Document:

exhibit_10-1.htm

    
      
        

      

    

    EXHIBIT
      1.1

    Stock
      Purchase Agreement

    

    STOCK
      PURCHASE AGREEMENT

     

    

     

    THIS
      STOCK PURCHASE AGREEMENT (this “Agreement”) is made
      and entered into as of this 15th day of
      November,
      2007.

     

    BY
      AND
      AMONG

     

    Tank
      Sports Inc., a corporation duly organized and existing under the laws of
      California (“USA”), with its registered address at 10925 Schmidt Rd., EI Monte,
      CA 91733 USA(the
“Purchaser”);

     

    and,

     

    Each
      of
      the company and individuals on Schedule A attached hereto (collectively, the
      “Sellers”, and each individually, a
“Seller”);

     

    Witnesseth

    

    Whereas,
      Sellers own all of the issued and outstanding shares
      of capital stock of People’s Motor International Company
      Limited (the “Company”), a limited company
      duly organized and existing under the laws of British Virgin Island (“BVI”) with
      its registered address at P.O. Box 957. Offshore Incorporation Centre Road
      Town,
      Tortola, British Virgin Island;

     

     Whereas,
      each Seller desires to sell to
Purchaser, and Purchaser
      desires to purchase from each Seller, certain of the
      shares owned by each Seller such that
Purchaser shall acquire in the
      aggregate from all of
      the Sellers total of the 10,500,000 shares subject to
      the terms and conditions contained herein; and

    

    Whereas,
      Sellers have authorized and caused the
Company to enter into a set
      of preliminary agreements
      with Purchaser, including Letter of Intent (dated
      September 24, 2007) with its Amendment(dated September 27, 2007), and Custodial
      Operation Agreement (dated September 27, 2007) with its Amendment (dated
      September 27, 2007), specifically for the transaction contemplated
      herein.

    

    NOW,
      THEREFORE, in consideration of the mutual promises, covenants and
      agreements set forth herein, the parties agree as follows:

    

    ARTICLE
      I

    Sale
      And Purchase Of Shares

    1.01
      Sale and Purchase

     

    On
      the
Closing Date (as defined in Article XII), each
Seller shall sell, assign,
      transfer and deliver to
Purchaser, and Purchaser
      shall purchase, accept and acquire from each Seller,
      all of each Seller’s right, title and interest in and
      to the number of shares opposite each such Seller’s
      name as set forth on Schedule A attached hereto (“Purchased
      Shares”), the aggregate of such Purchased
      Shares being total issued and outstanding shares in the
Company.

    

    1.02  Consideration
      for Purchase

     

    
      	
            	
              (a)
                

            	
              As
                Purchaser’s consideration for purchase and
                acquisition from each Seller’s such
                Purchased Shares,
                Purchaser shall transfer the number of common
                shares of its issued shares, which shares are restricted and
                control securities pursuant to Rule 144 in the Securities Exchange
                Act of
                1934 (as amended) (“SEC”) and are quoted on the NASDAQ OTC Bulletin Board,
                opposite each such Seller’s name as set forth
                on Schedule B attached hereto, the aggregate of such shares being
                4,000,000 (“Consideration Shares”) subject to
                terms and conditions herein. Purchaser shall
                apply for permission from authorities to transfer to Sellers
                sixty percent (60%) of the Consideration
                Shares namely 2,400,000 shares after the Closing
                Date.  The remaining forty percent (40%) of the
                Consideration Shares, namely 1,600,000 shares,
                shall be transferred to Sellers on the one
                hundred and eightieth (180th)
                day
                following the Closing Date.  The
                number of Consideration Shares transferred to
                each Seller shall be as described opposite to
                each Seller on Schedule B attached hereto.
                Purchaser shall make
                Sellers officially, legally the holders of
                Consideration
                Shares.

            

    

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      
STOCK PURCHASE AGREEMENT

     

    
      	
            	(b) 	
              Together
                with the Consideration Shares set forth herein,
                as Purchaser’s consideration for purchase and
                acquisition from each Seller’s such
                Purchased Shares,
                Purchaser, on the Closing
                Date, shall grant each Seller a
                warrant (“Warrant”) to purchase the number
                of common shares of its issued shares, which shares are restricted
                and
                control securities pursuant to Rule 144 in SEC and are quoted on
                the NASDQ
                OTC Bulletin Board, which number is opposite each such
                Seller’s name as set forth on Schedule C
                attached hereto and the number of such shares in aggregate being
                1,500,000, at an exercise price of US$0.64 per share, subject to
                all terms
                and conditions contained on Schedule
                C.

            

    

    

    1.03
      Effective Time of Purchased Shares
      Transfer

     

    The
      parties agree that all right, title and interest in and to the
Purchased Shares, including without limitation voting
      rights, rights to obtain dividends and other distributions, and rights to
      dispose and/or transfer the Purchased Shares in the
      future, shall be transferred to Purchaser upon the
Closing Date, notwithstanding the
      requisition by law
      or otherwise to obtain certain approvals or to complete certain filings or
      registrations from or with competent governmental agencies in connection with
      said transfer, which approvals or filings or registrations shall be performed
      by
Sellers with Purchaser’s
      assistance within fifteen (15) days after the Closing
      Date and be obtained promptly.

     

    The
      parties agree that, Purchaser shall apply for approval
      within 3 working days upon Closing Date, to make all
      right, title and interest in and to the Consideration
      Shares, including without limitation voting rights, rights to
      obtain dividends and other distributions, and rights to dispose and/or transfer
      the Consideration Shares in the future, be transferred
      to Sellers upon the Closing
      Date, notwithstanding the requisition by law or otherwise to
      obtain certain approvals or to complete certain filings or registrations from
      or
      with competent governmental agencies in connection with said
      transfer.

    

    1.04
      Stamp Duty and Share Transfer Taxes

     

    All
      applicable stamp duty and share transfer taxes and other income taxes, if any,
      arising by reason of the transfer of the Purchased
      Shares and/or Consideration Shares shall
      be borne by Purchaser and/or
Sellers oppositely according
      to the law or
      regulations.

    

    ARTICLE
      II

    Assets
      and Debts

    2.01
      Assets

     

    
      	
            	
              (a)

            	
              Sellers,
                jointly and severally, hereby agree, all of the assets owned by the
                Company and its
                Affiliates(as defined below) as specified on
                Schedule D attached hereto (“Assets”), shall remain its ownership
                status and condition, or in the event owned by any of
                Sellers, shall be transferred to
                Purchaser on the Closing
                Date.

            

    

     

    
      	
            	
              (b)

            	
              Sellers,
                jointly and severally, present and warrant to
                Purchaser that until and to the
                Closing Date, Sellers,
                the Company and its
                Affiliates didn’t, nor
                Sellers cause the
                Company or its
                Affiliates to, sell, assign, encumber, devise,
                grant any interest in or otherwise dispose of or otherwise transfer,
                or
                contract to sell, assign, encumber, devise, grant any interest in
                or
                otherwise dispose of or otherwise transfer, any of the assets, nor
                mortgage, pledge or subject any of the assets to any
                Burden(as defined below); unless otherwise
                directed by the Letter of Intent and Custodial Operation Agreement,
                together with their Amendments.

            

    

     

    
      	
            	
              (c)
                

            	
              Sellers,
                jointly and severally, present and warrant to
                Purchaser that he/they did not negotiate with
                anyone other than Purchaser for, or participate
                with anyone other than Purchaser in, the
                acquisition of any direct or indirect interest in all or any of the
                assets.

            

    

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      
STOCK PURCHASE AGREEMENT

    “Affiliate”
      shall mean any person or entity that, directly or indirectly, controls, is
      controlled by or is under direct or indirect common control with, the
Company. The term control (including its use in the
      terms “controlled by” and “under direct or indirect common control with”) shall
      mean the ownership, directly or indirectly, of more than fifty percent (50%)
      of
      the voting securities of such person or entity. A list of such
Affiliate of the Company is
      attached hereto as Schedule E.

    

    “Burden”
      shall mean any and all pledges, mortgagee, liens, charges, encumbrances,
      security interests, claims, demands, duties or other title defects of any kind,
      conditional sales and/or other types of title retention arrangements, pledges,
      privileges, options (except as provided in this
Agreement), subordination(s) to any right or claim of
      any person(s) or entity(s), or any other restrictions including any restriction
      as to transfer or as to use or possession thereof, whether perfected or
      otherwise, except those in favor of
Purchaser.

    

    2.02
      Debts

     

    Purchaser
      agree that other than the debt (“Debts”) as described
      on Schedule F attached hereto, which shall be born by the
Company and its Affiliates,
      unless which was set forth on Schedule F, shall be born by
Sellers. Should any claim on products liability
      arise
      after Closing Date, the
Company and its Affiliates
      would bear the deduction make by insurance agency according to the
      policy. Purchaser agrees that,
Sellers will not be regarded
      as having breached Clause
      3.11 if, (i) there would be any debts of the Company
      and it Affiliates that do not forth on Schedule F,
      and; (ii) amounts of those debts do not exceed RMB ¥800,000.00.

    

    ARTICLE
      III

    Representations
      And Warranties Of Sellers

    

    Sellers,
      jointly and severally, hereby represent and warrant to
Purchaser that hereunder, each of which is material to
      and is being relied upon by Purchaser:

     

    3.01
      Organization and Standing of the
Company and its
Affiliates

     

    
      	
            	
              (a)
                

            	
              The
                Company and its
                Affiliates are organized, validly existing and
                in good standing under the laws of respective jurisdiction.  The
                Company and it’s
                Affiliates have all requisite power and
                authority to own, lease, hold and operate their assets and properties
                and
                to conduct their business as and where they owned, leased, held,
                operated
                and/or conducted, as the case may be, and to hold all franchises,
                licenses
                and permits necessary or required
                therefore.

            

    

    

    
      	
            	
              (b)
                

            	
              The
                Company and its
                Affiliates are duly qualified to do business and
                are in good standing in all jurisdictions in which they operate their
                business or own or lease property.  Set forth on Schedule
                E is a true and complete list of all jurisdictions (foreign and
                domestic) in which the Company and its
                Affiliates are licensed or qualified to do
                business and each jurisdiction where the Company
                and its Affiliates do business and/or own or
                lease real and/or personal
                property.

            

    

    

    3.02
      Authority

     

    
      	
            	
              (a)
                

            	
              Each
                Seller has all requisite power, capacity and
                authority to execute, deliver and perform this
                Agreement and the documents and agreements
                furnished hereunder. Sellers represent and
                warrant to Purchaser that the sale of the
                Purchased Shares to
                Purchaser are not prohibited or impeded by the
                Articles of Association of the Company or all
                applicable laws.

            

    

    

    
      	
            	
              (b)
                

            	
              The
                execution and delivery of this Agreement and the
                documents or agreements furnished or caused to be furnished hereunder
                by
                Sellers, and the performance by
                Sellers of the transactions contemplated herein
                have been duly authorized by all necessary action on the part of
                each such
                Seller, and no further action on the part of
                any
                Seller is or will be necessary to make this
                Agreement and such other documents or agreements
                valid and binding on such parties and enforceable against such parties
                in
                accordance with its terms. Each Seller’s
                execution, delivery and performance of this
                Agreement and such documents, and the
                consummation of the transactions contemplated herein and therein,
                do not
                and will not, with the passage of time, the giving of notice or
                otherwise:-

            

    

    

    
      	
            	
              (i)

            	
              result
                in a violation or breach of any provision of or constitute a default
                under
                the Articles of Association of the Company or
                any other of the Company’s charter documents, or
                of any resolution of the shareholders of the
                Company, or any other corporate or shareholder
                obligation;

            

    

     

    
      	
            	
              (ii)

            	
              conflict
                with, violate or result in a breach, acceleration or termination
                of any
                provision or constitute a default under any term or provision of
                any
                Burden, shareholder agreement, indenture, loan
                agreement, promissory note, credit agreement, security agreement,
                lease,
                license, deed of trust, order, arbitration award, judgment, decree,
                rule,
                regulation, law, contract, instrument or other agreement to which
                any of
                Sellers or the Company (or its
                Affiliates) is a party or by which any of
                Sellers or the Company
                (or its Affiliates) is otherwise subject or
                bound; or

            

    

    

    
      	
            	
              (iii)

            	
              violate
                of conflict with any other restrictions of any kind or nature nor
                result
                in the creation of any Burden on the
                Purchased Shares and/or the assets of the
                Company and its
                Affiliates nor the loss of any license or
                contractual right with respect to the operations of the
                Company and its
                Affiliates.

            

    

    

     

    
 

    
      
        
        

      

      
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        STOCK
          PURCHASE AGREEMENT

      

    

     

     

    3.03
      Capitalization of the Company and its
Affiliates.

     

    The
      authorized capital and shares of the Company and its
Affiliates as described unless
      otherwise stipulated in
Schedule E are fully paid up, issued and outstanding. There are no other
      shares of the Company and its
Affiliates issued or outstanding.
      Each of the
Purchased Shares and the issued shares of the
Affiliates have been duly authorized
      and are validly
      issued, fully paid and non-assessable, and are owned beneficially and of record
      by the Sellers or the beneficiary as set forth in
Schedule A.  On the Closing Date,
      upon completion of the sale and transfer of the Purchased
      Shares from each Seller to
Purchaser in accordance
      with this
Agreement, Purchaser shall
      be the sole legal and beneficial owner of the Purchased
      Shares, free and clear of any and all
Burdens of any kind or nature. There are
      no
      outstanding obligations, options, warrants, puts, calls, rights to subscribe,
      agreements or other commitments or rights of any kind or nature whatsoever
      to
      purchase any securities of the Company or its
Affiliates, nor are there any
      outstanding securities
      of the Company or its
Affiliates which are convertible
      into or exchangeable
      for any shares of the Company. The
Company or its Affiliates
      does not have any obligation of any kind or nature whatsoever to issue any
      additional shares or other securities. Neither the
Company, its Affiliates nor
      any Seller has agreed to issue, purchase, sell, grant
      any interest in or transfer any securities of the
Company or its Affiliates to
      any person or entity other than to Purchaser
      hereunder. There are no shareholder agreements, close corporation agreements
      or
      similar agreements which affect the rights or obligations of the shareholders
      of
      the Company and its
Affiliates.

     

     

    3.04
      Financial Statements

     

    The
      financial statements of the Company and the
Affiliates till September 30,
      2007, (the
      "Financial Report"), are attached as Schedule
      G. The Financial Report (i) has been
      prepared in accordance with generally accepted accounting principles in
      respective jurisdiction, consistently applied, (ii) fairly present (as such
      concept is used in audited financial statements) the financial condition of
      the
Company and the Affiliates
      as of the dates thereof and the results of operations for the periods then
      ended, and (iii) are true and complete. The books of account and other financial
      records of the Company and its
Affiliates have been maintained
      in accordance with
      sound business practices. There are no other documents which are necessary
      to
      fully understand the financial statements of the
Company and its Affiliates
      or make them not misleading.

     

     

    3.05
      Title to and Condition of Real Property.

     

    
      	
            	
              (a)

            	
              A
                list of the real property owned by the Company
                or its Affiliates and the relevant Real Property
                Ownership Certificates are set out unless otherwise stipulated in
                Schedule I. The Company or the
                Affiliates has obtained Land Use Rights
                Certificates, each of which has been duly issued in the name of the
                Company or the
                Affiliates, with respect to each of the parcels
                of land listed on Schedule I(collectively, the
                “Land”), under which the
                Company or the
                Affiliates has the unconditional and
                unrestricted right to the exclusive use of the
                Land for a period of fifty (50) years (without
                any obligation
                on the part of the Company or the
                Affiliates to make any further payments for such
                use) for purposes of carrying out the activities of its business
                and all
                related purposes(collectively, the “Land Use
                Right”). The Land Use Right will
                not be adversely affected by the consummation of the transactions
                contemplated hereby, and will continue after the Closing Date
                with the same force and effect and under the same terms
                and
                conditions as existed prior to the date hereof. The
                Company or the
                Affiliates has obtained Ownership Certificates,
                each of which has been duly issued in the name of the
                Company or the
                Affiliates, with respect to each of the
                buildings listed on Schedule I(collectively, the
                “Buildings”), under which the
                Company or the
                Affiliates has the unconditional and
                unrestricted right to the exclusive use of the
                Buildings for a period of fifty (50) years
                (without any obligation on the part of the
                Company or the
                Affiliates to make any further payments for such
                use, excluding tear and wear) for purposes of carrying out the activities
                of its business and all related purposes(collectively, the
                “Ownership of Buildings”). The
                Ownership of Buildings will not be adversely
                affected by the consummation of the transactions contemplated hereby,
                and
                will continue after the Closing Date with the
                same force and effect and under the same terms and conditions as
                existed
                prior to the date hereof.

