Registration Statement) except as excused
        pursuant to Section 3(a); or

       

      (d)  the
        Common Stock generally or the Registrable Securities specifically are not
        listed
        or included for quotation on an Approved Market, or trading of the Common
        Stock
        is suspended or halted on the Approved Market, which at the time constitutes
        the
        principal market for the Common Stock, for more than two full, consecutive
        Trading Days; provided,
        however,
        a
        Registration Event shall not be deemed to occur if all or substantially all
        trading in equity securities (including the Common Stock) is suspended or
        halted
        on the Approved Market for any length of time.

       

      “Registration
        Filing Date”
means
        the date that is 90 days after the Effective Date. 

       

      “Registration
        Statement”
means
        the registration statement that the Company is required to file pursuant
        to this
        Agreement to register the Registrable Securities.

       

      “Rule
        144”
means
        Rule 144 promulgated by the Commission under the Securities Act.

       

      “Rule
        145”
means
        Rule 145 promulgated by the Commission under the Securities Act. 

       

      “Securities
        Act”
means
        the Securities Act of 1933, as amended, or any similar federal statute
        promulgated in replacement thereof, and the rules and regulations of the
        Commission thereunder, all as the same shall be in effect at the
        time.

       

      “SEC
        Effective Date”
means
        the date the Registration Statement is declared effective by the
        Commission.

       

      “Trading
        Day”
means
        any day on which the national securities exchange, the Nasdaq Stock Market,
        the
        NASD Over-the-Counter Bulletin Board or such other securities market or
        quotation system, which at the time constitutes the principal securities
        market
        for the Common Stock, is open for general trading of securities.

       

      
        
          
          

        

        
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      2.  Term.
        This
        Agreement shall continue in full force and effect for a period of two years
        from
        the Effective Date, unless terminated sooner hereunder.

       

      3.  Registration.

       

      (a)  Registration
        on Form SB-2.
        Not
        later than the Registration Filing Date, the Company shall file with the
        Commission a Registration Statement on Form SB-2, or other applicable form,
        relating to the resale by the Holders of all of the Registrable Securities,
        and
        the Company shall use its commercially reasonably efforts to cause such
        Registration Statement to be declared effective prior to the Registration
        Default Date; provided,
        that
        the Company shall not be obligated to effect any such registration,
        qualification or compliance pursuant to this Section, or keep such registration
        effective pursuant to the terms hereunder in any particular jurisdiction
        in
        which the Company would be required to qualify to do business as a foreign
        corporation or as a dealer in securities under the securities laws of such
        jurisdiction or to execute a general consent to service of process in effecting
        such registration, qualification or compliance, in each case where it has
        not
        already done so.

       

      (b)  Piggyback
        Registration.
        If the
        Company shall determine to register for sale for cash any of its Common Stock,
        for its own account or for the account of others (other than the Holders),
        other
        than (i) a registration relating solely to employee benefit plans or securities
        issued or issuable to employees, consultants (to the extent the securities
        owned
        or to be owned by such consultants could be registered on Form S-8) or any
        of
        their Family Members (including a registration on Form S-8) or (ii) a
        registration relating solely to a Securities Act Rule 145 transaction or
        a
        registration on Form S-4 in connection with a merger, acquisition, divestiture,
        reorganization or similar event, the Company shall promptly give to the Holders
        written notice thereof (and in no event shall such notice be given less than
        20
        calendar days prior to the filing of such registration statement), and shall,
        subject to Section 3(c), include as a Piggyback Registration all of the
        Registrable Securities specified in a written request delivered by the Holder
        thereof within 10 calendar days after receipt of such written notice from
        the
        Company. However, the Company may, without the consent of the Holders, withdraw
        such registration statement prior to its becoming effective if the Company
        or
        such other stockholders have elected to abandon the proposal to register
        the
        securities proposed to be registered thereby. 

       

      (c)  Underwriting.
        If a
        Piggyback Registration is for a registered public offering that is to be
        made by
        an underwriting, the Company shall so advise the Holders of the Registrable
        Securities eligible for inclusion in such Registration Statement pursuant
        to
        Sections 3(b)(i) and (ii), respectively. In that event, the right of any
        Holder
        to Piggyback Registration shall be conditioned upon such Holder’s participation
        in such underwriting and the inclusion of such Holder’s Registrable Securities
        in the underwriting to the extent provided herein. All Holders proposing
        to sell
        any of their Registrable Securities through such underwriting shall (together
        with the Company and any other stockholders of the Company selling their
        securities through such underwriting) enter into an underwriting agreement
        in
        customary form with the underwriter selected for such underwriting by the
        Company or the selling stockholders, as applicable. Notwithstanding any other
        provision of this Section, if the underwriter or the Company determines that
        marketing factors require a limitation on the number of shares of Common
        Stock
        or the amount of other securities to be underwritten, the underwriter may
        exclude some or all Registrable Securities from such registration and
        underwriting. The Company shall so advise all Holders (except those Holders
        who
        failed to timely elect to include their Registrable Securities through such
        underwriting or have indicated to the Company their decision not to do so),
        and
        indicate to each such Holder the number of shares of Registrable Securities
        that
        may be included in the registration and underwriting, if any. The number
        of
        shares of Registrable Securities to be included in such registration and
        underwriting shall be allocated among such Holders as follows: 

