Document:

EMPLOYMENT
      AGREEMENT

     

    This
      Employment Agreement (the “Agreement”)
      is
      entered into as of the 15th
      day of
      October 2007, by and between KnowFat Franchise Company, a Delaware corporation,
      with a business address of 255 Washington St. Suite 100 Newton, MA 02458 (the
      “Company”),
      and
      Eric Spitz, an individual with a residence address of 53 Fuller Street, Waban,
      MA 02468 (the “Executive”).

    

    INTRODUCTION

     

    1. The
      Company is in the better-for-you restaurant and nutritional product retail
      business (the “Business”).

     

    2. The
      Company wishes to employ the Executive as its Executive Vice President of
      Business Development pursuant to the terms and conditions set forth
      herein.

     

    3. The
      Executive desires to be employed by the Company, pursuant to the terms and
      conditions set forth herein.

     

    AGREEMENT

     

    In
      consideration of the premises and mutual promises herein below set forth, the
      parties hereby agree as follows:

     

    1. Employment
      Period.
      The
      term of the Executive’s employment by the Company pursuant to this Agreement
      (the “Employment
      Period”)
      shall
      commence on the date hereof and shall continue for a period of three (3) years.
      Thereafter, the Employment Period shall automatically renew for successive
      periods of one (1) year, unless either party shall have given to the other
      at
      least ninety (90) days’ prior written notice of their intention not to renew the
      Executive’s employment prior to the end of the Employment Period or the then
      applicable renewal term, as the case may be. In any event, the Employment Period
      may be terminated as provided herein.

     

    2. Employment;
      Duties.
      Subject
      to the terms and conditions set forth herein, the Company hereby employs the
      Executive to act as Executive Vice President for Business Development of the
      Company during the Employment Period, and the Executive hereby accepts such
      employment. The duties assigned and authority granted to the Executive shall
      be
      as determined by the Company’s Chief Executive Officer and Board of Directors
      (the “Board”)
      from
      time to time. The Executive agrees to perform his duties for the Company
      diligently, competently, and in a good faith manner.

     

    3. Salary. 

     

    (a) Base
      Salary. The
      Executive shall be entitled to receive a salary from the Company during the
      Employment Period at the rate of no less than One Hundred Seventy-five Thousand
      ($175,000) per year (the “Base
      Salary”),
      payable in accordance with the Company’s customary payroll practices. Beginning
      on the second anniversary date of this Agreement, the Executive’s Base Salary
      may be increased, but not decreased, on each anniversary date of this Agreement,
      at the Board’s sole discretion. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (b) Equity
      Payments. In
      addition to the Base Salary, it is intended that the Executive shall receive
      options to purchase two hundred and fifty thousand (250,000) shares of the
      common stock of UFood Restaurant Group, Inc. (the “Options”).
      The
      Options shall terminate ten (10) years from the date hereof, be exercisable
      at
      $1.00 per share, and vest and be exercisable as follows: (a) one hundred and
      twenty five thousand (125,000) Options shall vest upon the closing of the merger
      between the Company and a wholly-owned subsidiary of UFood Franchise Restaurant
      Group, Inc. (the “Merger
      Date”);
      (b)
      one hundred twenty-five thousand (125,000) Options shall vest un equal amounts
      on the first day of each month for thirty-six months. Notwithstanding the
      termination of this Agreement for any cause, the Executive shall receive the
      Options pursuant to the terms set forth herein. The Options shall be granted
      pursuant to the 2007 Equity Incentive Plan of UFood Restaurant Group, Inc.,
      and
      the Company shall use its best efforts to cause UFood Restaurant Group, Inc.
      to
      issue these Options as of the Merger Date.

     

    (c) Guaranteed
      Salary and Benefits.
      The
      Company agrees that notwithstanding the Executive’s voluntary resignation from
      the Company on or after the date more than thirty (30) days after the date
      on
      which the Registration Statement registering for resale the shares issued by
      UFood Restaurant Group, Inc. in its current private placement is declared
      effective by the Securities and Exchange Commission, the Executive shall
      continue to receive the Base Salary and all Benefits (as defined herein)
      throughout the Severance Period (as hereinafter defined). The Company further
      acknowledges and agrees that its obligation hereunder to pay the Executive
      the
      Base Salary and the Benefits such Period can not be limited, terminated, or
      modified in any way. 

     

    4. Bonus.
      The
      Executive will receive a cash bonus in the amount of twenty-five Thousand
      Dollars ($25,000) upon the closing of the sale of securities in the public
      offering of UFood Franchise Company. The Executive’s annual bonus (if any) shall
      be in such amount as the Board may determine in its sole discretion. The
      Executive shall be eligible to participate in any bonus or other incentive
      program established by the Company for executives of the Company.

     

    5. Other
      Benefits

     

    (a) Insurance
      and Other Benefits.
      During
      the Employment Period, the Executive shall be entitled to participate in the
      Company’s insurance programs and any ERISA benefit plans, as the same may be
      adopted and/or amended from time to time (the “Benefits”).
      The
      Executive shall be entitled to paid personal days on a basis consistent with
      the
      Company’s other senior executives. The Executive shall be bound by all of the
      policies and procedures established by the Company from time to time.