            

    

     

    
      
        
        

      

      
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STOCK PURCHASE AGREEMENT

     

    
      	
            	(b)  
               

            	
              An
                accurate and complete description of all leases entered into by the
                Company or the
                Affiliates (“Leases”)
                that currently exist for the lease of any real property by the
                Company or the
                Affiliates, whether as landlord or tenant
                (“Leased Real Property”) are set forth in
                Schedule J. With respect to such Leases
                and Leased Real
                Property:

            

    

     

    
      	
            	
              (i)

            	
              all
                Leases are in writing and are duly executed
                and,
                none have been modified, amended, sublet or
                assigned;

            

    

     

    
      	
            	
              (ii)

            	
              the
                rental set forth in each such Lease is the
                actual rental being paid, and there are no separate agreements or
                understandings with respect to the
                same;

            

    

     

    
      	
            	
              (iii)

            	
              there
                is no default by the Company or the
                Affiliates or, to the best of each
                Seller’s knowledge, any other party which
                affects the Leased Real
                Property;

            

    

     

    
      	
            	
              (iv)

            	
              all
                surety bonds, insurance, security and other deposits required by
                such
                Leases have been made and have not been refunded
                or returned, or their forfeiture claimed, in whole or in part, by
                any
                lessor; and

            

    

     

    
      	
            	
              (v)

            	
              where
                the Company or the
                Affiliates is the lessee, all leasehold
                improvements are in good operating or working condition and repair,
                after
                taking into account ordinary wear and tear, and are adequate for
                the
                operation of the business of the Company or the
                Affiliates as presently
                conducted.

            

    

     

    
      	
            	(c)    	
              The
                Land, Buildings and the Leased Real
                Property shall sometimes be referred to hereinafter
                collectively as the “Real Property”. With
                respect to the Real Property, including all
                leasehold improvements (unless otherwise directed in Schedule I and
                Schedule J):

            

    

     

    
      	
            	
              (i)

            	
              there
                is no condemnation or eminent domain proceeding of any kind pending
                or, to
                the best of each Seller's knowledge, threatened
                against any of the Real
                Property;

            

    

     

    
      	
            	
              (ii)

            	
              the
                Real Property is occupied under valid and
                current certificates of occupancy, governmental authorizations or
                the
                like, and the transactions contemplated by this
                Agreement will not require the issuance of any
                new or amended permits or governmental
                authorizations;

            

    

     

    
      
        
        

      

      
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STOCK PURCHASE AGREEMENT

     

    
      	
            	
              (iii)

            	
              the
                Real Property does not violate, and all
                improvements are constructed in compliance with, all applicable laws,
                and
                the Company or the
                Affiliates has obtained all required licenses,
                permits and approvals required to possess and operate its Real
                Property and conduct its business as it is presently being
                conducted;

            

    

     

    
      	
            	(iv)	
              there
                are no outstanding variances or special use permits affecting the
                Real Property or its
                uses;

            

    

     

    
      	
            	
              (v)  

            	
              no
                notice of a violation of any laws, or of any covenant, condition,
                easement
                or restriction affecting the Real Property or
                relating to its use or occupancy, has been given, nor is any
                Seller aware of any such
                violation;

            

    

     

    
      	
            	
              (vi)

            	
              no
                portion of the Real Property is located within a
                special flood plain or restricted use area as designated by any government
                authority;

            

    

     

    
      	
            	
              (vii)

            	
              the
                Real Property has and will have as of the
                Closing Date adequate water supply, storm and
                sanitary sewage facilities, telephone, gas, electricity, fire protection,
                means of ingress and egress to and from public highways and other
                required
                public utilities;

            

    

     

    
      	
            	
              (viii)

            	
              to
                the best of each Seller’s knowledge there are no
                improvements made or contemplated to be made by any public or private
                authority, the costs of which are to be assessed as special taxes
                or
                charges against the Real Property, and there are
                no present assessments with regard
                thereto;

            

    

     

    
      	
            	(ix) 
               

            	
              all
                improvements made by the Company or the
                Affiliates constituting the Real
                Property are without structural defects, were constructed in
                conformity with all plans and specifications and applicable laws,
                are
                located entirely within the boundary lines of the Real
                Property, and do not encroach upon any street or land of
                others; and

            

    

     

    
      	
            	
              (x) 

            	
              the
                Real Property either (A) is freely accessible
                directly from all public streets on which it abuts, or (B) uses adjoining
                private land to access the same in accordance with valid public easements.
                No Seller has any knowledge of any condition
                which would result in the termination of such
                access.

            

    

     

    3.06   Title
      to, Use and Condition of Certain Personal Property.

     

    
      	
            	
              (a)

            	
              Schedule
                K sets forth a list of all machinery, equipment, furniture, fixtures,
                tooling, dies, leasehold improvements and all other tangible personal
                property (“Machinery and
                Equipment”) owned and/or used
                by the Company or the
                Affiliates.

            

    

     

    
      	
            	
              (b)

            	
              Unless
                otherwise directed in Schedule P, (i)The
                Company or the
                Affiliates owns and possesses all right, title
                and interest in and to all of its Machinery and
                Equipment. (ii)The Company or the
                Affiliates has all licenses, permits, approvals,
                orders, certificates, and other authorizations as are necessary in
                order
                to enable it to use, operate or handle its Machinery and
                Equipment as it is currently being used, operated or
                handled; and (iii) the Machinery and Equipment
                is free and clear of any and all Burden, except
                those in favor of
                Purchaser.

            

    

     

    
      	
            	(c)
               

            	
              The
                Company or the
                Affiliates owns and/or leases all of the assets,
                whether real or personal property, necessary to carry on the operations
                of
                its respective business as the same is presently conducted and has
                been
                conducted during the twelve (12) month period immediately preceding
                the
                Closing Date.
                All of the Machinery and Equipment owned by the
                Company or the
                Affiliates has been maintained in good operating
                condition and is in a state of good maintenance and repair, usable
                in the
                ordinary course of business. The Company or the
                Affiliates enjoys peaceful and quiet possession
                of its Machinery and Equipment and, where
                applicable, has the corresponding titles, invoices or other documentation
                supporting ownership and the corresponding importation documentation
                evidencing its legal presence in all
                jurisdictions.

            

    

     

    
      
        
        

      

      
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STOCK PURCHASE AGREEMENT

     

    3.07   Proprietary
      Rights.

     

    
      	
            	
              (a)

            	
              (i)
                Schedule M lists all Chinese and foreign patents, patent
                applications, marks, symbols, trade names, trademarks, service marks,
                copyrights, copyright applications, logos, permits, licenses and
                sublicenses (and agreements in respect thereof or applications therefor)
                owned by the Company or the
                Affiliates and/or used in the operations of the
                business of the Company or the
                Affiliates (collectively,
                the “Scheduled Proprietary
                Rights”). The
                term “Proprietary Rights”
                shall mean the Scheduled Proprietary Rights and
                all inventions, formulas (patented and unpatented), trade secrets,
                technical know-how, methods, operations, franchises, software processes
                (patented and unpatented) and process instructions, patent, trademark
                and
                copyright histories, laboratory notebooks and all other proprietary
                rights, documents, information and records, including, but not limited
                to,
                all filings, registrations, or issuances of any of the foregoing
                with or
                by any federal, provincial, state, local or foreign regulatory,
                administrative or governmental office or offices, and all federal,
                provincial, state and common law rights protecting such in China
                and
                throughout the world, owned by the Company or
                the Affiliates and/or used in the operations of
                the business of the Company or the
                Affiliates; (ii) Schedule M lists all
                licenses and agreements under which the Company
                or the Affiliates has given the right to use any
                of the Proprietary Rights to any third party;
                and (iii) Schedule M lists all licenses and agreements under which
                the Company or the
                Affiliates has the right to use any third
                party’s similar type of property in connection with the
                business.

            

    

     

    
      	
            	
              (b)

            	
              No
                proceedings have been instituted, are pending or, to the best of
                each
                Seller’s knowledge, threatened which challenge
                the validity of the ownership or use by the
                Company or the
                Affiliates of the Proprietary
                Rights or any third party’s similar type of
                property.

            

    

     

    
      	
            	
              (c)

            	
              No
                Seller has any knowledge of the infringing
                use
                of any Proprietary Rights or the infringement of
                any of such companies respective Proprietary
                Rights by any other person. Neither the
                Company or the
                Affiliates nor any Seller
                has received any notice of conflict with the asserted
                rights
                of others with respect to the Proprietary Rights
                or any third party’s similar type of property. The
                Company or the
                Affiliates owns exclusively all formulas and
                technical know-how necessary to manufacture all products manufactured
                and/or sold by the Company or the
                Affiliates at any time during the past three (3)
                years.

            

    

     

    
      	
            	
              (d)

            	
              The
                Company or the
                Affiliates is the sole and exclusive owner, free
                and clear of all Burdens, of all right, title
                and interest in and to the Proprietary Rights as
                regards its business in the manner presently used. The
                Company or the
                Affiliates has the full right and authority to
                use the Proprietary Rights and the use thereof
                by the Company or the
                Affiliates does not infringe any third party's
                intellectual property rights; the Company or the
                Affiliates does not (and will not) owe any
                royalty or other payments to any third party in connection with the
                use of
                any of the Proprietary
                Rights.

            

    

     

    
      	
            	
              (e)

            	
              The
                Company or the
                Affiliates has not given any indemnification
                against and/or has agreed to defend claims for infringement with
                respect
                to its Proprietary Rights as to any equipment,
                materials, products,
                services or supplies which the Company or the
                Affiliates produces, uses, licenses and/or
                sells.

            

    

     

    
      	
            	
              (f)

            	
              The
                Company or the
                Affiliates has not sold, assigned or
                transferred, or entered into any agreement or any other arrangement
                within
                the past five (5) years, to and/or with any other person, corporation,
                firm or entity, for the ownership and/or use of proprietary rights
                or any
                similar rights owned and/or used (or previously owned and/or used)
                by any
                other person, corporation, firm or
                entity.

            

    

     

     

    
      
        
        

      

      
        7

        
          

        

      

      
        STOCK
          PURCHASE
          AGREEMENT

      

    

     

    3.08    Contracts

     

    
      	
            	
              (a) 

            	
              Schedule
                N, to the best knowledge of each seller,
                sets forth a list of all licenses, contracts, documents, agreements
                and
                other commitments (whether written or oral) relating to or in any
                way
                connected with the Company or the
                Affiliates’ operation of its
                business(collectively, “Contracts”), except the
                oral and/or written leases for real and/or personal property with
                respect
                to the same as discribed in Schdule
J.

            

    

     

     

    
      	
            	
              (b)

            	
              All
                Contracts are valid, subsisting and enforceable
                in accordance with their terms and in full force and effect. Neither
                any
                Seller, the Company or
                the Affiliates has violated or breached any
                provision of, any of the Contracts. Neither the
                Company or the
                Affiliates nor, to the best of each
                Seller's knowledge, is any third party in
                default (nor is any such default alleged to exist) in any respect
                under
                the terms of any of the Contracts. There exists
                no event or condition which, with the giving of notice, the lapse
                of time,
                or both, would become a default under any
                Contracts. To the best of each
                Seller’s knowledge, there is no event,
                happening, set of circumstances, threat or fact which would lead
                such
                Seller to believe that any party to any of
                the
                Contracts will terminate its contractual
                relationship with the Company or its
                Affiliates. Each of the
                Contracts were entered into by the
                Company or the
                Affiliates in the ordinary course of its
                business and Neither the Company nor its
                Affiliates has waived, or agreed to waive, any
                right or rights under any of the same. None of the
                Company or the
                Affiliates’ interests under any of their
                Contracts are encumbered or subject to any term,
                condition or restriction except as stated in the applicable
                Contract or as provided by
                law.

            

    

     

     

    3.09   Compliance
      with Laws.

     

    
      	
            	
              (a)

            	
              The
                Company and the
                Affiliates have complied with and are in
                compliance with all laws, ordinances, regulations, rules, codes,
                executive
                orders, orders, judicial and/or administrative decisions, license
                requirements or other requirements, including without limitation,
                any
                building, land use, zoning, fire or environmental laws or codes applicable
                to its business, the products manufactured and sold thereby, the
                services
                provided thereby, the assets owned and leased by the
                Company or the
                Affiliates, and/or any combination of such
                activities. To the best of each Seller’s
                knowledge, there is no pending or threatened investigation by any
                governmental or quasi-governmental body or agency with regard to
                the
                operations of the Company or the
                Affiliates’
business.

            

    

     

    
      	
            	(b)	
              The
                Company and the
                Affiliates are and have always been: (i) duly
                licensed, possessing all franchises, easements, permits, licenses,
                approvals and other authorizations for their respective business
                (collectively, “Permits”) required by all
                applicable laws in their respective jurisdiction, that are necessary
                to
                permit them to engage in their business and to own and operate their
                assets in all applicable jurisdictions; and (ii) in compliance with
                all
                Permits. All such Permits are listed on
                Schedule O and are valid, in full force and effect and not subject
                to challenge. All reports, informational returns and updates which
                the
                Company (including its
                Affiliates ) is required to file under any
                applicable law, rule, regulation or order with regard to the foregoing
                have been filed in a timely manner and all fees relating to the same
                have
                been paid. The Company or its
                Affiliates has not
                breached any provision of, is not in default in any respect under
                the
                terms of, nor has the Company or its
                Affiliates engaged in any activity which would
                cause revocation or suspension of any of its
                Permits. No action, proceeding or investigation
                contemplating the revocation or suspension of any
                Permit is pending, threatened or likely to
                be
                instituted. To the best of each Seller’s
                knowledge, there is no reason why any Permit
                would not be renewed. The transfer of the Purchased
                Shares as contemplated herein will not affect the validity
                or enforceability of Permits,
                Contracts or other rights and
                entitlements.

            

    

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      
STOCK PURCHASE AGREEMENT

     

    3.10
      Litigation

     

    Except
      as
      set forth on Schedule P, there are no administrative, governmental or judicial
      (satisfied and/or unsatisfied) suits, claims, actions, arbitrations, proceedings
      or investigations, pending or threatened, (a) which could relate to or affect
      the Company or the
Affiliates, or (b) against any
      Seller or the Company or the
Affiliates
      for the purposes of challenging, enjoining
      or preventing the execution or delivery of this
Agreement, the performance of the terms and conditions
      hereof or the consummation of the transactions contemplated hereby. No
Seller is aware of any basis upon which any such suit,
      claim, action, arbitration, proceeding or investigation could be brought or
      initiated. The Company or the
Affiliates is not bound by, subject
      to or in default
      under any order, judgment, award, writ, injunction or other ruling of any court,
      administrative or governmental authority.

    

    3.11  Other
      Liability

     

    Except
      as
      set forth in this Agreement or in any of the Schedules
      attached hereto, there are no liabilities, claims, lawsuits or events which
      could be the basis of a claim or lawsuit, loss, damage, deficiency,
      indebtedness, responsibility or other obligation of any nature or kind
      whatsoever, whether known or unknown, fixed or unfixed, liquidated or
      unliquidated, secured or unsecured, absolute, accrued, contingent or otherwise
      and whether due or to become due. Except for instruments endorsed for collection
      in the ordinary course of business, the Company or its
Affiliates is not liable under,
      a party to or an
      endorser, guarantor, surety, co-signor, co-maker or indemnitor of any contract,
      agreement, commitment or obligation of any person, corporation, firm or
      entity.

     

    3.12  Taxes

     

    
      	
            	
              (a)

            	
              Unless
                otherwise directed in Schedule D-1-2, the
                Company has: (i) timely filed, on or prior to
                the ClosingDate, all
                Taxes (as defined below) returns, reports,
                schedules, documents and declarations requires to be filed by any
                jurisdiction to which the Company or its
                Affiliates is or has been subject; (ii) timely
                paid in full all Taxes due and all
                Taxes claimed to be due by each such
                jurisdiction; (iii) made timely withholdings and timely payments
                of any
                Taxes required to be deducted and withheld
                from
                the wages or other amounts paid to employees of the
                Company and its
                Affiliates or to others on or prior to the
                Closing Date; and (iv) fully accrued in their
                respective financial statements all Taxes, for
                any periods, not yet due.  All Tax
                returns, schedules and declarations filed by the
                Company and its
                Affiliates correctly reflect, in all respects,
                the matters required to be reported therein including, where appropriate,
                income, expense, deductions, credits, loss carryovers and Taxes due,
                and
                such returns, schedules and declarations have not been amended. There
                are
                no controversies or claims, pending or otherwise, that have been
                asserted
                against the Company or its
                Affiliates that any Seller has a reasonable
                basis to anticipate will be asserted against the
                Company or its
                Affiliates or which would result in
                Burdens on any of the assets of the
                Company or its
                Affiliates and/or the Purchased
                Shares or that would result in any claim against
                Purchaser, the Company
                or its Affiliates, with regard to
                Taxes.