       

      
        
          
          

        

        
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      (i)  If
        the
        Piggyback Registration was initiated by the Company, the number of shares
        that
        may be included in the registration and underwriting shall be allocated first
        to
        the Company and then, subject to obligations and commitments existing as
        of the
        date hereof, to all selling stockholders, including the Holders, who have
        requested to sell in the registration on a pro rata basis according to the
        number of shares requested to be included therein; and

       

      (ii)  If
        the
        Piggyback Registration was initiated by the exercise of demand registration
        rights by a stockholder or stockholders of the Company (other than the Holders),
        then the number of shares that may be included in the registration and
        underwriting shall be allocated first to such selling stockholders who exercised
        such demand and then, subject to obligations and commitments existing as
        of the
        date hereof, to all other selling stockholders, including the Holders, who
        have
        requested to sell in the registration on a pro rata basis according to the
        number of shares requested to be included therein.

       

      No
        Registrable Securities excluded from the underwriting by reason of the
        underwriter’s marketing limitation shall be included in such registration. If
        any Holder disapproves of the terms of any such underwriting, such Holder
        may
        elect to withdraw such Holder’s Registrable Securities therefrom by delivering a
        written notice to the Company and the underwriter. The Registrable Securities
        so
        withdrawn from such underwriting shall also be withdrawn from such registration;
        provided,
        however,
        that,
        if by the withdrawal of such Registrable Securities, a greater number of
        Registrable Securities held by other Holders may be included in such
        registration (up to the maximum of any limitation imposed by the underwriters),
        then the Company shall offer to all Holders who have included Registrable
        Securities in the registration the right to include additional Registrable
        Securities pursuant to the terms and limitations set forth herein in the
        same
        proportion used above in determining the underwriter limitation. 

       

      (d)  Other
        Registrations.
        Before
        such date that is six months following the SEC Effective Date, the Company
        will
        not, without the prior written consent of the Majority Holders, file any
        other
        registration statement with the Commission or request the acceleration of
        any
        other registration statement filed with the Commission, and during any time
        subsequent to the SEC Effective Date when the Registration Statement for
        any
        reason is not available for use by any Holder for the resale of any Registrable
        Securities, the Company shall not, without the prior written consent of the
        Majority Holders, file any other registration statement or any amendment
        thereto
        with the Commission under the Securities Act or request the acceleration
        of the
        effectiveness of any other registration statement previously filed with the
        Commission, other than (i) any registration statement on Form S-8 or Form
        S-4
        and (ii) any registration statement or amendment which the Company is required
        to file or as to which the Company is required to request acceleration pursuant
        to any obligation in effect on the date of execution and delivery of this
        Agreement.

       

      
        
          
          

        

        
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      (e)  Occurrence
        of Registration Event.
        If a
        Registration Event occurs, then the Company will make payments to each Holder
        of
        Investor Shares or Bridge Shares (a “Qualified
        Purchaser”),
        as
        liquidated damages for the amount of damages to the Qualified Purchaser by
        reason thereof, at a rate equal to 1.25% of the purchase price per share
        paid by
        such Holder in the PPO for the Registrable Securities then held by each
        Qualified Purchaser for each full period of 30 days of the Registration Default
        Period (which shall be pro rated for any period less than 30 days); provided,
        however,
        if a
        Registration Event occurs (or is continuing) on a date more than one-year
        after
        the Qualified Purchaser acquired the Registrable Securities (and thus the
        one-year holding period under Rule 144(d) has elapsed), liquidated damages
        shall
        be paid only with respect to that portion of the Qualified Purchaser’s
        Registrable Securities that cannot then be immediately resold in reliance
        on
        Rule 144. Notwithstanding the foregoing, the maximum amount of liquidated
        damages that may be paid to any Qualified Purchaser pursuant to this Section
        3(e) shall be an amount equal to 15% of the purchase price per share paid
        by
        such Holder in the PPO for the Registrable Securities held by such Qualified
        Purchaser at the time of the first occurrence of a Registration Event. Each
        such
        payment shall be due and payable within five days after the end of each full
        30-day period of the Registration Default Period until the termination of
        the
        Registration Default Period and within five days after such termination.
        Such
        payments shall constitute the Qualified Purchaser’s exclusive remedy for such
        events. If the Company fails to pay any partial liquidated damages or refund
        pursuant to this Section in full within seven days after the date payable,
        the
        Company will pay interest thereon at a rate of 8% per annum (or such lesser
        maximum amount that is permitted to be paid by applicable law) to the Holder,
        accruing daily from the date such partial liquidated damages are due until
        such
        amounts, plus all such interest thereon, are paid in full. The Registration
        Default Period shall terminate upon (i) the filing of the Registration Statement
        in the case of clause (a) of the definition of Registration Event, (ii) the
        SEC
        Effective Date in the case of clause (b) of the definition of Registration
        Event, (iii) the ability of the Qualified Purchaser to effect sales pursuant
        to
        the Registration Statement in the case of clause (c) of the definition of
        Registration Event, (iv) the listing or inclusion and/or trading of the Common
        Stock on an Approved Market, as the case may be, in the case of clause (d)
        of
        the definition of Registration Event, and (v) in the case of the events
        described in clauses (b) and (c) of the definition of Registration Event,
        the
        earlier termination of the Registration Default Period. The amounts payable
        as
        liquidated damages pursuant to this Section 3(e) shall be payable in lawful
        money of the United States. Amounts payable as liquidated damages to each
        Qualified Purchaser hereunder with respect to each share of Registrable
        Securities shall cease when the Qualified Purchaser no longer holds such
        Registrable Securities or all such Registrable Securities can be immediately
        sold by the Qualified Purchaser in reliance on Rule 144(k). 