     

    (b) Vacation.
      During
      the Employment Period, the Executive shall be entitled to an annual vacation
      of
      such duration consistent with the Company’s policies from time to
      time.

     

    (c) Expense
      Reimbursement.
      The
      Company shall reimburse the Executive for all reasonable business, promotional,
      travel and entertainment expenses ("Reimbursable
      Expenses")
      incurred or paid by him during
      the Employment Period in the performance of his services
      under this Agreement, provided that the Executive furnishes to the Company
      appropriate documentation required by the Internal Revenue Code in a timely
      fashion in connection with such expenses and shall furnish such other
      documentation and accounting as the Company may from time to time reasonably
      request.

     

    
      
        
        

      

      
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    (d) Computer. At
      the
      end of the Employment Period, or upon the Executive’s resignation or termination
      from employment by the Company, the Executive may retain and remove the lap-top
      computer he used while working for the Company for his own personal use. Upon
      the Executive’s removal of the lap-top computer, such computer shall become the
      sole property of the Executive.

     

    6. Termination;
      Compensation Due Upon Termination of Employment.
      The
      Executive's employment hereunder may terminate as provided in paragraphs (a)
      through (e) below, and subject to those payments to Executive that expressly
      survive the termination of this Agreement as set forth in Section 3 hereof,
      the
      Executive’s right to compensation for periods after the date his employment
      with the Company terminates shall be determined in accordance with the
      provisions of paragraphs (a) through (e) below:

     

    (a) Voluntary
      Resignation.
      The
      Executive may terminate his employment
      at any time upon sixty (60) days prior written notice to the Company. In the
      event of the Executive's voluntary termination of employment, subject to Section
      3(c), the Company shall have no obligation to make payments to the Executive
      in
      accordance with the provisions of Sections 3 or 4, or, except as otherwise
      required by law, to provide the benefits described in Section 5, for periods
      after the date on which the Executive's employment with the Company terminates
      due to the Executive 's voluntary resignation, except for the payment of the
      Executive’s Base Salary accrued through the date of such resignation.

     

    (b) Discharge
      for Cause.
      Upon
      (i) written notice to the Executive, and (ii) Executive’s failure to cure such
      default within 30 days of receipt of notice, the Company may terminate the
      Executive’s employment for Cause if any of the following events shall
      occur:

     

    (i) the
      Executive’s continued and willful refusal or neglect to satisfactorily perform
      and discharge his material duties and responsibilities;

     

    (ii) the
      Executive’s gross misconduct that is injurious to the Company or the Executive’s
      ability to perform his duties and responsibilities hereunder;

     

    (iii) the
      Executive’s fraud, embezzlement or other acts of dishonesty;

     

    (iv) the
      Executive’s conviction of, or entry of a plea of guilty or nolo contendere to, a
      felony or a crime;

     

    (v) the
      Executive’s willful or prolonged absence from work (other than by reason of
      disability due to physical or mental illness); or

     

    (vi) the
      Executive’s breach of his obligations
      under Section 7 or Section 8.

     

    
      
        
        

      

      
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    In
      the
      event Executive is terminated for “Cause,” the Company shall have no obligation
      to make payments to Executive in accordance with the provisions of Sections
      3 or
      4, or, except as otherwise required by law, to provide the benefits described
      in
      Section 5, for periods after the Executive's employment with the Company is
      terminated on account of the Executive's discharge for cause except for the
      Executive’s base salary accrued through the date of such
      termination.

     

    (c) Disability. The
      Company shall have the right, but shall not be obligated to terminate the
      Executive's employment hereunder in the event the Executive becomes disabled
      such that he is
      unable
      to discharge his duties
      to
      the Company for a period of ninety (90) consecutive days or one hundred twenty
      (120) days in any one hundred eighty (180) consecutive day period (a
      "Permanent
      Disability").
      In
      the event of a termination of employment due to a Permanent Disability, then
      the
      Company shall be obligated to continue to make payments to the Executive in
      an
      amount equal to Executive’s then-current Base Salary and Benefits for the
      Severance Period, payable in the form of salary continuation for the applicable
      Severance Period after the Executive’s employment with the Company is terminated
      due to a Permanent Disability. A determination of a Permanent Disability shall
      be made by a physician satisfactory to both the Executive and the Company;
      provided,
      however,
      that if
      the Executive and the Company do not agree on a physician, the Executive and
      the
      Company shall each select a physician and those two physicians together shall
      select a third physician, whose determination as to a Permanent Disability
      shall
      be binding on all parties.

     

    (d) Death. The
      Executive's employment hereunder shall terminate upon the death of the
      Executive. The Company shall be obligated to continue to make payments to the
      Executive in an amount equal to Executive’s then-current Base Salary and
      Benefits for the Severance Period following his death, payable to the
      Executive's beneficiary, as the Executive shall have indicated in writing to
      the
      Company (or if no such beneficiary has been designated, to Executive’s
      estate).