            

    

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      
STOCK PURCHASE AGREEMENT

    

     

    
      	
            	(b)	
              There
                are no outstanding agreements or waivers extending the statutory
                period of
                limitations applicable to any Taxes return of
                the Company and its Affiliates
                for any period.  No any taxing authority has audited any tax
                return of report filed by the Company or its
                Affiliates for any taxable period beginning
                after September 30th,
                2007. No
                Seller has any knowledge that an audit of the
                Company or its
                Affiliates’ tax returns is in progress and no
                Seller has any reason to believe that any other
                audit is contemplated. Sellers have provided
                true, correct and complete copies pf the Company
                or its Affiliates’ Tax returns for each taxable
                period beginning on and after January 1st,
                2005.

            

    

     

    
      	
            	
              (c)

            	
              Tax
                and Taxes mean income taxes (whether federal,
                provincial, state, local or foreign of other taxes on or measured
                by
                income, gross receipts, profits or occupations), franchise taxes,
                excise
                taxes, employment taxes, unemployment taxes, compulsory profit sharing
                distributions, payroll taxes, employee taxes, employer taxes, sales
                and
                use taxes, personal property taxes(including any liability for personal
                property taxes accruing, arising or in any way resulting from or
                determined with respect to or in any way relating to or referenced
                by any
                period prior to the Closing Date), transfer
                taxes, ad valorem taxes, value added taxes, taxes levied on assets,
                per
                capita taxes, head taxes, taxes arising as result of the transfer
                of the
                Purchased Shares or otherwise by virtue of the
                consummation of the transactions contemplated in this
                Agreement, and any other tax or taxes imposed,
                whether or not assessed, by any federal, provincial, state, municipal,
                local or other governmental agency, foreign or domestic, including
                assessments in the nature or taxes, as well as interest an penalties
                on
                any of the foregoing, of the Company or its
                Affiliates, whether arising before, on or after
                the Closing
                Date.

            

    

     

    3.13
      Labor Relations

     

    The
      persons employed by the Company and its
Affiliates on the Closing
      Date hereof (collectively, the
“Employees”) are solely and exclusively those
      indicated in the payrolls and records of each of the
Company and its Affiliates.
      The Employees are listed by duties, relevant
      employment category and remuneration on Schedule Q. The
Employees have been duly remunerated for all services
      performed by them in the course of their working relationship with the
Company and its Affiliates
      and such remuneration is in compliance with the provisions of all applicable
      laws and contracts (including any collective labor agreements). The
Company or its Affiliates
      has established sufficient provisions on their respective current financial
      statements to cover the relative payments owed to each of their respective
      employees and any remuneration or rights which have accrued but which are not
      yet payable. With respect to the remuneration paid to the
Employees, all contributions have been made relating
      to compulsory health insurance and social security and the relevant amounts
      have
      been duly paid, as provided under applicable law. The
Company or its Affiliates is
      in full compliance with all Laws and applicable labor collective agreements
      respecting employment and employment practices, terms and conditions of
      employment, pay equity and wages and hours, and laws and regulations concerning
      health and safety in the workplace. There is no, unless otherwise directed
      in
Schedule H, labor strike, dispute, slowdown or stoppage actually pending,
      involving or threatened against the Company or its
Affiliates. No employment complaint
      or grievance
      exists on the date hereof as regards any Employee. All
      vacation pay, bonuses, commissions and other employee benefit payments are
      reflected and have been accrued respectively in the books and records of the
      Company and its Affiliates.
      No payments of salary, pension, bonuses or other remuneration of any nature
      have
      been made or authorized since September 30th, 2007,
      to any
      officers, directors, former directors, shareholders or employees of the
Company and its Affiliates
      or to any person or entity not dealing at arm’s length with any of the
      foregoing, except in the ordinary course of business and at regular rates.
      The
      terms of employment applicable and actually applied to the
Employees are solely those provided by the applicable
      law and by the provisions of the applicable collective labor agreement. No
      special terms of employment exist, of a collective or individual nature, which
      provide for the regulation of the relationship with the Employees or with any
      of
      them in a manner other than that of the provisions referred to herein. No
      pension scheme arrangements have been put in place other than those required
      by
      provisions of law. The duties actually performed by each of the
Employees correspond to the relevant category
      specified in respect of that Employee in Schedule
      Q, except as otherwise provided on such Schedule. No disputes or claims
      for
      remuneration adjustments or of any other kind by any
Employee, or by the relevant trade unions, are pending
      and no situation exists which may give rise to any such disputes or claims
      in
      the future. No person having had or now having a business relationship with
      the
Company and its Affiliates
      has any right to assert a claim based on the subordinated nature of such
      relationship.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      
STOCK PURCHASE AGREEMENT

     

    3.14
      Distributors. Sales Representatives and Agents

     

    Attached
      hereto as Schedule R is a complete and accurate list of all distributors,
      sales representatives, agents, and business finders used by the
Company and its Affiliates.
      Neither the Company nor its
Affiliates is in breach of any
      such distribution,
      sales representative, agency or business finder agreements. Neither the
Company nor its Affiliates
      has duplicated the award of exclusive rights to different persons or entities
      within the same territory. The relationships between the
Company(including its
Affiliates) and its distributors,
      sales
      representatives, agents, and business finders have been established and
      conducted in such a way that no such person is entitled to claim that he/she
      is
      an employee of the Company or its
Affiliates.

    

    3.15
      Inventory

     

    All
      items
      of the Company and its
Affiliates’ inventories of raw
      materials, work in
      process, finished goods, packaging materials and supplies, point of sale
      supplies, color cards, brochures, printed materials, signs and displays are
      in
      good condition and of a quality usable and salable in the ordinary course of
      business, unless otherwise directed in Schedule D-1-9 and Schedule D-2-3.
      Both Parties agree the details of inventory shall be determined by counting
      on
      September 30th,
      2007.

    

    3.16
      Warehouses

     

    Schedule
      S sets forth a complete, correct and segregated list by company, of all
      warehouses and other locations, other than the Leased Real
      Property, at which any assets of the
Company and its Affiliates
      are situated, together with a description of the assets at such
      location.

    

    3.17 Bankruptcy

     

    No
      proceedings, whether voluntary or involuntary, are pending or threatened against
      the Company, its Affiliates
      or any Seller, nor is the
Company, its Affiliates
      or
      any Seller contemplating any such proceedings, under
      the bankruptcy laws and/or receivership or similar laws of China or of any
      other
      country or jurisdiction.

    

    3.18
      Satisfactory Relationships

     

    The
      Company and its Affiliates’
relationships with
      customers, vendors, suppliers, employees, governmental
      authorities, health care organizations and others with whom the
Company or its
Affiliates  has dealings are satisfactory
      and have not suffered any adverse deterioration since September 30th, 2007.
      To the best
      of each Seller’s knowledge, there is no proposed or
      contemplated termination or other changes in such satisfactory relationships.
      The Company or its
Affiliates is not required, in
      the ordinary course of
      its business, to provide any bonding or any other financial security
      arrangements in connection with any transactions with any customers or
      suppliers.

    

    3.19
      Subsidiaries and Equity Investments.

     

    The
      Company or its Affiliates
      has no subsidiaries, or any direct or indirect beneficial or equity interest,
      or
      debt convertible into any equity interest, in any entity, corporation or
      otherwise other than set forth in Schedule D. The
Company has no obligation or right of any kind
      or
      nature whatsoever to purchase any shares, securities or any other form of
      investment or interest in any entity, corporation or otherwise.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      
STOCK PURCHASE AGREEMENT

     

    3.20
      Representations and Warranties

     

    Each
      of
      the representations and warranties of Sellers set
      forth in this Article III, each of which is material to and is being relied
      upon
      by Purchaser, shall be true and correct as of the
Closing Date.

    

    3.21
      Disclosure

     

    no
      representations or warranties of Sellers contained in
      this Agreement, and no statements contained herein or
      in any schedule, agreement, document, instrument or communication furnished
      to
      Purchaser pursuant hereto, contains any untrue statement of fact, or omits
      to
      state a fact which is necessary in order to make the statements contained herein
      or therein in light of the circumstances under which they were made not
      misleading. There is no fact to the best of Sellers’ knowledge to
      Sellers which is not disclosed herein or which could adversely
      affect the operations, properties or financial condition of the
Company.

    

    ARTICLE
      IV

    Representations
      And Warranties Of Purchaser

    

    Purchaser
      hereby represents and warrants to Sellers that
      hereunder, each of which is material to and is being relied upon by
Sellers:-

    

    4.01
      Organization, Good Standing and Authority of Purchase

     

    Purchaser
      is a company duly organized, validly existing and in good standing under the
      law
      of USA and has full corporate power and authority to execute and deliver this
      Agreement and to perform its obligations hereunder.
      The execution, delivery and performance of this
Agreement have been authorized by
Purchaser, which authorization
      constitutes all
      necessary corporate action on the part of Purchaser to
      execution, delivery and performance of this Agreement.
      This Agreement, and all documents required to be
      executed and delivered by Purchaser hereunder,
      constitute legal, valid and binding obligation of
Purchaser enforceable in accordance with their
      terms.

    

    4.02
      No Conflict

     

    Purchaser
      represents and warrants that neither the execution and delivery of this
Agreement, nor its performance hereto does or
      will:-

    

    
      	
               

            	
              (a)

            	
              violate,
                conflict with or constitute a default under any provision of its
                constitutional documents (if any) or applicable
                law;

            

    

    

    
      	
               

            	
              (b)

            	
              conflict
                with or result in a breach of any agreement to which
                Purchaser is a party or by which its properties
                are bound other than such covenants and agreements with respect to
                which
                failure to perform would not have a material adverse effect on the
                transactions contemplated by this
                Agreement;

            

    

    

    
      	
               

            	
              (c)

            	
              violate
                any judgment, order, injunction, decree or award of any court,
                administrative agency or governmental body against, or binding upon,
                Purchaser or its properties;
                or

            

    

    

    
      	
               

            	
              (d)

            	
              constitute
                a violation by Purchaser of any law or
                regulation applicable to it or its
                properties.

            

    

    

    4.03
      No Broker or Finder

     

    No
      broker, finder or agent has acted directly or indirectly for
Purchaser in connection with this
Agreement or with the transactions
      contemplated by
      this Agreement.

    

    4.04
      Representations and Warranties

     

    Each
      of
      the representations and warranties of Purchaser set
      forth in this Article IV, each of which is material to and is being relied
      upon
      by Sellers, shall be true and correct as of the
Closing Date.

    

    

    
      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        
STOCK PURCHASE AGREEMENT

    

    
       

      ARTICLE
        V

      Survival
        Of Presentations And Warranties

    

    

    5.01
      Survival of Representations and Warranties of
Sellers

     

    Unless
      otherwise indicated herein, the covenants, representations and warranties of
      Sellers contained in this
Agreement and any agreement,
      instrument, certificate
      or other document executed or delivered pursuant hereto or thereto shall survive
      by one (1) year upon the Completion of the transactions contemplated
      hereby.

    

    5.02
      Survival of Representations and Warranties of
Purchaser

     

    Unless
      otherwise indicated herein, the covenants, representations and warranties of
      Purchaser contained in this
Agreement and any agreement,
      instrument, certificate
      or other document executed or delivered pursuant hereto or thereto shall survive
      by one (1) year upon the Completion of the transactions contemplated
      hereby.

    

    5.03
      Interruption Due to Notice of Claim

     

    For
      the
      purpose of this Article V, Purchaser and
Sellers agree that each representation
      and warranty,
      and the covenants contained in this Agreement will
      continue to survive beyond the relevant terms indicated under Section 5.01
      and
      5.02 abovementioned, until the relevant claim of indemnity has been resolved
      as
      provided for in this Agreement.

    

    ARTICLE
      VI

    Covenants

    6.01
      Further Assurance

     

    Notwithstanding
      the Completion, if Purchaser considers or is advised
      that any further assignment conveyance, consents or other documents are
      necessary or desirable to vest, perfect, confirm or record in Purchaser title
      to
      the Purchased Shares or to aid in the prosecution, defense or enforcement of
      any
      rights arising from the sale and transfer or the Purchased
      Shares including all interests rights pertaining to such
Purchased Shares, each Seller
shall
      execute and deliver promptly to
Purchaser any and all deeds, assignments, power of
      attorney, consents or other documents and do all things requested by Purchaser
      to vest, perfect or confirm title to the Purchased
      Shares in Purchaser or to convey such
      other rights as provided herein or to otherwise carry out the intent of this
      Agreement.

     

    Notwithstanding
      the Completion, if Sellers considers or is advised
      that any further assignment conveyance, consents or other documents are
      necessary or desirable to vest, perfect, confirm or record in
Sellers title to the Consideration
      Shares or to aid in the prosecution, defense or enforcement of any
      rights arising from the sale and transfer or the Consideration
      Shares including all interests rights pertaining to such
Consideration Shares,
Purchaser shall
      execute and deliver promptly to
Sellers any and all deeds, assignments, power of
      attorney, consents or other documents and do all things requested by
Sellers to vest, perfect or confirm title to the
Consideration Shares in
Sellers
      or to convey such other rights as provided
      herein or to otherwise carry out the intent of this
Agreement.

    

    6.02
      No Public Announcements

     

    Except
      as
      otherwise mandatorily required under any applicable laws, regulations or rules
      issued by any  government, public body or authority, regulatory
      authority or stock exchange authority having jurisdiction on either party,
      none
      of the parties to this Agreement nor any subsidiary
      and affiliate thereof shall make any public announcement relating to the
      transactions contemplated by this Agreement, without
      the prior consent of the other party.

    

    6.03
      Confidentiality

     

    Upon
      execution of this Agreement and for an indefinite term
      thereinafter, Sellers shall keep confidential and
      shall not disclose to any person, company, corporation, firm or entity any
      information, documents and/or materials relating to the
Company or the content of this
Agreement, except to the extent
      disclosure of any such
      information is required by laws, authorized by
Purchaser or reasonably occurs in connection with
      dispute over the terms of this Agreement.

     

    6.04
      Supplemental Disclosure

     

    Sellers
      will immediately notify Purchaser of any event or
      circumstance which (a) makes it necessary to correct any representation and
      warranty in Article III which has been rendered inaccurate thereby, or (b)
      arises hereafter and which, had it existed on or prior to the date hereof,
      would
      have resulted in an inaccuracy in a representation and warranty in Article
      III.

    

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      
STOCK PURCHASE AGREEMENT

     

    ARTICLE
      VII

    Sellers’s
      Obligations

    

    7.01
      Accuracy of Representations and Warranties

     

    All
      representations and warranties made by Sellers in this
Agreement shall be true and
      correct in all respects on
      and as of Signing, and Sellers shall have performed or
      complied in all respects with all covenants, agreements and conditions contained
      in this Agreement which are required to be performed
      or complied with. But the Investment Sellers (as
      defined in Schedule A) only take the obligations under Clause 3.02
      hereof.

    

    

    7.02
      Transfer of Title

     

    Sellers
      shall execute and deliver this Agreement and such
      other documents required to be executed and delivered by
Sellers pursuant to this
Agreement in order to give effect
      to the transaction
      contemplated hereby or to vest in Purchaser good and
      valid title in and to the Purchased Shares and confer
      on Purchaser all such other rights or powers
      incidental or in relation to the Purchased Shares,
      including without limitation voting rights, rights to obtain dividends and
      other
      distributions, and rights to dispose and/or transfer the Purchased
      Shares in the future. Sellers shall sign
      and deliver to Purchaser such other documents
      necessary in order to properly register Purchaser as
      owner of the Purchased Shares.

    

    

    ARTICLE
      VIII

    Purchaser’s
      Obligations

    

    8.01
      Accuracy of Representations and Warranties

     

    All
      representations and warranties made by Purchaser in
      this Agreement shall be true and correct in all
      respects on and as of Signing, and Purchaser shall
      have performed or complied in all respects with all covenants, agreements and
      conditions contained in this Agreement which are
      required to be performed or complied with.

    

    8.02
      Further Assurances

     

    Purchaser
      shall cooperate or cause the Company to cooperate with
Sellers and shall execute
      and deliver or cause the
Company to execute and deliver to
Sellers such other instruments
      and documents and take
      such other actions as may be reasonably requested by
Sellers in order to carry out, evidence and confirm
      the rights and the intended purpose of this
Agreement.