       

      (f)  Notwithstanding
        the provisions of Section 3(e) above,
        (a)
        if
        the Commission does not declare the Registration Statement effective on or
        before the Registration Default Date, or (b) if the Commission allows the
        Registration Statement to be declared effective at any time before or after
        the
        Registration Default Date, subject to the withdrawal of certain Registrable
        Securities from the Registration Statement, and the reason for (a) or (b)
        is the
        Commission’s determination that (x) the offering of any of the Registrable
        Securities constitutes a primary offering of securities by the Company, (y)
        Rule
        415 may not be relied upon for the registration of the resale of any or all
        of
        the Registrable Securities, and/or (z) a Holder of any Registrable Securities
        must be named as an underwriter, the Holders understand and agree that in
        the
        case of (b) the Company may reduce, on a pro
        rata
        basis,
        the total number of Registrable Securities to be registered on behalf of
        each
        such Holder, and, in the case of (a) or (b), the overall limit of partial
        liquidated damages that a Holder shall be entitled to with respect to the
        Registrable Securities not registered for the reason set forth in (a), or
        so
        reduced on a pro
        rata
        basis as
        set forth in (b) shall be an aggregate of 7% of the aggregate purchase price
        paid by such Holder for such securities. In addition, any such affected Holder
        shall have demand registration rights after the Registration Statement is
        declared effective by the Commission until such time as: (AA) all Registrable
        Securities have been registered pursuant to an effective Registration Statement,
        (BB) the Registrable Securities may be resold without restriction pursuant
        to
        Rule 144 of the Securities Act, or (CC) the Holder agrees to be named as
        an
        underwriter in any such registration statement. The Holders acknowledge and
        agree the provisions of this paragraph may apply to more than one Registration
        Statement.

       

      
        
          
          

        

        
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      4.  Registration
        Procedures for Registrable Securities.
        The
        Company will keep each Holder reasonably advised as to the filing and
        effectiveness of the Registration Statement. At its expense with respect
        to the
        Registration Statement, the Company will:

       

      (a)  prepare
        and file with the Commission with respect to the Registrable Securities,
        a
        Registration Statement on Form SB-2, or any other form for which the Company
        then qualifies or which counsel for the Company shall deem appropriate and
        which
        form shall be available for the sale of the Registrable Securities in accordance
        with the intended methods of distribution thereof, and use its commercially
        reasonable efforts to cause such Registration Statement to become effective
        and
        shall remain effective for a period of two years or for such shorter period
        ending on the earlier to occur of (i) the sale of all Registrable Securities
        and
        (ii) the availability under Rule 144(k) for the Holder to sell the Registrable
        Securities (the “Effectiveness
        Period”);

       

      (b)  if
        the
        Registration Statement is subject to review by the Commission, promptly respond
        to all comments and diligently pursue resolution of any comments to the
        satisfaction of the Commission;

       

      (c)  prepare
        and file with the Commission such amendments and supplements to such
        Registration Statement as may be necessary to keep such Registration Statement
        effective during the Effectiveness Period;

       

      (d)  furnish,
        without charge, to each Holder of Registrable Securities covered by such
        Registration Statement (i) a reasonable number of copies of such Registration
        Statement (including any exhibits thereto other than exhibits incorporated
        by
        reference), each amendment and supplement thereto as such Holder may reasonably
        request, (ii) such number of copies of the prospectus included in such
        Registration Statement (including each preliminary prospectus and any other
        prospectus filed under Rule 424 of the Securities Act) as such Holders may
        reasonably request, in conformity with the requirements of the Securities
        Act,
        and (iii) such other documents as such Holder may require to consummate the
        disposition of the Registrable Securities owned by such Holder, but only
        during
        the Effectiveness Period;

       

      
        
          
          

        