     

    (e) Termination
      for Good Reason or Without Cause.
      The
      Executive may terminate this Agreement at any time for Good Reason. In the
      event
      that this Agreement is terminated by the Executive for Good Reason or this
      Agreement is terminated by the Company without Cause, the Company shall pay
      to
      the Executive severance in an amount equal to the Executive’s then-current Base
      Salary and Benefits for a period (the “Severance
      Period”)
      equal
      to the lesser of (i) 12 months or (ii) the remainder of the then-current
      Employment Period, payable in the form of salary continuation for the applicable
      Severance Period following the Executive’s termination, subject to the Company’s
      regular payroll practices and required withholdings. For the purposes of this
      Agreement, “Good Reason” shall mean any of the following (without Executive’s
      express written consent): (i) removal of Executive from his position
      as Executive
      Vice President for Business Development; (ii) a reduction by Company in
      Executive’s then current annual base salary or other compensation, unless said
      reduction is pari passu with other senior executives of the Company;
      (iii) the taking of any action by the Company that would, directly or
      indirectly, materially reduce Executive’s benefits, unless said reductions are
      pari passu with other senior executives of the Company; or (iv) breach by
      Company of any material term of this Agreement that is not cured by Company
      within 30 days following receipt by Company of written notice
      thereof.

     

    
      
        
        

      

      
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    7. Non-Competition;
      Non-Solicitation.
      Unless
      Executive terminates this Agreement pursuant to Section 6(e), for the duration
      of the Employment Period and three (3) years following the Employment Period
      (the “Non-compete
      Period”),
      the
      Executive shall not, directly or indirectly, engage or invest in, own, manage,
      operate, finance, control or participate in the ownership, management,
      operation, financing, or control of, be employed by, associated with, or in
      any
      manner connected with, lend any credit to, or render services or advice to,
      any
      business, firm, corporation, partnership, association, joint venture or other
      entity that engages or conducts any business the same as or substantially
      similar to the Business or currently proposed to be engaged in or conducted
      by
      the Company or included in the future strategic plan of the Business, anywhere
      within the United States of America; provided,
      however,
      that the
      Executive may own less than 5% of the outstanding shares of any class of
      securities of any enterprise (but without otherwise participating in the
      activities of such enterprise) if such securities are listed on any national
      or
      regional securities exchange or have been registered under Section 12(g) of
      the
      Securities Exchange Act of 1934, as amended.

     

    The
      Executive recognizes and agrees that because a violation by him of
      his obligations
      under this Section 7 will cause irreparable harm to the Company that would
      be
      difficult to quantify and for which money damages would be inadequate, the
      Company shall have the right to injunctive relief to prevent or restrain any
      such violation, without the necessity of posting a bond. The Non-compete Period
      will be extended by the duration of any violation by the Executive of any of
      his obligations
      under this Section 7.

     

    The
      Executive expressly agrees that the character, duration and scope of the
      covenant not to compete are reasonable in light of the circumstances as they
      exist at the date upon which this Agreement has been executed. However, should
      a
      determination nonetheless be made by a court of competent jurisdiction at a
      later date that the character, duration or geographical scope of the covenant
      not to compete is unreasonable in light of the circumstances as they then exist,
      then it is the intention of both the Executive and the Company that the covenant
      not to compete shall be construed by the court in such a manner as to impose
      only those restrictions on the conduct of the Executive which are reasonable
      in
      light of the circumstances as they then exist and necessary to assure the
      Company of the intended benefit of the covenant to compete.

     

    8. Confidentiality
      Covenants.

     

    (a) The
      Executive understands that the Company, from time to time, may impart to him
      confidential business information, whether such information is written, oral
      or
      graphic, including, but not limited to, financial plans and records, marketing
      plans, business strategies and relationships with third parties, present and
      proposed products, trade secrets, information regarding customers and suppliers,
      strategic planning and systems and contractual terms (collectively “Confidential
      Information”).
      The
      Executive hereby acknowledges Company’s exclusive ownership of such Confidential
      Information.

     

    (b) The
      Executive agrees as follows: (1) only to use the Confidential Information to
      provide services to Company; (2) only to communicate the Confidential
      Information to fellow employees, agents and representatives on a need-to-know
      basis; and (3) not to otherwise disclose or use any Confidential Information.
      Upon demand by Company or upon termination of the Executive’s employment, the
      Executive will deliver to Company all manuals, photographs, recordings and
      any
      other instrument or device by which, through which or on which Confidential
      Information has been recorded and/or preserved, which are in the Executive’s
      possession, custody or control.

     

    
      
        
        

      

      
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    9. Executive’s
      Representation.
      The
      Executive hereby represents that his entry
      into this Employment Agreement will not violate the terms or conditions of
      any
      other agreement to which the Executive is a party.