    

    8.03
      Promise not to sell the Land Use Right and Ownership of
      Buildings

     

    Purchaser
      promises not to sell the Land Use Right and/or
Ownership of Buildings, also not to result
      in the same
      case as if the Land Use Right and/or
Ownership of Buildings had been sold, within
      three (3)
      years upon the Closing Date or before the
Company is listed in AMEX,
      NASDAQ, NYSE or other major
      Security Exchanges, unless the deputy of Sellers
      consents.

     

    Each
      Seller shall jointly nominate a deputy upon the
Closing Date for reason of here
      above.

    

    ARTICLE
      IX

    Conditions
      Precedent To Obligations Of Purchaser

    

    The
      obligation of Purchaser to consummate the transaction
      contemplated by this Agreement shall be subject to
Sellers’ satisfaction, or written
      waiver by
Purchaser, on or prior to the Closing
      Date, of each of the following conditions:-

    

    9.01
      Accuracy of Representations and Warranties and Performance of
      Obligations

     

    All
      representations and warranties made by Sellers in this
Agreement and in any other document
      of
Sellers delivered pursuant hereto shall be true and
      correct in all respects on and as of the Closing Date,
      and Sellers shall have performed or complied in all
      respects with all covenants, agreements and conditions contained in this
Agreement on its part required to be performed of
      complied with at or prior to Closing Date, and
Purchaser shall have received
      a certificate signed by
      each such Sellers to the foregoing
      effect.

    

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      
STOCK PURCHASE AGREEMENT

     

    9.02 Transfer of Title in and to the
Purchased Shares

    Sellers
      shall execute such instrument of transfer, each bearing the requisite stamp
      duty
      in relation to the sale of the Purchased Shares, such
      transfer to be in favor of Purchaser, and take such
      other action as determined by Purchaser to transfer to
Purchaser good and marketable
      title in and to the
Purchased Shares and to properly change the relevant
      register in the shareholder’s book of the Company or
      any other documents.

    

    9.03
      No Contrary Judgment

     

    The
      Completion shall not violate any order, decree or judgment of any court or
      governmental body having competent jurisdiction and no claim, action, suit,
      proceeding or investigation shall have been commenced, be pending or threatened
      which questions the validity of this Agreement or of
      any action taken or to be taken to consummate the transaction contemplated
      hereby or which is likely to materially and adversely affect the value of the
      Company, the Affiliates or
      the Purchased Shares.

    

    ARTICLE
      X

    Conditions
      Precedent To Obligations Of Sellers

    

    The
      obligation of Sellers to consummate the transaction
      contemplated by this Agreement shall be subject to
Purchaser’s satisfaction, or
      written waiver by
Seller, on or prior to the Closing
      Date, of each of the following conditions:-

    

    10.01
      Accuracy of Representations and Warranties and Performance of
      Obligations

     

    All
      representations and warranties made by Purchaser in
      this Agreement and in any other document of
Purchaser delivered pursuant
      hereto shall be true and
      correct in all respects on and as of the Closing Date,
      and Purchaser shall have performed or complied in all
      respects with all covenants, agreements and conditions contained in
      this Agreement on its part required to be performed of
      complied with at or prior to the Closing Date, and
Sellers shall have received
      a certificate signed by an
      officer of Purchaser to the foregoing
      effect.

    

    10.02
      Consents

     

    All
      authorizations, permits, consents, or approval of any and all governmental
      regulatory authorities and other third parties required to be obtained by
Purchaser or which are necessary to consummate the
      transaction contemplated in this Agreement shall have
      been obtained and shall be in full force and effect.

    

    10.03
      No Contrary Judgment

     

    The
      Consideration Shares transactions shall not violate
      any order, deed of judgment, of any court or governmental body having competent
      jurisdiction and no claim, action, suit, proceeding of investigation shall
      have
      been commenced, be pending or threatened which questions the validity of this
      Agreement or of any action taken or to be taken to
      consummate the transactions contemplated hereby.

    

    10.04
      Resolutions

     

    Purchaser
      shall deliver copies, certified by the Secretary or Assistant Secretary of
      Purchaser, of resolutions of
Purchaser’ board of directors
      authorizing the
      execution, delivery and performance of this Agreement
      and all other agreements, documents and instruments relating hereto and the
      consummation of the transactions contemplated in this
Agreement, which certification shall recite that such
      resolutions have not bee subsequently amended, modified or rescinded and are
      in
      full force and effect.

    

    ARTICLE
      XI

    Indemnification

    

    11.01
      Sellers’s Indemnification

     

    
      	
            	
              11.01.1

            	
              Sellers
                agrees to indemnify, defend and hold Purchaser,
                its directors, officers, employees, subsidiaries, affiliates and
                the
                successors and assigns, of any of the foregoing (“Purchaser’s
                Indemnitees”) harmless from and against any and all claims,
                liabilities, obligations, demands, damages, losses, costs, expenses
                (including reasonable attorneys’ fees and expenses), fines, penalties,
                judgments and amounts paid in settlement, imposed on, asserted against
                or
                incurred by Purchaser’s Indemnitees
                (collectively, “Purchaser’s Losses”) and which
                arise out of, in connection with, result from or are incident to
                any of
                the following:- 

               

              any
                misrepresentation or breach of any representation, warranty, covenant,
                obligation or agreement of Sellers under this
                Agreement or in any Schedule, document or
                agreement furnished or to be furnished by
                Sellers under this
                Agreement;
                and

            

    

    

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      
STOCK PURCHASE AGREEMENT

    
 

    
      	
               

            	
              (a)

            	
              any
                claims, demands, suits, investigations, proceedings or actions by
                any
                third party containing or relating to allegations that, if true,
                would
                constitute a breach of, or misstatement in, any one of the representations
                and warranties of
                Purchaser.

            

    

    

    
      	
            	11.01.2	
              Both
                parties understand and acknowledge that any liability, debt,
                responsibility or duty with respect to the Purchased
                Shares before the transfer, whether actual or contingent,
                having occurred or possible to occur in the future, shall be born
                by
                Sellers notwithstanding that
                Sellers have transferred to
                Purchaser all its titles, interests and rights
                to and in the Purchased Shares. In the event
                that, after the Purchased Shares transfer,
                Purchaser is claimed by any party or is required
                by law to incur any liability, debt, responsibility or duty in connection
                with the Purchased Shares or the
                Company, Sellers shall
                indemnify, hold Purchaser harmless or cause the
                Company to indemnify, hold
                Purchaser harmless from and against all such
                liability, debt, responsibility or duty. But such indemnify will
                not
                exceed the value of 40% of Consideration Shares
                and 40% of Options (both are US$ 0.64 per
                share).

            

    

    

    11.02
      Purchaser’s Indemnification

     

    Purchaser
      agrees to indemnify, defend and hold Sellers harmless
      from and against any and all claims, liabilities, obligations, demands, damages,
      losses, costs, expenses (including reasonable attorneys’ fees and expenses),
      fines, penalties, judgments and amounts paid in settlement, imposed on, asserted
      against or incurred by Sellers and which arise out of,
      in connection with, result from or are incident to any misrepresentation or
      breach of any representation, warranty, covenant, obligation or agreement of
      Purchaser in this Agreement
      or in any document or agreement furnished or to be furnished by
Purchaser under this
Agreement.

    

    11.03
      Claim for Indemnification

     

    Any
      party
      seeking indemnification under the provisions of this
Agreement, within sixty (60) days of the time it
      discovers that it has a claim against another party or promptly upon receipt
      of
      written notice of any claim or the service of a summons or other initial legal
      process upon it in any action instituted against it which relates to this
Agreement, shall give written notice of such claim, or
      the commencement of such action, to the party from whom indemnification will
      be
      sought hereunder.

    

    

    ARTICLE
      XII

    Completion/Closing
      Date

    

    This
      Agreement will go into effect upon the signing of both
      Parties, the signing date will be Closing Date.
      (“Completion”). The parties will in good faith use all
      reasonable efforts to achieve the
Completion

    

    ARTICLE
      XIII

    Termination

    

    This
      Agreement may be terminated and upon such termination
      the SPA contemplated herein shall be abandoned at any time within one hundred
      and eighty (180) days upon Closing Date under any one
      of the following circumstances:-

    

    
      	
              (a)

            	
              by
                mutual written consent of the parties
                hereto;

            

    

    

    
      	
              (b)

            	
              by
                Purchaser or Sellers,
                if the other fails to satisfy and/ or perform the conditions precedent
                set
                forth in Article IX and X;

            

    

    

    
      	
              (c)

            	
              by
                Purchaser or Sellers,
                if any court of competent jurisdiction or any governmental body or
                agency
                shall have issued an order, decree or ruling, or taken any other
                action,
                restraining, enjoining or otherwise prohibiting the consummation
                of the
                transaction contemplated by this
                Agreement;

            

    

     

    
      	
              (d)

            	
              by
                Purchaser, if, as a result of
                Purchaser’s investigation of the
                Company or the Purchased
                Shares, the same are deemed to be frustration of the
                Agreement;

            

    

    

    
      	
              (e)

            	
              by
                Purchaser or Sellers if, in the
                case of Purchaser, there has been a material
                misrepresentation or breach of warranty in the representation and
                warranties of Sellers made under this
                Agreement or if, in the case of
                Sellers, there has been a material
                misrepresentation or breach of warranty in the representation and
                warranties of Purchaser made under this
                Agreement.

            

    

    
 

    
      
        
        

      

      
        16

        
          

        

      

      
        STOCK
          PURCHASE AGREEMENT

      

    

     

    Any
      termination pursuant to this Article XIII will not affect the obligations of
      the
      parties under Article XIV (Expenses) or Section 6.03 (Confidentiality), and
      will
      be without prejudice to either party’s legal rights and remedies available to
      such party by reason of the other party’s breach of this
Agreement occurring prior to such termination.
      Notwithstanding anything in this Agreement to the
      contrary, if Purchaser: (i) has complied with all of
      the conditions contained in Article X; (ii) has notified any of
Sellers of its intention to consummate the
      transactions contemplated under this Agreement, and
      (iii) is ready and able to transfer the Consideration
      Shares to Sellers if the transaction
      hereunder is not consummated due to the refusal of Sellers to perform any of
      its
      obligations under this Agreement,
Purchaser will be entitled to
      specifically enforce the
      terms of this Agreement in a court of competent
      jurisdiction, it being acknowledged that monetary damages available to
Purchaser in such case cannot be adequately determined
      at law. If the Sellers has transferred the
Purchased Shares to
Purchaser
      if the transaction hereunder is not
      consummated due to the refusal of Purchaser to perform
      any of its obligations under this Agreement,
Sellers will be entitled to
      specifically enforce the
      terms of this Agreement in a court of competent
      jurisdiction, it being acknowledged that monetary damages available to
Sellers in such case cannot be adequately determined
      at law.

    

    ARTICLE
      X IV

    Expenses

    

    The
      attorney fee and accountant fee shall be born by
Purchaser and Sellers in
      half. Purchaser agrees that the portion bore by
Sellers may be paid by the
      Company. In reason of this approach,
Sellers shall make sure such
      payment will match the
      Article of Associations of the Company.

     

     

    ARTICLE
      XV

    Arbitration
      Proceeding

    

    Any
      dispute arising out of or in connection with this
Agreement, including those relating to the
      interpretation, application or termination for whatever reason of this
Agreement, which is not settled amicably within
      forty-five (45) days by Sellers and
Purchaser, at either party’s request shall be
      submitted for final determination by arbitration in accordance with the CIETAC
      Arbitration Rules as at present in force and as may be amended from time to
      time. The place of arbitration shall be in Shanghai at China International
      Economic and Trade Arbitration Committee (CIETAC) Shanghai Branch. Any such
      arbitration shall be administered by CIETAC in accordance with CIETAC Procedures
      for Arbitration in force at the date of this contract including such additions
      to the CIETAC Arbitration Rules as are therein contained. The arbitration panel
      shall consist of three (3) arbitrators. Two arbitrators shall be appointed,
      one
      by Sellers and one by
Purchaser. The party requesting
      arbitration shall,
      simultaneously with such request, appoint one arbitrator and shall notify the
      other of such appointment together with the arbitrator’s acceptance. Within ten
      (10) business days of the receipt of such notice, the other party shall appoint
      the second arbitrator and shall notify the requesting party of such appointment
      together with the arbitrator’s acceptance. The third arbitrator, who shall act
      as Chairman of the arbitration panel, shall be appointed by the other two
      arbitrators within the following ten (10) business days. In the event either
      party fails to appoint an arbitrator or in the event no agreement is reached
      between the two arbitrators as to the appointment of the third arbitrator in
      accordance with the foregoing provisions, such arbitrator or arbitrators shall
      be appointed, upon application by the interested party, by the CIETAC in
      Shanghai. The award of the arbitrators shall be final and binding upon the
      parties and shall not be subject to any appeal or challenge whatsoever. Each
      party hereby designates its respective address, as set forth in Section 16.01
      hereof, as its respective domicile at which service of process may be made
      in
      any arbitration, legal action or proceeding arising hereunder. Each party shall
      bear its own costs and expenses related to the arbitration unless otherwise
      determined by the CIETAC in its arbitration award, and each party shall bear
      equally the costs and expenses of the arbitrators.

    

    ARTICLE
      X VI

    Miscellaneous

    

    16.01
      Notices

     

    Any
      notices, requests, claims, demands, instructions and other communications to
      be
      given hereunder to any party shall be in writing and delivered in person, sent
      either by hand delivery, by international courier, or by facsimile transmission
      with confirmation of such transmission, to the following addresses (or at such
      other address or number as specified in writing by the other party pursuant
      hereto):-

    

    
      	
              If
                to Sellers

            	
              Thomas
                Chia

              No.
                666, West Kang Qiao Road, Kang Qiao Industry Zone, Pu Dong District,
                Shanghai, P.R.C.

            

    

    

    
      	
              If
                to Purchaser

            	
              Jing
                Jing Long

              10925
                Schmidt Road,

            
	 	
              El
                Monte, CA 91733 USA

            
	 	 

    

    

    16.02
      Amendments

     

    This
      Agreement may be amended only upon the mutual written
      consent of the parties hereto.

    
 

    
      
        
        

      

      
        17

        
          

        

      

      
        STOCK
          PURCHASE AGREEMENT

      

    

     

    16.03
      Duplicates, Originals Counterparts

     

    This
      Agreement may be executed in counterparts, each of
      which shall be deemed to be an original, but all of which together shall
      constitute one and the same agreement.

    

    16.04
      Entire Agreement

     

    This
      Agreement, including the Schedules hereto, constitutes
      the entire agreement between the parties with respect to the subject matter
      hereof and supersedes all prior agreements and understandings between the
      parties. There are no representations, warranties, undertakings or agreements
      between the parties with respect to the subject matter of this
Agreement except as set forth herein.

    

    16.05
      Non-Assignability

     

    None
      of
      the parties hereto may assign its rights, interests, obligations or liabilities
      under this Agreement or delegate its duties without
      the prior written consent of the other party.

    

    16.06
      Headings

     

    The
      headings contained in this Agreement are for
      convenience of reference only and shall not affect the interpretation of
      this Agreement.

    

    16.07
      Governing Law

     

    This
      Agreement shall be governed and construed in
      accordance with the laws of People’s Republic of China.

    

    16.08
      Remedies

     

    No
      remedy
      conferred by any of the specific provisions of this
Agreement is intended to be exclusive of any other
      remedy, and each and every remedy will be cumulative and will be in addition
      to
      every remedy given under this Agreement or now or
      subsequently existing, at law or in equity, by statute or otherwise. The
      election of any one or more remedies by Purchaser or
Sellers will not constitute
      a waiver of the right to
      pursue other available remedies.

    

    16.09
      Severability

     

    In
      the
      event any term or provision of this Agreement shall be
      deemed to be illegal, invalid or unenforceable for any reason, such illegality,
      invalidity or unenforceability will not affect any other term or provision
      of
      this Agreement and the parties shall endeavor to
      replace the invalid or null and void provision(s) with such which correspond
      best to the intentions of the parties hereto.

    16.10
      Language

     

    This
      Agreement shall be written in English and Chinese,
      both versions shall be equally authentic. In case of any discrepancy between
      the
      two versions, the Chinese version shall prevail.

    

    ***************************************************************************

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      
STOCK PURCHASE AGREEMENT

    

    IN
      WITNESS WHEREOF, the parties hereto have executed this Agreement on the
      date hereinbefore stated.

    

    Purchaser:

    
      	
              Tank
                Sports Inc.