        
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      (e)  use
        its
        commercially reasonable efforts to register or qualify such registration
        under
        such other applicable securities laws of such jurisdictions as any Holder
        of
        Registrable Securities covered by such Registration Statement reasonably
        requests and as may be necessary for the marketability of the Registrable
        Securities (such request to be made by the time the applicable Registration
        Statement is deemed effective by the Commission) and do any and all other
        acts
        and things necessary to enable such Holder to consummate the disposition
        in such
        jurisdictions of the Registrable Securities owned by such Holder; provided,
        that
        the Company shall not be required to (i) qualify generally to do business
        in any
        jurisdiction where it would not otherwise be required to qualify but for
        this
        paragraph, (ii) subject itself to taxation in any such jurisdiction, or (iii)
        consent to general service of process in any such jurisdiction.

       

      (f)  as
        promptly as practicable after becoming aware of such event, notify each Holder
        of Registrable Securities, the disposition of which requires delivery of
        a
        prospectus relating thereto under the Securities Act, of the happening of
        any
        event, which comes to the Company’s attention, that will after the occurrence of
        such event cause the prospectus included in such Registration Statement,
        if not
        amended or supplemented, to contain an untrue statement of a material fact
        or an
        omission to state a material fact required to be stated therein or necessary
        to
        make the statements therein not misleading and the Company shall promptly
        thereafter prepare and furnish to such Holder a supplement or amendment to
        such
        prospectus (or prepare and file appropriate reports under the Exchange Act)
        so
        that, as thereafter delivered to the purchasers of such Registrable Securities,
        such prospectus shall not contain an untrue statement of a material fact
        or omit
        to state any material fact required to be stated therein or necessary to
        make
        the statements therein not misleading, unless suspension of the use of such
        prospectus otherwise is authorized herein or in the event of a Blackout Period,
        in which case no supplement or amendment need be furnished (or Exchange Act
        filing made) until the termination of such suspension or Blackout Period;
        

       

      (g)  comply,
        and continue to comply during the Effectiveness Period, in all material respects
        with the Securities Act and the Exchange Act and with all applicable rules
        and
        regulations of the Commission with respect to the disposition of all securities
        covered by such Registration Statement;

       

      (h)  as
        promptly as practicable after becoming aware of such event, notify each Holder
        of Registrable Securities being offered or sold pursuant to the Registration
        Statement of the issuance by the Commission of any stop order or other
        suspension of effectiveness of the Registration Statement;

       

      (i)  use
        its
        commercially reasonable efforts to cause all the Registrable Securities covered
        by the Registration Statement to be quoted on the NASD OTC Bulletin Board
        or
        such other principal securities market on which securities of the same class
        or
        series issued by the Company are then listed or traded; 

       

      (j)  provide
        a
        transfer agent and registrar, which may be a single entity, for the shares
        of
        Common Stock at all times;

       

      (k)  If
        requested by the Holders, cooperate with the Holders to facilitate the timely
        preparation and delivery of certificates representing Registrable Securities
        to
        be delivered to a transferee pursuant to the Registration Statement, which
        certificates shall be free, to the extent permitted by applicable law, of
        all
        restrictive legends, and to enable such Registrable Securities to be in such
        denominations and registered in such names as any such Holders may
        request;

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

       

      (l)  during
        the Effectiveness Period, refrain from bidding for or purchasing any Common
        Stock or any right to purchase Common Stock or attempting to induce any person
        to purchase any such security or right if such bid, purchase or attempt would
        in
        any way limit the right of the Holders to sell Registrable Securities by
        reason
        of the limitations set forth in Regulation M of the Exchange Act;
        and

       

      (m)  take
        all
        other reasonable actions necessary to expedite and facilitate the disposition
        by
        the Holders of the Registrable Securities pursuant to the Registration
        Statement.

       

      5.  Suspension
        of Offers and Sales.
        Each
        Holder agrees that, upon receipt of any notice from the Company of the happening
        of any event of the kind described in Section 4(f) hereof or of the commencement
        of a Blackout Period, such Holder shall discontinue the disposition of
        Registrable Securities included in the Registration Statement until such
        Holder’s receipt of the copies of the supplemented or amended prospectus
        contemplated by Section 4(f) hereof or notice of the end of the Blackout
        Period,
        and, if so directed by the Company, such Holder shall deliver to the Company
        (at
        the Company’s expense) all copies (including, without limitation, any and all
        drafts), other than permanent file copies, then in such Holder’s possession, of
        the prospectus covering such Registrable Securities current at the time of
        receipt of such notice.

       

      6.  Registration
        Expenses.
        The
        Company shall pay all expenses in connection with any registration obligation
        provided herein, including, without limitation, all registration, filing,
        stock
        exchange fees, printing expenses, all fees and expenses of complying with
        applicable securities laws, and the fees and disbursements of counsel for
        the
        Company and of its independent accountants; provided,
        that,
        in any underwritten registration, each party shall pay for its own underwriting
        discounts and commissions and transfer taxes. Except as provided in this
        Section
        and Section 9, the Company shall not be responsible for the expenses of any
        attorney or other advisor employed by a Holder.