     

    10. Technology
      Ownership.
      The
      Executive hereby assigns to the Company all inventions, discoveries, designs,
      trade secrets, formulae, processes, methods, techniques, mask works,
      improvements, developments, concepts, computer programs, databases and works
      which the Executive may make or acquire during the term of his employment
      hereunder, whether or not during working hours and whether made solely or
      jointly with others, that (1) are related to the Business of the Company at
      the
      time they are made or acquired, or (2) are made using the equipment, supplies,
      facilities, or proprietary information of the Company, as well as all patents,
      patent applications, copyrights, copyright registrations and all other
      intellectual property rights which cover, protect or are embodied in any of
      the
      foregoing.

     

    11. Arbitration.
      In the
      event of any breach arising from the performance of this Agreement, either
      party
      may request arbitration. In such event, the parties will submit to arbitration
      by a qualified arbitrator with the definition and laws of the Commonwealth
      of
      Massachusetts. Such arbitration shall be final and binding on both
      parties.

     

    12. Governing
      Law/Jurisdiction.
      This
      Agreement and any disputes or controversies arising hereunder shall be construed
      and enforced in accordance with and governed by the internal laws of the
      Commonwealth of Massachusetts other than principles of law that would apply
      the
      law of another jurisdiction. The parties agree that this Agreement was made
      and
      entered into in the Commonwealth of Massachusetts and, subject to Section 11,
      each party hereby consents to the jurisdiction of any competent federal or
      state
      court within the Commonwealth of Massachusetts to hear any dispute arising
      out
      of this Agreement.

     

    13. Entire
      Agreement.
      This
      Agreement constitutes the entire agreement between the parties hereto with
      respect to the subject matter hereof and thereof and supersedes and cancels
      any
      and all previous agreements, written and oral, regarding the subject matter
      hereof between the parties hereto. This Agreement shall not be changed, altered,
      modified or amended, except by a written agreement signed by both parties
      hereto.

     

    14. Notices.
      All
      notices, requests, demands and other communications called for or contemplated
      hereunder shall be in writing and shall be deemed to have been given when
      delivered to the party to whom addressed or when sent by telecopy (if promptly
      confirmed by registered or certified mail, return receipt requested, prepaid
      and
      addressed) to the parties, their successors in interest, or their assignees
      at
      the following addresses, or at such other addresses as the parties may designate
      by written notice in the manner aforesaid:

     

    (a) to
      the
      Company at:

    

    KnowFat
      Franchise Company, Inc.

    255
      Washington Street, Suite 100

    Newton,
      MA 02458

    Attn:
      George Naddaff

    Fax:
      (617) 787-6010

     

    
      
        
        

      

      
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    with
      a
      copy to:

     

    Robinson
      & Cole LLP

    695
      East
      Main Street

    Stamford,
      Connecticut 06904

    Attn:
      Richard A. Krantz

    Fax:
      (203) 462-7599

     

    (b) to
      the
      Executive at:

     

    53
      Fuller
      Street

    Waban,
      MA
      02468

    Fax:
      (617) 795-2321

    

    All
      such
      notices, requests and other communications will (i) if delivered personally
      to
      the address as provided in this Section 14, be deemed given upon delivery,
      (ii)
      if delivered by facsimile transmission to the facsimile number as provided
      for
      in this Section 14, be deemed given upon facsimile confirmation, (iii) if
      delivered by mail in the manner described above to the address as provided
      for
      in this Section 14, be deemed given on the earlier of the third business day
      following mailing or upon receipt and (iv) if delivered by overnight courier
      to
      the address as provided in this Section 14, be deemed given on the earlier
      of
      the first business day following the date sent by such overnight courier or
      upon
      receipt (in each case regardless of whether such notice, request or other
      communication is received by any other person to whom a copy of such notice
      is
      to be delivered pursuant to this Section 14). Either party may, by notice given
      to the other party in accordance with this Section 14, designate another address
      or person for receipt of notices hereunder.

     

    15. Severability.
      If any
      term or provision of this Agreement, or the application thereof to any person
      or
      under any circumstance, shall to any extent be invalid or unenforceable, the
      remainder of this Agreement, or the application of such terms to the persons
      or
      under circumstances other than those as to which it is invalid or unenforceable,
      shall be considered severable and shall not be affected thereby, and each term
      of this Agreement shall be valid and enforceable to the fullest extent permitted
      by law. The invalid or unenforceable provisions shall, to the extent permitted
      by law, be deemed amended and given such interpretation as to achieve the
      economic intent of this Agreement.

     

    16. Waiver.
      The
      failure of any party to insist in any one instance or more upon strict
      performance of any of the terms and conditions hereof, or to exercise any right
      or privilege herein conferred, shall not be construed as a waiver of such terms,
      conditions, rights or privileges, but same shall continue to remain in full
      force and effect. Any waiver by any party of any violation of, breach of or
      default under any provision of this Agreement by the other party shall not
      be
      construed as, or constitute, a continuing waiver of such provision, or waiver
      of
      any other violation of, breach of or default under any other provision of this
      Agreement.