              By:
                /s/  Jing Jing Long

              Title:
                CEO

            

    

    

    Seller:

    
      	
              (Each
                Seller who entrusted Mr. Thomas Chia to sign this Agreement are listed
                in
                Schedule A)

               

               

              By:
                /s/  Thomas Chia

              Title:
                Executive Director

            	 
	
               

               

              /s/  Thomas
                Chia

               

            	
               

               

              /s/ 
                Stanley Chan

               

            
	
               

               

              /s/ 
                Chan Iong Sang

               

            	 
	 	 

    

    

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      
STOCK PURCHASE AGREEMENT

    SCHEDULES

    

    
      	
              A

            	
              Sellers

            	
              1.01

            
	
              B

            	
              Total
                PMI Shares Holder by Seller

            	
              1.02(a)

            
	
              C

            	
              Consideration
                Shares & Transfer Sechedule

            	
              1.02(b)

            
	
              D

            	
              List
                of the Assets

            	
              2.02(a)

            
	
              E

            	
              Affiliates

            	
              3.01(b);
                3.03; 3.04

            
	
              F

            	
              List
                of Debts

            	
              2.02(b)

            
	
              G

            	
              Finance
                Statement

            	
              1.02(a);
                3.04

            
	
              H

            	
              Due
                Diligence Report

            	
              1.02(a)

            
	
              I

            	
              List
                of Real Estates

            	
              3.05(a)

            
	
              J

            	
              List
                of Leasing

            	
              3.05(b)

            
	
              K

            	
              List
                of Machines and Equipment

            	
              3.06

            
	
              M

            	
              List
                of Proprietary Rights

            	
              3.07(a)

            
	
              N

            	
              Contracts

            	
              3.08

            
	
              O

            	
              Certificates

            	
              3.09(b)

            
	
              P

            	
              Litigations

            	
              3.10

            
	
              Q

            	
              List
                of Employees

            	
              3.13

            
	
              R

            	
              Distributors,
                Sales and Agents

            	
              3.14

            
	
              S

            	
              Warehouses

            	
              3.16

            
	
              T

            	
              Others

            	
              3.11

            

    

    

     

     

     

     

     

    
 

    

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      
STOCK PURCHASE AGREEMENT

    Schedule
      A,B,C (Combined)

     

    

     

    
      	
              Name
                of Seller

              

            	
              PMI
                Shares Owned and to be transferred by Seller

            	
               

              Total
                Number of Consideration Shares/Warrants Received

               

            	
              Number
                of Shares to be Transferred to Seller within 45 days after the Closing
                Date

            	
              Number
                of Shares to be Transferred to Seller on the 180th date following
                the
                Closing Date

            
	
              Shareholder

              &
                Management

            	 	 	 	 
	
              Thomas
                Chia

            	
              1,441,610

            	
              549,185/205,944

            	
              32,9511

            	
              219,674

            
	
              Stanley
                Chan

            	
              756,558

            	
              288,212/108,080

            	
              172,927

            	
              115,285

            
	
              Joseph
                Chan

            	
              247,040

            	
              94,110/35,291

            	
              56,466

            	
              37,644

            
	
              Shareholder
                & Investor

            	 	 	 	 
	
              Asia
                Star IT Fund LP

            	
              585,868

            	
              223,188/83,696

            	
              133,913

            	
              89,275

            
	
              Kilin
                To

            	
              19,529

            	
              7,440/2,790

            	
              4,464

            	
              2,976

            
	
              Jonas
                Wang

            	
              465

            	
              177/66

            	
              106

            	
              71

            
	
              Ada
                Yuen

            	
              1,255

            	
              478/179

            	
              287

            	
              191

            
	
              Chong
                Family Trust

            	
              465

            	
              177/66

            	
              106

            	
              71

            
	
              Eric
                Lin

            	
              930

            	
              354/133

            	
              212

            	
              142

            
	
              Shareholder
                & Non-Management

            	 	 	 	 
	
              Michael
                Tung

            	
              465

            	
              177/66

            	
              106

            	
              71

            
	
              Mitchell
                Tseng

            	
              2,325

            	
              886/332

            	
              532

            	
              354

            
	
              Tse
                Kwong

            	
              288,7500

            	
              1,100,000/412,500

            	
              660,000

            	
              440,000

            
	
              Christina
                Mou

            	
              900,000

            	
              342,857/128,571

            	
              205,714

            	
              137,143

            
	
              Inspirational
                Wisdom Ltd

            	
              1,500,000

            	
              571,429/214,286

            	
              342,857

            	
              228,572

            
	
              Lee
                Chang Chi

            	
              448,612

            	
              170,900/64,088

            	
              102,540

            	
              68,360

            
	
              Ying
                Ming Che

            	
              1,497,378

            	
              570,430/213,912

            	
              342,258

            	
              228,172

            
	
              Cheng
                Wen Cheng

            	
              52,500

            	
              20,000/7,500

            	
              12,000

            	
              8,000

            
	
              Smartman
                Enterprises Ltd

            	
              157,500

            	
              60,000/22,500

            	
              36,000

            	
              24,000

            
	
              Total

            	
              10,500,000

            	
              4,000,000/1,500,000

            	
              2,400,000

            	
              1,600,000

            

    

     

     

     

     

     

     

     

     

     

     

     21ex10_1.htm

  
     

    
      	
               

            	
              Exhibit
                10.1

            

    

     

    

    EMPLOYMENT
      AGREEMENT

    

    EMPLOYMENT
      AGREEMENT
(this “Agreement”), dated as of November 20, 2007, between PHILIP
      KOWALCZYK (the “Executive”) and THE TALBOTS, INC., a Delaware corporation
      (together with it subsidiaries, the “Company”).

    WITNESSETH

    WHEREAS,
      the Executive has heretofore been employed by the Company as the
      President of its wholly owned subsidiary, The J. Jill Group, Inc. (“J. Jill”),
      pursuant to that certain employment agreement dated November 3, 2004, by and
      between the Company and the Executive, as amended by Amendment No. 1 to the
      Original Agreement dated May 3, 2006, by and between the Executive and the
      Company (as amended, the “Original Agreement”);

    WHEREAS,
      the Company has promoted the Executive to the position of Chief Operating
      Officer of the Company and the Executive desires to serve in such position,
      on
      the terms and conditions provided below;

    WHEREAS,
      this Agreement shall govern the employment relationship between Executive and
      the Company and supersedes all previous agreements and understandings with
      respect to such employment relationship, including without limitation the
      Original Agreement and the Term Sheet between the Company and the Executive
      dated October 4, 2007 (the “Term Sheet”);

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

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    1.  Engagement.  The
      Company hereby agrees to  employ the Executive, and the Executive
      hereby accepts such employment, as Chief Operating Officer (“COO”) of the
      Company, on the terms and conditions set forth herein, unless and until such
      employment hereunder shall have been terminated as provided in this
      Agreement.

    2.  Title
      and
      Duties.  During his employment by the
      Company, the Executive shall render his services as COO of the Company, shall
      perform duties consistent with his title as the Company shall reasonably
      request, and shall devote his full business time and best efforts to his duties
      hereunder and the business and affairs of the Company (except during vacation
      periods and reasonable periods of illness or other incapacity).  The
      Executive also agrees to continue to serve as the President of J. Jill on an
      interim basis until his successor is appointed, or such other time as the Chief
      Executive Officer or the Company’s Board of Directors (the “Board”) may
      determine.  The Executive may from time to time engage in such other
      pursuits, including, without limitation personal legal and personal financial
      affairs as shall not materially interfere with the proper performance of his
      duties and obligations hereunder, provided the Executive may serve on the board
      of directors of a public or private “for profit” company with the prior written
      consent of the Board.

    3.  Compensation.  As
      compensation for his services to the Company hereunder, the Company shall pay
      to
      the Executive the following:

    (A)  Base
      Salary

    (i)  Effective
      September 6,
      2007, the Executive’s base salary shall be $725,000 per annum (“Base Salary”),
      payable in substantially equal installments, in accordance with the normal
      payroll practices of the Company.

    (ii)  Base
      Salary may be
      increased during the term but may not be decreased, and the Board or the
      Compensation Committee of the Board (the “Compensation Committee”) shall
      consider, on an annual basis, the nature, extent and advisability, if any,
      of an
      increase in the Executive’s Base Salary.  Executive’s first
      eligibility for a salary increase will be scheduled for the first quarter of
      2008.

    
      
        
        

      

      
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    (B)           Annual
      Incentive Bonus.  For each fiscal year
      of the Company that ends during the term, Executive will be eligible to
      participate in the Company’s annual incentive plan established and developed by
      the Compensation Committee, as it may then be in effect (the “AIP”). Executive’s
      target annual bonus opportunity (“Target Bonus”) shall be determined in
      accordance with the applicable bonus arrangement in place from time to time,
      provided that the Target Bonus shall be no less than 45% of Base Salary, and
      the
      Target Bonus may be increased but not decreased from time to time in the
      Compensation Committee’s sole discretion.

    (C)    Special
      Inducement Award.  As a special inducement award, in
      consideration for Executive’s entering into this Agreement, the Executive shall
      be awarded a restricted stock award covering 53,476 shares of Common Stock
      of
      the Company, $0.01 par value per share (“Common Stock”) pursuant to and subject
      to the terms and conditions of a restricted stock award agreement, in the form
      of Exhibit A, to be executed by the Company and the Executive.  The
      restricted stock will vest in the following increments:  26,738 shares
      on October 4, 2008 and 26,738 shares on October 4, 2009.  Upon a
      termination of Executive’s employment without Cause (as defined in Section 6(C))
      or due to his death or Disability (as defined in Section 6(A)) or upon a
      termination of employment by the Executive for Good Reason (as defined in
      Section 6(D)), or upon a Change-in-Control (as defined in Exhibit B), then
      all
      such unvested restricted stock shall vest in full, the restricted period as
      to
      such shares shall automatically expire and the Company waives any repurchase
      option as to such shares (all subject to the Company’s receipt from the
      Executive of a release of claims as referred to in Section 6(H) below), and
      upon
      a termination of Executive’s employment for Cause or termination by the
      Executive without Good Reason, any then unvested restricted stock shall be
      forfeited.

    
      
        
        

      

      
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    (D)  Executive
      Stock Based Incentive Plan.

    (i)  General.  The
      Executive shall be eligible to receive such equity incentive compensation as
      may
      be awarded from time to time pursuant to the Company’s Executive Stock Based
      Incentive Plan as same may be amended or superseded from time to time (the
      Executive Stock Based Incentive Plan, as same may be amended or superseded
      from
      time to time, is hereinafter referred to as the “Equity Plan”).  All
      incentive awards granted to the Executive shall be subject to the terms of
      the
      Equity Plan.  The Company agrees that the terms of any grant of stock
      options the Compensation Committee makes to the Executive under the Plan shall
      provide that upon the termination of the Executive’s employment without Cause
      (as defined in Section 6(C)) or due to his Disability (as defined in Section
      6(A)) or upon termination of employment by the Executive for Good Reason (as
      defined in Section 6(D)), the Executive’s right to exercise any then
      unexercised, vested stock options shall be a period of not less than three
      (3)
      years (and in the case of the Executive’s death, one year) from the date of such
      termination, but not beyond the expiration date of the options.

    (ii)  Future
      Stock Option and Restricted Stock
      Awards.  The Executive understands and
      agrees that the number and timing of any future stock option and restricted
      stock awards to be granted to the Executive shall be subject to the Compensation
      Committee’s sole discretion.

    

    4.  Benefits.  Subject
      to the provisions of this Agreement, the Company shall provide the following
      benefits to the Executive for services rendered during the Term of
      Employment:

    
      
        
        

      

      
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    (A)  Insurance
      and
      Retirement Benefits.  The Executive
      shall be entitled to such insurance benefits of the Company as may be in effect
      from time to time and generally available to employees at the senior executive
      level, including, but not limited to, disability insurance and business travel
      accident insurance.  The Executive shall also be entitled to
      participate in benefit programs provided by the Company, including, but not
      limited to, the retirement program, the supplemental retirement program, the
      R.S.V.P. 401(k) Savings Program and the supplemental R.S.V.P. 401(k) Savings
      Program as in effect from time to time.  The Executive’s participation
      in the programs referred to in this Section 4(A) shall be subject to the terms
      and conditions of the respective programs as they may be amended by the Company
      from time to time in its sole discretion.

    (B)  Other
      Insurance and Welfare Benefits.  During
      the term, Executive will be eligible to participate, on terms which are
      generally available to the other senior executives of the Company and subject
      to
      the eligibility requirements of the applicable Company plans as in effect from
      time to time, in the Company’s deferred compensation, medical, dental, vacation,
      and life insurance programs, and other benefits generally available to the
      Company’s senior executives from time to time.

    (C)  Automobile
      Program.  The Executive shall be
      entitled to participate in the Company’s Executive Automobile Program, pursuant
      to which the Company, at the Executive’s election, shall either: (i) provide the
      Executive with an automobile (which automobile shall be replaced every two
      (2)
      years) for his use with a value, when new, of up to $42,800 and shall reimburse
      the Executive for all costs and expenses associated with such automobile
      (including, but not limited to, automobile insurance, repairs, and gas), or
      (ii)
      provide the Executive with a monthly automobile allowance, which allowance
      shall
      be based upon the annualized imputed value of the automobile to which the
      Executive is entitled under such program.  The value of the automobile
      to which the Executive is entitled shall be subject to an annual review and
      may
      be increased at the discretion of the Compensation Committee, in accordance
      with
      the terms of the Company’s Executive Automobile Program; provided, however, the
      Executive shall be entitled to receive any benefit to which participants in
      the
      Company’s Executive Automobile Program may from time to time hereafter generally
      become entitled thereunder that is broader or greater than the benefits to
      which
      participants are currently generally entitled (e.g., an across-the-board
      increase in the value of automobiles received under such program).

    
      
        
        

      

      
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    (D)  Financial
      Counseling Program.  The Executive shall
      be entitled to participate in the Company’s Key Management Financial Counseling
      Program.  The Executive’s initial annual allowance shall be $3,500 per
      calendar year, which allowance shall be subject to periodic review by the
      Compensation Committee and may be increased at the discretion of the Board,
      in
      accordance with the terms of the Key Management Financial Counseling
      Program.

    (E)  Vacation.  The
      Executive shall be entitled to an aggregate of not less than four (4) weeks
      of
      paid vacation in each full calendar-year during the Executive’s employment
      hereunder.

    (F)  Employee
      Discount.  The Executive shall be
      entitled to receive the benefit of any Company Discount which may be in effect
      from time to time and is generally available to the employees of the
      Company.  The Company Discount currently is forty (40%)
      percent.

    (G)  Perquisites.  Perquisites
      will not be grossed up for taxes.

    5.  Expenses.  The
      Executive is authorized to incur and the Company shall either pay directly
      or
      reimburse the Executive for ordinary and reasonable expenses in connection
      with
      the performance of his duties hereunder, including, without limitation, expenses
      for (A) transportation, (B) business meals, (C) travel and lodging, and (D)
      similar items.  The Executive agrees to comply with the Company’s
      policies with respect to record keeping in connection with such
      expenses.

    
      
        
        

      

      
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    6.  Termination
      of
      Employment.

    The
      employment of the Executive
      hereunder may be terminated by the Company at any time, subject to the Company
      providing the compensation and benefits in accordance with the terms of this
      Agreement.  The Executive acknowledges and agrees that Executive’s
      rights in the event of any termination or cessation of his employment with
      the
      Company at any time shall be governed solely and exclusively by the terms set
      forth in this Section 6, together with any rights expressly provided under
      Sections 3(C), 3(D), 7-9 and 13-18 of this Agreement.  Subject to the
      rights of the Company set forth in this Agreement (including Sections 11 and
      12), a voluntary termination of employment by the Executive without Good Reason
      under Section 6(G) will not constitute a breach by the Executive of this
      Agreement.