       

      7.  Assignment
        of Rights.
        No
        Holder may assign its rights under this Agreement to any party without the
        prior
        written consent of the Company; provided,
        however,
        that
        any Holder may assign its rights under this Agreement without such consent
        to a
        Permitted Assignee as long as (a) such transfer or assignment is effected
        in
        accordance with applicable securities laws; (b) such transferee or assignee
        agrees in writing to become subject to the terms of this Agreement; and (c)
        such
        Holder notifies the Company in writing of such transfer or assignment, stating
        the name and address of the transferee or assignee and identifying the
        Registrable Securities with respect to which such rights are being transferred
        or assigned.

       

      8.  Information
        by Holder.
        A
        Holder with Registrable Securities included in any registration shall furnish
        to
        the Company such information regarding itself, the Registrable Securities
        held
        by it, and the intended method of disposition of such securities as shall
        be
        required in order to comply with any applicable law or regulation in connection
        with the registration of such Holder’s Registrable Securities or any
        qualification or compliance with respect to such Holder’s Registrable Securities
        and referred to in this Agreement.

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

      9.  Indemnification.

       

      (a)  In
        the
        event of the offer and sale of Registrable Securities under the Securities
        Act,
        the Company shall, and hereby does, indemnify and hold harmless, to the fullest
        extent permitted by law, each Holder, its directors, officers, partners,
        each
        other person who participates as an underwriter in the offering or sale of
        such
        securities, and each other person, if any, who controls or is under common
        control with such Holder or any such underwriter within the meaning of Section
        15 of the Securities Act, against any losses, claims, damages or liabilities,
        joint or several, and expenses to which the Holder or any such director,
        officer, partner or underwriter or controlling person may become subject
        under
        the Securities Act, the Exchange Act, or any other federal or state law,
        insofar
        as such losses, claims, damages, liabilities or expenses (or actions or
        proceedings, whether commenced or threatened, in respect thereof) arise out
        of
        or are based upon any untrue statement of any material fact contained in
        any
        registration statement prepared and filed by the Company under which Registrable
        Securities were registered under the Securities Act, any preliminary prospectus,
        final prospectus or summary prospectus contained therein, or any amendment
        or
        supplement thereto, or any omission to state therein a material fact required
        to
        be stated or necessary to make the statements therein in light of the
        circumstances in which they were made not misleading, or any violation or
        alleged violation of the Securities Act, the Exchange Act, any state securities
        law or any rule or regulation promulgated under the Securities Act, the Exchange
        Act or any state securities law in connection with this Agreement; and the
        Company shall reimburse the Holder, and each such director, officer, partner,
        underwriter and controlling person for any legal or any other expenses
        reasonably incurred by them in connection with investigating, defending or
        settling any such loss, claim, damage, liability, action or proceeding;
provided,
        that
        such indemnity agreement found in this Section 9(a) shall in no event exceed
        the
        net proceeds from the Notes Offering or the PPO, as applicable, received
        by the
        Company; and provided
        further,
        that
        the Company shall not be liable in any such case (i) to the extent that any
        such
        loss, claim, damage, liability (or action or proceeding in respect thereof)
        or
        expense arises out of or is based upon an untrue statement in or omission
        from
        such registration statement, any such preliminary prospectus, final prospectus,
        summary prospectus, amendment or supplement in reliance upon and in conformity
        with written information furnished to the Company by the Holder specifically
        for
        use in the preparation thereof or (ii) if the person asserting any such loss,
        claim, damage, liability (or action or proceeding in respect thereof) who
        purchased the Registrable Securities that are the subject thereof did not
        receive a copy of an amended preliminary prospectus or the final prospectus
        (or
        the final prospectus as amended or supplemented) at or prior to the written
        confirmation of the sale of such Registrable Securities to such person because
        of the failure of such Holder or underwriter to so provide such amended
        preliminary or final prospectus and the untrue statement or omission of a
        material fact made in such preliminary prospectus was corrected in the amended
        preliminary or final prospectus (or the final prospectus as amended or
        supplemented). Such indemnity shall remain in full force and effect regardless
        of any investigation made by or on behalf of the Holders, or any such director,
        officer, partner, underwriter or controlling person and shall survive the
        transfer of such shares by the Holder.