     

    
      
        
        

      

      
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    17. Successors
      and Assigns.
      This
      Agreement shall be binding upon the Company and any successors and assigns
      of
      the Company. Neither this Agreement nor any right or obligation hereunder may
      be
      assigned by the Executive. The Company may assign this Agreement and its right
      and obligations hereunder, in whole or in part.

     

    18. Counterparts.
      This
      Agreement may be executed in multiple counterparts, each of which shall be
      deemed an original, and all of which together shall constitute one and the
      same
      instrument.

     

    19. Headings.
      Headings in this Agreement are for reference purposes only and shall not be
      deemed to have any substantive effect.

     

    20. Opportunity
      to Seek Advice.
      The
      Executive acknowledges and confirms that he has had the opportunity to seek
      such
      legal, financial and other advice and representation as he has deemed
      appropriate in connection with this Agreement.

     

    21. Withholding
      and Payroll Practices.
      All
      salary, severance payments, bonuses or benefits provided by the Company under
      this Agreement shall be net of any tax or other amounts required to be withheld
      by the Company under applicable law and shall be paid in the ordinary course
      pursuant to the Company’s then existing payroll practices.

     

    [the
      next page is the signature page]

    
      
        
        

      

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

    
      	 	 	 
	 	
              KNOWFAT
                FRANCHISE COMPANY, INC.,

              a
                Delaware corporation

            
	 
 	 
 	 
 
	
            	By:  	/s/ George
              Naddaff
	 	
              
Name:
              George Naddaff
	 	Title: Chairman & Chief Executive
              Officer

    

    
      	 	 	 	 
	
              Witness:

               

            	 	 	
              EXECUTIVE:

               

               

              /s/
                Eric Spitz

            
	
              
Name:	 	 	
              
Name: Eric
              Spitz
	
            	 	 	 

    

     

    
      
        
        

      

      
        9KnowFat
      Franchise Company, Inc.

    STOCK
      OPTION PLAN

    

    The
      purpose of this Plan is to encourage and enable certain officers, employees,
      Directors, consultants and agents of KnowFat Franchise Company, Inc. (the “Company”) to acquire an
      interest in the Company through the granting of options, as herein provided,
      to
      acquire its Common Stock, without par value (the “Common Stock”). Two separate
      forms of option may be granted pursuant to this Plan: Incentive Stock Options
      under the provisions of Section 422A of the Internal Revenue Code of 1954,
      as
      amended (the “Code”) (referred to herein as “Incentive Stock Options”) and other
      options (referred to as “Non-Qualified Options”). Both forms of option will be
      referred to collectively hereunder as “options”. 

    

    1
      Shares of Stock Subject to the Plan

    

    The
      stock
      that may be issued and sold pursuant to options granted under the Plan shall
      not
      exceed, in the aggregate, 20% of the total number of outstanding shares of
      Common Stock, which may be (i) authorized but unissued shares, (ii) treasury
      shares, or (iii) shares previously reserved for issue upon exercise of options
      under the Plan, which options have expired or terminated; provided, however,
      that the number of shares subject to the Plan shall be subject to adjustment
      as
      provided in Section 9.

    

    An
      option
      or portion thereof exercised through the exercise of a Stock Appreciation Right
      pursuant to Section 8 shall be treated for the purposes of this Section as
      though the option, or portion thereof, had been exercised, with the result
      that
      the shares of Common Stock subject to such option or portion thereof shall
      not
      be available for future grants of options. 

    

    2
      Eligibility and Granting of Options

    

    (a) Non-Qualified
      Options may be granted hereunder to any officer, employee, Director (except
      a
      disinterested Director under Paragraph 2(b) hereof), consultant or agent of
      the
      Company. Incentive Stock Options may only be granted to employees of the
      Company, including those who are Directors.  

    

    (b) The
      Board
      of Directors of the Company (the “Board”), acting by a majority of its
      disinterested Directors (as defined below), shall determine the persons to
      be
      granted options (the “Optionees”), the number of shares subject to each option
      (which cannot with respect to any one Optionee exceed 10% of the then
      outstanding shares of Common Stock), whether the options shall be Incentive
      Stock Options or Non-Qualified Options, and the terms of the options,
      consistently with the provisions of this Plan. The Board may appoint from its
      disinterested Directors a committee of three (3) or more persons who may
      exercise the powers of the Board in granting options under the Plan. As used
      herein, a “disinterested” Director shall mean one who is not currently eligible,
      and has not been eligible at any time within one (1) year prior to the granting
      of the options in question, to receive any option granted under the Plan or
      any
      stock, stock options or stock appreciation rights under any other plan of the
      Company or its affiliates. The Board of Directors shall from time to time
      determine the disinterested Directors. For purposes of qualifying a Director
      as
“disinterested,” the Board with the consent of such Director may for a specified
      period of time treat such Director as being ineligible to receive option grants
      under any plan even though he is otherwise a member of a class of people to
      whom
      options may be granted.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    3
      Price and Limitation on Grant of Options

    

    (a) The
      purchase price of shares which may be purchased under each Incentive Stock
      Option shall, except as provided in Paragraph (b) below, be at least equal
      to
      the fair market value per share of the outstanding Common Stock of the Company
      at the time the option is granted as determined by the Board in its discretion.
      The aggregate fair market value (determined as of the time the option is
      granted) of the stock for which an individual may be granted Incentive Stock
      Options which vest in any calendar year under this Plan and all other plans
      of
      the Company and any parent or subsidiary of the Company (as defined in Section
      425 of the Code) shall not exceed $500,000 plus any “unused limit carryover” as
      that term is defined in Section 422A of the Code.