    (A)           Termination
      due to Death or Disability.  In the event of the Executive’s
      death, Executive's employment shall automatically cease and terminate as of
      the
      date of death.  If Executive becomes Disabled, the Company may
      terminate Executive's employment upon thirty (30) days written notice to
      Executive.  For purposes of this Agreement, the terms "Disabled" or
      "Disability" shall mean Executive's inability, because of physical or mental
      illness or injury, substantially to perform his duties hereunder as a result
      of
      physical incapacity for a continuous period of at least six (6)
      months.  Any dispute as to the Executive’s incapacitation shall be
      resolved by an independent physician selected by the Board and reasonably
      acceptable to the Executive or his legal representative, whose determination
      shall be final and binding upon both the Executive and the
      Company.  In the event of the termination of employment due to
      Executive's death or Disability, Executive or his estate or legal
      representatives shall be entitled to receive:

    
      
        
        

      

      
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    (i)           payment
      for all accrued but unpaid Base Salary as of the date of Executive's termination
      of employment;

    (ii)           reimbursement
      for expenses incurred by the Executive pursuant to Section 4 (C), 4 (D) and 5 up
      to and including the date on which employment is terminated;

    (iii)           any
      earned benefits to which the Executive may be entitled as of the date of
      termination pursuant to the terms of any compensation or benefit plans to the
      extent permitted by such plans (with the payments described in subsections
      (i)
      through (iii) above collectively called the “Accrued Payments”);

    (iv)           any
      annual incentive bonus earned but not yet paid for any completed full fiscal
      year immediately preceding the employment termination date; and

    (v)           if
      employment termination occurs prior to the end of any fiscal year, a pro rata
      annual incentive bonus for the fiscal year in which employment termination
      occurs (based on actual business days in such fiscal year prior to such
      employment termination, divided by the total annual business days) determined
      and paid based on actual performance achieved for such fiscal year against
      the
      performance goals for that fiscal year (provided that, if Executive’s own
      individual performance rating constitutes a separate component under the annual
      incentive plan, it will be deemed to have been achieved at a target individual
      performance rating).

     (B)                      Termination
      on or following Normal Retirement Date.  The employment
      of the Executive hereunder may be terminated by the Company or by the Executive
      on or after the Executive’s normal retirement date, which is age 65 (“Normal
      Retirement”).  In the event of termination of employment under this
      Section 6(B), Executive shall be entitled to receive:

    
      
        
        

      

      
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    (i)            
      the Accrued Payments;

    (ii)           
      any annual incentive bonus earned but not yet paid for any completed full fiscal
      year immediately preceding the employment termination date; and

    (iii)           if
      employment termination occurs prior to the end of any fiscal year, a pro rata
      annual incentive bonus for such fiscal year in which employment termination
      occurs (based on actual business days in such fiscal year prior to such
      employment termination, divided by the total annual business days) determined
      and paid based on actual performance achieved for such fiscal year against
      the
      performance goals for that fiscal year (provided that, if Executive’s own
      individual performance rating constitutes a separate component under the annual
      incentive plan, it will be deemed to have been achieved at a target individual
      performance rating).

    (C)           Termination
      for Cause.  The Company may, by providing written notice
      to Executive, terminate Executive's employment for Cause.   The
      term "Cause" for purpose of this Agreement shall mean:

    (i)            
      Executive's conviction of, or entrance of a plea of guilty or nolo contendere
      to, a felony under federal law or state law; or

    (ii)            fraudulent
      conduct by Executive in connection with the business affairs of the Company;
      or

    (iii)           theft,
      embezzlement, or other criminal misappropriation of funds by Executive (other
      than good faith expense account disputes or de minimis amounts); or

    (iv)           Executive's
      willful refusal to materially perform his executive duties hereunder;
      or

    
      
        
        

      

      
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    (v)            Executive's
      willful misconduct, which has, or would have if generally known, a materially
      adverse effect on the business or reputation of the Company; or

    (vi)          
      Executive's material breach of a covenant, representation, warranty or
      obligation of Executive under this Agreement.

    For
      purposes of this Section 6(C), an act or failure to act shall be considered
      “willful” only if done or omitted to be done without a good faith reasonable
      belief that such act or failure to act was in the best interests of the
      Company.

    Any
      determination of Cause by the Company will be made by a resolution approved
      by a
      majority of the members of the Board, provided that no such determination may
      be
      made until Executive has been given written notice detailing the specific event
      constituting such Cause and a period of thirty (30) days following receipt
      of
      such notice to cure such event (if susceptible to cure), and, if such event
      is
      not curable or is not cured, an opportunity to appear before the Board (with
      legal counsel if so requested in writing by Executive) to discuss the specific
      circumstances alleged to give rise to the Cause event. Subject to Executive's
      right to cure and/or appear before the Board, if Executive's employment is
      terminated for Cause, the termination shall take effect on the effective date
      of
      such termination as specified in the written notice of such termination
      delivered to Executive.

    In
      the
      event of the termination of Executive's employment hereunder by the Company
      for
      Cause, then Executive shall be entitled to receive payment of the Accrued
      Payments.

    If
      the
      Company attempts to terminate Executive's employment pursuant to this Section
      6(C) and it is ultimately determined that the Company lacked Cause, the
      provisions of Section 6(D), Section 6(E) or Section 6(F) (as applicable) shall
      apply and Executive shall be entitled to receive the payments set forth under
      Section 6(D), Section 6(E) or Section 6(F) (as applicable).

    
      
        
        

      

      
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    (D)           Termination
      without Cause or for Good Reason prior to Change-in-Control through the end
      of
      Fiscal 2009. The Company may terminate Executive's employment
      hereunder without Cause at any time, by providing Executive 30 days’ written
      notice of such termination. Such notice shall specify the effective date of
      the
      termination of Executive's employment. The Executive may terminate his
      employment for Good Reason by providing 30 days’ prior written notice to the
      Company.  In the event of the termination of Executive's employment
      under this Section 6(D) without Cause or by the Executive for Good Reason,
      in
      each case from the date of this Agreement through the end of the Company’s
      fiscal year 2009 and in each case prior to, or more than 24 months following,
      a
      Change-in-Control (as defined in Exhibit B), then Executive shall be entitled
      to:

    (i)            
      payment of the Accrued Payments;

    (ii)            a
      separation allowance, payable in separate, equal installments in accordance
      with
      normal payroll practices over a 24 month period beginning immediately following
      the date of termination, in an aggregate amount equal to two (2) times the
      sum
      of (x) Executive’s then Base Salary and (y) the Executive’s then Target
      Bonus;

    (iii)           any
      annual incentive bonus earned but not yet paid for any completed full fiscal
      year immediately preceding the employment termination date;

    (iv)           if
      employment termination occurs prior to the end of any fiscal year, a pro rata
      annual incentive bonus for such fiscal year in which employment termination
      occurs (based on actual business days in such fiscal year prior to such
      employment termination, divided by the total annual business days) determined
      and paid based on actual performance achieved for such fiscal year against
      the
      performance goals for that fiscal year (provided that, if Executive’s own
      individual performance rating constitutes a separate component under the annual
      incentive plan, it will be deemed to have been achieved at a target individual
      performance rating); and

    
      
        
        

      

      
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      (v)           the Company
      shall arrange for the Executive to continue to participate (through COBRA or
      otherwise), on substantially the same terms and conditions as in effect for
      the
      Executive (including any required contribution) immediately prior to such
      termination, in the medical, dental, disability and life insurance programs
      provided to the Executive pursuant to Section 4(A) and Section 4(B) hereof
      (the
“Benefits Continuation”) until the earlier of (i) the end of the 24 month period
      beginning on the effective date of the termination of Executive’s employment
      hereunder, or (ii) such time as the Executive is eligible to be covered by
      comparable benefit(s) of a subsequent employer (determined on a
      benefit-by-benefit and coverage-by-coverage basis).  The Executive
      agrees to notify the Company promptly if and when he begins employment with
      another employer and if and when he becomes eligible to participate in any
      benefit or other welfare plans, programs or arrangements of another
      employer.

    For
      purposes of this Agreement, the term "Good Reason" means, without Executive’s
      written consent:

    (a)            a
      reduction by the Company in Executive's Base Salary or Target
      Bonus  as in effect from time to time (or its equivalent as reasonably
      determined by the Compensation Committee); or

    
      
        
        

      

      
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    (b)            a
      material reduction of Executive’s duties, other than during any period of
      illness or incapacity, such that Executive no longer has the title of, or serves
      or functions as, chief operating officer of the Company; provided that
      realignments in direct marketing functions will not constitute Good Reason;
      and
      provided further that neither a Change-in-Control nor a going private event
      will
      be an event which constitutes Good Reason or be considered a separate factor
      in
      determining whether any material reduction in duties constituting Good Reason
      under this subsection (b) has occurred; or

     (c)           the
      Company requiring Executive to be based at a location in excess of thirty-five
      (35) miles from the location of the Company's principal executive
      office  in Hingham, Massachusetts as of the effective date of this
      Agreement, except for required travel on Company business; or

    (d)            the
      Company fails to obtain the written assumption of its obligations under this
      Agreement by a successor not later than the consummation of a merger,
      consolidation or sale of the Company; or 

    (e)            a
      material breach by the Company of its obligations under this Agreement,
which,
      in
      each of subsections (a) through (e) above, is not remedied by the Company within
      30 days of receipt of written notice of such event or breach delivered by
      Executive to the Company; provided, that the Executive may only exercise his
      right to terminate this Agreement for Good Reason within the 120 day period
      immediately following the occurrence of any of the events described in
      subsections (a) through (e) above.

    
      
        
        

      

      
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    (E)    Termination
      without Cause or for Good Reason prior to Change-in-Control beginning with
      Fiscal 2010. The Company may terminate Executive's employment
      hereunder without Cause at any time, by providing Executive 30 days’ written
      notice of such termination. Such notice shall specify the effective date of
      the
      termination of Executive's employment. The Executive may terminate his
      employment for Good Reason by providing 30 days’ prior written notice to the
      Company.  In the event of the termination of Executive's employment
      under this Section 6(E) without Cause or by the Executive for Good Reason,
      in
      each case beginning with the Company’s fiscal year 2010 and in each case prior
      to or more than 24 months following a Change-in-Control (as defined in Exhibit
      B), then Executive shall be entitled to:

    (i)            
      payment of the Accrued Payments;

    (ii)            a
      separation allowance, payable in lump sum within 30 days from the date of
      termination, equal to one and one-half times (1.5) times the sum of (x)
      Executive’s then Base Salary and (y) the annual cash AIP bonus paid to Executive
      for the last full fiscal year immediately prior to termination;

    (iii)           any
      annual incentive bonus earned but not yet paid for any completed full fiscal
      year immediately preceding the employment termination date;

    (iv)           if
      employment termination occurs prior to the end of any fiscal year, a pro rata
      annual incentive bonus for such fiscal year in which employment termination
      occurs (based on actual business days in such fiscal year prior to such
      employment termination, divided by the total annual business days) determined
      and paid based on actual performance achieved for such fiscal year against
      the
      performance goals for that fiscal year (provided that, if Executive’s own
      individual performance rating constitutes a separate component under the annual
      incentive plan, it will be deemed to have been achieved at a target individual
      performance rating).; and

    
      
        
        

      

      
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    (v)            Benefits
      Continuation until the earlier of 18 months after termination of employment
      or
      such time as Executive is eligible to be covered by comparable benefit(s) of
      a
      subsequent employer (determined on a benefit-by-benefit and coverage-by-coverage
      basis).  The Executive agrees to notify the Company promptly if and
      when he begins employment with another employer and if and when he becomes
      eligible to participate in any benefit or other welfare plans, programs or
      arrangements of another employer.

     (F)    Termination
      of Employment without Cause or for Good Reason following a
      Change-in-Control. If the Company terminates
      Executive’s employment without Cause or Executive terminates his employment for
      Good Reason by providing 30 days’ prior written notice to the Company, in each
      case within 24 months following a Change-in-Control (as defined in Exhibit
      B),
      the Company will provide to Executive:

            (i)           
       payment of the Accrued Payments;

    (ii)            a
      lump sum separation allowance equal to two (2) times the sum of (x) Executive’s
      then Base Salary and (y) Executive’s then Target Bonus;

    (iii)           any
      annual incentive bonus earned but not yet paid for any completed full fiscal
      year immediately preceding the employment termination date;

    (iv)           if
      employment termination occurs prior to the end of any fiscal year, a pro rata
      annual incentive bonus for such fiscal year in which employment termination
      occurs (based on actual business days in such fiscal year prior to such
      employment termination, divided by the total annual business days) determined
      and paid based on actual performance achieved for such fiscal year against
      the
      performance goals for that fiscal year (provided that, if Executive’s own
      individual performance rating constitutes a separate component under the annual
      incentive plan, it will be deemed to have been achieved at a target individual
      performance rating); and

    
      
        
        

      

      
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    (v)           Benefits
      Continuation until the earlier of 24 months after termination of employment
      or
      such time as Executive is eligible to be covered by comparable benefit(s) of
      a
      subsequent employer (determined on a benefit-by-benefit and coverage-by-coverage
      basis).  The Executive agrees to notify the Company promptly if and
      when he begins employment with another employer and if and when he becomes
      eligible to participate in any benefit or other welfare plans, programs or
      arrangements of another employer.

    Upon
      the
      occurrence of a Change-in-Control, all of Executive’s then outstanding stock
      options, stock appreciation rights, restricted stock and restricted stock unit
      awards (including the equity award referred to in Section 3(C) above) will
      vest
      in full.

    (G)           Voluntary
      Termination by the Executive without Good Reason.  In the
      event Executive terminates his employment without Good Reason, he shall provide
      not less than 60 days’ prior written notice of such termination to the
      Company.  Upon such voluntary termination, the Executive will be
      entitled to the Accrued Payments.

    (H)           Release
      of Claims as Condition.  The Company’s obligation to pay
      the separation allowance and provide all other benefits and rights (including
      equity vesting) referred to in this Section 6 (other than Accrued Payments)
      and
      in Section 3(C) above shall be conditioned upon the Executive having delivered
      to the Company an executed separation agreement and full and unconditional
      release (that is not subject to revocation) of claims against the Company,
      its
      parent entities,  affiliates, employee benefit plans and fiduciaries,
      officers, employees, directors, agents and representatives satisfactory in
      form
      and content to the Company’s counsel.

    
      
        
        

      

      
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    (I)           No
      Mitigation; No Offset.  In no event shall Executive be
      obligated to seek other employment or take any other action by way of mitigation
      of the amounts payable to Executive under any of the provisions of this
      Agreement, nor shall the amount of any payment hereunder be reduced by any
      compensation earned by Executive as a result of subsequent
      employment.  The Company’s payment obligations under this Section 6
      shall not be subject to offset or recoupment, except as specifically provided
      in
      this Agreement (including Section 11(C)) and subject to the Executive’s
      satisfaction of his obligations under Section 6(H); and except that nothing
      herein shall affect the impact of any applicable law, including but not limited
      to Sarbanes-Oxley, which requires Executive to forfeit any compensation or
      benefits or to repay to the Company any compensation or benefits previously
      paid
      to him by the Company.

    7.     Indemnification.

    (A)  The
      Company shall
      indemnify, defend and hold the Executive harmless, to the maximum extent
      permitted by law, against all judgments, fines, amounts paid in settlement
      and
      all reasonable expenses, including attorneys’ fees incurred by the Executive, in
      connection with the defense of, or as a result of any action or proceeding
      (or
      any appeal from any action or proceeding) in which the Executive is made or
      is
      threatened to be made a party by reason of the fact that the Executive is or
      was
      an officer or director of the Company, regardless of whether such action or
      proceeding is one brought by or in the right of the Company, to procure a
      judgment in its favor (or other than by or in the right of the
      Company).  Each of the parties hereto shall give prompt notice to the
      other of any action or proceeding from which the Company is obligated to
      indemnify, defend and hold harmless the Executive of which it or he (as the
      case
      may be) gains knowledge.

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    (B)  The
      Company hereby represents and warrants that the Executive shall be covered
      and
      insured up to the maximum limits provided by all insurance which the Company
      then maintains to indemnify its directors and officers (and to indemnify the
      Company for any obligations which it incurs as a result of its undertaking
      to
      indemnify its officers and directors), subject to applicable deductibles and
      to
      the terms and conditions of such policies.

    8.  Arbitration;
      Mediation.  Any dispute, controversy or
      claim between the parties hereto arising out of or relating to this Agreement
      either during or after the term hereof, shall be settled by arbitration
      conducted in the Commonwealth of Massachusetts, in accordance with the
      Commercial Rules of the American Arbitration Association then in force,
      provided, however, the Executive acknowledges that in the event of a violation
      of Sections 11 and 12 of this Agreement, the Company shall be entitled to obtain
      from a state or federal court in the Commonwealth of Massachusetts, temporary,
      preliminary or permanent injunctive relief (without the necessity of posting
      any
      bond or other security), which rights shall be in addition to any other rights
      or remedies to which it may be entitled.  Moreover, nothing in this
      provision prevents the Executive from filing, cooperating with, or participating
      in any proceeding before the EEOC or a state Fair Employment Practices Agency
      relating to discrimination or bias (except that the Executive acknowledges
      that
      he may not recover any monetary benefits in connection with any such
      proceeding).  The decision of the arbitrator or arbitrators conducting
      any such arbitration proceedings shall be in writing, shall set forth the basis
      therefor and such arbitrator’s or arbitrators’ decision or award shall be final
      and binding upon the parties hereto.  The parties hereto shall abide
      by all awards rendered in such arbitration proceedings, and all such awards
      may
      be enforced and executed upon in any court having jurisdiction over the party
      against whom or which enforcement of such award is
      sought.  Notwithstanding the foregoing of this Section 8, each of the
      parties agrees that, prior to submitting a dispute under this Agreement to
      arbitration, the parties agree to submit, for a period of sixty (60) days,
      to
      voluntary mediation before a jointly selected neutral third party mediator
      under
      the auspices of JAMS, Boston, Massachusetts, Resolution Center (or any successor
      location), pursuant to the procedures of JAMS International Mediation Rules
      conducted in the Commonwealth of Massachusetts (however, such mediation or
      obligation to mediate shall not suspend or otherwise delay any termination
      or
      other action of the Company or affect the Company’s other rights).