       

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

       

      (b)  As
        a
        condition to including Registrable Securities in any registration statement
        filed pursuant to this Agreement, each Holder agrees to be bound by the terms
        of
        this Section 9 and to indemnify and hold harmless, to the fullest extent
        permitted by law, the Company, its directors and officers, and each other
        person, if any, who controls the Company within the meaning of Section 15
        of the
        Securities Act, against any losses, claims, damages or liabilities, joint
        or
        several, to which the Company or any such director or officer or controlling
        person may become subject under the Securities Act, the Exchange Act, or
        any
        other federal or state law, to the extent arising out of or based solely
        upon:
        (x) such Holder’s failure to comply with the prospectus delivery requirements of
        the Securities Act or (y) any untrue or alleged untrue statement of a material
        fact contained in any registration statement, any prospectus, or any form
        of
        prospectus, or in any amendment or supplement thereto or in any preliminary
        prospectus, or arising out of or relating to any omission or alleged omission
        of
        a material fact required to be stated therein or necessary to make the
        statements therein not misleading (i) to the extent, but only to the extent,
        that such untrue statement or omission is contained in any information so
        furnished in writing by such Holder to the Company specifically for inclusion
        in
        the registration statement or such prospectus or (ii) to the extent that
        (1)
        such untrue statements or omissions are based solely upon information regarding
        such Holder furnished in writing to the Company by such Holder expressly
        for use
        therein, or to the extent that such information relates to such Holder or
        such
        Holder’s proposed method of distribution of Registrable Securities and was
        reviewed and expressly approved in writing by such Holder expressly for use
        in
        the Registration Statement, such prospectus or such form of prospectus or
        in any
        amendment or supplement thereto or (2) in the case of an occurrence of an
        event
        of the type specified in Section 4(f) hereof, the use by such Holder of an
        outdated or defective prospectus after the Company has notified such Holder
        in
        writing that the prospectus is outdated or defective and prior to the receipt
        by
        such Holder of the advice contemplated in Section 4(f). In no event shall
        the
        liability of any selling Holder hereunder be greater in amount than the dollar
        amount of the net proceeds received by such Holder upon the sale of the
        Registrable Securities giving rise to such indemnification
        obligation.

       

      (c)  Promptly
        after receipt by an indemnified party of notice of the commencement of any
        action or proceeding involving a claim referred to in this Section (including
        any governmental action), such indemnified party shall, if a claim in respect
        thereof is to be made against an indemnifying party, give written notice
        to the
        indemnifying party of the commencement of such action; provided,
        that
        the failure of any indemnified party to give notice as provided herein shall
        not
        relieve the indemnifying party of its obligations under this Section, except
        to
        the extent that the indemnifying party is actually prejudiced by such failure
        to
        give notice. In case any such action is brought against an indemnified party,
        unless in the reasonable judgment of counsel to such indemnified party a
        conflict of interest between such indemnified and indemnifying parties may
        exist
        or the indemnified party may have defenses not available to the indemnifying
        party in respect of such claim, the indemnifying party shall be entitled
        to
        participate in and to assume the defense thereof, with counsel reasonably
        satisfactory to such indemnified party and, after notice from the indemnifying
        party to such indemnified party of its election so to assume the defense
        thereof, the indemnifying party shall not be liable to such indemnified party
        for any legal or other expenses subsequently incurred by the latter in
        connection with the defense thereof, unless in such indemnified party’s
        reasonable judgment a conflict of interest between such indemnified and
        indemnifying parties arises in respect of such claim after the assumption
        of the
        defenses thereof or the indemnifying party fails to defend such claim in
        a
        diligent manner, other than reasonable costs of investigation. Neither an
        indemnified nor an indemnifying party shall be liable for any settlement
        of any
        action or proceeding effected without its consent. No indemnifying party
        shall,
        without the consent of the indemnified party, consent to entry of any judgment
        or enter into any settlement, which does not include as an unconditional
        term
        thereof the giving by the claimant or plaintiff to such indemnified party
        of a
        release from all liability in respect of such claim or litigation.
        Notwithstanding anything to the contrary set forth herein, and without limiting
        any of the rights set forth above, in any event any party shall have the
        right
        to retain, at its own expense, counsel with respect to the defense of a
        claim.

       

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

       

      (d)  If
        an
        indemnifying party does or is not permitted to assume the defense of an action
        pursuant to Sections 9(c) or in the case of the expense reimbursement obligation
        set forth in Sections 9(a) and (b), the indemnification required by Sections
        9(a) and 9(b) shall be made by periodic payments of the amount thereof during
        the course of the investigation or defense, as and when bills received or
        expenses, losses, damages, or liabilities are incurred.

       

      (e)  If
        the
        indemnification provided for in Section 9(a) or 9(b) is held by a court of
        competent jurisdiction to be unavailable to an indemnified party with respect
        to
        any loss, liability, claim, damage or expense referred to herein, the
        indemnifying party, in lieu of indemnifying such indemnified party hereunder,
        shall (i) contribute to the amount paid or payable by such indemnified party
        as
        a result of such loss, liability, claim, damage or expense as is appropriate
        to
        reflect the proportionate relative fault of the indemnifying party on the
        one
        hand and the indemnified party on the other (determined by reference to,
        among
        other things, whether the untrue or alleged untrue statement of a material
        fact
        or omission relates to information supplied by the indemnifying party or
        the
        indemnified party and the parties’ relative intent, knowledge, access to
        information and opportunity to correct or prevent such untrue statement or
        omission), or (ii) if the allocation provided by clause (i) above is not
        permitted by applicable law or provides a lesser sum to the indemnified party
        than the amount hereinafter calculated, not only the proportionate relative
        fault of the indemnifying party and the indemnified party, but also the relative
        benefits received by the indemnifying party on the one hand and the indemnified
        party on the other, as well as any other relevant equitable considerations.
        No
        indemnified party guilty of fraudulent misrepresentation (within the meaning
        of
        Section 11(f) of the Securities Act) shall be entitled to contribution from
        any
        indemnifying party who was not guilty of such fraudulent
        misrepresentation.