    

    (b) The
      purchase price of shares which may be purchased under each Incentive Stock
      Option issued to a person who, immediately prior to the grant of such option
      owns (directly or indirectly) stock possessing more than ten percent of the
      total combined voting power of all classes of stock of the Company or of its
      parent or subsidiaries (a “restricted individual”) shall be at least equal to
      110 percent of the fair market value of the stock subject to the option, as
      determined in Paragraph 3(a) above.

    

    (c)
      The
      purchase price of shares which may be purchased under each Non-Qualified Option
      shall be such amount as may be determined by the Board of Directors of the
      Company.

    

    (d) In
      no
      event shall the purchase price of any shares be less than that permitted by
      applicable laws, rules or regulations.

    

    4
      Period of Option, Vesting, and Limitations on Right to
      Exercise

    

    All
      options shall be evidenced by written agreements executed by the Company and
      the
      Optionee, which in the case of Incentive Stock Options shall be in the form
      of
      the Incentive Stock Option Agreement attached hereto as Exhibit A, and in the
      case of Non-Qualified Options may be in the form of the Non-Qualified Option
      Agreement attached hereto as Exhibit B. All Incentive Stock Option Agreements,
      and such Non-Qualified Option Agreements as the Board may determine, shall
      provide that any options granted thereunder shall vest and become exercisable
      as
      follows: (i) a portion shall vest and become exercisable upon the achievement
      by
      the Company and/or the Optionee of such milestones as may be specified in such
      Option Agreements; and/or (ii) the balance shall vest and become exercisable
      in
      equal weekly installments over a period of not less than two years from the
      date
      of grant or the date of achievement of the final milestone, whichever occurs
      later.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    Each
      Incentive Stock Option shall be exercisable at such time or times as are set
      forth in the Incentive Stock Option Agreement related thereto, but in no event
      after the expiration of ten (10) years from the date such option is granted.
      An
      Incentive Stock Option granted to a restricted individual (as defined in
      Paragraph 3(b) above) shall not be exercisable after the expiration of 5 years
      from the date such option is granted. A Non-Qualified Option shall be
      exercisable for such consideration, in such manner and at such time or times
      as
      shall be set forth in the Non-Qualified Option Agreement related thereto, which
      shall contain such provisions as the Board shall determine in granting such
      an
      option, and may be exercisable for a period of ten years and one day from the
      date such option is granted, but in no event after such period. In any case,
      the
      Board may amend an option agreement to accelerate the date after which options
      may be exercised in whole or in part. An Optionee may exercise an option with
      respect to a number of shares, not a fractional number, which is less than
      the
      full number of shares for which the Option may then be exercised. The delivery
      of certificates representing shares under any option will be contingent upon
      receipt by the Company from the Optionee (or a purchaser acting in his stead
      in
      accordance with the provisions of the option) of the full purchase price for
      such shares (which may be paid as specified in the following sentence) and
      the
      fulfillment of any other requirements contained in the option or in applicable
      provisions of law; and until such receipt of the purchase price and fulfillment
      of other requirements no Optionee or person entitled to exercise the option
      shall be, or shall be deemed to be, a holder of any shares subject to the option
      for any purpose. The purchase price of shares may be paid either in United
      States dollars in cash or by check, bank draft or money order payable to the
      order of the Company, or through the delivery of shares of Common Stock with
      an
      aggregate fair market value on the date of exercise equal to the purchase price,
      or in any combination of the foregoing; provided, however, that the Company
      shall not be obligated to purchase or accept the surrender of any such shares
      if
      such action would be prohibited by applicable law or determined by the Board
      to
      be not in the best interests of the Company.

    

    The
      Company may, in its discretion, require an Optionee to pay to the Company the
      amount, or make such other arrangements (including the withholding of Common
      Shares which would otherwise be delivered upon exercise), at the time of
      exercise or thereafter, that the Company deems necessary to satisfy its
      obligation to withhold federal, state or local income or other taxes (which
      for
      purposes of this Section includes an Optionee's FICA obligation) incurred by
      reason of the exercise.