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

          9.  Enforceability.  It
      is the intention of the parties that the provisions of this Agreement shall
      be
      enforced to the fullest extent permissible under the laws and public policies
      of
      each state and jurisdiction in which such enforcement is sought, but that the
      unenforceability (or the modification to conform with such laws or public
      policies) of any provisions hereof, shall not render unenforceable or impair
      the
      remainder of this Agreement.  Accordingly, if any provision of this
      Agreement shall be determined to be invalid or unenforceable, either in whole
      or
      in part, this Agreement shall be deemed amended to delete or modify, as
      necessary, the offending provisions and to alter the balance of this Agreement
      in order to render the same valid and enforceable to the fullest extent
      permissible.

    10.  Assignment.  This
      Agreement is personal in nature to the Company and the rights and obligations
      of
      the Executive shall not be assigned or transferred by the
      Executive.  This Agreement and all of the provisions hereof shall be
      binding upon, and inure to the benefit of, the parties hereto, and their
      successors (including successors by merger, consolidation, sale or similar
      transactions, permitted assigns, executors, administrators, personal
      representatives, heirs and distributees).

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

    11.  Non-Disclosure;
      Non-Solicitation; Cooperation.

    (A)  The
      Executive shall not, at any time during or following the period of employment,
      disclose, use, transfer or sell, except in the course of such employment, any
      confidential information or proprietary data of the Company or its affiliates
      so
      long as such information or data remains confidential and has not been disclosed
      or is not otherwise in the public domain, except as required by law or pursuant
      to legal process or in connection with an administrative proceeding before
      a
      governmental agency.  The Company and the Executive agree that the
      Executive’s obligations under this Section 11(A) shall not apply if (1) any
      disclosure by the Executive is made with the express written permission of
      the
      Company; or (2) if the Executive can show by documentary evidence that he had
      knowledge of the confidential information, or it was in his possession, prior
      to
      disclosure by the Company, or that it was lawfully received by the Executive
      from a third party who is not or was not bound, at the time the information
      was
      conveyed, by any confidential relationship or obligation to the
      Company.

    (B)  The
      Executive agrees that, for a period of eighteen (18) months after the
      termination or cessation of the Executive’s employment with the Company for any
      reason, the Executive will not:

    (i)
      directly or indirectly solicit,
      attempt to hire, or hire any employee of the Company (or any person who may
      have
      been employed by the Company during the last year of the Executive’s employment
      with the Company), or assist in such hiring by any other person or business
      entity or encourage, induce or attempt to induce any such employee to terminate
      his or her employment with the Company; or 
      (ii)
        take action intended to encourage
        any vendor or supplier of the Company to cease to do business with the Company
        or materially reduce the amount of business the vendor or supplier does with
        the
        Company; or

      (iii)
        materially disparage the
        Company.

      (C)  In
        addition to all other rights and remedies of the Company under this Agreement
        or
        otherwise, upon breach of Section 11(B)(i) above and Section 12 below, the
        Company will have the right to terminate any severance payment and benefits
        under Section 6 above and will have the right to recover any severance payment
        and benefits previously paid under Section 6 above.

    

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

    12.  Non-Competition
      Agreement.  The Executive agrees that
      throughout the term of his employment, and for a period of twelve (12) months
      after termination or cessation of employment for any reason, he will not work
      directly or indirectly in any capacity or perform any services anywhere in
      the
      world (including as an officer, director, employee, agent, advisor, in any
      consulting capacity or as an independent contractor) for Ann Taylor, Chico’s
      FAS, Coldwater Creek, Gap Inc., Liz Claiborne, Ralph Lauren or Sundance Catalog
      Company (or any of their affiliated brands, subsidiaries or
      successors).  The Executive acknowledges, with the advice of legal
      counsel, that he understands the foregoing provisions of this Section 12 and
      that these provisions are fair, reasonable, and necessary for the protection
      of
      the Company’s business.

    13.  Taxes.

    (A)  All
      payments to be made
      to and on behalf of the Executive under this Agreement will be subject to
      required withholding of federal, state and local income and employment taxes
      and
      to related reporting requirements.

    (B)  Gross-Up
      Payment.  (i) In the event that any payment or benefit received or
      to be received by the Executive in connection with a Change-in-Control or the
      termination of the Executive’s employment, whether such payments or benefits are
      received pursuant to the terms

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

    of
      this
      Agreement or any other plan, arrangement or agreement with the Company, with
      any
      other person whose actions result in a Change-in-Control or with any person
      affiliated with the Company or such other persons (all such payments and
      benefits being hereinafter called “Total Payments”), would be subject (in whole
      or part), to the tax (the “Excise Tax”) imposed under Section 4999 of the
      Internal Revenue Code of 1986, as amended (the “Code”), the Company shall pay to
      the Executive such additional amounts (the “Gross-Up Payment”) as may be
      necessary to place the Executive in the same after-tax position (taking into
      account the fact that the Gross-Up Payment itself is or may be subject to
      federal, state and local income, employment and excise taxes) as if no portion
      of the Total Payments had been subject to the Excise Tax.  The amount
      of the Gross-Up Payment shall be calculated at the Company’s expense using the
      highest marginal tax rates, and shall be calculated by a “Big Four” accounting
      firm or nationally-recognized benefits consulting firm selected by the Company
      and reasonably acceptable to the Executive.  In the event that the
      Excise Tax is subsequently determined to be less than the amount taken into
      account hereunder, the Executive shall repay to the Company, at the time that
      the amount of such reduction in Excise Tax is finally determined, the portion
      of
      the Gross-Up Payment attributable to such reduction (plus that portion of the
      Gross-Up Payment attributable to the Excise Tax and federal, state and local
      income, employment and excise tax imposed on the Gross-Up Payment being repaid
      by the Executive, to the extent that such repayment results in a reduction
      in
      Excise Tax and/or a federal, state and local income, employment and excise
      tax
      deduction).  In the event that the Excise Tax is determined to exceed
      the amount taken into account hereunder (including by reason of any payment
      the
      existence or amount of which cannot be determined at the time of the Gross-Up
      Payment), the Company shall make an additional Gross-Up Payment in respect
      of
      such excess (plus any interest, penalties or additions payable by the Executive
      with respect to such excess) 

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

    at
      the
      time that the amount of such excess is finally determined.  The
      Executive (who shall immediately notify the Company of the commencement of
      any
      audit, administrative or judicial proceedings) and the Company shall each
      reasonably cooperate with the other in connection with any administrative or
      judicial proceedings concerning the existence or amount of liability for Excise
      Tax with respect to the Total Payments.  The Executive will allow and
      hereby authorizes the Company to control any such audit, administrative or
      judicial proceedings on the Executive’s behalf.

    (ii)  Notwithstanding
      any
      provision of this Agreement to the contrary, if but for this sentence, the
      Company would be obligated to make “parachute payments” to the Executive,
      whether under this Agreement, the terms of any stock-based compensation award
      or
      any other agreement, contract or arrangement, but the aggregate “present value”
of all such parachute payments does not exceed the lesser of (i) (x) 1.10
      multiplied by (y) three (3) times the Executive’s “base amount,” or (ii)
      $250,000 plus three (3) times the Executive’s “base amount,” then the payments
      and benefits to be paid or provided under this Agreement will be reduced to
      the
      minimum extent necessary (but in no event less than zero) so that no portion
      of
      the total payments or benefits due to the Executive on account of a
      Change-in-Control of the Company, determined after the reduction under this
      Agreement, constitutes an “excess parachute payment.”  For purposes of
      this Section 13(B)(ii), the terms “Change-in-Control,” “excess parachute
      payment,” “present value,” “parachute payment,” and “base amount” have the
      meanings assigned to them by Section 280G of the Code.  The
      determination of whether any reduction in such payments or benefits to be
      provided under this Agreement is required pursuant to the preceding sentence
      will be made, if requested by the Executive or the Company, at the expense
      of
      the Company by a “Big Four” accounting firm or nationally-recognized benefits
      consulting firm selected by the Company and reasonably acceptable to the
      Executive.  The fact that the Executive’s right to payments or
      benefits may

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    be
      reduced by reason of the limitations contained in this Section 13(B)(ii) will
      not of itself limit or otherwise affect any other rights of the Executive other
      than pursuant to this Agreement.  In the event that any payment or
      benefit intended to be provided under this Agreement or otherwise is required
      to
      be reduced pursuant to this Section 13(B)(ii), the Executive will be entitled
      to
      designate the payments and/or benefits to be so reduced (whether under this
      Agreement or otherwise) in order to give effect to this Section
      13(B)(ii).  The Company will provide the Executive with all
      information reasonably requested by the Executive to permit the Executive to
      make such designation.  In the event that the Executive fails to make
      such designation within ten (10) business days of the date of request by the
      Company, the Company may effect such reduction in any manner it deems
      appropriate.  If, despite a reduction in payments and/or benefits in
      accordance with this Section 13(B)(ii), the Executive is required to pay an
      Excise Tax, the Executive shall be paid a Gross-Up Payment in accordance with
      Section 13(B)(i), but shall not be entitled to any additional amounts relating
      to such reduction in payments and/or benefits, notwithstanding the failure
      of
      the reduction to achieve the goal of avoiding an Excise Tax
      liability.

    14.  Term.  This
      Agreement shall commence as of October 4, 2007 and shall continue in effect
      until the last day of the Company’s fiscal year 2009 (the “Term of Employment”);
      provided, however, that commencing at the beginning of the Company’s fiscal year
      immediately thereafter and at the beginning of the Company’s fiscal year each
      year thereafter, the term of this Agreement shall automatically be extended
      for
      one additional year unless at least 6 months prior to such date, the Company
      or
      the Executive shall have given notice to the other party that this Agreement
      shall not be extended.  It is acknowledged and agreed by the parties
      hereto that if this Agreement is not renewed by the Company pursuant to this
      Section 14, and not as a result of Executive’s death, Disability, Normal
      Retirement or Cause pursuant to Section 6(A), 6(B) or 6(C), such non-renewal
      by
      the Company will be deemed a termination without Cause pursuant to Section
      6(D),
      6(E) or 6(F) (as applicable).   In the event that Executive’s
      employment with the Company ceases at the end of any term because Executive
      (not
      the Company) has given a non-renewal notice set forth in this Section 14, and
      not as a result of the occurrence of Normal Retirement or Good Reason pursuant
      to Section 6(B), 6(D), 6(E) or 6(F), then such termination of employment shall
      be treated as a voluntary termination by Executive without Good
      Reason.

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

    15.  Special
      Rule for U.S. Income Tax Compliance.  Notwithstanding
      anything in this Agreement to the contrary, the parties hereto intend that
      this
      Agreement comply with Section 409A of the Code and all guidance or regulations
      thereunder (“Section 409A”), and this Agreement and the payment of any benefits
      hereunder shall be operated and administered
      accordingly.  Specifically, but not by limitation, the Executive
      agrees that if, at the time of termination of employment, the Company is
      considered to be publicly traded and he is considered to be a specified
      employee, as defined in Section 409A (and as determined as of December 31
      preceding his termination of employment, unless his termination of employment
      occurs prior to April 30, in which case the determination shall be made as
      of
      the second preceding December 31), then some or all of such payments to be
      made
      hereunder as a result of his termination of employment shall be deferred for
      no
      more than six (6) months following such termination of employment, if and to
      the
      extent the delay in such payment is necessary in order to comply with the
      requirements of Section 409A of the Code, including the right to rely upon
      the
      exclusions for short term deferrals and separation pay upon an involuntary
      separation from service.  Upon expiration of such six (6) month period
      (or, if earlier, his death), any payments so withheld hereunder from the
      Executive hereunder shall be distributed to the Executive, with a payment of
      interest thereon credited at a rate of prime plus 1% (with such prime rate
      to be
      determined as of the actual payment date).

    16.  Survival.  Anything
      in Section 6 hereof to the contrary notwithstanding, the provisions of Sections
      7 through 17 shall survive the expiration or termination hereof, regardless
      of
      the reasons therefor.

    17.  No
      Conflict.  The Executive and the Company
      each hereby represents and warrants to the other that the execution, delivery
      and performance of this Agreement by him or it (as the case may be) shall not
      violate any agreement or other obligation of any kind, written or oral, to
      which
      he or it (as the case may be) is subject.

    
      
        
        

      

      
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    18.  Miscellaneous.

    (A)  Notices.  All
      notices hereunder shall be given in writing, clearly marked “Personal and
      Confidential,” by personal delivery (which shall include delivery by overnight
      couriers such as Federal Express), or prepaid registered or certified mail,
      return receipt requested, to the addresses of the proper parties as set forth
      below:

    TO
      THE
      EXECUTIVE:

    PHILIP
      KOWALCZYK

    [Home
      Address]

    

    TO
      THE
      COMPANY:

    

    The
      Talbots, Inc.

    One
      Talbots Drive

    Hingham,
      MA 02043

    Attn:  Senior
      Vice President/Human Resources

    

    Copy
      to:

    

    The
      Talbots, Inc.

    211
      South
      Ridge Street

    Rye
      Brook, NY 10573

    Attn:  General
      Counsel

     

    Any
      notice given as set forth above will be deemed given on the business day sent
      when delivered by hand during normal business hours, on the business day after
      the business day sent if delivered by a nationally-recognized overnight courier,
      or on the third business day after the business day sent if delivered by
      registered or certified mail, return receipt requested.

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

    (B)  Law
      Governing.  This Agreement shall be
      governed by and construed in accordance with the laws of the Commonwealth of
      Massachusetts applicable to contracts made and to be wholly performed in that
      state without regard to its conflicts of laws provisions.

    (C)  Headings.  The
      Section headings contained in this Agreement are for convenience of reference
      only and are not intended to determine, limit or describe the scope or intent
      of
      any provision of this Agreement.

    (D)  Number
      and
      Gender.  Whenever in this Agreement the
      singular is used, it shall include the plural if the context so requires, and
      whenever the masculine gender is used in this Agreement, it shall be construed
      as if the masculine, feminine or neuter gender, respectively, has been used
      where the context so dictates, with the rest of the sentence being construed
      as
      if the grammatical and terminological changes thereby rendered necessary have
      been made.

    (E)  Entire
      Agreement.  This Agreement contains the
      entire understanding between the parties with respect to the subject matter
      hereof and supersedes any prior or contemporaneous understandings and
      agreements, written or oral, between and among them respecting such subject
      matter, including, without limitation, the Original Agreement and the Term
      Sheet.

    (F)  Counterparts.  This
      Agreement may be executed in counterparts, each of which shall be deemed an
      original but both of which taken together shall constitute one
      instrument.

    (G)  Amendments.

    This
      Agreement may not be amended except by a writing executed by each of the parties
      to this Agreement.

    (H)  Expenses.  All
      reasonable legal fees and expenses incurred by the Executive in negotiating
      and
      entering into this Agreement, up to $20,000, will be paid by the
      Company.  All such fees and expenses will be paid by the Company
      within 30 days after the Company’s receipt of the invoices
      therefor.

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

    (I)  No
      Waiver.  No provision of this Agreement
      may be modified, waived or discharged unless such waiver, modification or
      discharge is agreed to in writing and signed by the Executive and such officer
      as may be specifically designated by the Board.  No waiver by either
      party at any time of any breach by the other party of, or compliance with,
      any
      condition or provision of this Agreement to be performed by such other party
      shall be deemed a waiver of similar or dissimilar provisions or conditions
      at
      the same or at any prior or subsequent time.

    

    

    IN
      WITNESS WHEREOF,
the parties hereto have duly executed this Agreement as of the date
      first written above.

     

    
      	PHILIP
              KOWALCZYK 	 	THE
              TALBOTS, INC.	 
	 	 	 	 	 