       

      (f)  Other
        Indemnification.
        Indemnification similar to that specified in this Section (with appropriate
        modifications) shall be given by the Company and each Holder of Registrable
        Securities with respect to any required registration or other qualification
        of
        securities under any federal or state law or regulation or governmental
        authority other than the Securities Act.

       

      10.  Rule
        144.
        For
        a
        period of at least twenty-four (24) months following the Effective
        Date,
        the
        Company will use its commercially reasonable efforts to timely file all reports
        required to be filed by the Company after the date hereof under the Securities
        Act and the Exchange Act and the rules and regulations adopted by the Commission
        thereunder, and if the Company is not required to file reports pursuant to
        such
        sections, it will prepare and furnish to the Purchasers and make publicly
        available in accordance with Rule 144(c) such information as is required
        for the
        Purchasers to sell shares of Common Stock under Rule 144.

       

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

       

      11.  Corporate
        Existence.
        So long
        as any Holder owns any Registrable Securities, the Company shall not directly
        or
        indirectly consummate any merger, reorganization, restructuring, reverse
        stock
        split, consolidation, sale of all or substantially all of the Company’s assets
        or any similar transaction or related transactions (each such transaction,
        an
“Organizational
        Change”),
        unless, prior to the consummation of an Organizational Change, the Company
        obtains the written consent of the Majority Holders.

       

      12.  Independent
        Nature of Each Purchaser’s Obligations and Rights.
        The
        obligations of each Purchaser under this Agreement are several and not joint
        with the obligations of any other Purchaser, and each Purchaser shall not
        be
        responsible in any way for the performance of the obligations of any other
        Purchaser under this Agreement. Nothing contained herein and no action taken
        by
        any Purchaser pursuant hereto, shall be deemed to constitute such Purchasers
        as
        a partnership, an association, a joint venture, or any other kind of entity,
        or
        create a presumption that the Purchasers are in any way acting in concert
        or as
        a group with respect to such obligations or the transactions contemplated
        by
        this Agreement. Each Purchaser shall be entitled to independently protect
        and
        enforce its rights, including without limitation the rights arising out of
        this
        Agreement, and it shall not be necessary for any other Purchaser to be joined
        as
        an additional party in any proceeding for such purpose.

       

      13.  Miscellaneous.

       

      (a)  Governing
        Law.
        This
        Agreement shall be governed by and construed in accordance with the laws
        of the
        United States of America and the State of New York, both substantive and
        remedial, without regard to New York conflicts of law principles. Any
        judicial proceeding brought against either of the parties to this Agreement
        or
        any dispute arising out of this Agreement or any matter related hereto shall
        be
        brought in the courts of the State of New York, New York County, or in the
        United States District Court for the Southern District of New York and, by
        its
        execution and delivery of this Agreement, each party to this Agreement accepts
        the jurisdiction of such courts. The foregoing consent to jurisdiction shall
        not
        be deemed to confer rights on any person other than the parties to this
        Agreement.

       

      (b)  Remedies.
        In the
        event of a breach by the Company or by a Holder of any of their respective
        obligations under this Agreement, each Holder or the Company, as the case
        may
        be, in addition to being entitled to exercise all rights granted by law and
        under this Agreement, including recovery of damages, shall be entitled to
        specific performance of its rights under this Agreement. The Company and
        each
        Holder agree that monetary damages would not provide adequate compensation
        for
        any losses incurred by reason of a breach by it of any of the provisions
        of this
        Agreement and hereby further agrees that, in the event of any action for
        specific performance in respect of such breach, it shall not assert or shall
        waive the defense that a remedy at law would be adequate.

       

      (c)  Successors
        and Assigns.
        Except
        as otherwise provided herein, the provisions hereof shall inure to the benefit
        of, and be binding upon, the successors, Permitted Assignees, executors and
        administrators of the parties hereto.

       

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

       

      (d)  No
        Inconsistent Agreements.
        The
        Company has not entered, as of the date hereof, and shall not enter, on or
        after
        the date of this Agreement, into any agreement with respect to its securities
        that would have the effect of impairing the rights granted to the Holders
        in
        this Agreement or otherwise conflicts with the provisions hereof.

       

      (e)  Entire
        Agreement.
        This
        Agreement constitutes the full and entire understanding and agreement between
        the parties with regard to the subjects hereof.