    

    5
      Non-Transferability of Option

    

    Each
      option granted under the Plan shall provide that it is personal to the Optionee,
      is not transferable by the Optionee in any manner otherwise than by will or
      the
      laws of descent and distribution and is exercisable, during the Optionee's
      lifetime, only by the Optionee. In the event of any attempt by the Optionee
      to
      assign, pledge or otherwise dispose of any option (except as provided for
      herein) or in the event of any levy, attachment, execution or similar process
      upon rights or interests conferred hereby, the Company may terminate the option
      by notice to the Optionee and the option shall thereupon become null and
      void.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    6
      Cessation of Employment or Affiliation by Optionee

    

    The
      following provisions shall apply in the event of the cessation of an Optionee's
      employment or affiliation with the Company:

    

    (a) In
      the
      case of an Incentive Stock Option, in the event of the cessation by the Optionee
      of his or her employment with the Company:

    

    (i) If
      an
      Optionee shall cease to be employed by the Company otherwise than by reason
      of
      retirement, disability or death (as defined in Section 105 of the Code), each
      option held by the Optionee, together with all rights hereunder (including
      the
      right to any options not then vested), shall terminate on the date of cessation
      of employment, to the extent not previously exercised.

    

    (ii) If
      an
      Optionee shall cease to be employed by the Company by reason of retirement
      or
      disability, each vested option held by the Optionee shall be exercisable until
      the termination date set forth in the option or until one year after the date
      of
      cessation of employment, whichever comes first, provided that no such extension
      shall be construed to grant an optionee any rights to options not vested on
      the
      date of termination.

    

    (iii) If
      an
      Optionee shall die while employed by the Company, or at any time after cessation
      of employment by reason of retirement or disability, an Option may be exercised
      at any time or from time to time prior to the termination date set forth in
      the
      Option or until one year after the date of death, whichever comes first, by
      the
      person or persons to whom the Optionee's rights under each option shall pass
      by
      will or by the applicable laws of descent and distribution, provided that no
      such extension shall be construed to grant an optionee any rights to options
      not
      vested on the date of termination. Any person or persons to whom an Optionee's
      rights under an option shall have passed by will or by the applicable laws
      of
      descent and distribution shall be subject to all terms and conditions of the
      Plan and the option applicable to the Optionee.

    

    (b) In
      the
      case of a Non-Qualified Option, in the event of the cessation by the Optionee
      of
      his or her affiliation with the Company, the termination of the options shall
      be
      governed by the terms of the applicable Non-Qualified Option
      Agreement.

    

    7
      Notification of Sales of Shares

    

    Any
      Optionee who disposes of shares of Common Stock acquired upon the exercise
      of an
      Incentive Stock Option either (a) within two years after the date of the grant
      of the option under which the shares were acquired or (b) within one year after
      the transfer of such shares to the Optionee, shall notify the Company of such
      disposition and of the amount realized upon such disposition.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    8
      Stock Appreciation Rights

    

    At
      or
      after the grant of an option, the Board, in its discretion, may provide an
      Optionee with an alternate means of exercising such option, or a designated
      portion thereof, by granting the Optionee a Stock Appreciation Right. A Stock
      Appreciation Right with respect to an option or portion thereof is a right
      to
      receive, upon exercise thereof, an amount equal to the excess of the fair market
      value of a share of Common Stock on the date of exercise over the purchase
      price
      of a share under such Option, multiplied by the number of shares that the
      Optionee would have received had such option or portion thereof been exercised
      through the purchase of shares at such purchase price, provided that (a) such
      option or portion thereof has been designated as exercisable in this alternative
      manner, (b) such option or portion thereof is otherwise exercisable and (c)
      the
      fair market value of a share of Common Stock on the date of exercise exceeds
      such purchase price. Such amount shall be paid in cash and/or shares of Common
      Stock at the discretion of the Board. Upon the exercise of a Stock Appreciation
      Right in the manner herein provided, the option or portion thereof to which
      such
      Stock Appreciation Right relates shall be deemed in the case of a cash payment
      to have been cancelled and in the case of a payment in Shares of Common Stock
      to
      have been exercised. Shares of Common Stock issued as a result of the exercise
      of a Stock Appreciation Right shall be deemed issued at the fair market value
      thereof on the date the Stock Appreciation Right is exercised.

    

    9
      Dilution or Other Adjustments

    

    The
      terms
      of the options and the number of shares subject to this Plan shall be equitably
      adjusted in such manner as to prevent dilution or enlargement of option rights
      in the following instances:

    

    (a) the
      declaration of a stock dividend payable to the holders of Common
      Stock;

    

    (b) a
      split-up of the Common Stock or a reverse split thereof;

    

    (c) a
      recapitalization of the Company under which shares of one or more different
      classes of stock of the Company are distributed in exchange for or upon the
      Common Stock without payment of any valuable consideration by the holders
      thereof.

    

    The
      terms
      of any such adjustment shall be conclusively determined by the
      Board.