	 	 	 	 	 
	
              /s/
                Philip
                Kowalczyk

            	 	By:	
              /s/
                John
                Fiske

            	 
	
              Philip
                Kowalczyk   

            	 	Name:
	
              John
                Fiske
                III

            	 
	
               

            	 	Title:	
              Senior
                Vice
                President,

              Human
                Resources

            	 

         

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      A

     

    THE
      TALBOTS, INC.

    

    2003
      EXECUTIVE STOCK BASED INCENTIVE PLAN

    

    RESTRICTED
      STOCK AGREEMENT

    

    November
      __, 2007

    

    The
      Talbots, Inc.

    One
      Talbots Drive

    Hingham,
      Massachusetts 02043

    

    The
      undersigned acknowledges receipt
      from The Talbots, Inc. (together with its subsidiaries, the “Company” or
“Talbots”) of (i) this Restricted Stock Agreement providing the terms and
      conditions of a grant of restricted stock made on November __, 2007 under the
      2003 Executive Stock Based Incentive Plan, as amended and restated (the “Plan”),
      and (ii) a copy of the Plan.

     

    The
      restricted stock grant (the
“Award”) is for 53,476 shares of Common Stock of the Company, $.01 par value
      (the “Restricted Stock”).

    

    The
      amount of $534.76 in full payment
      of the purchase price for each share of Restricted Stock (being $.01 per share)
      has been paid by the Company on behalf of the undersigned, as additional
      compensation to the undersigned.

    

    In
      consideration of the Company’s
      accepting this Agreement and delivering the shares of Restricted Stock provided
      for herein, the undersigned hereby agrees with the Company as
      follows:

    

    
      	
               

            	
              1.

            	
              Restricted
                Period.

            

    

    

    
      	
               

            	
              (a)

            	
              No
                Transfer of Shares.  During the period of time that any
                shares of Restricted Stock are unvested as set forth in paragraphs
                1(b)
                below (the “Restricted Period”), such unvested shares shall not be sold,
                assigned, transferred, pledged, hypothecated or otherwise disposed
                of,
                except by will or the laws of descent and distribution or as provided
                in
                this Agreement.

            

    

    

    
      	
               

            	
              (b)

            	
              Vesting
                Period.  Except as otherwise provided below, the Restricted
                Stock subject to this Award shall vest as follows: (i) fifty percent
                (50%)
                on October 4, 2008 and (ii) fifty percent (50%) on October 4,
                2009.

            

    

    

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

    
      2.           The
        Company will have the option to repurchase the Restricted Stock that has
        not yet
        vested at a price of $.01 per share, which price may be amended from time
        to
        time by the Compensation Committee of the Company (the “Committee”) at its
        discretion.  Such option will be exercisable with respect to such
        unvested shares of Restricted Stock (i) if the undersigned’s continuous
        employment for the Company or an Affiliate (as such term is defined below)
        shall
terminate
        for any reason, except solely by reason of a period of Related Employment
        (as
        such term is defined in the Plan), or except as otherwise provided in paragraphs
        3(a), 3(b) and 3(c) hereof, prior to the expiration of the Restricted Period
        with respect to such unvested shares of Restricted Stock, and (ii) if, on
        or
        prior to the expiration of the Restricted Period with respect to such unvested
        shares of Restricted Stock or the earlier lapse of this repurchase option
        with
        respect to such unvested shares of Restricted Stock, the undersigned has
        not
        paid to the Company an amount equal to any federal, state, local or foreign
        income or other taxes which the Company determines is required to be withheld
        in
        respect of such shares.  At your election, the Committee hereby
        authorizes you to satisfy any such withholding tax obligation in whole or
        in
        part by the Company withholding, or your transferring to the Company, shares
        of
        Common Stock of the Company in satisfaction of any such obligations, determined
        using the fair market value of such shares at the time of such
        vesting.  Any such shares of Common Stock delivered to the Company in
        satisfaction of all or any portion of such withholding taxes shall be
        appropriately endorsed for transfer and assignment to the Company.  In
        all events, no share shall be issued until full payment therefor has been
        delivered to and received by the Company.  Pursuant to the foregoing,
        and consistent with SEC Rule 10b5-1, the Company is hereby instructed to
        withhold as of each vesting date of the Restricted Stock a sufficient number
        of
        shares of Restricted Stock so vesting to satisfy all federal, state, local
        and
        foreign income, employment and other taxes which the Company determines is
        required to be withheld in respect of such Restricted Stock then vesting,
        determined based on the fair market value (as determined under the Plan)
        as of
        such vesting date.

    

    

    Any
      attempt by the undersigned to dispose of any unvested Restricted Stock in
      contravention of the foregoing repurchase option of the

    Company
      shall be null and void and without effect.  If the Company’s
      repurchase option is not exercised by the Company with respect to any unvested
      shares of Restricted Stock within 120 days after the later of (i) the date
      the
      undersigned is finally removed from the payroll of the Company or its Affiliates
      or (ii) any later effective date of employment termination (in each case,
      including any period of challenge or appeal by the undersigned), such repurchase
      option shall terminate and be of no further force and effect.

    

    For
      purposes of this Agreement,
“Affiliates” means all direct or indirect subsidiaries of the Company, including
      without limitation The J. Jill Group, Inc., as well as any other entity which
      is
      now or may later be directly or indirectly controlled by the
      Company.

    

    
      	
               

            	
              3.

            	
              Death
                or Disability; Termination without Cause or for Good Reason; Change
                in
                Control.

            

    

    

    
      	
               

            	
              (a)

            	
              If
                the undersigned has been in continuous employment for the Company
                or an
                Affiliate since the date on which the Award was granted, and while
                in such
                employment, the undersigned dies, or his employment is terminated
                by
                reason of disability (as such term is defined in Paragraph 12 of
                the
                Plan), and any such event shall occur prior to the end of the Restricted
                Period with respect to any unvested Restricted Stock, the Committee
                shall
                immediately cancel the repurchase option described in paragraph 2
                hereof
                and any and all other restrictions on the unvested Restricted Stock
                subject to the Award; and such shares shall no longer be subject
                to the
                restrictions under paragraph 2 hereof and shall be deemed
                vested.

            

    

    

    
      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

    

    

    
      	
               

            	
              (b)

            	
              In
                the event that the undersigned’s employment is terminated without Cause
                (as defined below) by the Company or by an Affiliate, or in the event
                that
                the undersigned terminates his employment with the Company or an
                Affiliate
                for Good Reason (as defined below), in each case prior to the end
                of the
                Restricted Period, with respect to any unvested Restricted Stock,
                then (i)
                the Restricted Period shall be deemed to have expired on such date
                with
                respect to such unvested Restricted Stock, (ii) the Company agrees
                not to
                exercise any repurchase option described in paragraph 2 with respect
                to
                such unvested Restricted Stock and (iii) such shares shall therefore
                no
                longer be subject to the restrictions under paragraph 2 hereof and
                shall
                be deemed vested.

            

    

    

    
      	
               

            	
              (c)

            	
              If
                a Change in Control Event (as such term is defined in the Plan) occurs
                prior to the end of the Restricted Period, with respect to any unvested
                Restricted Stock, then (i) the Restricted Period shall be deemed
                to have
                expired on such date with respect to such unvested Restricted Stock,
                (ii)
                the Company agrees not to exercise any repurchase option described
                in
                paragraph 2 with respect to such unvested Restricted Stock and (iii)
                such
                shares shall therefore no longer be subject to the restrictions under
                paragraph 2 hereof and shall be deemed
                vested.

            

    

    

    
      	
               

            	
              (d)

            	
              For
                purposes of clarity, in the event that (i) the undersigned’s employment is
                terminated for Cause by the Company or by an Affiliate or (ii) the
                undersigned terminates his employment with the Company or an Affiliate
                without Good Reason, in each case prior to the end of the Restricted
                Period, then with respect to any then unvested Restricted Stock,
                the
                Company shall have the repurchase option described in paragraph 2
                above.

            

    

    

    “Termination
      without Cause,” “termination for Good Reason,” “termination for Cause” and
“termination without Good Reason” shall have the meanings set forth in the
      amended Employment Agreement between you and the Company dated November __,
      2007
      (“Employment Agreement”).

    

    
      	
               

            	
              4.

            	
              Issuance
                and Repurchase of Restricted
                Stock.

            

    

    

    Each
      certificate for Restricted Stock issued pursuant to this Award shall be
      deposited by the undersigned with the Company, together with a stock power
      endorsed in blank, or shall be evidenced in such other manner permitted by
      applicable law as determined by the Committee in its discretion.  If
      the Company chooses to exercise its option to repurchase unvested Restricted
      Stock as described in paragraph 2 hereof, title to such shares shall be deemed
      transferred to the Company without further action by the
      undersigned.  Contemporaneously with such transfer of title to such
      shares, the Company shall pay to the undersigned, or in the event of his death,
      his personal representative, as the case may be, the $0.01 per share purchase
      price for such shares of repurchased Restricted Stock.

     

    
      
        	
                 

              	
                5.

              	
                Certificates.

              

      

    

               

    
      	
               

            	
              (a)

            	
              The
                undersigned acknowledges that all certificates evidencing shares
                of
                Restricted Stock of the Company issued pursuant to this Award and
                this
                Agreement shall bear a restrictive legend as
                follows:

            

    

    

    
      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

    

     

    “THE
      SHARES EVIDENCED BY THIS CERTIFICATE ARE PARTLY PAID AND ARE SUBJECT TO (i)
      RESTRICTIONS ON TRANSFER AND (ii) A REPURCHASE OPTION OF THE TALBOTS,
      INC.  UNDER CERTAIN CIRCUMSTANCES, PURSUANT TO THE PROVISIONS OF THE
      TALBOTS, INC. 2003 EXECUTIVE STOCK BASED INCENTIVE PLAN, AS AMENDED AND
      RESTATED, AND A RESTRICTED STOCK AGREEMENT DATED AS OF NOVEMBER  __,
      2007 BY AND BETWEEN PHILIP H. KOWALCZYK AND THE TALBOTS,
      INC. THE PLAN AND THE AGREEMENT ARE AVAILABLE FOR INSPECTION AT THE PRINCIPAL
      OFFICES OF THE TALBOTS, INC.”

    

    (Place
      date stamp)

    

    
      	
               

            	
              (b)

            	
              The
                undersigned acknowledges that the certificate evidencing the shares
                of
                Restricted Stock delivered pursuant to this Agreement may be issued
                in
                several denominations.  The date appearing immediately below the
                legend on each stock certificate will be the date on which shares
                represented by such certificate are scheduled to become free of the
                restrictions as set forth in paragraph 1(b) above, subject to all
                of the
                other terms and conditions of this
                Agreement.

            

    

    

    6.           Restriction.

    

    The
      undersigned understands that the Company has filed with the Securities and
      Exchange Commission a Form S-8 registration statement under the Securities
      Act
      of 1933 with respect to the Plan and the shares covered by this
      Agreement.  The undersigned understands that once shares have become
      free of restrictions, new certificates will be issued by the Company’s transfer
      agent not containing the legend provided for in paragraph 5 hereof, and that
      the
      undersigned will be free to sell the shares of Common Stock evidenced by such
      certificates not bearing such legend, subject to applicable requirements of
      federal and state securities laws and the requirements of this
      Agreement.  The undersigned agrees that any such sales will be
      effected by means of a broker’s transaction using the facilities of the stock
      exchange where the Common Stock is then listed.  The Company will
      endeavor to keep such registration statement effective to permit such sale,
      but
      in the event the Company notifies the undersigned that such registration
      statement is not then effective, the undersigned agrees to refrain from sales
      of
      shares of Common Stock until such time as the Company advises him that such
      registration statement has become effective.

    

    7.           Rights
      with Respect to Shares.

    

    The
      undersigned shall have, after issuance of a certificate for the number of shares
      of Restricted Stock awarded and prior to the expiration of any Restricted Period
      (or the earlier repurchase of unvested shares of Restricted Stock by the
      Company), the right to vote the same and to receive dividends or other
      distributions made or paid with respect to such Restricted Stock, subject,
      however, to the options, restrictions and limitations imposed thereon pursuant
      to this Agreement and the Plan.

    

    
      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

    

     

    8.           Subject
      to Terms of the Plan.

    

    This
      Agreement shall be subject in all respects to the terms and conditions of the
      Plan and in the event of any question or controversy relating to the terms
      of
      the Plan, the decision of the Committee shall be final and conclusive, except
      as
      expressly set forth in this Agreement or as expressly set forth in the
      Employment Agreement.

    

    9.           Trading
      Black Out Periods.

    

    By
      entering into this Agreement the undersigned expressly agrees that: (i) during
      all periods of employment of the undersigned with the Company or its Affiliates,
      or while the undersigned is otherwise maintained on the payroll of the Company
      or its Affiliates, the undersigned shall abide by all trading “black out”
periods with respect to purchases or sales of the Company’s stock or exercises
      of stock options for the Company’s stock established from time to time by the
      Company (“Trading Black Out Periods”) and (ii) upon any cessation or termination
      of employment with the Company or its Affiliates for any reason, the undersigned
      agrees that for a period of six (6) months following the effective date of
      any
      termination of employment or, if later, for a period or six (6) months following
      the date as of which the undersigned is no longer on the payroll of the Company
      or its Affiliates, the undersigned shall continue to abide by all such Trading
      Black Out Periods established from time to time by the Company; provided that
      in
      no event shall the undersigned be prohibited from making a purchase or sale
      of
      the Company’s stock or exercising stock options for the Company’s stock if such
      sale, purchase or exercise is made pursuant to a written plan for trading
      securities within the meaning of Rule 10b5-1 under the
      Securities  Exchange Act of 1934, as amended (a “10b5-1 Trading
      Plan”), and such 10b5-1 Trading Plan is consistent with the Company’s insider
      trading policy and has been approved by the Company.

    

    
      	
               Executive:  

            	 	 
	 	PHILIP
              H. KOWALCZYK	 

    

    

    

    Agreed:

    

    THE
      TALBOTS, INC.

                                                       
      
        	By:   	 	 
	 	John
                Fiske III
                Senior
                  Vice President, 

                Human
                  Resources

              	 

      

    

     

     

    

    
      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

    

    

    

    EXHIBIT
      B

    

    For
      purposes of this Agreement, “Change in Control” shall mean (i) the acquisition
      (including as a result of a merger) by any “person” (as such term is used in
      Sections 3(a)(9), 13(d) and 14(d) of the Securities Exchange Act of 1934, as
      amended (the “Exchange Act”), or persons “acting in concert” (which for purposes
      of this Agreement shall include two (2) or more persons voting together on
      a
      consistent basis pursuant to an agreement or understanding between them to
      act
      in concert and/or as a “group” within the meaning of Sections 13(d)(3) and
      14(d)(2) of the Exchange Act), other than the Company of any of its
      subsidiaries, and other than AEON (U.S.A.), Inc.  or any of its
      subsidiaries or “affiliates” (as such term is defined in Rule 12b-2 under the
      Exchange Act; (collectively, an “Acquiring Person”), of beneficial ownership
      (within the meaning of Rule 13d-3 under the Exchange Act), directly or
      indirectly, of securities of the Company representing more than 25 percent
      of
      the combined voting power of the then outstanding securities of the Company
      entitled to then vote generally in the election of directors of the Company,
      and
      no other stockholder is the beneficial owner (within the meaning of Rule 13d-3
      under the Exchange Act), directly or indirectly, of a percentage of such
      securities higher than that held by the Acquiring Person; or (ii) individuals,
      who, as of the effective date of this Agreement (the “Effective Date”),
      constitute the Board (the “Incumbent Board”) cease for any reason to constitute
      at least a majority of the Board; provided that any individual becoming a
      director subsequent to the Effective Date, whose election or nomination for
      election by the Company’s stockholders was approved by a vote of at least
      two-thirds of the directors then comprising the Incumbent Board shall be
      considered as though such individual were a member of
      the
      Incumbent Board, but excluding as a member of the Incumbent Board, any such
      individual whose initial assumption of office is in connection with an actual
      or
      threatened election contest relating to the election of the directors of the
      Company (as such terms are used in Rule 14a-11 of Regulation 14A under the
      Exchange Act) and further excluding any individual who is an “affiliate”,
“associate” (as such terms are defined in Rule 12b-2 under the Exchange Act) or
      designee of an Acquiring Person having or proposing to acquire beneficial
      ownership (within the meaning of Rule 13d-3 under the Exchange Act), directly
      or
      indirectly, of securities of the Company representing more than 10 percent
      of
      the combined voting power of the then outstanding securities of the Company
      entitled to then vote generally in, the election of directors of the
      Company.

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