       

      (f)  Notices,
        etc.
        All
        notices or other communications which are required or permitted under this
        Agreement shall be in writing and sufficient if delivered by hand, by facsimile
        transmission, by registered or certified mail, postage pre-paid, by electronic
        mail, or by courier or overnight carrier, to the persons at the addresses
        set
        forth below (or at such other address as may be provided hereunder), and
        shall
        be deemed to have been delivered as of the date so delivered: 

       

      If
        to the
        Company to:

      


      UFood
        Restaurant Group, Inc.

      255
        Washington Street, Suite 100

      Newton,
        MA 02458

      Attention:
        George Naddaff, Chief Executive Officer

      Facsimile:
        (617) 787-6010

      


      with
        copy
        to:

      


      Robinson
        & Cole LLP

      695
        East
        Main Street

      Stamford,
        CT 06904

      Attention:
        Richard A. Krantz, Esq.

      Facsimile:
        (203) 462-7599

      


      If
        to the
        Purchasers:

      


      To
        each
        Purchaser at the address set forth on the signature page hereto

      


      or
        at
        such other address as any party shall have furnished to the other parties
        in
        writing.

       

      (g)  Delays
        or Omissions.
        No
        delay or omission to exercise any right, power or remedy accruing to any
        Holder,
        upon any breach or default of the Company under this Agreement, shall impair
        any
        such right, power or remedy of such Holder nor shall it be construed to be
        a
        waiver of any such breach or default, or an acquiescence therein, or of any
        similar breach or default thereunder occurring; nor shall any waiver of any
        single breach or default be deemed a waiver of any other breach or default
        theretofore or thereafter occurring. Any waiver, permit, consent or approval
        of
        any kind or character on the part of any Holder of any breach or default under
        this Agreement, or any waiver on the part of any Holder of any provisions
        or
        conditions of this Agreement, must be in writing and shall be effective only
        to
        the extent specifically set forth in such writing. All remedies, either under
        this Agreement, or by law or otherwise afforded to any holder, shall be
        cumulative and not alternative.

       

      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

      

       

      (h)  Counterparts.
        This
        Agreement may be executed in any number of counterparts, each of which shall
        be
        enforceable against the parties actually executing such counterparts, and
        all of
        which together shall constitute one instrument. In the event that any signature
        is delivered by facsimile transmission, such signature shall create a valid
        and
        binding obligation of the party executing (or on whose behalf such signature
        is
        executed) with the same force and effect as if such facsimile signature page
        were an original thereof.

       

      (i)  Severability.
        In the
        case any provision of this Agreement shall be invalid, illegal or unenforceable,
        the validity, legality and enforceability of the remaining provisions shall
        not
        in any way be affected or impaired thereby.

       

      (j)  Amendments.
        The
        provisions of this Agreement may be amended at any time and from time to
        time,
        and particular provisions of this Agreement may be waived, with and only
        with an
        agreement or consent in writing signed by the Company and the Majority Holders.
        The Purchasers acknowledge that by the operation of this Section, the Majority
        Holders may have the right and power to diminish or eliminate all rights
        of the
        Purchasers under this Agreement.

       

      (k)  Limitation
        on Subsequent Registration Rights.
        After
        the date of this Agreement, the Company shall not, without the prior written
        consent of the Majority Holders, enter into any agreement with any holder
        or
        prospective holder of any securities of the Company that would grant such
        holder
        registration rights senior or equal to those granted to the Holders
        hereunder.

       

      [SIGNATURE
        PAGES FOLLOW]

       


      
        
          
          

        

        
          16

          
            

          

        

        
          
          

        

      


      This
        Registration Rights Agreement is hereby executed as of the date first above
        written.

      
        	 	 	 
	 	
                COMPANY:

                 

                UFood Restaurant Group,
                  Inc.

              
	 
 	 
 	 
 
	
              	By:  	 
	 	
                
Name: George
                Naddaff
	 	Title: Chairman
                and Chief Executive Officer


      

       

      [SIGNATURE
        PAGE OF PURCHASER FOLLOWS]


      
        
          
          

        

        
          17

          
            

          

        

        
          
          

        

      


      This
        Registration Rights Agreement is hereby executed as of the date first above
        written.

      
        	 	 	 
	 	PURCHASER
                (Individual)
	 
 	 
 	 
 
	
              	 	  
	 	 	 
	 	 	 
	 	(Print Name)
	 	
              


      

      
        	 	 	 
	 	PURCHASER (Entity)
	 
 	 
 	 
 
	
              	By:  	
              
	 	
              
	 	 
	 	(Print Name)
	 	 
	 	 
	 	(Print
                Title)
	 	 
	 	 


      

      
        	 	 	 
	 	Address for notices:
                
	 
 	 
 	 
 
	
              	  	
              
	 	 
	 	
              
	 	 
	 	
              
	 	City     State     Zip
                Code


      

       

      
        
          
          

        

        
          18