    

    10
      Stockholder's Agreement

    

    All
      holders of shares of Common Stock issued upon exercise of options issued
      pursuant hereto shall, as a condition of issuance of such shares, become parties
      and become subject to the terms and provisions of the Stockholders' Agreement
      among the Company and the holders of Common Stock, and all certificates
      evidencing such shares shall contain the legends required by such
      Agreement.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    11
      Shareholder Approval

    

    The
      Plan
      is subject to the approval of the shareholders of the Company, and although
      options may be granted prior to such approval, none may be exercised until
      shareholder approval has been obtained. If such approval is not given within
      twelve (12) months after the date hereof, the Plan and all outstanding options
      shall terminate and be null and void

    

    12
      Administration and Amendment of the Plan

    

    The
      Plan
      shall be administered by the Board, or a committee thereof as provided in
      Section 2, which shall effect the grant of options under the Plan, determine
      the
      form of options to be granted in each case, and make any other determination
      under or interpretation of any provision of the Plan and any option. The Board
      or such committee shall maintain separate records with respect to Incentive
      Stock Options and Non-Qualified Options granted under the Plan to facilitate
      determination of the appropriate tax treatment for such options. Any of the
      foregoing actions taken by the Board or such committee shall be final and
      conclusive. The Board may amend and make such changes in and additions to the
      Plan as it may deem proper and in the best interest of the Company; provided,
      however, that no such action shall adversely affect or impair any options
      theretofore granted under the Plan without the consent of the Optionee; and
      provided, further, that no amendment (i) increasing the maximum number of shares
      which may be issued under the Plan, except as provided in Section 9, (ii)
      extending the term of the Plan or any option, (iii) changing the minimum
      exercise price of options to be granted under the Plan, (iv) changing the
      requirements as to eligibility for participation in the Plan (except as provided
      in Section 2(b)), or (v) materially increasing in any other way the benefits
      accruing the Optionees, shall be adopted without the approval of the
      shareholders of the Company.

    

    13
      Expiration and Termination of the Plan

    

    Options
      may be granted under the Plan at any time, or from time to time, within ten
      (10)
      years from the date the Plan is adopted or the date on which it is approved
      by
      the shareholders of the Company, whichever is earlier, as long as the total
      number of shares purchased under the Plan and subject to outstanding options
      under the Plan does not exceed 20% of the total outstanding shares of the Common
      Stock of the Company, subject to adjustment as provided in Section 9. The Plan
      may be abandoned or terminated at any time by the Board, except with respect
      to
      any options then outstanding under the Plan.

    

    14
      Effect of Certain Transactions

    

    If
      the
      Company is merged into or consolidated with another corporation under
      circumstances where the Company is not the surviving corporation, or if the
      Company is liquidated or sells or otherwise disposes of all or substantially
      all
      of its assets to another corporation while unexercised options remain
      outstanding under the Plan, without limitation of any rights which Optionees
      may
      have under Section 10, (i) subject to the provisions of clause (iii) below,
      after the effective date of such merger, consolidation or sale, as the case
      may
      be, each holder of an outstanding option shall be entitled, upon exercise of
      such option, to receive in lieu of shares of Common Stock, shares of such stock
      or other securities as the holders of shares of Common Stock received pursuant
      to the terms of the merger, consolidation or sale; (ii) the Board may waive
      any
      discretionary limitations provided in the stock option agreement so that all
      options from and after a date, specified by the Board, prior to the effective
      date of such merger, consolidation, liquidation or sale, as the case may be,
      shall be exercisable in full; and (iii) all outstanding options may be cancelled
      by the Board as of the effective date of such merger, consolidation,
      liquidation, or sale provided that notice of such cancellation shall be given
      to
      each holder of an option not less than thirty (30) days preceding the effective
      date of such merger, consolidation, liquidation, sale or disposition and
      provided that the Board may in its sole discretion waive any discretionary
      limitations provided in the option agreement with respect to any option so
      that
      such option shall be exercisable in full or in part as the Board may determine
      during such thirty (30) day period.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    15
      Miscellaneous Provisions

    

    (a) The
      right
      of the Company to terminate at will (whether by dismissal, discharge or
      otherwise) the Optionee's employment or affiliation (as the case may be) with
      it
      at any time is specifically reserved. Neither the Optionee nor any person
      entitled to exercise the Optionee's rights in the event of the Optionee's death
      shall have any rights of a shareholder with respect to the shares of Common
      Stock subject to each option, except to the extent that, and until, such Shares
      shall have been issued upon the exercise of each option.

    

    (b) Any
      expenses of administering the Plan shall be borne by the Company.

    

    (c) In
      addition to such other rights of indemnification as they may have as members
      of
      the Board, or the Committee, the members of the Board and any committee
      appointed pursuant to Section 2 shall be indemnified by the Company against
      all
      costs and expenses reasonably incurred by them in connection with any action,
      suit or proceeding to which they or any of them may be party by reason of any
      action taken or failure to act under or in connection with the Plan or any
      option granted thereunder, and against all amounts paid by them in settlement
      thereof (provided such settlement is approved by independent legal counsel
      selected by the Company) or paid by them in satisfaction of a judgment in any
      such action, suit or proceeding, except a judgment based upon a finding of
      bad
      faith; provided that upon the institution of any such action, suit or
      proceeding, a Board or committee member shall, in writing, give the Company
      notice thereof and an opportunity, at its own expense, to handle and defend
      the
      same before such Board or committee member undertakes to handle and defend
      it on
      such member's own behalf.

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